Exhibit 10.1

FORM OF DIRECTOR AND OFFICER INDEMNIFICATION AGREEMENT

This Director and Officer Indemnification Agreement, dated as of
                         ,      (this “Agreement”), is made by and between
Reynolds American Inc., a North Carolina corporation (the “Company”), and
                     (“Indemnitee”).

RECITALS:

A. Section 55-8-01 of the North Carolina Business Corporation Act (the “NCBCA”)
provides that the business and affairs of a North Carolina corporation will be
managed by or under the direction of its board of directors.

B. Pursuant to Section 55-8-41 of the NCBCA, significant authority with respect
to the management of the Company has been delegated to the officers of the
Company.

C. By virtue of the managerial prerogatives vested in the directors and officers
of a North Carolina corporation, directors and officers have significant
responsibilities and duties to the corporation and its shareholders.

D. It is critically important to the Company and its shareholders that the
Company be able to attract and retain the most capable persons reasonably
available to serve as directors and officers of the Company.

E. In recognition of the need for corporations to be able to induce capable and
responsible persons to accept positions in corporate management, North Carolina
law authorizes (and in some instances requires) corporations to indemnify their
directors, officers, employees and agents, and further authorizes corporations
to purchase and maintain insurance for the benefit of their directors, officers,
employees and agents.

F. North Carolina law authorizes a corporation to, upon the meeting of certain
conditions set forth in Section 55-8-53 of the NCBCA, pay in advance of the
final disposition of certain actions, suits or proceedings the Expenses incurred
by a director or officer in the defense thereof, and the Company intends that
any such right to the advancement of Expenses shall be made separate and
distinct from any right to indemnification and not be subject to the
satisfaction of any standard of conduct or otherwise affected by the merits of
any claims against the director or officer, subject to the requirement that such
director or officer provide an undertaking in accordance with the terms of the
NCBCA and this Agreement.

G. Indemnitee is a director and/or officer of the Company and possibly one or
more of its subsidiaries and his or her willingness to serve in such
capacity(ies) is predicated, in substantial part, upon the Company’s willingness
to indemnify him or her in accordance with the principles reflected above, to
the fullest extent permitted by the laws of the State of North Carolina, and
upon the terms set forth in this Agreement.

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H. Therefore, in recognition of the need to provide Indemnitee with the maximum
protection against personal liability allowed by applicable law (including
Section 55-8-57 of the NCBCA), in order to procure Indemnitee’s commencement of
service or continued service as a director or officer of the Company and to
enhance Indemnitee’s ability to serve the Company and/or one or more of its
subsidiaries in an effective manner, and in order to provide such protection
pursuant to express contract rights (intended to be enforceable irrespective of,
among other things, any amendment to the Company’s articles of incorporation or
bylaws (collectively, the “Constituent Documents”) or any change in the
composition of the Company’s Board of Directors (the “Board”)), the Company
wishes to provide in this Agreement for the indemnification of and the
advancement of Expenses to Indemnitee as set forth in this Agreement and for the
coverage or continued coverage of Indemnitee under the Company’s directors’ and
officers’ liability insurance policies.

I. In light of the considerations referred to in the preceding recitals, it is
the Company’s intention and desire that the provisions of this Agreement be
construed to maximize the protections to be provided to Indemnitee hereunder.

AGREEMENT:

NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:

1. Certain Definitions. In addition to terms defined elsewhere herein, the
following terms have the following meanings when used in this Agreement with
initial capital letters:

(a) “Agreement” has the meaning ascribed to such term in the introductory
paragraph hereof.

(b) “Beneficial Ownership” has the meaning ascribed to such term in Rule 13d-3
promulgated under the Exchange Act. The terms “Beneficial Owner” and
“Beneficially Own” shall have corresponding meanings.

(c) “Board” has the meaning ascribed to such term in Recital H hereof.

(d) “Business Day” means any day other than Saturday, Sunday or a United States
federal holiday.

(e) “Claim” means (i) any threatened, asserted, pending or completed claim,
demand, action, suit or proceeding, whether civil, criminal, administrative,
arbitrative, investigative or other, and whether made pursuant to federal, state
or other law; and (ii) any threatened, pending or completed inquiry or
investigation, whether made, instituted or conducted by or at the behest of the
Company or any other person or entity, including any federal, state or other
court or governmental entity or agency and any committee or other representative
of any corporate constituency, that Indemnitee determines might lead to the
institution of any such claim, demand, action, suit or proceeding. For the
avoidance of doubt, the Company intends indemnity to be provided hereunder in
respect of acts or failure to act prior to, on or after the date hereof and to
apply to any act or failure to act, or claim related thereto, in whole or in
part prior to, on or after the date hereof.

 

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(f) “Company” has the meaning ascribed to such term in the introductory
paragraph hereof.

(g) “Constituent Documents” has the meaning ascribed to such term in Recital H
hereof.

(h) “Controlled Affiliate” means any corporation, limited liability company,
partnership, joint venture, trust or other entity or enterprise, whether or not
for profit, that is directly or indirectly controlled by the Company. For
purposes of this definition, “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of an entity or enterprise, whether through the ownership of Voting
Shares, through other voting rights, by contract or otherwise; provided, however
that direct or indirect Beneficial Ownership of capital stock or other interests
in an entity or enterprise entitling the holder to cast 30% or more of the total
number of votes generally entitled to be cast in the election of directors (or
persons performing comparable functions) of such entity or enterprise will be
deemed to constitute control for purposes of this definition.

(i) “Disinterested Director” means a director of the Company who is not and was
not a party to, significantly involved in or otherwise implicated in the Claim
in respect of which indemnification is sought by Indemnitee.

