Document:

EX-10.1

 

Exhibit 10.1

 

 

PURCHASE AGREEMENT

 

$500,000,000

R.J. REYNOLDS TOBACCO HOLDINGS, INC.

$300,000,000 6.500% Secured Notes due 2010

$200,000,000 7.300% Secured Notes due 2015

guaranteed by

the Guarantors listed on Schedule 1 hereto

 

 

 

 

Purchase Agreement

June 22, 2005

Citigroup Global Markets Inc.

     388 Greenwich Street

     New York, New York 10013

J.P. Morgan Securities Inc.

     270 Park Avenue

     New York, New York 10017

As Representatives of the

several Initial Purchasers listed

in Schedule 2 hereto

Ladies and Gentlemen:

     R.J. Reynolds Tobacco Holdings, Inc., a Delaware 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”), $300,000,000
principal amount of its 6.500% Secured Notes due 2010 (the “2010 Notes”) and $200,000,000 principal
amount of its 7.300% Secured Notes due 2015 (the “2015 Notes” and together with the 2010 Notes, the
“Securities”). The Securities will be issued pursuant to an Indenture dated as of May 20, 2002, as
amended by a first supplemental indenture dated as of June 30, 2003, and a second supplemental
indenture dated as of July 30, 2004 among the Company, Reynolds American Inc., a North Carolina
corporation (“RAI”), the other Guarantors listed in Schedule 1 hereto (together with RAI, the
“Guarantors”), and The Bank of New York, as trustee (the “Trustee”), and will be guaranteed by the
Guarantors (the “Guarantee”).

     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 June 21, 2005
(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. The Company and the Guarantors hereby confirm that they
have authorized the use of the Preliminary Offering Memorandum 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 and the Offering Memorandum shall be deemed to refer to and include any
document incorporated by reference therein.

     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 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.

     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 and the Guarantors agree 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 2010 Notes and the 2015 Notes set
forth opposite such Initial Purchaser’s name in Schedule 2 hereto at a price equal to 98.601% of
the principal amount of the 2010 Notes and 98.346% of the principal amount of the 2015 Notes, in
each case, plus accrued interest, if any, from June 29, 2005 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 understands that the Initial Purchasers intend to offer the Securities for
resale on the terms set forth in the Offering Memorandum. 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:

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     (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 A 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 5(f),
5(g), 5(h) and 5(i), counsel for the Company and the Guarantors, McDara P. Folan, III, Senior Vice
President, Deputy General Counsel and Secretary of RAI and Senior Vice President 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 A hereto), and each Initial Purchaser hereby consents
to such reliance.

     (d) The Company acknowledges and agrees 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.

     2. Payment and Delivery. (a) Payment for and delivery of the Securities will be made
at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017 at 10:00
A.M., New York City time, on June 29, 2005, 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 the nominee
of The Depository Trust Company, for the account of the Initial Purchasers, of one or more global
notes representing each of the 2010 Notes and the 2015 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
the Guarantors jointly and severally represent and warrant to each Initial Purchaser that:

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     (a) Offering Memorandum. The Preliminary Offering Memorandum, as of its date, did not, and
the Offering Memorandum, in the form first used by the Initial Purchasers to confirm sales of the
Securities and as of the Closing Date, will not, 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 in the Preliminary Offering Memorandum and the Offering
Memorandum.

     (b) Incorporated Documents. Except for the annual report on Form 10-K for the year ended
December 31, 2004, prior to its amendment, the documents incorporated by reference in the
Preliminary Offering Memorandum 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 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.

     (c) Financial Statements. The financial statements and the related schedules and notes
thereto included or incorporated by reference in the Preliminary Offering Memorandum and the
Offering Memorandum comply in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, as applicable, and present fairly the financial position of
RAI 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; and the other financial information included or incorporated by reference in the
Preliminary Offering Memorandum and the Offering Memorandum has been derived from the accounting
records of RAI and its subsidiaries, and presents fairly the information shown thereby; and the
pro forma financial information and the related notes thereto included or
incorporated by reference in the Preliminary Offering Memorandum and the Offering Memorandum have
been prepared in accordance with the Commission’s rules and guidance with respect to pro
forma financial information, and the assumptions underlying such pro forma
financial information are reasonable and are set forth in the Preliminary Offering Memorandum and
the Offering Memorandum.

