~~The MSA~~in this prospectus.

RAI has substantial long-term debt, which could adversely affect its financial position and ~~other state settlement agreements have materially adversely affected RJR Tobacco’s shipment volumes. The payments under these agreements also make it difficult~~its ability to obtain financing in the future and react to changes in its business.

As of the date hereof, RAI has outstanding notes in the aggregate principal amount of $17.2 billion. Following completion of the Lorillard merger, RAI substantially increased its consolidated indebtedness compared to its recent historical indebtedness. RAI incurred or assumed approximately $12.5 billion of additional indebtedness in connection with the Lorillard merger, as a result of financing to complete the Lorillard merger and $3.5 billion of Lorillard Tobacco notes assumed in the Lorillard merger.

Because of this increased level of debt as a result of the Lorillard merger:

RAI’s ability to obtain additional financing for ~~RJR Tobacco~~working capital, capital expenditures, acquisitions, debt service requirements or general corporate purposes, and its ability to ~~compete~~satisfy its obligations with ~~certain manufacturers~~respect to its indebtedness, may be impaired in the future;

a substantial portion of deep-discount cigarettes. RAI believes deep-discount brands made by small manufacturers in recent years have proliferated and have increased their combined market share to 13% to 15% of U.S. industry unit sales. The manufacturers of deep-discount brands are either subsequent participating manufacturers or non-participating manufacturers, referred to as NPMs,RAI’s cash flow from operations must be dedicated to the ~~MSA. As such, they have lower~~ payment ~~obligations than do~~of principal and interest on its indebtedness, thereby reducing the ~~original participating manufacturers, allowing them~~funds available to ~~price their products lower than the original participating manufacturers. This pricing has resulted~~it for other purposes;

RAI may be at a disadvantage compared to its competitors with less debt or comparable debt at more favorable interest rates; and

RAI’s flexibility to adjust to changing market conditions and ability to withstand competitive pressures could be limited, and it may be more vulnerable to a downturn in ~~higher levels of discounting~~general economic conditions or its business, or be unable to carry out capital spending that is necessary or important to its growth strategy and ~~promotional support by RJR Tobacco as part of~~ its efforts to improve operating margins.

defend its existing brands, attract adult smokers of competitive brands and launch new brands. RAI believes that these settlement obligations may materially adversely affect the results of operations, cash flows and financial condition of RJR Tobacco and, consequently, of RAI, theThe ability of RAI to ~~make payments on~~access the ~~notes~~debt capital markets could be impaired if the credit ratings of its debt securities fall. Borrowing costs under RAI’s revolving credit facility could increase as the credit ratings of RAI’s long-term debt falls.

RAI’s credit ratings impact the cost and ~~the ability~~availability of ~~RJR Tobacco to make payments pursuant to its guarantee~~future borrowings and, accordingly, RAI’s cost of capital. As of the ~~notes. The degree~~date hereof, the outstanding notes issued by RAI are rated investment grade. Following announcement of the adverse impact will depend, among other things, on the rate of decline in U.S. cigarette sales in the premium and discount categories, RJR Tobacco’s share of the domestic premium and discount cigarette categories, and the effect of any cost advantage of manufacturers not subject to the MSA and other state settlement agreements.

The MSA includes an adjustment, referred to as an NPM adjustment, that potentially reduces RJR Tobacco’s and other participating manufacturers’ annual payment obligations. RJR Tobacco is currently involved in litigation with more than 35 of the settling states as to whether RJR Tobacco is entitled to an NPM adjustment for 2003. For more information on this litigation, see note 8 to the condensed consolidated financial statements (unaudited) contained in RAI’s June 30, 2006, Form ~~10-Q,~~ incorporated by reference herein. If RJR Tobacco is unsuccessful in disputing that it is entitled to deduct its share of the 2003, or any subsequent, NPM adjustment from its MSA payments, RJR Tobacco would be obligated to continue paying the full amountsLorillard merger, S&P reaffirmed all of its ~~projected MSA payments notwithstanding that~~ratings on RAI, including its market share, and potentially its revenues, were decreasing as a result of increased competition from NPMs. Even if RJR Tobacco is successful in deducting its share of the NPM adjustment from its 2003, and any subsequent, MSA payments, it could incur substantial litigation costsBBB- corporate credit ratings. On June 9, 2015, Moody’s downgraded RAI’s Baa2 senior unsecured debt rating by one notch, to establish its entitlement to the deduction, particularly if one or more of the settling states that have filed legal proceedings prevail in their claim that the courts of the individual states are the proper forum for resolving the dispute.


	*~~RAI’s operating subsidiaries have substantial payment obligations under the Fair and Equitable Tobacco Reform Act.~~*

On October 22, 2004, the President signed the Fair and Equitable Tobacco Reform Act of 2004, referred to as FETRA, eliminating the U.S. government’s tobacco production controls and price support program. The buyout of tobacco quota holders provided for in FETRA is funded by a direct quarterly assessment on every tobacco product manufacturer and importer, on a market-share basis measured on volume to which federal excise tax is applied. The aggregate cost of the buyout to the industry is approximately $9.9 billion, including approximately $9.6 billion payable to quota tobacco holders and growers through industry assessments over ten years and approximately $290 million for the liquidation of quota tobacco stock.

The MSA provided for the establishment of a $5.15 billion trust fund to be divided among the states that produce cigarette tobacco to compensate tobacco growers and quota holders for any negative effects that the MSA might have on them — MSA participants’ payment obligations with respect to this fund are referred to as “Phase II” obligations. As a result of the tobacco buyout legislation, the MSA Phase II obligations established in 1999 will be continued as scheduled through the end of 2010, but will be offset against the tobacco quota buyout obligations. RAI’s operating subsidiaries’ annual expense under FETRA, excluding the tobacco stock liquidation assessment, is estimated to be approximately $265 million. Since the inception of FETRA through June 30, 2006, RAI’s operating subsidiaries have incurred $72 million of cumulative net assessments from quota tobacco stock liquidation. Of these amounts, approximately $46 million has been paid through the second quarter of 2006, and the remaining amount is scheduled to be paid, quarterly, by December 31, 2006. RAI’s operating subsidiaries estimate that their overall share of the buyout will approximate $2.4 billion to $2.9 billion prior to the deduction of permitted offsets under the MSA.

FETRA’s substantial buyout payment obligations could negatively affect the profits and cash flows of RJR Tobacco and RAI’s other operating subsidiaries and could adversely affect sales if price increases are required to offset the obligations.


	The assumption of certain of B&W’s historical and future liabilities has exposed RJR Tobacco and its subsidiaries to significant additional potential liabilities associated with the cigarette and tobacco industry.

In connection with the B&W business combination, RJR Tobacco agreed to indemnify B&W and its affiliates for B&W’s historic and future liabilities related to the contributed business, including all tobacco-related litigation and all post-closing liabilities under the MSA and other state settlement agreements with respect to B&W’s U.S. cigarette and tobacco business. These liabilities could expose RJR Tobacco to material losses, which would materially adversely affect the results of operations, cash flows and financial condition of RJR Tobacco and, consequently, of RAI, the ability of RAI to make payments on the notes and the ability of RJR Tobacco to make payments pursuant to its guarantee of the notes. As of July 14, 2006, of the 1,291 cigarette-related cases pending against RJR Tobacco or its affiliates or indemnitees, 36 cases were pending against B&W that are not also pending against RJR Tobacco.


	*~~RJR Tobacco is dependent on the U.S. cigarette business, which it expects to continue to decline.~~*

The international rights to substantially all of RJR Tobacco’s brands were sold in 1999 to JTI. In connection with this sale, RJR Tobacco also agreed that, prior to its use or license outside the United States of any trademarks or other intellectual property relating to its manufacture or sale of tobacco products, RJR Tobacco would first negotiate in good faith with JTI with respect to JTI’s acquisition or licensing of such trademarks or intellectual property. In addition, in connection with the B&W business combination in 2004, RAI entered into a non-competition agreement with British American Tobacco, p.l.c., referred to as BAT, B&W’s parent, under which RAI’s operating subsidiaries generally are prohibited, subject to certain exceptions, from manufacturing and marketing certain tobacco products outside the United States until July 2009. As a result of the foregoing, RJR Tobacco is dependent on the U.S. cigarette market. As a result of price increases, restrictions on advertising and promotions, funding by U.S. manufacturers, including RJR Tobacco, of smoking prevention campaigns, increases in regulation and excise taxes, health concerns, a decline in the social acceptability of smoking, increased pressure from anti-tobacco groups and other factors, U.S. cigarette consumption has generally been declining, and it is expected to continue to decline, which could adversely affect the results of operations, cash flows and financial condition of RJR Tobacco and, consequently, of RAI, the ability of RAI to make payments on the notes and the ability of RJR Tobacco to make payments pursuant to its guarantee of the notes. U.S. cigarette shipments, as tracked by Management Science Associates, Inc., referred to as MSAi, decreased at a compound annual rate of 1.6% from 1987 through 1997. After declining 4.6% in 1998 and 9% in 1999, shipments remained relatively stable in 2000, declined 3.2% in 2001, 3.7% in 2002, 5.1% in 2003 and 1.8% in 2004. In 2005, shipments declined 3.4% to 381.0 billion units.


	RAI’s operating subsidiaries are subject to significant limitations on advertising and marketing tobacco products that could harm the value of their existing brands or their ability to launch new brands.

In the United States, television and radio advertisements of cigarettes have been prohibited since 1971, and television and radio advertisements of smokeless tobacco products have been prohibited since 1986. Under the MSA, certain of RAI’s operating subsidiaries, including RJR Tobacco, cannot use billboard advertising, cartoon characters, sponsorship of certain events, non-tobacco merchandise bearing their brand names and various other advertising and marketing techniques. In addition, the MSA prohibits targeting of youth in advertising, promotion or marketing of tobacco products, including the smokeless tobacco products of RJR Tobacco. The smokeless tobacco products of Conwood are not covered by the MSA. Although these restrictions were intended to ensure that tobacco advertising was not aimed at young people, some of the restrictions also may limit the ability of RAI’s operating subsidiaries to communicate with adult smokers. For example, RAI’s operating subsidiaries only advertise their cigarettes in magazines in which the vast majority of readers are adults 18 years of age or older. Additional restrictions may be imposed legislatively or agreed to in the future. Recent proposals have included limiting tobacco advertising to black-and-white, text-only advertisements. These limitations may make it difficult to maintain the value of existing brands. Moreover, these limitations could significantly impair the ability of

RAI’s operating subsidiaries to launch new premium brands. Also, as discussed in greater detail above, RJR Tobacco will be subject to additional marketing restrictions if the recent decision by the U.S. District Court for the District of Columbia in the case brought by the U.S. Department of Justice is not reversed on appeal.

The U.S. cigarette industry is subject to substantial and increasing regulation and taxation, which has a negative effect on sales volume and profitability. In addition, Conwood’s tobacco products are subject to excise taxes and to many restrictions and regulations similar to the ones to which the tobacco products of RAI’s other operating subsidiaries are subject, which may have a negative effect on sales volume and profitability of Conwood.

A wide variety of federal, state and local laws limit the advertising, sale and use of cigarettes, and these laws have proliferated in recent years. For example, many local laws prohibit smoking in restaurants and other public places. Private businesses also have adopted regulations that prohibit or restrict, or are intended to discourage, smoking. This trend has had, and is likely to continue to have, a material adverse effect on the sales, volumes, operating income and cash flows of RJR Tobacco and, consequently, of RAI.

Cigarettes are subject to substantial and increasing excise taxes in the United States. The federal excise tax per pack of 20 cigarettes is $0.39. All states and the District of Columbia currently impose cigarette excise taxes at levels ranging from $0.07 per pack in South Carolina to $2.575 in New Jersey. During 2005, seven state legislatures increased their cigarette excise tax per pack. As a result of these increases, on July 1, 2006, the weighted average state cigarette excise tax per pack, calculated on a~~12-month~~ rolling average, was approximately $0.788. Several states have pending legislation proposing excise tax increases, and four states have passed excise tax per pack increases in 2006. Additionally, four states, including California with a $2.60 increase per pack measure, may have proposals to increase the cigarette excise tax on the ballot during November elections this year. RJR Tobacco, as part of coalitions in each state, expects to spend up to $40 million in 2006, to address these and other tobacco-related initiatives. Certain city and county governments, such as New York and Chicago, also impose substantial excise taxes on cigarettes sold in those jurisdictions. In 2006, increased excise taxes are likely to result in declines in overall sales volume and shifts by consumers to less expensive brands. Both of these results could have a material adverse effect on the results of operations, cash flows and financial condition of RJR Tobacco and, consequently, of RAI, the ability of RAI to make payments on the notes and the ability of RJR Tobacco to make payments pursuant to its guarantee of the notes.

A federal excise tax was imposed on smokeless tobacco products in 1986, which was increased in 1991, 1993, 1997, 2000 and 2002. The current federal excise tax on smokeless tobacco products is $0.195 per pound for chewing tobacco, and $0.585 per pound for snuff. As of January 1, 2006, 43 states taxed smokeless tobacco products on an ad valorem basis at rates ranging from 3% in North Carolina to 90% in Massachusetts. Other states tax smokeless tobacco products based on weight or on a per unit basis. A federal tax is imposed on cigars, and certain states also impose taxes, generally on an ad valorem basis, on cigars.

In 1996, the U.S. Food and Drug Administration, referred to as the FDA, published regulations that would have severely restricted cigarette advertising and promotion, and limited the manner in which tobacco products could be sold. On March 21, 2000, the U.S. Supreme Court held that Congress did not give the FDA authority to regulate tobacco products under the Federal Food, Drug, and Cosmetic Act and, accordingly, the FDA’s assertion of jurisdiction over tobacco products was impermissible under that act. Since the Supreme Court decision, various proposals have been made for federal legislation to regulate tobacco products, including smokeless tobacco products. A presidential commission appointed by former President Clinton issued a final report on May 14, 2001, recommending that the FDA be given authority by Congress to regulate the manufacture, sale, distribution and labeling of tobacco products to protect public health. In addition, congressional advocates of FDA regulation have introduced legislation for consideration by Congress. Other proposals for the federal regulation of tobacco products have related to, among other things, additional warning notices, the disallowance of advertising and promotion expenses as deductions under federal tax law, a ban or further restriction of all advertising and promotion and

~~increased regulation of the manufacturing and marketing of tobacco products by new or existing federal agencies.~~

Over the years, various state and local governments have continued to regulate tobacco products, including smokeless tobacco products. These regulations relate to, among other things, the imposition of significantly higher taxes, increases in the minimum age to purchase tobacco products, sampling and advertising bans or restrictions, ingredient and constituent disclosure requirements and significant tobacco control media campaigns. Additional state and local legislative and regulatory actions will likely be considered in the future, including, among other things, restrictions on the use of flavorings.

Additional federal or state regulation relating to the manufacture, sale, distribution, advertising, labeling and mandatory ingredients disclosure of tobacco products could reduce sales, increase costs and have a material adverse effect on the business of the operating subsidiaries of RAI. Extensive and inconsistent regulation by multiple states could prove to be particularly disruptive to the business of RJR Tobacco. These factors could have a material adverse effect on RAI’s results of operations, cash flows and financial condition.

Various state governments have adopted or are considering adopting legislation establishing fire safety standards for cigarettes. Compliance with this legislation could be burdensome. On December 31, 2003, the New York State Office of Fire Prevention and Control issued a final standard with accompanying regulations that requires all cigarettes offered for sale in New York State after June 28, 2004, to achieve specified test results when placed on ten layers of filter paper in controlled laboratory conditions. The cigarettes that RAI’s operating companies sell in New York State comply with this standard. In 2005, California and Vermont, and in 2006, Illinois, Massachusetts and New Hampshire, each enacted fire-safe legislation of its own, adopting the same testing standard set forth in the OFPC regulations described above. This requirement took effect in Vermont on May 1, 2006, and will take effect in California on January 1, 2007, in New Hampshire on October 1, 2007, and in Illinois and Massachusetts on January 1, 2008. Similar legislation is being considered in a number of other states. Varying standards from state to state could have an adverse effect on the business or results of operations of RJR Tobacco.


	*~~RJR Tobacco’s and Conwood’s volumes, market share and profitability may be adversely affected by competitive actions and pricing pressures in the marketplace.~~*

The tobacco industry is highly competitive. Among the major manufacturers, brands primarily compete on such elements as product quality, price, brand recognition, brand imagery and packaging. Substantial marketing support, merchandising display, competitive pricing and other financial incentives generally are required to maintain or improve a brand’s market position or introduce a new brand.

~~Increased selling prices from higher cigarette taxes and settlement costs have resulted in increased competitive discounting and the proliferation of deep-discount brands.~~

In addition to the competition Conwood faces from its largest competitor, UST Inc., RJR Tobacco’s largest competitor in the cigarette market, Philip Morris USA Inc., has recently begun test marketing smokeless tobacco products. Further, other companies may test or enter the smokeless tobacco marketplace. Increased competition, from new entrants or existing market participants, could introduce pricing pressure or decrease Conwood’s market share, either of which could adversely affect Conwood’s profitability and revenues.

Although RAI believes Conwood’s business has benefited in recent years from the increased popularity of price-value brands compared to premium priced brands, if this trend deprives Conwood’s premium brands of market share, Conwood’s profitability and revenues from those brands could decrease. Even if consumers shift from Conwood’s premium brands to its own price-value brands, Conwood’s revenues and profitability could be adversely affected due to the higher sales prices and higher profit margins on Conwood’s premium brands as compared with its price-value brands.


	*~~Failure to successfully integrate Conwood into RAI’s corporate organization could prevent RAI from attaining the anticipated benefits of the Conwood acquisition.~~*

Achieving the anticipated benefits of the Conwood acquisition will depend in part upon the integration of Conwood into RAI’s corporate organization. Integration of a substantial business is a challenging, time-consuming and costly process. It is possible that the acquisition itself or the integration process could result in the loss of the management of Conwood or other key employees, the disruption of Conwood’s business or inconsistencies in standards, controls, procedures and policies that adversely affect its ability to maintain relationships with suppliers, customers and employees. In addition, successful integration of Conwood will require the dedication of significant management resources that may temporarily detract attention from RAI’s and Conwood’s day-to-day business.Baa3. If management is not able to integrate the organizations, operations and systems of Conwood and RAI in a timely and efficient manner, the anticipated benefits of the Conwood acquisition may not be realized fully.


	If RJR Tobacco is not able to develop, produce or commercialize new products and technologies required by regulatory changes or changes in adult consumer preferences, sales and profitability could be adversely affected.

Consumer health concerns and changes in regulations are likely to require RJR Tobacco to introduce new products or make substantial changes to existing products. Similarly, RAI believes that there may be increasing pressure from public health authorities and consumers to develop a conventional cigarette or an alternative cigarette that provides a demonstrable reduced risk of adverse health effects. RJR Tobacco may not be able to develop a potentially reduced risk product that is broadly acceptable to adult consumers in a cost-effective manner, or at all. Moreover, it may be difficult for RJR Tobacco to effectively promote such a product in any event. RJR Tobacco believes that the order in the U.S. Department of Justice case, described above, might (unless the order is reversed on appeal) limit RJR Tobacco’s ability to market effectively any potentially reduced risk product it may develop. Further, additional marketing restrictions could be imposed legislatively or judicially in the future that could adversely affect RJR Tobacco’s ability to market effectively any potentially reduced risk product it may develop. The costs associated with developing new products and technologies, as well as the inability to develop and effectively market acceptable products in response to competitive conditions or regulatory requirements, may have a material adverse effect on RAI’s results of operations, cash flows and financial condition.


	RJR Tobacco depends on third-party suppliers for its tobacco packaging materials requirements; if the supply of tobacco packaging materials from the suppliers is interrupted, or the quality of the packaging declines, RJR Tobacco’s sales and packaging related costs could be negatively affected.

On May 2, 2005, RJR Tobacco and RJR Packaging sold the assets and business of RJR Packaging to five packaging companies. In connection with this sale, RJR Tobacco entered into agreements with four of the purchasers, pursuant to which those companies supply RJR Tobacco with certain of its tobacco packaging materials requirements.

As a result, RJR Tobacco is now dependent upon third parties for its packaging requirements. Consequently, the risks of an interruption in the supply of packaging materials to RJR Tobacco, or a decline in the quality of such packaging materials, have increased. A decline in the quality of packaging materials could negatively affect sales. If the supply of packaging materials is interrupted, RJR Tobacco’s own shipments of tobacco products could be materially slowed, which could decrease sales and adversely impact RJR Tobacco’s relationships with wholesalers and retailers. Delays in the shipments of RJR Tobacco’s products may result in certain RJR Tobacco brand styles being out of stock at the retail level, increasing the potential that consumers may switch to brands made by RJR Tobacco’s competitors.

If RJR Tobacco had to seek alternate suppliers, particularly on an urgent basis, there is no guarantee that RJR Tobacco could find alternate suppliers willing or able to supply packaging materials on a timely basis (if at all), at an acceptable cost and of the necessary quality. If, as a result of securing an alternate supply of packaging materials, RJR Tobacco’s packaging related costs increased, its profits could

~~consequently decrease. Sales could also be negatively affected if the quality of packaging from the alternate suppliers were below RJR Tobacco’s requirements.~~

A material increase in RJR Tobacco’s packaging related costs, a material decrease in the quality of packaging materials or a material interruption in the supply of packaging materials could materially adversely affect the results of operations, cash flows and financial condition of RJR Tobacco and, consequently, of RAI.

Since late June 2006, RJR Tobacco has been experiencing a shortage of packaging materials for certain of its brand styles. This shortage has caused incomplete deliveries to certain of RJR Tobacco’s customers of the affected brand styles. To address this issue, packaging materials capacity has been increased at RJR Tobacco’s primary packaging supplier, and RJR Tobacco has been purchasing certain packaging materials from other packaging suppliers. As a result, RJR Tobacco currently is in the process of building its cigarette inventories back to historical levels, a process which it expects to complete during the fourth quarter of 2006. RAI does not believe that this shortage will materially adversely affect the results of operations, cash flows and financial condition of RJR Tobacco or RAI.


	*~~Certain of RAI’s operating subsidiaries face a customer concentration risk.~~*

Sales made by RJR Tobacco to McLane Company, Inc., a distributor, comprised 25%, 27% and 31% of RAI’s consolidated revenue in 2005, 2004 and 2003, respectively. Sales made by Conwood to McLane Company, Inc. comprised 15%, 16% and 16% of Conwood’s consolidated revenue in 2005, 2004 and 2003, respectively. No other customer accounted for 10% or more of RAI’s or Conwood’s revenue during those years. The loss of this customer, or a significant decline in its purchases from RJR Tobacco or Conwood, could have a material adverse effect on the business, financial condition and results of operations of RJR Tobacco or Conwood, as the case may be, and, consequently, of RAI, the ability of RAI to make payments on the notes and the ability of RJR Tobacco or Conwood to make payments pursuant to its guarantee of the notes.


	RAI’s credit facilities contain restrictive covenants that may limit the flexibility of RAI and its subsidiaries, and breach of those covenants may result in a default under the agreement relating to the facilities.

RAI’s credit ~~facilities limit, and in some circumstances prohibit, the ability of RAI and its subsidiaries to, among other things:~~


	•	~~incur additional debt;~~

	•	~~pay dividends;~~

	•	~~make capital expenditures, investments or other restricted payments;~~

	•	~~engage in sale-leaseback transactions;~~

	•	~~guarantee debt;~~

	•	~~engage in transactions with shareholders and affiliates;~~

	•	~~create liens;~~

	•	~~sell assets;~~

	•	~~issue or sell capital stock of subsidiaries;~~

	•	~~engage in mergers and acquisitions; and~~

	•	~~prepay certain indebtedness.~~

These restrictions could limit the ability of RAI and its subsidiaries to obtain future financing, withstand a future downturn in their businesses or the economy in general, conduct operations or otherwise take advantage of business opportunities that may arise. In addition, if RAI does not comply with these

covenants and with financial covenants in its credit facilities that require it to maintain certain minimum financial ratios, any indebtedness outstanding under the credit facilities could become immediately due and payable. In addition, the lenders under RAI’s credit facilities could refuse to lend funds if RAI is not in compliance with the covenants or could terminate the credit facilities. If RAI were unable to repay accelerated amounts, the lenders under RAI’s credit facilities could initiate a bankruptcy proceeding or liquidation proceeding, or proceed against any collateral securing that indebtedness.


	*~~Fire, violent weather conditions and other disasters may adversely affect the operations of RAI’s operating subsidiaries.~~*

A major fire, violent weather conditions or other disasters that affect the manufacturing facilities of RAI’s operating subsidiaries, or of their suppliers and vendors, could have a material adverse effect on the operations of RAI’s operating subsidiaries. Although RAI has insurance coverage for some of these events, a prolonged interruption in the manufacturing operations of RAI’s operating subsidiaries could have a material adverse effect on the ability of its operating subsidiaries to effectively operate their businesses.


	RAI has substantial debt and may incur substantial additional debt, which could adversely affect its financial health and its ability to obtain financing in the future, react to changes in its business and make payments on the notes.

As of June 30, 2006, on a consolidated basis, RAI had an aggregate principal amount of $4.413 billion of outstanding long-term indebtedness (less current maturities). RAI’s substantial debt could have important consequences to holders of the notes. Because of RAI’s substantial indebtedness:


	•	its ability to obtain additional financing for working capital, capital expenditures, acquisitions, debt service requirements or general corporate purposes and its ability to satisfy its obligations with respect to the notes may be impaired in the future;

	•	~~a substantial portion of its cash flow from operations must be dedicated to the payment of principal and interest on its indebtedness, thereby reducing the funds available to it for other purposes;~~

	•	~~it may be at a disadvantage compared to its competitors with less debt or comparable debt at more favorable interest rates; and~~

	•	its flexibility to adjust to changing market conditions and ability to withstand competitive pressures could be limited, and it may be more vulnerable to a downturn in general economic conditions or its business or be unable to carry out capital spending that is necessary or important to its growth strategy and its efforts to improve operating margins.

It is likely that RAI will refinance, or attempt to refinance, a significant portion of this indebtedness prior to its maturity through the incurrence of new indebtedness. There can be no assurance that RAI’s available cash or access to financing on acceptable terms will be sufficient to satisfy when due such indebtedness and its obligations under the notes.


	An increase in interest rates would increase the cost of servicing RAI’s variable rate indebtedness and could cause its annual debt service obligations to increase significantly and reduce its profitability.

RAI’s borrowings under its credit facilities bear interest at a variable or floating rate. As of June 30, 2006, the borrowings outstanding under the credit facilities consisted solely of the $1.55 billion floating rate term loan. In addition, as of June 30, 2006, RAI had outstanding interest rate swap agreements, the effect of which was to convert the interest rate applicable to $750 million principal amount of debt from a fixed to a floating rate. Any increase in interest rates would increase the cost of servicing RAI’s floating rate debt and, consequently, RAI’s net income would decrease. A 100 basis-point increase in LIBOR (the rate applicable as of June 30, 2006, to the term loan and $750 million principal amount of debt subject to the interest rate swap) would increase RAI’s annual interest expense by $23 million. For a discussion of how RAI manages its exposure to changes in interest rates, see note 7 to the condensed consolidated

~~financial statements (unaudited) included in RAI’s June 30, 2006, Form~~ ~~10-Q,~~ ~~incorporated by reference herein.~~


	*~~The ability of RAI to access the debt capital markets could be impaired because of its credit rating.~~*

~~The old notes are, and the new notes will be, rated below investment grade. Because of these~~ ratings ~~in the future~~fall, RAI may not be able to sell ~~its~~additional debt securities or borrow money in such amounts, at the times, at the lower interest rates or upon the more favorable terms and conditions that might ~~otherwise~~ be available ~~to RAI~~ if its debt ~~was rated investment grade. The below-investment grade credit rating of RAI’s notes may make it more difficult for RAI to obtain future debt financing on an unsecured basis. In addition, future~~maintained its current or higher ratings. Future debt security issuances or other borrowings may be subject to further negative terms, including provisions for collateral or limitations on indebtedness or ~~similar~~more restrictive covenants, ~~particularly~~ if RAI’s credit ratings ~~decline further.~~

decline.

RAI’s credit ratings are influenced by some important factors not entirely within the control of RAI or its affiliates, such as tobacco litigation, the regulatory environment and the performance of suppliers ~~and vendors~~ to RAI’s operating subsidiaries. Moreover, because the kinds of events and contingencies that may impair RAI’s credit ratings and the ability of RAI and its affiliates to access the debt capital markets are often the same kinds of events and contingencies that could cause RAI and its affiliates to seek to raise additional capital on an urgent basis, RAI and its affiliates may not be able to issue debt securities or borrow money ~~upon~~with acceptable terms, or at all, at the times at which they may most need additional capital.

In addition, the interest rate RAI pays on borrowings under its revolving credit facility is equal to an underlying interest rate plus an applicable margin, which margin is based on the ratings of RAI’s senior, unsecured, long-term indebtedness. If these ratings decline, the applicable margin RAI is required to pay would increase. RAI pays a fee on commitments under its revolving credit facility based on the ratings of RAI’s senior, unsecured, long-term indebtedness. As a result, although the revolving credit facility provides RAI with a source of liquidity, the cost of borrowing under, and of maintaining, that facility could be at a higher rate at a time when RAI most needs to utilize that facility.

RAI may have to reduce its indebtedness in order to remain in compliance with a covenant under its revolving credit facility. There is no guarantee RAI will be able to reduce its indebtedness in the amount or at the times needed to maintain compliance, which could result in a default under the revolving credit facility.

Under the revolving credit facility, RAI’s consolidated leverage ratio (as defined therein) may not exceed:

4.50 to 1.00 for the reference periods ending on the last day of each of RAI��s fiscal quarters ending on June 30, September 30, and December 31, 2015;

4.25 to 1.00 for the reference periods ending on the last day of each of RAI’s fiscal quarters ending on March 31, June 30, and September 30, 2016;

3.75 to 1.00 for the reference periods ending on the last day of each of RAI’s fiscal quarters ending on December 31, 2016, and March 31, and June 30, 2017; and

3.50 to 1.00 thereafter.

Since the leverage ratio becomes more restrictive as time passes after the completion of the Lorillard merger, RAI may need to reduce its indebtedness in order to remain in compliance with the covenant. There is no guarantee that RAI will be able to reduce its indebtedness in the amount or at the times needed, which could result in RAI defaulting under the revolving credit facility. In such event, the agents or lenders under the revolving credit facility could exercise remedies, including acceleration of any amounts outstanding under the

revolving credit facility or termination of the facility, which could have a material negative effect on RAI’s financial position.

If the proposed sale to JTIH is completed, RAI will have an additional estimated $3.2 billion, after taxes, in available cash. However, the proposed sale to JTIH has not been completed yet, and the completion of that transaction is subject to certain conditions. There is no guarantee that the proposed sale to JTIH will be completed.

RJR Tobacco will be reliant on Imperial Sub to manufacture NEWPORT on RJR Tobacco’s behalf for a period of time, and RJR Tobacco will manufacture WINSTON, KOOL and SALEM on Imperial Sub’s behalf. RJR Tobacco’s reliance on Imperial Sub for the manufacture of NEWPORT subjects RAI and RJR Tobacco to risks and uncertainties to which it would not otherwise be subject, and Imperial Sub’s inability to manufacture NEWPORT as contemplated could materially adversely affect RAI and RJR Tobacco’s results of operations, cash flows, financial position and ability to realize any or all of the synergies expected as a result of the Lorillard merger and divestiture.

RJR Tobacco and Imperial Sub entered into a reciprocal manufacturing agreement in connection with the closing of the Lorillard merger and the divestiture, pursuant to which for a period of up to two years, subject to extension as provided therein, Imperial Sub will manufacture NEWPORT (and KENT, TRUE, and OLD GOLD) on RJR Tobacco’s behalf and RJR Tobacco will manufacture WINSTON, KOOL and SALEM on Imperial Sub’s behalf. Reliance on Imperial Sub for the manufacture of NEWPORT subjects RAI and RJR Tobacco to risks and uncertainties to which it would not be subject if RJR Tobacco manufactured NEWPORT itself, including, among others:

reduced control over the manufacturing process and quality control;

disruptions to Imperial Sub’s operations and the production of NEWPORT caused by conditions unrelated to RAI’s and its subsidiaries’ businesses or operations, including disputes under collective bargaining agreements with labor unions or in connection with negotiation of new collective bargaining agreements, strikes or other work stoppages at the Imperial Sub plant that manufactures NEWPORT or the occurrence of a catastrophic event affecting Imperial Sub; and

loss of market share and reputational harm to RAI and RJR Tobacco in the event a disruption of the production of NEWPORT by Imperial Sub results in insufficient supply.

In addition, Imperial Sub may not transition the manufacturing of WINSTON, KOOL and SALEM to the Greensboro plant acquired by Imperial Sub in the divestiture as quickly as currently contemplated.

If Imperial Sub fails to or is unable to perform under the reciprocal manufacturing agreement, RAI’s and RJR Tobacco’s results of operations, cash flows and financial position could be materially adversely affected, and there could be a delay to RAI and RJR Tobacco’s ability to realize any or all of the synergies expected as a result of the Lorillard merger and divestiture.

The business relationships of RAI and Lorillard and their respective subsidiaries may be subject to disruption due to uncertainty associated with the Lorillard merger, which could have an adverse effect on the results of operations, cash flows and financial position of RAI and Lorillard.

Parties with which RAI or Lorillard, or their respective subsidiaries, do business may experience uncertainty associated with the Lorillard merger and related transactions, including with respect to current or future business relationships with RAI, Lorillard, their respective subsidiaries or the combined business. RAI’s and Lorillard’s business relationships may be subject to disruption as customers, distributors, suppliers, vendors and others may attempt to negotiate changes in existing business relationships or consider entering into business relationships with parties other than RAI, Lorillard, their respective affiliates or subsidiaries or the combined business. These disruptions could have an adverse effect on the results of operations, cash flows and financial position of RAI following the closing of the Lorillard merger, including an adverse effect on RAI’s ability to realize the expected synergies and other benefits of the Lorillard merger.

RAI may fail to realize the expected synergies and other benefits of the Lorillard merger, which could have an adverse effect on RAI’s consolidated results of operations, cash flows and financial position.

The success of the Lorillard merger will depend, in part, on RAI’s ability to realize the expected synergies and other benefits from combining the businesses of RAI and Lorillard and their respective subsidiaries and affiliates. RAI’s ability to realize these anticipated benefits and cost savings is subject to certain risks, including the following:

the ability to successfully combine and integrate the businesses of RAI, Lorillard and their respective subsidiaries;

RAI’s ability to reduce its level of indebtedness in a timely manner following the completed Lorillard merger; and

the ability to successfully transition manufacturing of NEWPORT from Lorillard’s manufacturing facility to RJR Tobacco’s manufacturing facility when and as expected.

If RAI is not able to successfully combine the businesses of RAI, Lorillard and their respective subsidiaries within the anticipated time frame, or at all, the expected synergies and other benefits, including cost savings, of the Lorillard merger may not be realized fully or at all or may take longer to realize than expected and the combined businesses may not perform as expected. In addition, if RAI is unable to timely reduce its level of indebtedness following the completed Lorillard merger, RAI will be subject to increased demands on its cash resources and tightening financial covenants under its revolving credit facility, which could result in a breach of the covenants or otherwise adversely affect the business and financial results of the combined company.

Further, RAI and Lorillard and their respective subsidiaries and affiliates operated independently until completion of the Lorillard merger on June 12, 2015, and there can be no assurances that their businesses can be integrated successfully. It is possible that the integration process could result in the loss of key employees or customers of RAI or Lorillard or their respective subsidiaries, the disruption of the companies’ ongoing businesses or in unexpected integration issues, higher than expected integration costs and an overall post-Lorillard merger integration process that takes longer than originally anticipated. RAI will be required to devote significant management attention and resources to integrating the business practices and operations of RAI and Lorillard. It is possible that the integration process could result in:

diversion of the attention of management;

the lack of personnel or other resources to pursue other potential business opportunities, such as possible acquisition opportunities; and

the disruption of, or the loss of momentum in, the combined company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies,

any of which could adversely affect the combined company’s ability to maintain relationships with customers, suppliers, employees and other constituencies or its ability to achieve the anticipated benefits of the Lorillard merger or could reduce the combined company’s earnings or otherwise adversely affect the business and financial results of the combined company.

Accordingly, the contemplated benefits of the Lorillard merger may not be realized fully, or at all, or may take longer to realize than expected.

RAI will incur transaction fees and costs related to formulating and implementing integration plans with respect to the two companies, including facilities and systems consolidation costs. Furthermore, the transaction fees and costs associated with the divestiture could deviate from RAI’s current expectations, particularly if Imperial Sub fails to or is unable to perform under the reciprocal manufacturing agreement. RAI continues to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the integration of the

two companies’ businesses. The expected net benefits associated with these costs may not be achieved in the near term, or at all.

RAI, through its subsidiaries, is dependent on the U.S. cigarette market, which is expected to continue to decline. In addition, RAI is dependent on premium and super premium cigarette brands. The continued decline in U.S. cigarette consumption, or the transition of consumers away from premium cigarette brands, could have an adverse effect on the consolidated results of operations, cash flows and financial position of RAI.

RAI’s subsidiaries are dependent on the U.S. cigarette market. In connection with the Lorillard merger, RAI did not acquire any brands outside of the United States and the assets of Lorillard’s subsidiaries related to the electronic cigarette brands blu eCIGS and SKYCIG were included in the divestiture. Lorillard, like RAI, previously divested its international cigarette business.

Furthermore, if the proposed sale to JTIH is completed, the international NAS business will be sold to JTIH, which will exacerbate the reliance of RAI’s operating subsidiaries on the U.S. cigarette market. In addition, pursuant to the Japan Tobacco purchase agreement, RAI has agreed not to, and agreed to cause its controlled affiliates not to, engage in the business of producing, selling, distributing and developing natural, organic and additive-free combustible tobacco cigarettes and roll your own or make your own tobacco products outside of the United States for a period of five years after the closing of the proposed sale to JTIH.

RAI’s subsidiaries’ U.S. combustible cigarette brands include, among others, NEWPORT, CAMEL, PALL MALL and NATURAL AMERICAN SPIRIT. RAI estimates that its sales in the United States attributable to combustible cigarettes would have represented approximately 90% of RAI’s pro forma 2014 net sales, assuming the merger and the divestiture had occurred on January 1, 2014. U.S. cigarette consumption has declined since 1981 for a variety of factors including, for example, price increases, restrictions on advertising and promotions, smoking prevention campaigns, increases in regulation and excise taxes, health concerns, a decline in the social acceptability of smoking, increased pressure from anti-tobacco groups, and migration to smoke-free products. U.S. cigarette consumption is expected to continue to decline.

In addition, RAI’s subsidiaries’ brands are subject to consumer price sensitivities, with certain brands subject to greater price sensitivities than others or competitors’ brands. Some consumers may switch to a lower priced brand than the brands offered by RAI’s subsidiaries. As a result of the acquisition of Lorillard’s subsidiaries’ brands, which principally consist of NEWPORT, RAI’s subsidiaries’ concentration of premium brands increased significantly. As a result, RAI’s subsidiaries are more susceptible to consumer price sensitivities following the Lorillard merger. A downturn in the economy or other adverse financial or economic conditions could increase the number of consumers switching to a lower priced brand than any of those offered by RAI’s subsidiaries.

The continued decline in U.S. cigarette consumption, or the transition of consumers away from premium cigarette brands, could have an adverse effect on the consolidated results of operations, cash flows and financial position of RAI.

RAI and its subsidiaries may have to make additional contributions to fund its pension and other post-retirement benefit plans or any such plans of Lorillard.

RAI and its subsidiaries currently maintain and contribute to defined benefit pension plans and other post-retirement benefit plans that cover various categories of employees and retirees. The obligation to make contributions to fund benefit obligations under these pension and other post-retirement benefit plans is based on actuarial valuations, which are based on certain assumptions, including the long-term return on plan assets and discount rate. RAI may have to make additional contributions beyond what is currently contemplated to fund its

pension and other post-retirement benefit plans or any such plans of Lorillard. Additional contributions could have an adverse effect on the results of operations, cash flows and financial position of RAI.

RAI is obligated to indemnify Imperial Sub for specified matters and to retain certain liabilities related to the divested brands and other assets.

Under the asset purchase agreement, RAI has agreed to indemnify Imperial Sub against losses arising from, among other things, breaches of representations and warranties, breaches of covenants, assets excluded from the transaction, excluded liabilities, certain specific tobacco liabilities, certain assumed plaintiff fees, certain employment related obligations, and liabilities in connection with certain tobacco litigation, settlement and regulatory matters related to the divested brands. The asset purchase agreement does not cap RAI’s indemnification obligations, except with respect to any indemnification arising from breaches of certain representations and warranties or pre-closing covenants. Accordingly, these indemnification obligations could be substantial and could have an adverse effect on RAI’s results of operations, cash flows and financial position.

Risks Related to the New Notes


	All of RAI’s operations are conducted through its subsidiaries, and this structure may impair RAI’s ability to pay the new notes. In addition, the new notes and related guarantees thereof will be structurally subordinated to creditors (including trade creditors) of non-guarantor subsidiaries of each of RAI and the guarantors.

All of RAI’s operations are conducted through its subsidiaries, and this structure may impair RAI’s ability to make payments on the new notes. In addition, the new notes and related guarantees will be structurally subordinated to creditors (including trade creditors) of non-guarantor subsidiaries of each of RAI and the guarantors.

The new notes will be the direct obligations of RAI. Certain of RAI’s subsidiaries, including its material domestic subsidiaries, will guarantee RAI’s obligations under the new notes. Because RAI’s operations are conducted through ~~certain of~~ its ~~subsidiaries.~~subsidiaries, RAI’s cash flow and its ability to service its debt, including the new notes, depends upon the earnings of its subsidiaries and their loans, dividends, distributions or other payments to or for the benefit of RAI. This structure may impair RAI’s ability to make payments on the new notes. The ability of RAI’s subsidiaries to pay dividends and make other distributions is subject to applicable law. Claims of creditors of non-guarantor subsidiaries, including trade creditors, secured creditors and creditors holding debt and guarantees issued by those non-guarantor subsidiaries generally will have priority with respect to the assets and earnings of those non-guarantor subsidiaries over the claims of creditors of RAI and the guarantors, including holders of the new notes. This lack of priority over claims of creditors of non-guarantor subsidiaries is referred to as structural subordination.

Your right to receive payments on the new notes may be effectively subordinated to those lenders who may have a security interest in the assets of RAI and the guarantor subsidiaries in the future.

The new notes and the related guarantees ~~thereof~~are unsecured. In the future, RAI and its guarantor subsidiaries may incur indebtedness that is secured by their respective tangible and intangible assets, including the equity interests of certain subsidiaries. The RAI indenture contains a “negative pledge” covenant that requires RAI and certain of its subsidiaries, including some of the guarantors, to pledge equally and ratably as security for the new notes offered hereby certain collateral it may pledge for certain other indebtedness. That covenant, however, is subject to exceptions, as described in more detail in “Description of the New Notes.” If RAI or any of its guarantor subsidiaries were unable to repay any indebtedness secured by collateral that does not also secure the new notes offered hereby and related guarantees on an equal and ratable basis, the creditors of such obligations could foreclose on the pledged assets to the exclusion of holders of the new notes, even if an event of default exists under the RAI indenture. Because the new notes are unsecured, it is possible in such a case that there would be no assets remaining from which your claims could be satisfied or, if any assets remained, they might be insufficient to fully satisfy your claims.

