Document:

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                                                                   EXHIBIT 10.37

           FIFTH AMENDMENT TO CREDIT AGREEMENT AND FIRST AMENDMENT TO
                       GUARANTEE AND COLLATERAL AGREEMENT

         FIFTH AMENDMENT, dated as of July 27, 2006, to the Credit Agreement,
dated as of May 19, 2005 (as amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"), among CARMIKE CINEMAS, INC., a Delaware
corporation (the "Borrower"), the several banks and other financial institutions
from time to time parties thereto (the "Lenders"), WELLS FARGO FOOTHILL, INC.,
as Documentation Agent (in such capacity, the "Documentation Agent"), and BEAR
STEARNS CORPORATE LENDING INC., as administrative agent (in such capacity, the
"Administrative Agent") and FIRST AMENDMENT, dated as of July 27, 2006
(collectively with the Fifth Amendment referred to above, this "Amendment"), to
the Guarantee and Collateral Agreement, dated as of May 19, 2005, made by the
Borrower and certain of its Subsidiaries in favor of the Administrative Agent.

                              W I T N E S S E T H:

         WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to
make certain extensions of credit to the Borrower; and

         WHEREAS, the Borrower, the Lenders and the Administrative Agent desire
to amend the Credit Agreement and the Guarantee and Collateral Agreement on the
terms and subject to the conditions set forth herein;

         NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the Borrower, the Lenders and the Administrative Agent hereby
agree as follows:

         SECTION 1.1. Defined Terms. Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given to
them in the Credit Agreement.

         SECTION 1.2. Amendments to Section 1.1 of the Credit Agreement. Section
1.1 of the Credit Agreement is hereby amended by (a) deleting clause (ii) of the
proviso in the definition of "Applicable Margin" in its entirety and inserting,
in lieu thereof the following:

         "(ii) during any time from and after the Fifth Amendment Effective Date
         when any of the financial statements and other items specified in
         Sections 7.1 and 7.2 for the fiscal year ended December 31, 2005 and
         the fiscal quarters ended March 31, 2006, June 30, 2006 and September
         30, 2006 (the "Required Information") shall not have been delivered to
         the Lenders in the manner and at the times prescribed by such sections
         prior to giving effect to the Fourth Amendment and the Fifth Amendment,
         the Applicable Margin with respect to the Loans shall be increased by
         0.50% per annum from the Applicable Margin otherwise applicable thereto
         without giving effect to this clause (ii)";

         (b) inserting the following new defined terms and related definitions:

                  "Fifth Amendment": shall mean the Fifth Amendment to this
         Agreement dated as of July 27, 2006.

<PAGE>

                  "Fifth Amendment Effective Date": as defined in the Fifth
         Amendment.

                  "Qualified Counterparty": with respect to any Specified Hedge
         Agreement, any counterparty thereto that, at the time such Specified
         Hedge Agreement was entered into, was a Lender, an Affiliate of a
         Lender, an Agent or an Affiliate of an Agent; provided that, in the
         event a counterparty to a Specified Hedge Agreement at the time such
         Specified Hedge Agreement was entered into was a Qualified
         Counterparty, such counterparty shall constitute a Qualified
         Counterparty hereunder and under the other Loan Documents.

                  "Secured Parties": the collective reference to the Lenders,
         the Agents, the Qualified Counterparties, the Issuing Lender and the
         Swingline Lender.

         (c) deleting the terms "Obligations" and "Specified Hedge Agreement"
and substituting in lieu thereof the following new defined terms:

                  "Obligations": the unpaid principal of and interest on
         (including interest accruing after the maturity of the Loans and
         Reimbursement Obligations and interest accruing after the filing of any
         petition in bankruptcy, or the commencement of any insolvency,
         reorganization or like proceeding, relating to the Borrower, whether or
         not a claim for post-filing or post-petition interest is allowed in
         such proceeding) the Loans and all other obligations and liabilities of
         the Borrower to any Agent or to any Lender (or, in the case of
         Specified Hedge Agreements, any Qualified Counterparty), whether direct
         or indirect, absolute or contingent, due or to become due, or now
         existing or hereafter incurred, which may arise under, out of, or in
         connection with, this Agreement, any other Loan Document, the Letters
         of Credit, any Specified Hedge Agreement or any other document made,
         delivered or given in connection herewith or therewith, whether on
         account of principal, interest, reimbursement obligations, fees,
         indemnities, costs, expenses (including all fees, charges and
         disbursements of counsel to any Agent or to any other Secured Party
         that are required to be paid by the Borrower pursuant hereto) or
         otherwise.

                  "Specified Hedge Agreement": any Hedge Agreement (a) entered
         into by (i) the Borrower or any of its Subsidiaries and (ii) any
         Qualified Counterparty, as counterparty and (b) that has been
         designated by such Qualified Counterparty and the Borrower, by notice
         to the Administrative Agent, as a Specified Hedge Agreement provided,
         that any release of Collateral or Guarantors effected in the manner
         permitted by this Agreement shall not require the consent of holders of
         obligations under Specified Hedge Agreements. The designation of any
         Hedge Agreement as a Specified Hedge Agreement shall not create in
         favor of any Qualified Counterparty that is a party thereto any rights
         in connection with the management or release of any Collateral or of
         the obligations of any Guarantor under the Guarantee and Collateral
         Agreement except as provided in Section 11.14.

         SECTION 1.3. Amendments to Section 7.1 of the Credit Agreement. Section
7.1 of the Credit Agreement is hereby amended by (i) deleting the parenthetical
immediately

<PAGE>

after the word "Borrower" in the second line of paragraph (a) thereof, that was
inserted pursuant to the Fourth Amendment, and inserting the following: "(or, in
the case of the fiscal year ended December 31, 2005, no later than September 30,
2006)" and (ii) deleting the parenthetical immediately after the word "Borrower"
in the second line of paragraph (b) thereof that was inserted pursuant to the
Fourth Amendment, and inserting the following: "(or, in the case of the fiscal
quarter ended March 31, 2006, no later than September 30, 2006, and in the case
of the fiscal quarters ended June 30, 2006 and September 30, 2006, no later than
December 31, 2006)".

         SECTION 1.4. Amendments to Section 7.2(b) of the Credit Agreement.
Section 7.2(b) of the Credit Agreement is hereby amended by inserting
immediately after the reference to Section 7.1 in the second line thereof the
following: "(or, in the case of the fiscal quarter ended June 30, 2006, on or
prior to August 14, 2006, and in the case of the fiscal quarter ended September
30, 2006, on or prior to November 14, 2006, and, in the case of each such fiscal
quarter, based on compiled monthly financial statements for the months
comprising such fiscal quarter in the form previously delivered to the
Administrative Agent during 2006 prior to the Fifth Amendment Effective Date)".

         SECTION 1.5. Amendments to Section 7.2(d) of the Credit Agreement.
Section 7.2(d) of the Credit Agreement is hereby amended by deleting the phrase
"or on or prior to July 27, 2006 in the case of the fiscal quarter ended March
31, 2006", that was inserted pursuant to the Fourth Amendment, and inserting the
following: "or on or prior to September 30, 2006 in the case of the fiscal
quarter ended March 31, 2006, and on or prior to December 31, 2006 in the case
of the fiscal quarters ended June 30, 2006 and September 30, 2006".

         SECTION 1.6. Amendments to Section 7.9 of the Credit Agreement. Section
7.9 of the Credit Agreement is hereby amended by deleting such section in its
entirety and substituting in lieu thereof the following new Section 7.9:

                  "7.9 Interest Rate Protection. In the case of the Borrower,
         within 90 days after the Fifth Amendment Effective Date, enter into,
         and thereafter maintain, Hedge Agreements to the extent necessary to
         provide that at least 45% of the aggregate principal amount of
         outstanding Initial Term Loans and Delayed-Draw Term Loans is subject
         to either a fixed interest rate or interest rate protection from the
         effective date of such Hedge Agreements through a date not earlier
         than May 19, 2008, which Hedge Agreements shall have terms and
         conditions reasonably satisfactory to the Administrative Agent."

         SECTION 1.8. Amendments to Section 9 of the Credit Agreement. Section 9
of the Credit Agreement is hereby amended by adding after the words "Loan
Documents" the last two times they appear therein the following: "and any
Specified Hedge Agreements".

         SECTION 1.9. Amendments to Section 11.1 of the Credit Agreement.
Section 11.1 of the Credit Agreement is hereby amended by deleting the word "or"
immediately prior to clause (xi) therein and adding the following immediately
after clause (xi) and prior to the period: "(xii) amend, modify or waive any
Loan Document so as to alter the ratable treatment of the Borrower Hedge
Agreement Obligations and the Borrower Credit Agreement Obligations (each as
defined in the Guarantee and Collateral Agreement) in a manner adverse to any
Qualified

<PAGE>

Counterparty with Obligations then outstanding without the written consent of
any such Qualified Counterparty".

         SECTION 1.10. Amendments to Section 11.14 of the Credit Agreement.
Section 11.14 of the Credit Agreement is hereby amended by deleting such section
in its entirety and substituting in lieu thereof the following new Section
11.14:

                  "11.14 Releases of Guarantees and Liens. (a) Notwithstanding
         anything to the contrary contained herein or in any other Loan
         Document, the Administrative Agent is hereby irrevocably authorized by
         each Secured Party, for itself and behalf of each of its Affiliates
         that may hereafter become a Secured Party (without requirement of
         notice to or consent of any Secured Party except as expressly required
         by Section 11.1) to take any action requested by the Borrower having
         the effect of releasing any Collateral or guarantee obligations (i) to
         the extent necessary to permit consummation of any transaction not
         prohibited by any Loan Document or that has been consented to in
         accordance with Section 11.1 or (ii) under the circumstances described
         in paragraph (b) below.

                  (b) At such time as the Loans, the Reimbursement Obligations
         and the other obligations under the Loan Documents (other than
         obligations under or in respect of Hedge Agreements) shall have been
         paid in full, the Commitments have been terminated, no Letters of
         Credit shall be outstanding or any outstanding Letters of Credit shall
         have been cash collateralized or otherwise secured by a collateral
         arrangement reasonably satisfactory to the Issuing Lender, and the net
         termination liability under or in respect of Specified Hedge Agreements
         at such time shall have been paid in full or secured by a collateral
         arrangement satisfactory to the Qualified Counterparty as determined in
         its sole discretion, the Collateral shall be released from the Liens
         created by the Security Documents, and the Security Documents and all
         obligations (other than those expressly stated to survive such
         termination) of the Administrative Agent and each Loan Party under the
         Security Documents shall terminate, all without delivery of any
         instrument or performance of any act by any Person."

         SECTION 1.11. Limitation on Borrowing of Revolving Credit Loans. During
any time from and after the Fifth Amendment Effective Date (as defined below)
when any of the Required Information (as defined in this Amendment) shall not
have been delivered to the Lenders in the manner and at the times prescribed by
Sections 7.1 and 7.2 of the Credit Agreement prior to giving effect to the
Fourth Amendment and this Amendment, and subject to compliance with the
conditions to borrowing thereof contained in the Credit Agreement, the maximum
principal amount of Revolving Extensions of Credit that may be outstanding shall
not exceed $10,000,000.

