EXHIBIT 10.7

     
This Mortgage was prepared by,
  This document is intended
and when recorded should be returned to:
  to be recorded in
 
  Cherokee County, South Carolina

Leila Rachlin, Esq.
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
(212) 819-8720
1107993-0127
FIRST AMENDED AND RESTATED MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES,
RENTS AND PROFITS,
FINANCING STATEMENT AND FIXTURE FILING
made by
R. J. REYNOLDS TOBACCO COMPANY,
as the Mortgagor,
to
JPMorgan Chase Bank, N.A.,
as Administrative Agent and Collateral Agent for the Secured Creditors,
as the Mortgagee
COLLATERAL IS OR INCLUDES FIXTURES
THIS MORTGAGE CONSTITUTES A FIXTURE FINANCING STATEMENT FILING PURSUANT TO
SECTION 36-9-402 OF THE SOUTH CAROLINA CODE OF LAWS
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FIRST AMENDED AND RESTATED MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES,
RENTS AND PROFITS,
FINANCING STATEMENT AND FIXTURE FILING
          THIS FIRST AMENDED AND RESTATED MORTGAGE, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES, RENTS AND PROFITS, FINANCING STATEMENT AND FIXTURE FILING
dated as July 30, 2004, and amended and restated as of May 31, 2006 (as so
amended and restated and as the same may be further amended, restated,
supplemented and/or otherwise modified from time to time, this “Mortgage”) made
by R. J. Reynolds Tobacco Company, a North Carolina Corporation (the
“Mortgagor”), having an address at 401 North Main Street, Winston-Salem, North
Carolina 27102, as the Mortgagor to JPMorgan Chase Bank, N.A. (together with any
successor Mortgagee, the “Mortgagee”), having an address at 270 Park Avenue, New
York, NY 10017, as Administrative Agent and Collateral Agent for the benefit of
the Secured Creditors (as defined below).
          All capitalized terms used but not otherwise defined herein shall have
the same meanings ascribed to such terms in the Credit Agreement described
below.
W I T N E S S E T H :
          WHEREAS, Reynolds American Inc. (the “Borrower”), the various lending
institutions from time to time party thereto (the “Lenders”), the Mortgagee, as
Administrative Agent (the “Administrative Agent”), Lehman Commercial Paper Inc.
and Citicorp USA, Inc., as Syndication Agents (the “Syndication Agents”),
General Electric Capital Corporation and Mizuho Corporate Bank, Ltd., as
Documentation Agents (the “Documentation Agents”), Lehman Brothers Inc., J.P.
Morgan Securities Inc., Citigroup Global Markets Inc. and General Electric
Capital Corporation, as Joint Lead Arrangers and Lehman Brothers Inc., J.P.
Morgan Securities Inc. and Citigroup Global Markets Inc., as Joint Bookrunners
(the “Joint Bookrunners”) have entered into a Credit Agreement, dated as of
May 7, 1999, as amended and restated as of November 17, 2000, as further amended
and restated as of May 10, 2002, as further amended and restated as of July 30,
2004 and as further amended and restated as of the date hereof, providing for
the making of Loans to the Borrower and the issuance of, and participation in,
Letters of Credit for the account of the Borrower, in the aggregate principal
amount of up to $2,350,000,000 all as contemplated therein (with (i) the
Lenders, the Swingline Lender, each Letter of Credit Issuer, the Administrative
Agent, the Syndication Agents, the Documentation Agents, the other Agents and
the Collateral Agent being herein collectively called the “Lender Creditors” and
(ii) the term “Credit Agreement” as used herein to mean the Credit Agreement
described above in this paragraph, as the same may be further amended, modified,
extended, renewed, replaced, restated, supplemented and/or refinanced from time
to time, and including any agreement extending the maturity of, or refinancing
or restructuring (including, but not limited to, the inclusion of additional
borrowers or guarantors thereunder or any increase in the amount borrowed) all
or any portion of, the indebtedness under such agreement or any successor
agreement, whether or not with the same agent, trustee, representative lenders
or holders; provided that, with respect to any agreement providing for the
refinancing or replacement of indebtedness under the Credit Agreement, such
agreement shall only be treated as, or as part of, the Credit Agreement
hereunder if (x) either (A) all obligations under the Credit Agreement
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being refinanced or replaced shall be paid in full at the time of such
refinancing or replacement, and all commitments and letters of credit issued
pursuant to the refinanced or replaced Credit Agreement shall have terminated in
accordance with their terms or (B) the Required Lenders shall have consented in
writing to the refinancing or replacement indebtedness being treated as
indebtedness pursuant to the Credit Agreement, and (y) a notice to the effect
that the refinancing or replacement indebtedness shall be treated as issued
under the Credit Agreement shall be delivered by the Borrower to the Collateral
Agent);
          WHEREAS, the Borrower and/or one or more of its Subsidiaries has from
time to time entered into, and/or may in the future from time to time enter
into, one or more agreements or arrangements with JPMCB or any of its affiliates
(even if JPMCB ceases to be a Lender under the Credit Agreement for any reason
(JPMCB and any such affiliate and their respective successors and assigns, each,
a “Credit Card Issuer”)) providing for credit card loans to be made available to
certain employees of the Borrower and/or one or more of its Subsidiaries (each
such agreement or arrangement with a Credit Card Issuer, a “Secured Credit Card
Agreement”);
          WHEREAS, the Borrower and/or one or more of its Subsidiaries has from
time to time entered into, and or may in the future from time to time enter into
or guarantee one or more (i) interest rate protection agreements (including,
without limitation, interest rate swaps, caps, floors, collars and similar
agreements), and/or (ii) foreign exchange contracts, currency swap agreements,
commodity agreements or other similar agreements or arrangements designed to
protect against the fluctuations in currency or commodity values (each such
agreement or arrangement with a Hedging Creditor (as hereinafter defined),
together with the Existing Interest Rate Swap Agreement, a “Secured Hedging
Agreement”), with any Lender, any affiliate thereof or a syndicate of financial
institutions organized by a Lender or an affiliate of a Lender (even if any such
Lender ceases to be a Lender under the Credit Agreement for any reason) (any
such Lender, affiliate or other such financial institution that participates
therein, together with Calyon (as counterparty to the Existing Interest Rate
Swap Agreement), and in each case their subsequent successors and assigns,
collectively, the “Hedging Creditors”, and together with the Lender Creditors
and each Credit Card Issuer, the “Lender Secured Creditors”);
          WHEREAS, R.J. Reynolds Tobacco Holdings, Inc., a Wholly-Owned
Subsidiary of the Borrower (“RJRTH”) and the Existing Senior Notes Trustee, on
behalf of the holders of the Existing Senior Notes, have entered into the
Existing Senior Notes Indenture, providing for the issuance of Existing Senior
Notes by RJRTH;
          WHEREAS, the Borrower and the New Senior Notes Trustee, on behalf of
the holders of the New Senior Notes, have entered into the New Senior Notes
Indenture, providing for the issuance of New Senior Notes by the Borrower;
          WHEREAS, the Borrower and the Refinancing Senior Notes Trustee, on
behalf of the holders of the Refinancing Senior Notes, may from time to time
enter into the Refinancing Senior Notes Indenture, providing for the issuance
from time to time of Refinancing Senior Notes by the Borrower providing for the
issuance of Refinancing Senior Notes by the Borrower;
          WHEREAS, the Mortgagor is owner of the fee simple title to the
Property (as hereinafter defined), subject to Permitted Liens;
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          WHEREAS, pursuant to the Subsidiary Guaranty, the Mortgagor has
(together with the other Subsidiaries of the Borrower party thereto) jointly and
severally guaranteed to the Lender Secured Creditors the payment when due of the
Guaranteed Obligations (as and to the extent defined in the Subsidiary
Guaranty);
          WHEREAS, the Mortgagor has guaranteed to the Existing Senior Notes
Creditors the payment when due of principal, premium (if any) and interest on
the Existing Senior Notes;
          WHEREAS, the Mortgagor has guaranteed to the New Senior Notes
Creditors the payment when due of principal, premium (if any) and interest on
the New Senior Notes;
          WHEREAS, the Mortgagor may from time to time guarantee to the
Refinancing Senior Notes Creditors the payment when due of principal, premium
(if any) and interest on the Refinancing Senior Notes;
          WHEREAS, pursuant to the Credit Agreement, the Mortgagor executed and
delivered that certain Mortgage, Security Agreement, Assignment of Leases, Rents
and Profits, Financing Statement and Fixture Filing dated as of July 30, 2004,
for the benefit of JPMorgan Chase Bank, N.A. as Mortgagee, as Collateral Agent
for the Secured Creditors as described therein (the “Original Mortgage”), which
was recorded in the Records of the Clerk of Court for Cherokee County, South
Carolina (the “Records”) on August 3, 2004 in Mortgage Book 1071 at Page 195.
          WHEREAS, the Credit Agreement requires this Mortgage be executed and
delivered to the Mortgagee by the Mortgagor and the Secured Hedging Agreements,
the Secured Credit Card Agreements, the Existing Senior Notes Indenture and the
New Senior Notes Indenture, require that this Mortgage secure the respective
Obligations as provided herein; and
          WHEREAS, the Mortgagor desires to further amend and restate the
Original Mortgage to satisfy the condition in the preceding paragraph and to
secure (and this Mortgage shall secure) the following:
     (i) the full and prompt payment when due (whether at the stated maturity,
by acceleration or otherwise) of all obligations (including obligations which,
but for the automatic stay under Section 362(a) of the Bankruptcy Code, would
become due) and liabilities of the Mortgagor, now existing or hereafter incurred
under, arising out of or in connection with any Credit Document to which the
Mortgagor is a party (including, without limitation, indemnities, fees and
interest (including all interest that accrues after the commencement of any
case, proceeding or other action relating to the bankruptcy, insolvency,
reorganization or similar proceeding of the Borrower or any other Credit Party
at the rate provided for in the respective documentation, whether or not a claim
for post-petition interest is allowed in any such proceeding)), as described in
Schedule I hereto and the due performance of and compliance by the Mortgagor
with the terms of each such Credit Document (all such obligations and
liabilities under this clause (i), except to the extent consisting of
obligations or liabilities with respect to Secured Hedging Agreements, being
herein collectively called the “Credit Document Obligations”);
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     (ii) in accordance with Section 29-3-50 of the South Carolina Code of Laws
(1976), as amended, all future advances and re-advances that may subsequently be
made to the Mortgagor under the Credit Agreement and evidenced by the Notes,
Loans, commitments or other notes or instruments, and all modifications,
renewals, or extensions thereof, the maximum amount of all Credit Document
Obligations outstanding at one time secured by this Mortgage not to exceed
$7,050,000,000, plus interest thereon attorneys’ fees and court costs:
     (iii) the full and prompt payment when due (whether at the stated maturity,
by acceleration or otherwise) of all obligations (including obligations which,
but for the automatic stay under Section 362(a) of the Bankruptcy Code, would
become due) and liabilities of the Mortgagor, now existing or hereafter incurred
under, arising out of or in connection with each Secured Credit Card Agreement
(including, all obligations, if any, of the Mortgagor under the Subsidiary
Guaranty in respect of any Secured Credit Card Agreement), and all interest that
accrues after the commencement of any case, proceeding or other action relating
to the bankruptcy, insolvency, reorganization or similar proceeding of the
Borrower or any other Credit Party at the rate provided for in the respective
documentation, whether or not a claim for post-petition interest is allowed in
any such proceeding (all such obligations and liabilities under this clause
(iii) being herein collectively called the “Credit Card Obligations”);
     (iv) the full and prompt payment when due (whether at the stated maturity,
by acceleration or otherwise) of all obligations (including obligations which,
but for the automatic stay under Section 362(a) of the Bankruptcy Code, would
become due) and liabilities of the Mortgagor, now existing or hereafter incurred
under, arising out of or in connection with each Secured Hedging Agreement
(including, all obligations, if any, of the Mortgagor under the Subsidiary
Guaranty in respect of any Secured Hedging Agreement), and all interest that
accrues after the commencement of any case, proceeding or other action relating
to the bankruptcy, insolvency, reorganization or similar proceeding of the
Borrower or any other Credit Party at the rate provided for in the respective
documentation, whether or not a claim for post-petition interest is allowed in
any such proceeding (all such obligations and liabilities under this clause
(iv) being herein collectively called the “Hedging Obligations”);
     (v) the full and prompt payment when due (whether at the stated maturity,
by acceleration or otherwise) of all obligations (including obligations which,
but for the automatic stay under Section 362(a) of the Bankruptcy Code, would
become due) and liabilities of the Mortgagor, now existing or hereinafter
incurred under, arising out of or in connection with each Existing Senior Notes
Document to which it is a party (including all interest that accrues after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency, reorganization or similar proceeding of the Borrower or any other
Credit Party at the rate provided for in the respective documentation, whether
or not a claim for post-petition interest is allowed in any such proceeding) and
the due performance and compliance by the Mortgagor with the terms of each such
Existing Senior Notes Document (all such obligations and liabilities under this
clause (v) being herein collectively called the “Existing Senior Notes
Obligations”);
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     (vi) the full and prompt payment when due (whether at the stated maturity,
by acceleration or otherwise) of all obligations (including obligations which,
but for the automatic stay under Section 362(a) of the Bankruptcy Code, would
become due) and liabilities of the Mortgagor, now existing or hereinafter
incurred under, arising out of or in connection with each New Senior Notes
Document to which it is a party (including all interest that accrues after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency, reorganization or similar proceeding of the Borrower or any other
Credit Party at the rate provided for in the respective documentation, whether
or not a claim for post-petition interest is allowed in any such proceeding) and
the due performance and compliance by the Mortgagor with the terms of each such
New Senior Notes Document (all such obligations and liabilities under this
clause (vi) being herein collectively called the “New Senior Notes
Obligations”);
     (vii) the full and prompt payment when due (whether at the stated maturity,
by acceleration or otherwise) of all obligations (including obligations which,
but for the automatic stay under Section 362(a) of the Bankruptcy Code, would
become due) and liabilities of the Mortgagor now existing or hereinafter
incurred under, arising out of or in connection with each Refinancing Senior
Notes Document to which it is a party (including all interest that accrues after
the commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency, reorganization or similar proceeding of the Borrower or
any other Credit Party at the rate provided for in the respective documentation,
whether or not a claim for post-petition interest is allowed in any such
proceeding) and the due performance and compliance by the Mortgagor with the
terms of each such Refinancing Senior Notes Document (all such obligations and
liabilities under this clause (vii) being herein collectively called the
“Refinancing Senior Notes Obligations” and together with the New Senior Notes
Obligations, the “RAI Senior Notes Obligations”);
     (viii) any and all sums advanced by the Mortgagee in order to preserve the
Property or preserve its lien and security interest in the Property;
     (ix) in the event of any proceeding for the collection or enforcement of
any indebtedness, obligations, or liabilities of the Mortgagor and/or the