(j) “ERISA Losses” means any taxes, penalties or other liabilities under the
Employee Retirement Income Security Act of 1974, as amended, or Section 4975 of
the Internal Revenue Code of 1986, as amended.

(k) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(l) “Expenses” means any and all reasonable fees, costs and expenses (including
reasonable attorneys’ and experts’ fees and expenses) paid or payable in
connection with investigating, defending, being a witness in or participating in
(including on appeal), or preparing to investigate, defend, be a witness in or
participate in (including on appeal), any Claim, other than the fees, expenses
and costs in respect of which the Company is expressly stated in Section 14 to
have no obligation.

(m) “Indemnifiable Claim” means any Claim based upon, arising out of or
resulting from (i) any actual, alleged or suspected act or failure to act by
Indemnitee in his or her capacity as a director, officer, employee or agent of
the Company or as a director, officer, employee, member, manager, trustee or
agent of any other corporation, limited liability company, partnership, joint
venture, trust or other entity or enterprise, whether or not for profit
(including any employee benefit plan or related trust), as to which Indemnitee
is or was serving at the request of the Company as a director, officer,
employee, member, manager, trustee or agent, including any Controlled Affiliate
of the Company; (ii) any actual, alleged or suspected act or failure to act by
Indemnitee in respect of any business, transaction, communication, filing,
disclosure or other activity of the Company or any other entity or enterprise
referred to in clause (i) of this sentence; or (iii) Indemnitee’s status as a
current or former director, officer, employee, or agent of the Company or as a
current or former director, officer, employee, member, manager, trustee or agent
of any other entity or enterprise referred to in clause (i) of this

 

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sentence or any actual, alleged or suspected act or failure to act by Indemnitee
in connection with any obligation or restriction imposed upon Indemnitee by
reason of such status; provided, however, that except for compulsory
counterclaims, the term “Indemnifiable Claim” will not include any Claim
initiated by Indemnitee against the Company, any director, officer or employee
of the Company, or any other entity or enterprise referred to in clause (i) of
this sentence, unless (A) the Disinterested Directors consented to the
initiation of such Claim prior to its initiation; (B) the Disinterested
Directors authorize the Company to join in such Claim; or (C) such Claim is
initiated solely to enforce Indemnitee’s rights under this Agreement. In
addition to any service at the actual request of the Company, for purposes of
this Agreement, Indemnitee will be deemed to be serving or to have served at the
request of the Company as a director, officer, employee, member, manager,
partner, trustee or agent of another entity or enterprise if Indemnitee is or
was serving as a director, officer, employee, member, manager, partner, trustee
or agent of such entity or enterprise and (i) such entity or enterprise is or at
the time of such service was a Controlled Affiliate; (ii) such entity or
enterprise is or at the time of such service was an employee benefit plan (or
related trust) sponsored or maintained by the Company or a Controlled Affiliate;
or (iii) the Company or a Controlled Affiliate directly or indirectly caused or
authorized Indemnitee to be nominated, elected, appointed, designated, employed,
engaged or selected to serve in such capacity. For the avoidance of doubt,
“Indemnifiable Claim” shall include any Claim in which Indemnitee is involved as
a witness by reason of Indemnitee’s status as a current or former director,
officer, employee, member, manager, partner, trustee or agent of the Company or
as a current or former director, officer, employee, member, manager, partner
trustee or agent of any other entity or enterprise referred to in clause (i) of
the first sentence of this definition.

(n) “Indemnifiable Losses” means any and all Losses relating to, arising out of
or resulting from any Indemnifiable Claim.

(o) “Indemnitee” has the meaning ascribed to such term in the introductory
paragraph hereof.

(p) “Independent Counsel” means a law firm, or a member of a law firm, that is
experienced in matters of corporation law and neither presently is, nor in the
past three years has been, retained to represent: (i) the Company (or any
Subsidiary), a Controlled Affiliate or Indemnitee in any matter material to any
such party; or (ii) any other named (or, as to a threatened matter, reasonably
likely to be named) party to the Indemnifiable Claim giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the term “Independent
Counsel” will not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to determine
Indemnitee’s rights under this Agreement.

(q) “Losses” means any and all Expenses, damages, losses, liabilities,
judgments, fines, penalties (whether civil, criminal or other), ERISA Losses and
amounts paid in settlement, including all interest, assessments and other
charges paid or payable in connection with or in respect of any of the
foregoing.

(r) “Notification Date” has the meaning ascribed to such term in Section 8(c)
hereof.

 

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(s) “Other Indemnity Provisions” has the meaning ascribed to such term in
Section 10 hereof.

(t) “Standard of Conduct Determination” has the meaning ascribed to such term in
Section 8(b) hereof.

(u) “Subsidiary” means an entity in which the Company directly or indirectly
Beneficially Owns 50% or more of the outstanding Voting Shares.

(v) “Voting Shares” means, with respect to any corporation, limited liability
company, partnership, trust or other entity or enterprise, securities entitled
to vote generally in the election of directors (or similar governing bodies) of
such corporation, limited liability company, partnership, trust or other entity
or enterprise.

2. Indemnification Obligation. Subject to the terms and conditions of this
Agreement, the Company will indemnify, defend and hold harmless Indemnitee, to
the fullest extent permitted or required by the laws of the State of North
Carolina in effect on the date hereof or as such laws may from time to time
hereafter be amended to increase the scope of such permitted or required
indemnification, against any and all Indemnifiable Claims and Indemnifiable
Losses; provided, however, that no repeal or amendment of any law of the State
of North Carolina will in any way diminish or adversely affect the rights of
Indemnitee pursuant to this Agreement in respect of any occurrence or matter
arising prior to any such repeal or amendment; provided, further, Indemnitee
will not be entitled to indemnification pursuant to this Agreement in connection
with any Claim or any part thereof arising out of acts or omissions for which
applicable law prohibits indemnification. For the purposes of clarity and not in
limitation of the foregoing, as of the date hereof, it is intended that
Indemnitee shall be provided under this Agreement the broadest indemnification
authorized by the NCBCA (including, without limitation, Section 55-8-57).

