Document:

Exhibit 4.1

 

Exhibit 4.1

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

REYNOLDS AMERICAN INC.

Floating Rate Senior Secured Notes due 2011

			
	 	 	 
	Certificate No. 1
	 	$400,000,000
	 
	 	CUSIP No. 761713AS5

     Reynolds American Inc., a North Carolina corporation (the “Company,”) which term includes any
successor corporation under the Indenture hereinafter referred to), for value received, promises
to pay to Cede & Co., or its registered assigns, the principal sum of FOUR HUNDRED MILLION DOLLARS
($400,000,000) on June 15, 2011.

     Interest Payment Dates: March 15, June 15, September 15 and December 15, commencing
September 15, 2007.

     Record Dates: March 1, June 1, September 1 and December 1

 

 

     Reference is hereby made to the further provisions of this Note set forth on the reverse
hereof, which further provisions shall have the same effect for all purposes as if set forth at
this place.

     Unless the certificate of authentication hereof has been executed by the Trustee referred to
on the reverse hereof by manual signature, this Note shall not be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose.

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     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its
corporate seal.

Dated: June 21, 2007

	 	 	 	 	 
	 	REYNOLDS AMERICAN INC.,

as Issuer

 	 
	 	By:  	/s/ Daniel A. Fawley
 	 
	 	 	Daniel A. Fawley 	 
	 	 	Senior Vice President and Treasurer 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	                  /s/ McDara P. Folan, III
 	 
	 	 	McDara P. Folan, III 	 
	 	 	Senior Vice President, Deputy General Counsel
and Secretary 	 
	 

     Each of the undersigned hereby acknowledges its obligation as a Guarantor under the Indenture.

SANTA FE NATURAL TOBACCO COMPANY, INC., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Assistant Treasurer	 	 

	 	 	 	 	 
	LANE, LIMITED, as Guarantor	 	 
	 
	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Assistant Treasurer	 	 

Note Signature Page

 

 

CONWOOD HOLDINGS, INC., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Treasurer	 	 

CONWOOD COMPANY, LLC, as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Treasurer	 	 

CONWOOD SALES CO., LLC, as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Treasurer	 	 

ROSSWIL LLC, as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Treasurer	 	 

SCOTT TOBACCO LLC, as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Treasurer	 	 

Note Signature Page

 

 

R.J. REYNOLDS TOBACCO HOLDINGS, INC., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Senior Vice President and Treasurer	 	 

R. J. REYNOLDS GLOBAL PRODUCTS, INC., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Treasurer	 	 

RJR ACQUISITION CORP., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Assistant Treasurer	 	 

R. J. REYNOLDS TOBACCO COMPANY, as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Treasurer	 	 

R. J. REYNOLDS TOBACCO CO., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Treasurer	 	 

Note Signature Page

 

 

RJR PACKAGING, LLC, as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Treasurer	 	 

FHS, INC., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Kathryn A. Premo
	 	 
	 

	 	 	 	 
	 

	 	Kathryn A. Premo	 	 
	 

	 	Treasurer	 	 

GMB, INC., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Treasurer	 	 

Note Signature Page

 

 

(Trustee’s Certificate of Authentication)

     This is one of the Notes of the series designated herein referred to in the within-mentioned
Indenture.

Dated: June 21, 2007

THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee

	 	 	 	 	 
	By:

	 	/s/ Christie Leppert
	 	 
	 

	 	 	 	 
	Name:

	 	Christie Leppert	 	 
	Title:

	 	Assistant Vice President	 	 

 

 

[REVERSE OF FLOATING RATE NOTE]

Floating Rate Senior Secured Notes due 2011

     References herein to the “Notes” mean the Company’s Floating Rate Senior Secured Notes due
2011 and not to any other series. Other capitalized terms used, but not defined, herein shall have
the meanings assigned to them in the Indenture and Schedule I attached hereto unless
otherwise indicated.

     1. Interest. The Company promises to pay interest on the principal amount of this
Note. The Company will make interest payments on the Notes quarterly, in arrears, on March 15,
June 15, September 15, and December 15 of each year, commencing on September 15, 2007 (each, an
“Interest Payment Date”) to the Holders of record at the close of business on the preceding March
1, June 1, September 1 and December 1, respectively, whether or not such record dates are Business
Days. Interest on the Notes will be calculated on the basis of the actual number of days in the
applicable Interest Period and a 360-day year.

     The Notes will bear interest at a variable rate determined by the Calculation Agent. The
interest rate for a particular Interest Period will be an annual rate equal to three-month LIBOR as
determined on the applicable Interest Determination Date plus 0.70%. The interest rate will be
reset on the first day of each Interest Period other than the initial Interest Period (each an
“Interest Reset Date”). An “Interest Period” will be the period commencing on an Interest Payment
Date (or the date of initial issuance in the case of the initial Interest Period) and ending on the
day immediately preceding the next following Interest Payment Date. The “Interest Determination
Date” will be June 19, 2007 in the case of the first Interest Period and the second London Banking
Day preceding the beginning of the Interest Period in the case of each other Interest Period.

     On any Interest Determination Date, “LIBOR” will be determined by the Calculation Agent as
follows:

	 	(1)	 	LIBOR will be the arithmetic mean of the offered rates for deposits in U.S.
dollars for the three-month period, that appear on “Reuters Page LIBOR 01” (or if such
page by its terms provides for a single rate, such single rate) at approximately 11:00
a.m., London time, on the Interest Determination Date. “Reuters Page LIBOR 01” means
the display page designated as “LIBOR 01” on the Reuters service for the purpose of
displaying London interbank offered rates of major banks, or any successor page on the
Reuters service selected by the Company with the consent of the Calculation Agent, or
if the Company determines that no such successor page exists on Reuters, an equivalent
page on any successor service selected by the Company with the consent of the
Calculation Agent; and

	 
	 	(2)	 	If the offered rate does not appear on the Reuters Page LIBOR 01 at 11:00 a.m.,
London time, on the applicable Interest Determination Date, the Calculation Agent will
determine LIBOR as follows, on the basis of the rates at which deposits in U.S. dollars
are offered by four major banks in the London interbank market (selected by the
Calculation Agent after consulting with the Company) at approximately 11:00 a.m.,
London time, on the Interest Determination Date to prime banks in the London interbank
market for a period of three months in principal amounts of at least $1,000,000, which
rates are representative for

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	 	 	 	single transactions in that market at that time. In that case, the Calculation Agent
will request the principal London office of each of those major banks to provide a
quotation of that rate. If at least two such quotations are provided, LIBOR for the
applicable Interest Reset Date will be the arithmetic average of the quotations. If
fewer than two quotations are provided as requested, LIBOR for the applicable Interest
Reset Date will be the arithmetic average of the rates quoted by three major banks in
New York City, New York (selected by the Calculation Agent after consulting with the
Company) at approximately 11:00 a.m., New York time, on the Interest Determination Date
for the applicable Interest Reset Date for loans in U.S. dollars to leading banks for a
period of three months commencing on that Interest Reset Date and in a principal amount
equal to an amount not less than $1,000,000, which rates are representative for single
transactions in that market at that time. If fewer than three quotations are provided
as requested, LIBOR for the following Interest Period will be the same as the rate
determined for the then-current Interest Period.

     A “London Banking Day” is any day on which dealings in U.S. dollars are transacted or, with
respect to any future date, are expected to be transacted in the London interbank market.

     All percentages resulting from calculation of the interest rate with respect to the floating
rate Notes will be rounded, if necessary, to the nearest one-hundred thousandth of a percentage
point, with five one-millionth of a percentage point rounded upward (e.g., 9.876545% (or .09876545)
would be rounded to 9.87655% (or .0987655) and 9.876544% (or .09876544) would be rounded to
9.87654% (or .0987654)), and all dollar amounts in or resulting from any such calculation will be
rounded to the nearest cent (with one-half cent or more being rounded upward).

     Promptly upon determination, the Calculation Agent will inform the Trustee and the Company of
the interest rate for the next Interest Period. The Calculation Agent will also, upon the request
of the holder of any Notes, provide the interest rate in effect for the then-current Interest
Period and, if it has been determined, the interest rate to be in effect for the next Interest
Period. All calculations made by the Calculation Agent in the absence of willful misconduct, bad
faith or manifest error will be conclusive for all purposes and binding on the Company and the
Holders of the Notes.

     Interest on the Notes will accrue from the date of initial issuance or, if interest has
already been paid on the Notes, from and including the most recent Interest Payment Date to which
interest has been paid or provided for, to, but excluding the relevant Interest Payment Date. If
an Interest Payment Date (other than the maturity date) falls on a day that is not a Business Day,
the Interest Payment Date shall be postponed to the next succeeding Business Day, unless such next
succeeding Business Day would fall in the next calendar month, in which case the Interest Payment
Date will be the immediately preceding Business Day. If the maturity date of the Notes falls on a
day that is not a Business Day, the Company will make the required payment of principal and
interest on the immediately succeeding Business Day, as if it were made on the date the payment was
due. Interest will not accrue as a result of any postponed or delayed payment in accordance with
this paragraph.

     The interest rate on the Notes will in no event be higher than the maximum rate permitted by
New York law.

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     2. Method of Payment. The Company shall pay interest on the Notes (except defaulted
interest) to the Persons who are registered Holders of Notes at the close of business on the March
1, June 1, September 1 or December 1 immediately preceding the Interest Payment Date (except that
interest payable at maturity of the Notes shall be paid to the same persons to whom principal of
such Notes is payable), even if such Notes are canceled after such record date and on or before
such Interest Payment Date, except as provided in Section 2.13 of the Indenture with respect to
defaulted interest. The Notes shall be payable as to principal, premium, if any, and interest at
the office or agency of the Company maintained for such purpose within the Borough of Manhattan of
the City of New York, or, at the option of the Company, payment of interest may be made by check
mailed to the Holders at their addresses set forth in the register of Holders, and provided that
payment by wire transfer of immediately available funds shall be required with respect to principal
of and interest and premium, if any, on, all Global Notes and all other Notes the Holders of which
shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment
shall be in such coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.

     3. Paying Agent and Registrar. Initially, The Bank of New York Trust Company, N.A.,
the Trustee under the Indenture, shall act as Paying Agent and Registrar. The Company may change
any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries
may act in any such capacity.

     4. Indenture. The Company issued the Notes under an Indenture dated as of May 31,
2006 among the Company, as issuer, certain direct and indirect subsidiaries of the Company, as
guarantors, and The Bank of New York Trust Company, N.A., as trustee (the “Indenture”).
The terms of the Notes include those stated in the Indenture, those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (the “TIA”), and those set forth in
Schedule I attached hereto. The Notes are subject to all such terms, and Holders are
referred to the Indenture, the TIA, and Schedule I for a statement of such terms.

     5. Redemption at Company’s Option. The Company may redeem all or a part of the Notes
from time to time on any Interest Payment Date at any time after December 15, 2008, in accordance
with Article 5 of the Indenture at a redemption price equal to 100% of the principal amount of the
Notes plus, with respect to each of the Notes, accrued and unpaid interest, on the principal amount
being redeemed to the date of redemption. Notice of redemption under this Article 5 shall be
mailed, by first class mail, at least 30 days but not more than 60 days before the redemption date
to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations
equal to or larger than $2,000 may be redeemed in part but only in whole multiples of $1,000,
unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date,
interest ceases to accrue on Notes or portions thereof called for redemption (unless the Company
shall default in the payment of the redemption price and accrued interest).