         SECTION 1.12. Interim Financial Statements and Calculations. The
Borrower agrees to deliver to the Administrative Agent and the Lenders on or
prior to the 15th day of each month during which the Required Information shall
not have been previously delivered to the Lenders monthly financial statements
for the immediately preceding month in the form of the monthly financial
statements previously delivered to the Administrative Agent during 2006.

<PAGE>

         SECTION 1.13. Amendments to Guarantee and Collateral Agreement. The
Guarantee and Collateral Agreement is hereby amended by:

(i) deleting the words "for the banks, financial institutions and other entities
(the "Lenders") from time to time parties to the Credit Agreement, dated as of
May 19, 2005 (as amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), among Carmike Cinemas, Inc., a Delaware corporation
(the "Borrower"), the Lenders, Bear, Stearns & Co. Inc., as sole lead arranger
and sole bookrunner (in such capacity, the "Arranger"), Wells Fargo Foothill,
Inc., as documentation agent (in such capacity, the "Documentation Agent"), and
the Administrative Agent" in the introductory paragraph and substituting in lieu
thereof the following: "acting pursuant to this Agreement for the benefit of the
Secured Parties",

(ii) deleting the final two recitals and substituting in lieu thereof the
following new recitals:

                  "WHEREAS, it is a condition precedent to the obligation of the
         Lenders to make their respective extensions of credit to the Borrower
         under the Credit Agreement and, to the extent applicable, of Qualified
         Counterparties to provide financial accommodations under Specified
         Hedge Agreements that the Grantors shall have executed and delivered
         this Agreement to the Administrative Agent for the ratable benefit of
         the Secured Parties;

         NOW, THEREFORE, in consideration of the premises and to induce the
         Agents and the Lenders to enter into the Credit Agreement and to induce
         the Lenders to make their respective extensions of credit to the
         Borrower thereunder and to induce Qualified Counterparties to enter
         into Specified Hedge Agreements, each Grantor hereby agrees with the
         Administrative Agent, for the ratable benefit of the Secured Parties,
         as follows:",

(iii) deleting the words "Lender or any affiliate of any Lender" and the words
"Lender or affiliate thereof" where they appear in the definition of "Borrower
Hedge Agreement Obligations" and substituting in lieu thereof the words
"Qualified Counterparty",

(iv) deleting the words "but only to the extent that, and only so long as, the
Borrower Credit Agreement Obligations are secured and guaranteed pursuant
hereto," where they appear in the definition of "Borrower Obligations,

(v) deleting the words "Agents and the Lenders" in the third line of Section
2.1(a) and substituting in lieu thereof the words "Secured Parties",

(vi) deleting the words "Agents and the Lenders (and any affiliates of any
Lender to which Borrower Hedge Agreement Obligations are owing)" beginning in
the second line of Section 3 and substituting in lieu thereof the words "Secured
Parties",

(vii) deleting the words "To induce the Administrative Agent and the Lenders to
enter into the Credit Agreement and to induce the Lenders to make their
respective extensions of credit to the Borrower thereunder, each Grantor hereby
represents and warrants to the Administrative Agent and each Lender that:" at
the beginning of Section 4 and substituting in lieu thereof the words "To induce
the Administrative Agent and the Lenders to enter into the Credit Agreement and
to induce the Lenders to make their respective extensions of credit to the
Borrower thereunder and

<PAGE>

to induce the Qualified Counterparties to enter into the Specified Hedge
Agreements, each Grantor hereby represents and warrants to each Secured Party
that:",

(viii) deleting the words "Agents and the Lenders" in the first line of the
initial paragraph of Section 5 and substituting in lieu thereof the words
"Secured Parties",

(ix) deleting paragraphs "Second", "Third" and "Fourth" of Section 6.5 and
substituting in lieu thereof the following:

                  "Second, to the Administrative Agent, for application by it
         towards payment of amounts then due and owing and remaining unpaid in
         respect of the Obligations, pro rata among the Secured Parties
         according to the amounts of the Obligations then due and owing and
         remaining unpaid to the Secured Parties; and

                  Third, any balance of such Proceeds remaining after the
         Obligations shall have been paid in full, no Letters of Credit shall be
         outstanding or any outstanding Letters of Credit shall have been cash
         collateralized or otherwise secured by a collateral arrangement
         reasonably satisfactory to the Issuing Lender, the Commitments shall
         have terminated, and any Specified Hedge Agreement of each Qualified
         Counterparty shall have been paid in full or secured by a collateral
         arrangement satisfactory to such Qualified Counterparty in its sole
         discretion, shall be paid over to the Borrower or to whomsoever may be
         lawfully entitled to receive the same. For purposes of this Section, to
         the extent that any Obligation is unmatured, unliquidated or contingent
         at the time any distribution is to be made pursuant to clause Second
         above and has not been cash collateralized or otherwise secured by a
         satisfactory collateral arrangement as indicated above, the
         Administrative Agent shall allocate a portion of the amount to be
         distributed pursuant to such clause for the benefit of the Secured
         Parties holding such Obligations and shall hold such amounts for the
         benefit of such Secured Parties until such time as such Obligations
         become matured, liquidated and/or payable at which time such amounts
         shall be distributed to the holders of such Obligations to the extent
         necessary to pay such Obligations in full (with any excess to be
         distributed in accordance with this Section as if distributed at such
         time). In making determinations and allocations required by this
         Section, the Administrative Agent may conclusively rely upon
         information provided to it by the holder of the relevant Obligations
         (which, in the case of the immediately preceding sentence) shall be a
         reasonable estimate of the amount of the Obligations) and shall not be
         required to, or be responsible for, ascertaining the existence of or
         amount of any Obligations."

(x) deleting the words "in such order as the Administrative Agent may elect" in
the twenty-seventh and twenty-eighth lines of Section 6.6 and substituting in
lieu thereof the words "in accordance with Section 6.5",

(xi) deleting Section 8.15(a) in its entirety and substituting in lieu thereof
the following new Section 8.15(a):

                  "(a) At such time as the Loans, the Reimbursement Obligations
         and the other Obligations (other than Borrower Hedge Agreement
         Obligations) shall have been paid in

<PAGE>

         full, the Commitments have been terminated, no Letters of Credit shall
         be outstanding or any outstanding Letters of Credit shall have been
         cash collateralized or otherwise secured by a collateral arrangement
         reasonably satisfactory to the Issuing Lenders, and the Specified Hedge
         Agreement of each Qualified Counterparty shall have been either (i)
         paid in full or (ii) secured by a collateral arrangement satisfactory
         to such Qualified Counterparty as determined in its sole discretion,
         the Collateral shall be released from the Liens created hereby, and
         this Agreement and all obligations (other than those expressly stated
         to survive such termination) of the Administrative Agent and each
         Grantor hereunder shall terminate, all without delivery of any
         instrument or performance of any act by any party, and all rights to
         the Collateral shall revert to the Grantors. At the request and sole
         expense of any Grantor following any such termination, the
         Administrative Agent shall deliver to such Grantor any Collateral held
         by the Administrative Agent hereunder, and execute and deliver to such
         Grantor such documents as such Grantor shall reasonably request to
         evidence such termination.", and

and (xii) providing that the rights and benefits provided therein to the Agents
and the Lenders (including, without limitation, the security interests granted
therein and the rights and benefits of a secured party afforded thereby) shall
also accrue to and be for the benefit of the other Secured Parties (as defined
in this Amendment). For this purpose, the relevant provisions of the Guarantee
and Collateral Agreement not otherwise amended by this Amendment, except for
Sections 5.7, 5.10(e) and 8.6 shall be amended by replacing "Lender" or
"Lenders" with "Secured Party" or "Secured Parties", as the case may be.

SECTION 1.14. Conditions to Effectiveness. This Amendment shall become effective
as of the date hereof on the date (the "Fifth Amendment Effective Date") on
which the Borrower, the Administrative Agent and the Required Lenders shall have
executed and delivered to the Administrative Agent this Amendment.

SECTION 1.15. Representation and Warranties. To induce the Administrative Agent
to enter into this Amendment, the Borrower hereby represents and warrants to the
Administrative Agent and all of the Lenders as of the Fifth Amendment Effective
Date that:

         (a) Corporate Power; Authorization; Enforceable Obligations.

                  (i) The Borrower has the corporate power and authority, and
         the legal right, to make and deliver this Amendment and to perform its
         obligations under the Loan Documents, as amended by this Amendment, and
         has taken all necessary corporate action to authorize the execution,
         delivery and performance of this Amendment and the performance of the
         Loan Documents, as so amended.

                  (ii) No consent or authorization of, approval by, notice to,
         filing with or other act by or in respect of, any Governmental
         Authority or any other Person is required in connection with the
         execution and delivery of this Amendment or with the performance,
         validity or enforceability of the Loan Documents, as amended by this
         Amendment, except as otherwise provided in Section 5.4 of the Credit
         Agreement.

<PAGE>

                  (iii) This Amendment has been duly executed and delivered on
         behalf of the Borrower.

                  (iv) This Amendment and each Loan Document, as amended by this
         Amendment, constitutes a legal, valid and binding obligation of the
         Borrower enforceable against the Borrower in accordance with its terms,
         except as affected by bankruptcy, insolvency, fraudulent conveyance,
         reorganization, moratorium and other similar laws relating to or
         affecting the enforcement of creditors' rights generally, general
         equitable principles (whether considered in a proceeding in equity or
         at law) and an implied covenant of good faith and fair dealing.

         (b) Representations and Warranties. The representations and warranties
made by the Borrower in and pursuant to the Loan Documents are true and correct
in all material respects on and as of the Fifth Amendment Effective Date, after
giving effect to the effectiveness of this Amendment, as if made on and as of
the Fifth Amendment Effective Date.

         SECTION 1.16. Payment of Fees and Expenses.

         (a) Amendment Fee. In the event that the Required Lenders and the
Borrower execute and deliver this Amendment, the Borrower shall pay to the
Administrative Agent, for the ratable benefit of the Lenders consenting to this
Amendment, an amendment fee in the amount of 0.10% on the principal amount of
each such Lender's outstanding Initial Term Loans, Delayed-Draw Term Loans and
Revolving Commitment immediately prior to the Fifth Amendment Effective Date,
payable on the Fifth Amendment Effective Date.

         (b) Expenses. The Borrower agrees to pay or reimburse the
Administrative Agent for all of its reasonable out-of-pocket costs and expenses
incurred in connection with this Amendment, any other documents prepared in
connection herewith and the transactions contemplated hereby, including, without
limitation, the reasonable fees and disbursements of counsel to each Agent.

         SECTION 1.17. No Other Amendments; Confirmation. Except as expressly
amended, modified and supplemented hereby, the provisions of the Credit
Agreement and the other Loan Documents are and shall remain in full force and
effect.

         SECTION 1.18. Governing Law; Counterparts. (a) This Amendment and the
rights and obligations of the parties hereto shall be governed by, and construed
and interpreted in accordance with, the laws of the State of New York.

         (b) This Amendment may be executed by one or more of the parties to
this Amendment on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written. CARMIKE CINEMAS, INC.

