Document:

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                                                                    Exhibit 10.2

                       FIRST AMENDMENT TO CREDIT AGREEMENT

            FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as of
January 17, 2003, among R.J. REYNOLDS TOBACCO HOLDINGS, INC. (f/k/a/ RJR
NABISCO, INC.), a Delaware corporation (the "Borrower"), various Subsidiaries of
the Borrower party to the Second Amended and Restated Subsidiary Guaranty
referred to below and various lending institutions party to the Credit Agreement
referred to below. All capitalized terms used herein and not otherwise defined
herein shall have the respective meanings provided such terms in the Credit
Agreement.

                              W I T N E S S E T H :

            WHEREAS, the Borrower, various lending institutions (the "Lenders")
and JPMorgan Chase Bank, as Administrative Agent (the "Administrative Agent")
are parties to a Second Amended and Restated Credit Agreement, dated as of May
10, 2002 (as so amended and restated, the "Credit Agreement");

            WHEREAS, the R.J. Reynolds Tobacco Company ("Reynolds Tobacco"), RJR
Acquisition Corp. ("Acquisition Corp.") and the Administrative Agent are parties
to a Second Amended and Restated Subsidiary Guaranty Agreement, dated as of May
10, 2002 (the "Second Amended and Restated Subsidiary Guaranty");

            WHEREAS, Reynolds Tobacco, Acquisition Corp., certain Subsidiaries
of Reynolds Tobacco and the Administrative Agent are parties to a Second Amended
and Restated Subordination Agreement, dated as of May 10, 2002 (the "Second
Amended and Restated Subordination Agreement");

            WHEREAS, the Borrower and the Lenders wish to amend the Credit
Agreement as provided herein; and

            WHEREAS, the Subsidiary Guarantors and the Lenders wish to further
amend and restate the Second Amended and Restated Subsidiary Guaranty and
Reynolds Tobacco, Acquisition Corp., certain Subsidiaries of Reynolds Tobacco
and the Lenders wish to further amend and restate the Second Amended and
Restated Subordination Agreement, in each case as herein provided;

            NOW, THEREFORE, it is agreed:

I. Amendments to the Credit Agreement.

            1. Section 7.01(c) of the Credit Agreement is hereby amended by (i)
inserting the text "(x)" immediately following the text "which certificate shall
set forth" and (ii) inserting the text "and (y) the fair market value of all
investments held by Acquisition Corp. and/or the Borrower which represent
Acquisition Corp.'s and/or the Borrower's return on investments made with
proceeds of cash acquired pursuant to the NGH Acquisition (and/or cash returns
from investment returns on such proceeds) after (and only after) December 31,
2002 (in the case of the first delivery of an officer's certificate pursuant to
this Section 7.01(c) after the First Amendment Effective Date) or the last day
of the fiscal quarter then most recently ended

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for which an officer's certificate has previously been delivered pursuant to
this Section 7.01(c) (in the case of any subsequent delivery of an officer's
certificate pursuant to this Section 7.01(c)) (the fair market value of such
investments as set forth in any certificate delivered pursuant to this Section
7.01(c), an "Additional Certified Incremental NGH Cash Amount")" immediately
preceding the period at the end of said Section.

            2. Section 8.04(b) of the Credit Agreement is hereby amended by (x)
deleting the word "and" appearing at the end of clause (i) appearing in said
Section and inserting a comma in lieu thereof and (y) inserting the following
text immediately prior to the semicolon appearing at the end of said Section:

      "and (iii) Indebtedness owing by Subsidiaries of the Borrower (other than
      the Subsidiary Guarantors and the Specified Subsidiaries) to the Borrower,
      so long as the aggregate principal amount thereof at any time outstanding
      does not exceed $100,000,000".

            3. Section 8.04(d) of the Credit Agreement is hereby amended by
deleting the text "Subsidiary Guarantor" and inserting the text "Subsidiary of
the Borrower" in lieu thereof.

            4. Section 8.04(i) of the Credit Agreement is hereby amended by (i)
deleting the reference to "Reynolds Tobacco" appearing in subclause (I)(z) of
said Section and inserting the text "the Borrower" in lieu thereof and (ii)
deleting the text "in connection with their cash management systems" appearing
in subclause (I)(z) of said Section and inserting the text "or for tax planning
purposes" in lieu thereof.

            5. Section 8.04(k) of the Credit Agreement is hereby amended by
deleting the text "consistent with past practices" appearing in said Section.

            6. Section 8.05(vi) of the Credit Agreement is hereby amended by
inserting the text "the sum of (x) the Certified Incremental NGH Cash Amount
plus (y)" immediately preceding the text "the Certified Acquired NGH Cash
Amount" appearing in said Section.

            7. Section 8.05(vii) of the Credit Agreement is hereby amended to
read in its entirety as follows:

            "(vii) the Borrower may from time to time declare and pay, or
      otherwise pay and make, Dividends (including by way of a repurchase of
      shares of Borrower Common Stock), provided that (x) the aggregate amount
      of cash paid in respect of all such Dividends on and after the Second
      Restatement Effective Date pursuant to this clause (vii) shall not exceed
      $500,000,000 and (y) any Dividend made or paid pursuant to this clause
      (vii) (except to the extent taking the form of a repurchase of shares of
      Borrower Common Stock) shall be made or paid as part of the Borrower's
      regular, quarterly dividend program (and not as a special dividend).".

            8. Section 9.07 of the Credit Agreement is hereby amended by
deleting said Section in its entirety and inserting the following new Section
9.07 in lieu thereof:

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            "9.07 Guaranties. Any Guaranty or any provision thereof shall cease
      to be in full force or effect or any Guarantor or any Person acting by or
      on behalf thereof shall deny or disaffirm such Guarantor's obligations
      under its Guaranty or any Guarantor shall default in the due performance
      or observance of any term, covenant or agreement on its part to be
      performed or observed pursuant to its Guaranty and such default, if (but
      only if) a default of the covenant therein not to violate the provisions
      of Section 7 hereof, shall continue unremedied for a period of at least 30
      days after written notice to the Borrower from the Administrative Agent;
      or".

            9. The definition of "Adjusted Operating Income" appearing in
Section 10 of the Credit Agreement is hereby amended by (i) deleting the word
"and" appearing at the end of clause (ii) of the proviso appearing therein and
(ii) inserting the following text immediately preceding the period at the end of
said definition:

      "and (iv) for all purposes, for any Test Period which includes any portion
      of the period from October 1, 2002 to and including December 31, 2002,
      Adjusted Operated Income shall be adjusted by adding thereto the pre-tax
      2002 Restructuring Charges recorded or accrued during such period, in each
      case to the extent deducted in any determination of Adjusted Operating
      Income".

            10. The definition of "Consolidated Net Worth" appearing in Section
10 of the Credit Agreement is hereby amended by (i) inserting the text "(or, if
less, the Certified Acquired NGH Cash Amount)" immediately prior to the text
"less (z)" appearing in said definition, (ii) deleting the word "and" appearing
at the end of clause (i) of the proviso appearing in said definition and
inserting a comma in lieu thereof and (iii) inserting the text "and (iii) an
amount equal to the aggregate post-tax 2002 Restructuring Charges recorded or
accrued as of such date of determination" immediately preceding the period at
the end of said definition.

            11. The definition of "Cumulative Adjusted Net Cash Income"
appearing in Section 10 of the Credit Agreement is hereby amended by inserting
the following text immediately preceding the period at the end of said
definition:

      "plus (v) any post-tax 2002 Restructuring Charges recorded or accrued
      during the period referred to in clause (i) above, to the extent deducted
      in any determination of Cumulative Adjusted Cash Net Income" .