     6. Repurchase upon Change of Control Repurchase Event. If a Change of Control
Repurchase Event occurs with respect to the Notes, unless the Company has exercised its right to
redeem the Notes, the Company will make an offer to each Holder of Notes to repurchase all or any
part (in excess of $2,000 and in integral multiples of $1,000) of that Holder’s Notes of that
series at a repurchase price in cash equal to 101% of the aggregate principal amount of Notes
repurchased plus any accrued and unpaid interest on the Notes repurchased to the date of
repurchase. Within 30 days

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following any Change of Control Repurchase Event, the Company will mail a notice to each
Holder, with a copy to the Trustee, describing the transaction or transactions that constitute or
may constitute the Change of Control Repurchase Event and offering to repurchase Notes on the
payment date specified in the notice, which date will be no earlier than 30 days and no later than
60 days from the date such notice is mailed. The Company will comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and regulations thereunder, to the
extent those laws and regulations are applicable in connection with the repurchase of the Notes as
a result of a Change of Control Repurchase Event. To the extent that the provisions of any
securities laws or regulations conflict with the Change of Control Repurchase Event provisions of
the Notes, the Company will comply with the applicable securities laws and regulations and will not
be deemed to have breached its obligations hereunder by virtue of such conflict. On the Change of
Control Repurchase Event payment date, the Company will, to the extent lawful (i) accept for
payment all Notes or portions of Notes (in excess of $2,000 and in integral multiples of $1,000)
properly tendered pursuant to the Company’s offer; (ii) deposit with the Paying Agent an amount
equal to the aggregate repurchase price in respect of all Notes or portions of Notes properly
tendered; and (iii) deliver or cause to be delivered to the Trustee the Notes properly accepted,
together with an Officers’ Certificate stating the aggregate principal amount of Notes being
purchased by the Company. The Paying Agent will promptly mail to each Holder of Notes properly
tendered the repurchase price for the Notes, and the Trustee will promptly authenticate and mail
(or cause to be transferred by book-entry) to each Holder a new Note equal in principal amount to
any unpurchased portion of any Notes surrendered; provided that each new Note will be in a
principal amount of $2,000 or an integral multiple of $1,000. The Company will not be required to
make an offer to repurchase the notes upon a Change of Control Repurchase Event if a third party
makes such an offer in the manner, at the times and otherwise in compliance with the requirements
for an offer made by the Company, and such third party purchases all Notes properly tendered and
not withdrawn under its offer.

     7. No Sinking Fund. The Company shall not be required to make sinking fund payments
with respect to the Notes.

     8. Denominations, Transfer, Exchange. The Notes are in registered form without
coupons in minimum denominations of $2,000 and integral multiples of $1,000. The transfer of Notes
may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer
documents and the Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture, including any transfer tax or other similar governmental charge payable
in connection therewith. The Company need not exchange or register the transfer of any Note or
portion of a Note selected for redemption, except for the unredeemed portion of any Note being
redeemed in part. Also, the Company need not exchange or register the transfer of any Note for a
period of 15 days before a selection of Notes to be redeemed.

     9. Persons Deemed Owners. The registered Holder of a Note may be treated as its owner
for all purposes.

     10. Amendment, Supplement and Waiver. Subject to certain exceptions, the Indenture or
the Notes may be amended or supplemented by the Company and Guarantors, each when authorized by a
Board Resolution, with the consent of the Holders of at least a majority in aggregate principal
amount of the Securities at the time outstanding of all series affected by such amendment or

4

 

supplement, voting as a single class, and any existing Default or compliance with any
provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority
in aggregate principal amount of the Securities at the time outstanding of all series affected by
such Default or waiver of compliance, voting as a single class. Without the consent of any Holder
of a Note, the Company and the Guarantors, when authorized by a Board Resolution, and the Trustee
may supplement the Indenture or the Notes: (a) to convey, transfer, assign, mortgage or pledge to
the Trustee as security for the Notes any property or assets; (b) to evidence the succession of
another corporation to the Company, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Company; (c) to add to the
covenants of the Company such further covenants, restrictions, conditions or provisions as its
Board of Directors and the Trustee shall consider to be for the protection or benefit of the
Holders of the Notes, and to make the occurrence, or the occurrence and continuance, of a Default
in any such additional covenants, restrictions, conditions or provisions an Event of Default
permitting the enforcement of all or any of the several remedies provided in the Indenture as
therein set forth; provided, that in respect of any such additional covenant, restriction,
condition or provision such amendment or supplement may provide for a particular period of grace
after Default (which period may be shorter or longer than that allowed in the case of other
Defaults) or may provide for an immediate enforcement upon such an Event of Default or may limit
the remedies available to the Trustee upon such an Event of Default or may limit the right of the
Holders of a majority in aggregate principal amount of the Notes to waive such an Event of Default;
(d) to cure any ambiguity or to correct or supplement any provision contained in the Indenture or
in any indenture supplemental thereto which may be defective or inconsistent with any other
provision contained in the Indenture or in any indenture supplemental thereto; (e) to make such
other provisions in regard to matters or questions arising under the Indenture or under any
indenture supplemental thereto as the Board of Directors may deem necessary or desirable and which
shall not adversely affect the interests of the Holders of the Notes in any material respect; (f)
to establish the form or forms or terms of Securities of any series as permitted by the Indenture;
(g) to evidence and provide for the acceptance of appointment under the Indenture by a successor
trustee with respect to the Notes and to add to or change any of the provisions of the Indenture as
shall be necessary to provide for or facilitate the administration of the trusts thereunder by more
than one trustee; (h) to provide for uncertificated Securities and to make all appropriate changes
for such purpose; (i) to comply with the requirements of the TIA; and (j) to add additional
Guarantors with respect to the Notes.

     The Trustee is hereby authorized to join with the Company and the Guarantors in the execution
of any such supplemental indenture, to make any further appropriate agreements and stipulations
which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or
pledge of any property thereunder, but the Trustee shall not be obligated to enter into any such
supplemental indenture which affects the Trustee’s own rights, duties or immunities under this
Indenture or otherwise.

     11. Defaults and Remedies. Any of the following events which shall have occurred and
be continuing (whatever the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental body), constitutes an
“Event of Default” under the Indenture: (a) default in the payment of any installment of interest
upon Securities of any series as and when the same shall become due and payable, and continuance of
such default for a period of 30 days; or (b) default in the payment of all or any part of the
principal on

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Securities of any series as and when the same shall become due and payable either at maturity,
upon any redemption, by declaration or otherwise; or (c) default in the payment of any sinking fund
installment as and when the same shall become due and payable by the terms of Securities of any
series; or (d) default in the performance, or breach, of any covenant or agreement of the Company
or the Guarantors in respect of Securities of any series (other than a covenant or agreement in
respect of such Securities a default in whose performance or whose breach is elsewhere in this
Section specifically dealt with), and continuance of such default or breach for a period of 90 days
after there has been given, by first class mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in principal amount of the outstanding Securities of
all series affected thereby, a written notice specifying such default or breach and requiring it to
be remedied and stating that such notice is a “Notice of Default” hereunder; or (e) a court having
jurisdiction in the premises shall enter a decree or order for relief in respect of the Company or
the Guarantors in an involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee
or sequestrator (or similar official) of the Company or for any substantial part of its property or
ordering the winding up or liquidation of its affairs, and such decree or order shall remain
unstayed and in effect for a period of 60 consecutive days; or (f) the Company or any Restricted
Subsidiary shall commence a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee or sequestrator (or similar official) of the
Company or for any substantial part of its property, or make any general assignment for the benefit
of creditors; or (g) any Guarantee ceases to be in full force and effect (except as contemplated by
the terms of the Indenture), or any Guarantee is declared in a judicial proceeding to be null and
void, or any Guarantor denies or disaffirms in writing its obligations under the terms of the
Indenture or its Guarantee; or (h) at any time as such security is required by the terms of the
Indenture, any Security Document shall cease to be in full force and effect or shall cease to give
the Collateral Agent the liens or any of the material rights, powers and privileges purported to be
created thereby in favor of the Collateral Agent and such default shall continue unremedied for a
period of at least 30 days after written notice to the Company by the Collateral Agent; or (i) any
other Event of Default provided in Schedule I or in this Note.

     If an Event of Default described in clauses (a), (b), (c), (d) or (i) above (if the Event of
Default under clause (d) or (i) is with respect to less than all series of Securities then
outstanding) occurs and is continuing, then, and in each and every such case, except for any
series of Securities the principal of which shall have already become due and payable, either the
Trustee or the Holders of not less than 25% in aggregate principal amount of the Securities of
each such affected series then outstanding under the Indenture (voting as a single class) by
notice in writing to the Company (and to the Trustee if given by Securityholders), may declare the
entire principal of all Securities of all such affected series, and the interest accrued thereon,
if any, to be due and payable immediately, and upon any such declaration the same shall become
immediately due and payable. If an Event of Default described in clause (d) or (i) (if the Event
of Default under clauses (d) or (i), as the case may be, is with respect to all series of
Securities then outstanding), (e), (f), (g) or (h) occurs and is continuing, then and in each and
every such case, unless the principal of all the Securities shall have already become due and
payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of
all the Securities then outstanding under the Indenture (treated as one class), by notice in
writing to the Company (and to the Trustee if given by Securityholders), may declare the entire
principal of all the Securities then outstanding and interest accrued thereon,

6

 

if any, to be due and payable immediately, and upon any such declaration the same shall
become immediately due and payable.

     The foregoing provisions, however, are subject to the condition that if, at any time after
the principal of the Securities of any series (or of all the Securities, as the case may be) shall
have been so declared due and payable, and before any judgment or decree for the payment of the
moneys due shall have been obtained or entered as hereinafter provided, the Company or any
Guarantor shall pay or shall deposit with the Trustee a sum sufficient to pay all matured
installments of interest upon all the Securities of each such series (or of all the Securities, as
the case may be) and the principal of any and all Securities of each such series (or of all the
Securities, as the case may be) which shall have become due otherwise than by acceleration (with
interest upon such principal and, to the extent that payment of such interest is enforceable under
applicable law, on overdue installments of interest, at the same rate as the rate of interest
specified in the Securities of each such series to the date of such payment or deposit) and such
amount as shall be sufficient to cover reasonable compensation to the Trustee and each predecessor
Trustee, their respective agents, attorneys and counsel, and all other expenses and liabilities
incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of
gross negligence or willful misconduct, and if any and all Events of Default under the Indenture,
other than the non-payment of the principal of Securities which shall have become due by
acceleration, shall have been cured, waived or otherwise remedied as provided herein, then and in
every such case the Holders of a majority in aggregate principal amount of all the Securities of
each such series, or of all the Securities, in each case voting as a single class, then
outstanding, by written notice to the Company and to the Trustee, may waive all defaults with
respect to each such series (or with respect to all the Securities, as the case may be) and
rescind and annul such declaration and its consequences, but no such waiver or rescission and
annulment shall extend to or shall affect any subsequent default or shall impair any right
consequent thereon.

     12. Trustee Dealings with Company. The Trustee, in its individual or any other
capacity, may become the owner or pledgee of Securities, and may otherwise deal with the Company,
as if it were not the Trustee.

     13. No Recourse Against Others. No director, officer, employee, incorporator or
shareholder or controlling person of the Company or the Trustee, as such, shall have any liability
for any obligations of the Company or the Trustee, respectively, under the Notes or the Indenture
or for any claim based on, in respect of, or by reason of, such obligations or their creation.
Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes. Such waiver may not be effective
to waive liabilities under the federal securities laws and it is the view of the Securities and
Exchange Commission that such a waiver is against public policy.

     14. Authentication. This Note shall not be valid until authenticated by the manual
signature of the Trustee or an authenticating agent and in accordance with the Indenture.

     15. Guarantees. This Note will be entitled to the benefits of certain Guarantees made
for the benefit of the Holders. Subject to the terms of the Indenture, each Guarantor of the
Indenture fully, unconditionally and irrevocably guarantees, as primary obligor and not merely as
surety, jointly and severally, to each Holder of the Notes and the Trustee the full and punctual
payment

7

 

when due, whether at maturity, by acceleration, by redemption, by repurchase, or otherwise, of
the principal of, premium, if any, and interest on the Notes and all other obligations of the
Company under the Indenture, as provided in the Indenture. Reference is made to the Indenture for a
statement of the respective rights, limitations of rights, duties and obligations thereunder of the
Guarantors, the Trustee and the Holders, and of the circumstances under which the Guarantees may be
released.

