Exhibit 10.1
EXECUTION COPY

      Lehman Brothers Commercial Bank   JPMorgan Chase Bank, N.A. 745 Seventh
Avenue   270 Park Avenue New York, New York 10019   New York, New York 10017    
  Lehman Brothers Inc.   J.P. Morgan Securities Inc. 745 Seventh Avenue   270
Park Avenue New York, New York 10019   New York, New York 10017

April 24, 2006
COMMITMENT LETTER
PERSONAL AND CONFIDENTIAL
Reynolds American Inc.
401 North Main Street
Winston-Salem, NC 27102-2990
Attention: Daniel A. Fawley, SVP & Treasurer
Ladies and Gentlemen:
     This commitment letter agreement (together with all exhibits and schedules
hereto, the “Commitment Letter”) will confirm the understanding and agreement
among Lehman Brothers Commercial Bank (“LBCB”) and JPMorgan Chase Bank, N.A.
(“JPM”), as initial committing lenders (together in such capacity, the “Initial
Lenders”), Lehman Brothers Inc. (“Lehman Brothers”) and J.P. Morgan Securities
Inc. (“JPMS”), as joint lead arrangers and joint book-runners (in such capacity,
the “Lead Arrangers”), and Reynolds American Inc., a North Carolina corporation
(together with each of its subsidiaries, the “Company”), in connection with the
proposed financing for the acquisition of all of the issued and outstanding
capital stock of a newly-formed holding company code-named “Pinch” (“Target”,
and together with each of its subsidiaries, the “Acquired Business”). We
understand that the Company proposes to sign a Purchase Agreement among Karl J.
Breyer, Marshall E. Eisenberg, Thomas J. Pritzker, G.P. Investor L.L.C., and the
Company, dated as of the date hereof (the “Acquisition Agreement”) to acquire
all of the issued and outstanding capital stock of Target after giving effect to
certain preliminary restructuring transactions described in the Acquisition
Agreement (the “Acquisition”). The date on which the Acquisition is consummated
is referred to herein as the “Closing Date.” As used below, the defined term
“Company” will mean both the Company prior to the Acquisition and the Company,
together with the Acquired Business, after giving effect to the Acquisition.
     You have advised us that the total funds needed to finance the Acquisition
(excluding fees and expenses) will be provided from a combination of the
following sources:

  •   up to $1.70 billion of borrowings by the Company under a Tranche B Term
Loan Facility (the “Tranche B Term Loan Facility”);

 

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  •   the issuance by the Company of up to $1.80 billion in aggregate principal
amount of senior secured notes (the “Notes”) or, to the extent that the
aggregate principal amount of the Notes issued at the time the Acquisition is
consummated is less than $1.80 billion, up to $1.80 billion of borrowings by the
Company under a Capital Markets Term Loan Facility (the “Capital Markets Term
Loan Facility”) provided that the aggregate gross amount of the CMTL and the
Notes together shall not exceed $1.80 billion; and

Apart from the Acquisition financing, you have requested a $500.0 million
Revolving Credit Facility that, other than for undrawn exposure under existing
letters of credit issued under the Company’s existing credit agreement (which
will be reissued or otherwise covered under this new Revolving Credit Facility)
will remain undrawn on the Closing Date and be available for general corporate
purposes thereafter (the “Revolving Credit Facility”; and together with the
Tranche B Term Loan Facility and the Capital Markets Term Loan Facility, the
“Credit Facilities”).
     The approximate amounts of the sources and uses for the aforementioned
transactions are set forth in the Sources and Uses Table annexed as Schedule I
to the Summary of Terms of Credit Facilities attached hereto as Exhibit A (the
“Credit Facilities Term Sheet”).
     1. The Commitments.
          (a) You have requested that the Initial Lenders (collectively with
each other entity that becomes a lender under the Credit Facilities, the
“Lenders”) commit to provide the entire amount of the Credit Facilities upon the
terms and subject to the conditions set forth or referred to in this Commitment
Letter and in the Credit Facilities Term Sheet.
          (b) Based on the foregoing, each Initial Lender, severally and not
jointly, is pleased to confirm by this Commitment Letter its commitment to you
(the “Commitments”) to provide or cause one or more of its affiliates to provide
50% of the total amount of the Credit Facilities.
          (c) It is agreed that the Lead Arrangers will act as the exclusive
joint book-runners and exclusive joint lead arrangers for the Credit Facilities
(in each case with Lehman Brothers appearing lead left on any offering document)
and that JPM will act as the sole and exclusive Administrative Agent (acting in
such role, the “Administrative Agent”) and LBCB will act as Syndication Agent
(acting in such role, the “Syndication Agent”) for the Credit Facilities. Each
of the Lead Arrangers, the Administrative Agent and the Syndication Agent will
have the rights and authority customarily given to financial institutions in
such roles, but will have no duties other than those expressly set forth herein.
You agree that no other agents, co-agents, arrangers or book-runners will be
appointed, no other titles will be awarded and no compensation (other than that
expressly contemplated by this Commitment Letter, the Fee Letter (defined below)
and the Agency Letter (defined below) will be paid in connection with the Credit
Facilities unless you and we so agree.
          (d) The commitments and agreements of the Initial Lenders and the Lead
Arrangers described herein are subject to:
          (i) there not having occurred since December 31, 2005 (or if such has
occurred since December 31, 2005, the Lead Arrangers and Initial Lenders had no
knowledge thereof prior to the date hereof) any event, development or
circumstance that has caused or could reasonably be expected to cause a material
adverse condition or material adverse change in or affecting the business,
financial condition, results of operations, assets or liabilities of the Company
and its subsidiaries, taken as a whole, after giving effect to the Acquisition;
provided, however, that any adverse event, development or circumstance
attributable to the following shall, in each case, be excluded from such
determination to the extent any