The guarantees will be ~~structurally subordinated to creditors (including trade creditors)~~terminated without the consent of ~~non-guarantor subsidiaries~~the holders of ~~each~~the new notes if the guarantors of ~~RAI and~~ the ~~guarantors.~~


	*~~The guarantees may be terminated without the consent of the noteholders.~~*

new notes are released as guarantors under the revolving credit facility.

RAI’s obligations under the new notes will be guaranteed by certain of RAI’s subsidiaries, including its material domestic subsidiaries. These subsidiaries guarantee the obligations of RAI under ~~the~~its existing notes and revolving credit ~~facilities.~~facility. Under the terms of the ~~2006~~RAI indenture, if any guarantor of the new notes ceases to be a guarantor under the revolving credit ~~facilities,~~facility (or any replacement or financing thereof), that guarantor will be released automatically ~~released~~ from all of its obligations under both the ~~2006~~RAI indenture and its guarantee of the new notes, and, as a result, that guarantee will terminate. No ~~noteholder~~ consent from holders of new notes is required in this event. ~~It is possible that the lenders under RAI’s credit facilities may release some~~

Some or all of the guarantees ~~thereunder~~under the revolving credit facility may be released in accordance with the provisions of such facility, or such ~~credit facilities~~facility may be terminated, and any ~~replacement credit facilities~~replacements or refinancings thereof may not require guarantees of RAI’s obligations thereunder.

Not all of the current guarantors of the revolving credit facility are required to continue to guarantee such facility and could be released as guarantors thereunder, which would result in their being released as guarantors of the new notes.

The revolving credit facility generally only requires that “material subsidiaries,” as defined in the revolving credit facility, guarantee the revolving credit facility. Not all of the RAI subsidiaries that currently guarantee the revolving credit facility are material subsidiaries under the revolving credit facility. The revolving credit facility authorizes the administrative agent thereunder to take any action requested by RAI to release the guarantee of a subsidiary guarantor if, among other circumstances, the subsidiary ceases to be a material subsidiary as defined in the revolving credit facility. Therefore, the new notes may not continue to be guaranteed to the same extent as they will be upon issuance, or at ~~all.~~


	*~~The security for the obligations~~all, because, as described above, any guarantor of ~~RAI and the guarantors under the notes may be released.~~*

Under the terms of the 2006 indenture, if, for any reason, the assets specified therein are no longer pledged to secure the obligations of RAI and the guarantors under RAI’s credit facilities (or any other indebtedness), such assets will be released as security for the new notes ~~and related guarantees (as well as for the RJR notes). Under the terms of RAI’s credit facilities, provided certain defaults do not exist~~that ceases to be a guarantor under the 2006 indenture at such time as (1) RAI’s term loan is paid in full and (2) RAI obtains investment grade corporate ratings (with not worse than stable outlooks) from each of Moody’s and S&P, the security for RAI’srevolving credit ~~facilities automatically~~facility will be automatically released ~~and the obligations thereunder will become unsecured.~~

In the event the notes no longer have the benefit of the security described in this prospectus, the notes will be unsecured obligations and such obligations will rank equally with all other existing and future unsecured, unsubordinated obligations of such entity (except those obligations preferred by operation of law).


	Substantially all of the assets of RAI and the guarantors secure the obligations of these entities under RAI’s credit facilities, while only certain assets of RAI and the guarantors will secure the notes. The new notes will be effectively subordinated to RAI’s credit facilities to the extent of the value of such assets that do not also secure the notes.

If RAI or a guarantor becomes insolvent or is liquidated, or if payment under any secured obligation is accelerated, the lenders under that secured obligation will be entitled to exercise the remedies available to a secured lender under applicable law and pursuant to the terms of the agreement securing that obligation. Certain assets of RAI and the guarantors secure the obligations of these entities under:


	•	~~RAI’s $1.55 billion six-year senior secured term loan facility;~~

	•	~~RAI’s $550 million five-year senior secured revolving credit facility;~~

	•	~~the notes and related guarantees; and~~

	•	~~any future secured obligations of RAI.~~

The proceeds of such security, upon liquidation, will be shared equally and ratably among the holders of these secured obligations. See “Description of Material Indebtedness” and “Description of the New Notes.” Additional assets of RAI and the guarantors secure RAI’s credit facilities but will not secure the notes. The assets that secure the credit facilities that will not secure the notes include, among other assets, intellectual property, inventory, cash and accounts receivable and pledges of securities other than the stock of RJR Tobacco. Consequently, with respect to the exercise of remedies by the lenders under the credit facilities, the proceeds of those assets of RAI and the guarantors that secure the obligations under these facilities, but not under the notes, will, upon liquidation, not be available to the holders of the notes. As a result, the notes are effectively subordinated to the obligations under RAI’s credit facilities to the extent of the value of those assets which secure the credit facilities but do not secure the notes.


	*~~The credit ratings assigned to the notes may not reflect all risks of an investment in the notes.~~*

The credit ratings assigned to the notes reflect the rating agencies’ assessments of the ability of RAI to make payments on the notes when due. Consequently, real or anticipated changes in these credit ratings will generally affect the market value of the notes. These credit ratings, however, may not reflect the potential impact of risks related to structure, market or other factors related to the value of the notes.


	*~~RAI is not required to repurchase or redeem the notes upon a change of control of RAI or other events involving RAI that may affect its creditworthiness.~~*

The 2006 indenture does not require RAI to repurchase or redeem or otherwise modify the terms of the notes upon the occurrence of certain events involving RAI that may affect its creditworthiness. These

~~events include certain consolidations, mergers, sales of assets or other similar transactions, or a change of control of RAI.~~


	*~~The new notes lack some covenants typically found in other comparably rated debt securities.~~*

Although the old notes are and, upon issuance, the new notes will be, rated below investment grade by both Moody’s and S&P, they lack the protection of several financial and other restrictive covenants typically associated with comparably rated debt securities. In particular, the 2006 indenture does not contain restrictions on RAI’s ability to incur additional debt, pay dividends or make distributions or repurchase stock, make investments, enter into transactions with affiliates or sell less than substantially all of its assets.


	*~~The value of the collateral securing the notes and related guarantees may not be sufficient to satisfy the obligations of RAI and the guarantors thereunder.~~*

~~In the event of foreclosure on the collateral for the notes and the related guarantees, the proceeds~~ from the sale of this collateral may not be sufficient to satisfy the new notes. To the extent that the collateral securing the new notes is insufficient to satisfy the obligations under the new notes, the new notes would become unsecured and pari passu with the other unsecured debt of RAI. In addition, your rights to the collateral would be diluted by any further increase in the indebtedness secured by the collateral. By their nature, portions of the collateral may be illiquid and may have no readily ascertainable market value or realizable value apart from use in the businesses of RAI’s operating subsidiaries.


	Even if RAI defaults in its payment of the new notes, holders of the new notes cannot foreclose on the security for the notes and the guarantees until the lenders under RAI’s credit facilities do so, except in limited circumstances.

~~Upon a default under the notes issued under the 2006 indenture, the holders thereof may only seek enforcement of the remedies set forth in the security documents if:~~


	•	~~the required lenders under RAI’s credit facilities have required the collateral agent to take action against the collateral following a default under the term loan and the revolver; or~~

	•	a payment default with respect to at least $300 million aggregate principal amount of indebtedness under the 2006 indenture (or a substantially similar indenture) occurs and continues in existence for at least 180 days, following which the holders of such indebtedness can direct the collateral agent to enforce the remedies under the security documents, independent of a default under the term loan and the revolver; provided that, following the initiation of such enforcement, the required lenders under the credit facilities may direct the collateral agent as to the enforcement process, and the collateral agent shall comply with such directions (without any opportunity for consent or direction from the holders of the notes) so long as such directions are not adverse to the directions of the holders of the notes.


	Since there are no cross-default provisions in the 2006 indenture related to the notes, a default under RAI’s credit facilities will not permit the holders of the notes to declare a default unless independent grounds exist.

Upon a default occurring under the 2006 indenture, the lenders under RAI’s credit facilities may declare a default thereunder. Upon a default under RAI’s credit facilities, the lenders may require the collateral agent to pursue the remedies set forth in the security documents. However, unless a default has independently occurred with respect to the notes, a default under RAI’s credit facilities does not cause a default under the 2006 indenture, or give the holders of the notes thereunder a right to accelerate such debt. As a result, if RAI defaults in its obligations under its credit facilities but does not default in its obligations under the notes, the lenders under the credit facilities can exercise their remedies under the security documents with respect to the collateral provided for in such facilities, including those assets that also secure the notes, at a time when the holdersguarantee of the new notes.

Your right to be repaid would be adversely affected if a court determined that any of the guarantors of the new notes ~~would have no similar enforcement rights, potentially reducing~~made any guarantee for inadequate consideration or ~~eliminating~~with the ~~security for the notes.~~

intent to defraud creditors.


	Your right to be repaid would be adversely affected if a court determined that any of the guarantors of the notes made any guarantee for inadequate consideration or with the intent to defraud creditors.

Under the federal bankruptcy laws and comparable provisions of state fraudulent transfer or conveyance laws, a guarantee made by any of the guarantors of the new notes could be voided, or claims on the guarantees made by any of the guarantors could be subordinated to all other obligations of any such guarantor, if the guarantor, at the time it incurred the obligations under any guarantee:

incurred the obligations with the intent to hinder, delay or defraud creditors;

received less than reasonably equivalent value in exchange for incurring those obligations, and was insolvent or rendered insolvent by reason of that incurrence;


	•	~~incurred the obligations with the intent to hinder, delay or defraud creditors;~~

	•	~~received less than reasonably equivalent value in exchange for incurring those obligations, and was insolvent or rendered insolvent by reason of that incurrence;~~

	•	~~was engaged in a business or transaction for which the guarantor’s remaining assets constituted unreasonably small capital; or~~

	•	~~intended to incur, or believed that it would incur, debts beyond its ability to pay those debts as they mature.~~

was engaged in a business or transaction for which the guarantor’s remaining assets constituted unreasonably small capital; or

intended to incur, or believed that it would incur, debts beyond its ability to pay those debts as they mature.

In addition, any payment by that guarantor pursuant to its guarantee could be voided and required to be returned to the guarantor, or to a fund for the benefit of the creditors of the guarantor.

The measures of insolvency for purposes of the fraudulent transfer laws vary depending on the law applied in the proceeding to determine whether a fraudulent transfer has occurred. Generally, however, an entity would be considered insolvent if:

the sum of its debts, including contingent liabilities, is greater than the fair saleable value of all of its assets;

the present fair saleable value of its assets is less than the amount that would be required to pay its probable liabilities on its existing debts, including contingent liabilities, as they become absolute and mature; or


	•	~~the sum of its debts, including contingent liabilities, is greater than the fair saleable value of all of its assets;~~

	•	the present fair saleable value of its assets is less than the amount that would be required to pay its probable liabilities on its existing debts, including contingent liabilities, as they become absolute and mature; or

	•	~~it cannot pay its debts as they become due.~~

it cannot pay its debts as they become due.

Many of the foregoing terms are defined in or interpreted under those fraudulent transfer statutes. RAI cannot be certain what standard a court would apply to determine whether a guarantor was “insolvent” as of the date it guarantees the new notes, and cannot assure you that, regardless of the method of valuation, a court would not determine that such guarantor was insolvent on that date. Nor can RAI assure you that a court would not determine, regardless of whether such guarantor was insolvent on the date of such guarantee of the new notes, that the payments constituted fraudulent transfers on another ground.

The liability of each guarantor under the ~~2006~~RAI indenture will be limited to the amount that will result in its guarantee not constituting a fraudulent conveyance or improper corporate distribution, and we cannot assure you as to what standard a court would apply in making a determination as to what would be the maximum liability of each guarantor. If

Since there are no cross-default or cross-acceleration provisions in the RAI indenture related to the new notes, a ~~court were~~default or an acceleration event under the revolving credit facility, or any other indebtedness of RAI, including any other series of debt securities issued under the RAI indenture, will not permit the holders of the new notes to ~~void~~declare a ~~guarantor’s~~default or accelerate repayment under the notes unless independent grounds exist.

A payment default with respect to, or a default that could accelerate the repayment of, any “material indebtedness” of RAI, as such term is defined under the revolving credit facility, constitutes an event of default under the revolving credit facility. It is anticipated that each series of new notes offered hereby will constitute “material indebtedness” under such facility.

However, unless a default has independently occurred with respect to the new notes, a default under RAI’s revolving credit facility, or any other indebtedness, will not cause a default under the RAI indenture, or give the holders of the debt securities thereunder, including the new notes, a right to accelerate such debt securities. Furthermore, a default or an acceleration event under one series of debt securities issued pursuant to the RAI indenture (including any series of new notes offered hereby) will not cause a default or change of control repurchase event with respect to a separate series.

As a result, if RAI defaults in its obligations under the revolving credit facility or other indebtedness, including any other series of debt securities issued under the RAI indenture, but does not default in its obligations under the new notes offered hereby, the agents or lenders under such facility or other holders of such indebtedness of RAI can exercise their remedies at a ~~guarantee,~~time when the holders of the new notes offered hereby would have no similar rights. If RAI was required to repay in full significant outstanding sums upon such a default, it could jeopardize its ability to make regularly scheduled interest or principal payments on the new notes.

Certain changes of control that constitute an event of default under the revolving credit facility, or that would require RAI to offer to repurchase certain series of its existing notes, would not require RAI to offer to repurchase the new notes offered hereby.

Certain of the changes of control that constitute events of default under RAI’s revolving credit facility will not obligate RAI to offer to repurchase the new notes. For example, and without limitation, a change of control must be combined with a certain credit rating downgrade of a series of the new notes offered hereby in order for RAI to be required to offer to repurchase that series of notes, whereas a change of control need not be combined with a credit rating downgrade in order to constitute an event of default under the revolving credit facility.

Moreover, certain changes of control which would require RAI to offer to repurchase certain series of its existing notes would not require it to offer to repurchase the new notes offered hereby. For example, under certain series of RAI’s existing notes, more varieties of credit rating downgrades will, when combined with a change of control, require RAI to offer to repurchase such series than is the case with any ~~grant~~series of ~~security~~new notes offered hereby.

As a result, RAI may be in default under the revolving credit facility in connection with a change of control, or may be required to offer to repurchase certain series of existing notes, at a time when it is not required to repurchase any series of the new notes offered hereby. Because the RAI indenture does not contain any cross-default provisions, such an event of default under the revolving credit facility, or repurchase event under certain series of existing notes, would not constitute an event of default under, or require RAI to repurchase, any series of the new notes offered hereby. If RAI was required to repay in full significant outstanding sums under the revolving credit facility upon such a default, or repurchase any series of existing notes, it could jeopardize its ability to make regularly scheduled interest or principal payments on the new notes offered hereby.

RAI may not have sufficient cash to repurchase the new notes upon a change of control if required to do so.

RAI’s ability to pay cash to the holders of new notes following the occurrence of a change of control requiring such repurchase under the terms of the new notes may be limited by its then-existing financial resources. Certain changes of control, as well as certain events accelerating other indebtedness, constitute events of default under the revolving credit facility; therefore, borrowings under the revolving credit facility may not be available to fund repurchases of the new notes. If RAI was required to repay in full significant outstanding sums under the revolving credit facility upon such ~~guarantors would~~a change of control, or repurchase any or all series of its other notes, including the new notes offered hereby, it could jeopardize its ability to repay or repurchase all such obligations. Consequently, there can be no assurance that RAI will have sufficient funds available when necessary to make any required repurchases.

The Lorillard Tobacco notes not exchanged in the private exchange offers contain similar provisions obligating RJR Tobacco (as successor to Lorillard Tobacco) to repurchase the Lorillard Tobacco notes upon certain changes of control combined with adverse credit rating events. RAI’s ability to repurchase the new notes offered hereby upon a change of control may also be ~~extinguished.~~negatively affected if its subsidiary RJR Tobacco must also offer to repurchase the Lorillard Tobacco notes due to the same event.

You may find it difficult to sell the new notes or to sell them at a price you deem sufficient because there is no established trading market for the new notes and the new notes will not be listed on any securities exchange.

The new notes will be new securities for which no established trading market currently exists. The liquidity of any market for the new notes and pricing for the new notes will depend upon various factors, including:

the number of holders of the new notes;

the interest of securities dealers in making a market for the new notes;

the overall market for similar debt securities;

RAI’s financial performance and prospects;

the prospects for companies in the tobacco industry generally; and

prevailing interest rates.

None of the new notes offered hereby will be listed on any securities exchange. This may further restrict any trading market for the new notes.

Our credit ratings may not reflect all risks of your investment in the new notes.

The credit ratings assigned to the new notes are limited in scope and do not address all material risks relating to an investment in the new notes, but rather reflect only the view of each rating agency at the time the rating is issued. There can be no assurance that such credit ratings will remain in effect for any given period of time or that a rating will not be lowered, suspended or withdrawn entirely by the applicable rating agency, if, in such rating agency’s judgment, circumstances so warrant.

Credit ratings are not a recommendation to buy, sell or hold any security. Each agency’s rating should be evaluated independently of any other agency’s rating. Actual or anticipated changes or downgrades in our credit ratings, including any announcement that our ratings are under further review for a downgrade, could affect the market value of the new notes and increase our borrowing costs.

Risks Related to the Exchange ~~Offer~~


	*~~If you do not exchange your old notes for new notes in the exchange offer, your old notes will continue to be subject to restrictions on transfer.~~*

Offers

There is a limited trading market for the old notes; that market may be limited further as a result of the Exchange Offers.

To the extent that the old notes are tendered and accepted for exchange in the Exchange Offers, any existing trading market for the old notes that are not so tendered and accepted will become more limited. A debt security with a smaller outstanding principal amount available for trading (a smaller “float”) may command a lower price than would a comparable debt security with a greater float. Consequently, the liquidity, market value and price volatility of old notes that remain outstanding following consummation of the Exchange Offers may be adversely affected. Holders of the old notes may attempt to obtain quotations for the old notes from their brokers. However, there can be no assurance that any trading market will exist for the old notes following consummation of the Exchange Offers. The extent of the public market for the old notes following consummation of the Exchange Offers will depend upon the number of holders remaining at such time, the interest in maintaining a market in the old notes on the part of securities firms and other factors.

If you do not exchange your old notes for new notes in the Exchange Offers, your old notes will continue to be subject to restrictions on transfer.

If you do not exchange ~~offer,~~your old notes for new notes in the Exchange Offers, you will continue to be subject to the restrictions on transfer described in the legend on your old notes, ~~the offering memorandum related to the private offering of the Category A old notes~~ and in the offer to exchange and consent solicitation statement related to the private ~~offering of the Category B old notes.~~exchange offers. The restrictions on transfer of your old notes arise because we issued the old notes in private offerings in reliance on exemptions from the registration and prospectus delivery requirements of the Securities ~~Act.~~Act, or in transactions not subject to them. In general, you may only offer or sell the old notes if they are registered under the Securities Act or are offered and sold under an exemption from these requirements. Except as required by the registration rights

~~agreements,~~ agreement, we do not intend to register sales of the old notes under the Securities Act. For further information regarding the consequences of failing to tender your old notes in the ~~exchange offer,~~Exchange Offers, see the discussions below under the ~~captions~~caption “The Exchange ~~Offer —~~ Offers—Consequences of Failure to Exchange.”

~~To the extent any old notes are tendered and accepted~~

In some instances, you may be obligated to deliver a prospectus in the exchange offer, the trading market, if any, for the old notes that remain outstanding after the exchange offer would be adversely affected due to a reduction in market liquidity and there could be a significant diminution in the value of the old notes as compared to the valueconnection with resales of the new notes.


	*~~An active trading market may not develop for the new notes, which could adversely affect the market price and liquidity of the new notes.~~*

You may find it difficult to sell your new notes because an active trading market for the new notes may not develop. There is no existing trading market for the new notes. We do not intend to apply for listing of the new notes on any exchange or for inclusion of the new notes in any automated quotation system, and we do not know the extent to which investor interest will lead to the development of a trading market or how liquid that market might be in the new notes. As a result, the market price of the new notes, as well as your ability to sell the new notes, could be adversely affected. In addition, if a large amount of old notes are not tendered or are tendered improperly, the limited amount of new notes that would be issued and outstanding after we complete the exchange offer could lower the market price of such new notes.


	*~~In some instances, you may be obligated to deliver a prospectus in connection with resales of the new notes.~~*

Based on certain no-action letters issued by the staff of the SEC to third parties unrelated to us, we believe that you may offer for resale, resell or otherwise transfer the new notes without compliance with the registration and prospectus delivery requirements of the Securities Act, except in the instances described in this prospectus under “The Exchange ~~Offer —~~ Offers—Resale of the New Notes.” For example, if you exchange your old notes in the ~~exchange offer~~Exchange Offers for the purpose of participating in a distribution of the new notes, you may be deemed to have received restricted securities and, if so, will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction.


	*~~You must comply with the exchange offer procedures in order to receive freely tradable new notes.~~*

You must comply with the procedures of the Exchange Offers in order to receive freely tradable new notes.

We will not accept your old notes for exchange if you do not follow the ~~exchange offer procedures.~~procedures of the Exchange Offers. Delivery of new notes in exchange for old notes tendered and accepted for exchange pursuant to the ~~exchange offer~~Exchange Offers will be made only after timely receipt by the exchange agent of the following:

Assuming you hold old notes through DTC in the form of book-entry interests, and wish to participate in one or more Exchange Offers, then by the expiration of the Exchange Offers, you (or your broker, bank or similar nominee) must cause the book-entry transfer of your old notes to the exchange agent’s account at DTC, and the exchange agent must receive:

a confirmation of book-entry transfer and

either:


	•	~~certificates for old notes or a confirmation of a book-entry transfer of old notes into the exchange agent’s account at DTC, as depository;~~

	•	a completed and signed letter of transmittal (or facsimile thereof), with any required signature guarantees, or, in the case of tender through DTC’s ATOP program, an agent’s message in lieu of the letter of transmittal; and

	•	~~any other documents required by the letter of transmittal.~~

~~Therefore, holders~~an original or facsimile of the accompanying letter of transmittal, completed, signed and dated in accordance with the instructions contained in this prospectus and the letter of transmittal; or

an agent’s message transmitted pursuant to ATOP, by which each tendering holder will agree to be bound by, and to make the representations, warranties and agreements in, the letter of transmittal;

and any other required documentation.

Holders of old notes who would like to tender old notes in exchange for new notes should be sure to allow enough time to comply with the ~~exchange offer procedures.~~procedures of the Exchange Offers. Neither ~~we nor~~ the exchange agent nor we are required to notify you of defects or irregularities in tenders of old notes for exchange. Old notes that are not tendered or that are tendered but we do not accept for exchange will, following completion of the ~~exchange offer,~~Exchange Offers, continue to be subject to the existing transfer restrictions under the Securities Act and, upon completion of the ~~exchange offer,~~Exchange Offers, certain registration and other rights under the registration rights ~~agreements~~agreement will terminate. See “The Exchange ~~Offer —~~ Offers—Procedures for Tendering Old Notes” and “The Exchange ~~Offer —~~ Offers—Consequences of Failure to Exchange.”

FORWARD-LOOKING STATEMENTS

This prospectus and the documents incorporated by reference ~~in this prospectus~~herein contain or incorporate by reference forward-looking statements. Such statements ~~that~~ relate to future events or the future financial performance of ~~Reynolds American Inc.~~RAI and its subsidiaries. Forward-looking ~~information includes~~statements include, without limitation, statements relating to future actions, prospective products, future performance or results of current or anticipated products, sales and marketing efforts, costs and expenses, interest rates, outcome of litigation and other contingencies, potential increased regulation, financial condition, results of operations, liquidity, business strategies, cost savings, objectives of management and other matters. You can find many of these statements by looking for words like “believes,” “expects,” “anticipates,” “estimates,” “may,” “should,” “could,” “plan,” “intend” or similar expressions in this prospectus or in documents incorporated by reference in this prospectus.

These forward-looking statements involve risks and uncertainties. Actual results may differ materially from those contemplated by these forward-looking statements. You should understand that various factors, in addition to those discussed elsewhere in this prospectus and in the documents referred to and incorporated by reference in this prospectus, could affect the future results of RAI and its subsidiaries and could cause results to differ materially from those expressed in these forward-looking ~~statements, including:~~statements. These risks and uncertainties include:

the risk factors described under “Risk Factors” beginning on page 19 of this prospectus and the information appearing under the caption “Risk Factors” included in RAI’s most recent annual report on Form 10-K filed with the SEC and in any updates to the risk factors in any quarterly or other report RAI files subsequently to such annual report;

the substantial and increasing taxation and regulation of tobacco products, including the regulation of tobacco products by the FDA;

the effect of adverse governmental developments on RAI’s subsidiaries’ sales of products that contain menthol, including the possibility that the FDA will issue regulations prohibiting menthol, or restricting the use of menthol, in cigarettes;

the possibility that the FDA will require the reduction of nicotine levels or the reduction or elimination of other constituents in cigarettes;

the adverse effects (including decreased sales and recall costs) arising from an order of the FDA’s Center for Tobacco Products, referred to as the CTP, (1) finding that a provisional product sold by an RAI operating subsidiary is not substantially equivalent to a predicate product, and (2) as a result, requiring that the provisional product be removed from the market;

the possibility that the CTP fails to grant a marketing order allowing an RAI operating subsidiary to launch a new tobacco product or modify an existing product;

the adverse effects (including decreased sales, and the incurrence of fines and costs) arising from an FDA enforcement action against SFNTC for the company’s use of the terms “natural” and “additive free” in the product labeling and/or advertising for NATURAL AMERICAN SPIRIT cigarettes without a modified risk product authorization order from the agency;

the possibility that the FDA will issue regulations extending the FDA’s authority over tobacco products to e-cigarettes, subjecting e-cigarettes to restrictions on, among other things, the manufacturing, marketing and sale of such products;


	•	~~the risk factors described under “Risk Factors” beginning on page 18;~~

	•	decreased sales resulting from the ~~substantial~~future issuance of “corrective communications,” required by the order inUnited States v. Philip Morris USA, Inc. (brought by the U.S. Department of Justice against RJR Tobacco, B&W, Lorillard and ~~increasing regulation~~other tobacco companies in 1999) on five subjects, including smoking and ~~taxation of tobacco products;~~health, and addiction;

	•

various legal actions, proceedings and claims relating to the sale, distribution, manufacture, development, advertising, marketing and claimed health effects of tobacco products (including

smokeless tobacco products and electronic cigarettes) that are pending or may be instituted against RAI or its subsidiaries;

the possibility that reports from the U.S. Surgeon General regarding the negative health consequences associated with cigarette smoking and second-hand smoke may result in additional litigation and/or regulation;

	•	~~the substantial payment obligations and limitations on the advertising and marketing of cigarettes under the MSA and other state settlement agreements;~~

	•	~~the continuing decline in volume in the domestic cigarette industry;~~

	•	~~concentration of a material amount of sales with a single customer or distributor;~~

	•	~~competition from other manufacturers, including any new entrants in the marketplace;~~

	•	~~increased promotional activities by competitors and the growth of deep-discount cigarette brands;~~

	•	~~the success or failure of new product innovations and acquisitions;~~

	•	~~the responsiveness of both the trade and consumers to new products, marketing strategies and promotional programs;~~

	•	~~the failure to realize the anticipated benefits arising from the Conwood acquisition;~~

	•	~~the ability to achieve efficiencies in manufacturing and distribution operations without negatively affecting sales;~~

	•	~~the cost of tobacco leaf and other raw materials and other commodities used in products, including future market pricing of tobacco leaf which could adversely impact inventory valuations;~~

	•	~~the effect of market conditions on foreign currency exchange rate risk, interest rate risk and the return on corporate cash;~~

	•	the effect of market conditions on the performance of pension assets or any adverse effects of any new legislation or regulations changing pension expense accounting or required pension funding levels;

	•	~~the ratings of the securities of RAI and RJR;~~

	•	~~any restrictive covenants imposed under debt agreements of RAI and RJR;~~

	•	the possibility of ~~fire, violent weather and~~being required to pay various adverse judgments in theEngle v. R.J. Reynolds Tobacco Co. progeny cases and/or other ~~disasters that may adversely affect the manufacturing facilities;~~litigation;

the substantial payment obligations with respect to cigarette sales, and the substantial limitations on the advertising and marketing of cigarettes (and of RJR Tobacco’s smoke-free tobacco products) under the state settlement agreements;

the possibility that the arbitration award reflecting the partial resolution of the NPM adjustment disputes will be vacated or otherwise modified;

the possibility that the arbitration award with respect to certain of the states found to be non-diligent in connection with the 2003 NPM adjustment will be vacated or otherwise modified;

the continuing decline in volume in the U.S. cigarette industry and RAI’s and its subsidiaries’ dependence on the U.S. cigarette industry and premium and super-premium brands, a dependence that will increase if the proposed sale to JTIH is completed;

concentration of a material amount of sales with a limited number of customers and potential loss of these customers;

competition from other manufacturers, including those resulting from industry consolidations or any new entrants in the marketplace;

increased promotional activities by competitors, including manufacturers of deep-discount cigarette brands;

the success or failure of new product innovations, including the digital vapor cigarette, VUSE;

the success or failure of acquisitions or dispositions, which RAI or its subsidiaries may engage in from time to time, including the Lorillard merger and the divestiture;

the responsiveness of both the trade and consumers to new products, marketing strategies and promotional programs;

the reliance on outside suppliers to manage certain non-core business processes;

the reliance on a limited number of suppliers for certain raw materials;

the cost of tobacco leaf, and other raw materials and commodities used in products;

the passage of new federal or state legislation or regulations;

the effect of market conditions on interest rate risk, foreign currency exchange rate risk and the return on corporate cash, or adverse changes in liquidity in the financial markets;

the impairment of goodwill and other intangible assets, including trademarks;

the effect of market conditions on the performance of pension assets or any adverse effects of any new legislation or regulations changing pension and postretirement benefits accounting or required pension funding levels;

the substantial amount of RAI debt, including the additional debt incurred and assumed in connection with the Lorillard merger;

the possibility of decreases in the credit ratings assigned to RAI, and to the senior unsecured long-term debt of RAI;


	•	adverse effects from the transition of the packaging operations formerly conducted by RJR Packaging to the buyers of RJR Packaging’s businesses, and the recent shortage of packaging materials causing incomplete deliveries to RJR Tobacco’s customers of certain brand styles;

	•	~~any adverse effects arising out of the implementation of an SAP enterprise business system in the third quarter of 2006; and~~

	•	the potential existence of significant deficiencies or material weaknesses in internal control over financial reporting that may be identified during the performance of testing required under Section 404 of the Sarbanes-Oxley Act of 2002.

the possibility of changes in RAI’s historical dividend policy;

the restrictive covenants imposed under RAI’s debt agreements;

the possibility of natural or man-made disasters or other disruptions, including disruptions in information technology systems or security breaches, that may adversely affect manufacturing or other operations and other facilities or data;

the loss of key personnel or difficulties recruiting and retaining qualified personnel;

the inability to adequately protect intellectual property rights;

the significant ownership interest in RAI of BAT and its subsidiaries, collectively RAI’s largest beneficial owner, and their rights under the governance agreement, dated as of July 30, 2004, as amended, among RAI, BAT and B&W, referred to as the governance agreement;

the potential consequences due to the expiration of the standstill provisions of the governance agreement, and the expiration of RAI’s shareholder rights plan, on July 30, 2014;

a termination of the governance agreement or certain of its provisions in accordance with its terms, including the limitations on B&W’s representation on the RAI board of directors and its committees;

the potential for increased competition between RAI and BAT and their respective subsidiaries due to the expiration of the non-competition agreement between RAI and BAT on July 30, 2014;

additional risks, contingencies and uncertainties associated with the Lorillard merger and the divestiture that could result in an adverse effect on the results of operations, cash flows and financial position of RAI and its subsidiaries and/or the failure to realize any anticipated benefits of the Lorillard merger and the divestiture to RAI shareholders, including:

the effect of the Lorillard merger and the divestiture on the ability to maintain business relationships, and on operating results and businesses generally;

the reliance of RJR Tobacco on Imperial Sub to manufacture NEWPORT on RJR Tobacco’s behalf for a period of time after the Lorillard merger and the divestiture;

RAI’s obligations to indemnify Imperial Sub for specified matters and to retain certain liabilities related to the transferred assets;

the failure to realize projected synergies and other benefits from the Lorillard merger and the divestiture; and

the incurrence of significant post-transaction related costs in connection with the Lorillard merger and the divestiture; and

additional risks, contingencies and uncertainties associated with the proposed sale to JTIH that could result in the failure of the proposed sale to JTIH to be consummated or, if consummated, could have an adverse effect on the results of operations, cash flows and financial position of RAI and its subsidiaries are the following:

the occurrence of any event, change or other circumstances giving rise to the right of a party to terminate the Japan Tobacco purchase agreement;

the failure to obtain the necessary regulatory approvals for the proposed sale to JTIH, or if obtained, the possibility of being subjected to conditions as a result of regulatory approval that could reduce the expected benefits of the proposed sale to JTIH, result in a material delay in, or the abandonment of, the proposed sale to JTIH or otherwise have an adverse effect on RAI;

the failure to satisfy required closing conditions or complete the proposed sale to JTIH in a timely manner;

the effect of restrictions placed on RAI’s and its subsidiaries’ business activities, including restrictions associated with RAI’s agreement not to, and to cause its affiliates not to, engage in the business of producing, selling, distributing and developing natural, organic and additive-free combustible tobacco cigarettes and roll-your-own or make-your-own tobacco products outside of the United States for a period of five years after the closing, and the limitations put on RAI’s ability to pursue alternatives to the proposed sale to JTIH pursuant to the Japan Tobacco purchase agreement;

the possibility of delay or prevention of the proposed sale to JTIH if lawsuits challenging the proposed sale to JTIH are filed against RAI, the members of the RAI board of directors, Japan Tobacco and/or the members of the Japan Tobacco board of directors;

RAI’s obligation to indemnify Japan Tobacco for specified matters and to retain certain liabilities related to the acquired business;

the incurrence of significant pre-and post-sale transaction related costs in connection with the proposed sale to JTIH; and

the effect of the announcement of the proposed sale to JTIH on the ability of RAI and its subsidiaries to retain and hire key personnel, maintain business relationships, and on operating results and business generally; and

risks, contingencies and uncertainties associated with acquiring new notes in the Exchange Offers that could result in a loss to holders of new notes, including:

the structural subordination of the new notes and guarantees to claims of creditors of non-guarantor subsidiaries of RAI and the guarantors, as the case may be;

the effective subordination of the new notes and guarantees to any secured indebtedness;

the possibility of the termination of guarantees of the new notes without the consent of noteholders;

the possibility that the guarantees of the new notes would not be given effect by a court;

the lack of cross-default provisions in the RAI indenture;

differences in the change of control repurchase provisions of the new notes from provisions in RAI’s revolving credit facility, and certain series of existing notes, which may result in an acceleration of indebtedness or triggering of a repurchase obligation under such other indebtedness, but not under the new notes offered hereby;

the possibility that RAI might not have sufficient cash to repurchase the notes if the change of control repurchase provisions were triggered;

the lack of an existing trading market for the notes, and the fact that the new notes will not be listed on a securities exchange; and

the possibility that RAI credit ratings may not reflect all risks of an investment in new notes; and

risks, contingencies and uncertainties associated with participating, or declining to participate, in the Exchange Offers, including:

the limited trading market for the old notes, and any exacerbating effect of the Exchange Offers on such market for unexchanged old notes;

the continuing restrictions on transfer of unexchanged old notes;

possible prospectus delivery requirements in connection with sales of the new notes; and

the responsibility of old noteholders who wish to participate in the Exchange Offers to comply with the procedures for tendering old notes.

Due to these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this prospectus or, in the case of documents referred to or incorporated by reference, the dates of those documents.

Except as provided by federal securities laws, RAI is not required to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written or oral forward-looking statements attributable to RAI or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.

INDUSTRY DATA

When we make statements in this prospectus and in the documents incorporated by reference herein ~~about~~regarding the industry position of our operating subsidiaries inor market share (or the market share of their ~~respective industries or about their market share,~~brands), we are making statements of our belief. This belief is based ~~on data from IRI and from MSAi, with respect to our~~on: information regarding the market share of RAI’s operating ~~subsidiaries other than Conwood, and distributor reported data processed by MSAi with respect to Conwood. With respect to all of our operating subsidiaries, this belief is also based on~~subsidiaries’ products; estimates and assumptions that we have made based on ~~the IRI and MSAi data~~that data; and our knowledge of the markets for the products of our ~~products.~~operating subsidiaries. In this prospectus and documents incorporated by reference herein that were, or are, filed with the SEC commencing with RAI’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, the shares of RAI’s operating subsidiaries’ products are reported as a percentage of total share of U.S. cigarette (or moist snuff, as applicable) shipments to retail, referred to as STR data. This STR data is based on information submitted by wholesale locations and processed and managed by MSAi. For documents incorporated by reference herein that were filed with the SEC prior to RAI’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, the shares of RAI’s operating subsidiaries’ products were reported as a percentage of total share of U.S. retail cigarette (or moist snuff, as applicable) sales, referred to as retail scan data, based on data collected by IRI/Capstone, and processed and managed by MSAi. Management believes that STR data more accurately reflects marketplace performance across all channels of trade than retail scan data.

You should not rely, however, on the STR data reported by MSAi as being a precise measurement of actual market share as the shipments to retail do not reflect actual consumer sales and do not track all volume and trade channels. Similarly, market share data reported by IRI/Capstone should not be relied upon as being a precise measurement of actual market share because IRI/Capstone uses a sample methodology that does not track all volume and trade channels. Accordingly, the STR data or retail scan data for RAI’s operating subsidiaries’ brands may overstate or understate their actual market share. Moreover, you should be aware that in a market experiencing overall declining consumption, like the domestic cigarette market, a particular product can experience increasing market share relative to competing products, yet still be subject to declining consumption volumes. We have not independently verified ~~market and industry~~either the STR data ~~provided by third parties. With respect to~~or the retail scan data. Accordingly, we cannot assure you that any of our assumptions based on such data ~~from IRI,~~are accurate or that our assumptions correctly reflect the position of our operating subsidiaries in April 2006, IRI revised its market share data to better reflect industry dynamics. Had these revisions been applied to data for periods prior to April 2006, such application would not have resulted in any material changes to such data.

their industries.
36
THE EXCHANGE ~~OFFER~~OFFERS
Purpose and Effect of the Exchange Offer
s
On ~~May 31, 2006,~~July 15, 2015, RAI issued ~~and sold the Category A~~approximately $3.12 billion aggregate principal amount of old notes pursuant to ~~a group of initial purchasers in a~~the private ~~offering~~exchange offers that was exempt from the registration and prospectus delivery requirements of the Securities Act. Accordingly, these old notes may not be transferred in the United States unless registered under the Securities Act or unless an exemption from the registration requirements of the Securities Act is available. In connection with the issuance and sale of the ~~Category A~~ old notes, RAI and ~~certain~~the guarantors entered into a registration rights agreement with the ~~initial purchasers~~dealer managers for the private exchange offers pursuant to which RAI and the guarantors agreed, among other things, to use their reasonable best efforts to file with the SEC a registration statement relating to the old notes issued in the private exchange ~~offer~~offers and to complete ~~this exchange offer~~the Exchange Offers within 210 days after the date the ~~Category A~~ old notes were originally issued.
      On June 20, 2006, RAI issued the Category B old notes in a private exchange offer that was also exempt from the registration and prospectus delivery requirements of the Securities Act. Consequently, the Category B old notes also may not be transferred in the United States unless the transfer is registered under the Securities Act or is exempt from registration. In connection with the issuance of the Category B old notes in the private exchange offer, RAI and certain guarantors entered into a second registration rights agreement, substantially identical to the one relating to the Category A old notes, with the trustee for the Category B old notes, pursuant to which RAI and the guarantors agreed, among other things, to use their reasonable best efforts to file with the SEC a registration statement relating to the exchange offer and to complete this exchange offer within 210 days after the date the Category B old notes were originally issued.
      ~~This exchange offer is~~
The Exchange Offers are being conducted to satisfy the obligations of RAI and the guarantors under ~~both~~the registration rights ~~agreements.~~agreement. RAI and the guarantors are registering the ~~exchange offer~~Exchange Offers in reliance on the position of the staff of the SEC set forth in the followingno-action letters:Exxon Capital Holdings Corporation~~(available~~ (available May 13, 1998),Morgan Stanley & Co., Inc.~~(available~~ (available June 5, 1991), andShearman & ~~Sterling~~Stearling~~(available~~ (available July 2, 1993).
RAI will be required to pay additional interest on the old notes at the rate of ~~0.5%~~0.25% per year for the first 90-day period and an additional 0.25% per year with respect to each subsequent 90-day period if the ~~exchange offer has~~Exchange Offers have not been completed by ~~December 27, 2006, in the case~~February 10, 2016, up to a maximum increase of ~~the Category A old notes, and January 16, 2007, in the case of the Category B old notes.~~0.50% per year. This additional interest will be payable until the ~~exchange offer is~~Exchange Offers are completed.
Following the completion of the ~~exchange offer,~~Exchange Offers, holders of the old notes who were eligible to participate in the ~~exchange offer,~~Exchange Offers, but who do not tender their old notes, will have no further rights under the registration rights ~~agreements.~~agreement. In that case, ~~your~~the old notes will continue to be subject to restrictions on transfer under the Securities Act.