     16. Abbreviations. Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (=
joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (=Uniform Gifts to Minors Act).

     17. CUSIP and ISIN Numbers. Pursuant to a recommendation promulgated by the Committee
on Uniform Security Identification Procedures, the Company has caused CUSIP or ISIN numbers or both
numbers to be printed on the Notes and the Trustee may use CUSIP or ISIN numbers or both numbers in
notices to the Holders of the Notes as a convenience to Holders. No representation is made as to
the accuracy of such numbers either as printed on the Notes or as contained in any notice to the
Holders of the Notes and reliance may be placed only on the other identification numbers placed
thereon.

     18. Governing Law. This Note shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflict of laws.

8

 

     The Company shall furnish to any Holder upon written request and without charge a copy of the
Indenture. Requests may be made to:

Reynolds American Inc.

401 North Main Street

Winston-Salem, North Carolina 27101-3818

Facsimile: 336-741-5000

Attention: Treasurer

9

 

[FORM OF TRANSFER NOTICE]

          FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s)
unto

Insert Taxpayer Identification No.

 

 

Please print the name and address including zip code of assignee

 

 

the within Note and all rights thereunder, hereby irrevocably constituting and appointing
                     attorney to transfer said Note on the books of the Company with full power of
substitution in the premises.

 

Date:                                      &n
bsp; 

NOTICE: The signature to this assignment must correspond with the name as written
upon the face of the within-mentioned instrument in every particular, without
alteration or any change whatsoever.

Signature
Guarantee:                                      &n
bsp; 

Signature must be guaranteed by a participant in a recognized signature guaranty medallion program
or other signature guarantor acceptable to the Trustee.

10

 

SCHEDULE I

REYNOLDS AMERICAN INC.

TERMS OF 6.750% SENIOR SECURED NOTES DUE 2017,

7.250% SENIOR SECURED NOTES DUE 2037, AND

FLOATING RATE SENIOR SECURED NOTES DUE 2011

     Section 1.01 Designation of Notes. (a) The terms set forth in this Schedule I pertain
to notes to be issued pursuant to that certain Indenture dated May 31, 2006, by and among Reynolds
American Inc. (the “Company”) as Issuer, The Bank of New York Trust Company, N.A., as Trustee, and
certain Subsidiaries of the Company who have executed such Indenture or a supplement thereto as
Guarantors (as so supplemented, the “Indenture”). The notes subject to these terms are (i) the
Company’s 6.750% Senior Secured Notes due 2017 in the original principal amount of $700,000,000
(CUSIP Number 761713AU0) (the “2017 Notes”), (ii) the Company’s 7.250% Senior Secured Notes due
2037 in the original principal amount of $450,000,000 (CUSIP Number 761713AT3) (the “2037 Notes”),
and (iii) the Company’s Floating Rate Senior Secured Notes due 2011 in the original principal
amount of $400,000,000 (CUSIP Number 761713AS5) (the “Floating Rate Notes,” and together with the
2017 Notes and the 2037 Notes, the “Notes”).

          (b) The 2017 Notes, the 2037 Notes and the Floating Rate Notes shall each be considered a
separate series for all purposes of the Indenture.

     Section 1.02 Initial Issuance. (a) The Notes are being offered and sold by the Company
pursuant to an Underwriting Agreement, dated June 18, 2007 (the “Underwriting Agreement”) among the
Company, Citigroup Global Markets Inc., J.P. Morgan Securities Inc., Lehman Brothers Inc., and
Morgan Stanley and Co. Incorporated and the other underwriters named therein. The Notes will be
resold in an offering registered under the Securities Act. Each series of Notes shall be issued in
the form of a permanent global note, with each such global note to be deposited with the Trustee,
as Custodian for the Depository, duly executed by the Company, and authenticated by the Trustee as
hereinafter provided. Each such global note may be represented by more than one certificate, if so
required by the Depository’s rules regarding the maximum principal amount to be represented by a
single certificate. The global notes representing the Notes are sometimes collectively herein
referred to as the “Global Notes.” The Notes may have notations, legends or endorsements required
by law, stock exchange rule or usage. The Company and the Trustee shall approve the forms of the
Notes and any notation, endorsement or legend on them.

          (b) Denominations. The Notes shall be issuable only in fully registered form, without
interest coupons, and only in denominations of $2,000 and any integral multiples of $1,000 in
excess thereof.

     Section 1.03. Depository: Custodian. The Company initially appoints The Depository Trust
Company (“DTC”) to act as Depository with respect to the Global Notes. The Company initially
appoints the Trustee to act as Custodian with respect to the Global Notes.

     Section 1.04. Transfer and Exchange of Global Notes. A Global Note may not be transferred as
a whole except by the Depository to a nominee of the Depository, by a nominee of the Depository

I-1

 

to the Depository or to another nominee of the Depository, or by the Depository or any such
nominee to a successor Depository or to a nominee of such successor Depository.

     Section 1.05 Definitions. (a) Capitalized terms not defined in this Schedule I shall
have the meanings set forth in the Indenture.

          (b) As used herein and in the Notes, the following terms shall have the meanings set forth
below:

          “Below Investment Grade Rating Event” means, with respect to each series of Notes, the Notes
of that series are downgraded by each of the Rating Agencies on any date from the date of the
public notice of an arrangement that could result in a Change of Control until the end of the
60-day period following public notice of the occurrence of a Change of Control (which period shall
be extended so long as the rating of the Notes is under publicly announced consideration for
possible downgrade by any of the Rating Agencies), and the rating resulting from such downgrade for
such Notes issued by each Rating Agency is below Investment Grade, regardless of whether the rating
immediately prior to such downgrade was below Investment Grade; provided that a particular
reduction in rating shall not be deemed a Below Investment Grade Rating Event for purposes of the
definition of Change of Control Repurchase Event hereunder unless the Rating Agencies making the
reduction in rating to which this definition would otherwise apply announce or publicly confirm or
inform the Trustee in writing at its request that the reduction was the result, in whole or in
part, of any event or circumstance comprised of or arising as a result of, or in respect of, the
applicable Change of Control (whether or not the applicable Change of Control shall have occurred
at the time of the Below Investment Grade Rating Event).

          “Calculation Agent” means, initially, The Bank of New York Trust Company, N.A.

          “Change of Control” means the occurrence of any of the following: (1) the direct or indirect
sale, transfer, conveyance, or other disposition (other than by way of merger or consolidation), in
one or a series of related transactions, of all or substantially all of the properties or assets of
the Company and its subsidiaries taken as a whole to any “person” (as that term is used in Section
13(d)(3) of the Exchange Act), other than the Company or one of its subsidiaries; or (2) the
consummation of any transaction (including, without limitation, any merger or consolidation) the
result of which is that any “person” (as that term is used in Section 13(d)(3) of the Exchange Act)
other than the Company or one of its subsidiaries becomes the beneficial owner, directly or
indirectly, of more than 50% of the then outstanding number of shares of the Company’s Voting
Stock.

          “Change of Control Repurchase Event” means the occurrence of both a Change of Control and a
Below Investment Grade Rating Event.

          “Clearstream” means Clearstream Banking, société anonyme, Luxembourg.

          “Comparable Treasury Issue” means the U.S. Treasury security selected by an Independent
Investment Banker as having a maturity comparable to the remaining term (“Remaining Life”) of the
notes to be redeemed that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of such notes.

I-2

 

          “Comparable Treasury Price” means, with respect to any redemption date, (1) the average of
five Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and
lowest Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains
fewer than five such Reference Treasury Dealer Quotations, the average of all such quotations.

          “Custodian” means the Trustee, as custodian with respect to the Global Notes, or any successor
entity thereto.

          “Definitive Note” means a certificated Note registered in the name of the Holder thereof.

          “Depository” means, with respect to the Notes issued in the form of one or more Global Notes,
DTC as the Person appointed hereby as the Depository with respect to the Notes, or another Person
appointed as Depository by the Company, which Person must be a clearing agency registered under the
Exchange Act, and any and all successors thereto appointed as Depository hereunder and having
become such pursuant to the applicable provision of the Indenture.

          “Euroclear” means Euroclear Bank S.A./N.V., as operator of the Euroclear System.

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

          “Independent Investment Banker” means any of Citigroup Global Markets Inc., J.P. Morgan
Securities Inc., Lehman Brothers Securities Inc. and Morgan Stanley & Co. Incorporated, or, if all
such firms are unwilling or unable to select the Comparable Treasury Issue, an independent
investment banking institution of national standing appointed by the Trustee after consultation
with the Company.

          “Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any
successor rating categories of Moody’s); a rating of BBB– or better by S&P (or its equivalent under
any successor rating categories of S&P); or the equivalent investment grade credit rating from any
additional Rating Agency or Rating Agencies selected by the Company pursuant to clause (2) of the
definition of Rating Agency.

          “Moody’s” means Moody’s Investors Service Inc.

          “Rating Agency” means (1) each of Moody’s and S&P; and (2) if any of Moody’s or
S&P ceases to
rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of the
control of the Company, a “nationally recognized statistical rating organization” within the
meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act, selected by the Company as a
replacement agency for Moody’s or S&P, as the case may be.

          “Reference Treasury Dealer” means (1) Citigroup Global Markets Inc., J.P. Morgan Securities
Inc., Lehman Brothers Securities Inc. or Morgan Stanley & Co. Incorporated and their respective
successors, provided, however, that if any of the foregoing shall cease to be a primary U.S.
Government securities dealer in New York City (a “Primary Treasury Dealer”), the Company will
substitute for it another Primary Treasury Dealer and (2) any other Primary Treasury Dealer
selected by the Independent Investment Banker after consultation with the Company.

I-3

 

          “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any redemption date, the average, as determined by the Independent Investment Banker, of the
bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of
its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m., New York
City time, on the third business day preceding such redemption date.

          “S&P” means Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies.

          “Securities Act” means the Securities Act of 1933, as amended.

          “Treasury Rate” means, with respect to any redemption date, (1) the yield, under the heading
which represents the average for the immediate preceding week, appearing in the most recently
published statistical release designated “H.15(519)” or any successor publication which is
published weekly by the Board of Governors of the Federal Reserve System and which establishes
yields on actively traded U.S. Treasury securities adjusted to constant maturity under the caption
“Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if
no maturity is within three months before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Comparable Treasury Issue will be determined and the
Treasury Rate will be interpolated or extrapolated from such yields on a straight line basis,
rounding to the nearest month) or (2) if such release (or any successor release) is not published
during the week preceding the calculation date or does not contain such yields, the rate per annum
equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated
using a price for the Comparable Treasury Price for such redemption date. The Treasury Rate will
be calculated on the third business day preceding the redemption date.

          “Voting Stock” means capital stock of any class or kind the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of the issuer thereof, even if the right so to vote has been
suspended by the happening of such a contingency.

I-4Exhibit 4.2

 

Exhibit 4.2

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

REYNOLDS AMERICAN INC.

6.750% Senior Secured Notes due 2017

			
	 	 	 
	Certificate No. 1
	 	$500,000,000
	 
	 	CUSIP No. 761713AU0

     Reynolds American Inc., a North Carolina corporation (the “Company,”) which term includes any
successor corporation under the Indenture hereinafter referred to), for value received, promises
to pay to Cede & Co., or its registered assigns, the principal sum of FIVE HUNDRED MILLION DOLLARS
($500,000,000) on June 15, 2017.

     Interest Payment Dates: June 15 and December 15, commencing December 15, 2007.

     Record Dates: June 1 and December 1.

 

 

     Reference is hereby made to the further provisions of this Note set forth on the reverse
hereof, which further provisions shall have the same effect for all purposes as if set forth at
this place.