                                      By: /s/ Lee Champion
                                          ----------------------------------
                                          Name:  Lee Champion
                                          Title: SVP

                       Fifth Amendment to Credit Agreement

<PAGE>

                                      BEAR STEARNS CORPORATE LENDING INC.,
                                         as Administrative Agent and as a Lender

                                      By: /s/ Victor Bulzacchelli
                                          --------------------------------------
                                          Name:  Victor Bulzacchelli
                                          Title: Vice President

                       Fifth Amendment to Credit Agreement

<PAGE>

                                      WELLS FARGO FOOTHILL, N.A.,
                                        as Issuing Lender, Documentation Agent
                                        and a Lender

                                      By: /s/ Ilene Silberman
                                          --------------------------------------
                                          Name:  Ilene Silberman
                                          Title: Vice President

                       Fifth Amendment to Credit AgreementEx-10.1

 

Exhibit 10.1

$1,650,000,000

REYNOLDS AMERICAN INC.

$625,000,000 7.250% Senior Secured Notes due 2013

$775,000,000 7.625% Senior Secured Notes due 2016

$250,000,000 7.750% Senior Secured Notes due 2018

guaranteed by

the Guarantors listed on Schedule 1 hereto

PURCHASE AGREEMENT

 

 

Purchase Agreement

May 18, 2006

Lehman Brothers Inc.

745 Seventh Avenue

New York, New York 10019

J.P. Morgan Securities Inc.

270 Park Avenue

New York, New York 10017

Citigroup Global Markets Inc.

388 Greenwich Street

New York, New York 10013

As Representatives of the

several Initial Purchasers listed

in Schedule 2 hereto

Ladies and Gentlemen:

Reynolds American Inc., a North Carolina corporation (the “Company”), proposes to issue and sell to
the several Initial Purchasers listed in Schedule 2 hereto (the “Initial Purchasers”), for whom you
are acting as representatives (the “Representatives”), $625,000,000 principal amount of its 7.250%
Senior Secured Notes due 2013 (the “2013 Notes”), $775,000,000 principal amount of its 7.625%
Senior Secured Notes due 2016 (the “2016 Notes”) and $250,000,000 principal amount of its 7.750%
Senior Secured Notes due 2018 (the “2018 Notes” and together with the 2013 Notes and the 2016
Notes, the “Securities”). The Securities will be issued pursuant to an Indenture, to be dated as of
the Closing Date (as defined below) (the “Indenture”), among the Company, the guarantors listed in
Schedule 1 hereto, and The Bank of New York, as trustee (the “Trustee”).

The Company is issuing the Securities in connection with its acquisition (the “Acquisition”) of
Conwood Holdings Inc., a Delaware corporation (“Conwood”). Conwood and its subsidiaries will become
parties to this Agreement by executing counterpart signature pages hereto on the Closing Date (as
defined below). All references herein to the subsidiaries of the Company shall be construed to
include Conwood and its subsidiaries as of the Closing Date (as defined below).

The Company’s obligations under the Indenture and the Securities will be unconditionally guaranteed
by each of the guarantors listed in Schedule 1 hereto. All references herein to the “Guarantors”
shall be construed to include (i) as of the date hereof, Santa Fe Natural Tobacco Company, Inc., a
New Mexico corporation, Lane Limited, a New York corporation, RJR Acquisition Corp., a Delaware
corporation, R.J. Reynolds Tobacco Company, a North Carolina corporation, R.J. Reynolds Tobacco Co,
a Delaware corporation, FHS, Inc., a Delaware corporation, and GMB, Inc., a North Carolina
corporation (collectively, the “Initial Guarantors”) and (ii) as of the Closing Date (as defined
below), the Initial Guarantors and Conwood, Conwood Company, L.P., a Delaware limited partnership,
Conwood Sales Company, L.P., a Delaware limited partnership and Rosswil LLC, a Delaware limited
liability company (collectively, the “Additional Guarantors” and, together with the Initial
Guarantors, the “Guarantors”).

 

1

 

The Company’s obligations under the Indenture and the Securities, and the Guarantors’ obligations
under the Guarantees, will be secured by a lien on certain assets of the Company and its
subsidiaries, pursuant to the security documents listed in Schedule 3 hereto (the “Security
Documents”) to be dated the Closing Date (as defined below).

The Securities will be sold to the Initial Purchasers without being registered under the Securities
Act of 1933, as amended (the “Securities Act”), in reliance upon an exemption therefrom. The
Company and the Guarantors have prepared a preliminary offering memorandum dated May 12, 2006 (as
amended by the Supplement to the Preliminary Offering Memorandum set forth on the Term Sheet
attached hereto as Annex B) (the “Preliminary Offering Memorandum”), and will prepare an offering
memorandum dated the date hereof (the “Offering Memorandum”) setting forth information concerning
the Company, the Guarantors and the Securities. Copies of the Preliminary Offering Memorandum have
been, and copies of the Offering Memorandum will be, delivered by the Company and the Guarantors to
the Initial Purchasers pursuant to the terms of this Agreement. Each of the Company and the
Guarantors hereby confirm that they have authorized the use of the Preliminary Offering Memorandum,
the Time of Sale Information (as defined below) and the Offering Memorandum in connection with the
offering and resale of the Securities by the Initial Purchasers in the manner contemplated by this
Agreement. Capitalized terms used but not defined herein shall have the meanings given to such
terms in the Offering Memorandum. References herein to the Preliminary Offering Memorandum, the
Time of Sale Information (as defined below) and the Offering Memorandum, shall be deemed to refer
to and include any exhibit thereto and any document incorporated by reference therein.

At 5:30 p.m. on the date of this Agreement (the “Time of Sale”), the following information shall
have been prepared (collectively, the “Time of Sale Information”): the Preliminary Offering
Memorandum, as supplemented and amended by the written communications listed on Annex A hereto.

Holders of the Securities (including the Initial Purchasers and their direct and indirect
transferees) will be entitled to the benefits of a Registration Rights Agreement, to be dated the
Closing Date (as defined below) and substantially in the form attached hereto as Exhibit A (the
"Registration Rights Agreement”), pursuant to which each of the Company and the Guarantors will
agree to file one or more registration statements with the Securities and Exchange Commission (the
"Commission”) providing for the registration under the Securities Act of the Securities or the
Exchange Securities referred to (and as defined) in the Registration Rights Agreement.

Each of the Company and the Guarantors hereby confirm their agreement with the several Initial
Purchasers concerning the purchase and resale of the Securities, as follows:

	1	 	Purchase and Resale of the Securities

	 	(a)	 	The Company agrees to issue and sell the Securities to the several Initial
Purchasers as provided in this Agreement, and each Initial Purchaser, on the basis of
the representations, warranties and agreements set forth herein and subject to the
conditions set forth herein, agrees, severally and not jointly, to purchase from the
Company the respective principal amount of the 2013 Notes, the 2016 Notes and the 2018
Notes set forth opposite such Initial Purchaser’s name in Schedule 2 hereto at a price
equal to 97.902% of the principal amount of the 2013 Notes, 98.163% of the principal
amount of the 2016 Notes and 98.109% of the principal amount of the 2018

 

2

 

	 	 	 	Notes, in each case, plus accrued interest, if any, from May 31, 2006 to the Closing
Date. The Company will not be obligated to deliver any of the Securities except upon
payment for all the Securities to be purchased as provided herein.
	 
	 	(b)	 	The Company and the Guarantors understand that the Initial Purchasers intend to
offer the Securities for resale on the terms set forth in the Time of Sale Information.
Each Initial Purchaser, severally and not jointly, represents, warrants and agrees that:

	 	(i)	 	it is a qualified institutional buyer within the meaning of Rule
144A under the Securities Act (a “QIB”) and an accredited investor within the
meaning of Rule 501(a) under the Securities Act;
	 
	 	(ii)	 	it has not solicited offers for, or offered or sold, and will not
solicit offers for, or offer or sell, the Securities by means of any form of
general solicitation or general advertising within the meaning of Rule 502(c) of
Regulation D under the Securities Act (“Regulation D”) or in any manner involving
a public offering within the meaning of Section 4(2) of the Securities Act; and
	 
	 	(iii)	 	it has not solicited offers for, or offered or sold, and will not
solicit offers for, or offer or sell, the Securities as part of their initial
offering except:

	 	(A)	 	within the United States to persons whom it
reasonably believes to be QIBs in transactions pursuant to Rule 144A
under the Securities Act (“Rule 144A”) and in connection with each such
sale, it has taken or will take reasonable steps to ensure that the
purchaser of the Securities is aware that such sale is being made in
reliance on Rule 144A; or
	 
	 	(B)	 	in accordance with the restrictions set forth in
Annex C hereto.

	 	(c)	 	Each Initial Purchaser acknowledges and agrees that the Company and the
Guarantors and, for purposes of the opinions to be delivered to the Initial Purchasers
pursuant to Sections 6(f), 6(g), 6(h) and 6(i), counsel for the Company and the
Guarantors, McDara P. Folan, III, Senior Vice President, Deputy General Counsel and
Secretary of the Company, special counsel for the Company and the Guarantors, and
counsel for the Initial Purchasers, respectively, may rely upon the accuracy of the
representations and warranties of the Initial Purchasers, and compliance by the Initial
Purchasers with their agreements, contained in paragraph (b)(iii)(B) above (including
Annex C hereto), and each Initial Purchaser hereby consents to such reliance.
	 
	 	(d)	 	The Company and each Guarantor acknowledge and agree that the Initial Purchasers
may offer and sell Securities to or through any affiliate of an Initial Purchaser and
that any such affiliate may offer and sell Securities purchased by it to or through any
Initial Purchaser.
	 
	 	(e)	 	The Company and each Guarantor acknowledges and agrees that the Initial
Purchasers are acting solely in the capacity of an arm’s length contractual counterparty
to the Company and the Guarantors with respect to the offering of Securities
contemplated hereby (including in connection with determining the terms of the offering)
and not as financial advisors or a fiduciaries to, or agents of, the Company, any
Guarantor or any other person. Additionally, neither the Representatives nor any other
Initial Purchaser is

 

3

 

	 	 	 	advising the Company, any Guarantor or any other person as to any legal, tax,
investment, accounting or regulatory matters in any jurisdiction. The Company and the
Guarantors shall consult with their own advisors concerning such matters and shall be
responsible for making their own independent investigation and appraisal of the
transactions contemplated hereby, and neither the Representatives nor any other
Initial Purchaser shall have any responsibility or liability to the Company or any
Guarantor with respect thereto. Any review by the Representatives or any Initial
Purchaser of the Company, any Guarantor, and the transactions contemplated hereby or
other matters relating to such transactions will be performed solely for the benefit
of the Representatives or such Initial Purchaser, as the case may be, and shall not be
on behalf of the Company, any Guarantor or any other person.

	2	 	Payment and Delivery

	 	(a)	 	Payment for and delivery of the Securities will be made at the offices of
Linklaters, 1345 Avenue of the Americas, New York, New York 10105 at 10:00 A.M., New
York City time, on May 31, 2006, or at such other time or place on the same or such
other date, not later than the fifth business day thereafter, as the Representatives and
the Company may agree upon in writing. The time and date of such payment and delivery is
referred to herein as the “Closing Date”.
	 
	 	(b)	 	Payment for the Securities shall be made by wire transfer in immediately
available funds to the account(s) specified by the Company to the Representatives
against delivery to Cede & Co. as nominee of the Depository Trust Company, for the
account of the Initial Purchasers, of one or more global notes representing each of the
2013 Notes, the 2016 Notes and the 2018 Notes (collectively, the “Global Notes”), with
any transfer taxes payable in connection with the sale of the Securities duly paid by
the Company. The Global Notes will be made available for inspection by the
Representatives not later than 1:00 P.M., New York City time, on the business day prior
to the Closing Date.