     (d) 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 RAI and its subsidiaries, taken as a whole, from that set forth in the
Preliminary Offering Memorandum and the Offering Memorandum.

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     (e) Organization and Good Standing. The Company and each Guarantor (other than RJR Packaging)
have been duly incorporated, are validly existing and in good standing under the laws of their
respective jurisdictions of organization, have the corporate power and authority to own property
and to conduct their respective businesses as described in the Preliminary Offering Memorandum and
the Offering Memorandum and are duly qualified to transact business and are in good standing in
each jurisdiction in which the conduct of their respective business or their respective 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 RAI 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 Guarantee (a “Material Adverse
Effect”). RJR Packaging is duly formed, validly existing and in good standing as a limited
liability company under the laws of the State of Delaware and has the limited liability company
power and authority to conduct its business as described in the Preliminary Offering Memorandum 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 the 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.

     (f) Capitalization. RAI has an authorized capitalization as set forth in the Preliminary
Offering Memorandum 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 other
subsidiary of RAI 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 the Offering Memorandum) and are owned directly or indirectly by
RAI, 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 the Offering
Memorandum).

     (g) Due Authorization. The Company and the Guarantors have full right, power and authority to
execute and deliver this Agreement, the Securities (including each related Guarantee), the Exchange
Securities, and the Registration Rights Agreement (collectively, the “Transaction Documents”) and
to perform their respective 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 the Guarantors and the consummation of the transactions contemplated
thereby has been duly and validly taken.

     (h) The Indenture. The Indenture has been duly authorized, executed and delivered by the
Company and the Guarantors and constitutes a valid and legally binding agreement of the Company and
the Guarantors enforceable against the Company and the Guarantors in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws
affecting the enforcement

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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.

     (i) The Securities and the Guarantee. 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 contained in the Indenture, assuming (i) the taking of all necessary
corporate action to approve the issuance and terms of the Guarantee and related matters by the
Board of Directors of each of the Guarantors, a duly constituted and acting committee of such Board
or duly authorized officers of each of the Guarantors or in the case of RJR Packaging, the sole
member, (ii) the due execution, authentication, issuance and delivery of the Securities underlying
the Guarantee upon payment for and delivery of the Securities in accordance with this Agreement and
(iii) the due execution, delivery and issuance of the Guarantee, will constitute the valid and
legally binding obligation of each of the Guarantors enforceable against each of the Guarantors in
accordance with its terms, subject to the Enforceability Exceptions, and entitled to the benefits
of the Indenture.

     (j) 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.

     (k) Purchase and Registration Rights Agreements. This Agreement has been duly authorized,
executed and delivered by the Company and the Guarantors; and the Registration Rights Agreement has
been duly authorized by the Company and the Guarantors 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 the Guarantors enforceable against the Company and the
Guarantors in accordance with its terms, subject to the Enforceability Exceptions, and except that
rights to indemnity and contribution thereunder may be limited by applicable law and public policy.

     (l) Descriptions of the Transaction Documents. Each Transaction Document conforms in all
material respects to the description thereof contained in the Preliminary Offering Memorandum and
the Offering Memorandum.

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     (m) No Violation or Default. None of the Company, RAI 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, RAI
or any of its subsidiaries is a party or by which the Company, RAI or any of its subsidiaries is
bound or to which any of the property or assets of the Company, RAI 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.

     (n) 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, RAI or any of its subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company, RAI or any of its subsidiaries is
a party or by which the Company, RAI or any of its subsidiaries is bound or to which any of the
property or assets of the Company, RAI 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, RAI 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.

     (o) No Consents Required. Assuming the accuracy of the Initial Purchasers’ representations
and warranties contained herein and their compliance with the 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 RAI of each of the Transaction Documents to which each is a party, the issuance and
sale of the Securities (including the Guarantee) and compliance by the Company and RAI 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 guarantee) under the Securities Act and applicable state
securities laws as contemplated by the Registration Rights Agreement.