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such event, development or circumstance does not have a disproportionate adverse
effect on the Company and its subsidiaries, taken as a whole, after giving
effect to the Acquisition, as compared to other entities engaged in the industry
in which the Company and its subsidiaries, taken as a whole, after giving effect
to the Acquisition, operates in general: (1) any adoption, implementation,
promulgation, repeal, modification, reinterpretation or proposal of any rule,
regulation, ordinance, order, guidance, protocol or any other law of or by any
governmental authority; and (2) any change or development in financial or
securities markets or the economy in general or relating to the industry in
which the Company and its subsidiaries, taken as a whole, after giving effect to
the Acquisition, operates in general (including any legal action against any
entities (other than the Company and its affiliates) engaged in the industry in
which the Company and its subsidiaries, taken as a whole, after giving effect to
the Acquisition, operates in general); and
          (ii) the other conditions set forth in the Funding Conditions attached
hereto as Exhibit B.
     2. Fees and Expenses. In consideration of the execution and delivery of
this Commitment Letter by the Initial Lenders, you agree to pay the fees and
expenses set forth in Annex A-I to the Credit Facilities Term Sheet and in the
Fee Letter (the “Fee Letter”) and the Agency Letter (the “Agency Letter”), both
dated the date hereof as and when payable in accordance with the terms thereof.
     3. Indemnification.
          (a) The Company hereby agrees to indemnify and hold harmless each of
the Lead Arrangers, each of the Lenders and each of their respective affiliates
and all their respective officers, directors, partners, trustees, employees,
shareholders, advisors, agents, attorneys and controlling persons and each of
their respective heirs, successors and assigns (each, an “Indemnified Person”)
from and against any and all losses, claims, damages and liabilities to which
any Indemnified Person may become subject arising out of or in connection with
this Commitment Letter, the Credit Facilities, the use of the proceeds
therefrom, the Acquisition, any of the other transactions contemplated by this
Commitment Letter or the Fee Letter, any other transaction related thereto or
any claim, litigation, investigation or proceeding relating to any of the
foregoing, regardless of whether any Indemnified Person is a party thereto, and
to reimburse each Indemnified Person promptly upon demand for all documented (in
a reasonable, customary manner), reasonable out-of-pocket legal and other
expenses reasonably incurred by it in connection with investigating, preparing
to defend or defending, or providing evidence in or preparing to serve or
serving as a witness with respect to, any lawsuit, investigation, claim or other
proceeding relating to any of the foregoing (including, without limitation, in
connection with the enforcement of the indemnification obligations set forth
herein); provided, however, that no Indemnified Person will be entitled to
indemnity hereunder in respect of any loss, claim, damage, liability or expense
to the extent that it is found by a final, non-appealable judgment of a court of
competent jurisdiction that such loss, claim, damage, liability or expense
resulted directly from the gross negligence, bad faith or willful misconduct of
such Indemnified Person. In no event will any Indemnified Person be liable on
any theory of liability for indirect, special or consequential damages, lost
profits or punitive damages as a result of any failure to fund any of the Credit
Facilities contemplated hereby or otherwise in connection with the Credit
Facilities. No Indemnified Person will be liable for any damages arising from
the use by unauthorized persons of information, projections or other materials
sent from reasonably secure electronic, telecommunications or other information
transmission systems that are intercepted by unauthorized persons.
          (b) The Company further agrees that, without the prior written consent
of each of the Initial Lenders and Lead Arrangers, which consents will not be
unreasonably withheld, it will not enter into any settlement of a lawsuit, claim
or other proceeding arising out of this Commitment Letter or the transactions
contemplated by this Commitment Letter unless such settlement includes an
explicit and

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unconditional release from the party bringing such lawsuit, claim or other
proceeding of all Indemnified Persons in form and substance satisfactory to such
Indemnified Persons from all liability on claims that are the subject matter of
such lawsuit, claim or other proceeding and does not include any statement as to
or any admission of fault, culpability or a failure to act by or on behalf of
any Indemnified Person. The Company shall not be liable for any settlement
effected without its written consent, which consent will not be unreasonably
withheld or delayed.
          (c) In case any action or proceeding is instituted involving any
Indemnified Person for which indemnification is to be sought hereunder by such
Indemnified Person, then such Indemnified Person will promptly notify the
Company in writing of the commencement of any action or proceeding; provided,
however, that the failure so to notify the Company will not relieve the Company
from any liability that it may have to such Indemnified Person pursuant to this
Section 3 or from any liability that it may have to such Indemnified Person
other than pursuant to this Section 3, except to the extent the Company has been
materially prejudiced by such failure. Notwithstanding the above, following such
notification, the Company may elect in writing to assume the defense of such
action or proceeding, and, upon such election, it will not be liable for any
legal costs subsequently incurred by such Indemnified Person (other than
reasonable costs of investigation and providing evidence) in connection
therewith, unless (i) it has failed to provide counsel reasonably satisfactory
to such Indemnified Person in a timely manner, (ii) either the Indemnified
Person or counsel provided by the Company reasonably determines that its
representation of such Indemnified Person would present it with a conflict of
interest or (iii) the Indemnified Person reasonably determines that there may be
legal defenses available to it which are different from or in addition to those
available to the Company. In connection with any one action or proceeding, the
Company will not be responsible for the fees and expenses of more than one
separate law firm (in addition to local counsel) for all Indemnified Persons.
          (d) The Company, the Initial Lenders and the Lead Arrangers agree that
if any indemnification or reimbursement sought pursuant to this Section 3 is
judicially determined to be unavailable for a reason other than the gross
negligence, bad faith or willful misconduct of such Indemnified Person, then the
Company will contribute to the amount paid or payable by any of the Initial
Lenders or Lead Arrangers, as the case may be, as a result of such losses,
claims, damages, liabilities and expenses for which such indemnification or
reimbursement is held unavailable (i) in such proportion as is appropriate to
reflect the relative benefits to the Company, on the one hand, and each of the
Initial Lenders and Lead Arrangers, on the other hand, in connection with the
transactions to which such indemnification or reimbursement relates, or (ii) if
the allocation provided by clause (i) above is judicially determined not to be
permitted, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) but also the relative faults of the Company,
on the one hand, and each of the Initial Lenders and Lead Arrangers, on the
other hand, as well as any other equitable considerations.
     4. Expiration of Commitments. The Commitments will expire at 11:59 p.m.,
New York City time, on April 24, 2006 unless on or prior to such time you have
executed and returned to the Lead Arrangers a copy of this Commitment Letter and
the Fee Letter. If you do so execute and deliver to the Lead Arrangers this
Commitment Letter and the Fee Letter, the Initial Lenders agree to hold their
Commitments available for you until the earliest of (i) the termination of the
Acquisition Agreement, (ii) the consummation of the Acquisition with or without
the funding of the Credit Facilities and (iii) 5:00 p.m., New York City time, on
September 24, 2006. The Commitments will terminate on the Closing Date, and you
agree to rely exclusively on your rights and the commitments set forth in the
Credit Documentation in respect of all loans and extensions of credit to be made
after the Closing Date.