	3	 	Representations and Warranties of the Company and the Guarantors
	 
	 	 	The Company and each Guarantor jointly and severally represents and warrants to each Initial
Purchaser that:

	 	(a)	 	Offering Memorandum None of the Preliminary Offering Memorandum or the Time of
Sale Information, at the Time of Sale, or the Offering Memorandum, as of its date,
contained, and at the Closing Date none of the Preliminary Offering Memorandum, the Time
of Sale Information or the Offering Memorandum will contain, any untrue statement of a
material fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading;
provided that the Company and each of the Guarantors make no representation or warranty
with respect to any statements or omissions made in reliance upon and in conformity with
information relating to any Initial Purchaser furnished to the Company and the
Guarantors in writing by such Initial Purchaser through the Representatives expressly
for use therein. No statement of material fact included in the Offering Memorandum has
been omitted from the Time of Sale Information and no statement of material fact
included in the Time of Sale Information that is necessary to

 

4

 

	 	 	 	make the statements in the Offering Memorandum, in the light of the circumstances
under which they were made, not misleading, has been omitted from the Offering
Memorandum.
	 
	 	(b)	 	Additional Written Communications Other than the Preliminary Offering Memorandum
and the Offering Memorandum, neither the Company nor any Guarantor (including their
agents and representatives, other than the Initial Purchasers) has made, used, prepared,
authorized, approved or referred to and will not prepare, make, use, authorize, approve
or refer to any “written communication” (as defined in Rule 405 under the Securities
Act) that constitutes an offer to sell or solicitation of an offer to buy the Securities
(each such communication by the Company, any Guarantor or any of their agents and
representatives, an “Issuer Written Communication”) other than the documents listed on
Annex A hereto, including a term sheet substantially in the form of Annex B hereto, and
other written communications used in accordance with Section 4(c).
	 
	 	(c)	 	Incorporated Documents The documents incorporated by reference in the
Preliminary Offering Memorandum, the Time of Sale Information and the Offering
Memorandum, when filed with the Commission, conformed or will conform, as the case may
be, in all material respects with the requirements of the Securities Exchange Act of
1934 (the “Exchange Act”) and the applicable rules and regulations of the Commission
thereunder, and did not and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they were
made, not misleading.
	 
	 	(d)	 	Company Financial Statements Other than the financial statements for Conwood and
its subsidiaries, the financial statements and the related schedules and notes thereto
included or incorporated by reference in each of the Preliminary Offering Memorandum,
the Time of Sale Information and the Offering Memorandum comply in all material respects
with the applicable requirements of the Securities Act and the Exchange Act, as
applicable. The financial statements and the related schedules and notes thereto
included or incorporated by reference in each of the Preliminary Offering Memorandum,
the Time of Sale Information and the Offering Memorandum present fairly the financial
position of the Company and its subsidiaries, as of the dates indicated and the results
of operations and the changes in cash flows for the periods specified; such financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods covered thereby (except
as set forth therein); and the other financial information included or incorporated by
reference in each of the Preliminary Offering Memorandum, the Time of Sale Information
and the Offering Memorandum (other than financial information relating to Conwood) has
been derived from the accounting records of the Company and its subsidiaries, and
presents fairly the information shown thereby; and the pro forma financial information
of the Company and the related schedules and notes thereto included in each of the
Preliminary Offering Memorandum, the Time of Sale Information and the Offering
Memorandum includes assumptions based on preliminary estimates of the fair value of the
assets and liabilities of Conwood and its subsidiaries that provide a

 

5

 

	 	 	 	reasonable basis for presenting the significant effects directly attributable to the
transactions and events described therein, the related pro forma adjustments give
appropriate effect to those preliminary adjustments to the historical financial
statement amounts in the pro forma financial information included in each of the
Preliminary Offering Memorandum, the Time of Sale Information and the Offering
Memorandum, such pro forma financial information complies as to form with the
applicable requirements of generally accepted accounting principles in the United
States (“U.S. GAAP”), and such pro forma adjustments have been properly applied to the
historical amounts in the compilation of that information and constitute in all
material respects a fair and reliable representation of the historical operating
results and financial positions of the Company and its subsidiaries.
	 
	 	(e)	 	No Material Adverse Change There has not occurred any material adverse change,
or any development involving a prospective material adverse change, in the financial
condition or results of the operations of the Company and its subsidiaries, taken as a
whole, from that set forth in each of the Preliminary Offering Memorandum, the Time of
Sale Information and the Offering Memorandum.
	 
	 	(f)	 	Organization and Good Standing The Company and each Guarantor has been duly
incorporated, is validly existing and in good standing under the laws of its
jurisdiction of organization, has the corporate power and authority to own property and
to conduct its business as described in each of the Preliminary Offering Memorandum, the
Time of Sale Information and the Offering Memorandum and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such qualification, except to
the extent that the failure to be so qualified or be in good standing would not,
individually or in the aggregate, have a material adverse effect on the business,
properties, management, financial position, results of operations or prospects of the
Company and its subsidiaries, taken as a whole or on the performance by the Company and
the Guarantors of their obligations under the Securities and the Guarantees (a “Material
Adverse Effect”).
	 
	 	(g)	 	Capitalization The Company has an authorized capitalization as set forth in each
of the Preliminary Offering Memorandum, the Time of Sale Information and the Offering
Memorandum under the heading “Capitalization”; and all the outstanding shares of capital
stock or other equity interests of the Company and each subsidiary of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable (except,
in the case of any foreign subsidiary, for directors’ qualifying shares and except as
otherwise described in each of the Preliminary Offering Memorandum, the Time of Sale
Information and the Offering Memorandum) and are owned directly or indirectly by the
Company, free and clear of any lien, charge, encumbrance, security interest, restriction
on voting or transfer or any other claim of any third party (except as otherwise
described in each of the Preliminary Offering Memorandum, the Time of Sale Information
and the Offering Memorandum).
	 
	 	(h)	 	Due Authorization The Company and each Guarantor has the full right, power and
authority to execute and deliver this Agreement, the Securities (including each related
Guarantee), the Security Documents, the Exchange Securities, and the Registration Rights
Agreement (collectively, the “Transaction Documents”) and to perform its

 

6

 

	 	 	 	obligations hereunder and thereunder; and all action required to be taken for the due
and proper authorization, execution and delivery of each of the Transaction Documents
by the Company and each Guarantor and the consummation of the transactions
contemplated hereby and thereby has been duly and validly taken.
	 
	 	(i)	 	The Indenture The Indenture has been duly authorized by the Company and each
Guarantor and, when duly executed and delivered by the Company and each Guarantor will
constitute a valid and legally binding agreement of the Company and each Guarantors
enforceable against the Company and each Guarantor in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency or similar laws
affecting the enforcement of creditors’ rights generally or by equitable principles
relating to enforceability (collectively, the “Enforceability Exceptions”); and on the
Closing Date, the Indenture will conform in all material respects to the requirements of
the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), and the rules
and regulations of the Commission applicable to an indenture that is qualified
thereunder.
	 
	 	(j)	 	The Securities and the Guarantees The Securities have been duly authorized by
the Company and, when duly executed, authenticated, issued and delivered as provided in
the Indenture and paid for as provided herein, will be duly and validly issued and
outstanding and will constitute valid and legally binding obligations of the Company
enforceable against the Company in accordance with their terms, subject to the
Enforceability Exceptions, and will be entitled to the benefits of the Indenture; the
Guarantee of each Guarantor contained in the Indenture, assuming (i) the taking of all
necessary action to approve the issuance and terms of such Guarantees and related
matters by the Board of Directors of such Guarantor, a duly constituted and acting
committee of such Board or duly authorized officers of such Guarantor, (ii) the due
execution, authentication, issuance and delivery of the Securities underlying the
Guarantees upon payment for and delivery of the Securities in accordance with this
Agreement and (iii) the due execution, delivery and issuance of such Guarantee, will
constitute the valid and legally binding obligation of each of such Guarantors
enforceable against each such Guarantor in accordance with its terms, subject to the
Enforceability Exceptions, and entitled to the benefits of the Indenture.
	 
	 	(k)	 	Security Documents. Each of the Security Documents, when duly authorized,
executed and delivered in accordance with its terms by each of the parties thereto, will
constitute a valid and legally binding agreement of the Company and each Guarantor,
enforceable against the Company and each Guarantor in accordance with its terms, subject
to the Enforceability Exceptions.
	 
	 	(l)	 	The Exchange Securities On the Closing Date, the Exchange Securities will have
been duly authorized by the Company and each related Guarantee will have been duly
authorized by the respective Guarantor thereof and, when duly executed, authenticated,
issued and delivered as contemplated by the Registration Rights Agreement, will be duly
and validly issued and outstanding and will constitute valid and legally binding
obligations of the Company, as issuer, and the Guarantors, as guarantors, enforceable
against the Company and the Guarantors in accordance with their terms, subject to the
Enforceability Exceptions, and will be entitled to the benefits of the Indenture.

 

7

 

	 	(m)	 	Purchase and Registration Rights Agreements This Agreement has been duly
authorized, executed and delivered by the Company and each Guarantor and constitutes a
valid and legally binding agreement of the Company and each Guarantor; and the
Registration Rights Agreement has been duly authorized by the Company and each Guarantor
and, when duly executed and delivered in accordance with its terms by each of the
parties thereto, will constitute a valid and legally binding agreement of the Company
and each Guarantor enforceable against the Company and each Guarantor in accordance with
its terms, subject to the Enforceability Exceptions.
	 
	 	(n)	 	Descriptions of the Transaction Documents Each Transaction Document and the
Indenture conforms in all material respects to the description thereof contained in each
of the Preliminary Offering Memorandum, the Time of Sale Information and the Offering
Memorandum.
	 
	 	(o)	 	No Violation or Default None of the Company or any of its subsidiaries is (i) in
violation of its charter, by-laws or similar organizational documents; (ii) in default,
and no event has occurred that, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject; or (iii) in violation of any law or
statute or any judgment, order, rule or regulation of any court or arbitrator or
governmental or regulatory authority, except, in the case of clauses (ii) and (iii)
above, for any such default or violation that would not, individually or in the
aggregate, have a Material Adverse Effect.
	 
	 	(p)	 	No Conflicts The execution, delivery and performance by the Company and the
Guarantors of each of the Transaction Documents to which each is a party, the issuance
and sale of the Securities (including the Guarantees) and compliance by the Company and
the Guarantors with the terms thereof and the consummation of the transactions
contemplated by the Transaction Documents will not (i) conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a default under,
or, except as contemplated by the Transaction Documents, result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the Company
or any of its subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is bound or
to which any of the property or assets of the Company or any of its subsidiaries is
subject, (ii) result in any violation of the provisions of the charter, by-laws or
similar organizational documents of the Company or any of its subsidiaries or (iii)
result in the violation of any law or statute or any judgment, order, rule or regulation
of any court or arbitrator or governmental or regulatory authority, except, in the case
of clauses (i) and (iii) above, for any such conflict, breach or violation that would
not, individually or in the aggregate, have a Material Adverse Effect.
	 