3. Advancement of Expenses. Expenses incurred by Indemnitee in defense of any
Indemnifiable Claim shall be paid by the Company in advance of the final
disposition of such Indemnifiable Claim. Indemnitee’s right to such advancement
is not subject to the satisfaction of any standard of conduct and is not
conditioned upon any prior determination that Indemnitee is entitled to
indemnification under this Agreement with respect to the Indemnifiable Claim or
the absence of any prior determination to the contrary. Without limiting the
generality or effect of the foregoing, within five Business Days after any
request by Indemnitee (which request shall be accompanied by reasonable
documentation evidencing the amount and nature of the Expenses claimed), the
Company will, in accordance with such request (but without duplication), (a) pay
such Expenses on behalf of Indemnitee; (b) advance to Indemnitee funds in an
amount sufficient to pay such Expenses; or (c) reimburse Indemnitee for such
Expenses (except in any instance where it has been previously determined that
Indemnitee did not meet the applicable standard of conduct), in each case to the
fullest extent permitted or required by the laws of the State of North Carolina
in effect on the date hereof or as such laws may from time to time hereafter be
amended to increase the scope of such permitted or required payment, advance or
reimbursement of such Expenses; provided, however that Indemnitee will repay,
without interest, any amounts actually advanced to Indemnitee that, at the final
disposition of the Indemnifiable Claim to which the advance related, were in
excess of amounts paid or payable by Indemnitee in respect of Expenses

 

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incurred in defending such Indemnifiable Claim. In connection with, and as a
condition to, any such payment, advancement or reimbursement, Indemnitee will
execute and deliver to the Company an unsecured undertaking in the form attached
hereto as Exhibit A (subject to Indemnitee filling in the blanks therein and
selecting from among the bracketed alternatives therein), which will be accepted
by the Company without reference to Indemnitee’s ability to repay the Expenses.
In no event will Indemnitee’s right to the payment, advancement or reimbursement
of Expenses pursuant to this Section 3 be conditioned upon any undertaking that
is less favorable to Indemnitee than, or that is in addition to, the undertaking
set forth in Exhibit A.

4. Indemnification for Additional Expenses; Interpretation, Defense and
Enforcement. Without limiting the generality or effect of the foregoing, the
Company will indemnify and hold harmless Indemnitee against and, if requested by
Indemnitee, will pay, within five Business Days of Indemnitee’s request (which
request shall be accompanied by reasonable documentation evidencing the amount
and nature of the Expenses claimed), in advance of or following a final
disposition, any and all Expenses paid or incurred by Indemnitee in connection
with an Indemnifiable Claim, in each case to the fullest extent permitted or
required by the laws of the State of North Carolina in effect on the date hereof
or as such laws may from time to time hereafter be amended to increase the scope
of such permitted or required indemnification, reimbursement or advancement of
such Expenses, for (a) indemnification or payment, advancement or reimbursement
of Expenses by the Company under any provision of this Agreement relating to
Indemnifiable Claims, or under any other agreement or provision of the
Constituent Documents now or hereafter in effect relating to Indemnifiable
Claims; (b) indemnification or payment, advancement or reimbursement of Expenses
by the Company relating to the interpretation, enforcement or defense of
Indemnitee’s rights under this Agreement (including, but not limited to, (i) any
fees and expenses of legal counsel of Indemnitee’s choice retained to advise and
represent Indemnitee in connection with any such interpretation, enforcement or
defense; and (ii) Expenses associated with making a Standard of Conduct
Determination pursuant to this Agreement); and/or (c) recovery under any
directors’ and officers’ liability insurance policies maintained by the Company
regardless in each case of whether Indemnitee ultimately is determined to be
entitled to such insurance recovery; provided, however, that Indemnitee will
return, without interest, any such advance of Expenses (or portion thereof)
which remains unspent at the final disposition of the Claim to which the advance
related; provided, further, that any payment, advancement or reimbursement of
expenses by the Company prior to a final disposition of a Claim shall be
conditioned upon the Company’s receipt of a written undertaking in accordance
with the provisions of Section 3.

5. Contribution. To the fullest extent permissible under applicable law in
effect on the date hereof or as such law may from time to time hereafter be
amended to increase the scope of permitted or required indemnification, if the
indemnification provided for in this Agreement is unavailable to Indemnitee for
any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, will
contribute to the payment of any and all Indemnifiable Claims or Indemnifiable
Losses, in such proportion as is fair and reasonable in light of all of the
circumstances in order to reflect (a) the relative benefits received by the
Company and Indemnitee as a result of the event(s) and/or transaction(s) giving
rise to such Indemnifiable Claim or Indemnifiable Loss; and/or (b) the relative
fault of the Company (and its other directors, officers, employees and agents)
and Indemnitee in connection with such event(s) and/or transaction(s); provided
that such

 

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contribution will not be made where it is determined, pursuant to a final
disposition of such Indemnifiable Claim or Indemnifiable Loss in accordance with
Section 8, that Indemnitee is not entitled to indemnification by the Company
with respect to such Indemnifiable Claim or Indemnifiable Loss. The
determination of the proportion to be contributed by the Company to Indemnitee
shall be made in the same manner as a Standard of Conduct Determination pursuant
to this Agreement. The Company will indemnify and hold harmless Indemnitee from
any claim of contribution that may be brought by directors, officers, employees
or other agents or representatives of the Company, other than Indemnitee, who
may be jointly liable with Indemnitee.