     Unless the certificate of authentication hereof has been executed by the Trustee referred to
on the reverse hereof by manual signature, this Note shall not be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose.

2

 

     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its
corporate seal.

Dated: June 21, 2007

	 	 	 	 	 
	 	REYNOLDS AMERICAN INC.,

as Issuer

 	 
	 	By:  	/s/ Daniel A. Fawley
 	 
	 	 	Daniel A. Fawley 	 
	 	 	Senior Vice President and Treasurer 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	                  /s/ McDara P. Folan, III
 	 
	 	 	McDara P. Folan, III 	 
	 	 	Senior Vice President, Deputy General Counsel
and Secretary 	 
	 

     Each of the undersigned hereby acknowledges its obligation as a Guarantor under the Indenture.

SANTA FE NATURAL TOBACCO COMPANY, INC., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Assistant Treasurer	 	 

LANE, LIMITED, as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Assistant Treasurer	 	 

Note Signature Page

 

 

CONWOOD HOLDINGS, INC., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley
	 	 
	 

	 	Vice President and Treasurer	 	 

CONWOOD COMPANY, LLC, as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Treasurer
	 	 

CONWOOD SALES CO., LLC, as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Treasurer
	 	 

ROSSWIL LLC, as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Treasurer	 	 

SCOTT TOBACCO LLC, as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Treasurer
	 	 

Note Signature Page

 

 

R.J. REYNOLDS TOBACCO HOLDINGS, INC., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Senior Vice President and Treasurer	 	 

R. J. REYNOLDS GLOBAL PRODUCTS, INC., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Treasurer	 	 

RJR ACQUISITION CORP., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Assistant Treasurer	 	 

R. J. REYNOLDS TOBACCO COMPANY, as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Treasurer	 	 

R. J. REYNOLDS TOBACCO CO., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Treasurer	 	 

Note Signature Page

 

 

RJR PACKAGING, LLC, as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Treasurer	 	 

FHS, INC., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Kathryn A. Premo
	 	 
	 

	 	 	 	 
	 

	 	Kathryn A. Premo	 	 
	 

	 	Treasurer	 	 

GMB, INC., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Treasurer	 	 

Note Signature Page

 

 

(Trustee’s Certificate of Authentication)

     This is one of the Notes of the series designated herein referred to in the within-mentioned
Indenture.

Dated: June 21, 2007

THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee

	 	 	 	 	 
	By:

	 	/s/ Christie Leppert
	 	 
	 

	 	 	 	 
	Name:

	 	Christie Leppert	 	 
	Title:

	 	Assistant Vice President	 	 

Note Signature Page

 

 

[REVERSE OF NOTE]

6.750% Senior Secured Notes due 2017

     References herein to the “Notes” mean the Company’s 6.750% Senior Secured Notes due 2017 and
not to any other series. Other capitalized terms used, but not defined, herein shall have the
meanings assigned to them in the Indenture and Schedule I attached hereto unless otherwise
indicated.

     1. Interest. The Company promises to pay interest on the principal amount of this
Note at 6.750% per annum from the date provided below until maturity. The Company shall pay
interest semi-annually, in arrears, on June 15 and December 15 of each year, or if any such day is
not a Business Day, on the next succeeding Business Day (each an “Interest Payment Date”), except
that, if the maturity date of the Note falls on a day that is not a Business Day, the Company will
make the required payment of interest and principal on the immediately succeeding Business Day, as
if it were made on the date the payment was due. Interest on the Notes shall accrue from the date
of initial issuance or, if interest has already been paid on the Notes, from and including the most
recent Interest Payment Date to which interest has been paid or provided for, to, but excluding the
relevant Interest Payment Date; provided the first Interest Payment Date shall be December 15,
2007. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. Interest
will not accrue as a result of any postponed or delayed payment in accordance with this paragraph.

     2. Method of Payment. The Company shall pay interest on the Notes (except defaulted
interest) to the Persons who are registered Holders of Notes at the close of business on the June 1
or December 1 immediately preceding the Interest Payment Date (except that interest payable at
maturity of the Notes shall be paid to the same persons to whom principal of such Notes is
payable), even if such Notes are canceled after such record date and on or before such Interest
Payment Date, except as provided in Section 2.13 of the Indenture with respect to defaulted
interest. The Notes shall be payable as to principal, premium, if any, and interest at the office
or agency of the Company maintained for such purpose within the Borough of Manhattan of the City of
New York, or, at the option of the Company, payment of interest may be made by check mailed to the
Holders at their addresses set forth in the register of Holders, and provided that payment by wire
transfer of immediately available funds shall be required with respect to principal of and interest
and premium, if any, on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in
such coin or currency of the United States of America as at the time of payment is legal tender for
payment of public and private debts.

     3. Paying Agent and Registrar. Initially, The Bank of New York Trust Company, N.A.,
the Trustee under the Indenture, shall act as Paying Agent and Registrar. The Company may change
any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries
may act in any such capacity.

     4. Indenture. The Company issued the Notes under an Indenture dated as of May 31,
2006 among the Company, as issuer, certain direct and indirect subsidiaries of the Company, as
guarantors, and The Bank of New York Trust Company, N.A., as trustee (the “Indenture”). The

1

 

terms of the Notes include those stated in the Indenture, those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (the “TIA”), and those set forth in
Schedule I attached hereto. The Notes are subject to all such terms, and Holders are
referred to the Indenture, the TIA and Schedule I for a statement of such terms.

     5. Redemption at Company’s Option. The Company may redeem all or a part of the Notes
from time to time in accordance with Article 5 of the Indenture at a redemption price equal to the
greater of (a) 100% of the principal amount of the Notes and (b) the sum of the present values of
the remaining scheduled payments of principal and interest on the Notes, discounted to the
redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months)
at the applicable Treasury Rate plus 25 basis points plus, with respect to each of the Notes,
accrued and unpaid interest, on the principal amount being redeemed to the date of redemption.
Notice of redemption under this Article 5 shall be mailed, by first class mail, at least 30 days
but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed
at its registered address. Notes in denominations equal to or larger than $2,000 may be redeemed
in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date, interest ceases to accrue on Notes or portions thereof
called for redemption (unless the Company shall default in the payment of the redemption price and
accrued interest).

     6. Repurchase upon Change of Control Repurchase Event. If a Change of Control
Repurchase Event occurs with respect to the Notes, unless the Company has exercised its right to
redeem the Notes, the Company will make an offer to each Holder of Notes to repurchase all or any
part (in excess of $2,000 and in integral multiples of $1,000) of that Holder’s Notes of that
series at a repurchase price in cash equal to 101% of the aggregate principal amount of Notes
repurchased plus any accrued and unpaid interest on the Notes repurchased to the date of
repurchase. Within 30 days following any Change of Control Repurchase Event, the Company will mail
a notice to each Holder, with a copy to the Trustee, describing the transaction or transactions
that constitute or may constitute the Change of Control Repurchase Event and offering to repurchase
Notes on the payment date specified in the notice, which date will be no earlier than 30 days and
no later than 60 days from the date such notice is mailed. The Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder, to the extent those laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control Repurchase Event. To the extent that
the provisions of any securities laws or regulations conflict with the Change of Control Repurchase
Event provisions of the Notes, the Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations hereunder by virtue of such
conflict. On the Change of Control Repurchase Event payment date, the Company will, to the extent
lawful (i) accept for payment all Notes or portions of Notes (in excess of $2,000 and in integral
multiples of $1,000) properly tendered pursuant to the Company’s offer; (ii) deposit with the
Paying Agent an amount equal to the aggregate repurchase price in respect of all Notes or portions
of Notes properly tendered; and (iii) deliver or cause to be delivered to the Trustee the Notes
properly accepted, together with an Officers’ Certificate stating the aggregate principal amount of
Notes being purchased by the Company. The Paying Agent will promptly mail to each Holder of Notes
properly tendered the repurchase price for the Notes, and the Trustee will promptly authenticate
and mail (or cause to be transferred by book-entry) to each Holder a new Note equal in principal
amount to any unpurchased portion of any Notes surrendered; provided that each new Note will be in
a principal

2

 

amount of $2,000 or an integral multiple of $1,000. The Company will not be required to make
an offer to repurchase the notes upon a Change of Control Repurchase Event if a third party makes
such an offer in the manner, at the times and otherwise in compliance with the requirements for an
offer made by the Company, and such third party purchases all Notes properly tendered and not
withdrawn under its offer.

     7. No Sinking Fund. The Company shall not be required to make sinking fund payments
with respect to the Notes.

     8. Denominations, Transfer, Exchange. The Notes are in registered form without
coupons in minimum denominations of $2,000 and integral multiples of $1,000. The transfer of Notes
may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer
documents and the Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture, including any transfer tax or other similar governmental charge payable
in connection therewith. The Company need not exchange or register the transfer of any Note or
portion of a Note selected for redemption, except for the unredeemed portion of any Note being
redeemed in part. Also, the Company need not exchange or register the transfer of any Note for a
period of 15 days before a selection of Notes to be redeemed.

     9. Persons Deemed Owners. The registered Holder of a Note may be treated as its owner
for all purposes.

     10. Amendment, Supplement and Waiver. Subject to certain exceptions, the Indenture or the
Notes may be amended or supplemented by the Company and Guarantors, each when authorized by a Board
Resolution, with the consent of the Holders of at least a majority in aggregate principal amount of
the Securities at the time outstanding of all series affected by such amendment or supplement,
voting as a single class, and any existing Default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a majority in aggregate
principal amount of the Securities at the time outstanding of all series affected by such Default
or waiver of compliance, voting as a single class. Without the consent of any Holder of a Note,
the Company and the Guarantors, when authorized by a Board Resolution, and the Trustee may
supplement the Indenture or the Notes: (a) to convey, transfer, assign, mortgage or pledge to the
Trustee as security for the Notes any property or assets; (b) to evidence the succession of another
corporation to the Company, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the
Company; (c) to add to the covenants of the Company such further covenants, restrictions,
conditions or provisions as its Board of Directors and the Trustee shall consider to be for the
protection or benefit of the Holders of the Notes, and to make the occurrence, or the occurrence
and continuance, of a Default in any such additional covenants, restrictions, conditions or
provisions an Event of Default permitting the enforcement of all or any of the several remedies
provided in the Indenture as therein set forth; provided, that in respect of any such additional
covenant, restriction, condition or provision such amendment or supplement may provide for a
particular period of grace after Default (which period may be shorter or longer than that allowed
in the case of other Defaults) or may provide for an immediate enforcement upon such an Event of
Default or may limit the remedies available to the Trustee upon such an Event of Default or may
limit the right of the Holders of a majority in aggregate principal amount of the Notes to waive
such an Event of Default; (d) to cure any

3

 

ambiguity or to correct or supplement any provision contained in the Indenture or in any
indenture supplemental thereto which may be defective or inconsistent with any other provision
contained in the Indenture or in any indenture supplemental thereto; (e) to make such other
provisions in regard to matters or questions arising under the Indenture or under any indenture
supplemental thereto as the Board of Directors may deem necessary or desirable and which shall not
adversely affect the interests of the Holders of the Notes in any material respect; (f) to
establish the form or forms or terms of Securities of any series as permitted by the Indenture; (g)
to evidence and provide for the acceptance of appointment under the Indenture by a successor
trustee with respect to the Notes and to add to or change any of the provisions of the Indenture as
shall be necessary to provide for or facilitate the administration of the trusts thereunder by more
than one trustee; (h) to provide for uncertificated Securities and to make all appropriate changes
for such purpose; (i) to comply with the requirements of the TIA; and (j) to add additional
Guarantors with respect to the Notes.

     The Trustee is hereby authorized to join with the Company and the Guarantors in the execution
of any such supplemental indenture, to make any further appropriate agreements and stipulations
which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or
pledge of any property thereunder, but the Trustee shall not be obligated to enter into any such
supplemental indenture which affects the Trustee’s own rights, duties or immunities under this
Indenture or otherwise.