	 	(q)	 	No Consents Required Assuming the accuracy of the Initial Purchasers’
representations and warranties contained herein and their compliance with the

 

8

 

	 	 	 	agreements herein, no consent, approval, authorization, order, registration or
qualification of or with any court or arbitrator or governmental or regulatory
authority is required for the execution, delivery and performance by the Company and
each of its subsidiaries of each of the Transaction Documents to which each is a
party, the issuance and sale of the Securities (including the Guarantees) and
compliance by the Company and each of its subsidiaries with the terms thereof and the
consummation of the transactions contemplated by the Transaction Documents, except for
such consents, approvals, authorizations, orders and registrations or qualifications
as may be required (i) under applicable state securities laws in connection with the
purchase and resale of the Securities by the Initial Purchasers and (ii) with respect
to the Exchange Securities (including the related guarantees) under the Securities Act
and applicable state securities laws as contemplated by the Registration Rights
Agreement.
	 
	 	(r)	 	Legal Proceedings There are no legal or governmental proceedings pending or, to
the best of the Company’s knowledge, threatened to which the Company or any of its
subsidiaries is or may be a party or to which any of their properties is subject other
than proceedings accurately described in all material respects in, or incorporated by
reference into, each of the Preliminary Offering Memorandum, the Time of Sale
Information and the Offering Memorandum and proceedings that would not have a Material
Adverse Effect on the power or ability of the Company or any Guarantor to perform its
obligations under the Transaction Documents or the Indenture or to consummate the
transactions contemplated by each of the Preliminary Offering Memorandum, the Time of
Sale Information and the Offering Memorandum.
	 
	 	(s)	 	Environmental Laws The Company and each of its subsidiaries (i) is in compliance
with any and all applicable federal, state and local laws and regulations relating to
the protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii) has
received all permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its respective business and (iii) is in compliance with
all terms and conditions of any such permit, license or approval, except as described in
each of the Preliminary Offering Memorandum, the Time of Sale Information and the
Offering Memorandum or except where such noncompliance with Environmental Laws, failure
to receive required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not, singly or in the
aggregate, have a Material Adverse Effect. There are no costs or liabilities associated
with Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related constraints on
operating activities and any potential liabilities to third parties) which would, singly
or in the aggregate, have a Material Adverse Effect, except as described in each of the
Preliminary Offering Memorandum, the Time of Sale Information and the Offering
Memorandum.
	 
	 	(t)	 	Independent Accountants KPMG LLP, who has certified certain financial statements
of the Company and its subsidiaries, is an independent registered public accounting firm
with respect to the Company and its subsidiaries, as required by the Securities Act.

 

9

 

	 	(u)	 	Investment Company Act None of the Company or any of its subsidiaries is, and
after giving effect to the offering and sale of the Securities and the application of
the proceeds thereof as described in the Offering Memorandum will be, an “investment
company” or an entity “controlled” by an “investment company” within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations of the
Commission thereunder (collectively, “Investment Company Act”).
	 
	 	(v)	 	No Broker’s Fees None of the Company or any of its subsidiaries is a party to
any contract, agreement or understanding with any person (other than this Agreement)
that would give rise to a valid claim against any of them or any Initial Purchaser for a
brokerage commission, finder’s fee or like payment in connection with the offering and
sale of the Securities.
	 
	 	(w)	 	Rule 144A Eligibility On the Closing Date, the Securities will not be of the
same class as securities listed on a national securities exchange registered under
Section 6 of the Exchange Act or quoted in an automated inter-dealer quotation system;
and each of the Preliminary Offering Memorandum, the Time of Sale Information and the
Offering Memorandum, as of their respective dates, contains or will contain all the
information that, if requested by a prospective purchaser of the Securities, would be
required to be provided to such prospective purchaser pursuant to Rule 144A(d)(4) under
the Securities Act.
	 
	 	(x)	 	No Integration None of the Company, any Guarantor or any of its or their
affiliates (as defined in Rule 501(b) of Regulation D) has, directly or through any
agent, sold, offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as defined in the Securities Act), that is or will be
integrated with the sale of the Securities in a manner that would require registration
of the Securities under the Securities Act.
	 
	 	(y)	 	No General Solicitation or Directed Selling Efforts None of the Company, any
Guarantor or any of its or their affiliates or any other person acting on behalf of any
of them (other than the Initial Purchasers, as to which no representation is made) has
(i) solicited offers for, or offered or sold, the Securities by means of any form of
general solicitation or general advertising within the meaning of Rule 502(c) of
Regulation D or in any manner involving a public offering within the meaning of Section
4(2) of the Securities Act or (ii) engaged in any directed selling efforts within the
meaning of Regulation S under the Securities Act (“Regulation S”), and all such persons
have complied with the offering restrictions requirement of Regulation S.
	 
	 	(z)	 	Securities Law Exemptions Assuming the accuracy of the representations and
warranties of the Initial Purchasers contained in Section 1(b) (including Annex C
hereto) and their compliance with their agreements set forth therein, it is not
necessary, in connection with the issuance and sale of the Securities to the Initial
Purchasers and the offer, resale and delivery of the Securities by the Initial
Purchasers in the manner contemplated by this Agreement, the Preliminary Offering
Memorandum, the Time of Sale Information and the Offering Memorandum, to register the
Securities under the Securities Act or to qualify the Indenture under the Trust
Indenture Act.
	 
	 	(aa)	 	No Stabilization None of the Company, any Guarantor nor any of its or their
affiliates has taken, directly or indirectly, any action designed to or that could
reasonably be

 

10

 

	 	 	 	expected to cause or result in any stabilization or manipulation of the price of the
Securities.
	 
	 	(bb)	 	Forward-Looking Statements No forward-looking statement (within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act) contained or
incorporated by reference in the Preliminary Offering Memorandum, the Time of Sale
Information and the Offering Memorandum has been made or reaffirmed without a reasonable
basis or has been disclosed other than in good faith.

	4	 	Further Agreements of the Company and the Guarantors
	 
	 	 	The Company and each Guarantor jointly and severally covenants and agrees with each Initial
Purchaser that:

	 	(a)	 	Delivery of Copies The Company and the Guarantors will deliver to the Initial
Purchasers as many copies of the Preliminary Offering Memorandum, the Time of Sale
Information and the Offering Memorandum (including all amendments and supplements
thereto) as the Representatives may reasonably request.
	 
	 	(b)	 	Amendments or Supplements Before finalizing the Offering Memorandum or making or
distributing any amendment or supplement to any of the Preliminary Offering Memorandum,
the Time of Sale Information or the Offering Memorandum or filing with the Commission
any document that will be incorporated by reference therein, the Company and the
Guarantors will furnish to the Representatives and counsel for the Initial Purchasers a
copy of the proposed Offering Memorandum, amendment, supplement or document, and will
not distribute any such proposed Offering Memorandum, amendment or supplement or file
any such document with the Commission (unless so required by law) to which the
Representatives reasonably object.
	 
	 	(c)	 	Additional Written Communications. Before preparing, using, authorizing,
approving or referring to any Issuer Written Communication that constitutes an offer to
sell or a solicitation of an offer to buy the Securities (other than written
communications that are listed on Annex A hereto and the Offering Memorandum), the
Company and the Guarantors will furnish to the Representatives and counsel for the
Initial Purchasers a copy of such proposed Issuer Written Communication for review and
will not use, authorize, approve or refer to any such Issuer Written Communication to
which the Representatives reasonably object.
	 
	 	(d)	 	Notice to the Representatives The Company and the Guarantors will advise the
Representatives promptly, and confirm such advice in writing, (i) of the issuance by any
governmental or regulatory authority of any order preventing or suspending the use of
any of the Preliminary Offering Memorandum, the Time of Sale Information or the Offering
Memorandum or the initiation or threatening of any proceeding for that purpose; (ii) of
the occurrence of any event at any time prior to the completion of the initial offering
of the Securities as a result of which any of the Preliminary Offering Memorandum, the
Time of Sale Information or the Offering Memorandum as then amended or supplemented
would include any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of

 

11

 

	 	 	 	the circumstances existing when such Preliminary Offering Memorandum, Time of Sale
Information or the Offering Memorandum is delivered to a purchaser, not misleading;
and (iii) of the receipt by the Company or the Guarantors of any notice with respect
to any suspension of the qualification of the Securities for offer and sale in any
jurisdiction or the initiation or threatening of any proceeding for such purpose; and
the Company and the Guarantors will use their reasonable best efforts to prevent the
issuance of any such order preventing or suspending the use of any of the Preliminary
Offering Memorandum, the Time of Sale Information or the Offering Memorandum or
suspending any such qualification of the Securities and, if any such order is issued,
will use their reasonable best efforts to obtain as soon as possible the withdrawal
thereof.
	 
	 	(e)	 	Ongoing Compliance of the Offering Memorandum (1) If at any time prior to the
completion of the initial offering of the Securities (i) any event shall occur or
condition shall exist as a result of which the Offering Memorandum as then amended or
supplemented would include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of the
circumstances existing when the Offering Memorandum, is delivered to a purchaser, not
misleading or (ii) it is necessary to amend or supplement the Offering Memorandum to
comply with law, the Company and the Guarantors will immediately notify the Initial
Purchasers thereof and forthwith prepare and, subject to paragraph (b) in this Section
4, file with the Commission any document to be incorporated by reference therein and
furnish to the Initial Purchasers, and to such dealers as the Representatives may
designate, such amendments or supplements to the Offering Memorandum, as may be
necessary so that the statements in the Offering Memorandum, as so amended or
supplemented (or including such document to be incorporated by reference therein) will
not, in the light of the circumstances existing when the Offering Memorandum is
delivered to a purchaser, be misleading or so that the Offering Memorandum will comply
with law, and (2) if at any time prior to the Closing Date (i) any event shall occur or
condition shall exist as a result of which any of the Time of Sale Information as then
amended or supplemented would include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading or (ii) it is necessary
to amend or supplement any of the Time of Sale Information so that any of the Time of
Sale Information will not include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, the Company and the
Guarantors will immediately notify the Initial Purchasers thereof and forthwith prepare
and, subject to paragraph (b) in this Section 4, furnish to the Initial Purchasers such
amendments or supplements to any of the Time of Sale Information (or any document to be
filed with the Commission and incorporated by reference therein) as may be necessary so
that the statements in any of the Time of Sale Information as so amended or supplemented
will not, in the light of the circumstances under which they were made, be misleading.
	 
	 	(f)	 	Blue Sky Compliance The Company and the Guarantors will cooperate with the
Initial Purchasers to qualify the Securities for offer and sale under the securities or
Blue Sky laws of such jurisdictions as the Representatives shall reasonably request and
will

 

12

 

	 	 	 	continue such qualifications in effect so long as required for the offering and resale
of the Securities; provided that neither the Company nor any Guarantor shall be
required to (i) qualify as a foreign corporation or other entity or as a dealer in
securities in any such jurisdiction where it would not otherwise be required to so
qualify, (ii) file any general consent to service of process in any such jurisdiction
or (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so
subject.
	 
	 	(g)	 	Clear Market During the period from the date hereof and for a period of 180 days
from the Closing Date, the Company and the Guarantors will not, without the prior
written consent of the Representatives, offer, sell, contract to sell or otherwise
dispose of, directly or indirectly, or announce the offering of, any debt securities
substantially similar to the Securities or securities convertible into such debt
securities issued or guaranteed by the Company or the Guarantors.
	 