Terms of the Exchange ~~Offer~~
Offers
Upon the terms and subject to the conditions set forth in this prospectus and in the accompanying letter of transmittal, RAI is offering to exchange any and all outstanding old notes of the series listed below for a like principal amount of our new notes. Old notes may be tendered only in minimum
37
denominations of $2,000 and ~~additional~~ integral multiples of ~~$1,000.~~$1,000 in excess thereof. As of the date of this prospectus, the following principal amounts of old notes are outstanding:

Old Notes to be Exchanged Outstanding Principal Amount

Category A

7.250% Senior Secured Notes due 2013 $ 625,000,000
7.625% Senior Secured Notes due 2016 $ 775,000,000
7.750% Senior Secured Notes due 2018 $ 250,000,000
Category B

6.500% Senior Secured Notes due 2007 $ 236,449,000
7.875% Senior Secured Notes due 2009 $ 185,731,000
6.500% Senior Secured Notes due 2010 $ 299,265,000
7.250% Senior Secured Notes due 2012 $ 367,927,000
7.300% Senior Secured Notes due 2015 $ 199,445,000
Title of Series of Old Notes to be Exchanged
Aggregate Principal Amount Outstanding
3.500% Senior Notes due 2016
$414,793,000
2.300% Senior Notes due 2017
$447,092,000
8.125% Senior Notes due 2019
$668,689,000
6.875% Senior Notes due 2020
$641,462,000
3.750% Senior Notes due 2023
$473,689,000
8.125% Senior Notes due 2040
$236,748,000
7.000% Senior Notes due 2041
$240,197,000
RAI will accept for exchange any and all old notes properly tendered and not validly withdrawn before the expiration of the ~~exchange offer.~~Exchange Offers. For each old note exchanged pursuant to the ~~exchange offer,~~Exchange Offers, the holder of the old note will receive a new note having a principal amount equal to that of the exchanged old note. The new notes will be issued and delivered promptly following the expiration of the Exchange Offers.
The Exchange Offers are being made in reliance upon interpretations by the staff of the SEC issued to unrelated third parties that the new notes issued in exchange ~~offer.~~
for the old notes pursuant to the Exchange Offers
may be offered for sale, resold and otherwise transferred by holders thereof (other than a broker-dealer who purchased such old notes directly from RAI for resale pursuant to any available exemption under the Securities Act or a holder that is an “affiliate” of RAI or the guarantors within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery requirements of the Securities Act, provided that such new notes are acquired in the ordinary course of such holders’ businesses and such holders are not engaged in, do not intend to engage in, and have no arrangement or understanding with any person or entity to participate in, the distribution of such new notes. To participate in the ~~exchange offer,~~Exchange Offers, you will be required to acknowledge and agree in the letter of transmittal that the SEC has not considered the Exchange Offers in the context of a no-action letter, and there can be no assurance that the staff of the SEC would make a similar determination with respect to the Exchange Offers as in other circumstances.
To participate in the Exchange Offers, you will be required to make the following representations to us in the letter of transmittal:
the new notes to be acquired pursuant to the Exchange Offers are being acquired in the ordinary course of your business or the business of any beneficial owner of the old notes tendered by such letter of transmittal;
neither you nor any beneficial owner of the old notes tendered by such letter of transmittal is engaged in, intends to engage in, or has any arrangement or understanding with any person or entity to participate in, a “distribution” of the new notes within the meaning of the Securities Act;
• ~~any new notes will be acquired by you in the ordinary course of your business;~~
• at the time of the commencement of the exchange offer you have no arrangement or understanding with any person, or any intention, to participate in the distribution (within the meaning of the Securities Act) of the new notes;
• ~~you are not an “affiliate” of RAI or a guarantor, as defined in Rule 405 of the Securities Act;~~
• if you are a broker-dealer, you did not acquire old notes directly from RAI for resale pursuant to Rule 144A under the Securities Act or any other available exemption from registration under the Securities Act;
• if you are a broker-dealer that will receive new notes for your own account in exchange for old notes that were acquired as a result of market-making or other trading activities, then you will deliver a prospectus in connection with any resale of such new notes; and
• ~~you are not acting on behalf of any persons or entities who could not truthfully make the foregoing representations.~~
neither you nor any beneficial owner of the old notes tendered by such letter of transmittal is an “affiliate” of any of RAI or the guarantors within the meaning of Rule 405 promulgated under the Securities Act;
if you or any beneficial owner of the old notes tendered by such letter of transmittal is a broker-dealer, neither you nor any such beneficial owner purchased the old notes directly from RAI for resale pursuant to an exemption from registration under the Securities Act;
if you or any beneficial owner of the old notes tendered by such letter of transmittal is a broker-dealer, you further represent that you or such other beneficial owner (1) acquired the old notes as a result of market-making or other trading activities (and not directly from RAI for resale), (2) may be considered a statutory “underwriter” under the Securities Act and (3) will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of new notes received in the Exchange Offers; provided, however, that, by acknowledging that you or such beneficial owner, as such a broker-dealer, will deliver, and by delivering, a prospectus meeting the requirements of the Securities Act in connection with any resale of new notes, you or such beneficial owner will not be deemed to admit that you are an “underwriter” within the meaning of the Securities Act; and
you are not acting on behalf of any person or entity that could not truthfully make the foregoing representations, warranties and agreements.
If you cannot make all of the above representations, warranties and agreements, you cannot participate in the Exchange Offers. In such case, you cannot rely on the SEC staff position enunciated in the no-action letters issued to unrelated third parties and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any secondary resale transaction. You acknowledge that such a secondary resale transaction should be covered by an effective registration statement containing the selling security holder information required by Item 507 or Item 508, as applicable, of the SEC’s Regulation S-K.
As described below under “—Resale of the New Notes,” the SEC has taken the position that broker-dealers who exchange old notes for their own account acquired as a result of market-making or other trading activities may fulfill their prospectus delivery requirements with respect to new notes with this prospectus. By signing the letter of transmittal, such broker-dealers will acknowledge that they will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of the new notes.
The form and terms of the new notes will be substantially identical to the form and terms of the old notes, except that the new notes will be registered under the Securities Act and hence will not bear legends restricting their transfer; holders of the new notes will not be entitled to most rights under the registration rights ~~agreements;~~agreement; and holders of the new notes will not be entitled to additional interest in certain situations. The new notes will evidence the same debt as the old notes. The new notes will be issued under and entitled to the benefits of the same indenture under which the old notes were issued.
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This prospectus and the letter of transmittal are being sent to all registered holders of the old notes. There will be no fixed record date for determining registered holders of the old notes entitled to participate in the ~~exchange offer.~~
Exchange Offers.
RAI intends to conduct the ~~exchange offer~~Exchange Offers in accordance with the applicable requirements of the Securities Act, the Securities ~~Exchange Act of 1934, referred to as the~~ Exchange Act and the rules and regulations of the SEC. Old notes that are not exchanged in the ~~exchange offer~~Exchange Offers will remain outstanding and continue to accrue interest, and will be entitled to the rights and benefits their holders have under the ~~2006~~RAI indenture. Other than as set forth below under “—Shelf Registration,” we will have no further obligation to you to provide for the registration of the new notes and the exchange offer under the registration rights ~~agreements.~~
~~Condition~~
agreement.
Conditions
Notwithstanding any other provision of the ~~exchange offer~~Exchange Offers and subject to our obligations under the registration rights ~~agreements, we will~~agreement, the Exchange Offers shall not be ~~required~~subject to ~~accept for exchange,~~any conditions, other than that:
there shall not have been adopted or ~~to issue new notes in exchange for,~~enacted any ~~old notes and may terminate~~law, statute, rule or ~~amend the exchange offer, if at~~regulation, or any ~~time before the acceptance of any old notes for exchange, the exchange offer violates any applicable law or applicable~~ interpretation of the staff of the ~~SEC.~~SEC, which in our judgment, would materially impair our ability to proceed with the Exchange Offers;
no action or proceeding shall have been instituted or threatened in any court or by or before any governmental agency with respect to the Exchange Offers, which, in RAI’s judgment, might impair RAI’s ability to proceed with the Exchange Offers; or
the SEC has issued an order or orders declaring that the trustee under the RAI indenture has been qualified under the Trust Indenture Act of 1939.
We expressly reserve the right to amend or terminate the ~~exchange offer,~~Exchange Offers, and to reject for exchange any old notes not previously accepted for exchange, upon ~~the~~any occurrence that causes any of the foregoing ~~condition~~conditions of the ~~exchange offer.~~
      ~~This condition is~~Exchange Offers not to be satisfied prior to the expiration of the Exchange Offers.
These conditions are for our sole benefit, and we may assert ita condition regardless of the circumstances giving rise to it, subject to applicable law. We also may waive in whole or in part at any time before the expiration of the ~~exchange offer this~~Exchange Offers any condition in our sole discretion. Our failure at any time to exercise the foregoing rights will not be deemed a waiver of these rights, and these rights will be deemed to be ongoing rights, which may be asserted at any time. Any waiver by us will be made by written notice or public announcement to the registered holders of the notes. If such waiver constitutes a material change in ~~this exchange offer,~~the Exchange Offers, we will extend the ~~exchange offer~~Exchange Offers period if necessary to ensure that at least five business days remain in the ~~exchange offer~~Exchange Offers following notice of the material change.
The ~~condition~~conditions to the ~~exchange offer~~Exchange Offers must be satisfied or waived by us prior to the expiration of the ~~exchange offer.~~Exchange Offers. In addition, we will not accept for exchange any old notes tendered, and no new notes will be issued in exchange for any old notes, if at that time any stop order shall be threatened or in effect with respect to the ~~exchange offer~~Exchange Offers to which this prospectus relates or the qualification of the ~~2006~~RAI indenture under the Trust Indenture ~~Act of 1939, as amended, referred to as the Trust Indenture~~ Act.
The ~~exchange offer is~~Exchange Offers are not conditioned upon any minimum aggregate principal amount of old notes being tendered for exchange.

Expiration Date; Extensions; Amendment; Termination
The ~~exchange offer~~Exchange Offers will expire at ~~5:00~~          p.m., New York City time on                     , ~~2006,~~2015, or such later date and time to which we, in our sole discretion, extend ~~the exchange offer.~~any one or more Exchange Offer. In the case of any extension, we will notify the exchange agent orally (confirmed in writing) or in writing of any extension. We will also notify the registered holders of old notes by public announcement no later than          ~~9:00~~ a.m., New York City time, on the business day after the previously scheduled expiration of the ~~exchange offer.~~
Exchange Offers.
To the extent we are permitted to do so by applicable law, regulation or interpretation of the staff of the SEC, subject to the registration rights agreement, we expressly reserve the right, in our sole discretion, to:
• ~~delay accepting any old note if we extend the exchange offer;~~
• ~~amend the exchange offer;~~
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delay accepting any old note if we extend one or more Exchange Offers;
amend any Exchange Offer;
waive the conditions to any Exchange Offers; and
if the conditions described above under “—Conditions” have not been satisfied prior to the expiration of the Exchange Offers, to terminate any one or more Exchange Offers.
• ~~waive the condition to the exchange offer; and~~
• ~~if the condition described above under “— Condition” has occurred, to terminate the exchange offer.~~
Any such delay in acceptance, amendment or termination will be followed as promptly as practicable by notice to the registered holders of old notes by public announcement thereof. If we consider an amendment to ~~the exchange offer, including a waiver of the condition,~~an Exchange Offer to be material, we will promptly inform the registered holders of old notes of such amendment in a reasonable manner. In addition, in the event of a material change to ~~the exchange offer,~~an Exchange Offer, including ~~a material~~ waiver of the condition, ~~to the exchange offer,~~ within five business days of the scheduled expiration date, we will extend ~~the exchange offer~~such Exchange Offer period to ensure that there are at least five business days between the date we provide notice of such material change and the expiration of ~~the exchange offer.~~
such Exchange Offer.
Without limiting the manner by which we may choose to make public announcements of any extension, delay in acceptance, ~~material~~ amendment ~~including a material waiver~~ or termination of ~~the exchange offer,~~any one or more Exchange Offers, we will have no obligation to publish, advertise or otherwise communicate any public announcement, other than by making a timely release to a financial news service.
We acknowledge and undertake to comply with the provisions of Rule 14e-l(c) under the Securities Exchange Act, which requires us to return the old notes surrendered for exchange promptly after the termination or withdrawal of ~~the exchange offer.~~
an Exchange Offer.
Interest on the New Notes
Interest on the new notes issued in exchange for ~~the Category A~~ old notes will accrue from the last interest payment date on which interest was paid on such ~~Category A~~ old notes or, if no interest has been paid on such Category A old notes, from May 31, 2006. Interest on the new notes issued in exchange for Category B old notes will accrue from the last interest payment date on which interest was paid on such Category B old notes or, if no interest has been paid on such Category B old notes, from the last interest payment date on which interest was paid on the ~~RJR~~Lorillard Tobacco notes for which the ~~Category B~~ old notes were issued in exchange. Notwithstanding the foregoing, if new notes are issued in exchange for old notes between a record date for the payment of interest on ~~the~~such series of old notes and the interest payment date for such series of old notes following such record date, interest on the corresponding series of new notes will begin to accrue from such interest payment date. If your old notes are accepted for exchange, you will be deemed to have waived your right to receive any interest on the old notes (other than, in the event that new notes are issued in exchange for old notes between a record date for the payment of interest on ~~the~~such series of old notes and the interest payment date for such series of old notes following such record date, your right as a holder of old notes of such series on such record date to receive an interest payment on ~~the~~such old notes related to such record date). Consequently, holders of new notes will receive the same interest payments that they would have received had they not exchanged their old notes in the ~~exchange offer.~~
applicable Exchange Offer.
Resale of the New Notes
Based on interpretations by the staff of the SEC set forth in no-action letters issued to third parties unrelated to us and referred to above under “—Purpose and Effect of the Exchange ~~Offer,~~Offers,” we believe that the new notes
issued in the ~~exchange offer~~Exchange Offers may be offered for resale, resold and otherwise transferred by you, without compliance with the registration and prospectus delivery requirements of the Securities Act, provided that you can make each of the representations set forth above under “—Terms of the Exchange ~~Offer.~~Offers.” If you cannot make each of the representations set forth under “—Terms of the Exchange ~~Offer,~~Offers,” you may not rely on the interpretations by the staff of the SEC. Under those circumstances, you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a sale, transfer or other disposition of any new notes unless you are able to utilize an applicable exemption from all of those requirements. See “Plan of Distribution.”
Holders of old notes wishing to accept the ~~exchange offer~~Exchange Offers must ~~complete and sign~~submit the letter of transmittal ~~that will be mailed~~or agree to ~~each registered holder~~the terms of the ~~old notes.~~letter of transmittal pursuant to an agent’s message. The letter of transmittal contains
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the required representations described above and an agreement to comply with the agreements and covenants set forth in the registration rights ~~agreements.~~
agreement.
The SEC has not considered ~~this exchange offer~~the Exchange Offers in the context of a no-action letter, and there can be no assurance that the staff of the SEC would make a similar determination with respect to ~~this exchange offer~~these Exchange Offers as it made in the no-action letters to the unrelated persons.
Broker-dealers receiving new notes in exchange for old notes acquired for their own account through ~~market-making~~marketmaking or other trading activities may not rely on these SEC interpretations. Such broker-dealers may be deemed to be “underwriters” within the meaning of the Securities Act and must therefore acknowledge, by signing the letter of transmittal, that they will deliver a prospectus meeting the requirements of the Securities Act in connection with the resale of the new notes. The letter of transmittal states that by acknowledging that it will deliver, and by delivering, a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.
The SEC has taken the position that participating broker-dealers who exchange old notes for their own account acquired as a result of market-making or other trading activities may fulfill their prospectus delivery requirements with respect to the new notes with this prospectus. We have agreed to allow participating broker-dealers to use this prospectus in connection with the resale of the new notes, subject to RAI’s and the guarantors’ right to suspend use of the prospectus under the conditions described below under “—Shelf Registration.” RAI and the guarantors have also agreed to amend or supplement this prospectus for a period ending upon the earlier of (1) 180 days after the completion of the ~~exchange offer~~Exchange Offers and (2) the first day after the completion of the ~~exchange offer~~Exchange Offers when participating broker-dealers no longer have a prospectus delivery obligation, if requested by one or more participating broker-dealers, ~~(or in the case of the Category A old notes, by a participating broker-dealer or an initial purchaser),~~ in order to expedite or facilitate the disposition of any new note by participating broker-dealers consistent with the positions of the staff of the SEC described above.
Broker-dealers who hold old notes as unsold allotments from the ~~original sale~~issuance of the old notes cannot rely on the interpretations of the staff of the SEC described above, and cannot participate in the ~~exchange offer.~~Exchange Offers. See “Plan of Distribution.”
If you will not receive freely ~~tradeable~~tradable new notes in the ~~exchange offer~~Exchange Offers or are not eligible to participate in the ~~exchange offer,~~Exchange Offers, you can elect, by ~~indicating on the letter of transmittal~~notifying RAI and providing additional necessary information, to have your old notes registered on the shelf registration statement described below under “—Shelf Registration.”

Procedures for Tendering Old Notes
Tenders by Beneficial Owners
Only a registered holder of ~~record of~~the old notes may tender old notes of any series in the ~~exchange offer. To tender~~applicable Exchange Offer.If you are an eligible holder of old notes whose old notes are registered in the ~~exchange offer,~~name of a ~~holder must:~~
• complete, sign and date the letter of transmittal, or a facsimile of the letter of transmittal, have the signature on the letter of transmittal guaranteed if the letter of transmittal so requires and deliver the letter of transmittal or facsimile so that the exchange agent receives it prior to the expiration of the exchange offer; or
• ~~comply with DTC’s ATOP procedures described below.~~
      ~~In addition,~~broker, dealer, commercial bank, trust company or other nominee, and you wish to tender those old notes, ~~effectively, before~~you should contact the registered holder promptly and instruct the registered holder to tender your old notes on your behalf by the expiration of the Exchange Offer.
Book-Entry Transfers; Tender of Old Notes Using DTC’s Automated Tender Offer Program
RAI understands that the old notes are held solely in book-entry form through DTC. RAI further understands that the exchange ~~offer, either:~~
• ~~the exchange agent must receive old notes along with the letter of transmittal; or~~
• the exchange agent must receive a properly transmitted agent’s message or a timely confirmation of book-entry transfer of old notes into the exchange agent’s account at DTC according to the procedure for book-entry transfer described below.
agent will make a request promptly after the date of this prospectus to establish accounts with respect to the old notes at DTC for the purpose of facilitating the Exchange Offers. Subject to the establishment of the accounts, any financial institution that is a participant in DTC’s system may tender old notes in any Exchange Offer through book-entry delivery of such old notes by causing DTC to transfer the old notes into the exchange agent’s account in accordance with DTC’s procedures for such transfer.
If you desire to tender old notes ~~pursuant to~~held in book-entry form with DTC, the exchange ~~offer and you cannot comply with the procedures described above on or prior to~~agent must receive, by the expiration of the ~~exchange offer, you may nevertheless~~
applicable Exchange Offer:
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~~tender such notes if you comply with the procedures described under “— Guaranteed Delivery Procedures” below.~~
      ~~The tender~~a confirmation of book-entry transfer of old notes into the exchange agent’s account at DTC, and either:
a properly completed and validly executed letter of transmittal, or manually signed facsimile thereof, together with any signature guarantees and other documents required by the instructions in the letter of transmittal; or
an agent’s message transmitted through ATOP, and
any other required documentation.
DTC participants may electronically transmit their acceptance of an Exchange Offer by complying with DTC’s ATOP procedures. If a DTC participant participates in an Exchange Offer via ATOP, and also causes the transfer of book-entry old notes to the exchange agent’s account as described above, DTC is expected to send a book-entry confirmation, including an agent’s message, to the exchange agent. If you use ATOP procedures to tender old notes, you will not be required to deliver a letter of transmittal to the exchange agent, but you will be bound by its terms just as if you had signed it and be deemed to have made all the representations and warranties therein.
The term “agent’s message” means a message, transmitted by DTC and received by the exchange agent and forming part of the confirmation of a book-entry transfer, which states that DTC has received an express acknowledgment from a participant in DTC tendering old notes that such participant has received the letter of transmittal and agrees to be bound by the terms of the letter of transmittal, and RAI and the guarantors may enforce such agreement against the participant. Delivery of an agent’s message will also constitute an acknowledgment from the tendering DTC participant that the representations contained in the letter of transmittal are true and correct.
See “—Letter of Transmittal; Representations, Warranties and Agreements of Tendering Holders of Old Notes.”
Other Tenders
Although, as described above, RAI understands that all old notes are held solely in book-entry form through DTC, if old notes are subsequently issued in certificated form registered in the name of a holder, ~~that is not withdrawn before~~such holder wishing to participate in an Exchange Offer should send its certificated old notes with a properly completed and validly executed letter of transmittal, along with any other required documentation, by the expiration of the Exchange Offer, to the exchange ~~offer~~agent. In this event, such holder should contact the exchange agent for further information, including if the letter of transmittal with respect to such old notes is not signed by the registered holder or does not correspond to the name written on the face of the old notes, using the contact information appearing in the letter of transmittal.
Proper Execution of a Letter of Transmittal
If a letter of transmittal is completed, signatures on a letter of transmittal or a notice of withdrawal, as the case may be, must be guaranteed by a member firm of a registered national securities exchange or of the
Financial Industry Regulatory Authority, Inc., a commercial bank or trust company having an office or correspondent in the United States or another “eligible guarantor institution” within the meaning ofRule 17Ad-15 under the Securities Exchange Act, unless the old notes surrendered for exchange are tendered:
by a registered holder who has not completed the box labeled “Special Issuance and Payment Instructions” or “Special Delivery Instructions” in the letter of transmittal; or
for the account of an eligible guarantor institution.
If a DTC participant signs the applicable letter of transmittal, the signature must correspond with the name as it appears on the security position listing as the holder of the old notes. If a person other than a DTC participant signs the letter of transmittal, the letter of transmittal must be accompanied by a properly completed bond power. The DTC participant must sign the bond power as it appears on the security position listing and an eligible institution must guarantee the signature on the bond power. If the letter of transmittal or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, these persons should so indicate when signing. Unless we waive this requirement, they should also submit evidence satisfactory to us of their authority to execute and deliver the letter of transmittal.
Effect of Tender
The valid tender by a holder of the old notes by the expiration of the applicable Exchange Offer, that is not validly withdrawn, and the subsequent acceptance of ~~the~~such tender by usRAI will constitute ana binding agreement between ~~that~~the holder of such old notes and usRAI in accordance with the terms and subject to the conditions set forth in this prospectus and the letter of transmittal.
General
We will determine in our sole discretion all questions as to the validity, form, eligibility, including time of receipt, acceptance and withdrawal or revocation of tendered old notes. Our determination will be final and binding. We reserve the absolute right to reject any and all old notes not validly tendered or any old notes the acceptance of which would, in the opinion of our counsel, be unlawful. We also reserve the right to waive any defects or irregularities in, or conditions of, any tenders as to particular old notes. Our interpretation of the terms and conditions of the Exchange Offers, including the instructions in the letter of ~~transmittal.~~

applicable Exchange Offer. For a withdrawal to be effective:
the exchange agent must receive a written notice of withdrawal, or a facsimile thereof, at the address set forth in the letter of transmittal prior to the expiration of the applicable Exchange Offer; or
holders must comply with the appropriate procedures of DTC’s ATOP system prior to such expiration.
• ~~the exchange agent must receive a written notice of withdrawal at the address set forth below under the caption “— Exchange Agent;” or~~
• ~~holders must comply with the appropriate procedures of DTC’s ATOP system.~~
Any notice of withdrawal must:
• ~~specify the name of the person who tendered the old notes to be withdrawn;~~
• ~~identify the old notes to be withdrawn, including the principal amount of the old notes to be withdrawn;~~
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specify the name of the person who tendered the old notes to be withdrawn;
identify the old notes to be withdrawn, including the principal amount of the old notes to be withdrawn; and
be signed by the person who tendered the old notes in the same manner as the original signature on the letter of transmittal (if any), including any required signature guarantees.
• ~~be signed by the person who tendered the old notes in the same manner as the original signature on the letter of transmittal, including any required signature guarantees; and~~
• ~~specify the name in which the old notes are to be re-registered, if different from that of the withdrawing holder.~~
If you are a holder of old notes registered in the name of a broker, dealer, commercial bank, trust company or other nominee, and you wish to withdraw previously tendered old notes, you should contact the nominee promptly and instruct the nominee to withdraw your old notes on your behalf prior to the expiration of the applicable Exchange Offer. If old notes have been tendered pursuant to the procedure for book-entry transfer described ~~above,~~under “—Procedures for Tendering Old Notes,” any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn old notes and otherwise comply with the procedures of ~~the facility.~~
DTC.
We will determine all questions as to the validity, form and eligibility, including time of receipt, of notices of withdrawal, and our determination shall be final and binding on all parties. We will deem any old notes so withdrawn not to have been validly tendered for exchange ~~for~~or purposes of the ~~exchange offer. We will return any~~applicable Exchange Offer. Validly withdrawn old notes ~~that have been tendered for exchange but that are not exchanged for any reason~~will be returned without ~~cost~~expense to the tendering holder thereof promptly following the valid withdrawal ~~rejection of tender or termination of the exchange offer.~~thereof. In the case of old notes tendered by book-entry transfer into the exchange agent’s account at DTC ~~according~~pursuant to the book-entry transfer procedures described above, ~~those~~any such withdrawn old notes will be credited to anthe account ~~maintained with~~at DTC ~~for~~from which such old notes were tendered promptly ~~after withdrawal, rejection of tender or termination of the exchange offer.~~ following a valid withdrawal.
You may ~~retender properly~~re-tender validly withdrawn old notes by following one of the procedures described under the caption ~~“ —~~ “—Procedures for Tendering Old Notes” above at any time ~~on or before~~by the expiration of the ~~exchange offer.~~
applicable Exchange Offer.
A holder may obtain a form of the notice of withdrawal from the exchange agent at its ~~offices~~office listed ~~below under~~in the ~~caption “ — Exchange Agent.”~~
letter of transmittal.
Consequences of Failure to Exchange
If you do not exchange your old notes for new notes in the ~~exchange offer,~~Exchange Offers, your old notes will remain subject to the restrictions on transfer of such old notes:
as set forth in the legend printed on the old notes as a consequence of the issuance of the old notes pursuant to exemptions from the registration requirements of the Securities Act, or in transactions not subject to the Securities Act; and
as otherwise set forth in the offer to exchange and consent solicitation statement distributed in connection with the private exchange offers in which the old notes were issued.
• ~~as set forth in the legend printed on the old notes as a consequence of the issuance of the old notes pursuant to exemptions from the registration requirements of the Securities Act; and~~
• as otherwise set forth in the offering memorandum distributed in connection with the private offering of the Category A old notes and in the offer to exchange and consent solicitation statement distributed in connection with the prior RJR exchange offer.
In general, you may not offer or sell your old notes unless they are registered under the Securities Act or if the offer or sale is exempt from registration under the Securities Act and applicable state securities laws. Except as required by the registration rights ~~agreements,~~agreement, we do not intend to register resales of the old notes under the Securities Act.
Letter of Transmittal; Representations, Warranties and Agreements of Tendering Holders of Old Notes
In addition to the representations set forth above under the caption “—Terms of the Exchange Offers,” upon the submission of the letter of transmittal, or the agreement to the terms of the letter of transmittal pursuant to an
agent’s message, a holder of old notes will, subject to that holder’s ability to withdraw its tender, and subject to the terms and conditions set forth in this prospectus and the letter of transmittal generally, be deemed, among other things, to:
tender to RAI such holder’s old notes, and in doing so, irrevocably sell, assign and transfer to or upon RAI’s order or the order of its nominee all right, title and interest in and to, and any and all claims in respect of or arising or having arisen as a result of the holder’s status as a holder of, the old notes tendered, such that thereafter the holder shall have no contractual or other rights or claims in law or equity against RAI, the guarantors and their affiliates or any fiduciary, trustee, fiscal agent or other person connected with the old notes or RAI indenture arising under, from or in connection with the old notes;
waive any and all other rights with respect to such tendered old notes (including without limitation any existing or past defaults and their consequences with respect to such old notes under the RAI indenture and any rights under the registration rights agreement);
release and discharge RAI, the guarantors and their respective affiliates and the trustee under the RAI indenture from any and all claims that the holder may have, now or in the future, arising out of or related to the old notes tendered, including, without limitation, any claims that the holder is entitled to receive additional principal or interest payments with respect to the old notes tendered (other than as expressly provided in this prospectus or the letter of transmittal), or to participate in any redemption or defeasance of the old notes tendered; and
irrevocably constitute and appoint the exchange agent as its true and lawful agent and attorney-in-fact with respect to the tendered old notes (with full knowledge that the exchange agent also acts as the agent of RAI with respect to such old notes), with full powers of substitution and resubstitution, subject only to the right of withdrawal described in this prospectus, to cause the old notes tendered to be assigned, transferred and exchanged in the applicable Exchange Offer;
provided, in the event that new notes are issued in exchange for old notes between a record date for the payment of interest on such series of old notes and the interest payment date for such series of old notes following such record date, the holders of record of such old notes on such record date will not be deemed to have waived, released or discharged their right to receive an interest payment on such old notes related to such record date.
In addition, each holder of old notes whose old notes are validly tendered in the Exchange Offers upon the submission of the letter of transmittal or each such holder’s agreement to the terms of a letter of transmittal pursuant to an agent’s message, will be deemed to represent, warrant and agree that:
it has received the prospectus and the letter of transmittal;
it has full power and authority to execute or agree to be bound by the letter of transmittal and to tender, exchange, sell, assign and transfer the old notes tendered and to acquire the new notes issuable upon the exchange of such tendered old notes;
as of the date of delivery of the letter of transmittal or an agent’s message, the holders’ old notes were owned free and clear of all security interests, liens, restrictions, charges and encumbrances and were not subject to any adverse claim or right or proxy of any kind, and RAI will acquire good, indefeasible, marketable and unencumbered title to the tendered old notes, free and clear of all security interests, liens, restrictions, charges and encumbrances and not subject to any adverse claim or right or restriction or proxy of any kind, when the same are accepted for exchange by RAI;
it will not sell, pledge, hypothecate or otherwise encumber or transfer any old notes tendered from the date of the delivery of the letter of transmittal or an agent’s message, and any purported sale, pledge, hypothecation or other encumbrance or transfer will be void and of no effect;
it is not a person to whom it is unlawful to make an invitation pursuant to the Exchange Offers under applicable securities laws;
it has observed (and will observe) the laws and regulations of all relevant jurisdictions, obtained all requisite governmental, regulatory, exchange or other required consents, complied with all requisite formalities, including, without limitation, any verifications and registrations, and paid (or will pay) any issue, transfer or other taxes or requisite payments due from the holder in each respect in connection with any offer or acceptance, in any jurisdiction and that the holder has not taken or omitted to take any action in breach of the representations or which will or may result in RAI or any other person acting in breach of the legal or regulatory requirements of any such jurisdiction in connection with the Exchange Offers or tender of old notes in connection therewith; and
it undertakes to execute any further documents and give any further assurances that may be required in connection with any of the foregoing, in each case on and subject to the terms and conditions described or referred to in this prospectus and letter of transmittal.
The representations, warranties and agreements of a holder tendering old notes will be deemed to be repeated and reconfirmed on and as of the expiration of the applicable Exchange Offer and as of the settlement thereof.
Exchange Agent
The Bank of New York Mellon Trust Company, N.A. has been appointed as exchange agent for the ~~exchange offer~~Exchange Offers and is receiving a customary fee therefor, as well as reimbursement for reasonable out-of-pocket expenses. You should direct questions and requests for assistance, requests for additional copies of this prospectus or of the letter of transmittal and requests for the notice of guaranteed delivery or the notice of withdrawal to the exchange agent addressed as follows:
By Mail, Overnight Courier or Hand Delivery:
~~By Facsimile:~~
The Bank of New York Mellon Trust Company, ~~N.A.~~
~~101 Barclay Street~~
~~Floor 7E~~
~~Reorganization Unit~~
~~Attn.:~~
~~New York, New York 10286~~
N.A, as Exchange Agent
c/o The Bank of New York Mellon Corporation
Corporate Trust Operations- Reorganization Unit
111 Sanders Creek Parkway
East Syracuse, NY 13057
Attn: Pamela Adamo
Tel: 315-414-3317
By Facsimile:
The Bank of New York Mellon Trust Company, ~~N.A.~~

N.A, as Exchange Agent
c/o The Bank of New York Mellon Corporation
Corporate Trust Operations- Reorganization Unit
~~Attn.:~~
~~Confirm by Telephone:~~
Attn: Pamela Adamo
Fax: 732-667-9408
45
Delivery of the letter of transmittal to an address other than as shown above or transmission via facsimile other than as set forth above does not constitute a valid delivery of the letter of transmittal.
      In addition to serving as the exchange agent, The Bank of New York Trust Company, N.A. is the trustee under three indentures of RJR and under RAI’s 2006 indenture. The exchange agent and its affiliates have in the past provided, and are currently providing, banking, trust and other services to RAI and its affiliates, including as participants in RAI’s credit facilities and as transfer agent for RAI’s common stock. The exchange agent served as the exchange agent in the prior RJR exchange offer, and an affiliate of the exchange agent was an initial purchaser of the Category A old notes. From time to time, RAI or its affiliates may enter into other relationships with the exchange agent or its affiliates.

Shelf Registration
Pursuant to the registration rights ~~agreements,~~agreement, we may be required to file one or more shelf registration statements to permit certain holders of “registrable ~~notes”~~securities” (as defined below), who were not eligible to participate in the ~~exchange offer~~Exchange Offers to resell the registrable ~~notes~~securities periodically without being limited by the transfer restrictions.
We will only be required to file a shelf registration statement if:
we are not permitted by applicable law or by the staff of the SEC to effect the Exchange Offers as contemplated by the registration rights agreement;
the exchange offer is not completed by February 10, 2016, in the case of the old notes; or
• ~~we are not permitted by applicable law or by the staff of the SEC to effect the exchange offer as contemplated by the registration rights agreements;~~
• ~~the exchange offer is not completed by December 27, 2006, in the case of the Category A old notes, or by January 16, 2007, in the case of the Category B old notes; or~~
• such registration is requested by any initial purchaser of the Category A old notes, or any participant in the prior RJR exchange offer, not later than 30 days after the consummation of the exchange offer, if such requesting person holds old notes ineligible to be exchanged for new notes in the exchange offer.
such registration is requested by any participant in the private exchange offers in which the old notes were issued, not later than 60 days after the consummation of the Exchange Offers, if such requesting person holds old notes ineligible to be exchanged for new notes in the Exchange Offers.
If a shelf registration statement is required, we will use our reasonable best efforts to:
file the shelf registration statement with the SEC as soon as practicable after we are required to do so and cause the shelf registration statement to be declared effective by the SEC; and
keep the shelf registration statement continuously effective until all the registrable securities covered by the shelf registration statement are sold thereunder, they cease to be outstanding or all registerable securities are exchanged in the Exchange Offers.
• ~~file the shelf registration statement with the SEC as soon as practicable after we are required to do so and cause the shelf registration statement to be declared effective by the SEC; and~~
• keep the shelf registration statement continuously effective until May 31, 2008, in the case of the Category A old notes, or until June 20, 2008, in the case of the Category B old notes, or if earlier, until all the registrable notes covered by the shelf registration statement are sold thereunder, become eligible for resale pursuant to Rule 144 under the Securities Act or cease to be registrable notes.
Notwithstanding the foregoing, we may, by notice to holders of registrable ~~notes,~~securities, suspend the availability of a shelf registration statement and the use of the related prospectus, if:
such action is required by the SEC or a state securities authority;
the happening of any event that makes any statement made in the shelf registration statement or the related prospectus untrue in any material respect or requires changes in order to make the statements made not misleading; or
• ~~such action is required by the SEC or a state securities authority;~~
• the happening of any event that makes any statement made in the shelf registration statement or the related prospectus untrue in any material respect or requires changes in order to make the statements made not misleading; or
• we determine in our reasonable judgment that it is in the best interests of RAI and the guarantors not to disclose a possible acquisition or business combination or other transaction, business development or event involving RAI or the guarantors that might otherwise require disclosure in the registration statement, or if obtaining any financial statements relating to an acquisition or business combination required to be included in the registration statement would be impracticable.
we determine in our reasonable judgment that it is in the best interests of RAI and the guarantors not to disclose a possible acquisition or business combination or other transaction, business development or event involving RAI or the guarantors that might otherwise require disclosure in the registration statement, or if obtaining any financial statements relating to an acquisition or business combination required to be included in the registration statement would be impracticable.
The period for which we are obligated to keep the shelf registration statement continuously effective will be extended by the period of such suspension.
46
Each holder of registrable ~~notes~~securities will be required to discontinue disposition of registrable ~~notes~~securities pursuant to the shelf registration statement upon receipt from us of notice of any events described in the preceding paragraph or certain other events specified in the registration rights ~~agreements.~~
agreement.
A holder who sells registrable ~~notes~~securities pursuant to the shelf registration statement will be required to furnish information about itself as we may reasonably require, be named as a selling securityholder in the prospectus and deliver a copy of the prospectus to purchasers. If we are required to file a shelf registration statement, we will provide to each holder of the registrable ~~notes~~securities copies of the prospectus that is a part of the shelf registration statement and notify each of these holders when the shelf registration statement becomes effective. These holders will be subject to certain of the civil liability provisions under the Securities Act in connection with those sales and will be bound by the provisions of the registration rights ~~agreements~~agreement applicable to these holders (including certain indemnification obligations).
If we are required to file the shelf registration statement, we will be required to pay additional interest to each holder of registrable ~~notes~~securities at a rate of ~~0.5%~~0.25% per year for the first 90-day period and an additional 0.25% per year with respect to each subsequent 90-day period, up to a maximum increase of 0.50% per year if:
the shelf registration statement is not declared effective by the SEC on or prior to the deadlines specified in the registration rights agreement; or
the shelf registration statement is declared effective, but thereafter ceases to be effective or usable in connection with resales of the registrable securities during the periods specified in the registration rights agreement, except during limited periods as a result of the exercise by us of our right to suspend use of the shelf registration statement and the related prospectus as described above.
• ~~the shelf registration statement is not declared effective by the SEC on or prior to the deadlines specified in the registration rights agreements; or~~
• the shelf registration statement is declared effective but thereafter ceases to be effective or usable in connection with resales of the registrable notes during the periods specified in the registration rights agreements, except during limited periods as a result of the exercise by us of our right to suspend use of the shelf registration statement and the related prospectus as described above.
      ~~“Registrable notes”~~
“Registrable securities” means the old notes;provided, however, that any old notes shall cease to be registrable securities when:
such old notes ~~when:~~shall have been exchanged for new notes pursuant to the Exchange Offers (or are eligible for exchange) or disposed of pursuant to the shelf registration statement;
such old notes shall have ceased to be outstanding; or
• ~~such old notes shall have been exchanged for new notes pursuant to the exchange offer (or are eligible for exchange) or disposed of pursuant to the shelf registration statement;~~
• ~~such old notes shall have been sold pursuant to Rule 144 (or any similar provision then in force, but not Rule 144A) under the Securities Act, or be eligible for sale pursuant to Rule 144(k); or~~
• ~~such old notes shall have ceased to be outstanding.~~
when the Exchange Offers are consummated.
Fees and Expenses
We will ~~pay~~bear the ~~cash~~ expenses incurred in connection with the ~~exchange offer. These expenses include fees and expenses of the exchange agent and trustee, accounting and legal fees and printing costs, among others.~~
Exchange Offers. We are mailing the principal solicitation. However, our officers and regular employees and those of our affiliates may make additional solicitation by facsimile transmission, telephone or in person.
We have not retained any dealer-manager in connection with the ~~exchange offer.~~Exchange Offers. We will not make any payments to brokers, dealers or others soliciting tenders of old notes pursuant to the ~~exchange offer.~~Exchange Offers. However, we will pay the exchange agent reasonable and customary fees for its services and ~~may~~ reimburse it for its reasonable out-of-pocket expenses.
We will pay the cash expenses incurred in connection with the Exchange Offers. These expenses include fees and expenses of the exchange agent and trustee, accounting and legal fees and printing costs, among others.
Holders who tender their old notes for exchange will not be required to pay any transfer taxes, except that holders who instruct us to register new notes in the name of, or request that old notes not tendered or not accepted in the ~~exchange offer~~Exchange Offers be returned to, a person other than the registered tendering holder, will be responsible for paying any applicable transfer tax.

Accounting Treatment
For accounting purposes, we will recognize no gain or loss as a result of the ~~exchange offer.~~Exchange Offers. The costs of the ~~exchange offer~~Exchange Offers will be expensed in the period incurred.
Other
Other than the federal securities laws, we are not aware of any governmental or regulatory approvals that are required in order to complete the Exchange Offers.
Participation in the Exchange Offers is voluntary.
Holders of old notes have no appraisal or dissenters’ rights in connection with the Exchange Offers.
Holders of the old notes are urged to consult their financial and tax advisors in making their own decisions on what action to take. See “Material U.S. Federal Income Tax Consequences.”
47
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of RAI and its subsidiaries for the periods indicated. Earnings consist of income from continuing operations before earnings from equity investments, income taxes and fixed charges. Fixed charges consist of interest on indebtedness, amortization of original debt issuance discount and expense and the interest portion of rental expense.
   Year Ended December 31,    Nine Months
Ended
September 30,
   2010    2011    2012    2013    2014    2014    2015
Ratio of earnings to fixed charges
   10.2x       10.6x       9.1x       11.3x       8.7x       11.1x       16.0x
~~Other~~
• ~~Other than the federal securities laws, we are not aware of any governmental or regulatory approvals that are required in order to complete the exchange offer.~~
• ~~Participation in the exchange offer is voluntary.~~
• ~~Holders of old notes have no appraisal or dissenters’ rights in connection with the exchange offer.~~
• ~~Holders of the old notes are urged to consult their financial and tax advisors in making their own decisions on what action to take. See “Material U.S. Federal Income Tax Consequences.”~~
USE OF PROCEEDS
The ~~exchange offer is~~Exchange Offers are intended to satisfy our obligations under the registration rights ~~agreements~~agreement relating to the old notes. We will not receive any cash proceeds from the ~~exchange offer.~~issuance of the new notes. In ~~exchange~~consideration for issuing the new notes contemplated in this prospectus, we will receive aoutstanding securities in like principal amount, the form and terms of ~~old notes. We used~~which are the ~~net proceeds~~same as the form and terms of the ~~sale of the Category A~~new notes, except as otherwise described in this prospectus. The old notes surrendered in exchange for new notes will be retired and canceled. Accordingly, no additional debt will result from the ~~amount of approximately $1.64 billion, to help finance the Conwood acquisition.~~Exchange Offers. We have agreed to bear the expenses of the ~~exchange offer.~~
Exchange Offers.
48CAPITALIZATION
~~CAPITALIZATION~~
The following table sets forth the cash and cash equivalents and ~~short-term investments, and~~total capitalization of RAI and its subsidiaries as of ~~June~~September 30, ~~2006.~~2015. Any old notes that are properly tendered and exchanged for new notes pursuant to the ~~exchange offer~~Exchange Offers will be retired and cancelled. Accordingly, the issuance of the new notes will not result in any change to our capitalization.
This table should be read in conjunction with the consolidated financial statements of RAI and its subsidiaries and the notes thereto ~~appearing in the RAI June 30, 2006, Form~~ ~~10-Q,~~ incorporated by reference herein. All dollar amounts are in millions.