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     5. Confidentiality.
          (a) This Commitment Letter and the terms and conditions contained
herein and therein may not be disclosed by the Company to any person or entity
(other than the Acquired Business and such of your and their agents and advisors
as need to know and agree to be bound by the provisions of this paragraph and as
required by law) without the prior written consent of each of the Initial
Lenders and Lead Arrangers, except to the extent required by applicable law or
under the rules of the New York Stock Exchange. The Fee Letter and the terms and
conditions contained therein may not be disclosed by the Company to any person
or entity (other than such of your agents and advisors as need to know and agree
to be bound by the provisions of this paragraph and as required by law) without
the prior written consent of each of the Initial Lenders and Lead Arrangers.
          (b) You acknowledge that the Initial Lenders, the Lead Arrangers and
their respective affiliates may be providing debt financing, equity capital or
other services (including financial advisory services) to other companies in
respect of which you may have conflicting interests regarding the transactions
described herein and otherwise. None of the Initial Lenders, the Lead Arrangers
and their respective affiliates will use confidential information obtained from
you by virtue of the transactions contemplated by this Commitment Letter or
their other relationships with you in connection with the performance by the
Initial Lenders, the Lead Arrangers and their respective affiliates of services
for other companies, and none of the Initial Lenders, the Lead Arrangers and
their respective affiliates will furnish any such information to other
companies. You also acknowledge that none of the Initial Lenders, the Lead
Arrangers and their respective affiliates have any obligation to use in
connection with the transactions contemplated by this Commitment Letter, or to
furnish to you, confidential information obtained from other companies.
     6. Assignment and Syndication.
          (a) The parties hereto agree that the Lead Arrangers will have the
right to syndicate the Credit Facilities and the Commitments to one or more
groups of financial institutions or other investors, identified either by you or
us and which are reasonably acceptable to you and us. Subject to the immediately
preceding sentence, the Lead Arrangers will have the right to manage all aspects
of any such syndication, including decisions as to the selection of institutions
to be approached and when they will be approached, the acceptance of
commitments, the amounts offered, the amounts allocated and the allocation of
compensation provided. The Commitments are subject to the Company using all
commercially reasonable efforts to assist the Lead Arrangers in such syndication
process by: (i) ensuring that the syndication efforts benefit from the existing
lending relationships of the Company; (ii) arranging for direct contact between
senior management and other representatives and advisors of (A) the Company and
(B) to the extent the Company is entitled to arrange such access pursuant to the
terms of the Acquisition Agreement (if at all), the Acquired Business; and
(iii) as more particularly set forth in Sections 6(b) and 6(c), assisting in the
preparation of materials to be used in connection with the syndication
(collectively with the Credit Facilities Term Sheet, the “Information
Materials”); and (iv) hosting, with the Initial Lenders and Lead Arrangers, one
or more meetings of prospective Lenders, and, in connection with any such Lender
meeting, consulting with the Lead Arrangers with respect to the presentations to
be made at such meeting, and making available appropriate officers and
representatives to rehearse such presentations prior to such meetings, as
reasonably requested by the Lead Arrangers.
          (b) You agree to assist us in preparing the Information Materials,
including a Confidential Information Memorandum, for distribution to prospective
Lenders. You also agree to assist us in preparing an additional version of the
Information Materials (the “Public-Side Version”) to be used by prospective
Lenders’ public-side employees and representatives (“Public-Siders”) who do not
wish to receive material non-public information (within the meaning of United
States federal securities laws) with

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respect to the Company, its affiliates and any of their respective securities
(“MNPI”) and who may be engaged in investment and other market-related
activities with respect to the Company’s or its affiliates’ securities or loans.
Before distribution of any Information Materials, you agree to execute and
deliver to us (i) a letter in which you authorize distribution of the
Information Materials to a prospective Lender’s employees willing to receive
MNPI (“Private-Siders”) and (ii) a separate letter in which you authorize
distribution of the Public-Side Version to Public-Siders and represent that no
MNPI is contained therein. The Company agrees that the following documents may
be distributed to both Private-Siders and Public-Siders, unless the Company
advises the Lead Arrangers in writing (including by e-mail) within a reasonable
time prior to their intended distribution that such materials should be
distributed only to Private-Siders: (i) administrative materials prepared by the
Lead Arrangers for prospective Lenders (such as a lender meeting invitation,
bank allocation, if any, and funding and closing memoranda), (ii) notification
of changes in the terms of the Credit Facilities and (iii) other materials
intended for prospective Lenders after the initial distribution of Information
Materials. If you advise us that any of the foregoing should be distributed only
to Private-Siders, then Public-Siders will not receive such materials without
further discussions with you. Drafts of definitive documentation with respect to
the Credit Facilities will be distributed only to Private-Siders, unless the
Company hereafter authorizes their distribution to the Public-Siders in writing
(including by
e-mail).
          (c) To assist the Lead Arrangers in their syndication efforts, you
agree to promptly prepare and provide the Lead Arrangers such information with
respect to the Company, the Acquired Business, the Acquisition and the other
transactions contemplated hereby as they may reasonably request, including all
financial information and projections (including information and projections
prepared on a pro forma basis) as they may reasonably request, including a
business plan for fiscal 2006 through fiscal 2010 and a written analysis of the
business and prospects of the Company and its subsidiaries for such period, all
in form and substance reasonably satisfactory to the Lead Arrangers (the
“Projections”). You hereby represent and covenant that (i) all information other
than the Projections (the “Information”) that has been or will be made available
to the Lead Arrangers by you or any of your representatives in connection with
the financing transactions contemplated hereby is or will be, when furnished,
when taken as a whole, complete and correct in all material respects and does
not or will not, when furnished, contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
contained therein not materially misleading in light of the circumstances under
which such statements are made and (ii) the Projections that have been or will
be made available to the Lead Arrangers by you or any of your representatives
have been or will be prepared in good faith based upon assumptions believed by
the Company to be reasonable at the time made (it being understood that such
Projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by the Projections may differ from
projected results and that the difference may be material). You understand that
in arranging and syndicating the Credit Facilities and the Commitments we may
use and rely on the Information and Projections without independent verification
thereof and that you will promptly notify us of any changes in circumstances
that could reasonably be expected to call into question the continued
reasonableness of any assumption underlying the Projections.
          (d) To ensure an orderly and effective syndication of the Credit
Facilities and the Commitments, you agree that, from the date hereof until the
earlier of the termination of the syndication as determined by the Lead
Arrangers and 90 days following the Closing Date, you will not, and will not
permit any of your affiliates to, syndicate or issue, attempt to syndicate or
issue, announce or authorize the announcement of the syndication or issuance of,
or engage in discussions concerning the syndication or issuance of, any debt
facility or debt security of the Company or any of its respective subsidiaries
(other than the syndication of the Credit Facilities and the offering of the
Notes, in each case, as contemplated hereby, and the offering by the Company of
debt securities pursuant to an exchange offer (the “Exchange Offer”) for all of
R.J. Reynolds Tobacco Holdings, Inc.’s existing debt securities (the