Borrower referred to above after an Event of Default (as hereinafter defined)
shall have occurred and be continuing, all expenses of re-taking, holding,
preparing for sale or lease, selling or otherwise disposing of or realizing on
the Property, or of any exercise by the Mortgagee of its rights hereunder,
together with reasonable attorneys’ fees and disbursements (as set forth in
Section 4.09 hereof) and court costs;
(x) all amounts paid by any Indemnitee as to which such Indemnitee has the right
to reimbursement under Section 4.10 hereof;
(xi) any and all other indebtedness now owing or which may hereafter be owing by
the Mortgagor to the Mortgagee, however and whenever incurred or evidenced,
whether express or implied, direct or indirect, absolute or contingent, or due
or to become due; and
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(xii) any and all renewals, extensions and modifications of any of the
obligations and liabilities referred to in clauses (i) through (xi) above;
all such obligations, liabilities, sums and expenses set forth in clauses
(i) through (xii) above being herein collectively called the “Obligations”,
provided that notwithstanding the foregoing, (i) the Existing Senior Notes
Obligations shall be excluded from the Obligations, to the extent the Existing
Senior Notes Documents do not require the Existing Senior Notes Obligations to
be secured pursuant to this Mortgage, (ii) the New Senior Notes Obligations
shall be excluded from the Obligations, to the extent the New Senior Notes
Documents do not require the New Senior Notes Obligations to be secured pursuant
to this Mortgage and (iii) the Refinancing Senior Notes Obligations shall be
excluded from the Obligations, to the extent the Refinancing Senior Notes
Documents do not require the Refinancing Senior Notes Obligations to be secured
pursuant to this Mortgage.
          NOW, THEREFORE, as security for its Applicable Obligations (as defined
below) and in consideration of the sum of ten dollars ($10.00) and the other
benefits accruing to the Mortgagor, the receipt and sufficiency of which are
hereby acknowledged, THE MORTGAGOR HEREBY MORTGAGES, GIVES, GRANTS, BARGAINS,
SELLS, ASSIGNS, TRANSFERS, CONVEYS AND CONFIRMS TO THE MORTGAGEE AND ITS
SUCCESSORS AND ASSIGNS FOREVER FOR THE BENEFIT OF THE SECURED CREDITORS all of
the Mortgagor’s estate, right, title and interest, whether now owned or
hereafter acquired, whether as lessor or lessee and whether vested or
contingent, in and to all of the following:
          A. The land described in Exhibit A hereto, together with all rights,
privileges, franchises and powers related thereto which are appurtenant to said
land or its ownership, including all minerals, oil and gas and other hydrocarbon
substances thereon or therein; waters, water courses, water stock, water rights
(whether riparian, appropriative, or otherwise, and whether or not appurtenant),
sewer rights, shrubs, crops, trees, timber and other emblements now or hereafter
on, under or above the same or any part or parcel thereof (the “Land”);
          B. All buildings, structures, tenant improvements and other
improvements of every kind and description now or hereafter located in or on the
Land, including, but not limited to all machine shops, structures, improvements,
rail spurs, dams, reservoirs, water, sanitary and storm sewers, drainage,
electricity, steam, gas, telephone and other utility facilities, parking areas,
roads, driveways, walks and other site improvements of every kind and
description now or hereafter erected or placed on the Land; and all additions
and betterments thereto and all renewals, alterations, substitutions and
replacements thereof (collectively, the “Improvements”);
          C. All fixtures, attachments, appliances, equipment, machinery,
building materials and supplies, and other tangible personal property, now or
hereafter attached to said Improvements or now or at any time hereafter located
on the Land and/or Improvements including, but not limited to, artwork,
decorations, draperies, furnaces, boilers, oil burners, piping, plumbing,
refrigeration, air conditioning, lighting, ventilation, disposal and sprinkler
systems, elevators, motors, dynamos and all other equipment and machinery,
appliances, fittings and fixtures of every kind located in or used in the
operation of the Improvements, together with any and all replacements or
substitutions thereof and additions thereto, including the proceeds of any
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sale or transfer of the foregoing (hereinafter sometimes collectively referred
to as the “Equipment”);
          D. All surface rights, appurtenant rights and easements, rights of
way, and other rights appurtenant to the use and enjoyment of or used in
connection with the Land and/or the Improvements;
          E. All streets, roads and public places (whether open or proposed) now
or hereafter adjoining or otherwise providing access to the Land, the land lying
in the bed of such streets, roads and public places, and all other sidewalks,
alleys, ways, passages, vaults, water courses, strips and gores of land now or
hereafter adjoining or used or intended to be used in connection with all or any
part of the Land and/or the Improvements;
          F. Any leases, lease guaranties and any other agreements, relating to
the use and occupancy of the Land and/or the Improvements or any portion
thereof, including but not limited to any use or occupancy arrangements created
pursuant to Section 365(h) of he Bankruptcy Code or otherwise in connection with
the commencement or continuance of any bankruptcy, reorganization, arrangement,
insolvency, dissolution, receivership or similar proceedings, or any assignment
for the benefit of creditors, in respect of any tenant or occupant of any
portion of the Land and/or the Improvements (collectively, “Leases”);
          G. All revenues, rents, receipts, income, accounts receivable, issues
and profits of the Property (collectively, “Rents”);
          H. To the extent assignable, all permits, licenses and rights relating
to the use, occupation and operation of the Land and the Improvements, any
business conducted thereon or therein and any part thereof;
          I. All real estate tax refunds payable to the Mortgagor with respect
to the Land and/or the Improvements, and refunds, credits or reimbursements
payable with respect to bonds, escrow accounts or other sums payable in
connection with the use, development, or ownership of the Land or Improvements;
          J. Any claims or demands with respect to any proceeds of insurance in
effect with respect to the Land and/or the Improvements, including interest
thereon, which the Mortgagor now has or may hereafter acquire and any and all
awards made for the taking by eminent domain, condemnation or by any
proceedings, transfer or purchase in lieu or in anticipation of the exercise of
said rights, or for a change of grade, or for any other injury to or decrease in
the value of the whole or any part of the Property;
          K. Any zoning lot agreements and air rights and development rights
which may be vested in the Mortgagor together with any additional air rights or
development rights which have been or may hereafter be conveyed to or become
vested in the Mortgagor; and
          L. All proceeds and products of the conversion, voluntary or
involuntary, including, without limitation, those from sale, exchange, transfer,
collection, loss, damage,
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disposition, substitution or replacement of any of the foregoing; whether into
cash, liquidated claims or otherwise.
All of the foregoing estates, right, properties and interests hereby conveyed to
the Mortgagee may be referred to herein as the “Property”. Notwithstanding the
foregoing, (x) the Property that secures the Existing Senior Notes Obligations
shall be limited to Property consisting of any Principal Property (as defined in
the Existing Senior Notes Indenture (in each case as in effect on the date
hereof)) of the Mortgagor (the “Designated Existing Senior Notes Trust
Property”), all of which Property shall also ratably secure all other Applicable
Obligations of the Mortgagor, and the Trust Property Proceeds (as defined in
Section 4.04(a)) that are to be applied to the Existing Senior Notes Obligations
shall be limited to Trust Property Proceeds resulting from the sale of, and
Rents and other amounts generated by the holding, leasing, management, operation
or other use pursuant to this Mortgage of, the Designated Existing Senior Notes
Trust Property, with such Trust Property Proceeds to also be applied ratably to
all other Applicable Obligations of the Mortgagor and (y) the Property that
secures the RAI Senior Notes Obligations shall be limited to Property consisting
of any Principal Property (as defined in the New Senior Notes Indenture Notes
Indenture (in each case as in effect on the date hereof) or the Refinancing
Senior Notes Indenture) of the Mortgagor (the “Designated RAI Senior Notes Trust
Property”, and together with the Designated Existing Senior Notes Trust
Property, the “Limited Trust Property”), all of which Property shall also
ratably secure all other Applicable Obligations of the Mortgagor, and the Trust
Property Proceeds (as defined in Section 4.04(a)) that are to be applied to the
RAI Senior Notes Obligations shall be limited to Trust Property Proceeds
resulting from the sale of, and Rents and other amounts generated by the
holding, leasing, management, operation or other use pursuant to this Mortgage
of, the Designated RAI Senior Notes Trust Property, with such Trust Property
Proceeds to also be applied ratably to all other Applicable Obligations of the
Mortgagor.
“Applicable Obligations” shall mean all of the Obligations; provided that
(x) the Existing Senior Notes Obligations shall be excluded from the Applicable
Obligations of the Mortgagor to the extent the Existing Senior Notes Documents
do not require the Existing Senior Notes Obligations to be secured pursuant to
this Mortgage, (y) the New Senior Notes Obligations shall be excluded from the
Applicable Obligations of the Mortgagor to the extent the New Senior Notes
Documents do not require the New Senior Notes Obligations to be secured pursuant
to this Mortgage, and (z) the Refinancing Senior Notes Obligations shall be
excluded from the Applicable Obligations of the Mortgagor to the extent the
Refinancing Senior Notes Documents do not require the Refinancing Senior Notes
Obligations to be secured pursuant to this Agreement.
          TO HAVE AND TO HOLD the above granted and described Property unto the
Mortgagee and to its successors and assigns forever, and the Mortgagor hereby
covenants and agrees on behalf of itself and its successors and assigns to
warrant and defend the Property unto the Mortgagee, its successors and assigns
against the claim or claims of all persons and parties whatsoever.
          PROVIDED, HOWEVER, that if Obligations shall have been paid in cash at
the time and in the manner stipulated in the Secured Debt Agreements and all
other sums payable hereunder and all other indebtedness secured hereby shall
have been paid and all other covenants
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contained in the Secured Debt Agreements (as defined below) shall have been
performed, then, in such case the Mortgagee shall, subject to the provisions of
Section 6.19 of this Mortgage, at the request and expense of the Mortgagor,
satisfy this Mortgage (without recourse and without any representation or
warranty) and the estate, right, title and interest of the Mortgagee in the
Property shall cease, and upon payment to the Mortgagee of all reasonable costs
and expenses incurred for the preparation of the release hereinafter referenced
and all recording costs if allowed by law, the Mortgagee shall cancel and
surrender the estate and interest created by this Mortgage.
ARTICLE I
REPRESENTATIONS, WARRANTIES, COVENANTS
          1.01 Title to this Property. The Mortgagor represents and warrants:
(a) it has good and marketable fee title to the Property, free and clear of any
liens and encumbrances, other than Liens permitted under Section 8.03 of the
Credit Agreement (or, after the CA Termination Date (as defined below), the
Credit Agreement as in effect immediately prior to the occurrence of the CA
Termination Date) and any other easements, rights and claims of record
(collectively “Permitted Liens”), and is lawfully seized and possessed of the
Property; (b) this Mortgage is a valid first priority security interest and lien
upon the Property subject to the Permitted Liens; (c) it has full power and
authority to encumber the Property in the manner set forth herein; and (d) there
are no defenses or offsets to this Mortgage or to the Obligations which it
secures. The Mortgagor shall preserve such title and the validity and priority
of this Mortgage and shall forever warrant and defend the same to the Mortgagee
and the Mortgagee’s successors and assigns against the claims of all persons and
parties whatsoever. The Mortgagor shall take no action nor shall it fail to take
any action which could result in an impairment of the lien of this Mortgage or
which could form the basis for any Person(s) to claim an interest in the
Property (including, without limitation, any claim for adverse use or possession
or any implied dedication or easement by prescription other than leases
permitted under the Credit Agreement). If any Lien (other than Permitted Liens)
is asserted against the Property, the Mortgagor shall promptly, at its expense:
(a) provide the Mortgagee with written notice of such Lien, including
information relating to the amount of the Lien asserted; and (b) pay the Lien in
full or take such other action to cause the Lien to be released, or, so long as
the Lien of this Mortgage is not compromised, contest the same pursuant to the
provisions of the Credit Agreement. From and after the occurrence of an Event of
Default, the Mortgagee may, but shall not be obligated, to pay any such asserted
Lien if not timely paid by the Mortgagor.
          1.02 Compliance with Law. The Mortgagor represents and warrants that
it possesses all material certificates, licenses, authorizations, registrations,
permits and/or approvals necessary for the ownership, operation, leasing and
management of the Property, including, without limitation, all material
environmental permits, all of which are in full force and effect and not the
subject of any revocation proceeding, undisclosed amendment, release,
suspension, forfeiture or the like. The present and contemplated use and
occupancy of the Property does not conflict with or violate any such
certificate, license, authorization, registration, permit or approval,
including, without limitation, any certificate of occupancy which may have been
issued for the Property. The Mortgagor will not take any action, or fail to take
any required action, so as to compromise or adversely affect the zoning
classification of the Property.
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          1.03 Payment and Performance of Obligations. Subject to the terms of
the Secured Debt Agreements, the Mortgagor shall pay all of the Obligations when
due and payable without offset or counterclaim, and shall observe and comply in
all material respects with all of the terms, provisions, conditions, covenants
and agreements to be observed and performed by it under this Mortgage, the other
Credit Documents to which it is a party, the Secured Credit Card Agreements, the
Secured Hedging Agreements, the Existing Senior Notes Documents, the New Senior
Notes Documents and the Refinancing Senior Notes Documents (collectively, the
“Secured Debt Agreements”).
          1.04 Maintenance, Repair, Alterations, Etc. The Mortgagor will:
(i) keep and maintain the Property, to the extent used in Mortgagor’s day to day
business, in good condition and repair (normal wear and tear excepted);
(ii) make or cause to be made, as and when necessary, all material repairs,
renewals and replacements, structural and nonstructural, exterior and interior,
ordinary and extraordinary, foreseen and unforeseen which are necessary to so
maintain the Property in Mortgagor’s reasonable business judgment; (iii) restore
any Improvement, to the extent used in Mortgagor’s day to day business, which
may be damaged or destroyed so that the same shall be at least substantially
equal to its value, condition and character immediately prior to the damage or
destruction; (iv) not commit or permit any waste or deterioration (normal wear
and tear excepted) of the Property, to the extent used in Mortgagor’s day to day
business; (v) not permit any material Improvements, to the extent used in
Mortgagor’s day to day business, to be demolished or substantially altered in
any manner that substantially decreases the value thereof; (vi) promptly pay
when due all claims for labor performed and materials furnished therefor or
contest such claim and; (vii) comply with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
authorities having jurisdiction over the Property, as well as comply with the