6. Partial Indemnity. If Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of any
Indemnifiable Loss, but not for all of the total amount thereof, the Company
will nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled. If there is any dispute between Indemnitee and the
Company as to the portion of an Indemnifiable Loss that is eligible for
indemnification, such determination shall be made in the same manner as a
Standard of Conduct Determination pursuant to this Agreement.

7. Procedure for Notification. To obtain indemnification under this Agreement in
respect of an Indemnifiable Claim or Indemnifiable Loss, Indemnitee will submit
to the Company a written request therefor, including a brief description (based
upon information then available to Indemnitee) of such Indemnifiable Claim or
Indemnifiable Loss, not later than 30 days after receipt by Indemnitee of notice
or actual knowledge of such Indemnifiable Claim or Indemnifiable Loss, as
applicable. If, at the time of the receipt of such request, the Company has
directors’ and officers’ liability insurance in effect under which coverage for
such Indemnifiable Claim or Indemnifiable Loss is potentially available, the
Company will give prompt written notice of such Indemnifiable Claim or
Indemnifiable Loss to the applicable insurers in accordance with the procedures
set forth in the applicable policies. The Company will provide to Indemnitee a
copy of such notice delivered to the applicable insurers, and copies of all
subsequent correspondence between the Company and such insurers regarding the
Indemnifiable Claim or Indemnifiable Loss, in each case substantially
concurrently with the delivery or receipt thereof by the Company; provided,
however, that in no event shall notice or correspondence be provided by the
Company if any attorney-client privilege or confidentiality obligation would be
impaired or would prevent such disclosure. The failure by Indemnitee to timely
notify the Company of any Indemnifiable Claim or Indemnifiable Loss will not
relieve the Company from any liability hereunder unless, and only to the extent
that, the Company did not otherwise learn of such Indemnifiable Claim or
Indemnifiable Loss and such failure results in forfeiture by the Company of
substantial defenses, rights or insurance coverage.

8. Determination of Right to Indemnification.

(a) To the extent that (i) Indemnitee is successful on the merits or otherwise
in defense of any Indemnifiable Claim, including dismissal without prejudice; or
(ii) the court orders indemnification in accordance with Section 55-8-54 of the
NCBCA, Indemnitee will be indemnified against all Indemnifiable Losses relating
to, arising out of or resulting from such Indemnifiable Claim (or such portion
thereof) in accordance with Section 2, and no Standard of Conduct Determination
will be required with respect to such Indemnifiable Claim. Without

 

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limiting the generality or effect of the foregoing, any Claim that is settled in
whole or in part or withdrawn will be deemed to be governed by this Section 8(a)
(subject to the limitations set forth in Section 14 with respect to entry into
settlements) unless the indemnification would be inconsistent with any condition
with respect to indemnification expressly imposed by the court in approving the
settlement. If there is any dispute between Indemnitee and the Company as to
whether Indemnitee has been “successful on the merits or otherwise” in
accordance with this Section, such determination shall be made in the same
manner as a Standard of Conduct Determination pursuant to this Agreement.

(b) To the extent that the provisions of Section 8(a) are inapplicable to an
Indemnifiable Claim that has been finally disposed of, except as otherwise
provided in this Agreement, Indemnitee’s right to indemnification against
Indemnifiable Losses relating to, arising out of or resulting from such
Indemnifiable Claim under this Agreement shall be subject to a determination
that Indemnitee has satisfied the standard of conduct set forth in
Section 55-8-57 of the NCBCA (as such standard may from time to time hereafter
be amended to increase the scope of protection to Indemnitee), as the case may
be (a “Standard of Conduct Determination”). The Standard of Conduct
Determination will be made as follows (subject to the provisions of Section 9):
(i) by a majority vote of the Disinterested Directors, even if less than a
quorum of the Board; (ii) if such Disinterested Directors so direct, by a
majority vote of a committee of Disinterested Directors designated by a majority
vote of all Disinterested Directors; or (iii) if there are no such Disinterested
Directors, if the Disinterested Directors so direct, or if Indemnitee so
requests by providing a written request to the Company on or before the
Notification Date (which written request shall specify the Independent Counsel
selected by Indemnitee), by Independent Counsel, as approved by the Board (such
approval not to be unreasonably withheld, delayed or conditioned), in a written
opinion addressed to the Board, a copy of which will be delivered to Indemnitee;
provided, however, that if at the time of any Standard of Conduct Determination
Indemnitee is neither a director nor an officer of the Company, such Standard of
Conduct Determination may be made by or in the manner specified by the Board or
any duly authorized committee of the Board (unless Indemnitee requests that such
Standard of Conduct Determination be made by Independent Counsel, in which case
such Standard of Conduct Determination will be made by Independent Counsel).
Indemnitee will cooperate with the person or persons making such Standard of
Conduct Determination, including providing to such person or persons, upon
reasonable advance request, any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination without
incurring any unreimbursed cost in connection therewith. The Company will
indemnify and hold harmless Indemnitee against and, if requested by Indemnitee,
will reimburse Indemnitee for, or advance to Indemnitee, within five Business
Days of such request, any and all costs and expenses (including attorneys’ and
experts’ fees and expenses) incurred by Indemnitee in so cooperating with the
person or persons making such Standard of Conduct Determination.