	 	(h)	 	Use of Proceeds The Company will apply the net proceeds from the sale of the
Securities as described in the Offering Memorandum under the heading “Use of Proceeds.”
	 
	 	(i)	 	Supplying Information While the Securities remain outstanding and are
“restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act,
the Company and the Guarantors will, during any period in which the Company or any
Guarantor is not subject to and in compliance with Section 13 or 15(d) of the Exchange
Act, furnish to holders of the Securities and prospective purchasers of the Securities
designated by such holders, upon the request of such holders or such prospective
purchasers, the information required to be delivered pursuant to Rule 144A(d)(4) under
the Securities Act.
	 
	 	(j)	 	DTC The Company and the Guarantors will assist the Initial Purchasers in
arranging for the Securities to be eligible for clearance and settlement through The
Depository Trust Company (“DTC”).
	 
	 	(k)	 	No Resales by the Company and the Guarantors Until the issuance of the Exchange
Securities, the Company and the Guarantors will not, and will not permit any of their
affiliates (as defined in Rule 144 under the Securities Act) to, resell any of the
Securities that have been acquired by any of them, except for Securities purchased by
the Company, the Guarantors or any of their affiliates and resold in a transaction
registered under the Securities Act.
	 
	 	(l)	 	No Integration None of the Company, any Guarantor or any of their affiliates (as
defined in Rule 501(b) of Regulation D) will, directly or through any agent, sell, offer
for sale, solicit offers to buy or otherwise negotiate in respect of, any security (as
defined in the Securities Act), that is or will be integrated with the sale of the
Securities in a manner that would require registration of the Securities under the
Securities Act.
	 
	 	(m)	 	No General Solicitation or Directed Selling Efforts None of the Company, any
Guarantor or any of their affiliates or any other person acting on behalf of any of them
(other than the Initial Purchasers, as to which no covenant is given) will (i) solicit
offers for, or offer or sell, the Securities by means of any form of general
solicitation or general advertising within the meaning of Rule 502(c) of Regulation D or
in any manner

 

13

 

	 	 	 	involving a public offering within the meaning of Section 4(2) of the Securities Act
or (ii) engage in any directed selling efforts within the meaning of Regulation S, and
all such persons will comply with the offering restrictions requirement of Regulation
S.
	 
	 	(n)	 	No Stabilization Neither the Company nor any Guarantor will take, directly or
indirectly, any action designed to or that could reasonably be expected to cause or
result in any stabilization or manipulation of the price of the Securities.
	 
	 	(o)	 	Filing of Exchange Act Documents The Company will file promptly all reports and
any definitive proxy or information statements required to be filed by the Company with
the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act.
	 
	 	(p)	 	Acquisition Consummation On or prior to the Closing Date, the Acquisition will
have been consummated.
	 
	 	(q)	 	Joinder The Company and the Guarantors will cause each of Conwood, Conwood
Company, L.P., Conwood Sales Company, L.P. and Rosswil LLC to become a party to this
Agreement by executing a signature page hereto.

	5	 	Certain Agreements of the Initial Purchasers
	 
	 	 	Each Initial Purchaser hereby represents and agrees that it has not and will not use,
authorize use of, refer to, or participate in the planning for use of, any written
communication that constitutes an offer to sell or the solicitation of an offer to buy the
Securities other than (i) a written communication that contains no “issuer information” (as
defined in Rule 433(h)(2) under the Securities Act) that was not included (including through
incorporation by reference) in the Preliminary Offering Memorandum, (ii) any written
communication listed on Annex A or prepared pursuant to Section 4(c) above, (iii) any written
communication prepared by such Initial Purchaser and approved by the Company in advance in
writing, or (iv) any written communication relating to or that contains the terms of the
Securities and/or other information that was included (including through incorporation by
reference) in the Preliminary Offering Memorandum.

	6	 	Conditions of Initial Purchasers’ Obligations
	 
	 	 	The obligation of each Initial Purchaser to purchase Securities on the Closing Date as
provided herein is subject to the performance by the Company and the Guarantors of their
respective covenants and other obligations hereunder and to the following additional
conditions:

	 	(a)	 	Representations and Warranties The representations and warranties of the Company
and the Guarantors contained herein shall be true and correct on the date hereof and on
and as of the Closing Date; and the statements of the Company, the Guarantors and their
respective officers made in any certificates delivered pursuant to this Agreement shall
be true and correct on and as of the Closing Date.
	 
	 	(b)	 	No Downgrade Subsequent to the execution and delivery of this Agreement, (i) no
downgrading shall have occurred in the rating accorded the Securities or any other debt
securities or preferred stock issued or guaranteed by the Company or the Guarantors by
any “nationally recognized statistical rating organization”, as such term is defined by
the Commission for purposes of Rule 436(g)(2) under the Securities Act; and (ii) no such

 

14

 

	 	 	 	organization shall have publicly announced that it has under surveillance or review,
or has changed its outlook with respect to, its rating of the Securities or of any
other debt securities or preferred stock issued or guaranteed by the Company or any
Guarantor or any of its subsidiaries (other than an announcement with positive
implications of a possible upgrading).
	 
	 	(c)	 	No Material Adverse Change Subsequent to the execution and delivery of this
Agreement, no event or condition of a type described in Section 3(e) hereof shall have
occurred or shall exist, which event or condition is not described in each of the
Preliminary Offering Memorandum, the Time of Sale Information (excluding any amendment
or supplement thereto) the Offering Memorandum (excluding any amendment or supplement
thereto or any document filed with the Commission after the date hereof and incorporated
by reference therein) and the effect of which in the reasonable judgment of the
Representatives makes it impracticable or inadvisable to proceed with the offering, sale
or delivery of the Securities on the terms and in the manner contemplated by this
Agreement, the Preliminary Offering Memorandum, the Time of Sale Information and the
Offering Memorandum.
	 
	 	(d)	 	Officer’s Certificate The Representatives shall have received on and as of the
Closing Date a certificate of an executive officer of the Company and of each of the
Guarantors who has specific knowledge of the Company’s or such Guarantor’s financial
matters and is satisfactory to the Representatives (i) confirming that such officer has
carefully reviewed the Preliminary Offering Memorandum, the Time of Sale Information and
the Offering Memorandum and, to the best knowledge of such officer, the representation
set forth in Section 3(a) and 3(c) hereof is true and correct, (ii) confirming that the
other representations and warranties of the Company and the Guarantors in this Agreement
are true and correct and that the Company and the Guarantors have complied with all
agreements and satisfied all conditions on their part to be performed or satisfied
hereunder at or prior to the Closing Date and (iii) to the effect set forth in
paragraphs (b) and (c) above (such officer need not certify as to the judgment of the
Representatives with respect to paragraph (c) above).
	 
	 	(e)	 	Company Comfort Letters On the date of this Agreement and on the Closing Date,
KPMG LLP shall have furnished to the Representatives, at the request of the Company and
the Guarantors, letters, dated the respective dates of delivery thereof and addressed to
the Initial Purchasers, in form and substance reasonably satisfactory to the
Representatives, containing statements and information of the type customarily included
in accountants’ “comfort letters” to underwriters with respect to the financial
statements and certain financial information of the Company and its subsidiaries
contained or incorporated by reference in each of the Preliminary Offering Memorandum,
the Time of Sale Information and the Offering Memorandum; provided that the letter
delivered on the Closing Date shall use a “cut-off” date no more than three business
days prior to the Closing Date.
	 
	 	(f)	 	Conwood Comfort Letters On the date of this Agreement and on the Closing Date,
KPMG LLP shall have furnished to the Representatives, at the request of the Company and
the Guarantors, letters, dated the respective dates of delivery thereof and addressed to
the Initial Purchasers, in form and substance reasonably satisfactory to the

 

15

 

	 	 	 	Representatives, containing statements and information of the type customarily
included in accountants’ “comfort letters” to underwriters with respect to the
financial statements and certain financial information of Conwood and its subsidiaries
contained or incorporated by reference in each of the Preliminary Offering Memorandum,
the Time of Sale Information and the Offering Memorandum.
	 
	 	(g)	 	Opinion of Counsel for the Company and the Guarantors Kilpatrick Stockton LLP,
counsel for the Company and the Guarantors, shall have furnished to the Representatives,
at the request of the Company and the Guarantors, their written opinion, dated the
Closing Date and addressed to the Initial Purchasers, in form and substance reasonably
satisfactory to the Representatives, to the effect set forth in Annex D hereto.
	 
	 	(h)	 	Opinion of McDara P. Folan, III. McDara P. Folan, III, Senior Vice President,
Deputy General Counsel and Secretary of the Company, shall have furnished to the
Representatives, at the request of the Company and the Guarantors, his written opinion,
dated the Closing Date and addressed to the Initial Purchasers, in form and substance
reasonably satisfactory to the Representatives, to the effect set forth in Annex E
hereto.
	 
	 	(i)	 	Opinion of Special Counsel for the Company and the Guarantors Womble Carlyle
Sandridge & Rice, special counsel for the Company and the Guarantors, shall have
furnished to the Representatives, at the request of the Company and the Guarantors,
their written opinion, dated the Closing Date and addressed to the Initial Purchasers,
in form and substance reasonably satisfactory to the Representatives, to the effect set
forth in Annex F hereto.
	 
	 	(j)	 	Opinion of Counsel for the Initial Purchasers The Representatives shall have
received on and as of the Closing Date an opinion of Linklaters, counsel for the Initial
Purchasers, with respect to such matters as the Representatives may reasonably request,
and such counsel shall have received such documents and information as they may
reasonably request to enable them to pass upon such matters.
	 
	 	(k)	 	No Legal Impediment to Issuance No action shall have been taken and no statute,
rule, regulation or order shall have been enacted, adopted or issued by any federal,
state or foreign governmental or regulatory authority that would, as of the Closing
Date, prevent the issuance or sale of the Securities or the issuance of the Guarantees;
and no injunction or order of any federal, state or foreign court shall have been issued
that would, as of the Closing Date, prevent the issuance or sale of the Securities or
the issuance of the Guarantees.
	 
	 	(l)	 	Good Standing The Representatives shall have received on and as of the Closing
Date satisfactory evidence of the good standing of the Company and each of the
Guarantors in their respective jurisdictions of organization and their good standing in
such other jurisdictions as the Representatives may reasonably request, in each case in
writing or any standard form of telecommunication, from the appropriate governmental
authorities of such jurisdictions.

 

16

 

	 	(m)	 	Registration Rights Agreement The Initial Purchasers shall have received a
counterpart of the Registration Rights Agreement that shall have been executed and
delivered by a duly authorized officer of the Company and of each Guarantor.
	 
	 	(n)	 	DTC The Securities shall be eligible for clearance and settlement through DTC.
	 
	 	(o)	 	Acquisition Consummation On or prior to the Closing Date, the Acquisition shall
have been consummated.
	 
	 	(p)	 	Credit Facilities Each condition to the closing of the Company’s senior secured
term loan facility, senior secured revolving credit facility and 364-day senior secured
term loan facility to be entered into on or about the closing date (collectively, the
“Credit Facilities”) shall have been satisfied, (ii) no event of default or event that,
with the giving of notice or lapse of time, or both, would constitute an event of
default under the Credit Facilities shall have occurred and (iii) the closing under the
Credit Facilities and the borrowing of approximately $1.55 billion thereunder shall have
been consummated, and the Representatives shall have received evidence reasonably
satisfactory to them of such closings and borrowings.
	 