provisions of any lease, easement or other agreement affecting all or any part
of the Property.
          1.05 Required Insurance; Use of Proceeds. The Mortgagor will, at its
expense, at all times provide, maintain and keep in force policies of property,
hazard and liability insurance in accordance with Section 7.03 of the Credit
Agreement with respect to the Property, together with statutory workers’
compensation insurance with respect to any work to be performed on or about the
Property. To the extent required under the Credit Agreement, the Mortgagor shall
give prompt written notice to the Mortgagee of the occurrence of any material
damage to or material destruction of the Improvements or the Equipment. In the
event of any damage to or destruction of the Property or any part thereof, so
long as a Noticed Event of Default (as defined in Section 3.03(a) hereof) has
not occurred and is not continuing the Mortgagee will release any interest they
have in the proceeds of any insurance to the Mortgagor on account of such damage
or destruction and Mortgagor may use such proceeds for repair restoration
replacement or other business purposes as Mortgagor may reasonably determine. In
the event of foreclosure of the lien and interest of this Mortgage or other
transfer of title or assignment of the Property in extinguishment, in whole or
in part, of the Obligations, all right, title and interest of the Mortgagor in
and to all proceeds then payable under any policy of insurance required by this
Mortgage shall inure to the benefit of and pass to the successor in interest of
the Mortgagor, or the purchaser or mortgagor of the Property. After the
occurrence of an Event of Default, the Mortgagee shall be afforded the right to
participate in and approve the settlement of any claim made by the Mortgagor
against the insurance company.
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          1.06 Preservation of Property. The Mortgagor agrees to pay for any and
all reasonable and actual fees, costs and expenses of whatever kind or nature
incurred in connection with the creation, preservation or protection of the
Mortgagee’s liens on, and security interest in, the Property, including, without
limitation, all fees and taxes in connection with the recording or filing of
instruments and documents in public offices (including stamp and mortgage or
intangible recording taxes or other taxes imposed on the Mortgagee by virtue of
its ownership of this Mortgage), which are imposed upon the recording of this
Mortgage or thereafter, all reasonable attorneys’ fees, payment or discharge of
any taxes or Liens upon or in respect of the Property, premiums for insurance
with respect to the Property and all other reasonable fees, costs and expenses
in connection with protecting, maintaining or preserving the Property and the
Mortgagee’s interest therein, whether through judicial proceedings or otherwise,
or in defending or prosecuting any actions, suits or proceedings arising out of
or relating to the Property.
          1.07 Condemnation. Should the Mortgagor receive any notice that a
material portion of the Property or interest therein may be taken or damaged by
reason of any public improvements or condemnation proceeding or in any other
similar manner (a “Condemnation”), the Mortgagor, to the extent required under
the Credit Agreement, shall give prompt written notice thereof to the Mortgagee.
In the event of any Condemnation, after the occurrence and during the
continuation of any Event of Default, the Mortgagee shall have the right to
participate in any negotiations or litigation and shall have the right to
approve any settlement. So long as no Noticed Event of Default has occurred and
is continuing, the Mortgagee will release any interest they have in any and all
compensation, awards, damages and proceeds paid to the Mortgagor or the Borrower
on account of such Condemnation and Mortgagor may use such compensation awards,
damages and proceeds for repair, restoration, replacement or other business
purposes as Mortgagor may reasonably determine.
          1.08 Inspections. The Mortgagor hereby authorizes the Mortgagee, its
agents, employees and representatives, upon reasonable prior written notice to
the Mortgagor (except in an emergency or following the occurrence and during the
continuance of any Event of Default, in which case notice shall not be required)
to visit and inspect the Property or any portion(s) thereof, all at such
reasonable times and as often as the Mortgagee may reasonably request.
          1.09 Transfers. Except as otherwise permitted in accordance with the
terms of the Credit Agreement, no part of the Property or of any legal or
beneficial interest in the Property shall be sold, assigned, conveyed,
transferred or otherwise disposed of (whether voluntarily or involuntarily,
directly or indirectly, by sale of stock or any interest in the Mortgagor, or by
operation of law or otherwise).
          1.10 After Acquired Property Interests. Subject to applicable law, all
right, title and interest of the Mortgagor in and to all extensions,
improvements, betterments, renewals, substitutes and replacements of, and all
additions and appurtenances to, the Property, hereafter acquired by, or released
to, the Mortgagor or constructed, assembled or placed by the Mortgagor on the
Land, and all conversions of the security constituted thereby (collectively,
“After Acquired Property Interests”), immediately upon such acquisition,
release, construction, assembling, placement or conversion, as the case may be,
and in each such case, without any further mortgage, conveyance, assignment or
other act by the Mortgagor, shall become subject to the lien of this Mortgage as
fully and completely, and with the same effect, as though now
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owned by the Mortgagor and specifically described in the granting clauses
hereof. The Mortgagor shall execute and deliver to the Mortgagee all such other
assurances, mortgages, conveyances or assignments thereof as the Mortgagee may
reasonably require for the purpose of expressly and specifically subjecting such
After Acquired Property Interests to the lien of this Mortgage. The Mortgagor
hereby irrevocably authorizes and appoints the Mortgagee as the agent and
attorney-in-fact of the Mortgagor to execute all such documents and instruments
on behalf of the Mortgagor, which appointment shall be irrevocable and coupled
with an interest, if the Mortgagor fails or refuses to do so within ten
(10) days after a request therefor by the Mortgagee.
ARTICLE II
SECURITY AGREEMENT
          2.01 Grant of Security; Incorporation by Reference. This Mortgage
shall, in addition to constituting a mortgage lien on and security interest in
those portions of the Property classified as real property (including fixtures
to the extent they are real property), constitute a security agreement within
the meaning of the Uniform Commercial Code or within the meaning of the common
law with respect to those parts of the Property classified as personal property
(including fixtures to the extent they are personal property) to the extent a
security interest therein can be created by this Mortgage. The Mortgagor hereby
grants to the Mortgagee a security interest in and to the following property
whether now owned or hereafter acquired (collectively, the “Secured Property”)
for the benefit of the Mortgagee to further secure the payment and performance
of its Applicable Obligations:
     (a) Those parts of the Property classified as personal property (including
(i) fixtures to the extent they are personal property and (ii) personal property
and fixtures that are leased, but only to the extent the Mortgagor can grant to
the Mortgagee a security interest therein without breaching the terms of such
lease);
     (b) All general intangibles, contract rights, accounts and proceeds arising
from all insurance policies required to be maintained by the Mortgagor and
related to the Property hereunder;
     (c) All proceeds of any judgment, award or settlement in any condemnation
or eminent domain proceeding in connection with the Property, together with all
general intangibles, contract rights and accounts arising therefrom;
     (d) All permits, consents and other governmental approvals in connection
with the construction of the Improvements or the operation of the Property, to
the extent any of the same may be assigned, transferred, pledged or subjected to
a security interest;
     (e) All plans and specifications, studies, tests or design materials
relating to the design, construction, repair, alteration or leasing of the
Property, to the extent any of the same may be assigned, transferred, pledged or
subjected to a security interest; and
     (f) All cash and non-cash proceeds of the above-mentioned items.
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; provided that notwithstanding the foregoing, Secured Property securing
Existing Senior Notes Obligations and RAI Senior Notes Obligations shall be
limited to Limited Property, as the case may be.
          The provisions contained in the Security Agreement are hereby
incorporated by reference into this Mortgage with the same effect as if set
forth in full herein. In the event of a conflict between the provisions of this
Article II and the Security Agreement, the Security Agreement shall control and
govern and the Mortgagor shall comply therewith.
          2.02 Fixture Filing and Financing Statements. This Mortgage
constitutes a security agreement, fixture filing and financing statement as
those terms are used in the Uniform Commercial Code. For purposes of this
Section, this Mortgage is to be filed and recorded in, among other places, the
real estate records of Cherokee County and the following information is
included: (1) the Mortgagor shall be deemed the “Debtor” with the address set
forth for the Mortgagor on the first page of this Mortgage which the Mortgagor
certifies is accurate; (2) the Mortgagee shall be deemed to be the “Secured
Party” with the address set forth for the Mortgagee on the first page of this
Mortgage and shall have all of the rights of a secured party under the Uniform
Commercial Code; (3) this Mortgage covers goods which are or are to become
fixtures on the real property described in Exhibit A attached hereto; (4) the
name of the record owner of the land is the Debtor; (5) the organizational
identification number of the Debtor is NC0711678; (6) the Debtor is a
corporation, organized under the laws of the State of North Carolina; and
(7) the legal name of the Debtor is R. J. Reynolds Tobacco Company. The Debtor
hereby authorizes the Mortgagee to file any financing statements and
terminations thereof or amendments or modifications thereto without the
signature of the Debtor where permitted by law.
ARTICLE III
ASSIGNMENT OF LEASES, RENTS AND PROFITS
          3.01 Assignment. The Mortgagor hereby absolutely, irrevocably and
unconditionally sells, assigns, transfers and conveys to the Mortgagee all of
the Mortgagor’s right, title and interest in and to all current and future
Leases and Rents, including those now due, past due, or to become due by virtue
of any Lease or other agreement for the occupancy or use of all or any part of
the Property regardless of to whom the Rents are payable. The Mortgagor intends
that this assignment of Leases and Rents constitutes a present and absolute
assignment and not an assignment for additional security only. Such assignment
to the Mortgagee shall not be construed to bind the Mortgagee to the performance
of any of the covenants, conditions or provisions contained in any such Lease or
otherwise impose any obligation upon the Mortgagee. The Mortgagor covenants that
the Mortgagor will not hereafter collect or accept payment of any Rents more
than one month prior to the due dates of such Rents, and that no payment of any
of the Rents to accrue for any portion of the Property (other than a de minimis
amount) will be waived, released, reduced, discounted or otherwise discharged or
compromised by the Mortgagor, except as may be approved in writing by the
Mortgagee. The Mortgagor agrees that it will not assign any of the Leases or
Rents to any other Person. The Mortgagee shall have no liability for any loss
which may arise from a failure or inability to collect Rents, proceeds or
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other payments. The Mortgagor shall maintain all security deposits in accordance
with applicable law.
          3.02 Revocable License; Agent. Notwithstanding the foregoing, subject
to the terms of this Article III, the Mortgagee grants to the Mortgagor a
revocable license to operate and manage the Property and to collect the Rents
and hereby directs each tenant under a Lease to pay such Rents to, or at the
direction of, the Mortgagor, until such time as the Mortgagee provides notice to
the contrary to such tenants. The Mortgagor shall hold the Rents, or a portion
thereof sufficient to discharge all current sums due in respect of the
Obligations, in trust for the benefit of the Mortgagee for use in the payment of
such sums.
          3.03 Rents. (a) Upon the occurrence and during the continuance of a
Noticed Event of Default, without the need for notice or demand, the license
granted pursuant to this Article III shall immediately and automatically be
revoked and the Mortgagee shall immediately be entitled to possession of all
Rents, whether or not the Mortgagee enters upon or takes control of the
Property. Upon the revocation of such license, the Mortgagor grants to the
Mortgagee the right, at its option, to exercise all the rights granted in
Section 4.02(a). Nothing herein contained shall be construed as constituting the
Mortgagee a lender in possession in the absence of the taking of actual
possession of the Property by the Mortgagee pursuant to Section 4.02(a). As used
herein, a “Noticed Event of Default” shall mean (i) an Event of Default with
respect to the Borrower under Section 9.05 of the Credit Agreement and (ii) any
other Event of Default in respect of which the Mortgagee has given the Borrower
notice that such Event of Default constitutes a “Noticed Event of Default”.
          (b) From and after the termination of such license, the Mortgagor may,
at the Mortgagee’s direction, be the agent for the Mortgagee in collection of
the Rents and all of the Rents so collected by the Mortgagor shall be held in
trust by the Mortgagor for the sole and exclusive benefit of the Mortgagee and
the Mortgagor shall, within one (1) business day after receipt of any Rents, pay
the same to the Mortgagee to be applied by the Mortgagee as provided for herein.
All Rents collected shall be applied against all expenses of collection,
including, without limitation, attorneys’ fees, against costs of operation and
management of the Property and against the Obligations, in whatever order or
priority as to any of the items so mentioned as the Mortgagee directs in its
sole and absolute discretion and without regard to the adequacy of its security.
Neither the demand for or collection of Rents by the Mortgagee shall constitute
any assumption by the Mortgagee of any obligations under any Lease or agreement
relating thereto.
          (c) Any reasonable funds expended by the Mortgagee to take control of
and manage the Property and collect the Rents shall become part of the
Obligations secured hereby. Such amounts shall be payable from the Mortgagor to
the Mortgagee upon the Mortgagee’s demand therefor and shall bear interest from
the date of disbursement at the interest rate set forth in Section 1.08(c) of
the Credit Agreement unless payment of interest at such rate would be contrary
to applicable law, in which event such amounts shall bear interest at the
highest rate which may be collected from the Mortgagor under applicable law.
          3.04 Sale of Property. (a) Upon any sale of any portion of the
Property by or for the benefit of the Mortgagee pursuant to this Mortgage, the
Rents attributable to the part of the
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Property so sold shall be included in such sale and shall pass to the purchaser
free and clear of any rights granted herein to the Mortgagor.
          (b) The Mortgagor acknowledges and agrees that, upon recordation of
this Mortgage, the Mortgagee’s interest in the Rents shall be deemed to be fully
perfected, “choate” and enforceable against the Mortgagor and all third parties,
including, without limitation, any debtor in possession or trustee in any case
under title 11 of the United States Code, without the necessity of
(i) commencing a foreclosure action with respect to this Mortgage,
(ii) furnishing notice to the Mortgagor or tenants under the Leases,
(iii) making formal demand for the Rents, (iv) taking possession of the Property
as a lender-in-possession, (v) obtaining the appointment of a receiver of the
Rents, (vi) sequestering or impounding the Rents or (vii) taking any other
affirmative action.
          3.05 Bankruptcy Provisions. Without limiting the provisions of
Article III hereof or the absolute nature of the assignment of the Rents
hereunder, the Mortgagor and the Mortgagee agree that, to the extent that the