As of June
30, 2006

Cash and cash equivalents and short-term investments $ 1,822

Long-term debt, less current maturities:
Term loan 1,535
Old notes, less current maturities 2,692
RJR notes, less current maturities 186

Total long-term debt, less current maturities 4,413
Total shareholders’ equity 6,912

Total capitalization $ 11,325

49
   As of
September 30,
2015
   (unaudited)
Cash and cash equivalents
   $ 2,920


Debt:

Revolving credit facility
   0
Existing notes, including current maturities:

Existing notes of RAI

Old notes:

3.500% Senior Notes due 2016
   422
2.300% Senior Notes due 2017
   450
8.125% Senior Notes due 2019
   799
6.875% Senior Notes due 2020
   740
3.750% Senior Notes due 2023
   461
8.125% Senior Notes due 2040
   309
7.000% Senior Notes due 2041
   287


Total old notes
   3,468


Other existing notes of RAI
   14,046
Total existing notes of RAI (1)
   17,514


Lorillard Tobacco notes (2):

Total existing notes
   416


Total debt
   17,930


Shareholders’ equity:

Total capitalization
   $ 18,480


(1) Actual amount reflects the $17.2 billion principal amount of RAI’s existing notes, net of unamortized discount of $39 million, unamortized gain on termination of hedge accounting of $42 million, and adjustments to fair value of $338 million. RAI’s existing 1.05% Senior Notes due 2015, in the outstanding principal amount of $450 million, were repaid on their maturity date of October 30, 2015.
(2) In connection with the Lorillard Tobacco merger, RJR Tobacco expressly assumed Lorillard Tobacco’s outstanding obligations, and RJR expressly assumed Lorillard’s guarantee obligations, under the Lorillard Tobacco notes and Lorillard Tobacco indenture. In addition, subsequent to the Lorillard Tobacco merger, RAI fully and unconditionally guaranteed the obligations of RJR Tobacco with respect to the Lorillard Tobacco notes. Actual amount reflects the $377 million principal amount, adjustments associated with interest rate swaps of $1 million and adjustments to fair value of $38 million.
~~UNAUDITED~~ PRO FORMA CONDENSED COMBINED ~~STATEMENT~~STATEMENTS OF INCOME
The following unaudited pro forma condensed combined ~~statement~~statements of income ~~for~~reflect the ~~six months ended June 30, 2006, gives~~impact of the Lorillard merger on RAI’s consolidated financial statements and present the pro forma consolidated results of operation after giving effect to the ~~Conwood transactions as if they had been completed on January 1, 2006.~~Lorillard merger and the divestiture. The unaudited pro forma condensed combined statements of income give effect to the Lorillard merger and the divestiture as if they had occurred on January 1, 2014, the beginning of the earliest period presented. The Lorillard merger and the divestiture were actually completed on June 12, 2015. The following unaudited pro forma financial information for the ~~year ended December 31, 2005, incorporated by reference herein from RAI’s Current Report~~Lorillard merger is based on ~~Form 8-K/A filed~~the historical financial statements of RAI and Lorillard, and the following unaudited pro forma financial information for the divestiture is based on ~~August 4, 2006, gives~~the historical accounting records of RAI and Lorillard (in each case, with respect to Lorillard, through June 12, 2015, the date of the Lorillard merger).
The historical consolidated financial statements have been adjusted in the pro forma financial statements to give effect to pro forma events that are: (1) directly attributable to the ~~Conwood transactions as if they~~Lorillard merger or the divestiture; (2) factually supportable; and (3) expected to have a continuing impact on the combined results of RAI and Lorillard. The unaudited pro forma financial information is provided for illustrative purposes only and is based on available information and assumptions that RAI and Lorillard believe are reasonable. It does not purport to represent what the actual consolidated results of operations of RAI would have been had ~~been completed~~the Lorillard merger or the divestiture occurred on January 1, ~~2005.~~2014, nor is it necessarily indicative of future consolidated results of operations. The ~~Conwood transactions were actually completed on May 31, 2006.~~
      ~~This~~actual results of operations will differ, perhaps significantly, from the pro forma amounts reflected herein due to a variety of factors, including access to additional information and changes in operating results following the date of the pro forma financial information.
RAI anticipates that the Lorillard merger and the divestiture will result in significant annual cost savings and operating synergies that would be unachievable without completing the transactions. No assurance can be made that RAI will be able to achieve these cost savings and synergies or when they will be realized, and no such cost savings or synergies have been reflected in the unaudited pro forma financial information.
The unaudited pro forma condensed combined ~~statement~~statements of income do not include any material nonrecurring charges that might arise as a result of the Lorillard merger or the divestiture.
In accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 805,Business Combinations, the Lorillard merger has been accounted for under the acquisition method with RAI as the acquirer of Lorillard. The purchase price will be allocated to the fair values of the assets acquired and liabilities assumed from Lorillard. Since the pro forma financial statements have been prepared based on preliminary estimates and assumptions, the final amounts recorded at the date of the Lorillard merger may differ materially from the information presented. All estimates reflected in the pro forma financial statements are subject to change pending additional review of the assets acquired and liabilities assumed and the final purchase price, and there can be no assurance that any revisions to estimates will not result in material changes to the information presented.
The following pro forma statements of income should be read in conjunction with:
the accompanying notes to the unaudited pro forma condensed combined statements of income;
the separate historical consolidated financial statements of RAI as of and for the year ended December 31, 2014, included in RAI’s Annual Report on Form 10-K filed with the SEC and incorporated by reference into this prospectus;
the separate historical unaudited condensed consolidated interim financial statements of RAI as of and for the quarterly period ended September 30, 2015, included in RAI’s Quarterly Report on Form 10-Q filed with the SEC and incorporated by reference into this prospectus;
the separate historical consolidated financial statements of Lorillard as of and for the year ended December 31, 2014, included as Exhibit 99.1 to RAI’s Current Report on Form 8-K filed with the SEC on June 9, 2015 and incorporated by reference into this prospectus; and
the other information contained in or incorporated by reference into this prospectus.
Unaudited Pro Forma Condensed Combined Statement of Income
Giving Effect to the Lorillard Merger and the Divestiture
For the Nine Months Ended September 30, 2015
(Dollars in Millions, Except Per Share Amounts)
RAI Lorillard Reclassifications
Note 2a Merger-
Related Pro
Forma
Adjustments
Note 2 Notes Pro Forma
for Merger
Excluding
Divestiture Divestiture
Note 3 Notes Pro Forma
for Merger
Including
Divestiture
Net sales
$ 7,419    $ 3,244    $ (888 ) $ —   $ 9,775    $ (952 ) 3a $ 8,823
Net sales, related party
202    —   —   —   202    —   202

Net sales
7,621    3,244    (888 ) —   9,977    (952 ) 9,025
Costs and expenses:

Cost of products sold
3,338    �� 1,968    (888 ) (45 ) 2b, 2h 4,373    (452 ) 3b 3,921
Selling, general and administrative expenses
1,415    534    (5 ) (296 ) 2d, 2h 1,648    (146 ) 3c 1,502
Amortization expense
12    —   5    7    2c 24    (5 ) 3d 19
Asset impairment and exist charges
99    —   —   —   99    —   99
Gain on divestiture
(3,506 ) —   —   —   (3,506 ) 3,506    3e —

Operating income
6,263    742    —   334    7,339    (3,855 ) 3,484
Interest and debt expense
385    82    —   100    2e, 2f 567    —   567
Interest income
(4 ) (2 ) —   —   (6 ) —   (6 )
Other expense, net
8    —   —   —   8    —   8

Income from continuing operations before income taxes
5,874    662    —   234    6,770    (3,855 ) 2,915
Provision for income taxes
2,900    278    —   91    2g 3,269    (2,169 ) 3f 1,100

Net income
$ 2,974    $ 384    $ —   $ 143    $ 3,501    $ (1,686 ) $ 1,815

Earnings per share attributable to RAI shareholders:

Basic
$ 2.46    $ 1.27    Note 4
Diluted
$ 2.45    $ 1.27    Note 4
Weighted average shares outstanding, in thousands:

Basic
1,209,503    1,429,094    Note 4
Diluted
1,212,933    1,432,524    Note 4
See accompanying notes to unaudited pro forma condensed combined statements of income.
Unaudited Pro Forma Condensed Combined Statement of Income
Giving Effect to the Lorillard Merger and the Divestiture
For the Year Ended December 31, 2014
(Dollars in Millions, Except Per Share Amounts)
RAI Lorillard Reclassifications
Note 2a Merger-
Related Pro
Forma
Adjustments
Note 2 Notes Pro Forma
for Merger
Excluding
Divestiture Divestiture
Note 3 Notes Pro Forma
for Merger
Including
Divestiture
Net sales
$ 8,160    $ 6,990    $ (1,938 ) $ —   $ 13,212    $ (2,248 ) 3a $ 10,964
Net sales, related party
311    —   —   —   311    —   311

Net sales
8,471    6,990    (1,938 ) —   13,523    (2,248 ) 11,275
Costs and expenses:

Cost of products sold
4,058    4,252    (1,938 ) (24 ) 2b, 2h 6,348    (1,092 ) 3b 5,256
Selling, general and administrative expenses
1,871    630    (23 ) (70 ) 2d, 2h 2,408    (268 ) 3c 2,140
Amortization expense
11    —   23    14    2c 48    (23 ) 3d 25

Operating income
2,531    2,108    —   80    4,719    (865 ) 3,854
Interest and debt expense
286    179    —   296    2e, 2f 761    —   761
Interest income
(3 ) (7 ) —   —   (10 ) —   (10 )
Other income, net
(14 ) —   —   —   (14 ) —   (14 )

Income from continuing operations before income taxes
2,262    1,936    —   (216 ) 3,982    (865 ) 3,117
Provision for income taxes
817    749    —   (84 ) 2g 1,482    (337 ) 3f 1,145

Income from continuing operations
1,445    1,187    —   (132 ) 2,500    (528 ) 1,972
Income from discontinued operations, net of tax
25    —   —   —   25    —   25

Net income
$ 1,470    $ 1,187    $ —   $ (132 ) $ 2,525    $ (528 ) $ 1,997

Earnings per share attributable to RAI shareholders:

Basic
$ 1.38    $ 1.40    Note 4
Diluted
$ 1.37    $ 1.39    Note 4
Weighted average shares outstanding, in thousands:

Basic
1,066,320    1,431,094    Note 4
Diluted
1,069,940    1,434,714    Note 4
See accompanying notes to unaudited pro forma condensed combined statements of income.
Notes to Unaudited Pro Forma Condensed Combined Statements of Income
Note 1—Basis of Presentation
The accompanying unaudited pro forma statements of income are intended to reflect the impact of the Lorillard merger on RAI’s consolidated financial statements and presents the pro forma consolidated results of operations of RAI after giving effect to the Lorillard merger and divestiture. The accompanying unaudited pro forma financial information for the Lorillard merger is based on the historical financial statements of RAI and Lorillard, and the accompanying unaudited pro forma financial information for the divestiture is based on the historical accounting records of ~~Conwood (and~~RAI and Lorillard (in each case, with respect to Lorillard, through June 12, 2015, the date of ~~three non-operating~~the Lorillard merger).
Merger-related pro forma adjustments are included only to the extent they are directly attributable to the Lorillard merger, factually supportable and expected to have a continuing impact on the results of the combined company. The accompanying unaudited pro forma financial information is presented for illustrative purposes only.
Immediately prior to or immediately after the closing of the Lorillard merger, as the case may be, and pursuant to the asset purchase agreement and the transfer agreement, RAI and Lorillard, directly or indirectly through one or more of their respective subsidiaries or affiliates, divested the transferred assets and certain liabilities to Imperial Sub in the divestiture. Divestiture-related pro forma adjustments are included only to the extent they are directly attributable to the divestiture, factually supportable, and expected to have a continuing impact on the results of ~~Conwood Holdings — Conwood LLC, Conwood-1 LLC~~the combined company.
The Lorillard merger and ~~Conwood-2 LLC — that~~the divestiture were ~~merged into Conwood Holdings effective August 11, 2006) incorporated by reference herein.~~
actually completed on June 12, 2015.
This unaudited pro forma condensed combined ~~statement~~statements of income ~~has~~have been prepared using the ~~purchase~~acquisition method of accounting for business combinations and isare based upon the historical financial statements of RAI and ~~Conwood (and of the three non-operating subsidiaries described above),~~Lorillard, which have been prepared in accordance with Regulation S-X promulgated by the SEC. ~~It is~~They are based on certain assumptions and adjustments as discussed in ~~the~~these accompanying ~~notes to unaudited pro forma condensed combined statement of income.~~notes. The combined condensed consolidated balance sheet (unaudited) as of ~~June~~September 30, ~~2006,~~2015, is included in RAI’s ~~June~~Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2006, Form~~ ~~10-Q,~~2015, incorporated by reference herein, with the purchase price allocated to certain assets acquired and liabilities assumed based on their ~~historical book~~fair values as of the acquisition date. Due to the limited amount of available information concerning Conwood’s operations prior to the completion of the acquisition, the fair value of assets acquired and liabilities assumed, including trademarks and other intangibles, has not yet been determined. The excess of the amount paid over net assets acquired has been allocated to goodwill in RAI’s condensed consolidated balance sheet (unaudited) as of June 30, 2006.
The adjustments in ~~this~~the unaudited pro forma condensed combined ~~statement~~statements of income reflect adjustments necessary to account for the ~~Conwood transactions~~Lorillard merger and the divestiture as described herein. Further adjustments will be required pending allocation of the purchase price resulting from the determination of fair value of assets acquired and liabilities assumed. The final determination of the fair market value of the assets acquired and liabilities assumed and the final allocation of the consideration will be finalized when all information is received, but not later than one year from the date of the completion of the ~~Conwood transactions.~~
      ~~This~~Lorillard merger.
The Unaudited Pro Forma Condensed Combined Statement of Income for the nine months ended September 30, 2015 and the year ended December 31, 2014 gives effect to the Lorillard merger and divestiture as if they had occurred on January 1, 2014, the beginning of the earliest period presented.
Other Merger-Related Adjustments
The unaudited pro forma ~~condensed combined~~statements of income reflect certain reclassifications of the Lorillard statement of income ~~does~~categories to conform to RAI presentation.
The unaudited pro forma statements of income do not reflect ~~operating efficiencies, if~~ any adjustments to conform Lorillard’s accounting policies to those adopted by RAI, as no such adjustments have been identified that would have a material effect on the unaudited pro forma statements of income.
Further review may identify additional reclassifications, intercompany transactions or differences between the accounting policies of the two companies that, when conformed, could have a material impact on the unaudited pro forma statements of income of the combined company. At this time, RAI is not aware of any reclassifications, intercompany transactions or accounting policy differences that would have a material impact on the unaudited pro forma statements of income that are not reflected in the pro forma adjustments.
Items Not Adjusted in the Unaudited Pro Forma Statements of Income
The unaudited pro forma statements of income do not include any adjustment for actual costs incurred related to or that may result from integration activities.
RAI anticipates that the ~~completion of~~Lorillard merger and divestiture will result in significant annual cost savings and operating synergies that would be unachievable without having completed the ~~Conwood acquisition~~Lorillard transactions. No assurance can be made that RAI will be able to achieve these cost savings and ~~does not include any transition costs. For these~~synergies or when they will be realized, and ~~other reasons, this~~no such cost savings or synergies have been reflected in the unaudited pro forma ~~condensed combined statement~~statements of income.
Note 2—Reclassifications and Merger-Related Pro Forma Adjustments
The unaudited pro forma statements of income reflect the following adjustments related to the Lorillard merger:
(a) Reclassifications—Certain reclassifications have been made to amounts in the Lorillard statement of income to conform to RAI’s presentation, including reclassifying Lorillard’s federal excise taxes as a reduction in net sales and presenting Lorillard’s amortization expense within the amortization expense caption instead of selling, general and administrative expenses.
(b) Inventory—Adjustment to reflect Lorillard’s inventories at fair value. Lorillard’s tobacco inventories historically have been stated on a last-in, first-out, referred to as LIFO basis, and the adjustment based on historical Lorillard financial information is to reverse the LIFO impact of $40 million and $19 million for the nine months ended September 30, 2015, and the year ended December 31, 2014, respectively. The pro forma results include a nonrecurring fair value adjustment to finished goods inventories associated with the acquisition of $159 million in the Unaudited Pro Forma Condensed Combined Statement of Income for the nine months ended September 30, 2015.
(c) Intangible assets amortization—Adjustment to reflect the amortization associated with the preliminary fair value estimates of Lorillard’s identifiable intangible assets that are customer relationships and trademarks and the amortization for the customer relationships and trademarks with finite life. The adjustment to increase amortization expense of $7 million and $14 million for the nine months ended September 30, 2015, and the year ended December 31, 2014, respectively, is reflected in the unaudited pro forma condensed combined statements of income.
(d) Transaction-related costs—An adjustment to eliminate nonrecurring transaction-related costs of $288 million ($54 million for RAI and $234 million for Lorillard) and $64 million ($38 million for RAI and $26 million for Lorillard) recorded in the Unaudited Pro Forma Condensed Combined Statement of Income for the nine months ended September 30, 2015, and the year ended December 31, 2014, respectively.
(e)
Long-term debt/Interest expense—Adjustments to record the Lorillard debt portfolio at fair value using quoted market values as of June 12, 2015. The pro forma adjustments are a result of the quoted market values of the Lorillard debt portfolio being higher than the face amount of the related debt. The quoted market value of a debt instrument is higher than the face amount of the debt when the market interest
rates are lower than the stated interest rate of the debt. In acquisition accounting, this results in an increase in debt and a reduction in interest expense to reflect the lower market interest rate. The difference between the fair value of each borrowing, which was based on market interest rates and values as of June 12, 2015, based on each borrowing’s CUSIP bid price, and the face amount of each borrowing is amortized as a reduction in interest expense utilizing the effective interest method over the remaining term of each borrowing based on its maturity date. For the total debt portfolio, the adjustment is a reduction in interest expense of $33 million and $66 million for the nine months ended September 30, 2015, and the year ended December 31, 2014, respectively, resulting in interest expense that effectively reflects current market interest rates rather than the stated interest rate. Interest expense is further adjusted to reflect the elimination of amortization related to Lorillard’s previously deferred debt issuance costs of $2 million and $4 million for the nine months ended September 30, 2015 and the year ended December 31, 2014, respectively.
(f) Bond issuance/Interest expense—Pro forma statement of income reflects that the proceeds from RAI’s senior notes issued on June 12, 2015 were used in lieu of any borrowings under the bridge credit facility described below. The adjustment reflects the issuance of the notes offering of $9 billion using a weighted average interest rate of approximately 4.50%.
In September 2014, RAI entered into a bridge credit agreement, referred to as the bridge credit facility, with a syndicate of lenders, providing for a 364-day senior unsecured term loan in the aggregate principal amount of up to $9 billion. The bridge credit facility was available for the purpose of financing a portion of the merger consideration. On June 12, 2015, the bridge credit facility terminated in accordance with its terms.
Given that the June 12, 2015 RAI notes offering was made in lieu of any borrowings under the bridge credit facility, there also was an adjustment to eliminate nonrecurring bridge credit facility financing costs of $48 million and $39 million recorded in the Unaudited Pro Forma Condensed Combined Statement of Income for the nine months ended September 30, 2015, and the year ended December 31, 2014, respectively.
(g) Income taxes—Adjustment to record the deferred tax impact of acquisition accounting adjustments, primarily related to inventory, intangible assets and long-term debt. The pro forma adjustment to provision for (benefit from) income taxes represents the application of RAI’s estimated statutory tax rate of 39.0% to the pro forma adjustments.
(h) Pension amortization—Adjustment to remove the amortization of the net actuarial losses and prior service costs for the Lorillard pension and postretirement plans of $13 million ($5 million removed from cost of products sold and $8 million removed from selling, general and administrative expenses) and $11 million ($5 million removed from cost of products sold and $6 million removed from selling, general and administrative expenses) for the nine months ended September 30, 2015, and the year ended December 31, 2014, respectively.
Note 3—The Divestiture
In connection with entry into the merger agreement, on July 15, 2014, RAI entered into the asset purchase agreement with Imperial Sub, and for certain limited purposes, Imperial, pursuant to which, on June 12, 2015, at the satisfaction of the conditions to the closing of the Lorillard merger, Imperial Sub acquired the transferred assets from RAI, indirectly through one or more of its affiliates or subsidiaries, consisting of (1) certain assets owned by RAI subsidiaries, related to the cigarette brands WINSTON, KOOL and SALEM and (2) certain assets currently owned by Lorillard subsidiaries, related to the electronic cigarette brand blu eCIGS (including SKYCIG) and the cigarette brand MAVERICK, as well as Lorillard’s owned and leased real property, including its manufacturing, research and development facilities and headquarters in Greensboro, North Carolina and the tobacco receiving and storage facilities in Danville, Virginia, and the transferred employees, together with certain associated liabilities. Although most of the transferred assets were transferred immediately after the closing of the Lorillard merger by RAI directly or indirectly through its affiliates and subsidiaries, pursuant to the transfer
agreement, certain of the Lorillard transferred assets were transferred immediately prior to the closing of the Lorillard merger. The unaudited pro forma statements of income include the effects of the sale of these brands, plus assets and liabilities associated with the transfer agreement.
The purchase price for the transferred assets and certain related liabilities divested in the divestiture was $7.056 billion. The unaudited pro forma statements of income reflect the allocations of revenues and expenses directly attributable to the brands sold to Imperial Sub in the divestiture, as well as certain other allocations deemed reasonable by management to present the unaudited pro forma statements of income. The allocation methodologies developed for the purposes of these pro forma amounts are considered reasonable by management. The costs do not ~~necessarily indicative of results of operations or~~include costs associated with certain shared functions, and accordingly the financial ~~position that would have been achieved if the businesses had been combined as of January 1, 2006, or~~information does not reflect the results of operations or financial position that RAI will experience now that the Conwood transactions are completed. In addition, the preparation of financial statements in conformity with GAAP requires management to make certain estimatesas if these brands and ~~assumptions. These estimates and assumptions are preliminary and have been made solely~~assets were stand-alone entities for the ~~purpose of developing this~~periods presented.
The unaudited pro forma ~~condensed combined statement~~statements of ~~income. Actual results could differ materially from these estimates and assumptions.~~
50
~~REYNOLDS AMERICAN INC.~~
~~UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME~~
~~(Dollars in millions, except per share amounts)~~

For the Six Months Ended June 30, 2006

Historical Historical Pro Forma Pro Forma
RAI Conwood Adjustments Combined

Net Sales
$ 4,251 $ 202 $ — $ 4,453
Costs and expenses:
Cost of products sold 2,441 41 — 2,482
Selling, general and administrative expenses 734 45 — 779
Amortization expense 14 3 (3 )(A) 14

Operating income
1,062 113 3 1,178
Interest and debt expense 87 — 98 (B)
3 (B) 188
Interest Income (59 ) (2 ) 2 (A)
5 (C) (54 )
Other income, net (3 ) — — (3 )

Income from continuing operations before taxes
1,037 115 (105 ) 1,047
Provision for income taxes 390 2 (2 )(A)
4 (D) 394

Income from continuing operations
$ 647 $ 113 $ (107 ) $ 653

Basic income per share from continuing operations $ 2.19 (E) $ 2.21 (E)
Diluted income per share from continuing operations $ 2.19 (E) $ 2.21 (E)
Basic average shares outstanding, in thousands 294,991 (E) 294,991 (E)
Diluted average shares outstanding, in thousands 295,322 (E) 295,322 (E)
~~Note A — Elimination of Historical Conwood Items~~
      ~~Pro forma~~income reflect the following adjustments ~~include the elimination of Conwood’s historical amortization expense due to applying the purchase method of accounting for the Conwood transactions, Conwood’s historical interest income due~~related to the exclusion of the historical cash balances, and Conwood’s historical provision for income taxes due to the application of the new expected effective rate. Prior to the acquisition, Conwood was an “S” corporation for federal income tax purposes.
divestiture:
(a) Net sales—Adjustment to reflect the net sales of the cigarette brands WINSTON, KOOL and SALEM from RAI’s historical financial information and net sales of the cigarette brand MAVERICK and the electronic cigarette brand blu eCIGS from Lorillard’s historical financial information.
(b) Cost of products sold—Adjustment to reflect the cost of products sold for the divested brands.
(c) Selling, general and administrative expenses—Adjustment to reflect the estimated costs of these expenses for the divested brands.
(d) Amortization expense—Adjustment to reflect the elimination of amortization of these trademarks of $5 million and $23 million for the nine months ended September 30, 2015, and the year ended December 31, 2014, respectively.
(e) Gain on divestiture—Adjustment to reflect the gain on divestiture related to the asset purchase agreement with Imperial Sub.
(f) Income taxes—The pro forma adjustment to provision for (benefit from) income taxes represents the application of RAI’s estimated statutory tax rate of 39.0% to the pro forma adjustments and the applicable income taxes associated with the gain on divestiture.
Note ~~B — Increase in Interest and Debt Expense~~
      Interest expense increased based on $3.2 billion of additional debt at interest rates ranging from 7.1875% to 7.750%. Debt expense of $3.0 million relates to the $52 million of debt issuance costs to be amortized over five to 12 years.
~~Note C — Reduction in Interest Income due to Acquisition~~
      ~~Interest income has been reduced to reflect an average cash balance reduced by approximately $380 million, which is the amount of cash on hand used in connection with the Conwood acquisition.~~
~~Note D — Income Taxes~~
      ~~The pro forma adjustment to provision for income taxes represents the application of the expected effective rate of 39.0% to the Conwood historical earnings and pro forma adjustments.~~
~~Note E — Stock Split~~
4—Earnings per share
On July ~~19, 2006,~~27, 2015, RAI announced that its board of directors had declared atwo-for-one stock split, ~~to be effected~~ in the form of a special 100% stock dividend, ~~of its common stock~~ to shareholders of record on ~~July 31, 2006.~~August 17, 2015. The stock dividend was distributed to shareholders on August ~~14, 2006. All~~31, 2015. Except as otherwise noted in this prospectus, all share and per share amounts have been adjusted to reflect this stock split.
51
~~SELECTED FINANCIAL DATA~~
The ~~selected historical consolidated financial data of RAI as of December 31, 2004~~pro forma combined basic and ~~2005,~~diluted earnings per share for the nine months ended September 30, 2015, and ~~for each of the years in thethree-year~~ ~~period ended December 31, 2005, are derived from RAI’s audited consolidated financial statements and accompanying notes incorporated by reference herein from RAI’s Annual Report on Form~~ ~~10-K~~ ~~for~~ the year ended December 31, ~~2005. The selected historical consolidated financial data of RAI~~2014, are calculated as of December 31, 2001, 2002 and 2003, and for each of the years ended December 31, 2001 and 2002, are derived from RJR’s audited consolidated financial statements and notes not incorporated by reference herein. The selected historical consolidated financial data as of June 30, 2006, and for each of the six-month periods ended June 30, 2005 and 2006, are derived from, and are qualified by reference to, RAI’s unaudited financial statements included in RAI’s June 30, 2006, Form ~~10-Q,~~ incorporated by reference herein. The balance sheet data as of June 30, 2005, are derived from unaudited financial statements not incorporated by reference herein. The unaudited financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation. The consolidated financial statements of RAI include the results of RJR through July 30, 2004, of RAI and the acquired operations of B&W and Lane subsequent to July 30, 2004, and of these entities and Conwood subsequent to May 31, 2006. For further information, including the impact of new accounting developments, acquisitions and restructuring and impairment charges, you should read this selected financial data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in RAI’s June 30, 2006, Form ~~10-Q~~ ~~and the consolidated financial statements and notes thereto incorporated by reference herein. All dollar amounts (other than per share amounts) are in millions.~~

Six Months Ended
Year Ended December 31, June 30,

2001 2002 2003 2004 2005 2005 2006

(Unaudited)
Results of Operations:

Net sales(1) $ 6,269 $ 6,211 $ 5,267 $ 6,437 $ 8,256 $ 4,060 $ 4,251
Cost of products sold(1)(2) 3,560 3,732 3,218 3,872 4,919 2,352 2,441
Selling, general and administrative expenses 1,429 1,463 1,327 1,455 1,611 776 734
Amortization expense 362 — — 24 41 24 14
Fixture impairment — — 106 — — — —
Restructuring and asset impairment charges — 224 368 5 2 (1 ) —
Loss on sale of assets — — — — 24 25 —
Goodwill and trademark impairment charges — 13 4,089 199 200 — —
Operating income (loss) 918 779 (3,841 ) 882 1,459 884 1,062
Interest and debt expense 150 147 111 85 113 50 87
Interest income (137 ) (62 ) (29 ) (30 ) (85 ) (30 ) (59 )
Provision for (benefit from) income taxes 448 265 (229 ) 202 431 325 390
Income (loss) from continuing operations 444 418 (3,689 ) 627 985 532 647
Income (loss) from discontinued operations (9 ) 40 122 12 2 — —
Extraordinary items — gain — — 121 49 55 — 74
Cumulative effect of accounting change — (502 ) — — — — —
Net income (loss) 435 (44 ) (3,446 ) 688 1,042 532 721
Cash Flow Data:

Net cash from (used in) operating activities $ 626 $ 489 $ 581 $ 736 $ 1,273 $ (40 ) $ 103
Net cash from (used in) investing activities(3) (307 ) (901 ) 641 260 (989 ) (224 ) (2,921 )
Net cash from (used in) financing activities (842 ) (105 ) (1,122 ) (467 ) (450 ) 209 2,590
Other Data (unaudited):

Ratio of earnings to fixed charges(4) 6.4 x 5.2 x — 9.5 x 12.2 x 16.2 x 12.2 x
Deficiency in the coverage of fixed charges by earnings before fixed charges (in millions)(4) $ — $ — $ (3,913 ) $ — $ — $ — $ —
52

Six Months Ended
Year Ended December 31, June 30,

2001 2002 2003 2004 2005 2005 2006

(Unaudited)
Per Share Data:(5)

Basic income (loss) from continuing operations $ 2.29 $ 2.36 $ (22.04 ) $ 2.83 $ 3.34 $ 1.80 $ 2.19
Diluted income (loss) from continuing operations 2.24 2.32 (22.04 ) 2.81 3.34 1.80 2.19
Basic weighted average shares, in thousands 194,087 177,467 167,394 221,556 294,790 294,766 294,991
Diluted average shares, in thousands 197,973 180,351 167,394 222,873 295,172 295,159 295,322
Cash dividends declared per share of common stock $ 1.65 $ 1.865 $ 1.90 $ 1.90 $ 2.10 $ 0.95 $ 1.25

As of December 31, As of June 30,

2001 2002 2003 2004 2005 2005 2006

(Unaudited)
Balance Sheet Data:

Cash, cash equivalents and short-term investments $ 2,227 $ 2,179 $ 1,630 $ 1,972 $ 2,706 $ 2,138 $ 1,822
Total current assets 3,928 3,992 3,331 4,624 5,065 4,490 4,083
Property, plant and equipment, net 1,050 940 894 1,129 1,053 1,094 1,065
Trademarks, net 2,773 2,085 1,759 2,403 2,188 2,395 2,182
Goodwill, net 6,875 7,090 3,292 5,685 5,672 5,684 9,059
Total assets 15,122 14,651 9,677 14,428 14,519 14,205 16,934
Tobacco settlement and related accruals 1,520 1,543 1,629 2,381 2,254 1,463 1,499
Current maturities 43 741 56 50 190 555 314
Total current liabilities 2,792 3,427 2,865 4,055 4,149 3,668 3,549
Long-term debt, less current maturities 1,631 1,755 1,671 1,595 1,558 1,580 4,413
Total liabilities 7,096 7,935 6,620 8,252 7,966 8,011 10,022
Shareholders’ equity 8,026 6,716 3,057 6,176 6,553 6,194 6,912
~~(1)~~ Net sales and cost of products sold exclude excise taxes of $1.067 billion and $1.069 billion for the six months ended June 30, 2005 and 2006, respectively, and $1.529 billion, $1.751 billion, $1.572 billion, $1.850 billion and $2.175 billion for the years ended December 31, 2001, 2002, 2003, 2004 and 2005, respectively.
~~(2)~~ Cost of products sold includes settlement expense of $1.218 billion and $1.327 billion for the six months ended June 30, 2005 and 2006, respectively. Cost of products sold includes federal tobacco buyout expense of $142 million and $126 million for the six months ended June 30, 2005 and 2006, respectively. Cost of products sold includes settlement expense of $2.6 billion, $2.5 billion, $1.9 billion, $2.2 billion and $2.6 billion for the years ended December 31, 2001, 2002, 2003, 2004 and 2005, respectively. Cost of products sold includes federal tobacco buyout expense of $70 million and $345 million during 2004 and 2005, respectively. See “Litigation Affecting the Cigarette Industry — Governmental Health-Care Cost Recovery Cases — MSA and Other State Settlement Agreements” and “Tobacco Buyout Legislation” in note 8 to the unaudited financial statements appearing in RAI’s June 30, 2006, Form ~~10-Q,~~ ~~incorporated by reference herein.~~
~~(3)~~ Reflects reclassification of auction rate notes from cash and cash equivalents to short-term investments, resulting in an increase of $81 million in net cash flows used in investing activities in 2002 and an increase of $161 million in net cash flows from investing activities in 2003. Reclassifications in 2001 were not included, as information was not practically available.
~~(4)~~ For purposes of calculating the ratio of earnings to fixed charges, earnings consist of income before income taxes and fixed charges and fixed charges consist of interest on indebtedness, amortization of debt issuance costs and~~one-third~~ ~~of operating rental expense, representative of the interest factor.~~
~~(5)~~ ~~On July 19, 2006, RAI announced that its board of directors had declared atwo-for-one~~ stock split, to be effected in the form of a 100% stock dividend of its common stock, to shareholders of record on July 31, 2006. The stock dividend was distributed to RAI’s shareholders on August 14, 2006. All share and per share amounts have been adjusted to reflect this stock split.
53
~~BUSINESS~~
~~Introduction~~
      RAI was incorporated as a holding company in 2004 to facilitate transactions to combine the U.S. cigarette and tobacco assets, liabilities and operations of B&W with RJR Tobacco. RAI’s wholly owned subsidiaries include its operating subsidiaries, RJR Tobacco, Santa Fe, Lane and GPI, as well as Conwood, which RAI acquired on May 31, 2006.
      RJR Tobacco is the second largest cigarette manufacturer in the United States. Its largest selling cigarette brands, CAMEL, KOOL, WINSTON, SALEM and DORAL, were five of the ten best-selling brands of cigarettes in the United States in 2005. Those brands, and its other brands, including PALL MALL, ECLIPSE, MISTY, CAPRI, CARLTON, VANTAGE, MORE and NOW, are manufactured in a variety of styles and marketed in the United States to meet a range of adult smoker preferences. RJR Tobacco also manufactures tobacco products on a contract basis for BAT and certain of its affiliates. Santa Fe manufactures and markets cigarettes and other tobacco products under the NATURAL AMERICAN SPIRIT brand. Santa Fe markets its products primarily in the United States, and has a small, but growing, international tobacco business. Lane manufactures or distributes cigars, roll-your-own, cigarette and pipe tobacco brands, including DUNHILL and CAPTAIN BLACK tobacco products. GPI manufactures and exports cigarettes to U.S. territories, U.S. duty-free shops and U.S. overseas military bases, and manages a contract manufacturing business. For the years ended December 31, 2005, 2004 and 2003, RAI’s operating subsidiaries(excluding Conwood) had net sales to foreign countries of $548 million, $304 million and $94 million, respectively.
      Conwood is the second largest smokeless tobacco products manufacturer in the United States. Conwood’s largest selling moist snuff brands, KODIAK and GRIZZLY, were two of the six best-selling brands of moist snuff in the United States in 2005. Its other products include loose leaf chewing tobacco, dry snuff, plug and twist tobacco products and held the first or second position in market share in each category in 2005. Conwood markets its products only in the United States.
~~RJR Tobacco~~
      ~~RJR Tobacco’s brand portfolio strategy, which took~~follows, after giving effect at the beginning of 2005, includes three categories of brands: investment, selective support and non-support. The investment brands are CAMEL and KOOL, which receive significant resources focused on accelerating their share-of-market growth. The selective support brands include two full-price brands, WINSTON and SALEM, and two savings brands, DORAL and PALL MALL, all of which receive limited support in an effort to optimize profitability. ECLIPSE, a full-price brand of cigarettes that primarily heats rather than burns tobacco, is also a selective support brand. The non-support brands, comprised of all remaining brands, are managed to maximize near-term profitability. RJR Tobacco expects that, over a four- to six-year time frame, this focused portfolio strategy will result in growth in total company share, as gains on investment brands more than offset declines among other brands.
      During 2005, CAMEL’s filtered styles accelerated their growth based on the strength of the brand’s equity, driven by its “Pleasure to Burn” positioning. In addition, RJR Tobacco launched Turkish Silver in April 2005. Initiatives launched in prior years to actively market CAMEL’s three distinct product families — Classic, Turkish and Exotic Blends — also contributed to the brand’s performance in 2005. During 2005, RJR Tobacco introduced KOOL’s “Be True” advertising campaign to support KOOL’s future growth potential. KOOL’s full-year share of market increased in 2005 to its highest level since 1999 due to this and other initiatives to strengthen its appeal among adult menthol smokers.
      The combined share of market of the investment brands showed improvement during 2005 over 2004, and during the first six months of 2006 over the first six months of 2005. However, the decline in share of selective support and non-support brands more than offset the gains on the investment brands. This decline was partially driven by RJR Tobacco’s strategic shifts in 2005 to give significant resources to the investment brands. Within the selective support brands, PALL MALL savings continued to show slight
stock split.
54
   Pro Forma
Nine Months
Ended
September 30, 2015    Pro Forma
Year Ended
December 31, 2014
   (dollars in millions
except per share data)
Pro forma net income
   $ 1,815       $ 1,997




Pro forma basic weighted average shares outstanding
   1,429,094       1,431,094
Dilutive effect of securities:

RAI restricted stock units
   3,430       3,620




Pro forma diluted weighted average shares outstanding, in thousands
   1,432,524       1,434,714




Pro forma basic earnings per share
   $ 1.27       $ 1.40
Pro forma diluted earnings per share
   $ 1.27       $ 1.39
~~share growth in 2005 and in the first six months of 2006. ECLIPSE continues to be sold in limited distribution throughout the country and is supported by a cost-efficient marketing plan.~~
      In the first quarter of 2006, CAMEL introduced new CAMEL Wides packaging and initiated efforts to enhance the performance of the brand’s menthol styles, including new packaging. In the second quarter of 2006, CAMEL introduced CAMEL SNUS, a smokeless, spitless tobacco product, in test markets. KOOL continued to maintain its appeal among adult menthol smokers and increased its share in the second quarter of 2006 over the prior-year quarter. In the first six months of 2006, share loss of non-investment brands moderated, and overall share results were in line with the current brand portfolio strategy.
      RJR Tobacco’s marketing programs are designed to strengthen brand image, build brand awareness and loyalty and switch adult smokers of competing brands. In addition to building strong brand equity, RJR Tobacco’s marketing approach utilizes a retail pricing strategy, including discounting at retail, to defend certain brands’ shares of market against competitive pricing pressure. RJR Tobacco’s competitive pricing includes list price changes, discounting programs, such as retail buydowns, free product promotions and consumer coupons. RJR Tobacco provides trade incentives through trade terms, wholesale partner programs and retail incentives.
      Anti-smoking groups have attempted to restrict cigarette sales, cigarette advertising and the testing and introduction of new cigarette products. The MSA and other federal, state and local laws restrict utilization of television, radio or billboard advertising or certain other marketing and promotional tools for cigarettes. RAI’s operating subsidiaries continue to advertise their cigarettes in magazines where the vast majority of readers are adults 18 years of age or older, direct mailings and other means to market their cigarette brands and enhance their appeal among age-verified adult smokers. RAI’s operating subsidiaries continue to advertise and promote at retail cigarette locations and in adult venues where permitted.
      Primary competitors of RJR Tobacco include Philip Morris USA Inc., a subsidiary of Altria Group, Inc., referred to as Philip Morris, Lorillard Tobacco Company, an indirect subsidiary of the Loews Corporation, and manufacturers of deep-discount brands. From 1998 through 2002, the premium or full-price tier was negatively impacted by widening price gaps between those brands and the deep-discount brands. Since 2003, the price gap has remained relatively level.
      Based on data collected by IRI during 2005, 2004 and 2003, the combined retail share of RJR Tobacco and B&W of the U.S. cigarette market was 29.98%, 30.82% and 32.09%, respectively. During these same years, Philip Morris’ share was 50.73%, 50.00% and 49.37%, respectively, and the remaining participants held lesser shares. This data does not reflect revisions made by IRI to its market share data in April 2006 to better estimate participants’ shares of U.S. retail cigarette sales. The use of IRI’s revised methodology would not have had a material impact on the foregoing percentages. You should not rely on the market share data reported by IRI as being precise measurements of actual market share, however, because IRI’s reporting is based on sampling and, in addition, IRI is not able to effectively track the volume of all deep-discount brands. RAI believes that deep-discount brands made by small manufacturers have a combined market share of 13% to 15% of U.S. industry unit sales. Accordingly, the retail share of market of RAI’s operating subsidiaries and their brands as reported by IRI may overstate their actual market share.
      Cigarette competition is based primarily on brand positioning and price, as well as product attributes and packaging, consumer loyalty, promotions, advertising and retail presence. Cigarette brands produced by the major manufacturers generally require competitive pricing, substantial marketing support, retail programs and other incentives to maintain or improve a brand’s market position or to introduce a new brand.
~~Conwood~~
      ~~Moist snuff accounts for more than 70% of Conwood’s sales, led by both the premium-priced KODIAK brand and value-priced GRIZZLY brand. In 2005, Conwood had 23% by volume of the~~
55
U.S. moist snuff category, which has had an average growth rate of approximately 4% per year over the past four years. Loose leaf accounted for 20% of Conwood’s sales in 2005, led by the LEVI GARRETT brand. Conwood’s recent growth has been driven by the introduction of the GRIZZLY brand, which was the first significant brand launched in the sub-price value tier. Despite the introductions of sub-price value brands by two major competitors in the last three years, GRIZZLY has continued to increase its market share, holding approximately a 45% share of the price-value tier for the first six months of 2006. KODIAK has also been a well-recognized premium brand for the past 25 years, holding approximately a 9% share of the premium tier for the first six months of 2006. During the first half of 2006, the premium tier and the price-value tier represented approximately 58% and 42% of the U.S. moist snuff market, respectively.
      Conwood’s largest competitor is UST, Inc., whose share of the U.S. smokeless tobacco market for the first six months of 2006 was roughly 62%. Conwood also competes in the U.S. smokeless tobacco market with both domestic and international companies marketing and selling price-value and sub-price-value smokeless tobacco products. In addition, RJR Tobacco’s largest competitor in the cigarette market, Philip Morris, has recently begun test marketing smokeless tobacco products. As smokers continue to switch from cigarettes to smokeless tobacco products, other companies may test or enter the smokeless tobacco marketplace.
56
DESCRIPTION OF MATERIAL INDEBTEDNESS