	 	(q)	 	Joinder Each of Conwood, Conwood Company, L.P., Conwood Sales Company, L.P. and
Rosswil LLC shall have become parties to this Agreement by executing counterpart
signature pages hereto.
	 
	 	(r)	 	Additional Documents On or prior to the Closing Date, the Company and the
Guarantors shall have furnished to the Representatives such further certificates and
documents as the Representatives may reasonably request.

	 	 	All opinions, letters, certificates and evidence mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in
form and substance reasonably satisfactory to counsel for the Initial Purchasers.
	 
	7	 	Indemnification and Contribution

	 	(a)	 	Indemnification of the Initial Purchasers The Company and the Guarantors jointly
and severally agree to indemnify and hold harmless each Initial Purchaser, its
affiliates, directors and officers and each person, if any, who controls such Initial
Purchaser within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all reasonable losses, claims, damages and
liabilities (including, without limitation, reasonable legal fees and other expenses
incurred in connection with any suit, action or proceeding or any claim asserted, as
such fees and expenses are incurred), joint or several, that arise out of, or are based
upon, any untrue statement or alleged untrue statement of a material fact contained in
each of the Preliminary Offering Memorandum, the Time of Sale Information or the
Offering Memorandum (or any amendment or supplement thereto), or any omission or alleged
omission to state therein a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading,
except insofar as such losses, claims, damages or liabilities arise out of, or are based
upon, any untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with any information relating to any Initial Purchaser
furnished to the

 

17

 

	 	 	 	Company and the Guarantors in writing by such Initial Purchaser through the
Representatives expressly for use therein.
	 
	 	(b)	 	Indemnification of the Company and the Guarantors Each Initial Purchaser agrees,
severally and not jointly, to indemnify and hold harmless the Company, the Guarantors
and their respective directors and officers and each person, if any, who controls the
Company or any Guarantor within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the indemnity set forth in
paragraph (a) above, but only with respect to any losses, claims, damages or liabilities
that arise out of, or are based upon, any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with any information
relating to such Initial Purchaser furnished to the Company and the Guarantors in
writing by such Initial Purchaser through the Representatives expressly for use in any
of the Preliminary Offering Memorandum, the Time of Sale Information and the Offering
Memorandum (or any amendment or supplement thereto); it being understood that the only
such information consists of the following: the fifth sentence of the eighth paragraph
under the heading “Plan of Distribution” and the ninth, tenth and twelfth paragraphs
under the heading “Plan of Distribution.”
	 
	 	(c)	 	Notice and Procedures If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or asserted
against any person in respect of which indemnification may be sought pursuant to either
paragraph (a) or (b) above, such person (the “Indemnified Person”) shall promptly notify
the person against whom such indemnification may be sought (the “Indemnifying Person”)
in writing; provided that the failure to notify the Indemnifying Person shall not
relieve it from any liability that it may have under this Section 7 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive rights or
defenses) by such failure; and provided, further, that the failure to notify the
Indemnifying Person shall not relieve it from any liability that it may have to an
Indemnified Person otherwise than under this Section 7. If any such proceeding shall be
brought or asserted against an Indemnified Person and it shall have notified the
Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably
satisfactory to the Indemnified Person to represent the Indemnified Person and any
others entitled to indemnification pursuant to this Section 7 that the Indemnifying
Person may designate in such proceeding and shall pay the reasonable fees and expenses
of such counsel related to such proceeding, as incurred upon the receipt by the
Indemnifying Person of an invoice therefor. In any such proceeding, any Indemnified
Person shall have the right to retain its own counsel, but the reasonable fees and
expenses of such counsel shall be at the expense of such Indemnified Person unless (i)
the Indemnifying Person and the Indemnified Person shall have mutually agreed to the
contrary; (ii) the Indemnifying Person has failed within a reasonable time to retain
counsel reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person
shall have reasonably concluded that there may be legal defenses available to it that
are different from or in addition to those available to the Indemnifying Person; or (iv)
the named parties in any such proceeding (including any impleaded parties) include both
the Indemnifying Person and the Indemnified Person and representation of both parties by
the same counsel would be inappropriate due to actual or potential differing interests
between them. It is

 

18

 

	 	 	 	understood and agreed that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for all
Indemnified Persons, and that all such reasonable fees and expenses shall be
reimbursed as they are incurred upon the receipt by the Indemnifying Person of an
invoice therefor. Any such separate firm for any Initial Purchaser, its affiliates,
directors and officers and any control persons of such Initial Purchaser shall be
designated in writing by the Representatives and any such separate firm for the
Company, the Guarantors and any control persons of the Company and the Guarantors
shall be designated in writing by the Company and the Guarantors. The Indemnifying
Person shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified Person
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall
have requested that an Indemnifying Person reimburse the Indemnified Person for fees
and expenses of counsel as contemplated by this paragraph, the Indemnifying Person
shall be liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 30 days after receipt by the
Indemnifying Person of such request and (ii) the Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the date of
such settlement. No Indemnifying Person shall, without the written consent of the
Indemnified Person, effect any settlement of any pending or threatened proceeding in
respect of which any Indemnified Person is or could have been a party and
indemnification could have been sought hereunder by such Indemnified Person, unless
such settlement (x) includes an unconditional release of such Indemnified Person, in
form and substance reasonably satisfactory to such Indemnified Person, from all
liability on claims that are the subject matter of such proceeding and (y) does not
include any statement as to or any admission of fault, culpability or a failure to act
by or on behalf of any Indemnified Person.
	 
	 	(d)	 	Contribution If the indemnification provided for in paragraphs (a) and (b) above
is unavailable to an Indemnified Person or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each Indemnifying Person under
such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall
contribute to the amount paid or payable by such Indemnified Person as a result of such
losses, claims, damages or liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Guarantors on the one hand
and the Initial Purchasers on the other from the offering of the Securities or (ii) if
the allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred to in
clause (i) but also the relative fault of the Company and the Guarantors on the one hand
and the Initial Purchasers on the other in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the Company and the
Guarantors on the one hand and the Initial Purchasers on the other shall be deemed to be
in the same

 

19

 

	 	 	 	respective proportions as the net proceeds (before deducting expenses) received by the
Company from the sale of the Securities and the total discounts and commissions
received by the Initial Purchasers in connection therewith, as provided in this
Agreement, bear to the aggregate offering price of the Securities. The relative fault
of the Company and the Guarantors on the one hand and the Initial Purchasers on the
other shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or the Guarantors
or by the Initial Purchasers and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
	 
	 	(e)	 	Limitation on Liability The Company, the Guarantors and the Initial Purchasers
agree that it would not be just and equitable if contribution pursuant to this Section 6
were determined by pro rata allocation (even if the Initial Purchasers were treated as
one entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The amount
paid or payable by an Indemnified Person as a result of the losses, claims, damages and
liabilities referred to in paragraph (d) above shall be deemed to include, subject to
the limitations set forth above, any reasonable legal or other expenses incurred by such
Indemnified Person in connection with any such action or claim subject to the receipt by
the Indemnifying Person of an invoice therefor. Notwithstanding the provisions of this
Section 7, in no event shall an Initial Purchaser be required to contribute any amount
in excess of the amount by which the total discounts and commissions received by such
Initial Purchaser with respect to the offering of the Securities exceeds the amount of
any damages that such Initial Purchaser has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Initial Purchasers’ obligations to contribute
pursuant to this Section 7 are several in proportion to their respective purchase
obligations hereunder and not joint.
	 
	 	(f)	 	Non-Exclusive Remedies The remedies provided for in this Section 7 are not
exclusive and shall not limit any rights or remedies that may otherwise be available to
any Indemnified Person at law or in equity.

	8	 	Termination
	 
	 	 	This Agreement may be terminated in the absolute discretion of the Representatives, by notice
to the Company and the Guarantors, if after the execution and delivery of this Agreement and
prior to the Closing Date (a) trading generally shall have been suspended or materially
limited on the New York Stock Exchange or the over-the-counter market; (b) trading of any
securities issued or guaranteed by the Company or the Guarantors shall have been suspended on
any exchange or in any over-the-counter market; (c) a general moratorium on commercial
banking activities shall have been declared by federal or New York State authorities; or (d)
there shall have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis, either within or outside the United States,
that, in the judgment of the

 

20

 

	 	 	Representatives, is material and adverse and makes it impracticable or inadvisable to proceed
with the offering, sale or delivery of the Securities on the terms and in the manner
contemplated by this Agreement, the Preliminary Offering Memorandum, the Time of Sale
Information and the Offering Memorandum.
	 
	9	 	Defaulting Initial Purchaser

	 	(a)	 	If, on the Closing Date, any Initial Purchaser defaults on its obligation to
purchase the Securities that it has agreed to purchase hereunder, the non-defaulting
Initial Purchasers may in their discretion arrange for the purchase of such Securities
by other persons satisfactory to the Company and the Guarantors on the terms contained
in this Agreement. If, within 36 hours after any such default by any Initial Purchaser,
the non-defaulting Initial Purchasers do not arrange for the purchase of such
Securities, then the Company and the Guarantors shall be entitled to a further period of
36 hours within which to procure other persons satisfactory to the non-defaulting
Initial Purchasers to purchase such Securities on such terms. If other persons become
obligated or agree to purchase the Securities of a defaulting Initial Purchaser, either
the non defaulting Initial Purchasers or the Company and the Guarantors may postpone the
Closing Date for up to five full business days in order to effect any changes that in
the opinion of counsel for the Company and the Guarantors or counsel for the Initial
Purchasers may be necessary in the Time of Sale Information, the Offering Memorandum or
in any other document or arrangement, and the Company and the Guarantors agree to
promptly prepare any amendment or supplement to the Offering Memorandum that effects any
such changes. As used in this Agreement, the term “Initial Purchaser” includes, for all
purposes of this Agreement unless the context otherwise requires, any person not listed
in Schedule 2 hereto that, pursuant to this Section 9, purchases Securities that a
defaulting Initial Purchaser agreed but failed to purchase.
	 
	 	(b)	 	If, after giving effect to any arrangements for the purchase of the Securities of
a defaulting Initial Purchaser or Initial Purchasers by the non-defaulting Initial
Purchasers and the Company and the Guarantors as provided in paragraph (a) above, the
aggregate principal amount of such Securities that remains unpurchased does not exceed
one-eleventh of the aggregate principal amount of all the Securities, then the Company
and the Guarantors shall have the right to require each non-defaulting Initial Purchaser
to purchase the principal amount of Securities that such Initial Purchaser agreed to
purchase hereunder plus such Initial Purchaser’s pro rata share (based on the principal
amount of Securities that such Initial Purchaser agreed to purchase hereunder) of the
Securities of such defaulting Initial Purchaser or Initial Purchasers for which such
arrangements have not been made.
	 
	 	(c)	 	If, after giving effect to any arrangements for the purchase of the Securities of
a defaulting Initial Purchaser or Initial Purchasers by the non-defaulting Initial
Purchasers and the Company and the Guarantors as provided in paragraph (a) above, the
aggregate principal amount of such Securities that remains unpurchased exceeds
one-eleventh of the aggregate principal amount of all the Securities, or if the Company
and the Guarantors shall not exercise the right described in paragraph (b) above, then
this Agreement shall terminate without liability on the part of the non-defaulting
Initial

 

21

 

	 	 	 	Purchasers. Any termination of this Agreement pursuant to this Section 9 shall be
without liability on the part of the Company or the Guarantors, except that the
provisions of Section 7 hereof shall not terminate and shall remain in effect.
	 