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     (p) Legal Proceedings. There are no legal or governmental proceedings pending or, to the best
of the Company’s knowledge, threatened to which the Company, RAI 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, the Preliminary Offering
Memorandum 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 to consummate the transactions contemplated by the Preliminary Offering
Memorandum and the Offering Memorandum.

     (q) Environmental Laws. The Company and each of the Guarantors (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 the Preliminary Offering Memorandum and the Offering Memorandum and 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 the Preliminary Offering Memorandum and the
Offering Memorandum.

     (r) Independent Accountants. KPMG LLP, who has certified certain financial statements of RAI
and its subsidiaries, is an independent registered public accounting firm with respect to RAI and
its subsidiaries as required by the Securities Act.

     (s) Investment Company Act. None of the Company, RAI 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”).

     (t) No Broker’s Fees. None of the Company, RAI 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.

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     (u) 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 and the Offering Memorandum, as of its respective date, 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.

     (v) No Integration. None of the Company, any Guarantor or any of its 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.

     (w) No General Solicitation or Directed Selling Efforts. None of the Company, any Guarantor
or any of its affiliates or any other person acting on its or their behalf (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.

     (x) Securities Law Exemptions. Assuming the accuracy of the representations and warranties of
the Initial Purchasers contained in Section 1(b) (including Annex A 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 and the Offering
Memorandum, to register the Securities under the Securities Act or to qualify the Indenture under
the Trust Indenture Act.

     (y) No Stabilization. Neither the Company nor any Guarantor has taken, 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.

     (z) 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 and the Offering Memorandum has been made or
reaffirmed without a reasonable basis or has been disclosed other than in good faith.

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     4. Further Agreements of the Company and the Guarantors. The Company and the
Guarantors jointly and severally covenant and agree 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 and the Offering Memorandum (including all
amendments and supplements thereto) as the Representatives may reasonably request.

     (b) Amendments or Supplements. Before making or distributing any amendment or supplement to
the Preliminary Offering Memorandum 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
amendment or supplement or document to be incorporated by reference therein for review, and will
not distribute any such proposed amendment or supplement or file any such document with the
Commission (unless so required by law) to which the Representatives reasonably object.

     (c) 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 the
Preliminary Offering Memorandum 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 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 the
circumstances existing when 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 the Preliminary Offering Memorandum 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.

     (d) Ongoing Compliance of the Offering Memorandum. 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) above, file with

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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.

     (e) 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 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.

     (f) Clear Market. During the period from the date hereof through and including 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 any debt securities issued
or guaranteed by the Company or the Guarantors and having a tenor of more than one year.

     (g) 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.”

     (h) 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 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.

     (i) 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”).

     (j) 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.

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     (k) 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.

     (l) No General Solicitation or Directed Selling Efforts. None of the Company, any Guarantor
or any of its affiliates or any other person acting on their behalf (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 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.

     (m) 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.

     (n) 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.

     5. 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 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).

12

 

     (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(d) hereof shall have occurred or shall
exist, which event or condition is not described in 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 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 Offering
Memorandum and, to the best knowledge of such officer, the representation set forth in Section 3(a)
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) Comfort Letters. On the date of this Agreement and on the Closing Date, each of KPMG LLP
and Deloitte & Touche 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
contained or incorporated by reference in the Preliminary Offering Memorandum 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) 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 B hereto.

     (g) Opinion of McDara P. Folan, III. McDara P. Folan, III, Senior Vice President, Deputy
General Counsel and Secretary of RAI and Senior Vice President 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 C
hereto.

13

 

     (h) 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 D hereto.

     (i) Opinion of Counsel for the Initial Purchasers. The Representatives shall have received on
and as of the Closing Date an opinion of Davis Polk & Wardwell, 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.

     (j) 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 Guarantee; 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 Guarantee.

     (k) Good Standing. The Representatives shall have received on and as of the Closing Date
satisfactory evidence of the good standing of the Company and 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.

     (l) 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.

     (m) DTC. The Securities shall be eligible for clearance and settlement through DTC.

     (n) 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.