Revolving Credit Facility
On December 18, 2014, RAI ~~Credit Facilities~~
      ~~Concurrently~~entered into the revolving credit facility with a syndicate of lenders, providing for a five-year $2 billion senior unsecured revolving credit facility, which may be increased to $2.35 billion at the discretion of the lenders upon the request of RAI. The original maturity date of the revolving credit facility was December 18, 2019. Pursuant to the maturity date extension provision of the revolving credit facility, the requisite lenders agreed, in October 2015 and upon RAI’s request, to extend the maturity date of the revolving credit facility by 12 months, to December 18, 2020. Subject to the terms and conditions stated therein, the maturity date of the revolving credit facility may be extended further, upon the request of RAI and with the consent of the requisite lenders, an additional 12 months to December 18, 2021.
Certain of RAI’s subsidiaries, including its material subsidiaries, as such term is defined in the revolving credit facility, have guaranteed, on an unsecured basis, RAI’s obligations under the revolving credit facility.
As of September 30, 2015, there were no outstanding borrowings and $8 million of letters of credit outstanding under the revolving credit facility.
RAI Notes
As of September 30, 2015, the principal amount of RAI’s outstanding notes was $17.2 billion, including the old notes, with maturity dates ranging from 2015 to 2045. RAI, at its option, may redeem any or all of its outstanding notes, in whole or in part at any time, subject to the payment of an applicable premium. RAI’s outstanding notes include $9.0 billion aggregate principal amount of RAI senior notes that were issued on June 12, 2015, to fund part of the cash portion of the merger consideration. Interest on the notes is payable semi-annually.
RAI’s obligations under its existing notes are unsecured and are guaranteed, on an unsecured basis, by the same subsidiaries that guarantee its obligations under the revolving credit facility, and that will guarantee the new notes issued in the Exchange Offers.
At September 30, 2015, RAI had $872 million of current maturities of long-term debt. RAI repaid $450 million of notes on their maturity date of October 30, 2015. See note 12 to the condensed consolidated financial statements (unaudited) included in RAI’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2015, for additional information.
Lorillard Tobacco Notes
On June 11, 2015, RAI commenced offers to exchange any and all (to the extent held by eligible holders) of the $3.5 billion aggregate principal amount of the then outstanding Lorillard Tobacco notes for the old notes. RAI completed the private exchange offers on July 15, 2015. Approximately $3.1 billion, representing 89%, of the Lorillard Tobacco notes were exchanged for the old notes.
As of September 30, 2015, the principal amount of the Lorillard Tobacco notes was $377 million, with maturity dates ranging from 2016 to 2041. Such notes represent the unexchanged Lorillard Tobacco notes, originally issued by Lorillard Tobacco, as to which RJR Tobacco became the principal obligor in connection with the closing of the ~~Conwood acquisition,~~Lorillard Tobacco merger. RAI ~~entered into new $2.1 billion senior secured credit facilities consisting of:~~
• ~~a $1.55 billion six-year senior secured term loan; and~~
• ~~a $550 million five-year senior secured revolving credit facility (which may be increased to $800 million at the discretion of the lenders and at the request of RAI).~~
      ~~RAI used borrowings under~~and RJR are the ~~term loan together with~~guarantors of the ~~net proceeds from~~Lorillard Tobacco notes. Interest on the ~~sale~~notes is payable semi-annually.
At September 30, 2015, RJR Tobacco had $86 million of ~~Category A old notes and available cash~~current maturities of long-term debt. See note 12 to ~~pay~~ the ~~$3.5 billion purchase price~~condensed consolidated financial statements (unaudited) included in RAI’s Quarterly Report on Form10-Q for the ~~Conwood acquisition and the fees and expenses related to the Conwood transactions.~~
      ~~The term loan requires quarterly, mandatory repayments of approximately $4 million, beginning~~fiscal quarter ended September 30, ~~2006. An~~2015, for additional mandatory repayment is due 110 days after the last day of each year, commencing December 31, 2007, equal to excess cash flow as defined in the credit agreement, including reductions for, among other things, capital expenditures, cash dividends, debt principal payments and pension funding. The revolver is available for borrowings and issuances of letters of credit, at RAI’s option. At June 30, 2006, RAI had $25 million in letters of credit outstanding under its revolver. No borrowings were outstanding, and the remaining $525 million of the revolver was available for borrowing. Under the terms of its credit facilities, RAI is not required to maintain compensating balances; however, RAI is required to pay a commitment fee ranging from 0.75% to 1.50% per annum on the unused portion of the revolver. RAI can prepay the term loan at any time; provided, however, that if new indebtedness is incurred in connection with such prepayment, unless otherwise consented to by the lenders under RAI’s credit facilities, such indebtedness must have terms substantially identical to the notes, other than with respect to principal amounts, interest rates and payment and maturity dates, and any maturity date for such indebtedness cannot be prior to one year following the maturity date of the term loan.
      ~~Borrowings under the credit facilities bear interest, at the option of RAI, at a rate equal to an applicable margin plus:~~
• ~~the reference rate, which is the higher of (1) the federal funds effective rate from time to time plus 0.5% and (2) the prime rate; or~~
• ~~the Eurodollar rate, which is the rate at which Eurodollar deposits for one, two, three or six months are offered in the interbank Eurodollar market.~~
      The credit facilities’ applicable margin is subject to adjustment based upon RAI’s consolidated leverage ratio and the credit ratings assigned to the RAI credit facilities. At June 30, 2006, RAI had the following term loan amounts outstanding: $700 million bearing interest at the June 1, 2006, three-month LIBOR rate plus 1.875% and $850 million bearing interest at the June 1, 2006, six-month LIBOR rate plus 1.875%. Overdue principal and, to the extent permitted by law, overdue interest outstanding under the credit facilities bear interest at a rate equal to the rate then in effect with respect to such borrowings, plus 2.0% per annum.
      The credit facilities have restrictive covenants that limit RAI’s and its subsidiaries’ ability to pay dividends and repurchase stock, make investments, prepay certain indebtedness, incur indebtedness, engage in transactions with affiliates, create liens, acquire, sell or dispose of specific assets and engage in specified mergers or consolidations.
      Certain of RAI’s domestic subsidiaries, including its material domestic subsidiaries, have guaranteed RAI’s obligations under the credit facilities. RAI has pledged substantially all of its assets, including the stock of its direct subsidiaries, to secure such obligations. The guarantors have also pledged substantially all of their assets (including the stock, indebtedness and other obligations held by or owing to such guarantor of a subsidiary, other than for RJR and its direct and indirect subsidiaries, which pledge is
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limited to the stock, indebtedness and other obligations of RJR Tobacco held by or owing to RAI or any of the guarantors) to secure such obligations; provided, however, the pledge of assets by Lane, Santa Fe and Scott Tobacco is limited to certain personal property.
      Under the terms of RAI’s credit facilities, at such time, if any, as RAI has repaid the term loan in full and has obtained a corporate rating of investment grade from each of Moody’s and S&P (with not worse than stable outlooks), the security for RAI’s credit facilities will automatically be released and the obligations thereunder will become unsecured; provided, however, that if certain defaults exist under the 2006 indenture at such time, the collateral will not be released until these defaults are cured or waived. The guarantees of RAI’s obligations under the credit facilities, however, will not be automatically released under these circumstances.
      ~~Pursuant to documents~~information relating to the credit facilities, in the event of RAI’s exposure under any hedging arrangement with a lender under the credit facilities (or any affiliate of such lender), RAI’s obligations with respect to such hedging arrangement will be guaranteed by the same entities and secured by the same assets as under RAI’s credit facilities.
~~RJR Notes~~
      RAI’s long-term indebtedness includes outstanding notes of RJR in the aggregate principal amount of approximately $250 million, of which $161 million are currently guaranteed by RAI and certain direct and indirect subsidiaries of RJR, and $89 million are not guaranteed. None of the RJR notes are currently secured.
Lorillard Tobacco notes.
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DESCRIPTION OF THE NEW NOTES

General
The new notes will be the direct obligations of RAI and will consist of ~~eight~~seven series of debt securities ~~set forth~~to be issued under the RAI indenture. The following summary highlights selected provisions of the RAI indenture (which includes the guarantees) and the new notes and may not contain all the information that is important to you. For a complete description of the RAI indenture and new notes, you should read carefully all of their provisions. We have previously filed with the SEC a copy of the RAI indenture, as supplemented to date. A copy of the RAI indenture and new notes are also available upon request to the Office of the Secretary, Reynolds American Inc., P.O. Box 2990, Winston-Salem, North Carolina 27102-2990. In addition, this summary is qualified in its entirety by reference to the ~~table below.~~Trust Indenture Act. The maximum aggregate principal amount of each series of new notes is also set forth in the table below.
The form and terms of each series of new notes will be ~~substantially~~ the same as the form and terms of the corresponding series of old notes, except that the offer and sale of the new notes have been registered under the Securities Act, and the new notes will not have transfer restrictions, registration rights or certain rights to additional interest that the old notes have. The new notes will represent the same debt as the corresponding old notes, and will be issued under the same indenture as the old notes.
      ~~The new notes will be~~
References to “debt securities” in this section refer to debt securities issued ~~in fully registered form, without coupons, only in minimum denominations of $2,000, increased in multiples of $1,000. Interest on~~under the RAI indenture, including the new notes, ~~issued~~unless the context requires otherwise.
Up to $3,122,670,000 aggregate principal amount of new notes, consisting of:
1. Up to $414,793,000 aggregate principal amount of 3.500% Senior Notes due 2016;
2. Up to $447,092,000 aggregate principal amount of 2.300% Senior Notes due 2017;
3. Up to $668,689,000 aggregate principal amount of 8.125% Senior Notes due 2019;
4. Up to $641,462,000 aggregate principal amount of 6.875% Senior Notes due 2020;
5. Up to $473,689,000 aggregate principal amount of 3.750% Senior Notes due 2023;
6. Up to $236,748,000 aggregate principal amount of 8.125% Senior Notes due 2040; and
7. Up to $240,197,000 aggregate principal amount of 7.000% Senior Notes due 2041
are being offered in exchange for the ~~Category A~~seven corresponding series of old notes ~~will accrue from the last~~with identical interest payment date on which interest was paid on such old notes or, if no interest has been paid on such old notes, from May 31, 2006. Interest on the new notes issued in exchange for Category B old notes will accrue from the last interest payment date on which interest was paid on such old notes. Notwithstanding the foregoing, if new notes are issued in exchange for old notes between a record date for the payment of interest on the notes and the interest payment date following such record date, interest on the new notes will begin to accrue from such interest payment date. Interest will be payable semiannually, in arrears, on therate provisions, interest payment dates, set forth in the table below, to the persons in whose names the notes are registered at the close of business on the interest payment record dates set forth below preceding the respective interest payment dates, except that interest payable atand maturity ~~of the notes shall be paid to the same persons to whom principal of the notes is payable. Interest will be computed on the notes on the basis of a360-day~~ ~~year of twelve30-day~~ ~~months.~~ dates.
The ~~notes are redeemable at the option of~~ RAI ~~as described under “— Optional Redemption.” The notes will not be subject to any sinking fund.~~

Maximum
Aggregate Maturity Annual Interest Annual Interest
New Notes Principal Amount Date Payment Record Dates Payment Dates

6.500% Senior Secured Notes due 2007 $ 236,449,000 June 1, 2007 May 15 and November 15 June 1 and December 1
7.875% Senior Secured Notes due 2009 $ 185,731,000 May 15, 2009 May 1 and November 1 May 15 and November 15
6.500% Senior Secured Notes due 2010 $ 299,265,000 July 15, 2010 January 1 and July 1 January 15 and July 15
7.250% Senior Secured Notes due 2012 $ 367,927,000 June 1, 2012 May 15 and November 15 June 1 and December 1
7.250% Senior Secured Notes due 2013 $ 625,000,000 June 1, 2013 May 15 and November 15 June 1 and December 1
7.300% Senior Secured Notes due 2015 $ 199,445,000 July 15, 2015 January 1 and July 1 January 15 and July 15
7.625% Senior Secured Notes due 2016 $ 775,000,000 June 1, 2016 May 15 and November 15 June 1 and December 1
7.750% Senior Secured Notes due 2018 $ 250,000,000 June 1, 2018 May 15 and November 15 June 1 and December 1
      The new notes will be issued under the 2006 indenture. The following summary highlights selected provisions of the 2006 indenture (which includes the guarantees) and the new notes and may not contain all the information that is important to you. For a complete description of the 2006 indenture and the new notes, you should read carefully all of their provisions. A copy of the foregoing is available upon request to the Office of the Secretary, Reynolds American Inc., P.O. Box 2990, Winston-Salem, North Carolina~~27102-2990.~~ ~~In addition, this summary is qualified in its entirety by reference to the Trust Indenture Act.~~
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      ~~Certain capitalized terms used in this section are defined below under “— Certain Definitions.”~~
      ~~The 2006~~ indenture does not limit the aggregate principal amount of debt securities that may be issued thereunder and provides that debt securities may be issued thereunder from time to time in one or more additional series. We may “reopen” a previous issue of a series of debt securities and issue additional debt securities of that issue without the consent of the noteholders of the relevant series. The offered new notes and any additional notes of RAI subsequently issued ~~thereunder~~under the RAI indenture will rank equally with each other and RAI’s existing notes and will be treated as a single class for certain purposes under the ~~2006~~RAI indenture, including with respect to amendments of the ~~2006~~RAI indenture and defaults affecting all series of notes issued under the ~~2006~~RAI indenture. The ~~2006~~RAI indenture contains covenants that:
restrict the ability of RAI and certain of its subsidiaries to:
mortgage or pledge certain of their assets to secure indebtedness,
• ~~restrict the ability of RAI and certain of its subsidiaries to:~~
engage in sale/leaseback transactions, or
• ~~mortgage or pledge certain of their assets to secure indebtedness;~~
• ~~engage in sale and leaseback transactions; or~~
• ~~consolidate, merge or transfer all or substantially all of their property and assets; and~~
consolidate, merge or transfer all or substantially all of their property and assets; and
• prohibit RJR, at any time in the future that it does not guarantee the obligations of RAI under the notes, from creating, incurring, issuing, assuming, guaranteeing or otherwise becoming directly or indirectly liable, contingently or otherwise, with respect to any indebtedness to persons other than RAI or any of the guarantors (excluding accounts payable), other than securities issued under the 2006 indenture, including the notes, the RJR notes and RAI’s credit facilities.
prohibit RJR, at any time in the future that it does not guarantee the obligations of RAI under the new notes, from creating, incurring, issuing, assuming, guaranteeing or otherwise becoming directly or indirectly liable, contingently or otherwise, with respect to any indebtedness to persons other than RAI or any of the guarantors (excluding accounts payable), other than debt securities issued under the RAI indenture, including the new notes offered hereby and the existing notes of RAI, and the revolving credit facility (and any replacements or refinancings thereof).
The ~~2006~~RAI indenture does not contain any cross-default or cross-acceleration provisions, and does not limit the ability of RAI or any of its subsidiaries (other than RJR, as described above) to incur additional indebtedness.
Upon a payment default with respect to any series of notes, however, or in other circumstances causing indebtedness under any series of notes to be accelerated, an event of default will exist under the revolving credit facility.
The new notes will be issued in fully registered form, without coupons, only in minimum denominations of $2,000, and integral multiples of $1,000 in excess of $2,000. The new notes are redeemable at the option of RAI as described under “—Optional Redemption.” The new notes will not be subject to any sinking fund.
Maturity and Interest
Each new note matures on the same date as the corresponding tendered old note. Interest on the new notes issued in exchange for old notes will accrue from the last interest payment date on which interest was paid on such old notes or, if no interest has been paid on such old notes, from the last interest payment date on which interest was paid on the Lorillard Tobacco notes for which the old notes were issued in exchange. Notwithstanding the foregoing, if new notes are issued in exchange for old notes between a record date for the payment of interest on such series of old notes and the interest payment date for such series of old notes following such record date, interest on the corresponding series of new notes will begin to accrue from such interest payment date. If your old notes are accepted for exchange, you will be deemed to have waived your right to receive any interest on the old notes accrued since your last interest payment date (other than, in the event that new notes are issued in exchange for old notes between a record date for the payment of interest on such series of old notes and the interest payment date for such series of old notes following such record date, your right as a holder of old notes of such series on such record date to receive an interest payment on such old notes related to such record date). Consequently, holders of old notes whose old notes are accepted for exchange will receive the same interest payments on the new notes that they would have received on the old notes had they not exchanged their old notes in the Exchange Offers.
The interest rates, maturity dates and interest payment dates for the seven series of new notes offered in the Exchange Offers are set forth in the table below. Interest is payable semi-annually, in arrears, on the interest payment dates to the persons in whose names the new notes are registered at the close of business on the preceding interest payment record date, except that interest payable at maturity of the new notes shall be paid to the same persons to whom principal of such new notes is payable. Interest will be computed on the new notes on the basis of a 360-day year of twelve 30-day months.
Interest Rates and Maturity Dates
Interest Payment Dates
3.500% Senior Notes due August 4, 2016
February 4 and August 4
2.300% Senior Notes due August 21, 2017
February 21 and August 21
8.125% Senior Notes due June 23, 2019*
June 23 and December 23
6.875% Senior Notes due May 1, 2020
May 1 and November 1
3.750% Senior Notes due May 20, 2023
May 20 and November 20
8.125% Senior Notes due May 1, 2040
May 1 and November 1
7.000% Senior Notes due August 4, 2041
February 4 and August 4
* The interest rate on the 2019 new notes is subject to adjustment as described below under “—Interest Rate Adjustment on the 2019 New Notes.”
If an interest payment date (other than the maturity date) falls on a day that is not a business day, the interest payment date shall be postponed to the next succeeding business day. If the maturity date of the new notes falls on a day that is not a business day, we will make the required payment of principal and interest on the immediately succeeding business day, as if it were made on the date the payment was due. Interest will not accrue as a result of any postponed or delayed payment in accordance with this paragraph.
Interest Payment Record Dates
The interest payment record dates for each series of new notes are set forth in the table below:
Series
Interest Payment Record Dates
3.500% Senior Notes due 2016
January 20 and July 20
2.300% Senior Notes due 2017
February 6 and August 6
8.125% Senior Notes due 2019
June 8 and December 8
6.875% Senior Notes due 2020
April 15 and October 15
3.750% Senior Notes due 2023
May 5 and November 5
8.125% Senior Notes due 2040
April 15 and October 15
7.000% Senior Notes due 2041
January 20 and July 20
Interest Rate Adjustment on the 2019 New Notes
The interest rate payable on the 2019 new notes will be subject to adjustments from time to time if either Moody’s or S&P or, in either case, any substitute rating agency thereof downgrades (or subsequently upgrades) the debt rating assigned to the 2019 new notes, in the manner described below.
If the rating from Moody’s (or any substitute rating agency thereof) of the 2019 new notes is decreased to a rating set forth in the immediately following table, the interest rate on the 2019 new notes will increase such that it will equal the interest rate payable on the 2019 new notes on the date of their issuance plus the percentage set forth opposite the ratings from the table below:
Moody’s Rating*
Percentage
Points
Ba1
0.25
Ba2
0.50
Ba3
0.75
B1 or below
1.00
* Including the equivalent ratings of any substitute rating agency.
In addition, if the rating from S&P (or any substitute rating agency thereof) of the 2019 new notes is decreased to a rating set forth in the immediately following table, the interest rate on the 2019 new notes will increase such that it will equal the interest rate payable on the 2019 new notes on the date of their issuance plus the percentage set forth opposite the ratings from the table below:
S&P Rating*
Percentage
Points
BB+
0.25
BB
0.50
BB-
0.75
B+ or below
1.00
* Including the equivalent ratings of any substitute rating agency.
If at any time the interest rate on the 2019 new notes has been adjusted upward and either Moody’s or S&P (or, in either case, a substitute rating agency thereof), as the case may be, subsequently increases its rating of the 2019 new notes to any of the threshold ratings set forth above, the interest rate on the 2019 new notes will be decreased such that the interest rate for the 2019 new notes equals the interest rate payable on the 2019 new notes on the date of their issuance plus the percentages set forth opposite the ratings from the tables above in effect immediately following the increase. If Moody’s (or any substitute rating agency thereof) subsequently increases its rating of the 2019 new notes to Baa3 (or its equivalent, in the case of a substitute rating agency) or higher, and S&P (or any substitute rating agency thereof) increases its rating to BBB- (or its equivalent, in the case of a substitute rating agency) or higher, the interest rate on the 2019 new notes will be decreased to 8.125%. In addition, the interest rate on the 2019 new notes will permanently cease to be subject to any adjustment described above (notwithstanding any subsequent decrease in the ratings by either or both rating agencies) if the 2019 new notes become rated A3 and A- (or the equivalent of either such rating, in the case of a substitute rating agency) or higher by Moody’s and S&P (or, in either case, a substitute rating agency thereof), respectively (or one of these ratings if the 2019 new notes are only rated by one rating agency).
Each adjustment required by any decrease or increase in a rating set forth above, whether occasioned by the action of Moody’s or S&P (or, in either case, a substitute rating agency thereof), shall be made independent of any and all other adjustments. In no event shall (1) the interest rate for the 2019 new notes be reduced to below 8.125% or (2) the total increase in the interest rate on the 2019 new notes exceed 2.00% above 8.125%.
No adjustments in the interest rate of the 2019 new notes shall be made solely as a result of a rating agency ceasing to provide a rating of the 2019 new notes. If at any time fewer than two rating agencies provide a rating of the 2019 new notes for a reason beyond our control, we will use our commercially reasonable efforts to obtain a rating of the 2019 new notes from a substitute rating agency, to the extent one exists, and if a substitute rating agency exists, for purposes of determining any increase or decrease in the interest rate on the 2019 new notes pursuant to the tables above:
such substitute rating agency will be substituted for the last rating agency to provide a rating of the 2019 new notes but which has since ceased to provide such rating,
the relative rating scale used by such substitute rating agency to assign ratings to senior unsecured debt will be determined in good faith by an independent investment banking institution of national standing appointed by us and, for purposes of determining the applicable ratings included in the applicable table above with respect to such substitute rating agency, such ratings will be deemed to be the equivalent ratings used by Moody’s or S&P, as applicable, in such table, and
the interest rate on the 2019 new notes will increase or decrease, as the case may be, such that the interest rate equals the interest rate payable on the 2019 new notes on the date of their issuance plus the appropriate percentage, if any, set forth opposite the rating from such substitute rating agency in the applicable table above (taking into account the provisions of the second clause above) (plus any applicable percentage resulting from a decreased rating by the other rating agency).
For so long as only one rating agency provides a rating of the 2019 new notes, any subsequent increase or decrease in the interest rate of the 2019 new notes necessitated by a reduction or increase in the rating by the rating agency providing the rating shall be twice the percentage set forth in the applicable table above. For so long as none of Moody’s, S&P or a substitute rating agency provides a rating of the 2019 new notes for reasons within our control, the interest rate on the 2019 new notes will increase to, or remain at, as the case may be, 2.00% above the interest rate payable on the 2019 new notes on the date of their issuance.
Any interest rate increase or decrease described above will take effect from the first day of the interest period during which a rating change requires an adjustment in the interest rate. If Moody’s or S&P (or, in either case, a substitute rating agency thereof) changes its rating of the 2019 new notes more than once during any particular interest period, the last change by such agency will control for purposes of any interest rate increase or decrease with respect to the 2019 new notes described above relating to such rating agency’s action.
If the interest rate payable on the 2019 new notes is increased as described above, the term “interest,” as used with respect to the 2019 new notes, will be deemed to include any such additional interest unless the context otherwise requires.
The Guarantees
      ~~Certain~~
Upon issuance, certain of RAI’s direct and indirect subsidiaries, ~~— Conwood Company, Conwood Holdings, Conwood Sales Co., FHS, GMB, Lane, RJR Acquisition, RJR Packaging, GPI, RJR Tobacco Co., RJR Tobacco, RJR, Rosswil, Santa Fe and Scott Tobacco (collectively~~collectively referred to as the ~~guarantors) —~~guarantors, will fully, unconditionally and irrevocably guarantee, on a joint and several basis, the full and prompt payment of the principal of, premium, if any, and interest on the new notes on an unsubordinated basis. ~~All of~~The entities that will initially guarantee the new notes are RAI’s direct subsidiaries, RAI Services Company, Conwood Holdings, Inc., RJR and Santa Fe Natural Tobacco Company, Inc., and RAI’s indirect subsidiaries, American Snuff Company, LLC, Rosswil LLC, R. J. Reynolds Global Products, Inc., R. J. Reynolds Tobacco Company, Reynolds Finance Company, Reynolds Innovations Inc., R. J. Reynolds Tobacco Co. and Lorillard Licensing Company LLC. These same entities ~~that~~ guarantee RAI’s obligations under ~~its~~the revolving credit ~~facilities guarantee the obligations~~facility and RAI’s existing notes.
Each subsidiary of RAI that, in the future, guarantees RAI’s obligations under its revolving credit facility, or any replacement or refinancing thereof, will guarantee RAI’s obligations under the new notes. ~~RJR, RJR Packaging, GPI and Scott Tobacco became guarantors~~Under the revolving credit facility, only “material subsidiaries” of RAI (within the meaning of the ~~old notes on September 30, 2006. In addition, at the time of issuance of the old notes, Conwood Company and Conwood Sales Co. were limited partnerships. Each of these entities converted~~revolving credit facility) are required to ~~a limited liability company effective August 11, 2006.~~
become guarantors thereof.
If a guarantor of the new notes ceases to be a guarantor under ~~RAI’s~~the revolving credit ~~facilities~~facility (or any replacements or refinancings thereof), for any reason, such guarantor will be deemed released from all of its obligations under the ~~2006~~RAI indenture and its guarantee of the notes issued thereunder will terminate. In addition, if the lenders under RAI’s credit facilities release the security interest in the assets of a guarantor (whether prior to or following a termination of the guarantee), any collateral pledged by such guarantor to secure the notes and its guarantee of the notes will automatically be released. RAI’s credit facilities do not provide for any automatic release of the guarantees of RAI’s obligations thereunder.
      The 2006 indenture provides that the obligations of each guarantor are limited to the maximum amount that, after giving effect to all other contingent and fixed liabilities of such guarantor (including, without limitation, any guarantees under the credit facilities) and after giving effect to any collections from or payments made by or on behalf of any other guarantor in respect of the obligations of such other guarantor under its guarantee or pursuant to its contribution obligations under the 2006 indenture, would cause the obligations of such guarantor under its guarantee not to constitute a fraudulent conveyance or fraudulent transfer under federal or state law.
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~~Security for the New Notes and the Guarantees~~
      ~~Upon issuance, the~~ new notes will ~~be secured by certain assets of RAI and certain of the guarantors pursuant to the security documents discussed below.~~
~~Stock of RJR Tobacco.~~~~The stock of RJR Tobacco owned by RJR~~terminate. Generally, a guarantor will be pledged to the collateral agent under the credit facilities to secure the new notes. No shares of stock or any other equity interest of any other guarantor of the notes will be pledged to the collateral agent under the credit facilities to secure the new notes.
~~Principal property.~~Upon issuance, the new notes will be secured by all Principal Property (as defined below under “— Certain Definitions”) of RAI and the guarantors other than, pursuant to the terms of the 2006 indenture, any property owned by Santa Fe or Lane. In addition, because Scott Tobacco has not pledged its Principal Property to securereleased from its obligations under ~~RAI’s credit facilities, its Principal Property has not been pledged~~such facility if it ceases to ~~secure its obligations under the notes.~~
      RAI and the guarantors, including Santa Fe, Lane and Scott Tobacco, have pledged substantially all their assets to secure their obligations under RAI’s credit facilities. However, these entities will pledge onlybe a portion of their assets to secure the new notes. The assets pledged to secure their obligations under RAI’s credit facilities that will not be pledged to secure the obligations under the new notes include, among other assets:
• ~~stock, indebtedness and other obligations of subsidiaries held by or owing to RAI or a RAI~~ subsidiary ~~(other than the stock, indebtedness or other obligations of RJR Tobacco, which will be pledged to secure the new notes);~~
• ~~intellectual property;~~
• ~~inventory;~~
• ~~cash; and~~
• ~~accounts receivable.~~
The stock, indebtedness and other obligations of subsidiaries held by or owing to RAI or a RAI subsidiary (other than the stock, indebtedness or other obligations of RJR Tobacco, which will be pledged to secure the new notes) have not been and will not be pledged to secure obligations under the notes.
      The 2006 indenture provides that, except as discussed under “— Covenants — Restrictions on Liens,” if RAI or any of its Restricted Subsidiaries, as defined below, mortgage or pledge as security for any indebtedness any Principal Property of RAI in a transaction permitted by the facility or ~~such Restricted Subsidiary, then RAI will secure or cause such Restricted Subsidiary~~if it ceases to ~~secure the notes equally and ratably with all indebtedness secured by such mortgage or pledge, so long as such indebtedness shall~~ be ~~so secured.~~
      ~~Further, the 2006 indenture provides that if RAI and its Restricted Subsidiaries mortgage or pledge as security for any public bonds or notes any shares of stock, indebtedness or other obligation of~~ a subsidiary other than RJR Tobacco held by or owed to any of RAI or such Restricted Subsidiary, then RAI will secure or cause such Restricted Subsidiary to secure the notes equally and ratably with all public bonds or notes secured by such mortgage or pledge, so long as such public bonds or notes shall be so secured. At such time as the assets described above are no longer pledged to secure public bonds or notes, as the case may be, of RAI other than the notes, such assets automatically will be released as collateral for the notes. RAI and the guarantors have pledged substantially all of their assets to secure their respective obligations under RAI’s credit facilities and thus, with the exception of Santa Fe, Lane and Scott Tobacco, will also pledge their Principal Property to secure their respective obligations under the 2006 indenture.
      Currently, RAI has no subordinated debt. Therefore, all of its debt, including its guarantee obligations with respect to the RJR notes, is senior debt. As of June 30, 2006, RAI had approximately $2.407 billion in senior debt (not including the notes, but including RAI’s guarantee obligations with respect to the RJR notes) that would be pari passu in right of payment with the notes.
material subsidiary.
61Ranking
      As of the date of this prospectus, the minimum investment grade rating of S&P is BBB- and of Moody’s is Baa3. At such time as RAI has repaid the term loan in full and has obtained a corporate rating of investment grade from each of S&P and Moody’s (with not worse than stable outlooks), the security granted to secure the obligations under the credit facilities will automatically be released and, under the terms of the 2006 indenture, the collateral securing the notes will be released. Thereafter, at such time as RAI receives a corporate rating at least one level below investment grade from both S&P and Moody’s, or a corporate rating at least two levels below investment grade from either of S&P or Moody’s, RAI and the guarantors are required to repledge the security granted to secure the obligations under the credit facilities and thus repledge the collateral described above to secure their obligations with respect to the notes. In addition, whether or not there is any change in RAI’s corporate rating, the lenders under RAI’s credit facilities have the right, at any time, in their sole discretion, to instruct the collateral agent to release all or any portion of the security for both the credit facilities and the notes without obtaining any consent or approval from any holders of the notes.
~~Documents Creating the Security Interests; Exercise of Remedies~~
~~Description of the Security Documents~~
      The assets described above which secure the obligations of RAI and the guarantors under RAI’s credit facilities and the notes and the guarantees of the notes, are pledged under the terms of security documents in favor of the collateral agent under RAI’s credit facilities. These documents grant, in favor of the collateral agent and for the express benefit of the lenders under RAI’s credit facilities and the notes, a security interest in each of the categories of assets described above with respect to the credit facilities and the notes. The collateral agent, pursuant to the terms of the security documents, acts as agent for the lenders under RAI’s credit facilities and acts as agent for the holding and liquidation of rights in the assets pledged to secure RAI’s credit facilities and the notes.
~~No Ability to Declare a Cross-Default Under the 2006 Indenture~~
      ~~Upon a default occurring under the 2006 indenture, the lenders under RAI’s credit facilities also may declare a default under the credit facilities.~~
      Upon a default under RAI’s credit facilities, the lenders thereunder may require the collateral agent to pursue the remedies set forth in the security documents. However, a default under RAI’s credit facilities does not cause a default under the 2006 indenture, or give the noteholders thereunder a right to accelerate such debt.
~~Enforcement of Remedies Following a Default Under the 2006 indenture~~
      Upon a default under the notes issued under the 2006 indenture, the holders thereof may only seek enforcement of the remedies set forth in the security documents if the lenders under the credit facilities have required the collateral agent to take action against the collateral following a default under the credit facilities, unless a payment default with respect to at least $300 million of the principal amount of indebtedness under the 2006 indenture occurs and continues in existence for at least 180 days, following which the holders of such indebtedness can direct the collateral agent to enforce the remedies under the security documents, independent of a default under the credit facilities; provided that, following the initiation of such enforcement, the required lenders under the credit facilities may direct the collateral agent as to the enforcement process, and the collateral agent shall comply with such directions (without any opportunity for consent or direction from the holders of the notes), so long as such directions are not contrary to the directions of the holders of the notes.
~~Ranking~~
The new notes will be the senior ~~secured obligations of RAI, and the guarantees will be the senior secured obligations of each guarantor (except in each case those obligations preferred by operation of law).~~
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~~While Secured~~
      ~~The new notes will be the direct, senior secured~~unsecured obligations of RAI, and will rank equally in right of payment with RAI’s existing and future senior obligations ~~and, while secured, equally in right~~(except those obligations preferred by operation of ~~security~~law) and priority with RAI’s existing and future senior obligations that are secured by the same assets. As of June 30, 2006, not including RAI’s guarantee of the RJR notes, RAI had senior obligations of $5.185 billion (including current liabilities and intercompany obligations). Of these obligations, $1.575 billion are secured by a first priority security interest in substantially all the assets of RAI; the notes, in the aggregate principal amount of $2.939 billion, are secured by a first priority security interest in only a portion of these same assets; and $671 million are unsecured. In addition, as of June 30, 2006, RAI had obligations of $161 million related to its guarantee of RJR’s obligations under the RJR notes.
      ~~The new notes will rank~~ senior to any existing and future obligations from time to time of RAI that are, by their terms, expressly subordinated in right of payment to the new notes. ~~As of June 30, 2006, RAI had no subordinated obligations.~~
      ~~RAI’s obligations under the~~The new notes will be structurally subordinated to the obligations of ~~any~~ non-guarantor subsidiaries of RAI. As
Each of ~~June 30, 2006, RAI’s non-guarantor subsidiaries had obligations of $98 million.~~
      ~~RAI’s obligations under~~ the new notes will be effectively subordinated to RAI’s obligations under its credit facilities and any future obligations of RAI to the extent of the value of those assets securing the credit facilities and such future obligations that do not also secure the notes. As of June 30, 2006, RAI had $1.575 billion of indebtedness (consisting of borrowings and letters of credit issued under RAI’s credit facilities) secured by substantially all the assets of RAI. Only a portion of these same assets secures the notes in the aggregate principal amount of $2.939 billion. In addition, as of June 30, 2006, RAI had $525 million of availability under its revolver, all of which, if borrowed, would be secured by substantially all the assets of RAI.
      ~~The~~ guarantees related to the new notes will be the senior ~~secured~~unsecured obligations of the ~~guarantors~~applicable guarantor, and will rank equally in right of payment with the existing and future senior obligations of ~~the guarantors and, while secured, equally in right~~such guarantor (except those obligations preferred by operation of security and priority with the guarantors’ other existing and future senior obligations that are secured by the same assets. As of June 30, 2006 (after giving effect to certain transactions that occurred effective September 30, 2006, relating to intercompany obligations that existed on June 30, 2006), the guarantors had senior obligations of $11.823 billion (including the RJR notes, tobacco settlement and related accruals and current liabilities and intercompany obligations)law). ~~Of these obligations, $1.575 billion are secured by a first priority security interest in substantially all the assets~~Each of the guarantors; the notes, in the aggregate principal amount of $2.939 billion, are secured by a first priority security interest in only a portion of these same assets of the guarantors; and $7.309 billion are unsecured.
      ~~The guarantors’ obligations~~guarantees related to the new notes will rank senior to any existing and future subordinated obligations from time to time of ~~the guarantors~~such guarantor that are, by their terms, expressly subordinated in right of payment to the ~~notes. As of June 30, 2006, the guarantors did not have any obligations that were subordinated to their guarantees of the notes.~~
      ~~The guarantors’ obligations related to the new notes~~guarantee. Each guarantee will be structurally subordinated to all of the obligations of any non-guarantor subsidiaries of the ~~guarantors. As~~applicable guarantor.
Change of ~~June 30, 2006, the guarantors’ non-guarantor subsidiaries had obligations~~Control Repurchase Event
If a Change of ~~$98 million.~~
      ~~The guarantors’ obligations related~~Control Repurchase Event (as defined below) occurs with respect to a series of new notes offered hereby, unless we have exercised our right to redeem the new notes of that series as described below, we will ~~be effectively subordinated~~make an offer to ~~their guarantees~~each holder of ~~RAI’s current~~new notes of that series to repurchase all or any part (in excess of $2,000 and ~~future obligations under the credit facilities and any future additional obligations~~in integral multiples of ~~RAI~~$1,000) of that holder’s notes of that series at a repurchase price in cash equal to ~~the extent~~101% of the value of those assets securing the guarantee of the credit facilities and such other future obligations that do not also secure the guarantee of the notes. As of June 30, 2006, the guarantors had $1.575 billion of indebtedness (consisting of their guarantees of borrowings and letters of credit issued under RAI’s credit facilities) secured by substantially all their assets. Only a portion of these same assets secures the notes and related guarantees in the aggregate principal amount of
new notes repurchased plus any accrued and unpaid interest on the new notes repurchased to the date of repurchase. Within 30 days following any Change of Control Repurchase Event, we will mail a notice to each holder, with a copy to the trustee, describing the transaction or transactions that constitute the Change of Control Repurchase Event and offering to repurchase new notes on the payment date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed.
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~~$2.939 billion. In addition, as~~We will comply with the requirements of ~~June 30, 2006, RAI had $525 million of availability~~Rule 14e-1 under ~~its revolver, all of which, if borrowed, would be secured by substantially all~~ the ~~assets~~Securities Exchange Act and any other securities laws and regulations thereunder, to the extent those laws and regulations are applicable in connection with the repurchase of the ~~guarantors.~~
      ~~If any secured obligation is accelerated, the lenders under that secured obligation will be entitled to exercise the remedies available to~~new notes as a ~~secured lender under applicable law and pursuant to the terms~~result of ~~the agreement securing that obligation. The ability~~a Change of ~~holders of the notes to exercise remedies is limited as discussed above.~~Control Repurchase Event. To the extent that the provisions of ~~those assets that secure~~any securities laws or regulations conflict with the Change of Control Repurchase Event provisions of the new notes, we will comply with the applicable securities laws and regulations and will not be deemed to have breached our obligations under the Change of Control Repurchase Event provisions of the new notes by virtue of such conflict.
On the Change of Control Repurchase Event payment date, we will, to the extent lawful:
accept for payment all new notes or portions of new notes (in excess of $2,000 and in integral multiples of $1,000) properly tendered pursuant to our offer;
deposit with RAI’s paying agent an amount equal to the aggregate repurchase price in respect of all new notes or portions of new notes properly tendered; and
deliver or cause to be delivered to the trustee the new notes properly accepted, together with an officers’ certificate stating the aggregate principal amount of new notes being purchased by us.
The paying agent will promptly mail to each holder of new notes properly tendered the repurchase price for the new notes, and ~~credit facilities,~~ the ~~proceeds~~trustee will promptly authenticate and mail (or cause to be transferred by book-entry) to each holder a new note equal in principal amount to any unpurchased portion of ~~such security, upon liquidation,~~any new notes surrendered; provided that each new note will be ~~shared equally and ratably among~~in a principal amount of $2,000 or an integral multiple of $1,000.
We will not be required to make an offer to repurchase the ~~holders~~new notes upon a Change of Control Repurchase Event if a third party makes such ~~secured obligations (subject,~~an offer in the ~~case~~manner, at the times and otherwise in compliance with the requirements for an offer made by us, and such third party purchases all new notes properly tendered and not withdrawn under its offer.
We have no present intention to engage in a transaction involving a Change of Control, although it is possible that we would decide to do so in the future. In addition, a Change of Control could occur with no action on our part. We could, in the future, enter into certain transactions, including acquisitions, refinancings or other recapitalizations, that would not constitute a Change of Control, but that could increase the amount of debt outstanding at such time or otherwise affect our capital structure or credit ratings.
Certain definitions relevant to Change of Control Repurchase Events are set forth below.
“Below Investment Grade Rating Event” means, with respect to each series of new notes, the new notes of that series are downgraded by each of the ~~holders~~Rating Agencies on any date from the date of the public notice of an arrangement that could result in a Change of Control until the end of the 60-day period following public notice of the occurrence of a Change of Control (which period shall be extended so long as the rating of the new notes is under publicly announced consideration for possible downgrade by any of the Rating Agencies) from a rating that is Investment Grade to a rating that is below Investment Grade.
“Change of Control” means the ~~limitations on enforcement~~occurrence of ~~remedies contained~~any of the following:
the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the security documents and described under “— Documents Creating the Security Interests; Exercise of Remedies”). With respect to the exercise of remedies by the lenders under RAI’s credit facilities, thoseproperties or assets of RAI and its subsidiaries taken as a whole to any person other than RAI or one of its wholly owned subsidiaries;
the ~~guarantors~~consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that ~~secure~~any person other than RAI or one of its wholly owned subsidiaries becomes the beneficial owner, directly or indirectly, of more than 50% of the then outstanding number of shares of Voting Stock of RAI or other Voting Stock into which RAI’s Voting Stock is reclassified, consolidated, exchanged or changed, measured by voting power rather than number of shares;
the consolidation of RAI with, or merger of RAI with or into, any person, or the consolidation of any person with, or merger with or into, RAI, in any such event pursuant to a transaction in which any of RAI’s outstanding Voting Stock or the Voting Stock of such other person is converted into or exchanged for cash, securities or other property, other than any such transaction where the shares of RAI’s Voting Stock outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the Voting Stock of the surviving person or any direct or indirect parent company of the surviving person immediately after giving effect to such transaction; and
the adoption of a plan relating to RAI’s liquidation or dissolution (other than its liquidation into a holding company newly formed in accordance with the following paragraph, provided that all claims and obligations of RAI are assumed by, and all assets are transferred to such holding company).
Notwithstanding the foregoing, a transaction will not be deemed to involve a Change of Control under the ~~credit facilities, but not~~second clause above if (1) we become a direct or indirect wholly owned subsidiary of a holding company and (2) (a) the ~~notes and~~direct or indirect holders of the ~~proceeds thereof, will, upon any liquidation thereof, be unavailable to~~Voting Stock of such holding company immediately following that transaction are substantially the same as the holders of ~~such notes.~~
~~While Unsecured~~
      ~~Upon any release~~our Voting Stock immediately prior to that transaction or (b) immediately following that transaction no person (other than a holding company satisfying the requirements of this sentence) is the beneficial owner, directly or indirectly, of more than 50% of the ~~collateral securing~~Voting Stock of such holding company. As used in this paragraph and the ~~obligations~~definition of “Change of Control,” the term “person” has the meaning given thereto in Section 13(d)(3) of the Securities Exchange Act and the term “beneficial owner” has the meaning given thereto in Rules 13d-3 and 13d-5 promulgated under the Securities Exchange Act.
“Change of Control Repurchase Event” means the occurrence of both a Change of Control and a Below Investment Grade Rating Event.
“Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any successor rating categories of Moody’s); a rating of BBB- or better by S&P (or its equivalent under any successor rating categories of S&P); or the equivalent investment grade credit rating from any additional Rating Agency or Rating Agencies selected by us pursuant to the second clause of the definition of Rating Agency.
“Rating Agency” means (1) each of Moody’s and S&P; and (2) if either of Moody’s or S&P ceases to rate the new notes or fails to make a rating of the new notes publicly available for reasons outside of our control, a “nationally recognized statistical rating organization” within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Securities Exchange Act, selected by us as a replacement agency for Moody’s or S&P, as the case may be.
“Voting Stock” means, with respect to any specified “person” (as that term is used in Section 13(d)(3) of the Securities Exchange Act) as of any date, the capital stock of such person that is at the time entitled to vote generally in the election of the board of directors of such person.
The first clause of the definition of Change of Control includes a phrase relating to the direct or indirect sale, transfer, conveyance or other disposition of “all or substantially all” of the properties or assets of RAI and its subsidiaries, taken as a whole. Although there is a limited body of case law interpreting the ~~guarantors~~phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a holder of new notes ~~and guarantees and any~~to require RAI to repurchase its new notes as a result of a sale, transfer, conveyance or other ~~indebtedness~~disposition of ~~RAI secured by such collateral,~~less than all of the ~~notes will be unsecured obligations~~properties or assets of RAI and ~~the guarantees will~~its subsidiaries, taken as a whole, to another person or group may be ~~unsecured obligations~~uncertain.
Optional Redemption
Series Other Than 2023 New Notes
Each series of the relevant guarantor, and such obligations will rank equally in right of payment with all other existing and future unsubordinated, unsecured obligations of RAI and such guarantor, respectively (except those obligations preferred by operation of law).
~~Same-Day Settlement and Payment~~
      ~~The~~ new notes ~~will trade in~~(other than the same-day funds settlement system of DTC until maturity or until RAI issues the notes in definitive form. DTC will therefore require secondary market trading activity in the notes to settle in immediately available funds. RAI can give no assurance as to the effect, if any, of settlement in immediately available funds on trading activity in the notes.
~~Optional Redemption~~
      ~~The~~2023 new ~~notes will be~~notes) are redeemable, in whole at any time or in part from time to time, at any time after their issuance, at the option of RAI, at a redemption price equal to the greater ~~of (1)~~ of:
100% of the principal amount of ~~the~~new notes being redeemed, and ~~(2)~~
the sum of the present values of the remaining scheduled payments of principal and interest on the new notes being redeemed discounted to the date of redemption on a semi-annual basis (assuming a360-day year consisting of twelve 30-day months) at a yield equal to (1) the applicable Treasury Rate (as defined below), plus (2) 10 basis points,
plus accrued and unpaid interest on the principal amount of the applicable series of new notes being redeemed to the redemption date.
2023 New Notes
The 2023 new notes are redeemable, in whole at any time or in part from time to time, at any time after their issuance and prior to February 20, 2023, at the option of RAI, at a redemption price equal to the greater of:
100% of the principal amount of the 2023 new notes being redeemed, and
the sum of the present values of the remaining scheduled payments of principal and interest on the 2023 new notes being redeemed discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a yield equal to (1) the applicable Treasury Rate, plus (2) 10 basis points,
plus accrued and unpaid interest on the ~~following amounts:~~
~~Optional Redemption~~
~~Notes~~ ~~Spread (In Basis Points)~~
~~6.500% Senior Secured Notes due June 1, 2007~~ 25
~~7.875% Senior Secured Notes due May 15, 2009~~ ~~37.5~~
~~6.500% Senior Secured Notes due July 15, 2010~~ 50
~~7.250% Senior Secured Notes due June 1, 2012~~ 30
~~7.250% Senior Secured Notes due June 1, 2013~~ 50
~~7.300% Senior Secured Notes due July 15, 2015~~ 50
~~7.625% Senior Secured Notes due June 1, 2016~~ 50
~~7.750% Senior Secured Notes due June 1, 2018~~ 50
      ~~“Treasury~~principal amount of the 2023 new notes being redeemed to the redemption date.
On or after February 20, 2023, the 2023 new notes are redeemable at the option of RAI, at any time or from time to time, either in whole or in part, at a redemption price equal to 100% of the principal amount of the 2023 new notes being redeemed, plus accrued and unpaid interest on the principal amount of the 2023 new notes being redeemed at such redemption date.
Definitions
Certain definitions relevant to determining the Treasury Rate are set forth below.
“Treasury Rate” means, with respect to any redemption ~~date, (1)~~ date:
the yield, under the heading which represents the average for the immediate preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication that is published weekly by the
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Board of Governors of the Federal Reserve System and that establishes yields on actively traded U.S. Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the Remaining Life, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Rate will be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month); or ~~(2)~~
if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Price for such redemption date. The Treasury Rate will be calculated on the third business day preceding the redemption date.
“Comparable ~~Treasury Issue, calculated using a price for the Comparable Treasury Price for such redemption date. The Treasury Rate will be calculated on the third business day preceding the redemption date.~~
      ~~“Comparable~~ Treasury Issue” means the U.S. Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term ~~(“Remaining Life”)~~ of the relevant series of new notes to be redeemed (“Remaining Life”) that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the ~~remaining term of such notes.~~
      ~~“Independent~~Remaining Life.
“Independent Investment Banker” means any of ~~Lehman Brothers Securities~~Citigroup Global Markets Inc., or J.P. Morgan Securities ~~Inc. or Citigroup Global Markets Inc.~~LLC, or, if all such firms are unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by ~~the trustee after consultation with~~ RAI.
      ~~“Comparable~~
“Comparable Treasury Price” ~~means (1)~~ means:
the average of five Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest Reference Treasury Dealer ~~Quotations,~~Quotations; or ~~(2)~~
if the Independent Investment Banker obtains fewer than five such Reference Treasury Dealer Quotations, the average of all such quotations.
      ~~“Reference~~
“Reference Treasury Dealer” ~~means (1) Lehman Brothers Securities~~means:
Citigroup Global Markets Inc., or J.P. Morgan Securities ~~Inc. and Citigroup Global Markets Inc.~~LLC, and their respective successors; provided, however, that if ~~either~~any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), RAI will substitute for such firm another Primary Treasury ~~Dealer~~Dealer; and ~~(2)~~
any other Primary Treasury Dealer selected by the Independent Investment Banker after consultation with RAI.
      ~~“Reference~~
“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m., New York City time, on the third business day preceding such redemption date.
Holders of new notes to be redeemed will receive notice thereof by first-class mail at least 30 and not more than 60 days prior to the date fixed for redemption. If fewer than all of the new notes of a series are to be redeemed, the trustee will select in accordance with applicable depository procedures, to the extent applicable, not more than 60 days prior to the redemption date, the particular new notes of that series or portions thereof for redemption from the outstanding and not previously called new notes of that series by such method as the trustee under the RAI indenture deems fair and appropriate.