	 	(d)	 	Nothing contained herein shall relieve a defaulting Initial Purchaser of any
liability it may have to the Company, the Guarantors or any non-defaulting Initial
Purchaser for damages caused by its default.

	10	 	Payment of Expenses

	 	(a)	 	Whether or not the transactions contemplated by this Agreement are consummated or
this Agreement is terminated, the Company and the Guarantors jointly and severally agree
to pay or cause to be paid all costs and expenses incident to the performance of their
respective obligations hereunder, including without limitation, (i) the costs incident
to the authorization, issuance, sale, preparation and delivery of the Securities and any
taxes payable in that connection; (ii) the costs incident to the preparation and
printing of the Preliminary Offering Memorandum, the Time of Sale Information and the
Offering Memorandum (including any amendment or supplement thereto) and the distribution
thereof; (iii) the costs of reproducing and distributing each of the Transaction
Documents and the Indenture; (iv) the fees and expenses of the Company’s and the
Guarantors’ counsel and independent accountants; (v) the fees and expenses incurred in
connection with the registration or qualification and determination of eligibility for
investment of the Securities under the laws of such jurisdictions as the Representatives
may designate and the preparation, printing and distribution of a Blue Sky Memorandum
(including the related fees and expenses of counsel for the Initial Purchasers); (vi)
any fees charged by rating agencies for rating the Securities; (vii) the fees and
expenses of the Trustee and any paying agent (including related fees and expenses of any
counsel to such parties); (viii) all expenses and application fees incurred in
connection with the approval of the Securities for book-entry transfer by DTC; and (ix)
all expenses incurred by the Company and the Guarantors in connection with any “road
show” presentation to potential investors.
	 
	 	(b)	 	If (i) this Agreement is terminated pursuant to Section 8, (ii) the Company for
any reason fails to tender the Securities for delivery to the Initial Purchasers or
(iii) the Initial Purchasers decline to purchase the Securities for any reason permitted
under this Agreement other than pursuant to Section 9, the Company and the Guarantors
jointly and severally agree to reimburse the Initial Purchasers for all out-of-pocket
costs and expenses (including the reasonable fees and expenses of their counsel upon the
receipt by the Company of an invoice therefor) reasonably incurred by the Initial
Purchasers in connection with this Agreement and the offering contemplated hereby.

	11	 	Persons Entitled to Benefit of Agreement
	 
	 	 	This Agreement shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and any controlling persons referred to herein, and the affiliates,
officers and directors of each Initial Purchaser referred to in Section 7 hereof. Nothing in
this Agreement is intended or shall be construed to give any other person any legal or
equitable right, remedy or claim under or in respect of this Agreement or any provision
contained herein. No purchaser of

 

22

 

	 	 	Securities from any Initial Purchaser shall be deemed to be a successor merely by reason of
such purchase.
	 
	12	 	Survival
	 
	 	 	The respective indemnities, rights of contribution, representations, warranties and
agreements of the Company, the Guarantors and the Initial Purchasers contained in this
Agreement or made by or on behalf of the Company, the Guarantors or the Initial Purchasers
pursuant to this Agreement or any certificate delivered pursuant hereto shall survive the
delivery of and payment for the Securities and shall remain in full force and effect,
regardless of any termination of this Agreement or any investigation made by or on behalf of
the Company, the Guarantors or the Initial Purchasers.
	 
	13	 	Certain Defined Terms
	 
	 	 	For purposes of this Agreement, (a) except where otherwise expressly provided, the term
“affiliate” has the meaning set forth in Rule 405 under the Securities Act; (b) the term
“business day” means any day other than a day on which banks are permitted or required to be
closed in New York City; (c) the term “Exchange Act” means the Securities Exchange Act of
1934, as amended; (d) the term “subsidiary” has the meaning set forth in Rule 405 under the
Securities Act; and (e) the term “significant subsidiary” has the meaning set forth in Rule
1-02 of Regulation S-X under the Exchange Act.
	 
	14	 	Miscellaneous

	 	(a)	 	Authority of the Representatives Any action by the Initial Purchasers hereunder
may be taken by Lehman Brothers Inc., J.P. Morgan Securities Inc. or Citigroup Global
Markets Inc. on behalf of the Initial Purchasers, and any such action taken by Lehman
Brothers Inc., J.P. Morgan Securities Inc. or Citigroup Global Markets Inc. shall be
binding upon the Initial Purchasers.
	 
	 	(b)	 	Notices All such notices and communications hereunder shall be in writing and
shall be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five business days after being deposited in the mail, postage prepaid, if
mailed; when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the next Business Day if timely delivered to an air courier guaranteeing overnight
delivery. Notices to the Initial Purchasers shall be given to the Representatives c/o
Lehman Brothers Inc., 745 Seventh Avenue, New York, New York 10019, Telecopy No.:
646-834-8133, Attention: Syndicate Registration, with a copy, in the case of any notice
pursuant to Section 7(c), to the Director of Litigation, Office of the General Counsel,
Lehman Brothers Inc., 399 Park Avenue, 10th Floor, New York, New York 10022,
Telecopy No.: 212-520-0421; c/o J.P. Morgan Securities Inc., 270 Park Avenue, New York,
New York 10017, Telecopy No.: 212-834-6081, Attention: High Grade Syndicate Desk; and
c/o Citigroup Global Markets Inc., 388 Greenwich Street, New York, New York 10013,
Telecopy No.: 212-816-7912, Attention: General Counsel. Notices to the Company and the
Guarantors shall be given to them at Reynolds American Inc., 401 North Main Street,
Winston-Salem, North Carolina 27102, Telecopy No.: (336) 741-2998, Attention: General
Counsel.

 

23

 

	 	(c)	 	Governing Law This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
	 
	 	(d)	 	Counterparts This Agreement may be signed in counterparts (which may include
counterparts delivered by any standard form of telecommunication), each of which shall
be an original and all of which together shall constitute one and the same instrument.
	 
	 	(e)	 	Amendments or Waivers No amendment or waiver of any provision of this Agreement,
nor any consent or approval to any departure therefrom, shall in any event be effective
unless the same shall be in writing and signed by the parties hereto.
	 
	 	(f)	 	Headings The headings herein are included for convenience of reference only and
are not intended to be part of, or to affect the meaning or interpretation of, this
Agreement.
	 
	 	(g)	 	Execution and Delivery by Certain Parties Upon their delivery of executed
signature pages hereto, this Agreement shall be deemed executed and delivered by
Conwood, Conwood Company, L.P., Conwood Sales Company, L.P. and Rosswil LLC, and any
representation or warranty relating to any such entity shall be deemed to be made upon
the Closing Date, and no earlier.

 

24

 

If the foregoing is in accordance with your understanding, please indicate your acceptance of this
Agreement by signing in the space provided below.

	 	 	 	 	 
	Very truly yours,
	 
	 	 	 	 
	REYNOLDS AMERICAN INC.
	 
	 	 	 	 
	By:
	 	/s/ Daniel Fawley
	 	 	 
	 	 	Name: Daniel Fawley

Title: Treasurer
	 
	 	 	 	 
	SANTA FE NATURAL TOBACCO COMPANY INC., as Guarantor
	 
	 	 	 	 
	By:
	 	/s/ Daniel Fawley
	 	 	 
	 	 	Name: Daniel Fawley

Title: Assistant Treasurer
	 
	 	 	 	 
	LANE LIMITED, as Guarantor
	 
	 	 	 	 
	By:
	 	/s/ Daniel Fawley
	 	 	 
	 	 	Name: Daniel Fawley

Title: Assistant Treasurer
	 
	 	 	 	 
	R.J. REYNOLDS TOBACCO COMPANY, as Guarantor
	 
	 	 	 	 
	By:
	 	/s/ Daniel Fawley
	 	 	 
	 	 	Name: Daniel Fawley

Title: Senior Vice President and Treasurer
	 
	 	 	 	 
	RJR ACQUISITION CORP., as Guarantor
	 
	 	 	 	 
	By:
	 	/s/ Daniel Fawley
	 	 	 
	 	 	Name: Daniel Fawley

Title: Assistant Treasurer

 

25

 

	 	 	 	 	 
	R. J. REYNOLDS TOBACCO CO., as Guarantor
	 

	By:
	 	/s/ Daniel Fawley
	 	 	 
	 	 	Name: Daniel Fawley

Title: Vice President and Treasurer
	 
	 	 	 	 
	FHS, INC., as Guarantor
	 
	 	 	 	 
	By:
	 	/s/ Kathryn A. Premo
	 	 	 
	 	 	Name: Kathryn A. Premo

Title: Treasurer
	 
	 	 	 	 
	GMB, INC., as Guarantor
	 
	 	 	 	 
	By:
	 	/s/ Daniel Fawley
	 	 	 
	 	 	Name: Daniel Fawley

Title: Treasurer

 

26

 

	 	 	 	 	 
	Accepted: May 18, 2006
	 

	LEHMAN BROTHERS INC.
	 
	 	 	 	 
	For itself and on behalf of the

several Initial Purchasers listed

in Schedule 2 hereto.
	 
	 	 	 	 
	By:
	 	/s/ John Cokinos
	 	 	 
	 	 	Name: John Cokinos

Title: Managing Director
	 
	 	 	 	 
	J.P. MORGAN SECURITIES INC.
	 
	 	 	 	 
	For itself and on behalf of the

several Initial Purchasers listed

in Schedule 2 hereto.
	 
	 	 	 	 
	By:
	 	/s/ Maria Sramek
	 	 	 
	 	 	Name: Maria Sramek

Title: Vice President
	 
	 	 	 	 
	CITIGROUP GLOBAL MARKETS INC.
	 
	 	 	 	 
	For itself and on behalf of the

several Initial Purchasers listed

in Schedule 2 hereto.
	 
	 	 	 	 
	By:
	 	/s/ Brian D. Bednarski
	 	 	 
	 	 	Name: Brian D. Bednarski

Title: Director

 

27

 

The undersigned by their signature hereto become parties to this Purchase Agreement as of the
Closing Date.

	 	 	 	 	 
	CONWOOD HOLDINGS, INC..,

as Guarantor
	 
	 	 	 	 
	By:
	 	/s/ Daniel Fawley
	 	 	 
	 	 	Name: Daniel Fawley

Title: Vice President & Treasurer
	 
	 	 	 	 
	CONWOOD COMPANY, L.P.,

as Guarantor
	 
	 	 	 	 
	By:
	 	/s/ Daniel Fawley
	 	 	 
	 	 	Name: Daniel Fawley

Title: Vice President & Treasurer
	 
	 	 	 	 
	CONWOOD SALES COMPANY, L.P.,

as Guarantor
	 
	 	 	 	 
	By:
	 	/s/ Daniel Fawley
	 	 	 
	 	 	Name: Daniel Fawley

Title: Vice President & Treasurer
	 
	 	 	 	 
	ROSSWIL LLC,

as Guarantor
	 
	 	 	 	 
	By:
	 	/s/ Daniel Fawley
	 	 	 
	 	 	Name: Daniel Fawley

Title: Vice President & Treasurer

 

28

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