assignment of the Rents hereunder is deemed to be other than an absolute
assignment, (a) this Mortgage shall constitute a “security agreement” for
purposes of Section 552(b) of the Bankruptcy Code, (b) the security interest
created by this Mortgage extends to property of the Mortgagor acquired before
the commencement of a bankruptcy case and to all amounts paid as Rents and
(c) such security interest shall extend to all Rents acquired by the estate
after the commencement of any bankruptcy case. Without limitation of the
absolute nature of the assignment of the Rents hereunder, to the extent the
Mortgagor (or the Mortgagor’s bankruptcy estate) shall be deemed to hold any
interest in the Rents after the commencement of a voluntary or involuntary
bankruptcy case, the Mortgagor hereby acknowledges and agrees that such Rents
are and shall be deemed to be “cash collateral” under Section 363 of the
Bankruptcy Code.
ARTICLE IV
EVENTS OF DEFAULT AND REMEDIES
          4.01 Events of Default. The occurrence of (i) an “Event of Default”
under and as defined in the Credit Agreement, (ii) any “event of default” under
the Existing Senior Notes Documents, the New Senior Notes Documents or the
Refinancing Senior Notes Documents and (iii) any payment default, after any
applicable grace period, under any Secured Credit Card Agreement or any Secured
Hedging Agreement shall constitute an Event of Default (each, an “Event of
Default”) hereunder.
     4.02 Remedies Upon Default. Upon the occurrence of a Noticed Event of
Default, the Mortgagee may, in the Mortgagee’s sole discretion, either itself or
by or through one or more trustees, agents, nominees, assignees or otherwise, to
the fullest extent permitted by law, exercise any or all of the following rights
and remedies individually, collectively or cumulatively:
     (a) either in person or by its agent, with or without bringing any action
or proceeding, or by a receiver appointed by a court and without regard to the
adequacy of its security, (i) enter upon and take possession of the Property or
any part thereof and of
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all books, records and accounts relating thereto or located thereon, in its own
name or in the name of the Mortgagor, and do or cause to be done any acts which
it deems necessary or desirable to preserve the value of the Property or any
part thereof or interest therein, collect the income therefrom or protect the
security hereof; (ii) with or without taking possession of the Property make
such repairs, alterations, additions and improvements as the Mortgagee deems
necessary or desirable and do any and all acts and perform any and all work
which the Mortgagee deems necessary or desirable to complete any unfinished
construction on the Property; (iii) make, cancel or modify Leases and sue for or
otherwise collect the Rents thereof, including those past due and unpaid;
(iv) make any payment or perform any act which the Mortgagor has failed to make
or perform hereunder; (v) appear in and defend any action or proceeding
purporting to affect the security hereof or the rights or powers of the
Mortgagee; (vi) pay, purchase, contest or compromise any encumbrance, charge or
Lien on the Property; and (vii) take such other actions as the Mortgagee deems
necessary or desirable;
     (b) commence and maintain one or more actions at law or in equity or by any
other appropriate remedy (i) to protect and enforce the rights of the Mortgagee
hereunder, including for the specific performance of any covenant or agreement
herein contained (which covenants and agreements the Mortgagor agrees shall be
specifically enforceable by injunctive or other appropriate equitable remedy),
(ii) to collect any sum then due hereunder, (iii) to aid in the execution of any
power herein granted, or (iv) to foreclose this Mortgage in accordance with
Section 4.03 hereof;
     (c) exercise any or all of the remedies available to a secured party under
the Uniform Commercial Code;
     (d) by notice to the Mortgagor (to the extent such notice is required to be
given under the Credit Documents), but without formal demand, presentment,
notice of intention to accelerate or of acceleration, protest or notice of
protest, all of which are hereby waived by the Mortgagor, declare all of the
Obligations (except for the Existing Senior Notes Obligations and the RAI Senior
Notes Obligations) secured hereby to be immediately due and payable, and upon
such declaration all of such indebtedness shall become and be immediately due
and payable, anything in this Mortgage or any other Credit Documents to the
contrary notwithstanding; and
     (e) exercise any other right or remedy available to the Mortgagee under the
Secured Debt Agreements.
          4.03 Right of Foreclosure. (a) Upon the occurrence of a Noticed Event
of Default, the Mortgagee shall have the right, in its sole discretion, to
proceed at law or in equity to foreclose this Mortgage with respect to all or
any portion of the Property by judicial sale under the judgment of a Court of
competent jurisdiction, in accordance with the applicable laws of jurisdiction
in which the Property is located. If the Property consists of several lots,
parcels or items of Property, the Mortgagee may, in its sole discretion:
(i) designate the order in which such lots, parcels or items shall be offered
for sale or sold, or (ii) elect to sell such lots, parcels or items through a
single sale, or through two or more successive sales, or in any other manner the
Mortgagee deems in its best interest. Should the Mortgagee desire that more than
one sale or
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other disposition of the Property be conducted, the Mortgagee may, at its
option, cause the same to be conducted simultaneously, or successively, on the
same day, or at such different days or times and in such order as the Mortgagee
may deem to be in its best interests, and no such sale shall terminate or
otherwise affect the lien of this Mortgage on any part of the Property not sold
until all Obligations have been fully paid and performed. The Mortgagee may
elect to sell the Property for cash or credit. The Mortgagee may, to the extent
permitted by law, adjourn from time to time any sale by it to be made under or
by virtue of this Mortgage by announcement at the time and place appointed for
such sale or for such adjourned sale or sales; and, except as otherwise provided
by an applicable provision of law, the Mortgagee may make such sale at the time
and place to which the same shall be so adjourned. With respect to all
components of the Property and to the extent allowed by applicable law, the
Mortgagee is hereby irrevocably appointed the true and lawful attorney-in-fact
of the Mortgagor (coupled with an interest), in its name and stead, to make all
necessary conveyances, assignments, transfers and deliveries of the Property in
connection with any foreclosure of this Mortgage, and for that purpose the
Mortgagee may execute all necessary instruments of conveyance, assignment,
transfer and delivery, and may substitute one or more persons with such power,
the Mortgagor hereby ratifying and confirming all that its said attorney-in-fact
or such substitute or substitutes shall lawfully do by virtue hereof.
Notwithstanding the foregoing, the Mortgagor, if so requested by the Mortgagee,
shall ratify and confirm any such sale or sales by executing and delivering to
the Mortgagee or to such purchaser or purchasers all such instruments as may be
advisable, in the judgment of the Mortgagee, for such purpose, and as may be
designated in such request. To the extent permitted by law, any such sale or
sales made under or by virtue of this Article IV shall operate to divest all the
estate, right, title, interest, claim and demand whatsoever, whether at law or
in equity, of the Mortgagor in and to the properties and rights so sold, and
shall be a perpetual bar both at law and in equity against the Mortgagor and
against any and all persons claiming or who may claim the same, or any part
thereof, from, through or under the Mortgagor. Upon any sale made under or by
virtue of this Article IV, the Mortgagee may, to the extent permitted by law,
bid for and acquire the Property or any part thereof and in lieu of paying cash
therefor may make settlement for the purchase price by crediting upon the
Obligations secured hereby the net sales price after deducting therefrom the
expenses of the sale and the cost of the action and any other sums which the
Mortgagee is authorized to deduct by law or under this Mortgage.
          (b) Any foreclosure of this Mortgage and any other transfer of all or
any part of the Property in extinguishment of all or any part of the Obligations
may, at the Mortgagee’s option, be subject to any or all Leases of all or any
part of the Property and the rights of tenants under such Leases. No failure to
make any such tenant a defendant in any foreclosure proceedings or to foreclose
or otherwise terminate any such Lease and the rights of any such tenant in
connection with any such foreclosure or transfer shall be, or be asserted to be,
a defense or hindrance to any such foreclosure or transfer or to any proceedings
seeking collection of all or any part of the Obligations (including, without
limitation, any deficiency remaining unpaid after completion of any such
foreclosure or transfer).
          (c) If the Mortgagor retains possession of the Property or any part
thereof subsequent to a sale, the Mortgagor will be considered a tenant at
sufferance of the purchaser, and will, if the Mortgagor remains in possession
after demand to remove, be guilty of forcible detainer and will be subject to
eviction and removal, forcible or otherwise, with or without
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process of law, and all damages to the Mortgagor by reason thereof are hereby
expressly waived by the Mortgagor.
          (d) It is agreed and understood that (x) this Mortgage may be enforced
only by the action of the Mortgagee acting upon the instructions of the Required
Lenders or, if the CA Termination Date has occurred, the holders of a majority
of the outstanding principal amount of all remaining Obligations, provided that
if prior to the CA Termination Date a payment default with respect to at least
$300,000,000 principal amount in the aggregate of Existing Senior Notes, New
Senior Notes and/or Refinancing Senior Notes has continued for at least 180 days
(and such defaulted payment has not been received pursuant to a drawing under
any letter of credit), the holders of a majority of the outstanding principal
amount of the Indebtedness subject to such payment default or defaults can
direct the Mortgagee to commence and continue enforcement of the Liens created
hereunder, which the Mortgagee shall comply with subject to receiving any
indemnity which it reasonably requests, provided further, that the Mortgagee
shall thereafter comply only with the directions of the Required Lenders as to
carrying out such enforcement so long as such directions are not adverse to the
aforesaid directions of the holders of Indebtedness subject to such payment
default or defaults, and (y) no other Secured Creditor shall have any right
individually to seek to enforce or to enforce this Mortgage or to realize upon
the security to be granted hereby, it being understood and agreed that such
rights and remedies shall be exercised exclusively by the Mortgagee for the
benefit of the Secured Creditors as their interest may appear upon the terms of
this Mortgage and the other Secured Debt Agreements.
          4.04 Application of Proceeds. (a) To the fullest extent permitted by
law, the proceeds of any sale of, and the Rents and other amounts generated by
the holding, leasing, management, operation or other use of, each item of the
Property pursuant to this Mortgage (the “Trust Property Proceeds”) shall be
applied by the Mortgagee (or the receiver, if one is appointed) as follows:
     (i) first, to the payment of all Obligations owing to the Mortgagee of the
type described in clauses (viii), (ix), (x), (xi) and (xii) of the definition of
Obligations herein;
     (ii) second, to the extent Trust Property Proceeds of Property remain after
the application pursuant to preceding clause (i), an amount equal to the
outstanding Applicable Obligations secured by such item of Property shall be
paid to the Secured Creditors as their interests may appear, with (x) each
Secured Creditor receiving an amount equal to its outstanding Applicable
Obligations secured by such item of Property or, if the proceeds are
insufficient to pay in full all such Applicable Obligations, its Pro Rata Share
of the amount so remaining to be distributed and (y) in the case of the Credit
Document Obligations, the Existing Senior Notes Obligations, the New Senior
Notes Obligations and the Refinancing Senior Notes Obligations included in such
Applicable Obligations, any such amount to be applied (1) first to the payment
of interest in respect of the unpaid principal amount of Loans, Existing Senior
Notes, New Senior Notes or Refinancing Senior Notes, as the case may be, (2)
second to the payment of principal of Loans, Existing Senior Notes, New Senior
Notes or Refinancing Senior Notes, as the case may be, and (3) third to the
other Credit Document Obligations, Existing Senior Notes
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Obligations, New Senior Notes Obligations or Refinancing Senior Notes
Obligations, as the case may be; and
(iii) third, to the extent proceeds remain after the application pursuant to the
preceding clauses (i) and (ii) to the Mortgagor or, to the extent directed by
the Mortgagor or a court of competent jurisdiction, to whomever may be lawfully
entitled to receive such surplus.
          (b) For purposes of this Agreement, “Pro Rata Share” shall mean when
calculating a Secured Creditor’s portion of any distribution or amount pursuant
to clause (a) above, the amount (expressed as a percentage) equal to a fraction
the numerator of which is the then outstanding amount of the relevant Applicable
Obligations secured by the relevant item of Property owed such Secured Creditor
and the denominator of which is the then outstanding amount of all relevant
Applicable Obligations secured by the relevant item of Property.
          (c) All payments required to be made to the (i) Lender Creditors
hereunder shall be made to the Administrative Agent for the account of the
respective Lender Creditors, (ii) Credit Card Issuers hereunder shall be made to
the Credit Card Issuer(s) under the applicable Secured Credit Card Agreement,
(iii) Hedging Creditors hereunder shall be made to the paying agent under the
applicable Secured Hedging Agreement or, in the case of Secured Hedging
Agreements without a paying agent, directly to the applicable Hedging Creditors,
(iv) Existing Senior Notes Creditors hereunder shall be made to the Existing
Senior Notes Trustee for the account of the respective Existing Senior Notes
Creditors, (v) New Senior Notes Creditors hereunder shall be made to the New
Senior Notes Trustee for the account of the respective New Senior Notes
Creditors and (vi) Refinancing Senior Notes Creditors hereunder shall be made to
the Refinancing Senior Notes Trustee for the account of the respective
Refinancing Senior Notes Creditors.
          (d) For purposes of applying payments received in accordance with this
Section 4.04, the Mortgagee shall be entitled to rely upon (i) the
Administrative Agent for a determination of the outstanding Credit Document
Obligations, (ii) any Credit Card Issuer for a determination of the outstanding
Credit Card Obligations owed to such Credit Card Issuer, (iii) upon any Hedging
Creditor for a determination of the outstanding Hedging Obligations owed to such
Hedging Creditor, (iv) the Existing Senior Notes Trustee for a determination of
the outstanding Existing Senior Notes Obligations, (v) the New Senior Notes
Trustee for a determination of the outstanding New Senior Notes Obligations and
(vi) the Refinancing Senior Notes Trustee for a determination of the outstanding
Refinancing Senior Notes Obligations. Unless it has actual knowledge (including
by way of written notice from a Secured Creditor) to the contrary, the
Administrative Agent under the Credit Agreement, in furnishing information
pursuant to the preceding sentence, and the Mortgagee, in acting hereunder,
shall be entitled to assume that no Credit Document Obligations other than
principal, interest and regularly accruing fees are owing to any Lender
Creditor.
          (e) It is understood and agreed that the Mortgagor shall remain liable
to the extent of any deficiency between (x) the amount of the Obligations for
which it is responsible directly or as a guarantor that are satisfied with
proceeds of the Property and (y) the aggregate outstanding amount of such
Obligations.
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          4.05 Appointment of Receiver. Upon the occurrence and during the
continuance of a Noticed Event of Default, the Mortgagee as a matter of strict
right and without notice to the Mortgagor or anyone claiming under the