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“Existing Notes")), including any renewals or refinancings of any existing debt
facility, without the prior written consent of the Lead Arrangers.
     7. Survival. The provisions of Sections 2 (Fees and Expenses), 3
(Indemnification), 5 (Confidentiality), 6 (Assignment and Syndication), and 8
(Choice of Law; Jurisdiction; Waivers) of this Commitment Letter will survive
the expiration or termination of this Commitment Letter; provided, however, upon
execution of the Credit Documentation only Sections 2 (Fees and Expenses), 5
(Confidentiality) (as to the Fee Letter), and 8 (Choice of Law; Jurisdiction;
Waivers) will survive the expiration or termination of this Commitment Letter.
     8. Choice of Law; Jurisdiction; Waivers.
          (a) This Commitment Letter will be governed by and construed in
accordance with the laws of the State of New York. The Company hereby
irrevocably submits to the non-exclusive jurisdiction of any New York State
court or Federal court sitting in the County of New York in respect of any suit,
action or proceeding arising out of or relating to the provisions of this
Commitment Letter or the Fee Letter and irrevocably agrees that all claims in
respect of any such suit, action or proceeding may be heard and determined in
any such court. The parties hereto hereby waive any objection that they may now
or hereafter have to the laying of venue of any such suit, action or proceeding
brought in any such court, and any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
The parties hereto hereby waive, to the fullest extent permitted by applicable
law, any right to trial by jury with respect to any action or proceeding arising
out of or relating to this Commitment Letter or the Fee Letter.
          (b) Except as provided in Section 9(b) hereof, no Lender will be
liable in any respect for any of the obligations or liabilities of any other
Lender under this letter or arising from or relating to the transactions
contemplated hereby.
     9. Miscellaneous.
          (a) This Commitment Letter may be executed in one or more
counterparts, each of which will be deemed an original, but all of which when
taken together will constitute one and the same instrument. Delivery of an
executed signature page of this Commitment Letter by facsimile transmission will
be effective as delivery of a manually executed counterpart hereof. This
Commitment Letter may not be amended or waived except by an instrument in
writing signed by the Initial Lenders, the Lead Arrangers and you.
          (b) The Company may not assign any of its rights, or be relieved of
any of its obligations, without the prior written consent of each of the Lenders
(and any purported assignment without such consent will be null and void). In
connection with any syndication of all or a portion of the Commitments in
accordance with Section 6 above, the rights and obligations of each Lender
hereunder may be assigned, in whole or in part, and upon such assignment and
assumption by the assignee of all obligations of such Lender in respect of the
portion of the Commitments so assigned on the terms set forth in this Commitment
Letter or on the terms set forth in the definitive financing documents, such
Lender will be relieved and novated hereunder from its obligations with respect
to such portion of the Commitments; provided, however, in connection with the
initial syndication of the Commitments as contemplated in Section 6 hereof, if
an assignee Lender defaults in its commitment to fund on the Closing Date, the
Initial Lenders agree to fund such defaulting Lender’s commitment.
          (c) This Commitment Letter and the attached Exhibits and Annexes set
forth the entire understanding of the parties hereto as to the scope of the
Commitments and the obligations of the

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Lenders and the Lead Arrangers hereunder. This Commitment Letter supersedes all
prior understandings and proposals, whether written or oral, between any of the
Lenders and you relating to any financing or the transactions contemplated
hereby. This Commitment Letter is in addition to the agreements of the parties
contained in the Fee Letter.
          (d) This Commitment Letter has been and is made solely for the benefit
of the parties signatory hereto, the Indemnified Persons, and their respective
heirs, successors and assigns, and nothing in this Commitment Letter, expressed
or implied, is intended to confer or does confer on any other person or entity
any rights or remedies under or by reason of this Commitment Letter or the
agreements of the parties contained herein.
          (e) The Company acknowledges that it has engaged one or more
investment banks satisfactory to the Lead Arrangers to publicly sell or
privately place the Notes (or in lieu thereof, any debt, convertible debt or
equity securities issued by the Company or any of its affiliates, the proceeds
of which will be applied in full or in part to finance any portion of the
purchase price to be paid in connection with the Acquisition or to refinance
Capital Markets Term Loans or any other indebtedness (other than the Tranche B
Term Loans) or equity securities incurred or issued in connection with the
Acquisition).
          (f) You acknowledge that the Lenders and the Lead Arrangers may be (or
may be affiliated with) full service financial firms and as such from time to
time may effect transactions for their own account or the account of customers,
and hold long or short positions in debt or equity securities or loans of
companies that may be the subject of the transactions contemplated by this
Commitment Letter. You hereby waive and release, to the fullest extent permitted
by law, any claims you have with respect to any conflict of interest arising
from such transactions, activities, investments or holdings, or arising from the
failure of the Lead Arrangers or one or more Lenders or any of their respective
affiliates to bring such transactions, activities, investments or holdings to
your attention.
          (g) The Company agrees that the Lead Arrangers have the right to place
advertisements in financial and other newspapers and journals at their own
expense describing their services to the Company; provided that the Lead
Arrangers will submit a copy of any such advertisements to the Company for its
approval, which approval will not be unreasonably withheld.
          (h) You acknowledge that in connection with the financing transactions
contemplated under this Commitment Letter: (i) the Initial Lenders, the Lead
Arrangers and their respective affiliates have acted at arm’s length from, are
not agents of or advisors to, and owe no fiduciary duties to, you or any other
person, (ii) the Initial Lenders, the Lead Arrangers and their respective
affiliates owe you only those contractual duties and obligations set forth in
this Commitment Letter and any definitive financing documentation entered into
in connection with the Credit Facilities or the Notes and (iii) the Initial
Lenders, the Lead Arrangers and their respective affiliates may have interests
that differ from your interests. You agree you will not claim that the Initial
Lenders, the Lead Arrangers and their respective affiliates, or any of them,
have or has rendered advisory services of any nature or respect, or owed or owes
a fiduciary or similar duty to you, in connection with the financing
transactions under this Commitment Letter.
          (i) You agree to provide us, prior to the Closing Date, with all
documentation and other information required by bank regulatory authorities
under applicable “know your customer” and anti-money laundering rules and
regulations, including, without limitation, the U.S.A. Patriot Act.

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     If you are in agreement with the foregoing, kindly sign and return to us
the enclosed copy of this Commitment Letter.

                      Very truly yours,
 
                    LEHMAN BROTHERS COMMERCIAL BANK
 
           
 
      By:   /s/ George James
 
           
 
          Name: George James
Title: Chief Credit Officer
 
                    LEHMAN BROTHERS INC.
 
         
 
      By:   /s/ Laurie Perper
 
           
 
          Name: Laurie Perper
Title: Senior Vice President
 
                    JPMORGAN CHASE BANK, N.A.
 
           
 
         
 
      By:   /s/ Randolph Cates
 
           
 
          Name: Randolph Cates
Title: Vice President
 
                    J.P. MORGAN SECURITIES INC.
 
           
 
           
 
      By:   /s/ Jennifer S Sheer
 
           
 
          Name: Jennifer S. Sheer
Title: Vice President
 
            Accepted and agreed to as of the
date first above written:        
 
            REYNOLDS AMERICAN INC.        
 
           
By:
  /s/ Daniel Fawley        
 
           
 
  Name: Daniel A. Fawley
Title: SVP & Treasurer        

Commitment Letter

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EXHIBIT A TO COMMITMENT LETTER
SUMMARY OF TERMS OF CREDIT FACILITIES
     Set forth below is a summary of certain of the terms of the Credit
Facilities and the documentation related thereto. Capitalized terms used and not
otherwise defined herein have the meanings set forth in the Commitment Letter to
which this Summary of Terms is attached and of which it forms a part.