            12. The definition of "Intercompany Subordination Agreement"
appearing in Section 10 of the Credit Agreement is hereby amended by inserting
the text ", it being understood that on and after the First Amendment Effective
Date, the term "Intercompany Subordination Agreement" shall mean the Third
Amended and Restated Intercompany Subordination Agreement in the form of Exhibit
G-1 hereto, as the same may be further amended, restated, modified and/or
supplemented from time to time in accordance with the terms hereof and thereof"
immediately before the period appearing in said definition.

            13. The definition of "Permitted Currency Agreement" appearing in
Section 10 of the Credit Agreement is hereby amended by deleting the text
"Subsidiary Guarantor" and inserting the text "Subsidiary of the Borrower" in
lieu thereof.

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            14. The definition of "Subsidiary Guaranty" appearing in Section 10
of the Credit Agreement is hereby amended by inserting the text ", it being
understood that on and after the First Amendment Effective Date, the term
"Subsidiary Guaranty" shall mean the Third Amended and Restated Subsidiary
Guaranty in the form of Exhibit D-1 hereto, as the same may be further amended,
restated, modified and/or supplemented from time to time in accordance with the
terms hereof and thereof" immediately before the period appearing in said
definition.

            15. Section 10 of the Credit Agreement is hereby further amended by
inserting the following defined terms in the appropriate alphabetical order:

            "Additional Certified Incremental NGH Cash Amount" shall have the
      meaning provided in Section 7.01(c).

            "Borrower Guaranty" shall mean the guaranty of the Borrower pursuant
      to Section 13 of this Agreement.

            "Certified Incremental NGH Cash Amount" shall mean, as at any date
      of determination, an amount equal to the sum of (x) Original Certified
      Incremental NGH Cash Amount (as defined in Part II, Section 6 of the First
      Amendment) plus (y) the sum of the Additional Certified Incremental NGH
      Cash Amounts as set forth in each officer's certificate delivered by the
      Borrower pursuant to Section 7.01(c) on or prior to such date of
      determination.

            "First Amendment" shall mean the First Amendment to this Agreement,
      dated as of January 17, 2003.

            "First Amendment Effective Date" shall have the meaning provided in
      the First Amendment.

            "Guarantor" shall mean each Subsidiary Guarantor and the Borrower.

            "Guaranty" shall mean and include the Subsidiary Guaranty and the
      Borrower Guaranty.

            "Guaranteed Creditors" shall mean and include the Administrative
      Agent, each Lender and each party (other than any Credit Party) party to
      (or participating in) a Hedging Agreement to the extent such party is a
      Lender or an affiliate thereof (even if such Lender subsequently ceases to
      be a Lender under this Agreement for any reason) and their subsequent
      assigns.

            "Guaranteed Obligations" shall mean all obligations (including
      obligations which, but for the automatic stay under Section 362(a) of the
      Bankruptcy Code, would become due) and liabilities of each Guaranteed
      Party owing under any Hedging Agreement entered into by such Guaranteed
      Party with any Guaranteed Creditor, whether now in existence or hereafter
      arising, and the due performance and compliance by each Guaranteed Party
      with all terms, conditions and agreements contained therein.

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            "Guaranteed Party" shall mean each Subsidiary of the Borrower party
      to a Hedging Agreement with any Guaranteed Creditor.

            "2002 Restructuring Charges" shall mean restructuring charges
      incurred by the Borrower and its Subsidiaries during the fiscal quarter of
      the Borrower ended December 31, 2002 in connection with the divestiture of
      certain non-core businesses of the Borrower and its Subsidiaries and a
      reduction in the workforce of the Borrower and its Subsidiaries; provided
      that the aggregate amount of such restructuring charges (to the extent
      provided for as an add-back pursuant to the definitions of "Adjusted
      Operating Income", "Cumulative Adjusted Net Income" or "Consolidated Net
      Worth") shall not exceed $245,000,000 million (determined on a pre-tax
      basis), of which no more than approximately $70,000,000 (determined on a
      pre-tax basis) shall be characterized as cash restructuring charges.

            16. The Credit Agreement is hereby further amended by inserting the
following Section 13 immediately following the Section 12 thereof:

            "SECTION 13. Borrower Guaranty.

            13.01 The Guaranty. In order to induce the Lenders to enter into
      this Agreement and to induce the Lenders or any of their respective
      affiliates to enter into Hedging Agreements, and in recognition of the
      direct benefits to be received by the Subsidiaries of the Borrower from
      the entering into of Hedging Agreements, the Borrower hereby agrees with
      the Lenders as follows: the Borrower hereby unconditionally and
      irrevocably guarantees, as primary obligor and not merely as surety the
      full and prompt payment when due, whether upon maturity, acceleration or
      otherwise, of any and all of the Guaranteed Obligations to the Guaranteed
      Creditors. If any or all of the Guaranteed Obligations to the Guaranteed
      Creditors becomes due and payable hereunder, the Borrower unconditionally
      promises to pay such indebtedness to the Guaranteed Creditors, or order,
      on demand, together with any and all expenses which may be incurred by the
      Guaranteed Creditors in collecting any of the Guaranteed Obligations. This
      Borrower Guaranty is a guaranty of payment and not of collection. This
      Borrower Guaranty is a continuing one and all liabilities to which it
      applies or may apply under the terms hereof shall be conclusively presumed
      to have been created in reliance hereon. If claim is ever made upon any
      Guaranteed Creditor for repayment or recovery of any amount or amounts
      received in payment or on account of any of the Guaranteed Obligations and
      any of the aforesaid payees repays all or part of said amount by reason of
      (i) any judgment, decree or order of any court or administrative body
      having jurisdiction over such payee or any of its property or (ii) any
      settlement or compromise of any such claim effected by such payee with any
      such claimant (including any Guaranteed Party), then and in such event the
      Borrower agrees that any such judgment, decree, order, settlement or
      compromise shall be binding upon the Borrower, notwithstanding any
      revocation of this Borrower Guaranty or any other instrument evidencing
      any liability of any other Guaranteed Party, and the Borrower shall be and
      remain liable to the afore-

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      said payees hereunder for the amount so repaid or recovered to the same
      extent as if such amount had never originally been received by any such
      payee.

            13.02 Bankruptcy. Additionally, the Borrower unconditionally and
      irrevocably guarantees the payment of any and all of the Guaranteed
      Obligations to the Guaranteed Creditors whether or not due or payable by
      any Guaranteed Party upon the occurrence of any of the events specified in
      Section 9.05, and unconditionally promises to pay such indebtedness to the
      Guaranteed Creditors, or order, on demand.

            13.03 Nature of Liability. The liability of the Borrower hereunder
      is exclusive and independent of any guaranty of the Guaranteed Obligations
      whether executed by the Borrower, any other guarantor or by any other
      party, and the liability of the Borrower hereunder is not affected or
      impaired by (a) any direction as to application of payment by any
      Guaranteed Party or by any other party, or (b) any other continuing or
      other guaranty, undertaking or maximum liability of a guarantor or of any
      other party as to the Guaranteed Obligations, or (c) any payment on or in
      reduction of any such other guaranty or undertaking, or (d) any
      dissolution, termination or increase, decrease or change in personnel by
      any Guaranteed Party, or (e) any payment made to the Guaranteed Creditors
      on the Guaranteed Obligations which any such Guaranteed Creditor repays to
      any Guaranteed Party pursuant to court order in any bankruptcy,
      reorganization, arrangement, moratorium or other debtor relief proceeding,
      and the Borrower waives any right to the deferral or modification of its
      obligations hereunder by reason of any such proceeding, or (f) any action
      or inaction of the type described in Section 13.05, or (g) the lack of
      validity or enforceability of any Credit Document or any other instrument
      relating thereto.