(c) The Company will use commercially reasonable efforts to cause any Standard
of Conduct Determination to be made as promptly as practicable. If (i) the
person or persons empowered or selected under Section 8 to make the Standard of
Conduct Determination do not make a determination within 30 days after the later
of (A) receipt by the Company of written notice from Indemnitee advising the
Company of the final disposition of the applicable Indemnifiable Claim (the date
of such receipt being the “Notification Date”); and (B) the

 

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selection of an Independent Counsel, if such determination is to be made by
Independent Counsel; and (ii) Indemnitee has fulfilled his or her obligations
set forth in the third sentence of Section 8(b), then Indemnitee will be deemed
to have satisfied the applicable standard of conduct; provided that such 30-day
period may be extended for a reasonable time if the person or persons making
such determination in good faith requires such additional time for obtaining or
evaluating any documentation or information relating thereto and advises
Indemnitee and the Company of such extension prior to the expiration of such
initial 30-day period; provided that in no event shall such period be extended
beyond the date that is 60 days after the Notification Date.

(d) If (i) Indemnitee is entitled to indemnification hereunder against any
Indemnifiable Losses pursuant to Section 8(a); or (ii) Indemnitee has been
determined or deemed pursuant to Section 8(b) or (c) to have satisfied any
applicable standard of conduct under North Carolina law which is a legally
required condition precedent to indemnification of Indemnitee hereunder against
any Indemnifiable Losses, then the Company will pay to Indemnitee, within five
Business Days after the later of (A) the Notification Date in respect of the
Indemnifiable Claim or portion thereof to which such Indemnifiable Losses are
related, out of which such Indemnifiable Losses arose or from which such
Indemnifiable Losses resulted; and (B) the earliest date on which the applicable
criterion specified in clause (i) or (ii) above will have been satisfied, an
amount equal to the amount of such Indemnifiable Losses.

9. Presumption of Entitlement.

(a) In making a determination of whether Indemnitee has been successful on the
merits or otherwise in defense of any Indemnifiable Claim or any portion thereof
or in defense of any issue or matter therein, the Company acknowledges that a
resolution, disposition or outcome short of dismissal or final judgment,
including outcomes that permit Indemnitee to avoid expense, delay,
embarrassment, injury to reputation, distraction, disruption or uncertainty, may
constitute such success. In the event that any Indemnifiable Claim or any
portion thereof or issue or matter therein is resolved or disposed of in any
manner (including any resolution or disposition thereof by means of judgment,
order, settlement (with or without court approval, payment of money or other
consideration) or conviction or upon a plea of nolo contendere or its
equivalent): (i) unless such resolution or disposition is by adverse judgment,
conviction or order against Indemnitee, it will be presumed that Indemnitee has
been successful on the merits or otherwise in defense of such Indemnifiable
Claim or portion thereof or issue or matter therein; and (ii) such resolution or
disposition will not create a presumption that Indemnitee did not meet any
applicable standard of conduct or that indemnification hereunder is otherwise
not permitted, unless such Indemnifiable Claim or portion thereof has been
resolved by a judgment, conviction or order that includes a specific holding
that Indemnitee did not meet such applicable standard of conduct. The Company
may overcome such presumptions only by its adducing clear and convincing
evidence to the contrary.

(b) In making any Standard of Conduct Determination, the person or persons
making such determination will presume that Indemnitee has satisfied the
applicable standard of conduct, and the Company may overcome such presumption
only by its adducing clear and convincing evidence to the contrary. The
knowledge and/or action, or failure to act, of any director, officer, employee,
agent or representative of the Company (other than Indemnitee) will

 

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not be imputed to Indemnitee for purposes of any Standard of Conduct
Determination. Any Standard of Conduct Determination that Indemnitee has
satisfied the applicable standard of conduct will be final and binding in all
respects, including with respect to any litigation or other action or proceeding
initiated by Indemnitee to enforce his or her rights hereunder. Any Standard of
Conduct Determination that is adverse to Indemnitee may be challenged by
Indemnitee solely and exclusively in the Superior Court of the State of North
Carolina. The parties stipulate and agree that such dispute shall be designated
by agreement of the parties as a “mandatory complex business case” pursuant to
N.C.G.S. Section 7A-45.4 (as such statute may be amended from time to time) or,
in the alternative, as a discretionary “complex business” case under Rule 2.1 of
the North Carolina General Rules of Practice for the Superior and District
Courts (as such rule may be amended from time to time), and both parties hereby
irrevocably waive any objection to such dispute being so designated. No
determination by the Company (including by its directors or any Independent
Counsel) that Indemnitee has not satisfied any applicable standard of conduct
will create a presumption that Indemnitee has not met any applicable standard of
conduct. In any challenge to a Standard of Conduct Determination in the Superior
Court of the State of North Carolina, Indemnitee shall be presumed to have
satisfied the applicable standard of conduct, and the Company may overcome such
presumption only by its adducing clear and convincing evidence to the contrary.

(c) Without limiting the generality or effect of Section 9(b), (i) to the extent
that any Indemnifiable Claim relates to any entity or enterprise (other than the
Company) referred to in clause (i) of the first sentence of the definition of
“Indemnifiable Claim,” Indemnitee will be deemed to have satisfied the
applicable standard of conduct unless Indemnitee acted in a manner Indemnitee
knew or believed (at the time Indemnitee acted) to be clearly in conflict with
the best interests of such entity or enterprise; and (ii) in all cases, any
good-faith belief of Indemnitee that is based on the records or books of account
of the Company, including financial statements, or on information supplied to
Indemnitee by the directors or officers of the Company in the course of their
duties, or on the advice of legal counsel for the Company, the Board, any
committee of the Board or any director, or on information or records given or
reports made to the Company, the Board, any committee of the Board or any
director by an independent certified public accountant or by an appraiser or
other expert selected by or on behalf of the Company, the Board, any committee
of the Board or any director will be deemed to be reasonable.