Mortgagor, and without regard to the adequacy or the then value of the Property
or the interest of the Mortgagor therein or the solvency of any party bound for
payment of the Obligations, shall have the right to apply to any court having
jurisdiction to appoint a receiver or receivers of the Property, and the
Mortgagor hereby irrevocably consents to such appointment and waives notice of
any application therefor. Any such receiver or receivers shall have all the
usual rights, powers and duties of receivers in like or similar cases and all
the rights, powers and duties of the Mortgagee in case of entry as provided in
Section 4.02 hereof, including but not limited to the full power to rent,
maintain and otherwise operate the Property upon such terms as are approved by
the court and shall continue as such and exercise all such powers until the date
of confirmation of sale of the Property unless such receivership is sooner
terminated.
          4.06 Exercise of Rights and Remedies. The entering upon and taking
possession of the Property, the collection of any Rents and the exercise of any
of the rights contained in this Article IV, shall not, alone, cure or waive any
Event of Default or notice of default hereunder or invalidate any act done in
response to such Event of Default or pursuant to such notice of default and,
notwithstanding the continuance in possession of the Property or the collection,
receipt and application of Rents, the Mortgagee shall be entitled to exercise
every right provided for herein or in the Secured Debt Agreements, or at law or
in equity upon the occurrence of any Event of Default.
          4.07 Remedies Not Exclusive. The Mortgagee shall be entitled to
enforce payment and performance of the Obligations and to exercise all rights
and powers under this Mortgage or other agreement or any laws now or hereafter
in force, notwithstanding that some or all of the Obligations may now or
hereafter be otherwise secured, whether by mortgage, deed of trust, security
deed, pledge, lien, assignment or otherwise. Neither the acceptance of this
Mortgage nor its enforcement, whether by court action or pursuant to the powers
herein contained, shall prejudice or in any manner affect the Mortgagee’s right
to realize upon or enforce any other security now or hereafter held by the
Mortgagee, it being agreed that the Mortgagee shall be entitled to enforce this
Mortgage and any other security now or hereafter held by the Mortgagee in such
order and manner as it may in its absolute and sole discretion and election
determine. No remedy herein conferred upon or reserved to the Mortgagee is
intended to be exclusive of any other remedy herein or in any of the other
Secured Debt Agreements or by law provided or permitted, but each shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute. Every power or remedy
to which the Mortgagee is entitled may be exercised, concurrently or
independently, from time to time and as often as may be deemed expedient by the
Mortgagee, and the Mortgagee may pursue inconsistent remedies. No delay or
omission of the Mortgagee to exercise any right or power accruing upon any Event
of Default shall impair any right or power or shall be construed as a waiver of
any Event of Default or any acquiescence therein. If the Mortgagee shall have
proceeded to invoke any right or remedy hereunder or under any other Secured
Debt Agreement, and shall thereafter elect to discontinue or abandon it for any
reason, the Mortgagee shall have the unqualified right to do so and, in such an
event, the rights and remedies of the Mortgagee shall continue as if such right
or remedy had never been invoked, but no such discontinuance or abandonment
shall waive any Event of Default which may then exist
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or the right of the Mortgagee thereafter to exercise any right or remedy under
the Secured Debt Agreements for such Event of Default.
          4.08 WAIVER OF REDEMPTION, NOTICE, MARSHALLING, ETC. NOTWITHSTANDING
ANYTHING HEREIN CONTAINED TO THE CONTRARY, TO THE EXTENT PERMITTED BY LAW, THE
MORTGAGOR ACKNOWLEDGING THAT IT IS AWARE OF AND HAS HAD THE ADVICE OF COUNSEL OF
ITS CHOICE WITH RESPECT TO ITS RIGHTS HEREUNDER; (A) WILL NOT (I) AT ANY TIME
INSIST UPON, OR PLEAD, OR IN ANY MANNER WHATSOEVER, CLAIM OR TAKE ANY BENEFIT OR
ADVANTAGE OF ANY STAY OR EXTENSION OR MORATORIUM LAW, PRESENT OR FUTURE STATUTE
OF LIMITA TIONS, ANY LAW RELATING TO THE ADMINISTRATION OF ESTATES OF DECEDENTS,
APPRAISEMENT, VALUATION, REDEMPTION, STATUTORY RIGHT OF REDEMPTION, OR THE
MATURING OR DECLARING DUE OF THE WHOLE OR ANY PART OF THE OBLIGATIONS, NOTICE OF
INTENTION OF SUCH MATURING OR DECLARING DUE, OTHER NOTICE (WHETHER OF DEFAULTS,
ADVANCES, THE CREATION, EXISTENCE, EXTENSION OR RENEWAL OF ANY OF THE
OBLIGATIONS OR OTHERWISE, EXCEPT FOR RIGHTS TO NOTICES EXPRESSLY GRANTED HEREIN
OR IN THE SECURED DEBT AGREEMENTS), SUBROGATION, ANY SET-OFF RIGHTS, HOMESTEAD
OR ANY OTHER EXEMPTIONS FROM EXECUTION OR SALE OF THE PROPERTY OR ANY PART
THEREOF, WHEREVER ENACTED, NOW OR AT ANY TIME HEREAFTER IN FORCE, WHICH MAY
AFFECT THE COVENANTS AND TERMS OF PERFORMANCE OF THIS MORTGAGE, OR (II) CLAIM,
TAKE OR INSIST UPON ANY BENEFIT OR ADVANTAGE OF ANY LAW NOW OR HEREAFTER IN
FORCE PROVIDING FOR THE VALUATION OR APPRAISAL OF THE PROPERTY OR ANY PART
THEREOF, PRIOR TO ANY SALE OR SALES THEREOF WHICH MAY BE MADE PURSUANT TO ANY
PROVISION HEREOF, OR PURSUANT TO THE DECREE, JUDGMENT OR ORDER OF ANY COURT OF
COMPETENT JURISDICTION; OR (III) AFTER ANY SUCH SALE OR SALES, CLAIM OR EXERCISE
ANY RIGHT UNDER ANY STATUTE HERETOFORE OR HEREAFTER ENACTED TO REDEEM THE
PROPERTY SO SOLD OR ANY PART THEREOF; AND (B) COVENANTS NOT TO HINDER, DELAY OR
IMPEDE THE EXECUTION OF ANY POWER HEREIN GRANTED OR DELEGATED TO THE MORTGAGEE,
BUT TO SUFFER AND PERMIT THE EXECUTION OF EVERY POWER AS THOUGH NO SUCH LAW OR
LAWS HAD BEEN MADE OR ENACTED. THE MORTGAGOR, FOR ITSELF AND ALL WHO MAY CLAIM
UNDER IT, WAIVES, TO THE EXTENT THAT IT LAWFULLY MAY, ALL RIGHT TO HAVE THE
PROPERTY MARSHALLED UPON ANY FORECLOSURE HEREOF.
          4.09 Expenses of Enforcement. In connection with any action to enforce
any remedy of the Mortgagee under this Mortgage, the Mortgagor agrees to pay all
costs and expenses which may be paid or incurred by or on behalf of the
Mortgagee, including, without limitation, reasonable attorneys’ fees, receiver’s
fees, appraiser’s fees, outlays for documentary and expert evidence,
stenographer’s charges, publication costs, and costs (which may be estimated as
to items to be expended after entry of the decree) of procuring all such
abstracts of title, title searches and examinations, title insurance policies
and similar data and assurances with respect to title and value as the Mortgagee
may deem necessary or desirable, and neither the Mortgagee nor any other Person
shall be required to accept tender of any portion of the
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Obligations unless the same be accompanied by a tender of all such expenses,
costs and commissions. All of the costs and expenses described in this
Section 4.09, and such expenses and fees as may be incurred in the protection of
the Property and the maintenance of the Lien of this Mortgage, including the
reasonable fees of any attorney employed by the Mortgagee or in any litigation
or proceeding, including appellate proceedings, affecting this Mortgage or the
Property(including, without limitation, the occupancy thereof or any
construction work performed thereon), including probate and bankruptcy
proceedings, or in preparation for the commencement or defense of any proceeding
or threatened suit or proceeding whether or not an action is actually commenced,
shall be immediately due and payable by the Mortgagor, with interest thereon at
the rate of interest set forth in the Secured Debt Agreements and shall be part
of the Obligations secured by this Mortgage.
          4.10 Indemnity. (a) The Mortgagor agrees to indemnify, reimburse and
hold the Mortgagee, each other Secured Creditor and their respective successors,
permitted assigns, employees, agents and servants (hereinafter in this
Section 4.10 referred to individually, as “Indemnitee,” and collectively as
“Indemnitees”) harmless from any and all liabilities, obligations, losses,
damages, penalties, claims, demands, actions, suits, judgments and any and all
reasonable costs and expenses (including reasonable attorneys’ fees and
expenses) (for the purposes of this Section 4.10 the foregoing are collectively
called “expenses”) of whatsoever kind and nature imposed on, asserted against or
incurred by any of the Indemnitees in any way relating to or arising out of this
Mortgage, or the documents executed in connection herewith or in any other way
connected with the enforcement of any of the terms of, or the preservation of
any rights hereunder, or in any way relating to or arising out of the ownership,
lease, financing, possession, operation, condition, sale or other disposition,
or use of the Property, the violation of the laws of any country, state or other
governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or property
damage), or contract claim; provided that no Indemnitee shall be indemnified
pursuant to this Section 4.10(a) for expenses, losses, damages or liabilities to
the extent caused by the gross negligence or wilful misconduct of such
Indemnitee. The Mortgagor agrees that upon written notice by any Indemnitee of
the assertion of such a liability, obligation, loss, damage, penalty, claim,
demand, action, judgment or suit, the Mortgagor shall assume full responsibility
for the defense thereof. Each Indemnitee agrees to use its best efforts to
promptly notify the Mortgagor of any such assertion of which such Indemnitee has
knowledge.
          (b) Without limiting the application of Section 4.10(a), the Mortgagor
jointly and severally agrees to pay, indemnify and hold each Indemnitee harmless
from and against any loss, costs, damages and expenses which such Indemnitee may
suffer, expend or incur in consequence of or growing out of any material
misrepresentation by Mortgagor in this Mortgage, or in any statement or writing
contemplated by or made or delivered pursuant to or in connection with this
Mortgage.
          (c) If and to the extent that the obligations of the Mortgagor under
this Section 4.10 are unenforceable for any reason, the Mortgagor hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
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          4.11 Indemnity Obligations Secured by Collateral; Survival. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Property. The
indemnity obligations of the Mortgagor contained in Sections 4.09 and 4.10 shall
continue in full force and effect notwithstanding the full payment of all of the
Notes issued under the Credit Agreement, the termination of all Secured Hedging
Agreements, the full payment of all Existing Senior Notes issued under the
Existing Senior Notes Indenture, the full payment of all New Senior Notes issued
under the New Senior Notes Indenture, the full payment of all Refinancing Senior
Notes issued under the Refinancing Senior Notes Indenture and the payment of all
of the other Obligations and notwithstanding the discharge thereof.
ARTICLE V
ADDITIONAL COLLATERAL
          5.01 Additional Collateral. (a) The Mortgagor acknowledges and agrees
that its Applicable Obligations are secured by the Property and various other
collateral including, without limitation, at the time of execution of this
Mortgage certain personal property of the Mortgagor described in the Credit
Documents. The Mortgagor specifically acknowledges and agrees that the Property,
in and of itself, if foreclosed or realized upon would not be sufficient to
satisfy the outstanding amount of the Obligations. Accordingly, the Mortgagor
acknowledges that it is in the Mortgagor’s contemplation that the other
collateral pledged to secure the Applicable Obligations may be pursued by the
Mortgagee in separate proceedings in the various States, counties and other
countries where such collateral may be located and additionally that the
Mortgagor liable for payment of the Obligations will remain liable for any
deficiency judgments in addition to any amounts the Mortgagee may realize on
sales of other property or any other collateral given as security for the
Obligations. Specifically, and without limitation of the foregoing, it is agreed
that it is the intent of the parties hereto that in the event of a foreclosure
of this Mortgage, the Indebtedness evidencing the Obligations shall not be
deemed merged into any judgment of foreclosure, but rather shall remain
outstanding. It is the further intent and understanding of the parties that the
Mortgagee, following a Noticed Event of Default, may pursue all of its
collateral with the Obligations remaining outstanding and in full force and
effect notwithstanding any judgment of foreclosure or any other judgment which
the Mortgagee may obtain.
          (b) The Mortgagor acknowledges and agrees that the Property and the
property which may from time to time be encumbered by the other Secured Debt
Agreements may be located in more than one State or country and therefore the
Mortgagor waives and relinquishes any and all rights it may have, whether at law
or equity, to require the Mortgagee to proceed to enforce or exercise any
rights, powers and remedies it may have under the Secured Debt Agreements in any
particular manner, in any particular order, or in any particular State or other
jurisdiction. Furthermore, the Mortgagor acknowledges and agrees that the
Mortgagee shall be allowed to enforce payment and performance of the Obligations
and to exercise all rights and powers provided under this Mortgage, or the other
Secured Debt Agreements or under any provision of law, by one or more
proceedings, whether contemporaneous, consecutive or both in
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any one or more States in which the security is located. Neither the acceptance
of this Mortgage, or any Credit Document nor its enforcement in one State,
whether by court action, power of sale, or otherwise, shall prejudice or in any
way limit or preclude enforcement of the Credit Documents through one or more
additional proceedings, in that State or in any other State or country.
          (c) The Mortgagor further agrees that any particular remedy or
proceeding, including, without limitation, foreclosure through court action (in
a state or federal court) or power of sale, may be brought and prosecuted in the
local or federal courts of any one or more States as to all or any part of the
Property or the property encumbered by the Secured Debt Agreements wherever
located, without regard to the fact that any one or more prior or
contemporaneous proceedings have been situated elsewhere with respect to the
same or any other part of the Property and the property encumbered by the
Secured Debt Agreements.
          (d) The Mortgagee may resort to any other security held by the
Mortgagee for the payment of the Obligations in such order and manner as the
Mortgagee may elect.
          (e) Notwithstanding anything contained herein to the contrary, the
Mortgagee shall be under no duty to the Mortgagor or others, including, without
limitation, the holder of any junior, senior or subordinate mortgage on the
Property or any part thereof or on any other security held by the Mortgagee, to
exercise or exhaust all or any of the rights, powers and remedies available to
the Mortgagee.
ARTICLE VI
MISCELLANEOUS
          6.01 Governing Law. The provisions of this Mortgage regarding the
creation, perfection and enforcement of the liens, security title and security
interests herein granted shall be governed by and construed under the laws of
the state in which the Property is located. All other provisions of this
Mortgage shall be governed by the laws of the State of New York (including,
without limitation, Section 5-1401 of the General Obligations Law of the State
of New York), without regard to choice of laws provisions.
          6.02 Limitation on Interest. It is the intent of the Mortgagor and the
Mortgagee in the execution of this Mortgage and all other instruments evidencing
or securing the Obligations to contract in strict compliance with applicable
usury laws. In furtherance thereof, the Mortgagee and the Mortgagor stipulate
and agree that none of the terms and provisions contained in this Mortgage shall
ever be construed to create a contract for the use, forbearance or retention of
money requiring payment of interest at a rate in excess of the maximum interest
rate permitted to be charged by relevant law. If this Mortgage or any other
instrument evidencing or securing the Obligations violates any applicable usury
law, then the interest rate payable in respect of the Loans shall be the highest
rate permissible by law.
          6.03 Notices. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex, facsimile
transmission or cable communications) and
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mailed, telegraphed, telexed, telecopied, cabled or delivered (including by way
of overnight courier):