            13.04 Independent Obligation. No invalidity, irregularity or
      unenforceability of all or any part of the Guaranteed Obligations shall
      affect, impair or be a defense to this Borrower Guaranty, and this
      Borrower Guaranty shall be primary, absolute and unconditional
      notwithstanding the occurrence of any event or the existence of any other
      circumstances which might constitute a legal or equitable discharge of a
      surety or guarantor except payment in full of the Guaranteed Obligations.
      The obligations of the Borrower hereunder are independent of the
      obligations of any Guaranteed Party, any other guarantor or any other
      Person and a separate action or actions may be brought and prosecuted
      against the Borrower whether or not action is brought against any
      Guaranteed Party, any other guarantor or any other Person and whether or
      not any Guaranteed Party, any other guarantor or any other Person be
      joined in any such action or actions. The Borrower waives, to the full
      extent permitted by law, the benefit of any statute of limitations
      affecting its liability hereunder or the enforcement thereof. Any payment
      by any Guaranteed Party or other circumstance which operates to toll any
      statute of limitations as to such Guaranteed Party shall operate to toll
      the statute of limitations as to the Borrower.

            13.05 Authorization. The Borrower authorizes the Guaranteed
      Creditors without notice or demand (except as shall be required by
      applicable statute and

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      cannot be waived), and without affecting or impairing its liability
      hereunder, from time to time to:

                  (i) change the manner, place or terms of payment of, and/or
            change or extend the time of payment of, renew, increase, accelerate
            or alter, any of the Guaranteed Obligations (including any increase
            or decrease in the rate of interest thereon) or any liability
            incurred directly or indirectly in respect thereof, and this
            Borrower Guaranty made shall apply to the Guaranteed Obligations as
            so changed, extended, renewed or altered;

                  (ii) take and hold security for the payment of the Guaranteed
            Obligations and sell, exchange, release, impair, surrender, realize
            upon or otherwise deal with in any manner and in any order any
            property by whomsoever at any time pledged or mortgaged to secure,
            or howsoever securing, the Guaranteed Obligations or any liabilities
            (including any of those hereunder) incurred directly or indirectly
            in respect thereof or hereof, and/or any offset thereagainst;

                  (iii) exercise or refrain from exercising any rights against
            any Guaranteed Party or others or otherwise act or refrain from
            acting;

                  (iv) release or substitute any one or more endorsers,
            guarantors, any Guaranteed Party or other obligors;

                  (v) settle or compromise any of the Guaranteed Obligations or
            any liability (including any of those hereunder) incurred directly
            or indirectly in respect thereof or hereof, and may subordinate the
            payment of all or any part thereof to the payment of any liability
            (whether due or not) of any Guaranteed Party to their respective
            creditors other than the Guaranteed Creditors;

                  (vi) apply any sums by whomsoever paid or howsoever realized
            to any liability or liabilities of any Guaranteed Party to the
            Guaranteed Creditors regardless of what liability or liabilities of
            such Guaranteed Party remain unpaid;

                  (vii) consent to or waive any breach of, or any act, omission
            or default under, any Hedging Agreement or any of the instruments or
            agreements referred to herein or therein, or otherwise amend, modify
            or supplement any Hedging Agreement or any of such other instruments
            or agreements; and/or

                  (viii) take any other action which would, under otherwise
            applicable principles of common law, give rise to a legal or
            equitable discharge of the Borrower from its liabilities under this
            Borrower Guaranty.

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            13.06 Reliance. It is not necessary for the Guaranteed Creditors to
      inquire into the capacity or powers of any Guaranteed Party or the
      officers, directors, partners or agents acting or purporting to act on
      their behalf, and any Guaranteed Obligations made or created in reliance
      upon the professed exercise of such powers shall be guaranteed hereunder.

            13.07 Subordination. Any of the indebtedness of any Guaranteed Party
      now or hereafter owing to the Borrower is hereby subordinated to the
      Guaranteed Obligations of such Guaranteed Party owing to the Guaranteed
      Creditors; and if the Administrative Agent so requests at a time when an
      Event of Default exists, all such indebtedness of such Guaranteed Party to
      the Borrower shall be collected, enforced and received by the Borrower for
      the benefit of the Guaranteed Creditors and be paid over to the
      Administrative Agent on behalf of the Guaranteed Creditors on account of
      the Guaranteed Obligations of such Guaranteed Party to the Guaranteed
      Creditors, but without affecting or impairing in any manner the liability
      of the Borrower under the other provisions of this Borrower Guaranty.
      Prior to the transfer by the Borrower to any Person (other than a
      Subsidiary Guarantor) of any note or negotiable instrument evidencing any
      of the indebtedness of any Guaranteed Party to the Borrower, the Borrower
      shall mark such note or negotiable instrument with a legend that the same
      is subject to this subordination. Without limiting the generality of the
      foregoing, the Borrower hereby agrees with the Guaranteed Creditors that
      it will not exercise any right of subrogation which it may at any time
      otherwise have as a result of this Borrower Guaranty (whether contractual,
      under Section 509 of the Bankruptcy Code or otherwise) until all
      Guaranteed Obligations have been irrevocably paid in full in cash.

            13.08 Waiver. (a) The Borrower waives any right (except as shall be
      required by applicable statute and cannot be waived) to require any
      Guaranteed Creditor to (i) proceed against any Guaranteed Party, any other
      guarantor or any other party, (ii) proceed against or exhaust any security
      held from any Guaranteed Party, any other guarantor or any other party or
      (iii) pursue any other remedy in any Guaranteed Creditor's power
      whatsoever. The Borrower waives any defense based on or arising out of any
      defense of any Guaranteed Party, any other guarantor or any other party,
      other than payment in full in cash of the Guaranteed Obligations, based on
      or arising out of the disability of any Guaranteed Party, any other
      guarantor or any other party, or the unenforceability of the Guaranteed
      Obligations or any part thereof from any cause, or the cessation from any
      cause of the liability of any Guaranteed Party other than payment in full
      in cash of the Guaranteed Obligations. The Guaranteed Creditors may, at
      their election, foreclose on any security held by the Administrative Agent
      or any other Guaranteed Creditor by one or more judicial or nonjudicial
      sales, whether or not every aspect of any such sale is commercially
      reasonable (to the extent such sale is permitted by applicable law), or
      exercise any other right or remedy the Guaranteed Creditors may have
      against any Guaranteed Party or any other party, or any security, without
      affecting or impairing in any way the liability of the Borrower hereunder
      except to the extent the Guaranteed Obligations have been paid in cash.
      The Borrower waives any defense arising out of any such election

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      by the Guaranteed Creditors, even though such election operates to impair
      or extinguish any right of reimbursement or subrogation or other right or
      remedy of the Borrower against any Guaranteed Party or any other party or
      any security.

            (b) The Borrower waives all presentments, demands for performance,
      protests and notices, including, without limitation, notices of
      nonperformance, notices of protest, notices of dishonor, notices of
      acceptance of this Borrower Guaranty, and notices of the existence,
      creation, modification or incurring of new or additional Guaranteed
      Obligations. The Borrower assumes all responsibility for being and keeping
      itself informed of each Guaranteed Party's financial condition and assets,
      and of all other circumstances bearing upon the risk of nonpayment of the
      Guaranteed Obligations and the nature, scope and extent of the risks which
      the Borrower assumes and incurs hereunder, and agrees that the Guaranteed
      Creditors shall have no duty to advise the Borrower of information known
      to them regarding such circumstances or risks.