10. Non-Exclusivity. The rights of Indemnitee hereunder will be in addition to
any other rights Indemnitee may have against the Company under the Constituent
Documents, or the substantive laws of North Carolina (or, with respect to any
entity or enterprise other than the Company, of the jurisdiction of
incorporation or formation of such entity or enterprise), any other contract or
otherwise (collectively, “Other Indemnity Provisions”); provided, however, that
(a) to the extent that Indemnitee otherwise would have any greater right to
indemnification under any Other Indemnity Provision, Indemnitee will be deemed
to have such greater right hereunder; and (b) to the extent that any change is
made to any Other Indemnity Provision which permits any greater right to
indemnification than that provided under this Agreement as of the date hereof,
Indemnitee will be deemed to have such greater right hereunder. Except as
required by applicable law, the Company will not adopt any amendment to any of
the Constituent Documents the effect of which would be to deny, diminish or
encumber Indemnitee’s right to indemnification under this Agreement or any Other
Indemnity Provision. Nothing herein will negatively affect any rights Indemnitee
may have under any policy of insurance or any rights to indemnification from any
third party.

 

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11. Liability Insurance and Funding. For the duration of Indemnitee’s service as
a director and/or officer of the Company, and thereafter for so long as
Indemnitee is subject to any pending or possible Indemnifiable Claim, the
Company will use commercially reasonable efforts (taking into account the scope
and amount of coverage available relative to the cost thereof) to cause to be
maintained in effect policies of directors’ and officers’ liability insurance
providing coverage for directors and/or officers of the Company that is at least
substantially comparable in scope and amount to that provided by the Company’s
(or its predecessor’s) current policies of directors’ and officers’ liability
insurance. Upon request, the Company will provide Indemnitee or his or her
counsel with a copy of all directors’ and officers’ liability insurance
applications, binders, policies, declarations, endorsements and other related
materials, and will provide Indemnitee with a reasonable opportunity to review
and comment on the same. In any event, the Company will not discontinue or
significantly reduce the scope or amount of coverage from one policy period to
the next (a) without the prior approval thereof by a majority vote of the
Disinterested Directors, even if less than a quorum; or (b) if at the time that
any such discontinuation or significant reduction in the scope or amount of
coverage is proposed there are no Disinterested Directors, without the prior
written consent of Indemnitee. In all policies of directors’ and officers’
liability insurance obtained by the Company, Indemnitee will be named as an
insured in such a manner as to provide Indemnitee the same rights and benefits,
subject to the same limitations, as are accorded to the Company’s directors and
officers most favorably insured by such policy. The Company may, but will not be
required to, create a trust fund, grant a security interest or use other means,
including a letter of credit, to ensure the payment of such amounts as may be
necessary to satisfy its obligations to indemnify and advance expenses pursuant
to this Agreement. If requested by Indemnitee, the Company will use commercially
reasonable efforts, at the Company’s expense (subject to any applicable
requirement to provide a written undertaking pursuant to Sections 3 and 4
hereof), to enforce on behalf of and for the benefit of Indemnitee all rights
(including rights to receive payment) that may exist under the applicable
policies of insurance in relation to any Indemnifiable Claim or Indemnifiable
Loss.

12. Subrogation. In the event of payment under this Agreement, the Company will
be subrogated to the extent of such payment to all of the related rights of
recovery of Indemnitee against other persons or entities (other than
Indemnitee’s successors), including any entity or enterprise referred to in
clause (i) of the first sentence of the definition of “Indemnifiable Claim”.
Indemnitee will execute all papers reasonably required to evidence such rights
(all of Indemnitee’s reasonable Expenses, including attorneys’ fees and charges,
related thereto to be reimbursed by or, at the option of Indemnitee, advanced by
the Company).

13. No Duplication of Payments. The Company will not be liable under this
Agreement to make any payment to Indemnitee in respect of any Indemnifiable
Losses to the extent Indemnitee has otherwise actually received and is entitled
to retain payment (net of any Expenses incurred in connection therewith and any
repayment by Indemnitee made with respect thereto) under any insurance policy,
the Constituent Documents and Other Indemnity Provisions or otherwise (including
from any entity or enterprise referred to in clause (i) of the first sentence of
the definition of “Indemnifiable Claim”) in respect of such Indemnifiable Losses
otherwise indemnifiable hereunder.

 