         
I.
  Parties    
 
       
 
  Borrower   Reynolds American Inc. (the “Company”).
 
       
 
  Guarantors   Each of the guarantors of the Company’s obligations under its
existing credit agreement (the “Existing Credit Agreement”) (other than RJR
Packaging, LLC), Pinch (“Target”), each of Target’s direct and indirect domestic
subsidiaries (subject to materiality limitations substantially similar to those
in the Existing Credit Agreement), Lane Limited (“Lane”), Santa Fe Natural
Tobacco Company, Inc. (“Santa Fe”) and all future direct and indirect material
domestic subsidiaries of the Company (subject to materiality limitations
substantially similar to those in the Existing Credit Agreement) (the
“Guarantors”; the Company and the Guarantors, collectively, the “Credit
Parties”).
 
       
 
  Lead Arrangers
and Joint Book-Runners  
Lehman Brothers Inc. and J.P. Morgan Securities Inc. (in such capacity, the
“Lead Arrangers”), with Lehman Brothers appearing lead left on any offering
document.
 
       
 
  Syndication Agent   Lehman Brothers Commercial Bank (in such capacity, the
“Syndication Agent”).
 
       
 
  Administrative Agent   JPMorgan Chase Bank N.A. (in such capacity, the
“Administrative Agent”).
 
       
 
  Senior Lenders   A syndicate of banks, financial institutions and other
entities arranged by the Lead Arrangers pursuant to the Commitment Letter
(collectively, the “Senior Lenders”).
 
       
II.
  Types and Amounts of Credit Facilities    
 
       
 
  Senior Term Loan Facilities   Senior Term Loan Facilities (the “Senior Term
Loan Facilities”) in an aggregate principal amount of up to $3.50 billion (the
loans thereunder, the “Senior Term Loans”) as follows:
 
       
 
 
Tranche B Term Loan Facility
  A six-year term loan facility (the “Tranche B Term Loan Facility”) in an
aggregate principal amount of up to

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      $1.70 billion (the loans thereunder, the “Tranche B Term Loans”). The
Tranche B Term Loans will be repayable ratably on a quarterly basis in aggregate
annual amounts equal to 1% of the original aggregate principal amount of Tranche
B Term Loans, with the balance payable on the maturity date.
 
       
 
 
Capital Markets Term Loan
Facility
 
A 364-day term loan facility (the “Capital Markets Term Loan Facility”) in an
aggregate principal amount of up to $1.80 billion (the loans thereunder, the
“Capital Markets Term Loans”). The Capital Markets Term Loans will be repayable
in full on the maturity date.
 
       
 
 
Availability
  The Tranche B Term Loans will be made in a single drawing on the Closing Date.
Amounts will be available to be drawn under the Capital Markets Term Loan
Facility in a single drawing on the Closing Date only to the extent that the
aggregate principal amount of the Notes issued on or prior to the Closing Date
is less than $1.80 billion, such that the aggregate gross amount of the Capital
Markets Term Loans and the Notes equals $1.80 billion.
 
       
 
 
Purpose
  The proceeds of the Tranche B Term Loans and, if funded, the Capital Markets
Term Loans will be used to finance, in part, the Acquisition.
 
       
 
  Revolving Credit Facility   Five-year revolving credit facility (the
“Revolving Credit Facility”; together with the Senior Term Loan Facilities, the
“Credit Facilities”) in an aggregate principal amount equal to $500.0 million
(the loans thereunder, the “Revolving Credit Loans”).
 
       
 
 
Availability
  The Revolving Credit Facility will be available on a revolving basis during
the period commencing on the day after the Closing Date and ending on the fifth
anniversary of the Closing Date (the “Revolving Credit Termination Date”).
 
       
 
 
Letters of Credit
  The Revolving Credit Facility will be available for the issuance of letters of
credit denominated in US Dollars, Euro or Pounds Sterling (the “Letters of
Credit”) by one or more Senior Lenders to be selected in the syndication process
(each such Senior Lender in such capacity, an “Issuing Senior Lender”). The face
amount of any outstanding Letters of Credit will reduce availability under the
Revolving Credit Facility on a dollar-for-dollar basis. Except as provided in
the immediately following sentence, no Letter of Credit will have an expiration
date after the fifth business day preceding the Revolving Credit Termination
Date (the “L/C Termination Date”). Each Issuing Senior Lender may in its sole
discretion permit any Letter of Credit to have an expiration date after the L/C
Termination Date, provided that (i) the Company shall cash collateralize any and
all Letters of Credit having an expiration date

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      after the L/C Termination Date at any time such Issuing Senior Lender
shall so request in its sole discretion (and, in any event, at least 91 days
prior to the L/C Termination Date) and (ii) the aggregate stated amount of
Letters of Credit having expiration dates beyond the L/C Termination Date may at
no time exceed $15.0 million.
 
       
 
      Drawings under any Letter of Credit will be reimbursed by the Company
(whether with its own funds or with the proceeds of Revolving Credit Loans) on
the next business day. Each Senior Lender under the Revolving Credit Facility
will acquire an irrevocable and unconditional pro rata participation in each
Letter of Credit.
 
       
 
 
Swing Line Loans
  A portion of the Revolving Credit Facility not in excess of $75.0 million will
be available for swing line loans (the “Swing Line Loans”) from the
Administrative Agent (in such capacity, the “Swing Line Senior Lender”) on
same-day notice. Any such Swing Line Loans will reduce availability under the
Revolving Credit Facility on a dollar-for-dollar basis. Each Senior Lender under
the Revolving Credit Facility will acquire an irrevocable and unconditional pro
rata participation in each Swing Line Loan.
 
       
 
 
Maturity
  The Revolving Credit Termination Date.
 
       
 
 
Purpose
  The proceeds of the Revolving Credit Loans will be used for general corporate
purposes of the Company and its subsidiaries.
 
       
 
  Revolving Credit Facility
Accordion  
The Revolving Credit Facility will provide for the ability of the Company to
obtain commitments for and to borrow up to $250.0 million of additional
revolving loans (but in no event shall the total amount available under the
Revolving Credit Facility exceed $750.0 million) under the Revolving Credit
Facility (but, for the avoidance of doubt, the definitive financing
documentation will not itself provide any such commitments). Any and all of such
additional revolving loans shall be deemed for all purposes to be Revolving
Loans under the Revolving Credit Facility and shall be secured ratably with the
other loans under the Credit Facilities.

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III.
  Certain Payment Provisions    
 
       
 
  Fees and Interest Rates   As set forth on Annex A-I.
 