     11. Defaults and Remedies. Any of the following events which shall have occurred and
be continuing (whatever the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental body) constitutes an
“Event of Default” under the Indenture: (a) default in the payment of any installment of interest
upon Securities of any series as and when the same shall become due and payable, and continuance of
such default for a period of 30 days; or (b) default in the payment of all or any part of the
principal on Securities of any series as and when the same shall become due and payable either at
maturity, upon any redemption, by declaration or otherwise; or (c) default in the payment of any
sinking fund installment as and when the same shall become due and payable by the terms of
Securities of any series; or (d) default in the performance, or breach, of any covenant or
agreement of the Company or the Guarantors in respect of Securities of any series (other than a
covenant or agreement in respect of such Securities a default in whose performance or whose breach
is elsewhere in this Section specifically dealt with), and continuance of such default or breach
for a period of 90 days after there has been given, by first class mail, to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the
outstanding Securities of all series affected thereby, a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a “Notice of Default”
hereunder; or (e) a court having jurisdiction in the premises shall enter a decree or order for
relief in respect of the Company or the Guarantors in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee or sequestrator (or similar official) of the Company or
for any substantial part of its property or ordering the winding up or liquidation of its affairs,
and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days;
or (f) the Company or any Restricted Subsidiary shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to
the entry of an order for relief in an involuntary

4

 

case under any such law, or consent to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee or sequestrator (or similar official) of the Company or
for any substantial part of its property, or make any general assignment for the benefit of
creditors; or (g) any Guarantee ceases to be in full force and effect (except as contemplated by
the terms of the Indenture), or any Guarantee is declared in a judicial proceeding to be null and
void, or any Guarantor denies or disaffirms in writing its obligations under the terms of the
Indenture or its Guarantee; or (h) at any time as such security is required by the terms of the
Indenture, any Security Document shall cease to be in full force and effect or shall cease to give
the Collateral Agent the liens or any of the material rights, powers and privileges purported to be
created thereby in favor of the Collateral Agent and such default shall continue unremedied for a
period of at least 30 days after written notice to the Company by the Collateral Agent; or (i) any
other Event of Default provided in Schedule I or in this Note.

     If an Event of Default described in clauses (a), (b), (c), (d) or (i) above (if the Event of
Default under clause (d) or (i) is with respect to less than all series of Securities then
outstanding) occurs and is continuing, then, and in each and every such case, except for any
series of Securities the principal of which shall have already become due and payable, either the
Trustee or the Holders of not less than 25% in aggregate principal amount of the Securities of
each such affected series then outstanding under the Indenture (voting as a single class) by
notice in writing to the Company (and to the Trustee if given by Securityholders), may declare the
entire principal of all Securities of all such affected series, and the interest accrued thereon,
if any, to be due and payable immediately, and upon any such declaration the same shall become
immediately due and payable. If an Event of Default described in clause (d) or (i) (if the Event
of Default under clauses (d) or (i), as the case may be, is with respect to all series of
Securities then outstanding), (e), (f), (g) or (h) occurs and is continuing, then and in each and
every such case, unless the principal of all the Securities shall have already become due and
payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of
all the Securities then outstanding under the Indenture (treated as one class), by notice in
writing to the Company (and to the Trustee if given by Securityholders), may declare the entire
principal of all the Securities then outstanding and interest accrued thereon, if any, to be due
and payable immediately, and upon any such declaration the same shall become immediately due and
payable.

     The foregoing provisions, however, are subject to the condition that if, at any time after the
principal of the Securities of any series (or of all the Securities, as the case may be) shall have
been so declared due and payable, and before any judgment or decree for the payment of the moneys
due shall have been obtained or entered as hereinafter provided, the Company or any Guarantor shall
pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest
upon all the Securities of each such series (or of all the Securities, as the case may be) and the
principal of any and all Securities of each such series (or of all the Securities, as the case may
be) which shall have become due otherwise than by acceleration (with interest upon such principal
and, to the extent that payment of such interest is enforceable under applicable law, on overdue
installments of interest, at the same rate as the rate of interest specified in the Securities of
each such series to the date of such payment or deposit) and such amount as shall be sufficient to
cover reasonable compensation to the Trustee and each predecessor Trustee, their respective agents,
attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by
the Trustee and each predecessor Trustee except as a result of gross negligence or willful
misconduct, and if any and all Events of Default under the Indenture, other

5

 

than the non-payment of the principal of Securities which shall have become due by acceleration,
shall have been cured, waived or otherwise remedied as provided herein, then and in every such case
the Holders of a majority in aggregate principal amount of all the Securities of each such series,
or of all the Securities, in each case voting as a single class, then outstanding, by written
notice to the Company and to the Trustee, may waive all defaults with respect to each such series
(or with respect to all the Securities, as the case may be) and rescind and annul such declaration
and its consequences, but no such waiver or rescission and annulment shall extend to or shall
affect any subsequent default or shall impair any right consequent thereon.

     12. Trustee Dealings with Company. The Trustee, in its individual or any other
capacity, may become the owner or pledgee of Securities, and may otherwise deal with the Company,
as if it were not the Trustee.

     13. No Recourse Against Others. No director, officer, employee, incorporator or
shareholder or controlling person of the Company or the Trustee, as such, shall have any liability
for any obligations of the Company or the Trustee, respectively, under the Notes or the Indenture
or for any claim based on, in respect of, or by reason of, such obligations or their creation.
Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes. Such waiver may not be effective
to waive liabilities under the federal securities laws and it is the view of the Securities and
Exchange Commission that such a waiver is against public policy.

     14. Authentication. This Note shall not be valid until authenticated by the manual
signature of the Trustee or an authenticating agent and in accordance with the Indenture.

     15. Guarantees. This Note will be entitled to the benefits of certain Guarantees made
for the benefit of the Holders. Subject to the terms of the Indenture, each Guarantor of the
Indenture fully, unconditionally and irrevocably guarantees, as primary obligor and not merely as
surety, jointly and severally, to each Holder of the Notes and the Trustee the full and punctual
payment when due, whether at maturity, by acceleration, by redemption, by repurchase, or otherwise,
of the principal of, premium, if any, and interest on the Notes and all other obligations of the
Company under the Indenture, as provided in the Indenture. Reference is made to the Indenture for
a statement of the respective rights, limitations of rights, duties and obligations thereunder of
the Guarantors, the Trustee and the Holders, and of the circumstances under which the Guarantees
may be released.

     16. Abbreviations. Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (=
joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (=Uniform Gifts to Minors Act).

     17. CUSIP and ISIN Numbers. Pursuant to a recommendation promulgated by the Committee
on Uniform Security Identification Procedures, the Company has caused CUSIP or ISIN numbers or both
numbers to be printed on the Notes and the Trustee may use CUSIP or ISIN numbers or both numbers in
notices to the Holders of the Notes as a convenience to Holders. No representation is made as to
the accuracy of such numbers either as printed on the Notes or as

6

 

contained in any notice to the Holders of the Notes and reliance may be placed only on the
other identification numbers placed thereon.

     18. Governing Law. This Note shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflicts of laws.

7

 

     The Company shall furnish to any Holder upon written request and without charge a copy of the
Indenture. Requests may be made to:

Reynolds American Inc.

401 North Main Street

Winston-Salem, North Carolina 27101-3818

Facsimile: 336-741-5000

Attention: Treasurer

8

 

[FORM OF TRANSFER NOTICE]

          FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s)
unto

Insert Taxpayer Identification No.

 

 

Please print the name and address including zip code of assignee

 

 

the within Note and all rights thereunder, hereby irrevocably constituting and appointing
                                        
 attorney to transfer said Note on the books of the Company with full power of
substitution in the premises.

 

 

Date:                                      &
nbsp; 

NOTICE: The signature to this assignment must correspond with the name
as written upon the face of the within-mentioned instrument in every
particular, without alteration or any change whatsoever.

Signature
Guarantee:                                      &n
bsp; 

Signature must be guaranteed by a participant in a recognized signature guaranty medallion program
or other signature guarantor acceptable to the Trustee.

9

 

SCHEDULE I

REYNOLDS AMERICAN INC.

TERMS OF 6.750% SENIOR SECURED NOTES DUE 2017,

7.250% SENIOR SECURED NOTES DUE 2037, AND

FLOATING RATE SENIOR SECURED NOTES DUE 2011

     Section 1.01 Designation of Notes. (a) The terms set forth in this Schedule I pertain
to notes to be issued pursuant to that certain Indenture dated May 31, 2006, by and among Reynolds
American Inc. (the “Company”) as Issuer, The Bank of New York Trust Company, N.A., as Trustee, and
certain Subsidiaries of the Company who have executed such Indenture or a supplement thereto as
Guarantors (as so supplemented, the “Indenture”). The notes subject to these terms are (i) the
Company’s 6.750% Senior Secured Notes due 2017 in the original principal amount of $700,000,000
(CUSIP Number 761713AU0) (the “2017 Notes”), (ii) the Company’s 7.250% Senior Secured Notes due
2037 in the original principal amount of $450,000,000 (CUSIP Number 761713AT3) (the “2037 Notes”),
and (iii) the Company’s Floating Rate Senior Secured Notes due 2011 in the original principal
amount of $400,000,000 (CUSIP Number 761713AS5) (the “Floating Rate Notes,” and together with the
2017 Notes and the 2037 Notes, the “Notes”).

          (b) The 2017 Notes, the 2037 Notes and the Floating Rate Notes shall each be considered a
separate series for all purposes of the Indenture.

     Section 1.02 Initial Issuance. (a) The Notes are being offered and sold by the Company
pursuant to an Underwriting Agreement, dated June 18, 2007 (the “Underwriting Agreement”) among the
Company, Citigroup Global Markets Inc., J.P. Morgan Securities Inc., Lehman Brothers Inc., and
Morgan Stanley and Co. Incorporated and the other underwriters named therein. The Notes will be
resold in an offering registered under the Securities Act. Each series of Notes shall be issued in
the form of a permanent global note, with each such global note to be deposited with the Trustee,
as Custodian for the Depository, duly executed by the Company, and authenticated by the Trustee as
hereinafter provided. Each such global note may be represented by more than one certificate, if so
required by the Depository’s rules regarding the maximum principal amount to be represented by a
single certificate. The global notes representing the Notes are sometimes collectively herein
referred to as the “Global Notes.” The Notes may have notations, legends or endorsements required
by law, stock exchange rule or usage. The Company and the Trustee shall approve the forms of the
Notes and any notation, endorsement or legend on them.

          (b) Denominations. The Notes shall be issuable only in fully registered form, without
interest coupons, and only in denominations of $2,000 and any integral multiples of $1,000 in
excess thereof.

     Section 1.03. Depository: Custodian. The Company initially appoints The Depository Trust
Company (“DTC”) to act as Depository with respect to the Global Notes. The Company initially
appoints the Trustee to act as Custodian with respect to the Global Notes.

     Section 1.04. Transfer and Exchange of Global Notes. A Global Note may not be transferred as
a whole except by the Depository to a nominee of the Depository, by a nominee of the Depository

I-1

 

to the Depository or to another nominee of the Depository, or by the Depository or any such
nominee to a successor Depository or to a nominee of such successor Depository.

     Section 1.05 Definitions. (a) Capitalized terms not defined in this Schedule I shall
have the meanings set forth in the Indenture.