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14. Defense of Claims. Except for any Indemnifiable Claim asserted by or in the
right of the Company (as to which Indemnitee will be entitled to exclusively
control the defense), the Company will be entitled to participate in the defense
of any Indemnifiable Claim or to assume the defense thereof, with counsel
reasonably satisfactory to Indemnitee. The Company shall, as promptly as
practicable upon receiving notice of such Indemnifiable Claim, provide written
notification to Indemnitee stating whether the Company will be assuming or
participating in the defense of such Indemnifiable Claim. The Company’s
participation in the defense of any Indemnifiable Claim of which the Company has
not assumed the defense will not in any manner affect the rights of Indemnitee
under this Agreement, including Indemnitee’s right to control the defense of
such Indemnifiable Claims. If the Company assumes the defense of any
Indemnifiable Claim, the Company shall keep Indemnitee reasonably informed about
the status of such Indemnifiable Claim and provide copies of all material
documentation related thereto. With respect to the period (if any) commencing at
the time at which the Company notifies Indemnitee that the Company has assumed
the defense of any Indemnifiable Claim and continuing for so long as the Company
will be using commercially reasonable efforts to provide an effective defense of
such Indemnifiable Claim, the Company will have the right to control the defense
of such Indemnifiable Claim and will have no obligation under this Agreement in
respect of any attorneys’ or experts’ fees or expenses or any other costs or
expenses paid or incurred by Indemnitee in connection with defending such
Indemnifiable Claim (other than such costs and expenses paid or incurred by
Indemnitee in connection with any cooperation in the Company’s defense of such
Indemnifiable Claim or other action undertaken by Indemnitee at the request of
the Company or with the consent of the Company (which consent will not be
unreasonably withheld, conditioned or delayed)); provided, however that if
Indemnitee determines, after consultation with counsel selected by Indemnitee,
that (a) the use of counsel chosen by the Company to represent Indemnitee would
present such counsel with an actual or potential conflict; (b) the named parties
in any such Indemnifiable Claim (including any impleaded parties) include both
the Company and Indemnitee and Indemnitee concludes that there may be one or
more legal defenses available to him or her that are different from or in
addition to those available to the Company; or (c) any such representation by
such counsel would be precluded under the applicable standards of professional
conduct then prevailing, then Indemnitee will be entitled to retain and use the
services of separate counsel (but not more than one law firm plus, if
applicable, local counsel in respect of any particular Indemnifiable Claim) at
the Company’s expense. Nothing in this Agreement will limit Indemnitee’s right
to retain or use his or her own counsel at his or her own expense in connection
with any Indemnifiable Claim; provided that in all events Indemnitee will not
unreasonably interfere with the conduct of the defense by the Company of any
Indemnifiable Claim that the Company will have assumed and of which the Company
will be using its commercially reasonable efforts to provide an effective
defense. The Company will not be liable to Indemnitee under this Agreement for
any amounts paid in settlement of any threatened or pending Indemnifiable Claim
effected without the Company’s prior written consent. Notwithstanding the
foregoing sentence, if at any time Indemnitee shall have requested that the
Company reimburse Indemnitee for any Expenses to which Indemnitee is entitled
under this Agreement, the Company shall be liable for any settlement of any
proceeding effected without its prior written consent if (x) such settlement is
entered into more than 60 days after receipt by the Company of such request;
(y) the Company shall have received written notice of the terms of such
settlement at least 10 days prior to such settlement being entered into; and
(z) the Company shall not have reimbursed Indemnitee in accordance with such
request prior to

 

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the date of such settlement. The Company will not, without the prior written
consent of Indemnitee, effect any settlement of any threatened or
pending Indemnifiable Claim to which Indemnitee is, or is reasonably likely to
become, a party unless such settlement solely involves the payment of money,
includes a complete and unconditional release of Indemnitee from all liability
on any claims that are the subject matter of such Indemnifiable Claim and does
not involve the admission of liability by Indemnitee with respect to any such
claims. Neither the Company nor Indemnitee will unreasonably withhold, condition
or delay its consent to any proposed settlement; provided that Indemnitee may
withhold consent to any settlement that does not provide a complete and
unconditional release of Indemnitee.

15. Successors and Binding Agreement.

(a) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation, reorganization or otherwise) to all or
substantially all of the business or assets of the Company, by agreement in form
and substance satisfactory to Indemnitee and his or her counsel, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent the Company would be required to perform if no such succession had taken
place. This Agreement will be binding upon and inure to the benefit of the
Company and any successor to the Company, including any person acquiring
directly or indirectly all or substantially all of the business or assets of the
Company whether by purchase, merger, consolidation, reorganization or otherwise
(and such successor will thereafter be deemed the “Company” for purposes of this
Agreement), but will not otherwise be assignable or delegatable by the Company.

(b) This Agreement will inure to the benefit of and be enforceable by
Indemnitee’s personal or legal representatives, executors, administrators,
heirs, distributees, legatees and other successors.

(c) This Agreement is personal in nature and neither of the parties hereto will,
without the consent of the other, assign or delegate this Agreement or any
rights or obligations hereunder except as expressly provided in Sections 15(a)
and 15(b). Without limiting the generality or effect of the foregoing,
Indemnitee’s right to receive payments hereunder will not be assignable, whether
by pledge, creation of a security interest or otherwise, other than by a
transfer by Indemnitee’s will or by the laws of descent and distribution, and,
in the event of any attempted assignment or transfer contrary to this
Section 15(c), the Company will have no liability to pay any amount so attempted
to be assigned or transferred.

16. Notices. For all purposes of this Agreement, all communications, including
notices, consents, requests or approvals, required or permitted to be given
hereunder will be in writing and will be deemed to have been duly given when
hand delivered or dispatched by electronic facsimile transmission (with receipt
thereof orally confirmed), or five Business Days after having been mailed by
United States registered or certified mail, return receipt requested, postage
prepaid or one Business Day after having been sent for next-day delivery by a
nationally recognized overnight courier service, addressed to the Company (to
the attention of the General Counsel of the Company or, if Indemnitee is the
General Counsel of the Company, to the attention of the President of the
Company) and to Indemnitee at the applicable address shown on the signature page
hereto, or to such other address as any party may have furnished to the other in
writing and in accordance herewith, except that notices of changes of address
will be effective only upon receipt.

 

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17. Governing Law. The validity, interpretation, construction and performance of
this Agreement will be governed by and construed in accordance with the
substantive laws of the State of North Carolina, without giving effect to the
principles of conflict of laws of such State. The Company and Indemnitee each
hereby irrevocably consent to the sole and exclusive jurisdiction of the
Superior Court of the State of North Carolina for all purposes in connection
with any action or proceeding which arises out of or relates to this Agreement
and agree that any action instituted under this Agreement will be brought only
in the Superior Court of the State of North Carolina and waive all procedural
objections to suit in that jurisdiction, including objections as to venue or
inconvenience. The parties stipulate and agree that such action or proceeding
shall be designated by agreement of the parties as a “mandatory complex business
case” pursuant to N.C.G.S. Section 7A-45.4 (as such statute may be amended from
time to time) or, in the alternative, as a discretionary “complex business” case
under Rule 2.1 of the North Carolina General Rules of Practice for the Superior
and District Courts (as such rule may be amended from time to time), and both
parties hereby irrevocably waive any objection to such action or proceeding
being so designated.