            (c) Until such time as the Guaranteed Obligations have been paid in
      full in cash, the Borrower hereby waives all rights of subrogation which
      it may at any time otherwise have as a result of this Borrower Guaranty
      (whether contractual, under Section 509 of the Bankruptcy Code, or
      otherwise) to the claims of the Guaranteed Creditors against any other
      guarantor of the Guaranteed Obligations and all contractual, statutory or
      common law rights of reimbursement, contribution or indemnity from any
      Guaranteed Party or any other guarantor which it may at any time otherwise
      have as a result of this Borrower Guaranty.

            13.09 Payments. All payments made by the Borrower pursuant to this
      Section 13 shall be made in U.S. Dollars. All payments made by the
      Borrower pursuant to this Section 13 will be made without setoff,
      counterclaim or other defense, and shall be subject to the provisions of
      Sections 4.03 and 4.04.".

            17. The Credit Agreement is hereby further amended by adding thereto
Exhibit D-1 and Exhibit G-1 in the forms of Exhibit D-1 and Exhibit G-1,
respectively, attached hereto.

            18. The Lenders hereby agree that the Administrative Agent, the
Borrower, the Subsidiary Guarantors and/or various Subsidiaries of the Borrower,
as applicable, shall be permitted (and are hereby authorized) to enter into (i)
an amendment and restatement of the Second Amended and Restated Subsidiary
Guaranty in the form of Exhibit D-1 hereto and (ii) an amendment and restatement
of the Intercompany Subordination Agreement in the form of Exhibit G-1 hereto.

II. Miscellaneous Provisions.

            1. In order to induce the Lenders to enter into this Amendment, the
Borrower hereby (i) makes each of the representations, warranties and agreements
contained in Section 6 of the Credit Agreement, and (ii) represents and warrants
that there exists no Default or Event of Default, in each case on the date
hereof and on the First Amendment Effective Date (as defined below), both before
and after giving effect to this Amendment.

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            2. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement, the Subsidiary Guaranty or any other Credit Document.

            3. This Amendment may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower and the Administrative Agent.

            4. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.

            5. From and after the First Amendment Effective Date, all references
in the Credit Agreement and each of the other Credit Documents shall be deemed
to be references to the Credit Agreement, the Subsidiary Guaranty or the
Intercompany Subordination Agreement, as the case may be, as amended and/or
restated hereby.

            6. This Amendment shall become effective as of the date first
written above on the date (the "First Amendment Effective Date") when (i) the
Borrower, each Subsidiary Guarantor and the Lenders constituting Required
Lenders under the Credit Agreement shall have signed a copy hereof (whether the
same or different copies) and shall have delivered (including by way of
facsimile transmission) the same to White & Case LLP, 1155 Avenue of the
Americas, New York, New York 10036, Attention: May Yip-Daniels (Facsimile No.:
(212) 354-8113), (ii) the Administrative Agent shall have received an officer's
certificate from the Borrower, certifying as to the fair market value of all
investments held by Acquisition Corp. and/or the Borrower as of December 31,
2002 which represent a return on Acquisition Corp.'s and/or the Borrower's
investment of cash originally acquired pursuant to the NGH Acquisition (and/or
investment returns on investments of such cash) (the fair market value of such
investments as so certified, the "Original Certified Incremental NGH Cash
Amount"), (iii) Reynolds Tobacco and Acquisition Corp. shall have duly
authorized, executed and delivered an amendment and restatement of the Second
Amended and Restated Subsidiary Guaranty in the form of Exhibit D-1 hereto, and
such Subsidiary Guaranty shall be in full force and effect, (iv) each Subsidiary
of the Borrower shall have duly authorized, executed and delivered an amendment
and restatement of the Second Amended and Restated Subordination Agreement in
the form of Exhibit G-1 hereto, and such Subordination Agreement shall be in
full force and effect and (v) the Administrative Agent shall have received from
Charles A. Blixt, Executive Vice President, General Counsel and Assistant
Secretary of the Borrower an opinion addressed to each of the Lenders and dated
the First Amendment Effective Date covering such matters incident to this
Amendment as the Administrative Agent may reasonably request.

            7. The Borrower hereby covenants and agrees that, so long as the
First Amendment Effective Date occurs, it shall pay to each Lender which
executes and delivers to the Administrative Agent (or its designee) a
counterpart hereof by the later to occur of (x) 12:00 Noon (New York time) on
January 17, 2003 or (y) the close of business on the First Amendment Effective
Date (such later date, the "Outside Date"), a non-refundable cash fee in an
amount equal to 0.05% of the Commitment of such Lender as same is in effect on
the First Amendment

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Effective Date immediately prior to giving effect hereto, which fees shall be
paid by the Borrower to the Administrative Agent for distribution to the Lenders
not later than the second Business Day following the Outside Date.

                                      * * *

<PAGE>

            IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.

                                      R.J. REYNOLDS TOBACCO HOLDINGS, INC.,
                                        as the Borrower

                                      By: /s/ Lynn L. Lane
                                          ---------------------------------
                                           Name:
                                           Title: SVP and Treasurer

                                      R.J. REYNOLDS TOBACCO COMPANY,
                                        as a Subsidiary Guarantor

                                      By: /s/ Lynn L. Lane
                                          ---------------------------------
                                          Name:
                                          Title: SVP and Treasurer

                                      RJR ACQUISITION CORP.,
                                        as a Subsidiary Guarantor

                                      By: /s/Caroline M. Price
                                          ---------------------------------
                                          Name:
                                          Title: Assistant Treasurer
<PAGE>

                                           LEAD AGENTS

                                           JPMORGAN CHASE BANK, Individually, as
                                               Administrative Agent and as
                                               Senior Managing Agent

                                           By: /s/ Robert T. Sacks
                                               ---------------------------------
                                               Name:
                                               Title: Managing Director

                                           CITIBANK, N.A., Individually and as
                                               Syndication Agent and Senior
                                               Managing Agent

                                           By: /s/ Thomas F. Bruscino
                                               ---------------------------------
                                               Name:
                                               Title: Vice President

                                           THE BANK OF NEW YORK

                                           By: /s/ Walter C. Parelli
                                               ---------------------------------
                                               Name:
                                               Title: Vice President

                                           THE BANK OF NOVA SCOTIA

                                           By: /s/ Chris J. Allen
                                               --------------------------------
                                               Name:
                                               Title: Managing Director and
                                                      Office Head

                                           LEHMAN COMMERCIAL PAPER INC.

                                           By: /s/ Francis Chang
                                               --------------------------------
                                               Name:
                                               Title:

<PAGE>

                                           MIZUHO CORPORATE BANK, LTD.