Covenants
The following ~~restrictions will~~covenants apply to the new notes.
Restrictions on Liens
The ~~2006~~RAI indenture provides that RAI will not, and will not permit any Restricted Subsidiary, as defined below, to:
mortgage or pledge as security for any indebtedness any Principal Property, as defined below, of RAI or a Restricted Subsidiary, whether such Principal Property is owned at the date of the RAI indenture
• ~~mortgage~~
or ~~pledge as security for any indebtedness any Principal Property of RAI or a Restricted Subsidiary, whether such Principal Property is owned at the date of the 2006 indenture or~~
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thereafter acquired, unless RAI secures or causes such Restricted Subsidiary to secure the ~~new notes~~debt securities equally and ratably with all indebtedness secured by such mortgage or pledge, so long as such indebtedness shall be so secured;
• mortgage or pledge as security for any indebtedness any shares of stock, indebtedness or other obligations of RJR Tobacco, unless RAI pledges or secures or causes such Restricted Subsidiary to pledge or secure (1) such shares of stock, indebtedness or other obligations of RJR Tobacco to RAI equally and ratably with all indebtedness secured by such mortgage or pledge, so long as such indebtedness shall be so secured, and assign RAI’s security interest in such assets to the collateral agent to secure the new notes equally and ratably with all indebtedness secured by such mortgage or pledge, so long as such indebtedness shall be so secured, or (2) the new notes equally and ratably with all indebtedness secured with such mortgage or pledge, so long as such indebtedness shall be so secured; or
• mortgage or pledge as security for any public bonds or notes any shares of stock, indebtedness or other obligations of a subsidiary (other than that of RJR Tobacco) held by or owed to any of RAI or such Restricted Subsidiary, whether such shares of stock, indebtedness or other obligations are owned at the date of the 2006 indenture or thereafter acquired, unless RAI secures or causes such Restricted Subsidiary to secure the new notes equally and ratably with all such public bonds or notes secured by such mortgage or pledge, so long as such public bonds or notes shall be so secured.
mortgage or pledge as security for any indebtedness any shares of stock, indebtedness or other obligations of RJR Tobacco, unless RAI pledges or secures or causes such Restricted Subsidiary to pledge or secure (1) such shares of stock, indebtedness or other obligations of RJR Tobacco to RAI equally and ratably with all indebtedness secured by such mortgage or pledge, so long as such indebtedness shall be so secured, and assign RAI’s security interest in such assets to the collateral agent to secure the debt securities equally and ratably with all indebtedness secured by such mortgage or pledge, so long as such indebtedness shall be so secured, or (2) the debt securities equally and ratably with all indebtedness secured with such mortgage or pledge, so long as such indebtedness shall be so secured; or
mortgage or pledge as security for any public bonds or notes any shares of stock, indebtedness or other obligations of a subsidiary (other than that of RJR Tobacco) held by or owed to any of RAI or such Restricted Subsidiary, whether such shares of stock, indebtedness or other obligations are owned at the date of the RAI indenture or thereafter acquired, unless RAI secures or causes such Restricted Subsidiary to secure the debt securities equally and ratably with all such public bonds or notes secured by such mortgage or pledge, so long as such public bonds or notes shall be so secured.
These covenants regarding liens do not apply in the case of:
the creation of any mortgage, pledge or other lien on any shares of stock, indebtedness or other obligations of a subsidiary or any Principal Property acquired after the date of the RAI indenture (including acquisitions by way of merger or consolidation) by RAI or a Restricted Subsidiary contemporaneously with such acquisition, or within 120 days thereafter, to secure or provide for the payment or financing of any part of the purchase price thereof, or the assumption of any mortgage, pledge or other lien upon any shares of stock, indebtedness or other obligations of a subsidiary or any Principal Property acquired after the date of the RAI indenture existing at the time of such acquisition, or the acquisition of any shares of stock, indebtedness or other obligations of a subsidiary or any Principal Property subject to any mortgage, pledge or other lien without the assumption thereof; provided, that every such mortgage, pledge or lien referred to in this clause shall attach only to the shares of stock, indebtedness or other obligations of a subsidiary or any Principal Property so acquired and fixed improvements thereon;
any mortgage, pledge or other lien on any shares of stock, indebtedness or other obligations of a subsidiary or any Principal Property existing at the date of the RAI indenture;
• the creation of any mortgage, pledge or other lien on any shares of stock, indebtedness or other obligations of a subsidiary or any Principal Property acquired after the date of the 2006 indenture (including acquisitions by way of merger or consolidation) by RAI or a Restricted Subsidiary contemporaneously with such acquisition, or within 120 days thereafter, to secure or provide for the payment or financing of any part of the purchase price thereof, or the assumption of any mortgage, pledge or other lien upon any shares of stock, indebtedness or other obligations of a subsidiary or any Principal Property acquired after the date of the 2006 indenture existing at the time of such acquisition, or the acquisition of any shares of stock, indebtedness or other obligations of a subsidiary or any Principal Property subject to any mortgage, pledge or other lien without the assumption thereof; provided, that every such mortgage, pledge or lien referred to in this clause shall attach only to the shares of stock, indebtedness or other obligations of a subsidiary or any Principal Property so acquired and fixed improvements thereon;
• ~~any mortgage, pledge or other lien on any shares of stock, indebtedness or other obligations of a subsidiary or any Principal Property existing at the date of the 2006 indenture;~~
• ~~any mortgage, pledge or other lien on any shares of stock, indebtedness or other obligations of a subsidiary or any Principal Property in favor of RAI or any Restricted Subsidiary;~~
• ~~any mortgage, pledge or other lien on Principal Property being constructed or improved securing loans to finance such construction or improvements;~~
• any mortgage, pledge or other lien on shares of stock, indebtedness or other obligations of a subsidiary or any Principal Property incurred in connection with the issuance of tax exempt governmental obligations; and
• any renewal of or substitution for any mortgage, pledge or other lien permitted by any of the preceding clauses; provided, that in the case of a mortgage, pledge or other lien permitted under the second, third or fifth clauses above, the debt secured is not increased nor the lien extended to any additional assets.
any mortgage, pledge or other lien on any shares of stock, indebtedness or other obligations of a subsidiary or any Principal Property in favor of RAI or any Restricted Subsidiary;
any mortgage, pledge or other lien on Principal Property being constructed or improved securing loans to finance such construction or improvements;
any mortgage, pledge or other lien on shares of stock, indebtedness or other obligations of a subsidiary or any Principal Property incurred in connection with the issuance of tax exempt governmental obligations; and
any renewal of or substitution for any mortgage, pledge or other lien permitted by any of the preceding clauses; provided, that in the case of a mortgage, pledge or other lien permitted under the second, third or fifth clauses above, the debt secured is not increased nor the lien extended to any additional assets.
Notwithstanding the foregoing, RAI or any Restricted Subsidiary may create or assume liens in addition to the permitted liens described above, and renew, extend or replace such ~~liens;~~liens, provided that at
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the time of such creation, assumption, renewal, extension or replacement, and after giving effect thereto, Exempted Debt, as defined below, does not exceed 10% of Consolidated Net Worth, as defined below.
Restrictions on Sale and ~~Lease-Back~~Leaseback Transactions
The ~~2006~~RAI indenture provides that RAI will not, and will not permit any Restricted Subsidiary to, sell or transfer, directly or indirectly, except to RAI or a Restricted Subsidiary, any Principal Property as an entirety, or any substantial portion thereof, with the intention of taking back a lease of such property, except a lease for a period of three years or less at the end of which it is intended that the use of such property by the lessee will be discontinued; provided, that RAI or any Restricted Subsidiary may sell any such Principal Property and lease it back for a longer period if:
RAI or such Restricted Subsidiary would be entitled, pursuant to the provisions of the RAI indenture described above under “—Restrictions on Liens,” to create a mortgage on the property to be leased securing Funded Debt, as defined below, in an amount equal to the Attributable Debt, as defined below, with respect to such sale and leaseback transaction without equally and ratably securing the outstanding debt securities issued under the RAI indenture; or
RAI promptly informs the trustee of such transaction, the net proceeds of such transaction are at least equal to the fair value (as determined by resolution of the board of directors of RAI) of such property and RAI causes an amount equal to the net proceeds of the sale to be applied to the retirement, within 120 days after receipt of such proceeds, of Funded Debt incurred or assumed by RAI or a Restricted Subsidiary (including the debt securities);
      (a) RAI or such Restricted Subsidiary would be entitled, pursuant to the provisions of the 2006 indenture described above under “— Restrictions on Liens,” to create a mortgage on the property to be leased securing Funded Debt in an amount equal to the Attributable Debt with respect to such sale and lease-back transaction without equally and ratably securing the outstanding debt securities issued under the 2006 indenture; or
      ~~(b) (1) RAI promptly informs the trustee of such transaction,~~
      ~~(2) the net proceeds of such transaction are at least equal to the fair value (as determined by resolution of the board of directors of RAI) of such property, and~~
      (3) RAI causes an amount equal to the net proceeds of the sale to be applied to the retirement, within 120 days after receipt of such proceeds, of Funded Debt, as defined below, incurred or assumed by RAI or a Restricted Subsidiary (including the debt securities);
provided, further, that in lieu of applying all of or any part of such net proceeds to such retirement, RAI may, within 75 days after such sale, deliver or cause to be delivered to the applicable trustee for cancellation either debentures or notes evidencing Funded Debt of RAI (which may include ~~the~~ outstanding debt securities) or of a Restricted Subsidiary previously authenticated and delivered by the applicable trustee, and not theretofore tendered for sinking fund purposes or called for a sinking fund or otherwise applied as a credit against an obligation to redeem or retire such notes or debentures. If RAI so delivers debentures or notes to the applicable trustee with an ~~Officers’ Certificate,~~officers’ certificate, the amount of cash which RAI will be required to apply to the retirement of Funded Debt will be reduced by an amount equal to the aggregate of the then applicable optional redemption prices (not including any optional sinking fund redemption prices) of such debentures or notes, or if there are no such redemption prices, the principal amount of such debentures or notes; provided, that in the case of debentures or notes which provide for an amount less than the principal amount thereof to be due and payable upon a declaration of the maturity thereof, such amount of cash shall be reduced by the amount of principal of such debentures or notes that would be due and payable as of the date of such application upon a declaration of acceleration of the maturity thereof pursuant to the terms of the indenture pursuant to which such debentures or notes were issued.
Notwithstanding the foregoing, RAI or any Restricted Subsidiary may enter into sale and ~~lease-back~~leaseback transactions in addition to those permitted in the foregoing paragraph and without any obligation to retire any outstanding debt securities or other Funded ~~Debt;~~Debt, provided that at the time of entering into such sale and ~~lease-back~~leaseback transactions and after giving effect thereto, Exempted Debt does not exceed 10% of Consolidated Net Worth.
Restrictions on Mergers and Sales of Assets
Nothing contained in the RAI indenture will prevent any consolidation or merger of RAI into any other corporation or corporations (whether or not affiliated with RAI), or successive consolidations or mergers to which RAI or its successor will be a party, or will prevent any sale, lease or conveyance of the property of RAI, as an entirety or substantially as an entirety, provided that upon any such consolidation, merger, sale, lease or conveyance to which RAI is a party and in which RAI is not the surviving corporation, the due and punctual performance and observance of all of the covenants and conditions of the RAI indenture to be performed or observed by RAI and the due and punctual payment of the principal of and interest on all of the debt securities and the guarantees, according to their tenor, shall be expressly assumed by supplemental indenture satisfactory in
form to the trustee, executed and delivered to the trustee, by the corporation formed by such consolidation, or into which RAI shall have been merged, or which shall have acquired such property.
Unless otherwise provided with respect to a particular series, holders of debt securities are not afforded any protection in the event of a decline in RAI’s credit quality resulting from a change of control transaction, a highly leveraged transaction or other similar transactions involving RAI or any of the Restricted Subsidiaries.
Restrictions on Incurrence of Indebtedness by RJR
The ~~2006~~RAI indenture prohibits RJR, at any time ~~in the future that~~ it does not guarantee the obligations of RAI under the ~~notes,~~debt securities, from creating, incurring, issuing, assuming, guaranteeing or otherwise becoming directly or indirectly liable, contingently or otherwise, with respect to any indebtedness to persons other than RAI or any of the guarantors (excluding accounts payable) other than debt securities issued under the RAI indenture, outstanding notes ~~the~~of RJR ~~notes, other notes issued pursuant to the 2006 indenture and RAI’s credit facilities.~~
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~~Restrictions on Mergers and Sales of Assets~~
      Nothing contained in the 2006 indenture or in the notes will prevent any consolidation or merger of RAI into any other corporation or corporations (whether or not affiliated with RAI), or successive consolidations or mergers to which RAI or its successor will be a party, or will prevent any sale, lease or conveyance of the property of RAI, as an entirety or substantially as an entirety; provided, that upon any such consolidation, merger, sale, lease or conveyance to which RAI is a party and in which RAI is not the surviving corporation, the due and punctual performance and observance of all of the covenants and conditions of the 2006 indenture to be performed or observed by RAI and the ~~due and punctual payment~~revolving credit facility.
Events of ~~the principal of and interest on all of the debt securities and the guarantees, according to their tenor, shall be expressly assumed by supplemental~~Default
The RAI indenture satisfactory in form to the trustee, executed and delivered to the trustee, by the corporation formed by such consolidation, or into which RAI shall have been merged, or which shall have acquired such property.
      The 2006 indenture does not contain provisions which would afford the holders of notes protection in the event of a decline in RAI’s credit quality resulting from a change of control transaction, a highly leveraged transaction or other similar transactions involving RAI orprovides that any of the ~~Restricted Subsidiaries.~~
~~Events of Default~~
      ~~An event~~following events will be events of default with respect to the debt securities of a series, including the new notes:
default in payment of any principal of such series when the same shall become due and payable, either at maturity, upon any redemption, by declaration or otherwise;
default for 30 days in payment of any interest on the debt securities of such series;
default for 90 days after written notice in the observance or performance of any other covenant or agreement in respect of the debt securities of such series;
certain events of bankruptcy, insolvency or reorganization;
any guarantee ceasing to be in full force and effect (except as contemplated by the terms of the RAI indenture) or any guarantor denying or disaffirming in writing its obligations under the RAI indenture or its guarantee; and
at any time as such security is required under the RAI indenture, any security document ceasing to be in full force and effect or ceasing to give the collateral agent the liens or any of the material rights, powers and privileges purported to be created thereby in favor of the collateral agent and such default continuing unremedied for a period of at least 30 days after written notice to RAI by the collateral agent.
The RAI indenture provides that:
if an event of default due to the default in payment of principal of, premium, if any, or any interest on, the debt securities of any series or due to the default in the performance, or breach of any other covenant or warranty of RAI applicable to the debt securities of such series but not applicable to other outstanding debt securities issued under the RAI indenture shall have occurred and be continuing, either the trustee or the holders of not less than 25% in principal amount of the ~~notes is defined~~debt securities of each series affected by the default issued under the ~~2006~~RAI indenture then outstanding (voting as a single class) by notice in ~~relevant part as being:~~writing may then declare the principal of all debt securities of all such affected series and interest accrued thereon to be due and payable immediately; and
if an event of default due to a default in the performance of any of the other covenants or agreements in the RAI indenture applicable to all outstanding debt securities or due to certain events of bankruptcy, insolvency and reorganization of RAI or any other event of default provided in a supplemental indenture or board resolution relating to the debt securities shall have occurred and be continuing, either the trustee or the holders of not less than 25% in principal amount of all debt securities issued
• ~~default in payment of any principal of such series when the same shall become due and payable, either at maturity, upon any redemption, by declaration or otherwise;~~
• ~~default for 30 days in payment of any interest on the notes of such series;~~
• ~~default for 90 days after written notice in the observance or performance of any other covenant or agreement in respect of the notes of such series;~~
• ~~certain events of bankruptcy, insolvency or reorganization;~~
• ~~any guarantee ceasing to be in full force and effect (except as contemplated by the terms of the 2006 indenture) or any guarantor denying or disaffirming in writing its obligations~~
under the ~~2006 indenture or its guarantee; and~~
• at any time as such security is required under the 2006 indenture, any security document ceasing to be in full force and effect or ceasing to give the collateral agent the liens or any of the material rights, powers and privileges purported to be created thereby in favor of the collateral agent and such default continuing unremedied for a period of at least 30 days after written notice to RAI ~~by the collateral agent.~~
      ~~The 2006 indenture provides that:~~
• if an event of default due to the default in payment of principal of, premium, if any, or any interest on, the notes of any series or due to the default in the performance, or breach of any other covenant or warranty of RAI applicable to the notes of such series but not applicable to other outstanding notes issued under the 2006 indenture shall have occurred and be continuing, either the trustee or the holders of not less than 25% in principal amount of the debt securities of each series affected by the default issued under the 2006 indenture then outstanding (voting as a single class) by notice in writing may then declare the principal of all debt securities of all such affected series and interest accrued thereon to be due and payable immediately; and
• if an event of default due to a default in the performance of any of the other covenants or agreements in the 2006 indenture applicable to all outstanding debt securities or due to certain events of bankruptcy, insolvency and reorganization of RAI or any other event of default provided in a supplemental indenture or board resolution relating to the debt securities shall have occurred and be continuing, either the trustee or the holders of not less than 25% in principal amount of all
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~~debt securities issued under the 2006~~ indenture then outstanding (treated as one class) by notice in writing may declare the principal of all such debt securities and interest accrued thereon to be due and payable immediately,
but upon certain conditions such declarations may be annulled and past defaults may be waived (except a continuing default in payment of principal of, premium, if any, or any interest on such debt securities) by the holders of a majority in principal amount of the debt securities of all affected series then outstanding.
The ~~2006~~RAI indenture contains a provision entitling the trustee, subject to the duty of the trustee during a default to act with the required standard of care, to be indemnified by the holders of debt securities before proceeding to exercise any right or power under the ~~2006~~RAI indenture at the request of such holders. Subject to such provisions in the ~~2006~~RAI indenture for the indemnification of the trustee and certain other limitations, the holders of a majority in aggregate principal amount of the debt securities of each affected series then outstanding (with each such series voting as a separate class) may direct the time, method and place of conducting any proceeding for any remedy available to the trustee, or exercising any trust or power conferred on the trustee.
The ~~2006~~RAI indenture provides that no holder of ~~notes~~debt securities may institute any action against RAI under the ~~2006~~RAI indenture (except actions for payment of overdue principal or interest) unless such holder previously shall have given to the trustee written notice of default and continuance thereof and unless the holders of not less than 25% in aggregate principal amount of the debt securities of each affected series then outstanding (treated as a single class) shall have requested the trustee to institute such action and shall have offered the trustee ~~reasonable~~ indemnity reasonably satisfactory to it, the trustee shall not have instituted such action within 60 days of such request and the trustee shall not have received direction inconsistent with such written request by the holders of a majority in principal amount of the debt securities of each affected series (treated as one class). The ~~2006~~RAI indenture contains a covenant that RAI will file ~~annually, not more than four months after the end of its fiscal year,~~quarterly with the trustee a certificate that to the signers’ knowledge no default existed or a certificate specifying any default that existed.

Modification of the ~~2006~~RAI Indenture
The ~~2006~~RAI indenture provides that RAI, ~~the~~any guarantors (each when authorized by a board resolution) and the trustee may enter into supplemental indentures without the consent of the holders of debt securities issued under the RAI indenture, including the new notes, to:
add security in respect of debt securities;
evidence the assumption by a successor corporation of the obligations of RAI and any guarantors;
• ~~add security in respect of notes;~~
• ~~evidence the assumption by a successor corporation of the obligations of RAI and the guarantors;~~
• ~~add covenants for the protection of the holders of the notes or to add events of default;~~
• ~~cure any ambiguity or correct any inconsistency in the 2006 indenture or to make other changes not materially adverse to the interest of holders of the debt securities;~~
• ~~establish the forms or terms of additional series of debt securities;~~
• ~~provide for uncertificated debt securities;~~
• ~~evidence the acceptance of appointment by a successor trustee;~~
• ~~add an additional guarantor; or~~
• ~~comply with the Trust Indenture Act.~~
add covenants for the protection of the holders of debt securities or to add events of default;
cure any ambiguity or correct any inconsistency in the RAI indenture or to make other changes not materially adverse to the interest of holders of the debt securities;
establish the forms or terms of additional series of debt securities;
provide for uncertificated debt securities;
evidence the acceptance of appointment by a successor trustee;
add an additional guarantor; or
comply with the Trust Indenture Act.
The ~~2006~~RAI indenture also contains provisions permitting RAI, the guarantors (each when authorized by a board resolution) and the trustee, with the consent of the holders of not less than a majority in aggregate principal amount of debt securities of all series then outstanding and affected (voting as one class), to add any provisions to, or change in any manner or eliminate any of the provisions of, the ~~2006~~RAI indenture or modify in any manner the
rights of the holders of the debt securities of each series so affected; provided,
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that RAI and the trustee may not, without the consent of the holder of each outstanding debt security affected thereby:
extend the final maturity of any debt security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on the redemption thereof or change the currency in which the principal thereof, premium, if any (including any amount in respect of original issue discount), or any interest thereon is payable, or reduce the amount of the principal of any original issue discount security payable upon acceleration or provable in bankruptcy, or alter certain provisions of the RAI indenture relating to debt securities issued thereunder not denominated in U.S. dollars or impair the right to institute suit for the enforcement of any payment on any debt security when due or any right of repayment at the option of the holder of a debt security; or
reduce the aforesaid percentage in principal amount of debt securities of any series, the consents of the holders of which is required for any such modification.
• extend the final maturity of any debt security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on the redemption thereof or change the currency in which the principal thereof, premium, if any (including any amount in respect of original issue discount), or any interest thereon is payable, or reduce the amount of the principal of any original issue discount security payable upon acceleration or provable in bankruptcy, or alter certain provisions of the 2006 indenture relating to debt securities issued thereunder not denominated in U.S. dollars or impair the right to institute suit for the enforcement of any payment on any debt security when due or any right of repayment at the option of the holder of a debt security; or
• ~~reduce the aforesaid percentage in principal amount of debt securities of any series, the consent of the holders of which is required for any such modification.~~
~~Transfer~~
Satisfaction and ~~Exchange~~
      ~~A holder may~~Discharge
The RAI indenture will be discharged and will cease to be of further effect as to all outstanding debt securities of any series under the RAI indenture, including the new notes (except for the obligations to register the transfer or exchange of the debt securities ~~in accordance with the 2006 indenture. Upon~~of such series and RAI’s rights of optional redemption, if any, ~~transfer~~to replace mutilated, destroyed, lost or exchange, the registrar and the trustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents, and RAI may require a holder to pay any taxes required by law or permitted by the 2006 indenture, including any transfer tax or other similar governmental charge payable in connection therewith. RAI is not required to transfer or exchange any note selected for redemption or to transfer or exchange any note for a periodstolen debt securities of ~~15 days prior to a selection~~such series, rights of holders of debt securities to ~~be redeemed. The~~receive payments of principal thereof, premium, if any, and interest thereon, upon the original stated due dates therefor (but not upon acceleration), to maintain an office or agency in respect of the debt securities of such series and to hold moneys for payment in trust) when:
RAI or any guarantor has paid all amounts payable with respect to the debt securities of that series when due;
all outstanding debt securities of that series have been delivered to the trustee for cancellation (except mutilated, defaced, destroyed, lost or stolen debt securities which have been replaced or paid); or
all outstanding debt securities of that series not delivered to the trustee for cancellation:
have become due and payable,
will become due and payable at their stated maturity within one year, or
are to be ~~issued~~called for redemption within one year; and
RAI or any guarantor has deposited with the trustee, in ~~registered form~~trust for such purpose, cash or, in the case of debt securities payable only in U.S. dollars, U.S. government obligations which through the payment of principal and interest in accordance with their terms will insure the ~~registered holder~~availability of cash, or a combination thereof, sufficient in the opinion of a ~~note will be treated as~~nationally recognized firm of independent accountants, to pay the ~~owner~~principal of, premium, if any, and any interest on the debt securities of such ~~note for all purposes.~~series, and any mandatory sinking fund thereon, on the due date thereof.
Defeasance
The ~~2006~~RAI indenture provides with respect to each series of debt securities, including the new notes, that RAI and the guarantors, if any, as applicable, may elect:
to be released from any and all obligations (except for the obligations to register the transfer or exchange of the debt securities of such series and RAI’s rights of optional redemption, if any, to replace mutilated, destroyed, lost or stolen debt securities of such series, rights of holders of debt securities to receive payments of principal thereof, premium, if any, and interest thereon, upon the original stated due dates therefor (but not upon acceleration), to maintain an office or agency in respect of the debt securities of such series and to hold moneys for payment in trust) with respect to debt
• to be released from any and all obligations (except for the obligations to register the transfer or exchange of the debt securities of such series and RAI’s rights of optional redemption, if any, to replace mutilated, destroyed, lost or stolen debt securities of such series, rights of holders of debt securities to receive payments of principal thereof, premium, if any, and interest thereon, upon the original stated due dates therefor (but not upon acceleration), to maintain an office or agency in respect of the debt securities of such series and to hold moneys for payment in trust) with respect to debt
securities of any series for which the exact amount of principal and interest due can be determined at the time of the deposit with the trustee as described below, and all the debt securities of such series are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the trustee for the giving of notice of redemption (the foregoing referred to as one-year defeasance);
• to defease and be discharged from any and all obligations with respect to the debt securities of such series on the 91st day after the deposit with the trustee as described below (except for the obligations set forth as exceptions in the preceding clause) (the foregoing referred to as legal defeasance); or
• to be released from their obligations with respect to the debt securities of such series (except for the obligations set forth as exceptions in the first clause and the obligations to compensate and indemnify the trustee, to appoint a successor trustee, to repay certain moneys held by the paying agent and to return certain unclaimed moneys held by the trustee and to comply with the Trust Indenture Act) (the foregoing referred to as covenant defeasance),
to defease and be discharged from any and all obligations with respect to the debt securities of such series on the 91st day after the deposit with the trustee as described below (except for the obligations set forth as exceptions in the preceding clause) (the foregoing referred to as legal defeasance); or
to be released from their obligations with respect to the debt securities of such series (except for the obligations set forth as exceptions in the first clause and the obligations to compensate and indemnify the trustee, to appoint a successor trustee, to repay certain moneys held by the paying agent and to return certain unclaimed moneys held by the trustee and to comply with the Trust Indenture Act) (the foregoing referred to as covenant defeasance),
upon the deposit with the trustee, in trust for such purpose, of cash or, in the case of debt securities payable only in U.S. dollars, U.S. ~~Government Obligations~~government obligations which through the payment of principal and interest
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in accordance with their terms will insure the availability of ~~monies sufficient,~~cash, or a combination thereof, sufficient in the opinion of a nationally recognized firm of independent accountants, to pay the principal of, premium, if any, and any interest on the debt securities of such series, and any mandatory sinking fund thereon, on the due date thereof. Such a trust only may (except with respect to one-year defeasance or to the extent the terms of the debt securities of such series otherwise provide) ~~only~~ be established, if among other things, RAI has delivered to the trustee an opinion of counsel that the holders of the debt securities of such series will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance or covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same time as would have been the case if such legal defeasance or covenant defeasance had not occurred. Such opinion, in the case of legal defeasance, ~~under the second clause above,~~ must (except to the extent the terms of the debt securities of the relevant series otherwise provide) refer to and be based upon a ruling of the ~~Internal Revenue Service~~IRS or a change in applicable federal income tax law occurring after the date of the ~~2006~~RAI indenture. If RAI exercises its legal defeasance or covenant defeasance option, the guarantees in effect at such time will terminate.

Same-Day Settlement and Payment
Unless otherwise provided with respect to a particular series, the debt securities, including the new notes, will trade in the same-day funds settlement system of DTC until maturity or until RAI issues the debt securities in definitive form. DTC will therefore require secondary market trading activity in the debt securities to settle in immediately available funds. RAI and the Trustee can give no assurance as to the effect, if any, of settlement in immediately available funds on trading activity in the debt securities.
Transfer and Exchange
A holder may transfer or exchange new notes in accordance with the RAI indenture. Upon any transfer or exchange, the registrar and the trustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents, and RAI may require a holder to pay any taxes required by law or permitted by the RAI indenture, including any transfer tax or other similar governmental charge payable in connection therewith. RAI is not required to transfer or exchange any new note for a period of 15 days prior to a selection of debt securities to be redeemed or to transfer or exchange any new note selected for redemption, except the unredeemed portion of any new note being redeemed in part. The new notes will be issued in registered form and the registered holder of a new note will be treated as the owner of such new note for all purposes.
Book-Entry System; Delivery and Form
The following description of the operations and procedures of DTC, Clearstream Banking,~~General~~société anonyme
, referred to as Clearstream, and Euroclear Bank SA/NV, referred to as Euroclear, is provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. RAI takes no responsibility for these operations and procedures and urges investors to contact the system or their participants directly to discuss these matters.
New notes of each series will be in book-entry form and will be represented by one or more permanent global certificates in fully registered form without interest coupons, which we refer to as the Global Notes, and will be deposited with the trustee as custodian for DTC and registered in the name of Cede & Co., as nominee of DTC, or another nominee designated by DTC (such nominee referred to as a Global Note Holder).
Except as set forth below, the Global Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Notes may not be exchanged for ~~Certificated Notes (as defined below)~~new notes in certificated form except in the limited circumstances described below.
      ~~DTC is a limited-purpose trust company that was created~~ In addition, transfers of beneficial interests in the Global Notes will be subject to ~~hold securities for its participating organizations, including Euroclear~~the applicable rules and Clearstream, Luxembourg (referred to herein, collectively, as the Participants or the Depositary’s Participants), and to facilitate the clearance and settlement of transactions in these securities between Participants through electronic book-entry changes in accounts of its Participants. The Depositary’s Participants include securities brokers and dealers (including the initial purchasers), banks and trust companies, clearing corporations and certain other organizations. Access to DTC’s system is also available to other entities such as banks, brokers, dealers and trust companies (collectively, referred to as the Indirect Participants or the Depositary’s Indirect Participants) that clear through or maintain a custodial relationship with a Participant, either directly or indirectly. Persons who are not Participants may beneficially own securities held by or on behalfprocedures of DTC ~~only through~~and its direct or indirect participants, which may change from time to time.
Prospective purchasers are advised that the Depositary’s Participants or the Depositary’s Indirect Participants. Pursuant to procedures established by DTC, ownership of the notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the interests of the Depositary’s Participants) and the records of the Depositary’s Participants (with respect to the interests of the Depositary’s Indirect Participants).
      ~~The~~ laws of some ~~states~~jurisdictions require that certain persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer ~~the notes~~beneficial interests in a Global Note to such persons will be limited to such extent.
      So
Investors may elect to hold interests in the Global Notes through either DTC (in the United States) or Clearstream or Euroclear (in Europe) if they are participants in those systems, or indirectly through organizations which are participants in those systems. Clearstream and Euroclear will hold interests on behalf of their participants through customers’ securities accounts in Clearstream’s and Euroclear’s names on the books of their respective depositaries, which in turn will hold such interests in customers’ securities accounts in the depositaries’ names on the books of DTC. At the present time, Citibank, N.A. acts as U.S. depositary for Clearstream and JPMorgan Chase Bank, N.A. acts as U.S. depositary for Euroclear, collectively referred to as the U.S. Depositaries.
DTC advises that it is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act. DTC holds securities that its participants, referred to herein as the Direct Participants, deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly owned subsidiary of The Depository Trust & Clearing Corporation, referred to herein as DTCC. DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to DTC’s system is also available to others such as U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly, which we refer to as Indirect Participants. The DTC rules applicable to its Direct and Indirect Participants are on file with the SEC.
Clearstream advises that it is incorporated under the laws of Luxembourg as a professional depositary. Clearstream holds securities for its participating organizations, referred to as Clearstream Participants, and facilitates the clearance and settlement of securities transactions between Clearstream Participants through
electronic book-entry changes in accounts of Clearstream Participants, thereby eliminating the need for physical movement of certificates. Clearstream provides to Clearstream Participants, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream interfaces with domestic markets in several countries. As a professional depositary, Clearstream is subject to regulation by the Luxembourg Commission for the Supervision of the Financial Sector, also known as the Commission de Surveillance du Secteur Financier. Clearstream Participants are recognized financial institutions around the world, including securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations and may include the dealer managers for the private exchange offers. Indirect access to Clearstream is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Clearstream Participant, either directly or indirectly.
Distributions with respect to interests in the new notes held beneficially through Clearstream will be credited to cash accounts of Clearstream Participants in accordance with its rules and procedures, to the extent received by the U.S. Depositary for Clearstream.
Euroclear advises that it was created in 1968 to hold securities for its participants, referred to herein as Euroclear Participants, and to clear and settle transactions between Euroclear Participants and between Euroclear Participants and participants of certain other securities intermediaries through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous transfers of securities and cash. Euroclear provides other services, including securities lending and borrowing and interfaces with domestic markets in several countries. Euroclear is operated by Euroclear Bank SA/NV, referred to as the Euroclear operator. All operations are conducted by the Euroclear operator, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear operator. Euroclear Participants include banks (including central banks), securities brokers and dealers and other professional financial intermediaries and may include the dealer managers for the private exchange offers. Indirect access to Euroclear is also available to other firms that clear through or maintain a custodial relationship with a Euroclear Participant, either directly or indirectly. The Euroclear operator is regulated and examined by the Belgian Banking and Finance Commission.
Securities clearance accounts and cash accounts with the Euroclear operator are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of Euroclear System, and applicable Belgian law, collectively referred to as the Terms and Conditions. The Terms and Conditions govern transfers of securities and cash within Euroclear, withdrawals of securities and cash from Euroclear, and receipts of payments with respect to securities in Euroclear. All securities in Euroclear are held on a fungible basis without attribution of specific certificates to specific securities clearance accounts. The Euroclear operator acts under the Terms and Conditions only on behalf of Euroclear Participants, and has no records of or relationship with persons holding through Euroclear Participants.
Distributions with respect to the new notes held beneficially through Euroclear will be credited to the cash accounts of Euroclear Participants in accordance with the Terms and Conditions, to the extent received by the U.S. Depositary for Euroclear.
As long as ~~the Global Note Holder~~DTC or its nominee is the registered owner of ~~any notes,~~ the Global ~~Note Holder~~Notes, DTC or its nominee, as the case may be, will be considered the sole owner and holder of ~~outstanding~~the Global Notes and all notes represented by ~~such~~the Global Notes for all purposes under the ~~2006 indenture. Except as provided below, owners of~~new notes ~~will not be entitled to have~~and the ~~notes registered in their names and will not be considered the owners or holders thereof under the 2006~~RAI indenture, ~~for any purpose,~~ including with respect to the giving of any directions, instructions or approvals to the trustee thereunder. ~~None~~Except in the limited circumstances referred to below, owners of ~~RAI~~beneficial interests in the Global Notes:
will not be entitled to have the new notes represented by the Global Notes registered in their names; and
will not be considered to be owners or “Holders” of the Global Notes or any new notes represented by the Global Notes for any purpose under the new notes or the RAI indenture.
All payments on the new notes represented by the Global Notes and all transfers and deliveries of related new notes will be made to the depositary or its nominee, as the case may be, as the holder of the securities.
Ownership of beneficial interests in the Global Notes will be limited to participants or persons that may hold beneficial interests through institutions that have accounts with DTC or its nominee. Ownership of beneficial interests in the Global Notes will be shown only on, and the transfer of those ownership interests will be effected only through, records maintained by DTC or its nominee, with respect to participants’ interests, or any participant, with respect to interests of persons held by the participant on their behalf. Payments, transfers, deliveries, exchanges and other matters relating to beneficial interests in the Global Notes may be subject to various policies and procedures adopted by DTC from time to time. Neither the trustee nor we will have any responsibility or liability for any aspect of ~~the~~DTC’s or any participant’s records relating to, or for payments made on account of, ~~notes held by DTC,~~beneficial interests in the Global Notes, or for maintaining, supervising or reviewing any of DTC’s records ~~of DTC~~or any participant’s records relating to ~~such notes.~~
these beneficial ownership interests.
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      Payments in respect of the principal of, premium, if any, and interest on any notes registered in the name of a Global Note Holder on the applicable record date will be payable by the trustee to or at the direction of such Global Note Holder in its capacity as the registered holder under the 2006 indenture. Under the terms of the 2006 indenture, RAI and the trustee may treat the persons in whose names any notes, including the Global Notes, are registered as the owners thereof for the purpose of receiving such payments and for any and all other purposes whatsoever. Consequently, neither RAI nor the trusteeAlthough DTC has or will have any responsibility or liability for the payment of such amounts to beneficial owners of the notes (including principal, premium, if any, and interest). RAI believes, however, that it is currently the policy of DTC to immediately credit the accounts of the relevant Participants with such payments, in amounts proportionate to their respective beneficial interests in the relevant security as shown on the records of DTC. Payments by the Depositary’s Participants and the Depositary’s Indirect Participantsagreed to the ~~beneficial owners~~foregoing procedures in order to facilitate transfers of ~~the notes will be governed by standing instructions and customary practice and will be the responsibility of the Depositary’s Participants or the Depositary’s Indirect Participants.~~
      ~~Subject to certain conditions, any person having a beneficial interest~~interests in the Global Notes among participants, DTC is under no obligation to perform or continue to perform these procedures, and these procedures may ~~upon request to~~be discontinued at any time. We will not have any responsibility for the ~~trustee and confirmation of such beneficial interest~~performance by ~~the depositary~~DTC or its ~~Participants~~direct participants or ~~Indirect Participants, exchange such beneficial interest for notes in definitive form. Upon any such issuance,~~indirect participants under the ~~trustee~~rules and procedures governing DTC.
If DTC notifies us that it is ~~required to register such notes in the name of and cause the same to be delivered to, such person or persons (or the nominee of any thereof). Such notes would be issued in fully registered form.~~
      ~~If the depositary for the notes represented by a Global Note is at any time~~ unwilling or unable to continue ~~as depositary or ceases~~ to ~~be a clearing agency registered under the Exchange Act,~~act, and a successor ~~depositary registered as a~~ clearing agency ~~under the Exchange Act~~ is not appointed by us within 90 days, we will issue securities in definitive form in exchange for the Global Note that had been held by the ~~depositary.~~depository. In addition, ~~the 2006 indenture permits~~ RAI at any time and in ~~RAI’s~~its sole discretion tomay decide not to have the new notes represented by one or more Global Notes. DTC has advised us that, under its current practices, it would notify its Participants of RAI’s request, but will only withdraw beneficial interest from the Global Notes at the request of each Participant. We would issue definitive certificates in exchange for any such interests withdrawn. Any new notes issued in definitive form in exchange for the Global Notes will be registered in the name or names that the ~~depositary~~depository gives to the trustee or other relevant agent of theirs or ours. It is expected that the ~~depositary’s~~depository’s instructions will be based upon directions received by the ~~depositary~~depository from ~~Participants~~participants with respect to ownership of beneficial interests in the Global Note that had been held by the ~~depositary.~~
      ~~Neither RAI nor~~depository.
Global Clearance and Settlement Procedures
Initial settlement for the ~~trustee~~new notes will be ~~liable for any delay by~~made in immediately available funds. Secondary market trading between Direct Participants will occur in the ~~Global Note Holder or~~ordinary way in accordance with DTC ~~in identifying the beneficial owners of the notes and RAI and the trustee may conclusively rely on,~~rules and will be ~~protected~~settled in ~~relying~~immediately available funds using DTC’s Same-Day Funds Settlement System. Secondary market trading between Clearstream Participants and/or Euroclear Participants will occur in the ordinary way in accordance with the applicable rules and operating procedures of Clearstream and Euroclear, as applicable.
Cross-market transfers between persons holding directly or indirectly through DTC on the one hand, and directly or indirectly through Clearstream Participants or Euroclear Participants, on the other, will be effected through DTC in accordance with DTC rules on behalf of the relevant European international clearing system by its U.S. Depositary; however, such cross-market transactions will require delivery of instructions ~~from~~to the relevant European international clearing system by the counterparty in such system in accordance with its rules and procedures and within its established deadlines (European time). The relevant European international clearing system will, if the transaction meets its settlement requirements, deliver instructions to its U.S. Depositary to take action to effect final settlement on its behalf by delivering or receiving securities in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Clearstream Participants and Euroclear Participants may not deliver instructions directly to their respective U.S. Depositaries.
Because of time-zone differences, credits of new notes received in Clearstream or Euroclear as a result of a transaction with a Direct Participant will be made during subsequent securities settlement processing and dated the business day following the DTC settlement date. The credits or any transactions in the new notes settled during the processing will be reported to the relevant Euroclear Participant or Clearstream Participant on that
business day. Cash received in Clearstream or Euroclear as a result of sales of the new notes by or through a Clearstream Participant or a Euroclear Participant to a Direct Participant will be received with value on the DTC settlement date but will be available in the relevant Clearstream or Euroclear cash account only as of the business day following settlement in DTC.
Although DTC, Clearstream and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of beneficial interests in the Global ~~Note Holder~~Notes among participants of DTC, Clearstream and Euroclear, they are under no obligation to perform or ~~DTC for all purposes.~~
continue to perform such procedures and such procedures may be discontinued or changed at any time.
Governing Law
The RAI indenture, the new notes and the related guarantees will be governed by the laws of the State of New York.
Concerning the Trustee
The Bank of New York Mellon Trust Company, N.A. is the trustee under the ~~2006 indenture and is serving as exchange agent for this exchange offer.~~RAI indenture. The trustee ~~served as exchange agent for the prior RJR exchange offer and it~~ or its affiliates ~~serve as trustee under the indentures related to the RJR notes,~~ participate in RAI’s revolving credit ~~facilities~~facility and serve as transfer agent for ~~the~~RAI’s common ~~stock of RAI.~~stock. From time to time, RAI or ~~RJR~~its subsidiaries may enter into other relationships with the trustee or its affiliates.