       
 
  Optional Prepayments and
Commitment Reductions  
Loans may be prepaid in minimum amounts not less than $10.0 million. Optional
prepayments of the Senior Term Loans will be applied, first, to the prepayment
of the Capital Markets Term Loans and, second, to the prepayment of Tranche B
Term Loans. Each such prepayment of Tranche B Term Loans will be applied, first,
to the four immediately succeeding scheduled repayments of principal and,
second, to the remaining installments thereof ratably in accordance with the
then outstanding amounts thereof. Amounts so prepaid may not be reborrowed.
 
       
 
  Mandatory Prepayments and
Commitment Reductions  
100% of the net proceeds of any sale or issuance of equity (other than issuances
pursuant to employee stock plans) after the Closing Date by the Company will be
applied to prepay the Capital Markets Term Loans.
 
       
 
      The following amounts will be applied, first, to the prepayment of the
Capital Markets Term Loans and, second, to prepayment of Tranche B Term Loans:
 
       
 
     
(i) 100% of the net proceeds of any issuance or incurrence of indebtedness
(other than certain indebtedness (to be agreed upon) otherwise permitted under
the Credit Documentation (as defined below)) after the Closing Date by the
Company or any of its subsidiaries; and
 
       
 
     
(ii) 50% (subject to step downs to be agreed upon) of excess cash flow (to be
defined in a mutually satisfactory manner, but specifically permitting
continuation of the Company’s current dividend policy) for each fiscal year of
the Company (commencing with the fiscal year 2007).
 
       
 
      Each such prepayment of Tranche B Term Loans will be applied to the then
remaining scheduled installments thereof ratably in accordance with the then
outstanding amounts thereof. Once repaid, Senior Term Loans may not be
reborrowed.
 
       
 
      The Revolving Credit Loans (including Swing Line Loans) will be prepaid
and the Letters of Credit will be cash collateralized or replaced to the extent
such extensions of credit exceed the amount of the Revolving Credit Facility.
 
       
IV.
  Collateral   The obligations of each Credit Party in respect of the Credit
Facilities and in respect of hedging agreements,

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      cash management arrangements and corporate purchasing card arrangements
provided by and owing to Lenders or affiliates of the Lenders or by the Lead
Arrangers or affiliates of the Lead Arrangers (the “Secured Obligations”) will
be secured by a perfected security interest (subject to permitted liens) in all
of its tangible and intangible assets (including, without limitation,
intellectual property, real property, licenses, permits, the capital stock of
its direct and indirect material domestic subsidiaries and 65% of the voting
stock and 100% of the non-voting stock of its material first-tier foreign
subsidiaries); provided that (i) the Secured Obligations of Sante Fe and Lane
shall be secured only by collateral in which a security interest may be
perfected by the filing of UCC financing statements and (ii) collateral
comprised of capital stock shall be limited to capital stock issued by Target,
Target’s direct and indirect material subsidiaries, R.J. Reynolds Tobacco
Holdings, Inc., R.J. Reynolds Tobacco Company, Santa Fe and Lane (collectively,
the “Collateral”). The Designated Collateral (to be defined in the new Security
Agreement that will secure the Secured Obligations, which definition will
exclude the stock of the Company’s subsidiaries other than R.J. Reynolds Tobacco
Company) will secure the Notes and the Existing Notes equally and ratably, on a
first-priority basis, with the Secured Obligations, in each case to the extent
expressly required in the indentures governing the Notes and the Existing Notes.
All other Collateral will secure the Secured Obligations on a first-priority
basis, subject to exceptions for permitted liens to be agreed. The Lead
Arrangers may determine, in their sole discretion, that the costs of obtaining
such a security interest are excessive in relation to the value of the security
to be afforded thereby and may forego the same. The collateral requirements will
terminate at such time as (i) the Senior Term Loans have been paid in full and
all commitments in respect thereof shall have terminated and (ii) the Company
has obtained investment grade corporate ratings (with not worse than stable
outlooks) from each of Moody’s Investor Service, Inc. and Standard & Poor’s
Ratings Group; provided that the collateral requirements shall be fully
reinstated in the event that the Company fails to maintain investment grade
corporate ratings.
 
       
V.
  Certain Conditions    
 
       
 
  Initial Conditions   The availability of the Credit Facilities is subject to
the conditions set forth on Exhibit B to the Commitment Letter and the other
conditions specified in the Commitment Letter.

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  On-Going Conditions   The making of each extension of credit will be
conditioned upon (i) the accuracy of all representations and warranties (in all
material respects in the case of the representations and warranties that are not
otherwise qualified by materiality) in the definitive financing documentation
with respect to the Credit Facilities (the “Credit Documentation”) and
(ii) there being no default or event of default in existence at the time of, or
after giving effect to the making of, such extension of credit.
 
       
VI.
  Certain Documentation Matters   The Credit Documentation will contain the
following representations, warranties, covenants and events of default:
 
       
 
  Representations and Warranties   Substantially similar to those in the
Existing Credit Agreement (subject to such changes as may be appropriate, in the
reasonable discretion of the Lead Arrangers, in light of (i) the Acquisition and
the nature of the Acquired Business, (ii) the financing transactions
contemplated by the Commitment Letter and (iii) the Exchange Offer).
 
       
 
  Affirmative Covenants   Substantially similar to those in the Existing Credit
Agreement (subject to such changes as may be appropriate, in the reasonable
discretion of the Lead Arrangers, in light of (i) the Acquisition and the nature
of the Acquired Business, (ii) the financing transactions contemplated by the
Commitment Letter and (iii) the Exchange Offer).
 
       
 
  Financial Covenants   Financial covenants shall consist of a minimum fixed
charge coverage ratio, a maximum total leverage ratio and a maximum capital
expenditures limitation.
 
       
 
  Negative Covenants   Substantially similar to those in the Existing Credit
Agreement (subject to such changes as may be appropriate, in the reasonable
discretion of the Lead Arrangers, in light of (i) the Acquisition and the nature
of the Acquired Business, (ii) the financing transactions contemplated by the
Commitment Letter and (iii) the Exchange Offer), including, without limitation,
a dividends limitation covenant substantially similar to that contained in the
Existing Credit Agreement.
 
       
 
  Events of Default   Substantially similar to those in the Existing Credit
Agreement (subject to such changes as may be appropriate, in the reasonable
discretion of the Lead Arrangers, in light of (i) the Acquisition and the nature
of the Acquired Business, (ii) the financing transactions contemplated by the
Commitment Letter and (iii) the Exchange Offer).
 