                                           By: /s/ Yuji Tanaka
                                               --------------------------------
                                               Name:
                                               Title: Senior Vice President

                                           CREDIT LYONNAIS, NEW YORK BRANCH

                                           By: /s/ Scott R. Chappelka
                                               --------------------------------
                                               Name:
                                               Title: Vice President

                                           PARTICIPANTS

                                           WACHOVIA BANK, NATIONAL ASSOCIATION

                                           By: /s/ Mark Supple
                                               --------------------------------
                                               Name:
                                               Title: Vice President

                                           ERSTE BANK

                                           By: /s/ Paul Judicke
                                               --------------------------------
                                               Name:
                                               Title: Vice President

                                           By: /s/ Robert Svehnholz
                                               --------------------------------
                                               Name:
                                               Title: First Vice President

                                           CITY NATIONAL BANK OF NEW JERSEY

                                           By: /s/ Edward R. Wright
                                               --------------------------------
                                               Name:
                                               Title: Senior Vice President
<PAGE>

 CHOHUNG BANK, NEW YORK BRANCH

 By: /s/ Hyun Tae Park
     --------------------------------
     Name:
     Title: Senior Deputy General
            Manager

 BANCO BILBAO VIZCAYA ARGENTARIA
     PUERTO RICO OVERSEAS, A UNIT OF
     BANCO BILBAO VIZCAYA ARGENTARIA
     PUERTO RICO

 By: /s/ Olga Matta                    By: /s/ Helen Pardo
     --------------------------------      ----------------------------
     Name:                                 Name:
     Title: Executive Vice President       Title: Senior Vice President

 NORDDEUTSCHE LANDESBANK GIROZENTRALE,
     NEW YORK BRANCH AND/OR CAYMAN
     ISLANDS BRANCH

 By: /s/ Stephanie Finnen              By: /s/ George L. Peters
     --------------------------------      ----------------------------
     Name:                                 Name:
     Title: Vice President                 Title: Vice President

 FLEET NATIONAL BANK

 By: /s/ Kevin Kearns
     --------------------------------
     Name:
     Title: Managing Director

 NORDEA  BANK FINLAND PLC,
     NEW YORK BRANCH

 By:
     --------------------------------
     Name:
     Title:<PAGE>
                                                                    EXHIBIT 10.3

                           THIRD AMENDED AND RESTATED
                               SUBSIDIARY GUARANTY

            GUARANTY, dated as of May 18, 1999, as amended and restated as of
November 17, 2000, as further amended and restated as of May 10, 2002 and as
further amended and restated as of January 17, 2003 (as so amended and restated
and as the same may be further amended, restated, modified and/or supplemented
from time to time, this "Guaranty"), made by the undersigned (together with any
other entity which becomes a party hereto pursuant to Section 24, each a
"Guarantor" and, collectively, the "Guarantors"). Except as otherwise defined
herein, terms used herein and defined in the Credit Agreement (as defined below)
shall be used herein as therein defined.

                              W I T N E S S E T H :

            WHEREAS, R.J. Reynolds Tobacco Holdings, Inc. (f/k/a RJR Nabisco,
Inc. and herein, the "Borrower"), the various lending institutions from time to
time party thereto (the "Lenders"), JPMorgan Chase Bank (f/k/a The Chase
Manhattan Bank), as Administrative Agent (the "Administrative Agent"), Citibank,
N.A., as Syndication Agent (the "Syndication Agent"), The Bank of New York, The
Bank of Nova Scotia and Lehman Commercial Paper Inc., as Documentation Agents
(the "Documentation Agents"), and Credit Lyonnais New York Branch and Mizuho
Corporate Bank, Ltd., as Co-Documentation Agents (the "Co-Documentation
Agents"), have entered into a Credit Agreement, dated as of May 7, 1999, and
amended and restated as of November 17, 2000 and May 10, 2002 (as so amended and
restated and as the same may be further amended, restated, modified and/or
supplemented from time to time, the "Credit Agreement"), providing for the
making of Loans to the Borrower and the issuance of, and participation in,
Letters of Credit for the account of the Borrower, all as contemplated therein
(the Lenders, each Letter of Credit Issuer, the Administrative Agent, the
Syndication Agent, the Documentation Agents, the Co-Documentation Agents, the
Senior Managing Agents and the Collateral Agent herein called the "Lender
Creditors");

            WHEREAS, the Borrower and/or one or more of its Subsidiaries may
from time to time enter into one or more (i) interest rate protection agreements
(including, without limitation, interest rate swaps, caps, floors, collars and
similar agreements), (ii) foreign exchange contracts, currency swap agreements,
commodity agreements or other similar agreements or arrangements designed to
protect against the fluctuations in currency values and/or (iii) other types of
hedging agreements from time to time (each such agreement or arrangement with a
Hedging Creditor (as hereinafter defined), a "Permitted Hedging Agreement") with
any Lender or Lenders or a syndicate of financial institutions organized by a
Lender or an affiliate of a Lender (even if in either case any such Lender
ceases to be a Lender under the Credit Agreement for any reason) (any
institution that participates therein, and in each case their subsequent
successors and assigns, collectively, the "Hedging Creditors", and together with
the Lender Creditors, the "Creditors");

            WHEREAS, each Guarantor is a direct or indirect Subsidiary of the
Borrower;
<PAGE>

            WHEREAS, certain of the Guarantors have heretofore entered into a
Subsidiary Guaranty, dated as of May 18, 1999, as amended and restated as of
November 17, 2000 and as further amended and restated as of May 10, 2002 (as so
amended and restated and as further amended, modified and/or supplemented to,
but not including, the date hereof, the "Second Amended and Restated Subsidiary
Guaranty");

            WHEREAS, the Guarantors desire to amend and restate the Second
Amended and Restated Subsidiary Guaranty in the form of this Guaranty;

            WHEREAS, the Credit Agreement and/or the Permitted Hedging
Agreements require that this Guaranty be executed and delivered; and

            WHEREAS, each Guarantor will obtain benefits from the incurrence and
maintenance of Loans by the Borrower and the issuance of, and participation in,
Letters of Credit for the account of the Borrower under the Credit Agreement and
the entering into and/or maintaining by the Borrower and/or one or more of
Subsidiaries of the Permitted Hedging Agreements and, accordingly, desires to
execute this Guaranty in order to satisfy the requirements described in the
preceding paragraph;

            NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to each Guarantor, the receipt and sufficiency of which are hereby
acknowledged, each Guarantor hereby makes the following representations and
warranties to the Creditors and hereby covenants and agrees with each Creditor
as follows:

            1. Each Guarantor, jointly and severally, irrevocably and
unconditionally guarantees: (i) to the Lender Creditors the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of (x) the principal of and interest on the Notes issued by, and the Loans made
to, the Borrower under the Credit Agreement and all reimbursement obligations
and Unpaid Drawings with respect to Letters of Credit and (y) all other
obligations (including obligations which, but for any automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities owing
by the Borrower to the Lender Creditors (including, without limitation,
indemnities, Fees and interest thereon) now existing or hereafter incurred
under, arising out of or in connection with the Credit Agreement or any other
Credit Document and the due performance and compliance with the terms,
conditions and agreements contained in the Credit Documents by the Borrower (all
such principal, interest, liabilities and obligations being herein collectively
called the "Credit Document Obligations"); and (ii) to each Hedging Creditor the
full and prompt payment when due (whether at the stated maturity, by
acceleration or otherwise) of all obligations (including obligations which, but
for any automatic stay under Section 362(a) of the Bankruptcy Code, would become
due) and liabilities owing by each Guaranteed Party to the Hedging Creditors
(including, without limitation, indemnities, fees and interest thereon) under
any Permitted Hedging Agreements, whether now in existence or hereafter arising,
and the due performance and compliance by each Guaranteed Party with all terms,
conditions and agreements contained therein (all such obligations and
liabilities under this clause (ii) being herein collectively called the "Hedging
Obligations", and together with the Credit Document Obligations are herein
collectively called the "Guaranteed Obligations"). As used herein, the term
"Guaranteed Party" shall mean the Borrower and each Subsidiary thereof party to
any Permitted Hedging Agreement. Each

                                     - 2 -
<PAGE>

Guarantor understands, agrees and confirms that the Creditors may enforce this
Guaranty up to the full amount of the Guaranteed Obligations against each
Guarantor without proceeding against any other Guarantor, the Borrower, any
other Guaranteed Party, against any security for the Guaranteed Obligations, or
against any other guarantor under any other guaranty covering all or a portion
of the Guaranteed Obligations. This Guaranty shall constitute a guaranty of
payment and not of collection. All payments by each Guarantor under this
Guaranty shall be made on the same basis as payments by the Borrower under
Sections 4.03 and 4.04 of the Credit Agreement.