          (b) As used herein and in the Notes, the following terms shall have the meanings set forth
below:

          “Below Investment Grade Rating Event” means, with respect to each series of Notes, the Notes
of that series are downgraded by each of the Rating Agencies on any date from the date of the
public notice of an arrangement that could result in a Change of Control until the end of the
60-day period following public notice of the occurrence of a Change of Control (which period shall
be extended so long as the rating of the Notes is under publicly announced consideration for
possible downgrade by any of the Rating Agencies), and the rating resulting from such downgrade for
such Notes issued by each Rating Agency is below Investment Grade, regardless of whether the rating
immediately prior to such downgrade was below Investment Grade; provided that a particular
reduction in rating shall not be deemed a Below Investment Grade Rating Event for purposes of the
definition of Change of Control Repurchase Event hereunder unless the Rating Agencies making the
reduction in rating to which this definition would otherwise apply announce or publicly confirm or
inform the Trustee in writing at its request that the reduction was the result, in whole or in
part, of any event or circumstance comprised of or arising as a result of, or in respect of, the
applicable Change of Control (whether or not the applicable Change of Control shall have occurred
at the time of the Below Investment Grade Rating Event).

          “Calculation Agent” means, initially, The Bank of New York Trust Company, N.A.

          “Change of Control” means the occurrence of any of the following: (1) the direct or indirect
sale, transfer, conveyance, or other disposition (other than by way of merger or consolidation), in
one or a series of related transactions, of all or substantially all of the properties or assets of
the Company and its subsidiaries taken as a whole to any “person” (as that term is used in Section
13(d)(3) of the Exchange Act), other than the Company or one of its subsidiaries; or (2) the
consummation of any transaction (including, without limitation, any merger or consolidation) the
result of which is that any “person” (as that term is used in Section 13(d)(3) of the Exchange Act)
other than the Company or one of its subsidiaries becomes the beneficial owner, directly or
indirectly, of more than 50% of the then outstanding number of shares of the Company’s Voting
Stock.

          “Change of Control Repurchase Event” means the occurrence of both a Change of Control and a
Below Investment Grade Rating Event.

          “Clearstream” means Clearstream Banking, société anonyme, Luxembourg.

          “Comparable Treasury Issue” means the U.S. Treasury security selected by an Independent
Investment Banker as having a maturity comparable to the remaining term (“Remaining Life”) of the
notes to be redeemed that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of such notes.

I-2

 

          “Comparable Treasury Price” means, with respect to any redemption date, (1) the average of
five Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and
lowest Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains
fewer than five such Reference Treasury Dealer Quotations, the average of all such quotations.

          “Custodian” means the Trustee, as custodian with respect to the Global Notes, or any successor
entity thereto.

          “Definitive Note” means a certificated Note registered in the name of the Holder thereof.

          “Depository” means, with respect to the Notes issued in the form of one or more Global Notes,
DTC as the Person appointed hereby as the Depository with respect to the Notes, or another Person
appointed as Depository by the Company, which Person must be a clearing agency registered under the
Exchange Act, and any and all successors thereto appointed as Depository hereunder and having
become such pursuant to the applicable provision of the Indenture.

          “Euroclear” means Euroclear Bank S.A./N.V., as operator of the Euroclear System.

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

          “Independent Investment Banker” means any of Citigroup Global Markets Inc., J.P. Morgan
Securities Inc., Lehman Brothers Securities Inc. and Morgan Stanley & Co. Incorporated, or, if all
such firms are unwilling or unable to select the Comparable Treasury Issue, an independent
investment banking institution of national standing appointed by the Trustee after consultation
with the Company.

          “Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any
successor rating categories of Moody’s); a rating of BBB– or better by S&P (or its equivalent under
any successor rating categories of S&P); or the equivalent investment grade credit rating from any
additional Rating Agency or Rating Agencies selected by the Company pursuant to clause (2) of the
definition of Rating Agency.

          “Moody’s” means Moody’s Investors Service Inc.

          “Rating Agency” means (1) each of Moody’s and S&P; and (2) if any of Moody’s or
S&P ceases to
rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of the
control of the Company, a “nationally recognized statistical rating organization” within the
meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act, selected by the Company as a
replacement agency for Moody’s or S&P, as the case may be.

          “Reference Treasury Dealer” means (1) Citigroup Global Markets Inc., J.P. Morgan Securities
Inc., Lehman Brothers Securities Inc. or Morgan Stanley & Co. Incorporated and their respective
successors, provided, however, that if any of the foregoing shall cease to be a primary U.S.
Government securities dealer in New York City (a “Primary Treasury Dealer”), the Company will
substitute for it another Primary Treasury Dealer and (2) any other Primary Treasury Dealer
selected by the Independent Investment Banker after consultation with the Company.

I-3

 

          “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any redemption date, the average, as determined by the Independent Investment Banker, of the
bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of
its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m., New York
City time, on the third business day preceding such redemption date.

          “S&P” means Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies.

          “Securities Act” means the Securities Act of 1933, as amended.

          “Treasury Rate” means, with respect to any redemption date, (1) the yield, under the heading
which represents the average for the immediate preceding week, appearing in the most recently
published statistical release designated “H.15(519)” or any successor publication which is
published weekly by the Board of Governors of the Federal Reserve System and which establishes
yields on actively traded U.S. Treasury securities adjusted to constant maturity under the caption
“Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if
no maturity is within three months before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Comparable Treasury Issue will be determined and the
Treasury Rate will be interpolated or extrapolated from such yields on a straight line basis,
rounding to the nearest month) or (2) if such release (or any successor release) is not published
during the week preceding the calculation date or does not contain such yields, the rate per annum
equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated
using a price for the Comparable Treasury Price for such redemption date. The Treasury Rate will
be calculated on the third business day preceding the redemption date.

          “Voting Stock” means capital stock of any class or kind the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of the issuer thereof, even if the right so to vote has been
suspended by the happening of such a contingency.

I-4

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

REYNOLDS AMERICAN INC.

6.750% Senior Secured Notes due 2017

			
	 	 	 
	Certificate No. 2
	 	$200,000,000

CUSIP No. 761713AU0

     Reynolds American Inc., a North Carolina corporation (the “Company,”) which term includes any
successor corporation under the Indenture hereinafter referred to), for value received, promises
to pay to Cede & Co., or its registered assigns, the principal sum of TWO HUNDRED MILLION DOLLARS
($200,000,000) on June 15, 2017.

     Interest Payment Dates: June 15 and December 15, commencing December 15, 2007.

     Record Dates: June 1 and December 1.

 

 

     Reference is hereby made to the further provisions of this Note set forth on the reverse
hereof, which further provisions shall have the same effect for all purposes as if set forth at
this place.

     Unless the certificate of authentication hereof has been executed by the Trustee referred to
on the reverse hereof by manual signature, this Note shall not be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose.

2

 

     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its
corporate seal.

Dated: June 21, 2007

	 	 	 	 	 
	 	REYNOLDS AMERICAN INC.,

as Issuer

 	 
	 	By:  	/s/ Daniel A. Fawley
 	 
	 	 	Daniel A. Fawley 	 
	 	 	Senior Vice President and Treasurer 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	                  /s/ McDara P. Folan, III
 	 
	 	 	McDara P. Folan, III 	 
	 	 	Senior Vice President, Deputy General Counsel
and Secretary 	 
	 

     Each of the undersigned hereby acknowledges its obligation as a Guarantor under the Indenture.

SANTA FE NATURAL TOBACCO COMPANY, INC., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Assistant Treasurer	 	 

LANE, LIMITED, as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Assistant Treasurer	 	 

Note Signature Page

 

 

CONWOOD HOLDINGS, INC., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Treasurer	 	 

CONWOOD COMPANY, LLC, as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Treasurer	 	 

CONWOOD SALES CO., LLC, as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Treasurer	 	 

ROSSWIL LLC, as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Treasurer	 	 

SCOTT TOBACCO LLC, as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Treasurer
	 	 

Note Signature Page

 

 

R.J. REYNOLDS TOBACCO HOLDINGS, INC., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley	 	 
	 

	 	 	 	 
	Daniel A. Fawley

	 	 
	Senior Vice President and Treasurer

	 	 

R. J. REYNOLDS GLOBAL PRODUCTS, INC., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Treasurer
	 	 

RJR ACQUISITION CORP., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley
	 	 
	 

	 	Vice President and Assistant Treasurer	 	 

R. J. REYNOLDS TOBACCO COMPANY, as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley
	 	 
	 

	 	Treasurer	 	 

R. J. REYNOLDS TOBACCO CO., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Treasurer
	 	 

Note Signature Page

 

 

RJR PACKAGING, LLC, as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley
	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley	 	 
	 

	 	Vice President and Treasurer	 	 

FHS, INC., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Kathryn A. Premo
	 	 
	 

	 	 	 	 
	 

	 	Kathryn A. Premo	 	 
	 

	 	Treasurer	 	 

GMB, INC., as Guarantor

	 	 	 	 	 
	By:

	 	/s/ Daniel A. Fawley	 	 
	 

	 	 	 	 
	 

	 	Daniel A. Fawley
	 	 
	 

	 	Treasurer	 	 

Note Signature Page

 

 

(Trustee’s Certificate of Authentication)

     This is one of the Notes of the series designated herein referred to in the within-mentioned
Indenture.

Dated: June 21, 2007

THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee

	 	 	 	 	 
	By:

	 	/s/ Christie Leppert
	 	 
	 

	 	 	 	 
	Name:

	 	Christie Leppert	 	 
	Title:

	 	Assistant Vice President	 	 

Note Signature Page

 

 

[REVERSE OF NOTE]

6.750% Senior Secured Notes due 2017

     References herein to the “Notes” mean the Company’s 6.750% Senior Secured Notes due 2017 and
not to any other series. Other capitalized terms used, but not defined, herein shall have the
meanings assigned to them in the Indenture and Schedule I attached hereto unless otherwise
indicated.

     11. Interest. The Company promises to pay interest on the principal amount of this
Note at 6.750% per annum from the date provided below until maturity. The Company shall pay
interest semi-annually, in arrears, on June 15 and December 15 of each year, or if any such day is
not a Business Day, on the next succeeding Business Day (each an “Interest Payment Date”), except
that, if the maturity date of the Note falls on a day that is not a Business Day, the Company will
make the required payment of interest and principal on the immediately succeeding Business Day, as
if it were made on the date the payment was due. Interest on the Notes shall accrue from the date
of initial issuance or, if interest has already been paid on the Notes, from and including the most
recent Interest Payment Date to which interest has been paid or provided for, to, but excluding the
relevant Interest Payment Date; provided the first Interest Payment Date shall be December 15,
2007. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. Interest
will not accrue as a result of any postponed or delayed payment in accordance with this paragraph.

     12. Method of Payment. The Company shall pay interest on the Notes (except defaulted
interest) to the Persons who are registered Holders of Notes at the close of business on the June 1
or December 1 immediately preceding the Interest Payment Date (except that interest payable at
maturity of the Notes shall be paid to the same persons to whom principal of such Notes is
payable), even if such Notes are canceled after such record date and on or before such Interest
Payment Date, except as provided in Section 2.13 of the Indenture with respect to defaulted
interest. The Notes shall be payable as to principal, premium, if any, and interest at the office
or agency of the Company maintained for such purpose within the Borough of Manhattan of the City of
New York, or, at the option of the Company, payment of interest may be made by check mailed to the
Holders at their addresses set forth in the register of Holders, and provided that payment by wire
transfer of immediately available funds shall be required with respect to principal of and interest
and premium, if any, on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in
such coin or currency of the United States of America as at the time of payment is legal tender for
payment of public and private debts.

     13. Paying Agent and Registrar. Initially, The Bank of New York Trust Company, N.A.,
the Trustee under the Indenture, shall act as Paying Agent and Registrar. The Company may change
any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries
may act in any such capacity.

     14. Indenture. The Company issued the Notes under an Indenture dated as of May 31,
2006 among the Company, as issuer, certain direct and indirect subsidiaries of the Company, as
guarantors, and The Bank of New York Trust Company, N.A., as trustee (the “Indenture”). The

1

 

terms of the Notes include those stated in the Indenture, those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (the “TIA”), and those set forth in
Schedule I attached hereto. The Notes are subject to all such terms, and Holders are
referred to the Indenture, the TIA and Schedule I for a statement of such terms.