       
 
  Voting   Amendments and waivers with respect to the Credit Documentation will
require the approval of Senior

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      Lenders holding not less than a majority of the aggregate amount of the
Senior Term Loans, Revolving Credit Loans (including participations in Letters
of Credit and Swing Line Loans) and unused commitments under the Credit
Facilities, except that (i) the consent of each Senior Lender directly and
adversely affected thereby will be required with respect to (a) reductions in
the amount or extensions of the scheduled date of final maturity of any loan,
(b) reductions in the rate of interest or any fee or extensions of any due date
thereof, (c) increases in the amount or extensions of the expiry date of any
Senior Lender’s commitment, (d) modifications to the pro rata provisions of the
Credit Documentation or (e) modifications to the assignment and participation
provisions of the Credit Documentation which further restrict assignments
thereunder and (ii) the consent of 100% of the Senior Lenders will be required
with respect to (a) modifications to any of the voting percentages and (b)
releases of all or substantially all of the collateral or all or substantially
all of the Guarantees other than in accordance with the provisions of the Credit
Documentation. In addition, the consent of Senior Lenders holding a majority of
the aggregate amount of the funded and unfunded commitments under a Credit
Facility will be required with respect to certain modifications
disproportionately affecting such Credit Facility.
 
       
 
  Assignments and Participations   Subject to the consent requirements
referenced below, each Senior Lender may assign any or all of its loans and
commitments to its affiliates or to one or more banks, financial institutions or
other entities. Except for assignments (i) among the Lead Arrangers and their
affiliates, (ii) to another Senior Lender or to an affiliate of a Senior Lender
or (iii) of funded Senior Term Loans, assignments will require the consent of
the Administrative Agent and the Material Issuing Senior Lenders (to be defined)
and, so long as no default or event of default has occurred and is continuing,
the Company (which consent in each case will not be unreasonably withheld or
delayed); provided in any event that the consent of Administrative Agent and
each Material Issuing Senior Lender shall be required with respect to
assignments under the Revolving Credit Facility. Non-pro rata assignments will
be permitted. Partial assignments (other than to another Senior Lender or to an
affiliate of a Senior Lender), must be at least $1.0 million (or $5.0 million in
the case of Revolving Credit Loans and Revolving Credit Facility commitments)
unless otherwise agreed by the Company and the Administrative Agent. An
assignment fee of $3,500 will

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      be payable by the assignee to the Administrative Agent in connection with
each assignment. Upon assignment, the assignee will become a Senior Lender for
all purposes under the Credit Documentation pursuant to assignment documentation
reasonably acceptable to the Administrative Agent. Promissory notes will be
issued under the Credit Facilities only upon request.
 
       
 
  Yield Protection   The Credit Documentation will contain customary provisions
(i) protecting the Senior Lenders against increased costs or loss of yield
resulting from changes in reserve, tax, capital adequacy and other requirements
of law and from the imposition of or changes in withholding or other taxes and
(ii) indemnifying the Senior Lenders for “breakage costs” incurred in connection
with the events giving rise to breakage cost indemnification in the Existing
Credit Agreement, including without limitation the prepayment of a LIBOR Loan
(as defined in Annex A-I) on a day other than the last day of an interest period
with respect thereto.
 
       
 
  Expenses and Indemnification   The Company will pay (i) all documented (in a
reasonable, customary manner), reasonable out-of-pocket expenses of the
Administrative Agent, the Syndication Agent and the Lead Arrangers associated
with the syndication of the Credit Facilities and the preparation, negotiation,
execution, delivery and administration of the Credit Documentation and any
amendment or waiver with respect thereto (including the reasonable fees,
disbursements and other charges of counsel and the charges of IntraLinks) and
(ii) all documented (in a reasonable, customary manner) out-of-pocket expenses
of the Administrative Agent and the Senior Lenders (including the fees,
disbursements and other charges of counsel) in connection with the enforcement
of the Credit Documentation or in any bankruptcy case or insolvency proceeding.
 
       
 
      The Administrative Agent, the Syndication Agent, the Lead Arrangers and
the Senior Lenders (and their affiliates and each of their respective officers,
directors, partners, trustees, employees, shareholders, advisors, agents,
attorneys and controlling persons and each of their respective heirs, successors
and assigns) will have no liability for, and will be indemnified and held
harmless against, any loss, liability, cost or expense incurred in respect of
the financing contemplated hereby or the use or the proposed use of proceeds
thereof (except to the extent resulting from the gross negligence, bad faith or
willful misconduct of the indemnified party).
 
       
 
  Governing Law and Forum   State of New York.

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  Counsel to the Lead Arrangers   Linklaters.
 
       
 
  Credit Documentation Counsel   White & Case LLP.

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Annex A-I
Interest and Certain Fees

     
Interest Rate Options
  The Company may elect that the loans comprising each borrowing bear interest
at a rate per annum equal to:
 
   
 
  (i) the Base Rate plus the Applicable Margin (“Base Rate Loans”); or
 
   
 
  (ii) the LIBOR Rate plus the Applicable Margin (“LIBOR Loans”);
 
   
 
  except that Swing Line Loans will always be Base Rate Loans.
 
   
 
  As used herein:
 
   
 
  “Base Rate” means the higher of (i) the prime lending rate as set forth on the
British Banking Association Telerate Page 5 (the “Prime Rate”), and (ii) the
federal funds effective rate from time to time plus 0.5%.
 
   
 
  “Applicable Margin” means a per annum rate equal to (stated margins below
based on anticipated rating at closing):
 
   
 
  A. with respect to Revolving Loans, (i) 1.25% in the case of Base Rate Loans
and (ii) 2.25% in the case of LIBOR Loans, subject to adjustment pursuant to a
ratings-based pricing grid to be determined; and
 
   
 
  B. with respect to Senior Term Loans, (i) 1.25% in the case of Base Rate Loans
and (ii) 2.25% in the case of LIBOR Loans.
 
   
 
  “LIBOR Rate” means the rate (adjusted for statutory reserve requirements for
eurocurrency liabilities) at which eurodollar deposits for one, two, three or
six months (as selected by the Company) are offered in the interbank eurodollar
market.
 
   
 
  No new LIBOR interest period may be selected when any event of default is
continuing.
 
   
Interest Payment Dates
  For Base Rate Loans, quarterly in arrears.
 
   
 
  For LIBOR Loans, on the last day of each relevant interest period and, in the
case of any interest period longer than three months, on each successive date
three months after the first day of such interest period.
 
   
Commitment Fees
  The Company will pay a commitment fee of 1.00% per annum, subject to
adjustment pursuant to a ratings-based pricing grid to be determined, on the
average daily unused portion of the Revolving Credit Facility for the period
beginning on the Closing Date and ending on the termination date of the Lenders’
commitments under the

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  Revolving Credit Facility, payable quarterly in arrears and on the date of
such termination. Swing Line Loans will, for purposes of the commitment fee
calculations only, not be deemed to be a utilization of the Revolving Credit
Facility.
 
   
Letter of Credit Fees
  The Company will pay a commission on all outstanding Letters of Credit at a
per annum rate equal to the Applicable Margin then in effect with respect to
LIBOR Loans on the face amount of each Letter of Credit. Such commission will be
shared ratably among the Senior Lenders participating in the Revolving Credit
Facility and will be payable quarterly in arrears.
 