14

 

     6. 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 the
Preliminary Offering Memorandum 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 Company and the Guarantors in writing by such Initial Purchaser through the Representatives
expressly for use therein; provided, that with respect to any such untrue statement in or
omission from the Preliminary Offering Memorandum, the indemnity agreement contained in this
paragraph (a) shall not inure to the benefit of any Initial Purchaser to the extent that the sale
to the person asserting any such loss, claim, damage or liability was an initial resale by such
Initial Purchaser and any such loss, claim, damage or liability of or with respect to such Initial
Purchaser results from the fact that both (i) a copy of the Offering Memorandum (excluding any
documents incorporated by reference therein) was not sent or given to such person at or prior to
the written confirmation of the sale of such Securities to such person and (ii) the untrue
statement in or omission from such Preliminary Offering Memorandum was corrected in the Offering
Memorandum unless, in either case, such failure to deliver the Offering Memorandum was a result of
non-compliance by the Company and the Guarantors with the provisions of Section 4 hereof.

     (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 the Preliminary
Offering Memorandum and the Offering Memorandum (or any amendment or supplement thereto); it being
understood that the only such information consists of the following: the fourth sentence of the
tenth

15

 

paragraph under the heading “Plan of Distribution” and the eleventh, thirteenth and fifteenth
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 6 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 6. 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 6 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 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

16

 

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 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,

17

 

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 6, 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 6 are several in proportion to their respective purchase obligations hereunder and
not joint.

     (f) Non-Exclusive Remedies. The remedies provided for in this Section 6 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.

     7. 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
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 and the Offering Memorandum.

     8. 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

18

 

Company and the Guarantors or counsel for the Initial Purchasers may be necessary in 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 8, 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 Purchasers. Any termination of this Agreement pursuant to this Section 8
shall be without liability on the part of the Company or the Guarantors, except that the provisions
of Section 6 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.

     9. 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 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; (iv) the fees and expenses of the Company’s and the Guarantors’ counsel and independent
accountants; (v) the fees and expenses incurred

19

 

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 7, (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 8, 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.

     10. 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 6 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 Securities from any
Initial Purchaser shall be deemed to be a successor merely by reason of such purchase.

     11. 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.

     12. 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.

20

 

     13. Miscellaneous. (a) Authority of the Representatives. Any action by the Initial
Purchasers hereunder may be taken by Citigroup Global Markets, Inc. or J.P. Morgan Securities Inc.
on behalf of the Initial Purchasers, and any such action taken by Citigroup Global Markets, Inc. or
J.P. Morgan Securities 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 Citigroup Global Markets Inc., 388 Greenwich Street, New
York, New York 10013, Telecopy No.: (212) 723-8971, Attention: Thomas Reader, Director and c/o J.P.
Morgan Securities Inc., 270 Park Avenue, New York, New York 10017, Telecopy No.: (212) 834-6702,
Attention: Maria Sramek, Managing Director. Notices to the Company and the Guarantors shall be
given to them at R.J. Reynolds Tobacco Holdings Inc., 401 North Main Street, Winston-Salem, North
Carolina 27102, Telecopy No.: (336) 741-2998, Attention: General Counsel.

     (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.

21

 

     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,
	 
	 	 	 	 
	 

	 	R.J. REYNOLDS TOBACCO HOLDINGS, INC.
	 
	 	 	 	 
	 

	 	By
	 	/s/ Daniel A. Fawley
	 

	 	 	 	 
	 

	 	 	 	Title: SVP and Treasurer
	 
	 	 	 	 
	 

	 	REYNOLDS AMERICAN INC.

     AS GUARANTOR
	 
	 	 	 	 
	 

	 	By	 	/s/ Daniel A. Fawley
	 

	 	 	 	 
	 

	 	 	 	Title: SVP and Treasurer
	 
	 	 	 	 
	 

	 	RJR ACQUISITION CORP.,

     as GUARANTOR
	 
	 	 	 	 
	 

	 	By
	 	/s/ McDara P. Folan, III
	 

	 	 	 	 
	 

	 	 	 	Title: VP and Assistant Secretary
	 
	 	 	 	 
	 

	 	R. J. REYNOLDS TOBACCO COMPANY,

     as Guarantor
	 
	 	 	 	 
	 

	 	By
	 	/s/ Daniel A. Fawley
	 

	 	 	 	 
	 