         
 
  (i)   if to the Mortgagor, at;  
 
      R. J. Reynolds Tobacco Company
 
      401 North Main Street,
 
      Winston-Salem, North Carolina 27102
 
       
 
  (ii)   if to the Mortgagee, at:  
 
      JPMorgan Chase Bank, N.A.
 
      270 Park Avenue
 
      New York, New York 10017
 
      Attn.: Raju Nanoo
 
      Tel. No.: 212-270-2272
 
      Fax. No.: 212-270-5120

     (iii) if to any Lender (other than the Mortgagee), at such address as such
Lender shall have specified in the Credit Agreement;
     (iv) if to any Credit Card Issuer, at such address as such Credit Card
Issuer shall have specified in writing to the Mortgagor and the Mortgagee;
     (v) if to any Hedging Creditor, at such address as such Hedging Creditor
shall have specified in writing to the Mortgagor and the Mortgagee;
     (vi) if to any Existing Senior Notes Creditor, at such address of the
Existing Senior Notes Trustee as the Existing Senior Notes Trustee shall have
specified in writing to the Mortgagor and the Mortgagee;
     (vii) if to any New Senior Notes Creditor, at such address of the New
Senior Notes Trustee as the New Senior Notes Trustee shall have specified in
writing to the Mortgagor and the Mortgagee;
     (viii) if to any Refinancing Senior Notes Creditor, at such address of the
Refinancing Senior Notes Trustee as the Refinancing Senior Notes Trustee shall
have specified in writing to the Mortgagor and the Mortgagee;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder. Except as
otherwise expressly provided herein, all such notices and communications shall
be deemed to have been duly given or made (i) in the case of any Secured
Creditor, when received and (ii) in the case of the Mortgagor, when delivered to
the Mortgagor in any manner required or permitted hereunder.
          6.04 Captions. The captions or headings at the beginning of each
Article and Section hereof are for the convenience of the parties and are not a
part of this Mortgage.
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          6.05 Amendment. None of the terms and conditions of this Mortgage may
be changed, waived, modified or varied in any manner whatsoever unless in
writing duly signed by the Mortgagor and the Mortgagee (with the consent of
(x) if prior to the CA Termination Date, the Required Lenders or, to the extent
required by Section 12.12 of the Credit Agreement, all of the Lenders and (y) if
on and after the CA Termination Date, the holders of at least a majority of the
outstanding principal amount of the Obligations remaining outstanding), provided
that (i) no such change, waiver, modification or variance shall be made to
Section 4.04 hereof or this Section 6.05 without the consent of each Secured
Creditor adversely affected thereby and (ii) that any change, waiver,
modification or variance affecting the rights and benefits of a single Class of
Secured Creditors (and not all Secured Creditors in a like or similar manner)
shall require the written consent of the Requisite Creditors of such Class of
Secured Creditors. For the purpose of this Agreement, the term “Class” shall
mean each class of Secured Creditors, i.e., whether (1) the Lender Creditors as
holders of the Credit Document Obligations, (2) the Credit Card Issuers as
holders of the Credit Card Obligations, (3) the Hedging Creditors as holders of
the Hedging Obligations, (4) the Existing Senior Notes Creditors as holders of
the Existing Senior Notes Obligations, (5) the New Senior Notes Creditors as
holders of the New Senior Notes Obligations and (6) the Refinancing Senior Notes
Creditors as holders of the Refinancing Senior Notes Obligations. For the
purpose of this Agreement, the term “Requisite Creditors” of any Class shall
mean each of (1) with respect to each of the Credit Document Obligations, the
Required Lenders, (2) with respect to the Credit Card Obligations, the holders
of at least a majority of all Credit Card Obligations outstanding from time to
time, (3) with respect to the Hedging Obligations, the holders of at least a
majority of all Secured Hedging Obligations outstanding from time to time,
(4) with respect to the Existing Senior Notes Obligations, the holders of at
least a majority of the outstanding principal amount of the Existing Senior
Notes, (5) with respect to the New Senior Notes Obligations, the holders of at
least a majority of the outstanding principal amount of the New Senior Notes and
(6) with respect to the Refinancing Senior Notes Obligations, the holders of at
least a majority of the outstanding principal amount of the Refinancing Senior
Notes.
          6.06 Obligations Absolute. The Obligations of the Mortgagor hereunder
shall remain in full force and effect without regard to, and shall not be
impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of the Mortgagor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Mortgage, any other Credit Document or any
other Secured Debt Agreement, except as specifically set forth in a waiver
granted pursuant to Section 6.05 hereof; or (c) any amendment to or modification
of any Credit Document or any other Secured Debt Agreement, except as
specifically set forth in a waiver granted pursuant to Section 6.05 hereof, or
any security for any of the Obligations; whether or not the Mortgagor shall have
notice or knowledge of any of the foregoing.
          6.07 Further Assurances. The Mortgagor shall, upon the request of the
Mortgagee and at the expense of the Mortgagor: (a) promptly correct any defect,
error or omission which may be discovered in the contents of this Mortgage or
any UCC financing statements filed in connection herewith; (b) promptly execute,
acknowledge, deliver and record or file such further instruments (including,
without limitation, further mortgages, deeds of trust, security deeds, security
agreements, financing statements, continuation statements and assignments of
rents or leases) and promptly do such further acts as may be necessary,
desirable
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or proper to carry out more effectively the purposes of this Mortgage and to
subject to the liens and security interests hereof any property intended by the
terms hereof to be covered hereby, including specifically, but without
limitation, any renewals, additions, substitutions, replacements or
appurtenances to the Property; and (c) promptly execute, acknowledge, deliver,
procure and record or file any document or instrument (including specifically
any financing statement) deemed advisable by the Mortgagee to protect, continue
or perfect the liens or the security interests hereunder against the rights or
interests of third persons.
          6.08 Partial Invalidity. If any of the provisions of this Mortgage or
the application thereof to any person, party or circumstances shall to any
extent be invalid or unenforceable, the remainder of this Mortgage, or the
application of such provision or provisions to persons, parties or circumstances
other than those as to whom or which it is held invalid or unenforceable, shall
not be affected thereby, and every provision of this Mortgage shall be valid and
enforceable to the fullest extent permitted by law.
          6.09 Partial Releases. No release from the Lien of this Mortgage of
any part of the Property by the Mortgagee shall in any way alter, vary or
diminish the force or effect of this Mortgage on the balance of the Property or
the priority of the Lien of this Mortgage on the balance of the Property.
          6.10 Priority. This Mortgage is intended to and shall be valid and
have priority over all subsequent liens and encumbrances, including statutory
liens, excepting solely taxes and assessments levied on the real estate, to the
extent of the maximum amount secured hereby.
          6.11 Covenants Running with the Land. All Obligations are intended by
the Mortgagor and the Mortgagee to be, and shall be construed as, covenants
running with the Property. As used herein, the “Mortgagor” shall refer to the
party named in the first paragraph of this Mortgage and to any subsequent owner
of all or any portion of the Property. All persons who may have or acquire an
interest in the Property shall be deemed to have notice of, and be bound by, the
terms of the Credit Agreement and the other Secured Debt Agreements; provided,
however, that no such party shall be entitled to any rights thereunder without
prior written consent of the Mortgagee.
          6.12 Successors and Assigns. This Mortgage shall be binding upon and
inure to the benefit of the Mortgagee and the Mortgagor and their respective
successors and assigns. Except as otherwise permitted by Credit Agreement, the
Mortgagor shall not, without the prior written consent of the Mortgagee, assign
any rights, duties, or obligations hereunder.
          6.13 Purpose of Loans. The Mortgagor hereby represents and agrees that
the Loans, Existing Senior Notes, New Senior Notes and Refinancing Senior Notes
have or are being obtained or issued for business or commercial purposes, and
the proceeds thereof will not be used for personal, family, residential,
household or agricultural purposes.
          6.14 No Joint Venture or Partnership. The relationship created
hereunder and under the other Credit Documents, the Secured Hedging Agreements,
the Secured Credit Card Agreements, the Existing Senior Notes Documents, the New
Senior Notes Documents and the Refinancing Senior Notes Documents is that of
creditor/debtor. The Mortgagee does not owe
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any fiduciary or special obligation to the Mortgagor and/or any of the
Mortgagor’s, officers, partners, agents, or representatives. Nothing herein or
in any other Credit Document, any Secured Hedging Agreement, any Secured Credit
Card Document, any Existing Senior Notes Document, any New Senior Notes Document
or any Refinancing Senior Notes Document is intended to create a joint venture,
partnership, tenancy-in-common or joint tenancy relationship between the
Mortgagor and the Mortgagee.
          6.15 The Mortgagee as Collateral Agent for Secured Creditors. It is
expressly understood and agreed that the rights and obligations of the Mortgagee
as holder of this Mortgage and as Collateral Agent for the Secured Creditors and
otherwise under this Mortgage are only those expressly set forth in this
Mortgage and in the Credit Agreement. The Mortgagee shall act hereunder pursuant
to the terms and conditions set forth herein in Section 11 of the Credit
Agreement and in Annex M to the Security Agreement, the terms of which shall be
deemed incorporated herein by reference as fully as if same were set forth
herein in their entirety (for such purpose, treating each reference to the
“Security Agreement” as a reference to this Mortgage, each reference to the
“Collateral Agent” as a reference to the Mortgagee and each reference to an
“Assignor” as a reference to a “Mortgagor”).
          6.16 Full Recourse. This Mortgage is made with full recourse to the
Mortgagor and pursuant to and upon all the warranties, representations,
covenants, agreements on the part of the Mortgagor contained herein, in the
other Credit Documents and the other Secured Debt Agreements and otherwise in
writing in connection herewith or therewith.
          6.17 Reduction of Secured Amount. In the event the amount secured by
this Mortgage is less than the aggregate Obligations, then the amount secured
hereby shall be reduced only by the last and final sums that the Mortgagor or
the Borrower repays with respect to the Obligations and shall not be reduced by
any intervening repayments of the Obligations. So long as the balance of the
Obligations exceeds the amount secured hereby, any payments of the Obligations
shall not be deemed to be applied against, or to reduce, the portion of the
Obligations secured by this Mortgage. Such payments shall instead be deemed to
reduce only such portions of the Obligations as are secured by other collateral
located outside of the state in which the Property is located or are unsecured.
          6.18 Acknowledgment of Receipt. The Mortgagor hereby acknowledges
receipt of a true copy of this Mortgage.
          6.19 Release Payment. (a) After the Termination Date (as defined
below), this Mortgage shall terminate (provided that all indemnities set forth
herein shall survive any such termination) and the Mortgagee, at the request and
expense of the Mortgagor, will execute and deliver to the Mortgagor a proper
instrument or instruments (without recourse and without representation or
warranty) acknowledging the satisfaction and termination of this Mortgage. As
used in this Mortgage, (i) “CA Termination Date” shall mean the date upon which
the Total Commitment has been terminated, no Letter of Credit or Note under the
Credit Agreement is outstanding and all other Credit Document Obligations have
been paid in full in cash (other than arising from indemnities for which no
request for payment has been made) and (ii) “Termination Date” shall mean the
date upon which (x) the CA Termination Date shall have occurred and (y) if (but
only if) a Notified Non-Credit Agreement Event of Default (as defined below)
shall have
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occurred and be continuing on the CA Termination Date (and after giving effect
thereto), either (I) such Notified Non-Credit Agreement Event of Default shall
have been cured or waived by the requisite holders of the relevant Obligations
subject to such Notified Non-Credit Agreement Event of Default or (II) all
Secured Credit Card Agreements and all Secured Hedging Agreements (if any)
giving rise to a Notified Non-Credit Agreement Event of Default shall have been
terminated and all Obligations subject to such Notified Non-Credit Agreement
Event of Default shall have been paid in full (other than arising from
indemnities for which no request for payment has been made). As used herein
“Notified Non-Credit Agreement Event of Default” means (i) the acceleration of
the maturity of any Existing Senior Notes, New Senior Notes or Refinancing
Senior Notes or the failure to pay at maturity any Existing Senior Notes, New
Senior Notes or Refinancing Senior Notes, or the occurrence of any bankruptcy or
insolvency Event of Default under the Existing Senior Notes Indenture, the New
Senior Notes Indenture or the Refinancing Senior Notes Indenture, (ii) any Event
of Default under a Secured Credit Card Agreement or (iii) any Event of Default
under a Secured Hedging Agreement, in the case of any event described in clause
(i), (ii) or (iii) to the extent the Existing Senior Notes Trustee, New Senior
Notes Trustee, the Refinancing Senior Notes Trustee, the relevant Hedging
Creditor or the relevant Credit Card Issuer, as the case may be, has given
written notice to the Mortgagee that a “Notified Non-Credit Agreement Event of
Default” exists; provided that such written notice may only be given if such
Event of Default is continuing and, provided further, that any such Notified
Non-Credit Agreement Event of Default shall cease to exist (I) once there is no
longer any Event of Default under the Existing Senior Notes Indenture, the New
Senior Notes Indenture, the Refinancing Senior Notes Indenture, the respective
Secured Credit Card Agreement or the respective Secured Hedging Agreement, as
the case may be, in existence, (II) in the case of an Event of Default under the
Existing Senior Notes Indenture, the New Senior Notes Indenture, or the
Refinancing Senior Notes Indenture, after all Existing Senior Notes Obligations,
New Senior Notes Obligations or Refinancing Senior Notes Obligations, as the
case may be, have been repaid in full, (III) in the case of an Event of Default
under a Secured Credit Card Agreement or a Secured Hedging Agreement, such
Secured Hedging Agreement, as the case may be, has been terminated and all
Credit Card Obligations or Hedging Obligations, as the case may be, thereunder
have been repaid in full, (IV) in the case of an Event of Default under the
Existing Senior Notes Indenture, New Senior Notes Indenture or the Refinancing
Senior Notes Indenture, if the Existing Senior Notes Creditors, New Senior Notes
Creditors or the Refinancing Senior Notes Creditors, as the case may be, holding
at least a majority of the aggregate principal amount of the outstanding
Existing Senior Notes, New Senior Notes or the Refinancing Senior Notes, as the
case may be, at such time have rescinded such written notice and (V) in the case
of an Event of Default under a Secured Credit Card Agreement or a Secured
Hedging Agreement, the requisite Credit Card Issuers with Credit Card
Obligations or Hedging Creditors with Hedging Obligations thereunder at such
time have rescinded such written notice.