Certain Definitions
      ~~“Attributable~~
Set forth below are certain of the defined terms used in the RAI indenture.
“Attributable Debt” means, when used in connection with a sale and ~~lease-back~~leaseback transaction, at any date as of which the amount thereof is to be determined, the product of:
• ~~the net proceeds from such sale and lease-back transaction multiplied by~~
• ~~a fraction, the numerator of which is the number of full years of the term of the lease relating to the property involved in such sale and lease-back transaction (without regard to any options to~~
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the net proceeds from such sale and leaseback transaction, multiplied by
a fraction, the numerator of which is the number of full years of the term of the lease relating to the property involved in such sale and leaseback transaction (without regard to any options to renew or extend such term) remaining at the date of the making of such computation, and the denominator of which is the number of full years of the term of such lease measured from the first day of such term.
renew or extend such term) remaining at the date of the making of such computation and the denominator of which is the number of full years of the term of such lease measured from the first day of such term.
      ~~“Consolidated~~“Consolidated Net Worth” means, at any date of determination, the consolidated shareholders’ equity of RAI, as set forth on the then most recently available consolidated balance sheet of RAI and its consolidated Subsidiaries.
      ~~“Exempted~~
“Exempted Debt” means the sum, without duplication, of the following items outstanding as of the date Exempted Debt is being determined:
indebtedness of RAI and the Restricted Subsidiaries incurred after the date of the RAI indenture and secured by liens created, assumed or otherwise incurred or permitted to exist pursuant to the RAI indenture described above under “—Covenants—Restrictions on Liens;” and
Attributable Debt of RAI and the Restricted Subsidiaries in respect of all sale and leaseback transactions with regard to any Principal Property entered into pursuant to the RAI indenture described above under “—Covenants—Restrictions on Sale and Leaseback Transactions.”
• indebtedness of RAI and the Restricted Subsidiaries incurred after the date of the 2006 indenture and secured by liens created, assumed or otherwise incurred or permitted to exist pursuant to the 2006 indenture described above under “— Covenants — Restrictions on Liens;” and
• Attributable Debt of RAI and the Restricted Subsidiaries in respect of all sale and lease-back transactions with regard to any Principal Property entered into pursuant to the 2006 indenture described above under “— Covenants — Restrictions on Sale and Lease-Back Transactions.”
      ~~“Funded~~
“Funded Debt” means all indebtedness for money borrowed, including purchase money indebtedness, having a maturity of more than one year from the date of its creation or having a maturity of less than one year but by its terms being renewable or extendible, at the option of the obligor in respect thereof, beyond one year from its creation.
      ~~“guarantee”~~
“guarantee” means any obligation, contingent or otherwise, of any ~~person~~Person directly or indirectly guaranteeing any indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person:
to purchase or pay (or advance or supply funds for the purchase or payment of) such indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise); or
entered into for purposes of assuring in any other manner the obligee of such indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part);
• to purchase or pay (or advance or supply funds for the purchase or payment of) such indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise); or
• ~~entered into for purposes of assuring in any other manner the obligee of such indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part);~~
provided, however, that the term “guarantee” will not include endorsements for collection or deposit in the ordinary course of business. The term “guarantee” used as a verb has a corresponding meaning.
      ~~“Person”~~
“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.
      ~~“Principal~~
“Principal Property” means land, land improvements, buildings and associated factory and laboratory equipment owned or leased pursuant to a capital lease and used by RAI or a Restricted Subsidiary primarily for processing, producing, packaging or storing its products, raw materials, inventories, or other materials and supplies and located within the United States ~~of America~~ and having an acquisition cost plus capitalized improvements in excess of 2% of Consolidated Net Worth, as of the date of such determination, but not including any such property financed through the issuance of tax exempt governmental obligations, or any such property that has been determined by resolution of the ~~Board~~board of ~~Directors~~directors of RAI not to be of material importance to the respective businesses conducted by RAI or such Restricted Subsidiary effective as of the date such resolution is ~~adopted,~~adopted; provided, that “Principal Property” shall not include any property owned by Santa Fe ~~or Lane.~~
      ~~“Restricted~~Natural Tobacco Company, Inc.
“Restricted Subsidiary” ~~means (i)~~ means:
any Subsidiary (other than ~~Lane or~~ Santa Fe Natural Tobacco Company, Inc. and ~~their respective~~its subsidiaries) organized and existing under the laws of the United States ~~of America~~ and the principal business of which is carried on within the United States, ~~of America,~~ which owns or is a lessee pursuant to
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a capital lease of any Principal Property, and in which the investment of RAI and all of its Subsidiaries exceeds 5% of Consolidated Net Worth as of the date of such determination other than:
each Subsidiary the major part of whose business consists of finance, banking, credit, leasing, insurance, financial services or other similar operations, or any combination thereof;
• ~~each Subsidiary the major part of whose business consists of finance, banking, credit, leasing, insurance, financial services or other similar operations, or any combination thereof; and~~
• each Subsidiary formed or acquired after the date of the 2006 indenture for the purpose of acquiring the business or assets of another person and which does not acquire all or any substantial part of the business or assets of RAI or any Restricted Subsidiary; and
      ~~(ii)~~ each Subsidiary formed or acquired after the date of the RAI indenture for the purpose of acquiring the business or assets of another person and which does not acquire all or any substantial part of the business or assets of RAI or any Restricted Subsidiary; and
RJR and ~~Conwood.~~Conwood Holdings, Inc.
However, the board of directors of RAI may declare any such Subsidiary to be a Restricted Subsidiary.
      ~~“Subsidiary”~~
“Subsidiary” means any corporation of which at least a majority of all outstanding stock having by the terms thereof ordinary voting power in the election of directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation has or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned by RAI, or by one or more Subsidiaries of RAI or by RAI and one or more Subsidiaries.
      “U.S. Government Obligations” means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable or redeemable at RAI’s option.
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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material U.S. federal income tax considerations relating to the exchange of old notes for new notes, and of the ownership and disposition of the new notes by holders that have held the old notes, and that will hold the new notes, as capital assets generally for investment purposes. This summary does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended, and applicable tax regulations, rulings, and judicial decisions, all as in effect on the date hereof. These authorities may be changed, perhaps retroactively, so as to result in U.S. federal income tax consequences different from those set forth below. RAI has not sought any ruling from the Internal Revenue Service, or IRS, or an opinion of counsel with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS will agree with such statements and conclusions.
This summary also does not address the tax considerations arising under the laws of any foreign, state, or local jurisdiction. In addition, this discussion does not address tax considerations applicable to a holder’s particular circumstances or to holders that may be subject to special tax rules, including, without limitation:
holders subject to the alternative minimum tax;
banks;
• ~~holders subject to the alternative minimum tax;~~
• ~~banks;~~
• ~~tax-exempt organizations;~~
• ~~insurance companies;~~
• ~~dealers in securities or currencies;~~
• ~~traders in securities or commodities or dealers in commodities that elect to use amark-to-market method of accounting;~~
• ~~financial institutions;~~
• ~~holders whose “functional currency” is not the U.S. dollar; or~~
• ~~persons that will hold the new notes as a position in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction.~~
tax-exempt organizations;
insurance companies;
dealers in securities or currencies;
traders in securities or commodities or dealers in commodities that elect to use a mark-to-market method of accounting;
financial institutions;
holders whose “functional currency” is not the U.S. dollar; or
persons that will hold the new notes as a position in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction.
If a partnership holds new notes, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our new notes, you should consult your tax advisor.

This summary of material U.S. federal income tax considerations is for general information only. You are urged to consult your tax advisor with respect to the application of U.S. federal income tax laws to your particular situation as well as any tax consequences arising under the U.S. federal estate or gift tax rules or under the laws of any state, local, foreign or other taxing jurisdiction or under any applicable tax treaty.

Exchange ~~Offer~~
Offers
The exchange of an old note for a new note pursuant to the ~~exchange offer~~Exchange Offers will not be taxable to the exchanging holder for U.S. federal income tax purposes. As a result, an exchanging holder:
• ~~will not recognize any gain or loss on the exchange;~~
• ~~will have a holding period for the new note that includes the holding period for the old note exchanged; and~~
• ~~will have an adjusted tax basis in the new note immediately after the exchange equal to its adjusted tax basis in the old note exchanged immediately prior to the exchange.~~
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will not recognize any gain or loss on the exchange;
will have a holding period for the new note that includes the holding period for the old note exchanged; and
will have an adjusted tax basis in the new note immediately after the exchange equal to its adjusted tax basis in the old note exchanged immediately prior to the exchange.
The ~~exchange offer is~~Exchange Offers are not expected to result in any U.S. federal income tax consequences to anon-exchanging holder.

Ownership and Disposition of New Notes
Consequences to U.S. Holders
The following is a summary of the U.S. federal tax consequences that will apply to the ownership and disposition of the new notes by you if you are a U.S. Holder of the notes. Certain consequences to~~“non-U.S.~~ “non-U.S. Holders” of the notes are described under “—Consequences toNon-U.S. Holders” below. “U.S. Holder” means a beneficial owner of a note that is:
a citizen or resident of the United States;
a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any political subdivision of the United States; or
• ~~a citizen or resident of the United States;~~
• a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any political subdivision of the United States; or
• a trust (1) if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) that has a valid election in effect under applicable regulations to be treated as a U.S. person.
a trust (1) if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) that has a valid election in effect under applicable regulations to be treated as a U.S. person.
Payment of ~~Interest.~~Interest. Stated interest on the new notes will generally be taxable to you as ordinary income at the time it is paid or at the time it accrues in accordance with your method of accounting for U.S. federal income tax purposes.
Market Discount and ~~Premium.~~Premium ~~If you acquired~~. Subject to a statutory de minimis exception, if the issue price of a new note at ~~a price~~the time of the exchange is less than its stated principal amount, ~~you would be treated~~the new note will have original issue discount for U.S. federal income tax purposes as having acquired the new note with market discount, subject to a de minimis exception. In the case of a new note having market discount, you will be required to treat any partial principal payment received on, and any gain recognized upon the sale or other dispositionpurposes. The issue price of the new ~~note~~notes generally will be their fair market value, provided that the old notes or the new notes are treated as ~~ordinary income to~~“publicly traded” within the ~~extent~~meaning of the ~~market~~applicable Treasury regulations. Original issue discount that accrued during your holding period for the new note, unless you elect to annually include market discount in gross income over time as the market discount accrues (on a ratable basis, or at your election, a constant yield basis). An election to include market discount in gross income as it accrues, once made, is irrevocable and will apply to all debt instruments with market discount acquired by you on or after the first day of the first taxable year to which the election applies. In addition, if you hold a new note with market discount, and you do not elect to accrue market discount into gross income over time, you may be required to defer the deduction of interest expense incurred or continued to purchase or carry the new note.
      ~~If you acquired a new note for an amount in excess of its stated principal amount, you may elect to treat the excess as “amortizable bond premium.” In such case, the amount required to~~generally must be included in your gross income ~~each year with respect~~on a constant yield basis, in advance of the receipt of cash attributable to the discount. Any amount included in income as original issue discount will increase your tax basis in the new note. If your tax basis in a new note is greater than the issue price of the new note, you generally will be considered to have acquisition premium, which will reduce the amount of original issue discount required to be included in income. If your tax basis in a new note is greater than the principal amount of the new note, you generally will be considered to have bond premium, and will not be required to include any original issue discount in income. You may elect to amortize the bond premium against interest payable on the new note ~~generally will~~and any bond premium in excess of the original issue discount and interest may be ~~reduced by~~deductible over the term of the new notes. Any amount of ~~amortizable~~amortized bond premium ~~allocable (based~~will decrease your tax basis in the new note, so that some or all of the market discount on the old notes may be required to be included on a current basis as original issue discount on the new ~~note’s yield~~notes.
Subject to ~~maturity)~~a de minimis exception, if you hold old notes that were acquired (other than at original issue) at a discount from the principal amount of such old notes (i.e., a “market discount”), and did not elect to ~~that year. Any election~~include such market discount in income on a current basis, any accrued market discount on the old notes generally will carry over to ~~amortize bond premium will apply to all~~the new notes. If the new notes ~~held by you at~~are issued with original issue discount, then the ~~beginning~~new notes will be treated as having market discount only to the extent that the issue price of the ~~first taxable year to which~~new notes exceeds your tax basis in the ~~election applies or thereafter acquired by you and is irrevocable without the consent of the IRS.~~
new notes.
Sale, Exchange or Disposition of New ~~Notes.~~Notes. You generally will recognize gain or loss upon the sale, exchange, redemption, retirement or other taxable disposition of a new note equal to the difference between the amount realized upon the sale, exchange, redemption, retirement or other taxable disposition (less an amount attributable to any accrued stated interest not previously included in income, which will be taxable as interest income) and your adjusted tax basis in the new note. Your adjusted tax basis in a new note will generally equal
the amount you paid for the new note, increased by any original issue discount and/or market discount previously included in gross income and reduced by any amortizable bond premium previously deducted by you in respect of the new note. Any gain or loss recognized on a disposition of the new note will be capital
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gain or loss and will be long-term capital gain or loss if your holding period for the new note is more than one year. The ability to deduct capital losses is subject to limitation under U.S. federal income tax laws.
Medicare Surtax.Certain individuals, estates and trusts must pay a 3.8% surtax, commonly referred to as the Medicare tax, on “net investment income,” which includes, among other things, interest and proceeds of sale in respect of securities like the new notes, subject to certain exceptions. Holders should consult with their own tax advisors regarding the effect, if any, of the Medicare tax on their ownership and disposition of the new notes.
Information Reporting and Backup ~~Withholding.~~Withholding. In general, information reporting requirements will apply to certain payments of principal and interest on the new notes and the proceeds of sale of a new note unless you are an exempt recipient (such as a corporation). A backup withholding tax at the rate of 28% will apply to such payments if you fail to provide your taxpayer identification number or certification of exempt status or have been notified by the IRS that you are subject to backup withholding.
Any amounts withheld under the backup withholding rules will generally be allowed as a refund or a credit against your U.S. federal income tax liability provided the required information is furnished to the IRS.
Consequences toNon-U.S. Holders
The following is a summary of the U.S. federal income tax consequences that will apply to you if you are anon-U.S. Holder of new notes. The term~~“non-U.S.~~ “non-U.S. Holder” means a beneficial owner of a note that is not a U.S. Holder. Special rules may apply to certainnon-U.S. Holders such as “controlled foreign corporations” and “passive foreign investment companies.” Such entities should consult their own tax advisors to determine the U.S. federal, state, local and other tax consequences that may be relevant to them.
Payment of ~~Interest.~~Interest. The U.S. federal withholding tax will not apply to any payment to you of interest on a new note because of the “portfolio interest exemption” provided that:
you do not actually or constructively own 10% or more of the total combined voting power of all classes of our stock that are entitled to vote;
you are not a controlled foreign corporation that is related to us through stock ownership; and
• ~~you do not actually or constructively own 10% or more of the total combined voting power of all classes of our stock that are entitled to vote;~~
• ~~you are not a controlled foreign corporation that is related to us through stock ownership; and~~
• ~~you provide to us your name and address, and certify, under penalties of perjury, that you are not a U.S. person (which certification may be made on an IRS Form~~ ~~W-8BEN);~~ or a securities clearing organization, bank, or other financial institution that holds customers’ securities in the ordinary course of its business and that holds the new note on your behalf certifies, under penalties of perjury, that it has received IRS Form ~~W-8BEN~~ ~~from you or from another qualifying financial institution intermediary, and provides a copy of the IRS Form~~ ~~W-8BEN.~~
you provide to RAI your name and address, and certify, under penalties of perjury, that you are the beneficial owner of the new notes and that you are not a U.S. person (which certification may be made on an IRS Form W-8BEN or W-8BEN-E or applicable substitute form); or a securities clearing organization, bank or other financial institution that holds customers’ securities in the ordinary course of its business and holds the new note on your behalf certifies, under penalties of perjury, that it has received IRS Form W-8BEN or W-8BEN-E from you or from another qualifying financial institution intermediary, and provides a copy of the IRS Form W-8BEN or Form W-8BEN-E.
If you hold your new notes through certain foreign intermediaries or certain foreign partnerships, such foreign intermediaries or partnerships must also satisfy the certification requirements of applicable regulations.
If you are engaged in a trade or business in the United States and interest on a new note is effectively connected with the conduct of that trade or business, you will be exempt from withholding tax if you provide us with a properly executed IRS Form W-8ECI, but you will be required to pay U.S. federal income tax on that interest on a net income basis in the same manner as if you were a U.S. person as defined under the Internal Revenue Code. In addition, if you are a foreign corporation, you may be subject to a branch profits tax equal to 30% (or lower applicable treaty rate) of your earnings and profits for the taxable year, subject to adjustments, that
are effectively connected with your conduct of a trade or business in the United States. For this purpose, interest will be included in the earnings and profits of such foreign corporation.
In the event any additional interest we may be required to pay on the old notes under the circumstances described in “The Exchange Offers—Purpose and Effect of the Exchange Offers” and “—Shelf Registration” is treated as interest, the tax treatment of such payments should be the same as other interest payments received by you.
Sale, Exchange or Disposition of ~~Notes.~~Notes. Any gain realized upon the sale, exchange or other disposition of a new note (except with respect to accrued and unpaid interest, which would be taxable as described above) generally will not be subject to U.S. federal income tax unless:
• ~~subject to an applicable tax treaty providing otherwise, that gain is effectively connected with your conduct of a trade or business in the United States;~~
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subject to an applicable tax treaty providing otherwise, that gain is effectively connected with your conduct of a trade or business in the United States; or
you are an individual who is present in the United States for 183 days or more in the taxable year of that disposition, and certain other conditions are met.
• ~~you are an individual who is present in the United States for 183 days or more in the taxable year of that disposition, and certain other conditions are met; or~~
• ~~you are subject to Internal Revenue Code provisions applicable to certain U.S. expatriates.~~
A holder described in the first bullet point above will be required to pay U.S. federal income tax on the net gain derived from the sale, and if such holder is a foreign corporation, it may also be required to pay a branch profits tax at a 30% rate or a lower rate if so specified by an applicable income tax treaty. A holder described in the second bullet point above will be subject to a flat 30% U.S. federal income tax on the gain derived from the sale, which may be offset by U.S. source capital losses, even though the holder is not considered a resident of the United States.
Information Reporting and Backup ~~Withholding.~~Withholding. Information returns will be filed with the IRS in connection with payments on the new notes. Unless thenon-U.S. Holder complies with certification procedures to establish that it is not a ~~U.S.~~U.S person, information returns may be filed with the IRS in connection with the proceeds from a sale or other disposition and thenon-U.S. Holder may be subject to United States backup withholding tax on payments on the ~~new~~ notes or on the proceeds from a sale or other disposition of the new notes. The certification procedures required to claim the exemption from withholding tax on interest described above will satisfy the certification requirements necessary to avoid the backup withholding tax as well. The amount of any backup withholding from a payment to anon-U.S. Holder will be allowed as a credit against thenon-U.S. Holder’s U.S. federal income tax liability and may entitle thenon-U.S. Holder to a refund, provided that the required information is furnished to the IRS.
78Non-U.S. holders should consult their tax advisors concerning the information reporting and backup withholding rules applicable to any particular non-U.S. holder’s situation, the availability of an exemption therefrom, and the procedure for obtaining such an exemption, if available.
FATCA Withholding Tax
Under the Foreign Account Tax Compliance Act, generally referred to as FATCA, and administrative guidance, unless an exception applies, withholding taxes may be imposed on certain types of payments made to “foreign financial institutions” (as specifically defined in the Code) and certain other non-United States entities (including financial intermediaries). A 30% withholding tax is imposed on “withholdable payments” to a foreign financial institution or to a foreign non-financial entity, unless (1) the foreign financial institution undertakes certain diligence and reporting obligations, (2) the foreign non-financial entity either certifies it does not have any substantial United States owners or furnishes identifying information regarding each substantial United States owner, or (3) the foreign entity otherwise is excepted under FATCA. For these purposes, the term “withholdable payment” includes any interest paid with respect to a note and, with respect to gross proceeds paid on or after January 1, 2017, the gross proceeds from a disposition of a new note.
Different rules than those described above may apply to non-U.S. holders resident in jurisdictions that have entered into inter-governmental agreements with the United States regarding FATCA.
If withholding is required under FATCA on a payment related to the new notes investors that otherwise would not be subject to withholding (or that otherwise would be entitled to a reduced rate of withholding) generally will be required to seek a refund or credit from the IRS to obtain the benefit of such exemption or reduction (provided that such benefit is available).
Non-U.S. holders of the new notes offered hereby should consult their tax advisors regarding the effect of FATCA in their particular circumstances.
RAI will not pay any additional amounts with respect to any withholding tax.
PLAN OF DISTRIBUTION
Each broker-dealer that receives new notes for its own account pursuant to ~~this exchange offer~~the Exchange Offers must acknowledge that it will deliver a prospectus in connection with any resale of the new notes. A broker-dealer may use this prospectus, as it may be amended or supplemented from time to time, in connection with resales of new notes received in exchange for old notes where such old notes were acquired as a result of market-making activities or other trading activities. We have agreed, for a period ending upon the earlier of (1) 180 days after the completion of the ~~exchange offer~~Exchange Offers and (2) the first day after the completion of the ~~exchange offer~~Exchange Offers when participating broker-dealers no longer have a prospectus delivery obligation, to ~~make~~amend or supplement this prospectus as ~~amended or supplemented, available to~~may be required, at the request of any such broker-dealer, ~~for use~~and have authorized them to deliver such prospectus in connection with any such ~~resale.~~
resale, subject to certain limitations.
We will not receive any proceeds from any sale of new notes by any broker-dealer. New notes received by broker-dealers for their own account pursuant to ~~this exchange offer~~the Exchange Offers may be sold from time to time in one or more transactions in the following manners:
in the over-the-counter market;
in negotiated transactions;
• ~~in the over-the-counter market;~~
• ~~in negotiated transactions;~~
• ~~through the writing of options on the new notes; or~~
• ~~through a combination of such methods of resale.~~
through the writing of options on the new notes; or
through a combination of such methods of resale.
The sales may be at any of the following prices:
market prices prevailing at the time of resale;
prices related to such prevailing market prices; or
• ~~market prices prevailing at the time of resale;~~
• ~~prices related to~~
negotiated prices.
Any such ~~prevailing market prices; or~~
• ~~negotiated prices.~~
      ~~Any~~ resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such new notes.
Any broker-dealer ~~who~~that resells new notes that were received by it for its own account pursuant to ~~this exchange offer~~the Exchange Offers as a result of market-making or other trading activities and any broker or dealer that participates in a distribution of such new notes may be deemed to be an “underwriter” within the meaning of the Securities Act. Any profit on any such resale of new notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging ~~that it will~~or performing its obligation to deliver ~~and by delivering~~ a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.
The letter of transmittal also states that any holder participating in the Exchange Offers will represent that it has no arrangements or understanding with any person to participate with the distribution of the new notes within the meaning of the Securities Act.
We have agreed to pay all expenses incident to the ~~exchange offer~~Exchange Offers other than commissions or concessions of any brokers or dealers, and will indemnify the holders of the old notes, including any broker-dealers, against certain liabilities, including liabilities under the Securities Act.
We have not entered into any arrangements or understandings with any person to distribute the new notes to be received in ~~this exchange offer.~~
the Exchange Offers.
There is no existing market for the new notes, and there can be no assurance as to the liquidity of any market that may develop for the new notes, the ability of the holders of the new notes to sell their new notes or the price at which holders would be able to sell their new notes. ~~Future trading prices~~We do not presently intend to apply for listing of the new notes ~~will depend~~ on ~~many factors, including, among other things:~~
• ~~prevailing interest rates;~~
• ~~our operating results; and~~
• ~~the market for similar securities.~~
any securities exchange.
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This prospectus does not constitute an offer to purchase or a solicitation of an offer to sell any of the new notes in any jurisdiction in which such an offer or a solicitation is unlawful.
LEGAL MATTERS
The enforceability of the new notes and related guarantees offered hereby is being passed upon for usRAI by Kilpatrick Townsend & Stockton LLP, ~~Charlotte, NC.~~Atlanta, GA. Matters of New Mexico law are being passed upon for usRAI by Betzer, Roybal & Eisenberg P.C., Albuquerque, NM.
EXPERTS
The consolidated financial statements of ~~Reynolds American Inc.~~RAI and subsidiaries as of December 31, ~~2005~~2014 and ~~2004,~~2013, and for each of the years in the three-year period ended December 31, ~~2005,~~2014, and management’s assessment of the effectiveness of internal control over financial reporting (which is included in Management’s Report on Internal Control over Financial Reporting) as of December 31, ~~2005, are~~2014, have been incorporated by reference herein ~~and in the registration statement~~ in reliance upon the reports of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.
The ~~combined~~consolidated financial statements and the related financial statement schedule of ~~Conwood Company, L.P., Conwood Sales Co., L.P., Scott Tobacco LLC, Rosswil LLC, Conwood LLC,Conwood-1~~ ~~LLC andConwood-2~~ ~~LLC~~Lorillard as of December 31, 2014 and 2013, and for each of the ~~year~~three years in the period ended December 31, ~~2005, are~~2014, incorporated in this prospectus by reference from RAI’s Current Report on Form 8-K dated June 9, 2015, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report, which is incorporated herein by reference. Such consolidated financial statements and in the ~~registration~~related financial statement schedule have been so incorporated in reliance upon the report of ~~KPMG LLP, independent auditors, incorporated by reference herein, and~~such firm given upon ~~the~~their authority ~~of said firm~~ as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
RAI is subject to the informational requirements of the Securities Exchange Act, and, in accordance with the requirements ~~of the Exchange Act,~~thereof, files reports, proxy statements and other information with the SEC. You may read ~~and copy this information~~ or obtain copies of this information at the Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 at prescribed rates. You can obtain information on the operation of the Public Reference Room by calling the SEC at1-800-SEC-0330. You may also obtain the documents that RAI files electronically from the SEC’s web site athttp://www.sec.gov.
RAI and its subsidiary guarantors under the ~~guarantors~~RAI indenture have filed with the SEC a registration statement on Form S-4, of which this prospectus forms a part, under the Securities Act in connection with ~~our~~their offering of the ~~new notes and related guarantees to be issued in the exchange offer.~~securities covered by this prospectus. This prospectus does not contain all of the information in the registration statement. You will find additional information about RAI, the ~~guarantors~~other registrants and the ~~exchange offer~~securities covered hereby in the registration statement. Any statements made in this prospectus concerning the provisions of legal documents are not necessarily complete, and you should read the documents that are filed as exhibits to the registration statement. You may read and copy the registration statement, including its exhibits, at the SEC’s Public Reference Room ~~located at 100 F Street, NE, Washington D.C. 20549~~ or at the SEC’s web site at~~http://www.sec.gov.~~
as described above.
RAI’s SEC filings are also available at its web site athttp://~~www.reynoldsamerican.com~~.www.reynoldsamerican.com. Information with respect to RAI may also be obtained by writing or calling the Office of the Secretary, P.O. Box 2990, Winston-Salem, North Carolina 27102-2990; telephone number (336) 741-5162.
INCORPORATION BY REFERENCE
The SEC allows RAI ~~(SEC file number1-32258)~~ ~~“incorporates~~to “incorporate by reference” into this prospectus ~~certain~~ information that itRAI (SEC file number 1-32258) files with the SEC, which means that ~~it discloses~~ important information can be disclosed to you by referring you to those ~~documents.~~documents and those documents will be considered part of this prospectus. The information incorporated by reference is an important part of this prospectus. Certain information that is subsequently filed with the SEC will automatically update and supersede information in this prospectus and in earlier filings with the SEC. ~~RAI incorporates by reference the~~
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The information and documents listed below, which ~~have been~~RAI has filed with the SEC are incorporated by reference into this prospectus:
RAI’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on February 10, 2015;
RAI’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed with the SEC on April 20, 2015;
RAI’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, filed with the SEC on August 6, 2015;
RAI’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, filed with the SEC on October 27, 2015; and
RAI’s Current Reports on Form 8-K, filed with the SEC on January 20, 2015, January 28, 2015, February 6, 2015, May 7, 2015, May 27, 2015, May 28, 2015, June 5, 2015, June 8, 2015, June 9, 2015, June 11, 2015, June 12, 2015, June 25, 2015, June 29, 2015, July 13, 2015, July 15, 2015, July 28, 2015, July 29, 2015, September 2, 2015, September 14, 2015, September 29, 2015, October 20, 2015 and ~~any~~October 26, 2015.
In addition, all documents ~~that RAI files~~filed with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus and before the termination of the Exchange Offers shall be deemed to be incorporated by reference in this ~~exchange offer:~~
• ~~RAI’s Annual Report on Form~~ ~~10-K~~ ~~for the year ended December 31, 2005, filed with the SEC on February 27, 2006;~~
• ~~RAI’s Quarterly Reports on Form~~ ~~10-Q~~ ~~for the quarters ended March 31, 2006 and June 30, 2006, filed with the SEC on May 5, 2006 and August 4, 2006, respectively; and~~
• ~~RAI’s Current Reports on Form~~ ~~8-K,~~ and amendments thereto, filed with the SEC on February 7, 2006, February 15, 2006, April 25, 2006, May 24, 2006, June 6, 2006, June 26, 2006, August 4, 2006, August 24, 2006, September 19, 2006, October 2, 2006, and October 2, 2006.
      ~~We will provide without charge to each~~prospectus and made a part of this prospectus from the respective dates of filing;
provided, however, RAI is not incorporating any information furnished under Items 2.02 or 7.01 of any Current Report on Form 8-K unless specifically stated otherwise.
Each person to whom a copy of this prospectus is delivered, upon the oral or written request of such person, will be provided, without charge, a copy of any or all of the documents that are incorporated by reference herein, other than exhibits to such documents, unless such exhibits are specifically incorporated by reference into such documents. Requests should be directed to the Office of the Secretary, P.O. Box 2990, Winston-Salem, North Carolina 27102-2990; telephone number (336) 741-5162. ~~You may also obtain the documents incorporated by reference in this prospectus from the SEC as described above.~~
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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20.Indemnification of Directors and Officers.

North Carolina ~~Registrants~~
Corporations
The following registrants are corporations incorporated under the laws of the ~~state~~State of North Carolina: ~~Reynolds American Inc., referred to as RAI,~~RAI; R. J. Reynolds Tobacco ~~Company,~~Company; Reynolds Innovations Inc.; and RAI Services Company.
Section 55-8-51 of the North Carolina Business Corporation Act, referred to as ~~RJR Tobacco,~~the NCBCA, authorizes a corporation to indemnify an individual made a party to a proceeding because he is or was a director against liability incurred in the proceeding if: (1) the director conducted himself or herself in good faith; and ~~GMB Inc., referred~~(2) the director reasonably believed (i) in the case of conduct in his or her official capacity with the corporation, that his or her conduct was in the corporation’s best interests; and (ii) in all other cases, that his or her conduct was at least not opposed to the corporation’s best interests; and (3) in the case of any criminal proceeding, the director had no reasonable cause to believe his or her conduct was unlawful.
Sections 55-8-52 and 55-8-56 of the NCBCA require a corporation, unless its articles of incorporation provide otherwise, to indemnify a director or officer who has been wholly successful, on the merits or otherwise, in the defense of any proceeding to which such director or officer was made a party because he was or is a director or officer of the corporation against reasonable expenses actually incurred by the director or officer in connection with the proceeding. Unless prohibited by the articles of incorporation, a director or officer also may make application and obtain court-ordered indemnification if the court determines that such director or officer is fairly and reasonably entitled to such indemnification as ~~GMB.~~
provided in Sections 55-8-54 and 55-8-56 of the NCBCA.
Section 55-8-57 of the NCBCA permits a corporation, in its articles of incorporation or bylaws or by contract or resolution, to indemnify, or agree to indemnify, its directors, officers, employees or agents against liability and expenses (including attorneys’ fees) in any proceeding (including proceedings brought by or on behalf of the corporation) arising out of their status as such or their activities in such capacities, except for any liabilities or expenses incurred on account of activities that were, at the time taken, known or believed by the person to be clearly in conflict with the best interests of the corporation.
      ~~Sections~~ ~~55-8-52~~ ~~and55-8-56~~
Section 55-8-57 of the NCBCA require a corporation, unless its articles of incorporation provide otherwise, to indemnify a director or officer who has been wholly successful, on the merits or otherwise, in the defense of any proceeding to which such director or officer was made a party because he or she was or is a director or officer of the corporation against reasonable expenses actually incurred by the director or officer in connection with the proceeding. Unless prohibited by the articles of incorporation, a director or officer also ~~may make application and obtain court-ordered indemnification if the court determines that such director or officer is fairly and reasonably entitled to such indemnification as provided in Sections~~ ~~55-8-54~~ ~~and55-8-56~~ ~~of the NCBCA.~~
      ~~Section~~ ~~55-8-57~~ ~~of the NCBCA~~ authorizes a corporation to purchase and maintain insurance on behalf of an individual who was or is a director, officer, employee or agent of the corporation against certain liabilities incurred by such a person, whether or not the corporation is otherwise authorized by the NCBCA to indemnify that person.
Section 55-2-02 of the NCBCA enables a corporation in its articles of incorporation to eliminate or limit, with certain exceptions, the personal liability of directors for monetary damages for breach of their duties as directors. No such provision is effective to eliminate or limit a director’s liability for: (1) acts or omissions that the director at the time of the breach knew or believed to be clearly in conflict with the best interests of the corporation; (2) improper distributions as described in Section 55-8-33 of the NCBCA; (3) any transaction from which the director derived an improper personal benefit; or (4) acts or omissions occurring prior to the date the exculpatory provision became effective.
The articles of incorporation of RAI provide that RAI will indemnify, to the fullest extent permitted by the NCBCA, any person who was or is a director or officer of RAI who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, because such person was or is a director or officer of RAI or, while a director or officer of RAI, was or is serving at the request of RAI as a director, officer, partner, trustee, employee or agent of any other ~~enterprise.~~enterprise, plan or trust. RAI’s articles of incorporation also provide that RAI shall pay expenses incurred in connection with any such action, suit or proceeding in advance provided the director or officer agrees in writing
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to repay such amount if such person is ultimately determined not entitled to be indemnified against such expenses.
The indemnification rights pursuant to RAI’s articles of incorporation are not exclusive.
RAI has entered into separate indemnification agreements with its directors and executive officers. ~~These~~Pursuant to these agreements, RAI will generally indemnify, defend and hold harmless an indemnitee to the fullest extent permitted or required by the laws of North Carolina in effect on July 30, 2004, or as such laws may thereafter be amended to increase the scope of permitted indemnification, against all losses based upon, arising out of or resulting from any actual, alleged or suspected act or failure to act by an indemnitee in his or her capacity as a current or former, director, officer, employee or agent of RAI or as a director, officer, employee, member, manager, trustee or agent of any other entity or enterprise as to which an indemnitee is or was serving at the request of RAI, or in respect of any action or failure to act by an indemnitee in any business or other activity of RAI.
An indemnitee generally is not entitled to indemnification pursuant to the agreements to the extent that any loss is determined to have resulted from the indemnitee’s knowing misconduct from which he or she derived a direct improper personal benefit. In the event an indemnitee is not wholly successful on the merits in a proceeding, the indemnitee generally only is entitled to indemnification if it is determined that at the time of the indemnitee’s conduct, the indemnitee did not know or believe such conduct to be clearly in conflict with the best interests of RAI.
The agreements entitle an indemnitee to obtain advances of expenses from RAI, subject to conditions such as the indemnitee undertaking to repay RAI any advances he or she is not ultimately entitled to.
The agreements also generally require ~~among other things,~~ RAI to use commercially reasonably efforts to maintain, for soas long as ~~such person could be subject to claims based upon such person’s status as~~an indemnitee is a director or officer of RAI and through the sixth anniversary of the indemnitee terminating such status, directors’ and officers’ liability insurance covering the indemnitee that is at least substantially comparable in scope and amount to ~~former policies of insurance of R.J. Reynolds Tobacco Holdings, referred to as RJR. In no event will RAI be required to spend in any one year an amount more than 200% of the annual premiums paid~~that provided by ~~RAI or RJR, as the case may be, five years~~
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prior to the then-existing policy period; provided, however, that RAI will use commercially reasonable efforts to obtain and maintain policies of insurance with coverage having features as similar as reasonably practical to the features of the prior policies.
      ~~Pursuant to the agreement related to the B&W business combination, RAI agreed to maintain, for a period of six years following the completion, on July 30, 2004, of such combination, policies of~~RAI’s directors’ and officers’ ~~liability insurance maintained by RJR~~coverage in effect at the time of such completion, or policies of at least the same coverage and amounts containing terms and conditions which are, in the aggregate, no less advantageous to the insured, with respect to claims arising from facts or events that occurred on or before October 27, 2003, the dateexecution of the ~~business combination~~indemnitee’s agreement. RAI is not required to spend in any one year an amount more than 200% of the annual premiums paid by RJR as of the date of the combination agreement for such insurance and if the annual premiums of such insurance coverage exceed this amount, RAI will be obligated to obtain a policy with the greatest coverage available for a cost not exceeding such amount.
RAI’s articles of incorporation ~~further~~ provide that, to the fullest extent permitted by the NCBCA, no person who is serving or who has served as a director of the corporation shall be personally liable to the corporation or any of its shareholders for monetary damages for breach of duty as a director.
RAI’s articles of incorporation also provide that neither British American Tobacco p.l.c., referred to as BAT, or any of its subsidiaries or affiliates nor any director of RAI who is affiliated with, or employed by, BAT or any of its subsidiaries or affiliates shall have any obligation, duty or responsibility to present any transaction, relationship, arrangement or other opportunity not primarily relating to the United States to RAI, its board of directors or any RAI officer or employee. The articles further state that RAI renounces any expectancy or interest of RAI in, or in being offered an opportunity to participate in, any such business opportunity, and BAT and its subsidiaries and affiliates are entitled to act upon any such business opportunity and will not be liable to RAI or any of its shareholders for taking any such action or not presenting such business opportunity to RAI.
The provisions in the articles of incorporation of ~~RJR~~R. J. Reynolds Tobacco Company and RAI Services Company with respect to indemnification of officers and directors and elimination of personal liability of directors (other than with respect to the provisions in RAI’s articles concerning BAT and business opportunities) are identical to those contained in RAI’s articles of incorporation.
The articles of incorporation of ~~GMB,~~Reynolds Innovations Inc. provide that the corporation will, to the fullest extent permitted by the NCBCA, indemnify all persons it shall have the power to indemnify under the provisions of the NCBCA from and against any and all expenses and liabilities covered by such provisions. The articles of incorporation of ~~GMB,~~Reynolds Innovations Inc. also provide for the elimination of the personal liability of directors to the fullest extent permitted by the NCBCA.