	 	 	 	Title: SVP and Treasurer

 

 

	 	 	 	 	 
	 

	 	R. J. REYNOLDS TOBACCO CO.,

     as Guarantor
	 
	 	 	 	 
	 

	 	By
	 	/s/ Daniel A. Fawley
	 

	 	 	 	 
	 

	 	 	 	Title: VP and Treasurer
	 
	 	 	 	 
	 

	 	RJR PACKAGING, LLC,

     as Guarantor
	 
	 	 	 	 
	 

	 	By
	 	/s/ Daniel A. Fawley
	 

	 	 	 	 
	 

	 	 	 	Title: VP and Treasurer
	 
	 	 	 	 
	 

	 	FHS, INC.,

     as Guarantor
	 
	 	 	 	 
	 

	 	By
	 	/s/ Caroline M. Price
	 

	 	 	 	 
	 

	 	 	 	Title: President
	 
	 	 	 	 
	 

	 	GMB, INC.,

     as Guarantor
	 
	 	 	 	 
	 

	 	By
	 	/s/ Daniel A. Fawley
	 

	 	 	 	 
	 

	 	 	 	Title: Treasurer
	 
	 	 	 	 
	 

	 	BWT BRANDS, INC.,

     as Guarantor
	 
	 	 	 	 
	 

	 	By
	 	/s/ Daniel A. Fawley
	 

	 	 	 	 
	 

	 	 	 	Title: Treasurer

 

 

	 	 	 	 	 
	Accepted: June 22, 2005
	 	 
	 

	CITIGROUP GLOBAL MARKETS, INC.	 	 
	 
	 	 	 	 
	For itself and on behalf of the
several Initial Purchasers listed
in Schedule 2 hereto.	 	 
	 
	 	 	 	 
	By

	 	/s/ Brian D. Bednarski	 	 
	 

	 	 	 	 
	 

	 	Authorized Signatory	 	 
	 
	 	 	 	 
	J.P. MORGAN SECURITIES INC.	 	 
	 
	 	 	 	 
	For itself and on behalf of the
several Initial Purchasers listed
in Schedule 2 hereto.	 	 
	 
	 	 	 	 
	By

	 	/s/ Maria Sramek	 	 
	 

	 	 	 	 
	 

	 	Vice President	 	 

 

 

Schedule 1

Guarantors

Reynolds American Inc., a North Carolina corporation

RJR Acquisition Corp., a Delaware corporation

R. J. Reynolds Tobacco Company, a North Carolina corporation

R. J. Reynolds Tobacco Co., a Delaware corporation

RJR Packaging, LLC, a Delaware corporation

FHS, Inc., a Delaware corporation

GMB, Inc., a North Carolina corporation

BWT Brands, Inc., a Delaware corporation

 

 

Schedule 2

Initial Purchasers

	 	 	 	 	 	 	 	 	 
	 	 	Aggregate Principal	 	 	Aggregate Principal	 
	 	 	Amount of 2010	 	 	Amount of 2015	 
	 	 	Notes to be	 	 	Notes to be	 
	Initial Purchaser	 	Purchased	 	 	Purchased	 
	Citigroup Global Markets Inc.
	 	$	115,500,000	 	 	$	77,000,000	 
	J.P. Morgan Securities, Inc.
	 	 	115,500,000	 	 	 	77,000,000	 
	Lehman Brothers Inc.
	 	 	22,500,000	 	 	 	15,000,000	 
	Mizuho International plc
	 	 	17,100,000	 	 	 	11,400,000	 
	Scotia Capital (USA) Inc.
	 	 	12,000,000	 	 	 	8,000,000	 
	BNY Capital Markets, Inc.
	 	 	8,700,000	 	 	 	5,800,000	 
	Wachovia Capital Markets, LLC
	 	 	8,700,000	 	 	 	5,800,000	 
	 
	 	 	 	 	 	 
	Total
	 	$	300,000,000	 	 	$	200,000,000<PAGE>
                                                                    EXHIBIT 10.1

                                 FIRST AMENDMENT

                FIRST AMENDMENT, dated as of June 7, 2005 (this "Amendment"),
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").