     15. Redemption at Company’s Option. The Company may redeem all or a part of the Notes
from time to time in accordance with Article 5 of the Indenture at a redemption price equal to the
greater of (a) 100% of the principal amount of the Notes and (b) the sum of the present values of
the remaining scheduled payments of principal and interest on the Notes, discounted to the
redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months)
at the applicable Treasury Rate plus 25 basis points plus, with respect to each of the Notes,
accrued and unpaid interest, on the principal amount being redeemed to the date of redemption.
Notice of redemption under this Article 5 shall be mailed, by first class mail, at least 30 days
but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed
at its registered address. Notes in denominations equal to or larger than $2,000 may be redeemed
in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date, interest ceases to accrue on Notes or portions thereof
called for redemption (unless the Company shall default in the payment of the redemption price and
accrued interest).

     16. Repurchase upon Change of Control Repurchase Event. If a Change of Control
Repurchase Event occurs with respect to the Notes, unless the Company has exercised its right to
redeem the Notes, the Company will make an offer to each Holder of Notes to repurchase all or any
part (in excess of $2,000 and in integral multiples of $1,000) of that Holder’s Notes of that
series at a repurchase price in cash equal to 101% of the aggregate principal amount of Notes
repurchased plus any accrued and unpaid interest on the Notes repurchased to the date of
repurchase. Within 30 days following any Change of Control Repurchase Event, the Company will mail
a notice to each Holder, with a copy to the Trustee, describing the transaction or transactions
that constitute or may constitute the Change of Control Repurchase Event and offering to repurchase
Notes on the payment date specified in the notice, which date will be no earlier than 30 days and
no later than 60 days from the date such notice is mailed. The Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder, to the extent those laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control Repurchase Event. To the extent that
the provisions of any securities laws or regulations conflict with the Change of Control Repurchase
Event provisions of the Notes, the Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations hereunder by virtue of such
conflict. On the Change of Control Repurchase Event payment date, the Company will, to the extent
lawful (i) accept for payment all Notes or portions of Notes (in excess of $2,000 and in integral
multiples of $1,000) properly tendered pursuant to the Company’s offer; (ii) deposit with the
Paying Agent an amount equal to the aggregate repurchase price in respect of all Notes or portions
of Notes properly tendered; and (iii) deliver or cause to be delivered to the Trustee the Notes
properly accepted, together with an Officers’ Certificate stating the aggregate principal amount of
Notes being purchased by the Company. The Paying Agent will promptly mail to each Holder of Notes
properly tendered the repurchase price for the Notes, and the Trustee will promptly authenticate
and mail (or cause to be transferred by book-entry) to each Holder a new Note equal in principal
amount to any unpurchased portion of any Notes surrendered; provided that each new Note will be in
a principal

2

 

amount of $2,000 or an integral multiple of $1,000. The Company will not be required to make
an offer to repurchase the notes upon a Change of Control Repurchase Event if a third party makes
such an offer in the manner, at the times and otherwise in compliance with the requirements for an
offer made by the Company, and such third party purchases all Notes properly tendered and not
withdrawn under its offer.

     17. No Sinking Fund. The Company shall not be required to make sinking fund payments
with respect to the Notes.

     18. Denominations, Transfer, Exchange. The Notes are in registered form without
coupons in minimum denominations of $2,000 and integral multiples of $1,000. The transfer of Notes
may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer
documents and the Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture, including any transfer tax or other similar governmental charge payable
in connection therewith. The Company need not exchange or register the transfer of any Note or
portion of a Note selected for redemption, except for the unredeemed portion of any Note being
redeemed in part. Also, the Company need not exchange or register the transfer of any Note for a
period of 15 days before a selection of Notes to be redeemed.

     19. Persons Deemed Owners. The registered Holder of a Note may be treated as its owner
for all purposes.

     20. Amendment, Supplement and Waiver. Subject to certain exceptions, the Indenture or the
Notes may be amended or supplemented by the Company and Guarantors, each when authorized by a Board
Resolution, with the consent of the Holders of at least a majority in aggregate principal amount of
the Securities at the time outstanding of all series affected by such amendment or supplement,
voting as a single class, and any existing Default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a majority in aggregate
principal amount of the Securities at the time outstanding of all series affected by such Default
or waiver of compliance, voting as a single class. Without the consent of any Holder of a Note,
the Company and the Guarantors, when authorized by a Board Resolution, and the Trustee may
supplement the Indenture or the Notes: (a) to convey, transfer, assign, mortgage or pledge to the
Trustee as security for the Notes any property or assets; (b) to evidence the succession of another
corporation to the Company, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the
Company; (c) to add to the covenants of the Company such further covenants, restrictions,
conditions or provisions as its Board of Directors and the Trustee shall consider to be for the
protection or benefit of the Holders of the Notes, and to make the occurrence, or the occurrence
and continuance, of a Default in any such additional covenants, restrictions, conditions or
provisions an Event of Default permitting the enforcement of all or any of the several remedies
provided in the Indenture as therein set forth; provided, that in respect of any such additional
covenant, restriction, condition or provision such amendment or supplement may provide for a
particular period of grace after Default (which period may be shorter or longer than that allowed
in the case of other Defaults) or may provide for an immediate enforcement upon such an Event of
Default or may limit the remedies available to the Trustee upon such an Event of Default or may
limit the right of the Holders of a majority in aggregate principal amount of the Notes to waive
such an Event of Default; (d) to cure any

3

 

ambiguity or to correct or supplement any provision contained in the Indenture or in any
indenture supplemental thereto which may be defective or inconsistent with any other provision
contained in the Indenture or in any indenture supplemental thereto; (e) to make such other
provisions in regard to matters or questions arising under the Indenture or under any indenture
supplemental thereto as the Board of Directors may deem necessary or desirable and which shall not
adversely affect the interests of the Holders of the Notes in any material respect; (f) to
establish the form or forms or terms of Securities of any series as permitted by the Indenture; (g)
to evidence and provide for the acceptance of appointment under the Indenture by a successor
trustee with respect to the Notes and to add to or change any of the provisions of the Indenture as
shall be necessary to provide for or facilitate the administration of the trusts thereunder by more
than one trustee; (h) to provide for uncertificated Securities and to make all appropriate changes
for such purpose; (i) to comply with the requirements of the TIA; and (j) to add additional
Guarantors with respect to the Notes.

     The Trustee is hereby authorized to join with the Company and the Guarantors in the execution
of any such supplemental indenture, to make any further appropriate agreements and stipulations
which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or
pledge of any property thereunder, but the Trustee shall not be obligated to enter into any such
supplemental indenture which affects the Trustee’s own rights, duties or immunities under this
Indenture or otherwise.

     11. Defaults and Remedies. Any of the following events which shall have occurred and
be continuing (whatever the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental body) constitutes an
“Event of Default” under the Indenture: (a) default in the payment of any installment of interest
upon Securities of any series as and when the same shall become due and payable, and continuance of
such default for a period of 30 days; or (b) default in the payment of all or any part of the
principal on Securities of any series as and when the same shall become due and payable either at
maturity, upon any redemption, by declaration or otherwise; or (c) default in the payment of any
sinking fund installment as and when the same shall become due and payable by the terms of
Securities of any series; or (d) default in the performance, or breach, of any covenant or
agreement of the Company or the Guarantors in respect of Securities of any series (other than a
covenant or agreement in respect of such Securities a default in whose performance or whose breach
is elsewhere in this Section specifically dealt with), and continuance of such default or breach
for a period of 90 days after there has been given, by first class mail, to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the
outstanding Securities of all series affected thereby, a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a “Notice of Default”
hereunder; or (e) a court having jurisdiction in the premises shall enter a decree or order for
relief in respect of the Company or the Guarantors in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee or sequestrator (or similar official) of the Company or
for any substantial part of its property or ordering the winding up or liquidation of its affairs,
and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days;
or (f) the Company or any Restricted Subsidiary shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to
the entry of an order for relief in an involuntary

4

 

case under any such law, or consent to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee or sequestrator (or similar official) of the Company or
for any substantial part of its property, or make any general assignment for the benefit of
creditors; or (g) any Guarantee ceases to be in full force and effect (except as contemplated by
the terms of the Indenture), or any Guarantee is declared in a judicial proceeding to be null and
void, or any Guarantor denies or disaffirms in writing its obligations under the terms of the
Indenture or its Guarantee; or (h) at any time as such security is required by the terms of the
Indenture, any Security Document shall cease to be in full force and effect or shall cease to give
the Collateral Agent the liens or any of the material rights, powers and privileges purported to be
created thereby in favor of the Collateral Agent and such default shall continue unremedied for a
period of at least 30 days after written notice to the Company by the Collateral Agent; or (i) any
other Event of Default provided in Schedule I or in this Note.

     If an Event of Default described in clauses (a), (b), (c), (d) or (i) above (if the Event of
Default under clause (d) or (i) is with respect to less than all series of Securities then
outstanding) occurs and is continuing, then, and in each and every such case, except for any
series of Securities the principal of which shall have already become due and payable, either the
Trustee or the Holders of not less than 25% in aggregate principal amount of the Securities of
each such affected series then outstanding under the Indenture (voting as a single class) by
notice in writing to the Company (and to the Trustee if given by Securityholders), may declare the
entire principal of all Securities of all such affected series, and the interest accrued thereon,
if any, to be due and payable immediately, and upon any such declaration the same shall become
immediately due and payable. If an Event of Default described in clause (d) or (i) (if the Event
of Default under clauses (d) or (i), as the case may be, is with respect to all series of
Securities then outstanding), (e), (f), (g) or (h) occurs and is continuing, then and in each and
every such case, unless the principal of all the Securities shall have already become due and
payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of
all the Securities then outstanding under the Indenture (treated as one class), by notice in
writing to the Company (and to the Trustee if given by Securityholders), may declare the entire
principal of all the Securities then outstanding and interest accrued thereon, if any, to be due
and payable immediately, and upon any such declaration the same shall become immediately due and
payable.

     The foregoing provisions, however, are subject to the condition that if, at any time after the
principal of the Securities of any series (or of all the Securities, as the case may be) shall have
been so declared due and payable, and before any judgment or decree for the payment of the moneys
due shall have been obtained or entered as hereinafter provided, the Company or any Guarantor shall
pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest
upon all the Securities of each such series (or of all the Securities, as the case may be) and the
principal of any and all Securities of each such series (or of all the Securities, as the case may
be) which shall have become due otherwise than by acceleration (with interest upon such principal
and, to the extent that payment of such interest is enforceable under applicable law, on overdue
installments of interest, at the same rate as the rate of interest specified in the Securities of
each such series to the date of such payment or deposit) and such amount as shall be sufficient to
cover reasonable compensation to the Trustee and each predecessor Trustee, their respective agents,
attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by
the Trustee and each predecessor Trustee except as a result of gross negligence or willful
misconduct, and if any and all Events of Default under the Indenture, other

5

 

than the non-payment of the principal of Securities which shall have become due by acceleration,
shall have been cured, waived or otherwise remedied as provided herein, then and in every such case
the Holders of a majority in aggregate principal amount of all the Securities of each such series,
or of all the Securities, in each case voting as a single class, then outstanding, by written
notice to the Company and to the Trustee, may waive all defaults with respect to each such series
(or with respect to all the Securities, as the case may be) and rescind and annul such declaration
and its consequences, but no such waiver or rescission and annulment shall extend to or shall
affect any subsequent default or shall impair any right consequent thereon.

     15. Trustee Dealings with Company. The Trustee, in its individual or any other
capacity, may become the owner or pledgee of Securities, and may otherwise deal with the Company,
as if it were not the Trustee.

     16. No Recourse Against Others. No director, officer, employee, incorporator or
shareholder or controlling person of the Company or the Trustee, as such, shall have any liability
for any obligations of the Company or the Trustee, respectively, under the Notes or the Indenture
or for any claim based on, in respect of, or by reason of, such obligations or their creation.
Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes. Such waiver may not be effective
to waive liabilities under the federal securities laws and it is the view of the Securities and
Exchange Commission that such a waiver is against public policy.