          (b) So long as no Notified Non-Credit Agreement Event of Default has
occurred and is continuing, in the event that (x) prior to the CA Termination
Date, (i) any part of the Property is sold or otherwise disposed of in
connection with a sale or other disposition permitted by Section 8.02 of the
Credit Agreement (it being agreed for such purposes that a release will be
deemed “permitted by Section 8.02 of the Credit Agreement” if the proposed
transaction constitutes an exception to Section 8.02(f) of the Credit Agreement)
or (ii) all or any part of the Property is released at the direction of the
Required Lenders (or all the Lenders if required by Section 12.12 of the Credit
Agreement), and the proceeds of such sale or disposition
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or from such release (if any) are applied in accordance with the terms of the
Credit Agreement to the extent required to be so applied or (y) on and after the
CA Termination Date, any part of the Property is sold or otherwise disposed of
without violating the Existing Senior Notes Documents, the New Senior Notes
Documents, the Refinancing Senior Notes Documents, the Secured Credit Card
Agreements and the Secured Hedging Agreements, the Mortgagee, at the request and
expense of the Mortgagor, will release such Property from this Mortgage in the
manner provided in clause (a) above (it being understood and agreed that upon
the release of all or any portion of the Property by the Mortgagee at the
direction of the Lenders as provided above, the Lien on the Property in favor of
the Credit Card Issuers, the Hedging Creditors, the Existing Senior Notes
Creditors, the New Senior Notes Creditors and the Refinancing Senior Notes
Creditors shall automatically be released).
          (c) In addition to the foregoing, all Property shall be automatically
released (subject to reinstatement upon the occurrence of a new Trigger Event)
in accordance with Section 7.10(i) of the Credit Agreement.
          (d) At any time that the Mortgagor desires that the Mortgagee take any
action to give effect to any release of Property pursuant to the foregoing
Section 6.19(a), (b) or (c), it shall deliver to the Mortgagee a certificate
signed by an authorized officer describing the Property to be released and
certifying its entitlement to a release pursuant to the applicable provisions of
Sections 6.19(a), (b) or (c) and in such case the Mortgagee, at the request and
expense of the Mortgagor, will execute such documents (without recourse and
without any representation or warranty) as required to duly release such
Property. The Mortgagee shall have no liability whatsoever to any Secured
Creditor as the result of any release of Property by it as permitted by (or
which the Mortgagee in good faith believes to be permitted by) this
Section 6.19. Upon any release of Property pursuant to Section 6.19(a), (b) or
(c), so long as no Noticed Event of Default is then in existence, none of the
Secured Creditors shall have any continuing right or interest in such Property,
or the proceeds thereof (subject to reinstatement rights upon the occurrence of
a new Trigger Event in the case of a release pursuant to Section 6.19(c)(i)).
          6.20 Time of the Essence. Time is of the essence of this Mortgage.
          6.21 The Mortgagee’s Powers. Without affecting the liability of any
other Person liable for the payment and performance of the Obligations and
without affecting the Lien of this Mortgage in any way, the Mortgagee (acting at
the direction of the requisite holders of the relevant Obligations affected
thereby) may, from time to time, regardless of consideration and without notice
to or consent by the holder of any subordinate Lien, right, title or interest in
or to the Property, (a) release any Persons liable for the Obligations,
(b) extend the maturity of, increase or otherwise alter any of the terms of the
Obligations, (c) modify the interest rate payable on the principal balance of
the Obligations, (d) release or reconvey, or cause to be released or reconveyed,
all or any portion of the Property, or (e) take or release any other or
additional security for the Obligations.
          6.22 Rules of Usage. The following rules of usage shall apply to this
Mortgage unless otherwise required by the context:
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     (a) Singular words shall connote the plural as well as the singular, and
vice versa, as may be appropriate.
     (b) The words “herein”, “hereof” and “hereunder” and words of similar
import appearing in each such document shall be construed to refer to such
document as a whole and not to any particular section, paragraph or other
subpart thereof unless expressly so stated.
     (c) References to any Person shall include such Person and its successors
and permitted assigns.
     (d) Each of the parties hereto and their counsel have reviewed and revised,
or requested revisions to, such documents, and the usual rule of construction
that any ambiguities are to be resolved against the drafting party shall be
inapplicable in the construction and interpretation of such documents and any
amendments or exhibits thereto.
     (e) Unless an express provision requires otherwise, each reference to “the
Property” shall be deemed a reference to “the Property or any part thereof”, and
each reference to “Secured Property” shall be deemed a reference to “the Secured
Property or any part thereof”.
          6.23 No Off-Set. All sums payable by the Mortgagor shall be paid
without counterclaim, other compulsory counterclaims, set-off, or deduction and
without abatement, suspension, deferment, diminution or reduction, and the
Obligations shall in no way be released, discharged or otherwise affected
(except as expressly provided herein or in the Credit Agreement) by reason of:
(i) any damage or any condemnation of the Property or any part thereof; (ii) any
title defect or encumbrance or any eviction from the Property or any part
thereof by title paramount or otherwise; or (iii) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to the Mortgagee or the Mortgagor, or any action taken with
respect to this Mortgage by any agent or receiver of the Mortgagee. The
Mortgagor waives, to the extent permitted by law, all rights now or hereafter
conferred by statute or otherwise to any abatement, suspension, deferment,
diminution or reduction of any of the Obligations.
     6.24 Consent to Jurisdiction and Service of Process; Waiver of Jury Trial.
(a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS MORTGAGE OR ANY OTHER
CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, THE MORTGAGOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION
OF THE AFORESAID COURTS. THE MORTGAGOR HEREBY IRREVOCABLY DESIGNATES, APPOINTS
AND EMPOWERS PRENTICE-HALL CORPORATION SYSTEM, INC., WITH OFFICES ON THE DATE
HEREOF AT 80 STATE STREET, ALBANY, NEW YORK 12207-2543 AS ITS DESIGNEE,
APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND
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ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF
ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN
ANY SUCH ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND
AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, THE MORTGAGOR SHALL DESIGNATE
A NEW DESIGNEE, APPOINTEE AND AGENT IN THE STATE OF NEW YORK ON THE TERMS AND
FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THIS MORTGAGE. THE MORTGAGOR
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE MORTGAGOR AT
ITS ADDRESS FOR NOTICES PURSUANT TO SECTION 6.03 HEREOF, SUCH SERVICE TO BECOME
EFFECTIVE 30 DAYS AFTER SUCH MAILING. THE MORTGAGOR HEREBY IRREVOCABLY WAIVES
ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND
AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR
ANY OTHER CREDIT DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR
INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT
UNDER THE CREDIT AGREEMENT, ANY LENDER OR THE HOLDER OF ANY NOTE TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST ANY CREDIT PARTY IN ANY OTHER JURISDICTION BUT NOT
LIMITED TO THE JURISDICTION WHERE THE PROPERTY IS LOCATED WITH RESPECT TO THE
CREATION, PERFECTION AND ENFORCEMENT OF THE LIEN AND SECURITY INTEREST GRANTED
BY THIS MORTGAGE.
          (b) THE MORTGAGOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS MORTGAGE OR ANY OTHER
CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.
          (c) EACH OF THE PARTIES TO THIS MORTGAGE HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS MORTGAGE, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
     6.25 Future Advances. This Mortgage is given to secure the Mortgagor’s
Applicable Obligations under, or in respect of, the Secured Debt Agreements to
which the Mortgagor is “party” and shall secure not only Applicable Obligations
with respect to presently
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existing indebtedness under the foregoing documents and agreements but also any
and all other indebtedness now owing or which may hereafter be owing by the
Mortgagor or the Borrower, as the case may be, to the Secured Creditors, however
incurred, whether interest, discount or otherwise, and whether the same shall be
deferred, accrued or capitalized, including future advances and re-advances,
whether such advances are obligatory or to be made at the option of the Secured
Creditors, or otherwise, to the same extent as if such future advances were made
on the date of the execution of this Mortgage. The lien of this Mortgage shall
be valid as to all indebtedness secured hereby, including future advances, from
the time of its filing for record in the recorder’s office of the county in
which the Property is located. This Mortgage is intended to and shall be valid
and have priority over all subsequent liens and encumbrances, including
statutory liens, excepting solely taxes and assessments levied on the real
estate, to the extent of the maximum amount secured hereby, and Permitted
Encumbrances. Although this Mortgage is given wholly or partly to secure all
future obligations which may be incurred hereunder and under the other Secured
Debt Agreements, whether obligatory or optional, the Mortgagor and the Mortgagee
hereby acknowledge and agree that the Mortgagee and the other Secured Creditors
are obligated by the terms of the Secured Debt Agreements to make certain future
advances, including advances of a revolving nature, subject to the fulfillment
of the relevant conditions set forth in the Secured Debt Agreements. In
accordance with Section 29-3-50 of the South Carolina Code of Laws (1976), as
amended, all future advances and re-advances that may subsequently be made to
the Mortgagor under the Credit Agreement and evidenced by the Notes, Loans,
commitments or other notes or instruments, and all modifications, renewals, or
extensions thereof, the maximum amount of all Credit Document Obligations
outstanding at one time secured by this Mortgage shall not exceed
$7,050,000,000, plus interest thereon attorneys’ fees and court costs.
          6.26 Amendment and Restatement . From and after the Fourth Restatement
Effective Date, this mortgage amends, restates and supercedes the Original
Mortgage.
ARTICLE VII
DEFINITIONS
          “Existing Senior Notes” shall mean, collectively, (i) RJRTH’s 6.50%
Notes due June 1, 2007 in an initial aggregate principal amount equal to
$300,000,000, (ii) RJRTH’s 7.875% Notes due May 15, 2009 in an initial aggregate
principal amount equal to $200,000,000, (iii) RJRTH’s 6.50% Notes due July 15,
2010 in an initial aggregate principal amount equal to $300,000,000, (iv)
RJRTH’s 7.25% Notes due June 1, 2012 in an initial aggregate principal amount
equal to $450,000,000, and (v) RJRTH’s 7.30% Notes due July 15, 2015 in an
initial aggregate principal amount equal to $200,000,000, in each case as the
same may be amended, modified and/or supplemented from time to time in
accordance with the terms thereof and the Credit Agreement
          “Existing Senior Notes Creditors” shall mean the Existing Senior Notes
Trustee and the holders of the Existing Senior Notes.
          “Existing Senior Notes Documents” shall mean the Existing Senior Notes
and the Existing Senior Notes Indenture.
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          “Existing Senior Notes Indenture” shall mean, collectively, (i) the
indenture, dated as of May 20, 2002, as amended among RJRTH, the guarantors of
the notes issued pursuant thereto, and The Bank of New York, as trustee and
(ii) the indenture, dated as of May 15, 1999, as amended among RJRTH, the
guarantors of the notes issued pursuant thereto, and The Bank of New York, as
trustee, in each case as the same may be amended, modified and/or supplemented
from time to time in accordance with the terms thereof and the Credit Agreement.
          “Existing Senior Notes Trustee” shall mean, collectively, the trustee
and/or trustees under the under the Existing Senior Notes Indenture.
          “Initial New Senior Notes” shall mean, collectively, (i) the
Borrower’s 7.25% Senior Secured Notes due 2013 in an initial aggregate principal
amount equal to $625,000,000, (ii) the Borrower’s 7.625% Senior Secured Notes
due 2016 in an initial aggregate principal amount equal to $775,000,000 and
(iii) the Borrower’s 7.75% Senior Secured Notes due 2018 in an initial aggregate
principal amount equal to $250,000,000, in each case issued pursuant to the New
Senior Notes Indenture, as in effect on the Fourth Restatement Effective Date
and as the same may be amended, modified and/or supplemented from time to time
in accordance with the terms thereof and the Credit Agreement.
          “New Senior Notes” shall mean (i) the Initial New Senior Notes,
(ii) the Exchange Senior Notes and (iii) the Additional Senior Notes, in each
case as the same may be amended, modified and/or supplemented from time to time
in accordance with the terms thereof and the Credit Agreement.
          “New Senior Notes Creditors” shall mean the New Senior Notes Trustee
and the holders of the New Senior Notes.
          “New Senior Notes Documents” shall mean the New Senior Notes and the
New Senior Notes Indenture.
          “New Senior Notes Indenture” shall mean the Indenture, dated as of
May 31, 2006, among the Borrower, the Subsidiary Guarantors and The Bank of New
York, as trustee, as in effect on the Fourth Restatement Effective Date and as
the same may be amended, modified and/or supplemented from time to time in
accordance with the terms thereof and the Credit Agreement.
          “New Senior Notes Trustee” shall mean the trustee under the New Senior
Notes Indenture.
          “Refinancing Senior Notes Creditors” shall mean the Refinancing Senior
Notes Trustee and the holders of the Refinancing Senior Notes.
          “Refinancing Senior Notes Documents” shall mean, collectively, the
Refinancing Senior Notes and the Refinancing Senior Notes Indenture.
          “Refinancing Senior Notes Indenture” shall mean one or more indentures
entered into from time to time providing for the issuance of Refinancing Senior
Notes by the Borrower,
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in each case as the same may be amended, modified and/or supplemented from time
to time in accordance with the term thereof and the Credit Agreement.
          “Refinancing Senior Notes Trustee” shall mean, collectively, the
trustee and/or trustees under the Refinancing Senior Notes Indenture.
          “Secured Creditors” shall mean, collectively, the Lender Secured
Creditors, the Existing Senior Notes Creditors, the New Senior Notes Creditors
and the Refinancing Senior Notes Creditors.
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      The laws of South Carolina provide that in any real estate foreclosure
proceeding a defendant against whom a personal judgment may be taken or asked
may within thirty days after the sale of the mortgaged property apply to the
court for an order of appraisal. The statutory appraisal value as approved by
the court would be substituted for the high bid and may decrease the amount of
any deficiency owing in connection with the transaction. THE UNDERSIGNED HEREBY
WAIVES AND RELINQUISHES THE STATUTORY APPRAISAL RIGHTS WHICH MEANS THE HIGH BID
AT THE JUDICIAL FORECLOSURE SALE WILL BE APPLIED TO THE DEBT REGARDLESS OF ANY
APPRAISED VALUE OF THE PROPERTY.
      IN WITNESS WHEREOF, this First Amended and Restated Mortgage, Security
Agreement, Assignment of Leases, Rents and Profits, Financing Statement and
Fixture Filing has been duly executed by the Mortgagor as of the date first
written above.
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                Signed, sealed, and delivered in       R. J. REYNOLDS TOBACCO
COMPANY,     presence of       a North Carolina corporation    
 