                              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 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.  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 to the Credit
Agreement. (a) The definition of the term "Application" in Section 1.1 of the
Credit Agreement is hereby amended by inserting at the end of such definition
the phrase ", in each case executed by a duly authorized employee or officer of
the Borrower".

                (b) The definition of the term "Consolidated EBITDA" in
Section 1.1 of the Credit Agreement is hereby amended by inserting a closing
parenthesis after the phrase "state law" in the fourth line of such definition.

                (c) The definition of the term "Delayed-Draw Activation
Notice" in Section 1.1 of the Credit Agreement is hereby amended by deleting the
word "Commitment" therein and inserting, in lieu thereof, the word "Loan".

                (d) The definition of the term "L/C Issuance Side Letter" is
hereby in Section 1.1 of the Credit Agreement is hereby amended by deleting such
definition in its entirety.

                (e) The definition of the phrase "Permitted Acquisition" in
Section 1.1 of the Credit Agreement is hereby amended by deleting the word
"Draw-Down" therein and inserting, in lieu thereof, the word "Delayed-Draw".

                SECTION 1.3. Amendment to Sections 3.7, 3.8 and 3.9.
Sections 3.7, 3.8 and 3.9 of the Credit Agreement are hereby amended by deleting
such Sections in their entirety and inserting, in lieu thereof, the following
new Sections 3.7, 3.8 and 3.9:

                           "3.7 L/C Commitment. (a) Subject to the terms and
         conditions hereof, the Issuing Lender, in reliance on the agreements of
         the other Revolving Lenders set forth in Section 3.10(a), agrees to
         issue letters of credit ("Letters of Credit") for the

<PAGE>
                                                                               2

         account of the Borrower on any Business Day during the Revolving
         Commitment Period in such form as may be approved from time to time by
         the Issuing Lender; provided that the Issuing Lender shall have no
         obligation to issue any Letter of Credit if, after giving effect to
         such issuance, (i) the L/C Obligations would exceed the L/C Commitment
         or (ii) the aggregate amount of the Available Revolving Commitments
         would be less than zero. Each Letter of Credit shall (i) be denominated
         in Dollars, (ii) have a face amount of at least $100,000 (unless
         otherwise agreed by the Issuing Lender) and (iii) expire no later than
         the earlier of (x) the first anniversary of its date of issuance and
         (y) the date that is five Business Days prior to the Revolving
         Termination Date, provided that any Letter of Credit with a term not
         greater than one-year may provide for the renewal thereof for
         additional periods in accordance with Section 3.7(b).

                           (b) The Issuing Lender shall send a request for
         approval of renewal of any renewable Letter of Credit to the
         Administrative Agent no later than the earlier of (a) thirty days prior
         to the anniversary date of the date of the issuance of such Letter of
         Credit and (b) thirty days prior to any non-renewal notice date set
         forth in such Letter of Credit. If the Administrative Agent confirms
         that such renewal would not, after giving effect to such renewal, cause
         the Available Revolving Commitments to be less than zero (such
         confirmation to be delivered by the Administrative Agent to the Issuing
         Lender not less than twenty (20) days prior to (x) the anniversary date
         of the date of issuance of such Letter of Credit (in the event that
         Issuing Lender sent to the Administrative Agent the applicable request
         for confirmation pursuant to clause (a) of the immediately preceding
         sentence) or (y) the non-renewal notice date set forth in such Letter
         of Credit (in the event that the Issuing Lender sent to the
         Administrative Agent the applicable request for approval pursuant to
         clause (b) of the immediately preceding sentence). Notwithstanding the
         foregoing, in no event shall the term of any such renewed Letter of
         Credit extend beyond the date that is five Business Days prior to the
         Revolving Termination Date.

                           (c) The Issuing Lender shall not at any time be
         obligated to issue any Letter of Credit hereunder if such issuance
         would conflict with, or cause the Issuing Lender or any L/C Participant
         to exceed any limits imposed by, any applicable Requirement of Law.