     17. Authentication. This Note shall not be valid until authenticated by the manual
signature of the Trustee or an authenticating agent and in accordance with the Indenture.

     19. Guarantees. This Note will be entitled to the benefits of certain Guarantees made
for the benefit of the Holders. Subject to the terms of the Indenture, each Guarantor of the
Indenture fully, unconditionally and irrevocably guarantees, as primary obligor and not merely as
surety, jointly and severally, to each Holder of the Notes and the Trustee the full and punctual
payment when due, whether at maturity, by acceleration, by redemption, by repurchase, or otherwise,
of the principal of, premium, if any, and interest on the Notes and all other obligations of the
Company under the Indenture, as provided in the Indenture. Reference is made to the Indenture for
a statement of the respective rights, limitations of rights, duties and obligations thereunder of
the Guarantors, the Trustee and the Holders, and of the circumstances under which the Guarantees
may be released.

     20. Abbreviations. Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (=
joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (=Uniform Gifts to Minors Act).

     21. CUSIP and ISIN Numbers. Pursuant to a recommendation promulgated by the Committee
on Uniform Security Identification Procedures, the Company has caused CUSIP or ISIN numbers or both
numbers to be printed on the Notes and the Trustee may use CUSIP or ISIN numbers or both numbers in
notices to the Holders of the Notes as a convenience to Holders. No representation is made as to
the accuracy of such numbers either as printed on the Notes or as

6

 

contained in any notice to the Holders of the Notes and reliance may be placed only on the
other identification numbers placed thereon.

     22. Governing Law. This Note shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflicts of laws.

7

 

     The Company shall furnish to any Holder upon written request and without charge a copy of the
Indenture. Requests may be made to:

     Reynolds American Inc.

     401 North Main Street

     Winston-Salem, North Carolina 27101-3818

     Facsimile: 336-741-5000

     Attention: Treasurer

8

 

[FORM OF TRANSFER NOTICE]

          FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s)
unto

Insert Taxpayer Identification No.

 

 

Please print the name and address including zip code of assignee

 

 

the within Note and all rights thereunder, hereby irrevocably constituting and appointing
___ attorney to transfer said Note on the books of the Company with full power of
substitution in the premises.

 

 

Date:                                      &n
bsp; 

NOTICE: The signature to this assignment must correspond with the name
as written upon the face of the within-mentioned instrument in every
particular, without alteration or any change whatsoever.

Signature
Guarantee:                                      &n
bsp; 

Signature must be guaranteed by a participant in a recognized signature guaranty medallion program
or other signature guarantor acceptable to the Trustee.

9

 

SCHEDULE I

REYNOLDS AMERICAN INC.

TERMS OF 6.750% SENIOR SECURED NOTES DUE 2017,

7.250% SENIOR SECURED NOTES DUE 2037, AND

FLOATING RATE SENIOR SECURED NOTES DUE 2011

     Section 1.01 Designation of Notes. (a) The terms set forth in this Schedule I pertain
to notes to be issued pursuant to that certain Indenture dated May 31, 2006, by and among Reynolds
American Inc. (the “Company”) as Issuer, The Bank of New York Trust Company, N.A., as Trustee, and
certain Subsidiaries of the Company who have executed such Indenture or a supplement thereto as
Guarantors (as so supplemented, the “Indenture”). The notes subject to these terms are (i) the
Company’s 6.750% Senior Secured Notes due 2017 in the original principal amount of $700,000,000
(CUSIP Number 761713AU0) (the “2017 Notes”), (ii) the Company’s 7.250% Senior Secured Notes due
2037 in the original principal amount of $450,000,000 (CUSIP Number 761713AT3) (the “2037 Notes”),
and (iii) the Company’s Floating Rate Senior Secured Notes due 2011 in the original principal
amount of $400,000,000 (CUSIP Number 761713AS5) (the “Floating Rate Notes,” and together with the
2017 Notes and the 2037 Notes, the “Notes”).

          (b) The 2017 Notes, the 2037 Notes and the Floating Rate Notes shall each be considered a
separate series for all purposes of the Indenture.

     Section 1.02 Initial Issuance. (a) The Notes are being offered and sold by the Company
pursuant to an Underwriting Agreement, dated June 18, 2007 (the “Underwriting Agreement”) among the
Company, Citigroup Global Markets Inc., J.P. Morgan Securities Inc., Lehman Brothers Inc., and
Morgan Stanley and Co. Incorporated and the other underwriters named therein. The Notes will be
resold in an offering registered under the Securities Act. Each series of Notes shall be issued in
the form of a permanent global note, with each such global note to be deposited with the Trustee,
as Custodian for the Depository, duly executed by the Company, and authenticated by the Trustee as
hereinafter provided. Each such global note may be represented by more than one certificate, if so
required by the Depository’s rules regarding the maximum principal amount to be represented by a
single certificate. The global notes representing the Notes are sometimes collectively herein
referred to as the “Global Notes.” The Notes may have notations, legends or endorsements required
by law, stock exchange rule or usage. The Company and the Trustee shall approve the forms of the
Notes and any notation, endorsement or legend on them.

          (b) Denominations. The Notes shall be issuable only in fully registered form, without
interest coupons, and only in denominations of $2,000 and any integral multiples of $1,000 in
excess thereof.

     Section 1.03. Depository: Custodian. The Company initially appoints The Depository Trust
Company (“DTC”) to act as Depository with respect to the Global Notes. The Company initially
appoints the Trustee to act as Custodian with respect to the Global Notes.

     Section 1.04. Transfer and Exchange of Global Notes. A Global Note may not be transferred as
a whole except by the Depository to a nominee of the Depository, by a nominee of the Depository

I-1

 

to the Depository or to another nominee of the Depository, or by the Depository or any such
nominee to a successor Depository or to a nominee of such successor Depository.

     Section 1.05 Definitions. (a) Capitalized terms not defined in this Schedule I shall
have the meanings set forth in the Indenture.

          (b) As used herein and in the Notes, the following terms shall have the meanings set forth
below:

          “Below Investment Grade Rating Event” means, with respect to each series of Notes, the Notes
of that series are downgraded by each of the Rating Agencies on any date from the date of the
public notice of an arrangement that could result in a Change of Control until the end of the
60-day period following public notice of the occurrence of a Change of Control (which period shall
be extended so long as the rating of the Notes is under publicly announced consideration for
possible downgrade by any of the Rating Agencies), and the rating resulting from such downgrade for
such Notes issued by each Rating Agency is below Investment Grade, regardless of whether the rating
immediately prior to such downgrade was below Investment Grade; provided that a particular
reduction in rating shall not be deemed a Below Investment Grade Rating Event for purposes of the
definition of Change of Control Repurchase Event hereunder unless the Rating Agencies making the
reduction in rating to which this definition would otherwise apply announce or publicly confirm or
inform the Trustee in writing at its request that the reduction was the result, in whole or in
part, of any event or circumstance comprised of or arising as a result of, or in respect of, the
applicable Change of Control (whether or not the applicable Change of Control shall have occurred
at the time of the Below Investment Grade Rating Event).

          “Calculation Agent” means, initially, The Bank of New York Trust Company, N.A.

          “Change of Control” means the occurrence of any of the following: (1) the direct or indirect
sale, transfer, conveyance, or other disposition (other than by way of merger or consolidation), in
one or a series of related transactions, of all or substantially all of the properties or assets of
the Company and its subsidiaries taken as a whole to any “person” (as that term is used in Section
13(d)(3) of the Exchange Act), other than the Company or one of its subsidiaries; or (2) the
consummation of any transaction (including, without limitation, any merger or consolidation) the
result of which is that any “person” (as that term is used in Section 13(d)(3) of the Exchange Act)
other than the Company or one of its subsidiaries becomes the beneficial owner, directly or
indirectly, of more than 50% of the then outstanding number of shares of the Company’s Voting
Stock.

          “Change of Control Repurchase Event” means the occurrence of both a Change of Control and a
Below Investment Grade Rating Event.

          “Clearstream” means Clearstream Banking, société anonyme, Luxembourg.

          “Comparable Treasury Issue” means the U.S. Treasury security selected by an Independent
Investment Banker as having a maturity comparable to the remaining term (“Remaining Life”) of the
notes to be redeemed that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of such notes.

I-2

 

          “Comparable Treasury Price” means, with respect to any redemption date, (1) the average of
five Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and
lowest Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains
fewer than five such Reference Treasury Dealer Quotations, the average of all such quotations.

          “Custodian” means the Trustee, as custodian with respect to the Global Notes, or any successor
entity thereto.

          “Definitive Note” means a certificated Note registered in the name of the Holder thereof.

          “Depository” means, with respect to the Notes issued in the form of one or more Global Notes,
DTC as the Person appointed hereby as the Depository with respect to the Notes, or another Person
appointed as Depository by the Company, which Person must be a clearing agency registered under the
Exchange Act, and any and all successors thereto appointed as Depository hereunder and having
become such pursuant to the applicable provision of the Indenture.

          “Euroclear” means Euroclear Bank S.A./N.V., as operator of the Euroclear System.

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

          “Independent Investment Banker” means any of Citigroup Global Markets Inc., J.P. Morgan
Securities Inc., Lehman Brothers Securities Inc. and Morgan Stanley & Co. Incorporated, or, if all
such firms are unwilling or unable to select the Comparable Treasury Issue, an independent
investment banking institution of national standing appointed by the Trustee after consultation
with the Company.

          “Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any
successor rating categories of Moody’s); a rating of BBB– or better by S&P (or its equivalent under
any successor rating categories of S&P); or the equivalent investment grade credit rating from any
additional Rating Agency or Rating Agencies selected by the Company pursuant to clause (2) of the
definition of Rating Agency.

          “Moody’s” means Moody’s Investors Service Inc.

          “Rating Agency” means (1) each of Moody’s and S&P; and (2) if any of Moody’s or
S&P ceases to
rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of the
control of the Company, a “nationally recognized statistical rating organization” within the
meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act, selected by the Company as a
replacement agency for Moody’s or S&P, as the case may be.

          “Reference Treasury Dealer” means (1) Citigroup Global Markets Inc., J.P. Morgan Securities
Inc., Lehman Brothers Securities Inc. or Morgan Stanley & Co. Incorporated and their respective
successors, provided, however, that if any of the foregoing shall cease to be a primary U.S.
Government securities dealer in New York City (a “Primary Treasury Dealer”), the Company will
substitute for it another Primary Treasury Dealer and (2) any other Primary Treasury Dealer
selected by the Independent Investment Banker after consultation with the Company.

I-3

 

          “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any redemption date, the average, as determined by the Independent Investment Banker, of the
bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of
its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m., New York
City time, on the third business day preceding such redemption date.

          “S&P” means Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies.

          “Securities Act” means the Securities Act of 1933, as amended.

          “Treasury Rate” means, with respect to any redemption date, (1) the yield, under the heading
which represents the average for the immediate preceding week, appearing in the most recently
published statistical release designated “H.15(519)” or any successor publication which is
published weekly by the Board of Governors of the Federal Reserve System and which establishes
yields on actively traded U.S. Treasury securities adjusted to constant maturity under the caption
“Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if
no maturity is within three months before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Comparable Treasury Issue will be determined and the
Treasury Rate will be interpolated or extrapolated from such yields on a straight line basis,
rounding to the nearest month) or (2) if such release (or any successor release) is not published
during the week preceding the calculation date or does not contain such yields, the rate per annum
equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated
using a price for the Comparable Treasury Price for such redemption date. The Treasury Rate will
be calculated on the third business day preceding the redemption date.

          “Voting Stock” means capital stock of any class or kind the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of the issuer thereof, even if the right so to vote has been
suspended by the happening of such a contingency.

I-4

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