            2. Additionally, each Guarantor, jointly and severally,
unconditionally and irrevocably, guarantees the payment of any and all
Guaranteed Obligations to the Creditors whether or not due or payable by the
Borrower or any other Guaranteed Party upon the occurrence in respect of the
Borrower or any such other Guaranteed Party of any of the events specified in
Section 9.05 of the Credit Agreement, and unconditionally and irrevocably,
jointly and severally, promises to pay such Guaranteed Obligations to the
Creditors, or order, on demand, in lawful money of the United States of America.

            3. The liability of each Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the Guaranteed Obligations
whether executed by such Guarantor, any other Guarantor, any other guarantor or
by any other person, and the liability of each Guarantor hereunder shall not be
affected or impaired by (i) any direction as to application of payment by the
Borrower, any other Guaranteed Party or any other person, (ii) any other
continuing or other guaranty, undertaking or maximum liability of a guarantor or
of any other person as to the Guaranteed Obligations, (iii) any payment on or in
reduction of any such other guaranty or undertaking, (iv) any dissolution,
termination or increase, decrease or change in personnel by the Borrower or any
other Guaranteed Party, (v) any payment made to any Creditor on the Guaranteed
Obligations which any Creditor repays the Borrower or any other Guaranteed Party
pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and each Guarantor waives any
right to the deferral or modification of its obligations hereunder by reason of
any such proceeding, (vi) any action or inaction by the Creditors as
contemplated in Section 6 hereof or (vii) any invalidity, irregularity or
unenforceability of all or part of the Guaranteed Obligations or of any security
therefor.

            4. The obligations of each Guarantor hereunder are independent of
the obligations of any other Guarantor, any other guarantor of the Borrower, the
Borrower or any other Guaranteed Party, and a separate action or actions may be
brought and prosecuted against each Guarantor whether or not action is brought
against any other Guarantor, any other guarantor of the Borrower, the Borrower
or any other Guaranteed Party and whether or not any other Guarantor, any other
guarantor of the Borrower, the Borrower or any other Guaranteed Party be joined
in any such action or actions. Each Guarantor waives, to the fullest extent
permitted by law, the benefit of any statute of limitations affecting its
liability hereunder or the enforcement thereof. Any payment by the Borrower or
any other Guaranteed Party or other circumstance which operates to toll any
statute of limitations as to the Borrower or any other Guaranteed Party shall
operate to toll the statute of limitations as to each Guarantor.

            5. Each Guarantor hereby waives notice of acceptance of this
Guaranty and notice of any liability to which it may apply, and waives
promptness, diligence, presentment, demand of payment, protest, notice of
dishonor or nonpayment of any such liabilities, suit or

                                     - 3 -
<PAGE>

taking of other action by the Administrative Agent or any other Creditor
against, and any other notice to, any party liable thereon (including such
Guarantor, any other guarantor of the Borrower or any other Guaranteed Party).

            6. Any Creditor may at any time and from time to time without the
consent of, or notice to, any Guarantor, without incurring responsibility to
such Guarantor, without impairing or releasing the obligations of such Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:

            (i) change the manner, place or terms of payment of, and/or change
      or extend the time of payment of, renew or alter, any of the Guaranteed
      Obligations (including any increase or decrease in the rate of interest
      thereon), any security therefor, or any liability incurred directly or
      indirectly in respect thereof, and the guaranty herein made shall apply to
      the Guaranteed Obligations as so changed, extended, renewed or altered;

            (ii) take and hold security for the payment of the Guaranteed
      Obligations and/or sell, exchange, release, surrender, realize upon or
      otherwise deal with in any manner and in any order any property by
      whomsoever at any time pledged or mortgaged to secure, or howsoever
      securing, the Guaranteed Obligations or any liabilities (including any of
      those hereunder) incurred directly or indirectly in respect thereof or
      hereof, and/or any offset thereagainst;

            (iii) exercise or refrain from exercising any rights against the
      Borrower, any Guarantor, any other guarantor of the Borrower, any other
      Guaranteed Party or others or otherwise act or refrain from acting;

            (iv) settle or compromise any of the Guaranteed Obligations, any
      security therefor or any liability (including any of those hereunder)
      incurred directly or indirectly in respect thereof or hereof, and may
      subordinate the payment of all or any part thereof to the payment of any
      liability (whether due or not) of the Borrower or any other Guaranteed
      Party to creditors of the Borrower or any other Guaranteed Party;

            (v) apply any sums by whomsoever paid or howsoever realized to any
      liability or liabilities of the Borrower or any other Guaranteed Party to
      the Creditors regardless of what liabilities of the Borrower or such other
      Guaranteed Party remain unpaid;

            (vi) release or substitute any one or more endorsers, guarantors,
      Guarantors, the Borrower, any other Guaranteed Party or other obligors;

            (vii) consent to or waive any breach of, or any act, omission or
      default under, the Permitted Hedging Agreements, the Credit Documents or
      any of the instruments or agreements referred to therein, or otherwise
      amend, modify or supplement any of the Permitted Hedging Agreements, the
      Credit Documents or any of such other instruments or agreements; and/or

            (viii) act or fail to act in any manner referred to in this Guaranty
      which may deprive such Guarantor of its right to subrogation against the
      Borrower or any other Guaranteed Party to recover full indemnity for any
      payments made pursuant to this Guaranty.

                                     - 4 -
<PAGE>

            7. No invalidity, irregularity or unenforceability of all or any
part of the Guaranteed Obligations or of any security therefor shall affect,
impair or be a defense to this Guaranty, and this Guaranty shall be primary,
absolute and unconditional notwithstanding the occurrence of any event or the
existence of any other circumstances which might constitute a legal or equitable
discharge of a surety or guarantor except payment in full of the Guaranteed
Obligations.

            8. This Guaranty is a continuing one and all liabilities to which it
applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon. No failure or delay on the part of any
Creditor in exercising any right, power or privilege hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
expressly specified are cumulative and not exclusive of any rights or remedies
which any Creditor would otherwise have. No notice to or demand on any Guarantor
in any case shall entitle such Guarantor to any other further notice or demand
in similar or other circumstances or constitute a waiver of the rights of any
Creditor to any other or further action in any circumstances without notice or
demand. It is not necessary for any Creditor to inquire into the capacity or
powers of the Borrower, any other Guaranteed Party or any of their respective
Subsidiaries or the officers, directors, partners or agents acting or purporting
to act on its or their behalf, and any indebtedness made or created in reliance
upon the professed exercise of such powers shall be guaranteed hereunder.