                           3.8. Procedure for Issuance of Letter of Credit. (a)
         The Borrower may from time to time request that the Issuing Lender
         issue a Letter of Credit by delivering to the Administrative Agent at
         its address for notices specified herein an Application therefor. Upon
         receipt of any Application, the Administrative Agent will notify the
         Issuing Lender of the amount, the beneficiary and the requested
         expiration of the requested Letter of Credit, and upon receipt of
         confirmation from the Administrative Agent that after giving effect to
         the requested issuance, the Available Revolving Commitments would not
         be less than zero, the Issuing Lender will process such Application (in
         each case to be completed to the satisfaction of the Issuing Lender,
         and accompanied by such other certificates, documents and other papers
         and information as the Issuing Lender may reasonably request) and any
         certificate, document or other papers and information delivered to it
         in connection therewith in accordance with its customary procedures.

                           (b) Following the receipt of an Application as to
         which confirmation has been received by the Issuing Lender in
         accordance with Section 3.8(a), the Issuing Lender shall cause the
         Letter of Credit to be issued: (i) if such Application is received by
         the Issuing Lender at or prior to 3:00 P.M., New York City time, on a
         Business Day, on

<PAGE>
                                                                               3

         the next succeeding Business Day, or (ii) if such Application is
         received by the Issuing Lender after 3:00 P.M., New York City time, on
         a Business Day, no later than the second Business Day following such
         Business Day, such date of issuance, in either case, the "Issuing
         Date". The original of such Letter of Credit may be issued to the
         beneficiary thereof or as otherwise may be agreed to by the Issuing
         Lender and the Borrower. The Issuing Lender shall within one Business
         Day of the issuance of a Letter of Credit furnish to the Administrative
         Agent, which shall in turn promptly furnish to the Lenders, notice of
         the issuance of each Letter of Credit (including the amount thereof).

                           (c) The Issuing Lender will send weekly and monthly
         reports prepared by the Issuing Lender to the Administrative Agent
         promptly after such reports become available.

                           3.9 Fees and Other Charges. (a) The Borrower will pay
         a fee on all outstanding Letters of Credit at a per annum rate equal to
         the Applicable Margin then in effect with respect to Eurodollar Loans
         under the Revolving Facility, shared ratably among the Revolving
         Lenders and payable quarterly in arrears on each L/C Fee Payment Date
         after the Issuance Date. In addition, the Borrower shall pay to the
         Issuing Lender for its own account a fronting fee on the undrawn and
         unexpired amount of each Letter of Credit equal to 0.30% per annum,
         payable quarterly in arrears on each L/C Fee Payment Date after the
         Issuance Date.

                           (b) In addition to the foregoing fees, the Borrower
         shall pay or reimburse the Issuing Lender for such normal and customary
         costs and expenses as are incurred or charged by the Issuing Lender in
         issuing, negotiating, effecting payment under, amending or otherwise
         administering any Letter of Credit. The Issuing Lender will provide the
         Administrative Agent a copy of the Letter of Credit fees, charges and
         expenses charged by the Issuing Lender by facsimile on or about the
         10th Business Day of each month."

                SECTION 1.4. Amendment to Section 3.12. Section 3.12 of the
Credit Agreement is hereby amended by inserting the phrase "without
responsibility for further investigation and regardless of any notice or
information to the contrary" after the phrase "the validity or genuineness of
documents or of any endorsements thereon" therein.

                SECTION 1.5. Amendment to Sections 3.13 and 3,14. Sections 3.13
and 3.14 of the Credit Agreement are hereby amended by deleting such Sections in
their entirety and inserting, in lieu thereof, the following new Sections 3.13
and 3.14:

                           "3.13 Letter of Credit Payments. (a) If any draft
         shall be presented for payment under any Letter of Credit, the Issuing
         Lender shall promptly notify the Borrower and the Administrative Agent
         of the date and amount thereof. The responsibility of the Issuing
         Lender to the Borrower in connection with any draft presented for
         payment under any Letter of Credit shall, in addition to any payment
         obligation expressly provided for in such Letter of Credit, be limited
         to determining that the documents (including each draft) delivered
         under such Letter of Credit in connection with such presentment are
         substantially in conformity with such Letter of Credit.