18. Validity. If any provision of this Agreement or the application of any
provision hereof to any person or circumstance is held invalid, unenforceable or
otherwise illegal, the remainder of this Agreement and the application of such
provision to any other person or circumstance will not be affected, and the
provision so held to be invalid, unenforceable or otherwise illegal will be
reformed to the extent, and only to the extent, necessary to make it
enforceable, valid or legal. In the event that any court or other adjudicative
body declines to reform any provision of this Agreement held to be invalid,
unenforceable or otherwise illegal as contemplated by the immediately preceding
sentence, the parties thereto will take all such action as may be necessary or
appropriate to replace the provision so held to be invalid, unenforceable or
otherwise illegal with one or more alternative provisions that effectuate the
purpose and intent of the original provisions of this Agreement as fully as
possible without being invalid, unenforceable or otherwise illegal. This
Agreement will replace and supersede that certain Director and Officer
Indemnification Agreement dated as of [                    ], by and between the
Company and Indemnitee.

19. Miscellaneous. No provision of this Agreement may be waived, modified or
discharged unless such waiver, modification or discharge is agreed to in writing
signed by Indemnitee and the Company (as approved by a majority of Disinterested
Directors or, if no Disinterested Directors, by a majority of the Board). No
waiver by either party hereto at any time of any breach by the other party
hereto or compliance with any condition or provision of this Agreement to be
performed by such other party will be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, expressed or implied with
respect to the subject matter hereof have been made by either party that are not
set forth expressly in this Agreement.

20. Interest. Any amount due to Indemnitee under this Agreement that is not paid
by the Company by the date on which it is due will accrue interest at the legal
rate of interest set forth in N.C.G.S. Section 24-1 from the date on which such
amount is due to the date on which such amount is paid to Indemnitee.

 

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21. Claims Under Section 16(b). Notwithstanding any other provision of this
Agreement, the Company shall not be obligated pursuant to the terms of this
Agreement to indemnify Indemnitee for expenses and payment of profits arising
from the purchase and sale by Indemnitee of securities in violation of
Section 16(b) of the Exchange Act or any similar successor statute; provided,
however, that notwithstanding any limitation set forth in this Section 21
regarding the Company’s obligation to provide indemnification, Indemnitee shall
be entitled under Section 3 to receive the advancement of Expenses hereunder
with respect to any such Claim unless and until a court having jurisdiction over
the Claim shall have made a final judicial determination (as to which all rights
of appeal therefrom have been exhausted or lapsed) that Indemnitee has violated
such statute.

22. Certain Interpretive Matters. Unless the context of this Agreement otherwise
requires, (a) “it” or “its” or words of any gender include each other gender;
(b) words using the singular or plural number also include the plural or
singular number, respectively; (c) the terms “hereof,” “herein,” “hereby” and
derivative or similar words refer to this entire Agreement; (d) the terms “
“Section” or “Exhibit” refer to the specified Section or Exhibit of or to this
Agreement, (e) the terms “include,” “includes” and “including” will be deemed to
be followed by the words “without limitation” (whether or not so expressed); and
(f) the word “or” is disjunctive but not exclusive. Whenever this Agreement
refers to a number of days, such number will refer to calendar days unless
Business Days are specified and whenever action must be taken (including the
giving of notice or the delivery of documents) under this Agreement during a
certain period of time or by a particular date that ends or occurs on a
non-Business Day, then such period or date will be extended until the
immediately following Business Day.

23. Counterparts. This Agreement may be executed in counterparts, each of which
will be deemed to be an original but all of which together will constitute one
and the same agreement.

[Signatures Appear on Following Page]

 

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IN WITNESS WHEREOF, Indemnitee has executed and the Company has caused its duly
authorized representative to execute this Agreement as of the date first above
written.

 

REYNOLDS AMERICAN INC.

401 North Main Street

Winston-Salem, North Carolina 27101

By:       Name:   Title:

 

[INDEMNITEE]

[Address]

      [Indemnitee]

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EXHIBIT A

UNDERTAKING

This Undertaking is submitted pursuant to the Director and Officer
Indemnification Agreement, dated as of                          ,      (the
“Indemnification Agreement”), between Reynolds American Inc., a North Carolina
corporation (the “Company”), and the undersigned. Capitalized terms used and not
otherwise defined herein have the meanings ascribed to such terms in the
Indemnification Agreement.

The undersigned hereby requests [payment], [advancement], [reimbursement] by the
Company of Expenses which the undersigned has incurred in connection with
                     (the “Indemnifiable Claim”). The undersigned’s request is
being made pursuant to Section [3, 4(a), 4(b), 4(c) or 11 – to be specified] of
the Indemnification Agreement.

The undersigned hereby undertakes to repay the [payment], [advancement],
[reimbursement] of Expenses made by the Company to or on behalf of the
undersigned in response to the foregoing request unless it is ultimately
determined, following the final disposition of the Indemnifiable Claim and in
accordance with the Indemnification Agreement, that the undersigned is entitled
to indemnification by the Company under the Indemnification Agreement with
respect to the Indemnifiable Claim.

IN WITNESS WHEREOF, the undersigned has executed this Undertaking as of this
     day of                         ,             .

 

      [Indemnitee]