            9. Any indebtedness of the Borrower or any other Guaranteed Party
now or hereafter held by any Guarantor is hereby subordinated to the
indebtedness of the Borrower or such other Guaranteed Party to the Creditors;
and such indebtedness of the Borrower or such other Guaranteed Party to any
Guarantor, if the Administrative Agent, after an Event of Default has occurred,
so requests, shall be collected, enforced and received by such Guarantor as
trustee for the Creditors and be paid over to the Creditors on account of the
indebtedness of the Borrower or such other Guaranteed Party to the Creditors,
but without affecting or impairing in any manner the liability of such Guarantor
under the other provisions of this Guaranty. Prior to the transfer by any
Guarantor of any note or negotiable instrument evidencing any indebtedness of
the Borrower or any other Guaranteed Party to such Guarantor, such Guarantor
shall mark such note or negotiable instrument with a legend that the same is
subject to this subordination. Without limiting the generality of the foregoing,
each Guarantor hereby agrees with the Creditors that it will not exercise any
right of subrogation which it may at any time otherwise have as a result of this
Guaranty (whether contractual, under Section 509 of the Bankruptcy Code or
otherwise) until all Guaranteed Obligations have been irrevocably paid in full
in cash.

            10. (a) Each Guarantor waives any right (except as shall be required
by applicable statute and cannot be waived) to require the Creditors to: (i)
proceed against the Borrower, any other Guaranteed Party, any other Guarantor,
any other guarantor of the Borrower or any other person; (ii) proceed against or
exhaust any security held from the Borrower, any other Guaranteed Party, any
other Guarantor, any other guarantor of the Borrower or any other person; or
(iii) pursue any other remedy in the Creditors' power whatsoever. Each Guarantor
waives any defense based on or arising out of any defense of the Borrower, any
other Guaranteed Party, any other Guarantor, any other guarantor of the Borrower
or any other person other than

                                     - 5 -
<PAGE>

payment in full in cash of the Guaranteed Obligations, including, without
limitation, any defense based on or arising out of the disability of the
Borrower, any other Guaranteed Party, any other Guarantor, any other guarantor
of the Borrower or any other person, or the unenforceability of the Guaranteed
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Borrower or any other Guaranteed Party, other than
payment in full in cash of the Guaranteed Obligations. The Creditors may, at
their election, foreclose on any security held by the Administrative Agent, the
Collateral Agent or the other Creditors by one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially reasonable
(to the extent such sale is permitted by applicable law), or exercise any other
right or remedy the Creditors may have against the Borrower, any other
Guaranteed Party or any other person, or any security, without affecting or
impairing in any way the liability of any Guarantor hereunder except to the
extent the Guaranteed Obligations have been paid in full in cash. Each Guarantor
waives any defense arising out of any such election by the Creditors, even
though such election operates to impair or extinguish any right of reimbursement
or subrogation or other right or remedy of such Guarantor against the Borrower,
any other Guaranteed Party or any other person or any security.

            (b) Each Guarantor waives all presentments, demands for performance,
protests and notices, including, without limitation, notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
indebtedness. Each Guarantor assumes all responsibility for being and keeping
itself informed of the Borrower's and each other Guaranteed Party's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Guaranteed Obligations and the nature, scope and extent of the
risks which such Guarantor assumes and incurs hereunder, and agrees that the
Creditors shall have no duty to advise any Guarantor of information known to
them regarding such circumstances or risks.

            (c) Until such time as the Guaranteed Obligations have been paid in
full in cash, each Guarantor hereby waives all contractual, statutory or common
law rights of reimbursement, contribution or indemnity from the Borrower, any
other Guaranteed Party or any other Guarantor which it may at any time otherwise
have as a result of this Guaranty.

            11. If and to the extent that any Guarantor makes any payment to any
Creditor or to any other Person pursuant to or in respect of this Guaranty, any
claim which such Guarantor may have against the Borrower or any other Guaranteed
Party by reason thereof shall be subject and subordinate to the prior payment in
full of the Guaranteed Obligations to each Creditor. Prior to the transfer by
any Guarantor of any note or negotiable instrument evidencing any indebtedness
of the Borrower or any other Guaranteed Party to such Guarantor, such Guarantor
shall mark such note or negotiable instrument with a legend that the same is
subject to this subordination.

            12. Each Guarantor covenants and agrees that on and after the date
hereof and until the termination of the Total Commitment and when no Note or
Letter of Credit remains outstanding and all other Credit Document Obligations
have been paid in full (other than those arising from indemnities for which no
request has been made), such Guarantor shall take, or will refrain from taking,
as the case may be, all actions that are necessary to be taken or not taken so
that no violation of any provision, covenant or agreement contained in Section 7
or 8 of the

                                     - 6 -
<PAGE>

Credit Agreement, and so that no Event of Default, is caused by the actions of
such Guarantor or any of its Subsidiaries.

            13. The Guarantors hereby jointly and severally agree to pay all
reasonable and actual out-of-pocket costs and expenses of each Creditor in
connection with the enforcement of this Guaranty and the protection of such
Creditor's rights hereunder, and in connection with any amendment, waiver or
consent relating hereto (including, without limitation, the reasonable and
actual fees and disbursements of counsel employed by the Administrative Agent or
any of the other Creditors). Any reference in this Guaranty, to "fees of
counsel" shall mean the actual and reasonable fees of counsel incurred at
customary and reasonable rates in the jurisdiction in which such counsel
performed its services, not pursuant to any statutory formula or percentage
calculation.

            14. This Guaranty shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the Creditors and their
successors and assigns.

            15. Neither this Guaranty nor any provision hereof may be changed,
waived, discharged or terminated in any manner whatsoever unless in writing duly
signed by the Administrative Agent (with the consent of (x) the Required Lenders
or, to the extent required by Section 12.12 of the Credit Agreement, all of the
Lenders, at all times prior to the time at which all Credit Document Obligations
have been paid in full, or (y) the holders of at least a majority of the
outstanding Hedging Obligations at all times after the time at which all Credit
Document Obligations have been paid in full) and each Guarantor directly
affected thereby (it being understood that the addition or release of any
Guarantor hereunder shall not constitute a change, waiver, discharge or
termination affecting any Guarantor other than the Guarantor so added or
released); provided, that any change, waiver, modification or variance affecting
the rights and benefits of a single Class (as defined below) of Creditors (and
not all Creditors in a like or similar manner) shall require the written consent
of the Requisite Creditors (as defined below) of such Class. For the purpose of
this Guaranty, the term "Class" shall mean each class of Creditors, i.e.,
whether (i) the Lender Creditors as holders of the Credit Document Obligations
or (ii) the Hedging Creditors as holders of the Hedging Obligations. For the
purpose of this Guaranty, the term "Requisite Creditors" of any Class shall mean
each of (i) with respect to the Credit Document Obligations, the Required
Lenders and (ii) with respect to the Hedging Obligations, the holders of at
least a majority of all obligations outstanding from time to time under the
Permitted Hedging Agreements.

            16. Each Guarantor acknowledges that an executed (or conformed) copy
of each of the Credit Documents and the Permitted Hedging Agreements has been
made available to its principal executive officers and such officers are
familiar with the contents thereof.

            17. In addition to any rights now or hereafter granted under
applicable law (including, without limitation, Section 151 of the New York
Debtor and Creditor Law) and not by way of limitation of any such rights, upon
the occurrence and during the continuance of an Event of Default (such term to
mean and include any "Event of Default" as defined in the Credit Agreement and
any payment default under any Permitted Hedging Agreement and shall in any
event, include, without limitation, any payment default on any of the Guaranteed
Obligations continuing after any applicable grace period), each Creditor is
hereby authorized at any time or

                                     - 7 -
<PAGE>

from time to time, without notice to any Guarantor or to any other Person, any
such notice being expressly waived, to set off and to appropriate and apply any
and all deposits (general or special) and any other indebtedness at any time
held or owing by such Creditor to or for the credit or the account of such
Guarantor, against and on account of the obligations and liabilities of such
Guarantor to such Creditor under this Guaranty, irrespective of whether or not
such Creditor shall have made any demand hereunder and although said
obligations, liabilities, deposits or claims, or any of them, shall be
contingent or unmatured. Each Creditor acknowledges and agrees that the
provisions of this Section 17 are subject to the sharing provisions set forth in
Section 12.06(b) of the Credit Agreement.