                           (b) Promptly following presentment to the Issuing
         Lender by the beneficiary of any Letter of Credit (a) with respect to
         which the face amount of the Letter of Credit would be exceeded after
         giving effect to any draw thereunder or (b) that has expired (each, a
         "Credit Risk Discrepancy"), the Issuing Lender shall send notice of
         such
<PAGE>
                                                                               4

         Credit Risk Discrepancy to the Administrative Agent. No Letter of
         Credit with respect to which a Credit Risk Discrepancy exists (or would
         exist upon the Issuing Lender honoring such Letter of Credit) shall be
         honored unless such Credit Risk Discrepancy has been waived in writing
         by each of the Borrower and the Administrative Agent. If waived, the
         Administrative Agent shall provide notice of such written waiver to the
         Issuing Lender not later than two Business Days after the Issuing
         Lender provides notice to the Administrative Agent of such Credit Risk
         Discrepancy.

                           3.14 Applications. To the extent that any provision
         of any Application related to any Letter of Credit is inconsistent with
         the provisions of this Section 3, the provisions of this Section 3
         shall apply."

                  SECTION 1.6. Amendment to Section 4.1(b). Section 4.1(b) of
the Credit Agreement is hereby amended by deleting such Section and inserting,
in lieu thereof, the following new Section 4.1(b):

                  "(b) Each optional prepayment in respect of the Initial Term
         Loans made prior to the second anniversary of the Closing Date shall be
         accompanied by a reduction of the Delayed-Draw Term Commitment of each
         Lender in effect at such time in an amount equal to the Delayed-Draw
         Term Percentage of such Lender multiplied by the aggregate amount of
         such optional prepayment."

                  SECTION 1.7. Amendment to Section 5.1(b)(i). Section 5.1(b)(i)
of the Credit Agreement is hereby amended by deleting the phrase "The audited
consolidated balance sheets of each of the Borrower and the Target as at
December 31, 2002, December 31, 2003 and December 31, 2004" therein and
inserting, in lieu thereof, the phrase "The audited consolidated balance sheets
of the Borrower as at December 31, 2002, December 31, 2003 and December 31,
2004, and of the Target as at December 31, 2003 and December 31, 2004".

                  SECTION 1.8. Amendment to Section 7.2.  Section 7.2 of the
Credit Agreement is hereby amended by

                  (a) Inserting the following new Section 7.2(g) in proper
         alphabetical order therein:

                  "(g) promptly upon receipt thereof, copies of all management
         letters and similar reports and documents submitted to the Borrower by
         independent accountants in connection with any annual or interim audit
         of the books of the Borrower made by such accountants; and";

                  (b) Deleting the word "and" from the end of Section 7.2(f);
         and

                  (c) Relettering existing Section 7.2(g) as new Section 7.2(h).

                  SECTION 1.9. Amendment to Section 8.1(b). Section 8.1(b) of
the Credit Agreement is hereby amended by inserting the phrase ", but not
including," after the phrase "Permitted Acquisitions consummated during the
period from" therein.

                  SECTION 1.10. Amendment to Section 11.2. Section 11.2 of the
Credit Agreement is hereby amended by inserting the phrase "and the Issuing
Lender" after the phrase "and as set forth in an administrative questionnaire
delivered to the Administrative Agent in the case of the Lenders" therein.

<PAGE>
                                                                               5

                  SECTION 1.11. Conditions to Effectiveness. This Amendment
shall become effective as of the date hereof on the date (the "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 1.12. 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 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.

                           (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 Amendment Effective Date,
after giving effect to the effectiveness of this Amendment, as if made on and as
of the Amendment Effective Date.

                  SECTION 1.13. Payment of Expenses. The Borrower agrees to pay
or reimburse each 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 1.14. 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 1.15. 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.

<PAGE>
                                                                               6

                 (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/ Martin A. Durant
                                  ---------------------------------------------
                                  Name:   Martin A. Durant
                                  Title:  Senior Vice President

                       First Amendment to Credit Agreement

<PAGE>

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

                              By:         /s/ Brian Smith
                                   --------------------------------------------
                                   Name:  Brian Smith
                                   Title: Vice President

                       First Amendment to Credit Agreement

<PAGE>

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

                              By:         /s/ Kevin Fong
                                   --------------------------------------------
                                   Name:  Kevin Fong
                                   Title: Vice President

                       First Amendment to Credit Agreement

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