               
 
      By:                          
 
               
 
      Its:                          

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Mortgagee:
           
 
  JPMORGA   N CHASE BANK, N.A.      
 
  By:        
 
           
 
      Name: 
 
   
 
      Its: 
 
   

Signed, sealed, and delivered in
presence of:
                                        
                                        
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STATE OF NEW YORK                )
                     )                     ACKNOWLEDGMENT
COUNTY OF NEW YORK           )
I,                     , a Notary Public in and for the County and State
aforesaid, certify that                    , the
                                        of R. J. Reynolds Tobacco Company, a
North Carolina corporation, the Mortgagor, personally appeared before me this
day and acknowledged the execution of the foregoing instrument by her on behalf
of the Mortgagor.
WITNESS my hand and official stamp or seal this ___day of May, 2006.

             
 
           
 
  By:        
 
                Notary Public for New York         My Commission
Expires:                        

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STATE OF NEW YORK                )
                     )                     ACKNOWLEDGMENT
COUNTY OF NEW YORK           )
I,                     , a Notary Public in and for the County and State
aforesaid, certify that                     , the                     of JP
Morgan Chase Bank, N.A, personally appeared before me this day and acknowledged
the execution of the foregoing instrument by him/her on behalf of JP Morgan
Chase Bank, N.A.
WITNESS my hand and official stamp or seal this ___day of May, 2006.

             
 
           
 
  By:        
 
                Notary Public for New York         My Commission Expires: ____  
 

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EXHIBIT A
DESCRIPTION OF LAND
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Schedule 1
CREDIT AGREEMENT LOANS
The Credit Document Obligations secured by this Mortgage are evidenced by the
Credit Agreement (including the Grantor’s obligations under the Subsidiary
Guaranty), which provides that the Grantor is obligated for the payment and
performance of, without limitation, the following: (i) Term Loans in the
aggregate principal amount of $1,550,000,000 and having a final maturity date of
May 31, 2012; (ii) Revolving Loans in the aggregate principal amount of up to
$800,000,000 and having final maturity dates no later than May 31, 2011 (the
“Revolving Loan Maturity Date”); (iii) Swingline Loans in the original aggregate
principal amount of up to $ 75,000,000, and having a final maturity date no
later than five business days prior to the Revolving Loan Maturity Date. The
Parent and/or one or more of its Subsidiaries may enter into Interest Rate
Protection Agreements and Other Hedging Agreements (together with the Existing
Interest Rate Swap Agreement), and the Borrower may also request Letters of
Credit in accordance Section 2 of the Credit Agreement.