            18. All notices and other communications provided for hereunder
shall be in writing (including telegraphic, telex, facsimile transmission or
cable communication) and mailed, telegraphed, telexed, telecopied, cabled or
delivered (including by way of overnight courier) (i) in the case of any Lender
Creditor, as provided in the Credit Agreement, (ii) in the case of any
Guarantor, at its address set forth opposite its signature below and (iii) in
the case of any Hedging Creditor, at such address as such Hedging Creditor shall
have specified in writing to the Guarantor; or, in any case, at such other
address as shall be designated by any party in a written notice to the other
parties hereto. All such notices and communications shall be deemed to have been
duly given or made (i) in the case of any Creditor, when received and (ii) in
the case of any Guarantor, when delivered to such Guarantor in any manner
required or permitted hereunder.

            19. If claim is ever made upon any Creditor for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Guaranteed Obligations and any of said Creditors repays all or part of said
amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such Creditor or any of its
property or (ii) any settlement or compromise of any such claim effected by such
Creditor with any such claimant (including the Borrower and each other
Guaranteed Party), then and in such event each Guarantor agrees that any such
judgment, decree, order, settlement or compromise shall be binding upon such
Guarantor, notwithstanding any revocation hereof or the cancellation of any Note
or any Permitted Hedging Agreement or other instrument evidencing any liability
of the Borrower or any other Guaranteed Party, and such Guarantor shall be and
remain liable to such Creditor hereunder for the amount so repaid or recovered
to the same extent as if such amount had never originally been received by any
such Creditor.

            20. (a) This Guaranty and the rights and obligations of the
Creditors and of the undersigned hereunder shall be governed by and construed in
accordance with the law of the state of New York.

            (b) Any legal action or proceeding with respect to this Guaranty or
any other Credit Document to which any Guarantor is a party may be brought in
the courts of the state of New York or of the United States of America for the
Southern District of New York, and, by execution and delivery of this Guaranty,
each Guarantor hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each Guarantor further irrevocably consents to the service of process
out of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
such Guarantor at its address set forth opposite its

                                     - 8 -
<PAGE>

signature below, such service to become effective 30 days after such mailing.
Each Guarantor hereby irrevocably waives any objection to such service of
process and further irrevocably waives and agrees not to plead or claim in any
action or proceeding commenced hereunder or under any other credit document to
which such Guarantor is a party that service of process was in any way invalid
or ineffective. Each Guarantor hereby irrevocably appoints the Borrower as its
agent for service of process in respect of any such action or proceeding.
Nothing herein shall affect the right of any of the creditors to serve process
in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against any Guarantor in any other jurisdiction.

            (c) Each Guarantor hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Guaranty or any other
Credit Document brought in the courts referred to in clause (b) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that such action or proceeding brought in any such court has been brought in an
inconvenient forum.

            (d) Each Guarantor hereby irrevocably waives all rights to a trial
by jury in any action, proceeding or counterclaim arising out of or relating to
this Guaranty, the other Credit Documents or the transactions contemplated
hereby or thereby.

            21. In the event that all of the capital stock or other equity
interests of one or more Guarantors is sold or otherwise disposed of (to a
Person other than the Borrower or a Subsidiary thereof) or liquidated in
compliance with the requirements of Section 8.02 of the Credit Agreement (or
such sale, disposition or liquidation has been approved in writing by the
Required Lenders (or all Lenders if required by Section 12.12 of the Credit
Agreement)), such Guarantor shall be released from this Guaranty and this
Guaranty shall, as to each such Guarantor or Guarantors, terminate, and have no
further force or effect (it being understood and agreed that the sale of one or
more Persons that own, directly or indirectly, all of the capital stock or other
equity interests of any Guarantor shall be deemed to be a sale of such Guarantor
for the purposes of this Section 21).

            22. All payments made by any Guarantor hereunder will be made
without setoff, counterclaim or other defense.

            23. This Guaranty may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with the Borrower and the Administrative
Agent.

            24. It is understood and agreed that any Subsidiary of the Borrower
that is required to execute a counterpart of this Guaranty pursuant to the
Credit Agreement shall automatically become a Guarantor hereunder by executing a
counterpart hereof and delivering the same to the Administrative Agent.

                                     - 9 -
<PAGE>

            25. Notwithstanding anything else to the contrary in this Guaranty,
the Creditors agree that this Guaranty may be enforced only by the action of the
Administrative Agent acting upon the instructions of the Required Lenders (or,
after the date on which all Credit Document Obligations have been paid in full,
the holders of at least a majority of the outstanding Hedging Obligations), and
that no other Creditor shall have any right individually to seek to enforce or
to enforce this Guaranty, it being understood and agreed that such rights and
remedies may be exercised by the Administrative Agent or the holders of at least
a majority of the outstanding Hedging Obligations, as the case may be, for the
benefit of the Creditors upon the terms of this Guaranty. The Creditors further
agree that this Guaranty may not be enforced against any director, officer,
employee, or stockholder of any Guarantor (except to the extent such stockholder
is also a Guarantor hereunder). It is understood that the agreement in this
Section 25 is among and solely for the benefit of the Lenders and that if the
Required Lenders so agree (without requiring the consent of any Guarantor), this
Guaranty may be directly enforced by any Creditor.

            26. Each Guarantor hereby confirms that it is its intention that
this Guaranty not constitute a fraudulent transfer or conveyance for purposes of
any bankruptcy, insolvency or similar law, the Uniform Fraudulent Conveyance Act
or any similar Federal, state of foreign law. To effectuate the foregoing
intention, each Guarantor hereby irrevocably agrees that the Guaranteed
Obligations shall be limited to the maximum amount as will, after giving effect
to such maximum amount and all other (contingent or otherwise) liabilities of
such Guarantor that are relevant under such laws, result in the Guaranteed
Obligations of such Guarantor in respect of such maximum amount not constituting
a fraudulent transfer or conveyance.

            27. Amendment and Restatement. Each of the Administrative Agent and
each Guarantor hereby acknowledges and agrees that this Guaranty amends and
restates (and supersedes in its entirety) the Second Amended and Restated
Subsidiary Guaranty.

                                      * * *

                                     - 10 -
<PAGE>

            IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
executed and delivered as of the date first above written.

Address:

P.O. Box 2959                              R.J. REYNOLDS TOBACCO COMPANY,
401 N. Main Street                            as a Guarantor
Winston Salem, NC 27102
Attn: Guy Blynn

                                       By: /s/ Lynn L. Lane
                                           ---------------------------------
                                           Title: SVP and Treasurer

                                        RJR ACQUISITION CORP., as a Guarantor

                                        By: /s/ Caroline M. Price
                                            ---------------------------------
                                            Title: Assistant Treasurer

Accepted and Agreed to:

JPMORGAN CHASE BANK (f/k/a The Chase Manhattan Bank),
as Administrative Agent for the Lenders

By: /s/ Robert T. Sacks
    ----------------------------
    Title: Managing Director

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