   
 
  In addition to letter of credit commissions, a fronting fee calculated at a
rate per annum to be agreed upon by the Company and the Issuing Senior Lender on
the face amount of each Letter of Credit will be payable quarterly in arrears to
the Issuing Senior Lender for its own account. In addition, customary
administrative, issuance, amendment, payment and negotiation charges will be
payable to the Issuing Senior Lender for its own account.
 
   
Default Rate
  Overdue amounts (including overdue interest) will bear interest at a rate
equal to 2% per annum above the rate applicable to Base Rate Loans.
 
   
Rate and Fee Basis
  All per annum rates will be calculated on the basis of a year of 360 days (or
365 days, in the case of Base Rate Loans the interest rate payable on which is
then based on the Prime Rate) and the actual number of days elapsed.

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SCHEDULE I
SOURCES AND USES TABLE

         
Sources
       
 
       
Revolving Credit Facility1
  $ 0  
Tranche B Term Loan Facility
    1,700,000,000.00  
Notes
    1,800,000,000.00  
Capital Markets Term Loan Facility2,
    0  
Cash of the Company, est.
    75,000,000.00  
 
       
Total Sources
    3,575,000,000.00  
 
       
Uses
       
 
       
Purchase price of Target shares
    3,500,000,000.00  
Fees and Expenses
    75,000,000.00  
 
       
Total Uses
    3,575,000,000.00  

 

1   The Revolving Credit Facility will be in the amount of $500.0 million. It
will not be available for drawing on the Closing Date.   2   The Capital Markets
Term Loan Facility will be available only on the Closing Date. It will be drawn
to the extent that the aggregate principal amount of the Notes issued at the
time the Acquisition is consummated is less than $1.80 billion, provided that
the aggregate gross amount of the CMTL and the Notes together shall not exceed
$1.80 billion.

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EXHIBIT B TO COMMITMENT LETTER
FUNDING CONDITIONS
Capitalized terms used but not defined herein have the meanings assigned to them
in the Commitment Letter to which this Exhibit B is attached and of which it
forms a part. The availability of the Credit Facilities is conditioned upon
satisfaction of the conditions precedent summarized below.

(a)   Each Credit Party shall have executed and delivered definitive financing
documentation and delivered customary closing certificates, legal opinions and
other documents and instruments with respect to the Credit Facilities
incorporating (and substantially consistent with) the terms of this Commitment
Letter and otherwise reasonably satisfactory to the Administrative Agent, the
Lead Arrangers and their counsel. All fees and expenses required to be paid on
or prior to the Closing Date to the Administrative Agent or other Agents, the
Lead Arrangers and the Initial Lenders as set forth in the Commitment Letter,
the Fee Letter or otherwise shall have been paid in full.   (b)   There shall
not exist (pro forma for the Acquisition and the financing thereof) any default
or event of default under the Credit Facilities.   (c)   All conditions to the
closing of the Acquisition, other than the payment of the purchase price, shall
have been satisfied. The Acquisition shall be consummated concurrently with the
effectiveness of the Credit Facilities and the initial funding thereunder for an
aggregate purchase price not exceeding $3.50 billion (excluding fees and
expenses not exceeding $75.0 million in the aggregate) in accordance with the
terms of the Acquisition Agreement, no material provision of which shall have
been waived, amended, supplemented or otherwise modified by the Company without
the consent of the Lead Arrangers.   (d)   All governmental, regulatory and
third party approvals necessary under the terms of the Acquisition Agreement to
consummate the Acquisition (except to the extent waived pursuant to paragraph
(c) above) and all material governmental, regulatory and third party approvals
necessary to consummate the financing transactions contemplated hereby and for
the continuing operations of the Company and its subsidiaries, taken as a whole,
shall have been obtained and be in full force and effect. With respect to
approval required under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, all applicable waiting periods shall have expired without any action being
taken or threatened by any competent authority that could reasonably be expected
to restrain, prevent or otherwise impose adverse conditions on the Acquisition
or the financing thereof.   (e)   (i) At least 21 days prior to the Closing
Date, the Lead Arrangers shall have received (a) audited (incorporated by
reference from filings with the Securities and Exchange Commission) and
unaudited interim (quarterly) consolidated financial statements of the Company
(which shall have been reviewed by the Company’s independent registered public
accounting firm as provided in Statement on Auditing Standards No. 100), each of
the guarantors of the Company’s obligations under the Existing Credit Agreement,
Lane and Santa Fe, to the extent any such financial statements would be required
by (including by means of incorporation by reference), and meeting the
requirements of, Regulation S-X for a Form S-3 registration statement under the
Securities Act of 1933, as amended, relating to the offering of debt securities
of the Company and guarantees thereof by each of the guarantors of the Company’s
obligations under the Existing Credit Agreement, Lane and Santa Fe, (b) audited
combined historical financial statements of PinchSub1, PinchSub2, PinchSub3 and
PinchSub4 (collectively, the “Pinch Companies”) for the year ended December 31,
2005 and (c) pro forma financial statements of the Company based on

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    the audited combined historical financial statements of the Pinch Companies
for the year ended December 31, 2005 and on the Company’s audited historical
financial statements for the year ended December 31, 2005.   (ii)   The Company
shall have provided a schedule showing the pro forma ratio of its pro forma
total funded debt as of the Closing Date after giving effect to the Acquisition
to the pro forma consolidated EBITDA of the Company (with EBITDA including such
adjustments as are required by Regulation S-X as well as such additional
adjustments as the Lead Arrangers agree are appropriate, which additional
adjustments shall include, but not be limited to, impairment charges, costs
related to the Acquisition, integration costs related to the Company’s Brown &
Williamson Holdings, Inc. acquisition, and the one-time $81 million “true-up”
payment made in 2005 pursuant to the federal tobacco buyout assessment) for the
twelve-month period ended on the date of the most recent available financial
statements as of the Closing Date for the Company (and using the most recent
available (as of the Closing Date) financial statements that have been subject
to review by independent accountants for the Acquired Business covering twelve
months) of no more than 2.25:1.00.   (iii)   The Company shall have provided to
the Lead Arrangers, as soon as they are available, any financial statements of
the Acquired Business provided to the Company.   (f)   The Company shall have
received a letter of indication with respect to the rating of the Credit
Facilities and the Notes from Moody’s Investor Service, Inc. and Standard and
Poor’s Ratings Group and (i) the Lead Arrangers shall have been afforded a
period of at least 30 days following such ratings and prior to the Closing Date
to syndicate the Credit Facilities as set forth in the Commitment Letter and
(ii) the Company shall have prepared a preliminary prospectus or preliminary
offering memorandum or preliminary private placement memorandum suitable for use
in a customary senior secured notes “road show” not less than 15 days prior to
the Closing Date and caused the participation of senior management and
representatives of the Company and, to the extent the Company is entitled to
arrange such participation pursuant to the terms of the Acquisition Agreement
(if at all), the Acquired Business in the road show.

B-2