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North Carolina Limited Liability Company
Lorillard Licensing Company LLC, referred to as Lorillard Licensing, is a limited liability company formed in the State of North Carolina.
Section 57D-3-31 of the North Carolina Limited Liability Company Act provides that, with certain exceptions, (1) a limited liability company shall indemnify a person who is wholly successful on the merits or otherwise in the defense of any proceeding to which the person was a party because the person is or was a member, a manager, or other company official if the person also is or was an interest owner at the time to which the claim relates, acting within the person’s scope of authority as a manager, member, or other company official against expenses incurred by the person in connection with the proceeding and (2) a limited liability company shall reimburse a person who is or was a member for any payment made and indemnify the person for any obligation, including any judgment, settlement, penalty, fine, or other cost, incurred or borne in the authorized conduct of the company’s business or preservation of the company’s business or property, whether acting in the capacity of a manager, member, or other company official, if, in making the payment or incurring the obligation, the person complied with the duties and standards of conduct (i) under Section 57D-3-21 of the North Carolina Limited Liability Company Act, as modified or eliminated by the operating agreement, or (ii) otherwise imposed by the North Carolina Limited Liability Company Act or other applicable law. Section 57D-3-21 of the North Carolina Limited Liability Company Act provides that each manager shall discharge that person’s duties (1) in good faith, (2) with the care an ordinary prudent person in a like position would exercise under similar circumstances, and (3) subject to the operating agreement, in a manner the manager believes to be in the best interests of the limited liability company. A manager is not liable to the limited liability company for any act or omission as a manager if the manager acts in compliance with Section 57D-3-21 of the North Carolina Limited Liability Company Act.
The operating agreement of Lorillard Licensing provides that its managers shall not be liable for the obligations of Lorillard Licensing, and the duties prescribed by Section 57D-3-21 of the North Carolina Limited Liability Company Act are eliminated. The operating agreement further provides that, Lorillard Licensing shall indemnify, defend and hold the managers harmless from, against, and in respect of any obligation, including any expenses incurred or borne in the conduct of Lorillard Licensing’s business or preservation of Lorillard Licensing’s business or property, if in making the payment or incurring the obligation, such manager did not know at the time of the act or omission that the act or omission was clearly in conflict with the best interests of Lorillard Licensing, and such manager did not derive an improper personal benefit. In addition, Lorillard Licensing shall indemnify any manager who is wholly successful on the merits or otherwise in the defense of any proceeding to which the person is a party because the person is or was a manager if the person also is or was acting within the person’s scope of authority as a manager against expenses incurred by such manager in connection with the proceeding.
Delaware ~~Registrants~~
Corporations
The following registrants are corporations incorporated in the State of Delaware: ~~RJR,~~R.J. Reynolds Tobacco Holdings, Inc., referred to as RJR; Conwood Holdings, Inc., referred to as Conwood ~~RJR Acquisition Corp., referred to as RJR Acquisition,~~Holdings; R. J. Reynolds Tobacco Co., referred to as RJR Tobacco Co.~~, and FHS,~~; R. J. Reynolds Global Products, Inc., referred to as ~~FHS.~~
GPI; and Reynolds Finance Company.
Section 145 of the Delaware General Corporation Law, referred to as the DGCL, provides that a corporation may indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or ~~complete~~completed action, suit or proceeding whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that ~~he or she~~the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by ~~him or her~~
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the person in connection with such action, suit or proceeding if ~~he or she~~the person acted in good faith and in a manner ~~he or she~~the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe ~~his or her~~the person’s conduct was unlawful. Section 145 further provides that a corporation similarly may indemnify any such person serving in any such capacity who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor, against expenses actually and reasonably incurred in connection with the defense or settlement of such action or suit if ~~he or she~~the person acted in good faith and in a manner ~~he or she~~the person reasonably believed to be in or not opposed to the best interests of the corporation. No indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Delaware Court of Chancery or such other court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is
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fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
The DGCL further authorizes a Delaware corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against ~~him or her~~such person and incurred by ~~him or her~~such person in any such capacity, arising out of ~~his or her~~such person’s status as such, whether or not the corporation would otherwise have the power to indemnify ~~him or her~~such person under Section 145.
Section 102(b)(7) of the DGCL permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability for any breach of the director’s duty of loyalty to the corporation or its stockholders, for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, for payments of unlawful dividends or unlawful stock repurchases or redemptions or for any transaction from which the director derived an improper personal benefit.
The certificate of incorporation of RJR provides that RJR will indemnify, to the fullest extent permitted by the DGCL, any person who was or is a director or officer of RJR (including the heirs, executors or administrators of such person) who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding (including an action, suit or proceeding by or in the right of RJR), whether civil, criminal, administrative or investigative, because such person was or is a director or officer of RJR or, while a director or officer of RJR, was serving at the request of RJR as a director, officer, partner, trustee, employee or agent of any other enterprise. RJR’s certificate of incorporation also provides that RJR shall pay expenses incurred in connection with any such action, suit or proceeding in advance provided the director or officer agrees in writing to repay such amount if such person is ultimately determined not entitled to be indemnified against such expenses. RJR’s certificate of incorporation further provides that, to the fullest extent permitted by the DGCL, no person who is serving or who has served as a director of the corporation shall be personally liable to the corporation or any of its shareholders for monetary damages for breach of duty as a director.
      The bylaws of RJR Acquisition provide that each person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative, because that person is or was a director or officer of RJR Acquisition or is or was serving at the request of RJR Acquisition as a director or officer of another entity, shall be indemnified and held harmless by RJR Acquisition to the fullest extent permitted by Delaware law. This right to indemnification also includes the right to be paid expenses incurred in connection with that proceeding in advance of its final disposition to the fullest extent authorized by Delaware law. The certificate of incorporation of RJR Acquisition provides the no director shall be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except as otherwise provided by the DGCL.
The certificate of incorporation of Conwood Holdings provides that Conwood Holdings will indemnify, to the fullest extent permitted under the DGCL or any other applicable laws, any person who is or was or has agreed to become a director or officer of the corporation, or each person who is or was serving or who has agreed to serve at the request of the board of directors of the corporation as an officer of the corporation or as an employee or agent of the corporation or as a director, officer, employee or agent of another corporation, partnership, joint venture or other enterprise (including the heirs, executors, administrators or estate of such person). The certificate of incorporation of Conwood Holdings also provides that Conwood Holdings may enter into one or more agreements with any person to provide for indemnification greater or different than that provided in its certificate of incorporation.
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The certificate of incorporation of ~~FHS~~GPI provides that GPI shall indemnify its directors and officers to the fullest extent permitted by law. The certificate further provides that GPI’s directors shall incur no personal liability to GPI or its stockholders for monetary damages for any breach of fiduciary duty as a director; provided, however, that GPI’s directors continue to be subject to liability for any breach of their duty of loyalty, for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, for liability under Section 174 of the DGCL (payment of dividends) and for transactions from which the director derived an improper personal benefit. In addition, the personal liability of directors shall further be limited or eliminated to the fullest extent permitted by any future amendments to Delaware law.
GPI’s bylaws provide that GPI shall indemnify any director, officer, other employee or agent, who was or is a party to, or is threatened to be made a party to or who is called as a witness in connection with any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of GPI by reason of the fact that such person is or was serving at the request of a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another enterprise, unless the act or the failure to act giving rise to the claim for indemnification is determined by a court to have constituted willful misconduct or recklessness. GPI shall pay expenses incurred by an officer, director or other employee or agent, in defending a civil or criminal action, suit or proceeding in advance of the final disposition of such proceeding upon receipt of an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by GPI. The indemnification and advancement of expenses provided by the bylaws are not exclusive of other rights. Effective immediately upon any modification of the DGCL which expands or enlarges the power or obligation of Delaware corporations to indemnify, or advance expenses to, directors, officers, employees and other agents of the corporation, GPI’s bylaws are deemed to have been amended for the benefit of its directors, officers, employees and other agents.
The certificate of incorporation of Reynolds Finance Company provides for the indemnification of the corporation’s directors and officers to the fullest extent permitted by law and eliminates the personal liability of its directors to the corporation or its stockholders for any breach of fiduciary duty as a director other than any breach of the duty of loyalty, for acts or omissions not in good faith or which involve intentional misconduct or knowing violation
~~II-3~~
of law, for acts ofor omissions arising under Section 174 of the DGCL (payment of dividends) or for any transaction ~~for~~from which the directors derived an improper personal benefit.
The bylaws of ~~FHS~~Reynolds Finance Company provide that its officers and directors shall be indemnified against any reasonable expense and any liability paid or incurred in connection with any actual or threatened claim, action, suit or proceeding, whether brought by or in the right of the corporation or otherwise, by reason of serving or having served as an officer or director of the ~~company~~corporation or an officer, director, employee, fiduciary or other representative of another entity at the request of ~~FHS,~~Reynolds Finance Company, so long as such indemnification does not contravene the DGCL or other applicable law and provided such officer or director acted in good faith and in a manner reasonably believed was in or not opposed to the best interest of the corporation and with respect to any criminal action or proceeding had no reasonable cause to believe his ~~or her~~ conduct was unlawful. The bylaws of ~~FHS~~Reynolds Finance Company also provide that the indemnification provided for therein shall include the right to have expenses incurred by such person in connection with an action paid in advance of a final disposition of such action, subject to subsequent determination of the right to be so indemnified.
Delaware Limited Liability Companies
The following registrants are limited liability companies formed in the ~~state~~State of Delaware: ~~Conwood Sales Co., LLC, referred to as Conwood Sales, Conwood~~American Snuff Company, LLC, referred to as ~~Conwood Company,~~American Snuff Co.; and Rosswil LLC, referred to as ~~Rosswil, RJR Packaging, LLC, referred to as RJR Packaging, and Scott Tobacco LLC, referred to as Scott Tobacco.~~
Rosswil.
Section 18-108 of the Delaware Limited Liability Company Act grants a Delaware limited liability company the power, subject to such standards and restrictions, if any, as are set forth in its limited liability company
II-5
agreement, to indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever.
The limited liability company agreement of ~~each of Conwood Sales and Conwood Company~~American Snuff Co. provides that ~~each of these entities~~it will, to the full extent permitted by the Delaware Limited Liability Company Act or other applicable law, indemnify any of its managers, officers or members for any loss, damage or claim incurred by such person in good faith on behalf of ~~Conwood Sales or Conwood Company, as the case may be,~~American Snuff Co. and in a manner reasonably believed to be within the scope of the authority conferred on such person under the entity’s ~~operating~~limited liability company agreement, other than for any loss, damage or claim incurred by such person by reason of gross negligence or willful misconduct. The limited liability company ~~agreements~~agreement further ~~provide~~provides that none of such persons shall be liable to ~~Conwood Sales~~American Snuff Co. or ~~Conwood Company, as the case may be, or their~~its members for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such person in good faith on behalf of ~~Conwood Sales or Conwood Company, as the case may be,~~American Snuff Co. and in a manner reasonably believed to be within the scope of the authority conferred on such person, other than for any such loss, damage or claim incurred by reason of such person’s gross negligence or willful misconduct.
The limited liability company agreement further provides that, to the fullest extent permitted by law, expenses incurred by managers, officers or members in defending any action, demand, claim, suit or proceeding shall be advanced upon receipt of an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified.
The limited liability company agreement of ~~each of~~ Rosswil ~~and Scott Tobacco~~ provides that no manager shall have any liability to Rosswil ~~or Scott Tobacco, as the case may be,~~ or any member for monetary damages for breach of fiduciary duty as a manager other than for any breach of such manager’s duty of loyalty to the entity or its members, for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law or for any transactions from which such manager derived an improper personal benefit. ~~These agreements~~The agreement also ~~provide~~provides that ~~each of these entities~~Rosswil will, except as discussed below, indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of Rosswil ~~or Scott Tobacco, as the case may be,~~ because such a person is or was a member, manager or officer, or is or was serving at the request of Rosswil ~~or Scott Tobacco, as the case may be,~~ as a manager, director, officer or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, against expenses (including ~~attorney’s~~attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of Rosswil, ~~or Scott Tobacco, as the case may be,~~ and with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. No indemnification shall be made in respect
~~II-4~~
of any claim, issue or matter as to which a member, manager or officer shall have been adjudged to be liable to the entity unless and to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine that such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. The limited liability company agreement of ~~each of~~ Rosswil ~~and Scott Tobacco~~ also provides that expenses (including attorneys’ fees) incurred by a member, manager or officer shall be paid by Rosswil in advance of the final disposition of such action, suit or proceeding ~~subject~~upon receipt of an undertaking by or on behalf of such person to ~~subsequent determination of the right~~repay such amount if it shall ultimately be determined that such person is not entitled to be so indemnified.
      ~~RJR Packaging’s operating agreement provides that RJR Packaging will indemnify, save harmless and pay all expenses of its sole member, RJR~~
New Mexico Corporation
Santa Fe Natural Tobacco any stockholder, member, partner, beneficiary and other equity holder of its member, and any officers, directors, employees and agents of any of them, incurred by reason of any act performed or omitted in connection with the business of RJR Packaging.
      ~~In addition to the foregoing, pursuant to the purchase agreement entered into by RAI in connection with its acquisition of Conwood Sales, Conwood~~ Company, Rosswil and Scott Tobacco, until May 31, 2012, each of these entities agreed to indemnify, to the maximum extent permitted by applicable law, any person who, as of May 31, 2006, was a current or former manager or officer of any of these entities, against all losses arising out of acts or omissions (or alleged acts or omissions) of any such person in the foregoing capacities, and further agreed that, prior to May 31, 2012, the provisions of the limited liability company agreements of these entities concerning the indemnification and elimination of liability of managers and officers would not be amended in any manner that would adversely affect the rights of such persons thereunder.
~~New York Registrant~~
      ~~Lane, Limited,~~Inc., referred to as ~~Lane,~~SFNTC, is a corporation incorporated under the laws of the ~~state~~State of New ~~York.~~
      ~~Article 7, Sections~~ ~~721-726~~ of the New York Business Corporation Law, referred to as the NYBCL, provides for the indemnification and advancement of expenses to officers and directors for actions in their capacity as such. Under the NYBCL, a corporation may indemnify an officer or director, in the case of third party actions, against judgments, fines, amounts paid in settlement and reasonable expenses and, in the case of derivative actions, against amounts paid in settlement and reasonable expenses, provided that the director or officer acted in good faith, for a purpose which he or she reasonably believed to be in the best interests of the corporation and, in the case of criminal actions, had no reasonable cause to believe his or her conduct was unlawful. A corporation may obtain indemnification insurance indemnifying itself and its directors and officers. Indemnification and advancement pursuant to the NYBCL are not exclusive of any other rights an officer or director may be entitled to, provided that no indemnification may be made to or on behalf of any director or officer if a judgment or other final adjudication adverse to the director or officer establishes that his or her acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated, or that he or she personally gained a financial profit or other advantage to which he or she was not legally entitled.
      The bylaws of Lane provide that Lane shall, to the fullest extent permitted by applicable law, indemnify or advance expenses on behalf of a director or officer of Lane in connection with any threatened, pending or completed action, suit or proceeding, including an action by or in the right of Lane to procure a judgment in its favor, and an action by or in the right of any other corporation of any type or kind, domestic or foreign or in any partnership, joint venture, trust, employee benefit plan or other enterprise, which such person is serving, has served or has agreed to serve in any capacity at the request of Lane, by reason of the fact that he or she is or was or has agreed to become a director or officer of Lane, or is or was serving or has agreed to serve such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, for or against judgments, fines, amounts paid or to be paid in settlement, taxes or penalties or costs, charges and expenses, including attorney’s fees, incurred in connection with such action or proceeding or any appeal therefrom. No indemnification shall be provided
Mexico.
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to any such person if a judgment or other final adjudication adverse to the director or officer establishes that his or her acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, or he or she personally gained in fact a financial profit or other advantage to which he or she was not legally entitled. In addition, the bylaws of Lane provide that the right to be indemnified and the reimbursement or advancement of expenses incurred in defending a proceeding in advance of its final disposition shall not be exclusive of any other right which any person may have or acquire under any statute, provision of Lane’s certificate of incorporation, bylaws, agreement, vote of shareholders or disinterested directors or otherwise.
~~New Mexico Registrant~~
      ~~Santa Fe Natural Tobacco Company, Inc., referred to as Santa Fe, is a corporation incorporated under the laws of the state of New Mexico.~~
Section 53-11-4.1 of the New Mexico Business Corporation Act, referred to as the NMBCA, empowers a corporation to indemnify any officer or director against judgments, penalties, fines, settlements and reasonable expenses actually incurred by the person in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, if the person acted in good faith and ~~in a manner~~the person reasonably believed ~~to be~~that, in ~~or not opposed to~~the case of conduct in the person’s official capacity with the corporation, the
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person’s conduct was in the best interests of the corporation and in all other cases, that the person’s conduct was at least not opposed to its best interests, and with respect to a criminal proceeding, had no reasonable cause to believe the person’s conduct was ~~unlawful.~~unlawful; except that if the proceeding was by or in the right of the corporation, indemnification may be made only against such reasonable expenses and shall not be made in respect of any proceeding in which the person shall have been adjudged to be liable to the corporation. A director or officer shall not be indemnified under this section in respect of any proceeding charging improper personal benefit to such person, whether or not involving action in the person’s official capacity, in which the person shall have been adjudged to be liable on the basis that personal benefit was improperly received by such person. This section empowers a corporation to maintain insurance or furnish similar protection, including, but not limited to, providing a trust fund, a letter of credit, or self-insurance on behalf of any officer ofor director against any liability asserted against and incurred by the person in such capacity whether or not the corporation would have the power to indemnify the person against such liability under the provisions of this section. Reasonable expenses incurred by a director or officer who is a party to a proceeding may be paid or reimbursed by the corporation in advance of the final disposition of such proceeding if such person furnishes the corporation a written affirmation of his good faith belief that the person has met the standard of conduct necessary for indemnification by the corporation as authorized in this section; such person furnishes the corporation a written undertaking to repay such amount if it shall ultimately be determined that the person has not met such standards of conduct; and a determination is made that the facts then known to those making the determination would not preclude indemnification under this section. The indemnification authorized by Section 53-11-4.1 is not exclusive of any other rights to which an officer or director may be entitled under the articles of incorporation, the bylaws, an agreement, a resolution of shareholders or directors or otherwise.
The restated articles of incorporation of ~~Santa Fe~~SFNTC provide for the indemnification of each of the corporation’s directors, officers and/or employees or any former director, officer and/or employee, or any person who has served at the request of the corporation as a director or officer of another corporation in which the corporation owns shares of stock or of which it is a creditor, and the personal representative of any such persons, against costs and expenses actually and necessarily incurred by such person in connection with the defense of any action or proceeding in which such person is made a party by reason of being or having been a director, officer and/or employee, except in relation to matters as to which such person is adjudged in such action or proceeding to be liable for actual fraud in the performance of his ofor her duties. The right to indemnification also includes the right to be paid immediately the costs and expenses of any such action or proceeding upon the incurrence of any such cost or expense. ~~The indemnification shall not be limited to reimbursement only of such cost or expense incurred and paid by any~~If such director, officer and/or ~~employee. If such director, officer and/~~employee or former director, officer and/or employee is adjudged in any action or proceeding to be liable of actual fraud in the performance of his or her duties, such person shall be liable to repay the corporation for any such costs or expenses incurred and paid by the corporation.
The bylaws of ~~Santa Fe~~SFNTC provide that ~~Santa Fe~~SFNTC shall indemnify its past, present and future directors and officers (and their executors, administrators or other legal ~~representative)~~representatives) and hold them harmless to the fullest extent of ~~Santa Fe’s~~SFNTC’s power to do so under the NMBCA and applicable law, from and against judgments, penalties, fines, settlements and reasonable expenses actually incurred in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, to the extent that any such director or officer is made a party to such proceeding by reason of the fact that the person is or was a director or officer of ~~Santa Fe~~SFNTC (or served at the request of ~~Santa Fe~~SFNTC as a director, officer, partner, trustee, employee or agent of another corporation or of a partnership, joint venture, trust or other incorporated or unincorporated enterprise, including service with respect to employee benefit plans or trusts), except in relation to matters as to which any such officer ofor director shall be adjudged in such action, suit or proceeding to be liable for gross negligence or willful misconduct in the performance of his or her duties. The bylaws of
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~~Santa Fe~~ SFNTC further provide that ~~Santa Fe~~SFNTC shall indemnify its past, present and future directors and officers (and their executors, administrators or other legal ~~representative)~~representatives) from and against all reasonable expense incurred by any such person in defending claims made or suits or proceedings brought against him or her as a director or officer.
SFNTC shall pay and reimburse such expenses incurred by any such director or officer in advance of the final disposition of such proceeding if such person furnishes SFNTC a written affirmation of such person’s good faith belief that the person has met the standard of conduct necessary for indemnification by SFNTC; such person furnishes SFNTC a written
II-7
undertaking to repay such amount if it shall ultimately be determined that the person has not met such standards of conduct; and a determination is made, if required by the NMBCA, that the facts then known to those making the determination would not preclude indemnification.
Directors’ and Officers’ Insurance
Under insurance policies maintained by RAI, the directors and officers of RAI and the other registrants are insured, within the limits and subject to the limitations of the policies, against certain expenses in connection with the defense of actions, suits or ~~proceeding,~~proceedings, and certain liabilities which might be imposed as a result of such actions, suits or proceedings, to which they are parties by reason of being or having been such directors or officers, including liabilities under the Securities ~~Act.~~Act of 1933, as amended. These insurance policies are designed to make payments on behalf of RAI and the other registrants to their directors and officers pursuant to the indemnification provisions described above as well as with respect to non-indemnifiable claims. These insurance policies maintained by RAI satisfy its obligations under its indemnification agreements with directors and ~~officers relating~~officers.
The merger agreement also requires RAI to maintain for six years following the Lorillard merger directors’ and officers’ liability insurance ~~under the 2004 agreement relating~~with respect to facts, events, acts or omissions that occurred prior to the ~~B&W business combination.~~
Lorillard merger on terms and conditions not less favorable to the insured persons than the directors’ and officers’ liability insurance coverage maintained by Lorillard at the time the merger agreement was executed and at an annual cost not to exceed 250% of Lorillard’s 2013 aggregate annual premium for such insurance policy.
Item 21.Exhibits and Financial Statement Schedules
      ~~(a) Exhibits.~~

Exhibit No. Description of Document

2 .1 Purchase Agreement dated April 24, 2006 by and among Reynolds American Inc., Reynolds American Inc.’s direct, wholly owned acquisition subsidiary, Pinch Acquisition Corporation, Karl J. Breyer, Marshall E. Eisenberg and Thomas J. Pritzker, not individually, but solely as co-trustees of those certain separate and distinct trusts listed therein, and GP Investor, L.L.C. (incorporated by reference to Exhibit 2.1 to Reynolds American Inc.’s Form 8-K dated April 24, 2006).
2 .2 Amendment No. 1, dated as of May 31, 2006, to the Purchase Agreement, dated as of April 24, 2006, by and among Karl J. Breyer, Marshall E. Eisenberg and Thomas J. Pritzker, as trustees, GP Investor, L.L.C., Reynolds American Inc. and Conwood Holdings, Inc. (f/k/a Pinch Acquisition Corporation) (incorporated by reference to Exhibit 2.1 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
3 .1 Amended and Restated Certificate of Incorporation of Reynolds American Inc. (incorporated by reference to Exhibit 1 to Reynolds American Inc.’s Form 8-A filed July 29, 2004).
3 .2 Amended and Restated Bylaws of Reynolds American Inc. (incorporated by reference to Exhibit 3.1 to Reynolds American Inc.’s Form 8-K dated February 1, 2005).
3 .3 Amended and Restated Certificate of Incorporation of R.J. Reynolds Tobacco Holdings, Inc. (incorporated by reference to Exhibit 3.3 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .4 Amended and Restated Bylaws of R.J. Reynolds Tobacco Holdings, Inc. (incorporated by reference to Exhibit 3.4 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .5 Amended and Restated Certificate of Incorporation of RJR Acquisition Corp. (incorporated by reference to Exhibit 3.5 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .6 Bylaws of RJR Acquisition Corp. (incorporated by reference to Exhibit 3.6 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .7 Amended and Restated Articles of Incorporation of R. J. Reynolds Tobacco Company (incorporated by reference to Exhibit 3.7 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .8 Amended and Restated Bylaws of R. J. Reynolds Tobacco Company (incorporated by reference to Exhibit 3.8 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .9 Certificate of Incorporation of R. J. Reynolds Tobacco Co. (formerly R. J. Reynolds Company), as amended (incorporated by reference to Exhibit 3.9 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
~~II-7~~
(a) Exhibits.

Exhibit No. Description of Document

3 .10 By-Laws of R. J. Reynolds Tobacco Co. (formerly R. J. Reynolds Company) (incorporated by reference to Exhibit 3.10 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .11 Certificate of Formation of RJR Packaging, LLC (incorporated by reference to Exhibit 3.11 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .12 Operating Agreement of RJR Packaging, LLC (incorporated by reference to Exhibit 3.12 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .13 Certificate of Incorporation of FHS, Inc. (incorporated by reference to Exhibit 3.13 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .14 Bylaws of FHS, Inc. (incorporated by reference to Exhibit 3.14 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .15 Articles of Incorporation of GMB, Inc. (formerly Interim, Inc.), as amended (incorporated by reference to Exhibit 3.15 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .16 Bylaws of GMB, Inc. (formerly Interim, Inc.) (incorporated by reference to Exhibit 3.16 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .17 Restated Articles of Incorporation of Santa Fe Natural Tobacco Company, Inc., as amended.
3 .18 Restated By-Laws of Santa Fe Natural Tobacco Company, Inc.
3 .19 Certificate of Incorporation of Lane, Limited (formerly M.D. Tabac, LTD.).
3 .20 By-Laws of Lane, Limited.
3 .21 Certificate of Incorporation of Conwood Holdings, Inc. (formerly Pinch Acquisition Corporation), as amended.
3 .22 Bylaws of Conwood Holdings, Inc. (formerly Pinch Acquisition Corporation), as amended.
3 .23 Certificate of Formation of Conwood Company, LLC.
3 .24 Limited Liability Company Agreement of Conwood Company, LLC.
3 .25 Certificate of Formation of Conwood Sales Co., LLC.
3 .26 Limited Liability Company Agreement of Conwood Sales Co., LLC.
3 .27 Certificate of Formation of Rosswil LLC.
3 .28 Limited Liability Company Agreement of Rosswil LLC.
3 .29 Restated Certificate of Incorporation of R. J. Reynolds Global Products, Inc. (formerly MSSH, Inc. and R.J. Reynolds International Business Group, Inc.), as amended.
3 .30 Bylaws of R. J. Reynolds Global Products, Inc. (formerly MSSH, Inc. and R.J. Reynolds International Business Group, Inc.), as amended.
3 .31 Certificate of Formation of Scott Tobacco LLC.
3 .32 Limited Liability Company Agreement of Scott Tobacco LLC.
4 .1 Rights Agreement, between Reynolds American Inc. and The Bank of New York, as rights agent (incorporated by reference to Exhibit 3 to Reynolds American Inc.’s Form 8-A filed July 29, 2004).
4 .2 Amended and Restated Indenture dated as of July 24, 1995, between RJR Nabisco, Inc. and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to RJR Nabisco, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1995, filed August 8, 1995).
4 .3 First Supplemental Indenture and Waiver dated as of April 27, 1999, between RJR Nabisco, Inc. and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee, to the Amended and Restated Indenture dated as of July 24, 1995, between RJR Nabisco, Inc. and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 10.3 to R.J. Reynolds Tobacco Holdings, Inc.’s Form 8-A filed May 19, 1999).
~~II-8~~

Exhibit No. Description of Document

4 .4 Indenture dated as of May 15, 1999, among RJR Nabisco, Inc., R. J. Reynolds Tobacco Company and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 10.2 to R.J. Reynolds Tobacco Holdings, Inc.’s Form 8-A filed May 19, 1999).
4 .5 Guarantee dated as of May 18, 1999, by R. J. Reynolds Tobacco Company to the holders and to The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee, issued in connection with the Indenture dated as of May 15, 1999, among RJR Nabisco, Inc., R. J. Reynolds Tobacco Company and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 10.6 to R.J. Reynolds Tobacco Holdings, Inc.’s Form 8-A filed May 19, 1999).
4 .6 First Supplemental Indenture dated as of December 12, 2000, among RJR Acquisition Corp., R.J. Reynolds Tobacco Holdings, Inc., R. J. Reynolds Tobacco Company and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee, to the Indenture dated as of May 15, 1999, among RJR Nabisco, Inc., R. J. Reynolds Tobacco Company and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.6 to R.J. Reynolds Tobacco Holdings, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2000, filed March 1, 2001).
4 .7 Second Supplemental Indenture dated as of June 30, 2003, among GMB, Inc., FSH, Inc., R. J. Reynolds Tobacco Co., Santa Fe Natural Tobacco Company, Inc., RJR Packaging, LLC, R.J. Reynolds Tobacco Holdings, Inc., R. J. Reynolds Tobacco Company, RJR Acquisition Corp. and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee, to the Indenture dated May 15, 1999, among RJR Nabisco, Inc., R. J. Reynolds Tobacco Company and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, filed August 8, 2003).
4 .8 Third Supplemental Indenture, dated as of July 30, 2004, among R.J. Reynolds Tobacco Holdings, Inc., Reynolds American Inc., R. J. Reynolds Tobacco Company, RJR Acquisition Corp., GMB, Inc., FHS, Inc., R. J. Reynolds Tobacco Co., RJR Packaging, LLC, BWT Brands, Inc. and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee, to the Indenture dated May 15, 1999, among RJR Nabisco, Inc., R. J. Reynolds Tobacco Company and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.2 to Reynolds American Inc.’s Form 8-K dated July 30, 2004).
4 .9 Fourth Supplemental Indenture, dated July 6, 2005, to Indenture dated May 15, 1999, by and among R.J. Reynolds Tobacco Holdings, Inc., Reynolds American Inc. and various subsidiaries of Reynolds American Inc. as guarantors, and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to Reynolds American Inc.’s From 8-K dated July 11, 2005).
4 .10 Fifth Supplemental Indenture dated May 31, 2006, to Indenture dated May 15, 1999, among R.J. Reynolds Tobacco Holdings, Inc., Reynolds American Inc. and certain subsidiaries of R.J. Reynolds Tobacco Holdings, Inc. as guarantors and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.5 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
4 .11 Sixth Supplemental Indenture dated June 20, 2006, to Indenture dated May 15, 1999, among R.J. Reynolds Tobacco Holdings, Inc., Reynolds American Inc. and certain subsidiaries of R.J. Reynolds Tobacco Holdings, Inc. as guarantors and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.6 to Reynolds American Inc.’s Form 8-K dated June 20, 2006).
4 .12 Seventh Supplemental Indenture dated September 30, 2006, to Indenture dated May 15, 1999, among R.J. Reynolds Tobacco Holdings, Inc., Reynolds American Inc. and certain subsidiaries of R.J. Reynolds Tobacco Holdings, Inc. as guarantors and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.3 to Reynolds American Inc.’s Form 8-K dated October 2, 2006).
~~II-9~~

Exhibit No. Description of Document

4 .13 Indenture dated as of May 20, 2002, by and among R.J. Reynolds Tobacco Holdings, Inc., R. J. Reynolds Tobacco Company, RJR Acquisition Corp. and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.3 to R.J. Reynolds Tobacco Holdings, Inc.’s Form 8-K dated May 15, 2002).
4 .14 First Supplemental Indenture dated as of June 30, 2003, among GMB, Inc., FSH, Inc., R. J. Reynolds Tobacco Co., Santa Fe Natural Tobacco Company, Inc., RJR Packaging, LLC, R.J. Reynolds Tobacco Holdings, Inc., R. J. Reynolds Tobacco Company, RJR Acquisition Corp. and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee, to the Indenture dated as of May 20, 2002, among R.J. Reynolds Tobacco Holdings, Inc., R. J. Reynolds Tobacco Company, RJR Acquisition Corp. and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.2 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, filed August 8, 2003).
4 .15 Second Supplemental Indenture, dated as of July 30, 2004, among R.J. Reynolds Tobacco Holdings, Inc., Reynolds American Inc., R. J. Reynolds Tobacco Company, RJR Acquisition, GMB, Inc., FSH, Inc., R. J. Reynolds Tobacco Co., RJR Packaging, LLC, BWT Brands, Inc. and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee, to the Indenture dated May 20, 2002, among R.J. Reynolds Tobacco Holdings, Inc., R. J. Reynolds Tobacco Company, RJR Acquisition Corp. and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.3 to Reynolds American Inc.’s Form 8-K dated July 30, 2004).
4 .16 Third Supplemental Indenture dated May 31, 2006, to Indenture dated May 20, 2002, among R.J. Reynolds Tobacco Holdings, Inc., Reynolds American Inc. and certain subsidiaries of R.J. Reynolds Tobacco Holdings, Inc. as guarantors and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.6 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
4 .17 Fourth Supplemental Indenture dated June 20, 2006, to Indenture dated May 20, 2002, among R.J. Reynolds Tobacco Holdings, Inc., Reynolds American Inc. and certain subsidiaries of R.J. Reynolds Tobacco Holdings, Inc. as guarantors and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.7 to Reynolds American Inc.’s Form 8-K dated June 20, 2006).
4 .18 Fifth Supplemental Indenture dated September 30, 2006, to Indenture dated May 20, 2002, among R.J. Reynolds Tobacco Holdings, Inc., Reynolds American Inc. and certain subsidiaries of R.J. Reynolds Tobacco Holdings, Inc. as guarantors and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.2 to Reynolds American Inc.’s form 8-K dated October 2, 2006).
4 .19 Indenture dated May 31, 2006, among Reynolds American Inc. and certain of its subsidiaries as guarantors and The Bank of New York Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
4 .20 First Supplemental Indenture dated September 30, 2006, to Indenture dated May 31, 2006, among Reynolds American Inc. and certain of its subsidiaries as guarantors and The Bank of New York Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 to Reynolds American Inc.’s Form 8-K dated October 2, 2006).
4 .21 Form of Reynolds American Inc. old 6.500% Senior Secured Note due 2007 (incorporated by reference to Exhibit 4.1 to Reynolds American Inc.’s Form 8-K dated June 20, 2006).
4 .22 Form of Reynolds American Inc. old 7.875% Senior Secured Note due 2009 (incorporated by reference to Exhibit 4.2 to Reynolds American Inc.’s Form 8-K dated June 20, 2006).
4 .23 Form of Reynolds American Inc. old 6.500% Senior Secured Note due 2010 (incorporated by reference to Exhibit 4.3 to Reynolds American Inc.’s Form 8-K dated June 20, 2006).
4 .24 Form of Reynolds American Inc. old 7.250% Senior Secured Note due 2012 (incorporated by reference to Exhibit 4.4 to Reynolds American Inc.’s Form 8-K dated June 20, 2006).
4 .25 Form of Reynolds American Inc. old 7.250% Senior Secured Note due 2013 (incorporated by reference to Exhibit 4.2 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
~~II-10~~

Exhibit No. Description of Document

4 .26 Form of Reynolds American Inc. old 7.300% Senior Secured Note due 2015 (incorporated by reference to Exhibit 4.5 to Reynolds American Inc.’s Form 8-K dated June 20, 2006).
4 .27 Form of Reynolds American Inc. old 7.625% Senior Secured Note due 2016 (incorporated by reference to Exhibit 4.3 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
4 .28 Form of Reynolds American Inc. old 7.750% Senior Secured Note due 2018 (incorporated by reference to Exhibit 4.4 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
4 .29 Form of Reynolds American Inc. new 7.250% Senior Secured Notes due 2013, 7.625% Senior Secured Notes due 2016 and 7.750% Senior Secured Notes due 2018.
4 .30 Form of Reynolds American Inc. new 6.500% Senior Secured Notes due 2007, 7.875% Senior Secured Notes due 2009, 6.500% Senior Secured Notes due 2010, 7.250% Senior Secured Notes due 2012 and 7.300% Senior Secured Notes due 2015.
5 .1 Opinion of Kilpatrick Stockton LLP regarding the validity of securities being registered.
5 .2 Opinion of Betzer, Roybal & Eisenberg P.C., special New Mexico counsel.
10 .1 Fourth Amended and Restated Credit Agreement, dated as of May 31, 2006, among Reynolds American Inc., the agents and other parties named therein, and the lending institutions listed from time to time on Annex I thereto (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
10 .2 Second Amended and Restated Pledge Agreement, dated as of May 31, 2006, among Reynolds American Inc., certain of its subsidiaries as pledgors and JPMorgan Chase Bank, N.A. as collateral agent (incorporated by reference to Exhibit 10.2 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
10 .3 Second Amended and Restated Security Agreement, dated as of May 31, 2006, among Reynolds American Inc., certain of its subsidiaries as assignors and JPMorgan Chase Bank, N.A. as collateral agent (incorporated by reference to Exhibit 10.3 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
10 .4 Fifth Amended and Restated Subsidiary Guaranty, dated as of May 31, 2006, among certain of the subsidiaries of Reynolds American Inc. as guarantors and JPMorgan Chase Bank, N.A. as administrative agent (incorporated by reference to Exhibit 10.4 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
10 .5 Form of First Amended and Restated Deed of Trust, Security Agreement, Assignment of Leases, Rents and Profits, Financing Statement and Fixture Filing (North Carolina) made as of May 31, 2006, by R. J. Reynolds Tobacco Company, as the Trustor, to The Fidelity Company, as Trustee (incorporated by reference to Exhibit 10.5 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
10 .6 Form of First Amended and Restated Deed to Secure Debt, Security Agreement, Assignment of Leases, Rents and Profits (Bibb County, Georgia) made as of May 31, 2006, by R. J. Reynolds Tobacco Company, as the Grantor, to JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent for the Secured Creditors, as the Grantee (incorporated by reference to Exhibit 10.6 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
10 .7 Form of First Amended and Restated Mortgage, Security Agreement, Assignment of Leases, Rents and Profits, Financing Statement and Fixture Filing (Cherokee County, South Carolina) made as of May 31, 2006, by R. J. Reynolds Tobacco Company, as the Mortgagor, to JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent for the Secured Creditors, as the Mortgagee (incorporated by reference to Exhibit 10.7 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
10 .8 Formation Agreement, dated as of July 30, 2004, among Brown & Williamson Tobacco Corporation (n/k/a Brown & Williamson Holdings, Inc.), Brown & Williamson U.S.A., Inc. (n/k/a R. J. Reynolds Tobacco Company) and Reynolds American Inc. (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated July 30, 2004).
~~II-11~~

Exhibit No. Description of Document

10 .9 Governance Agreement, dated as of July 30, 2004, among British American Tobacco p.l.c., Brown & Williamson Tobacco Corporation (n/k/a Brown & Williamson Holdings, Inc.) and Reynolds American Inc. (incorporated by reference to Exhibit 10.2 to Reynolds American Inc.’s Form 8-K dated July 30, 2004).
10 .10 Amendment No. 1 to the Governance Agreement, dated as of November 18, 2004, among British American Tobacco p.l.c., Brown & Williamson Holdings, Inc. and Reynolds American Inc. (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated November 18, 2004).
10 .11 Non-Competition Agreement, dated as of July 30, 2004, between Reynolds American Inc. and British American Tobacco p.l.c. (incorporated by reference to Exhibit 10.3 to Reynolds American Inc.’s Form 8-K dated July 30, 2004).
10 .12 Contract Manufacturing Agreement, dated as of July 30, 2004, by and between R. J. Reynolds Tobacco Company and BATUS Japan, Inc. (incorporated by reference to Exhibit 10.4 to Reynolds American Inc.’s Form 8-K dated July 30, 2004).
10 .13 October 2005 Amendments to the Contract Manufacturing Agreement, dated as of July 30, 2004, by and between R. J. Reynolds Tobacco Company and BATUS Japan, Inc. (incorporated by reference to Exhibit 10.2 to Reynolds American Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, filed November 3, 2005).
10 .14 Contract Manufacturing Agreement, dated as of July 30, 2004, by and between R. J. Reynolds Tobacco Company and B.A.T. (U.K. & Export) Limited (incorporated by reference to Exhibit 10.5 to Reynolds American Inc.’s Form 8-K dated July 30, 2004).
10 .15 Purchase Agreement dated as of March 9, 1999, as amended and restated as of May 11, 1999, among R. J. Reynolds Tobacco Company, RJR Nabisco, Inc. and Japan Tobacco Inc. (incorporated by reference to Exhibit 2.1 to R.J. Reynolds Tobacco Holdings, Inc.’s Form 8-K dated May 12, 1999).
10 .16 Tax Sharing Agreement dated as of June 14, 1999, among RJR Nabisco Holdings Corp., R.J. Reynolds Tobacco Holdings, Inc., R. J. Reynolds Tobacco Company and Nabisco Holdings Corp. (incorporated by reference to Exhibit 10.1 to R.J. Reynolds Tobacco Holdings, Inc.’s Form 8-K dated June 14, 1999).
10 .17 Amendment to Tax Sharing Agreement dated June 25, 2000, among Nabisco Group Holdings Corp., R.J. Reynolds Tobacco Holdings, Inc., Nabisco Holdings Corp. and R. J. Reynolds Tobacco Company (incorporated by reference to Exhibit 10.2 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000, filed August 7, 2000).
10 .18 Agreement dated as of May 20, 1999, among Pension Benefit Guaranty Corporation, RJR Nabisco Holdings Corp. and R. J. Reynolds Tobacco Company (incorporated by reference to Exhibit 10.16 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, filed August 16, 1999).
10 .19 Amendment effective as of June 14, 1999, to the Agreement effective as of May 20, 1999, by and among the Pension Benefit Guaranty Corporation, R.J. Reynolds Tobacco Holdings, Inc. and R. J. Reynolds Tobacco Company (incorporated by reference to Exhibit 10.3 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000, filed August 7, 2000).
10 .20 Second Amendment effective as of January 7, 2002, to the Agreement effective as of May 20, 1999, by and among the Pension Benefit Guaranty Corporation, R.J. Reynolds Tobacco Holdings, Inc. and R. J. Reynolds Tobacco Company (incorporated by reference to Exhibit 10.9 to R.J. Reynolds Tobacco Holdings, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2001, filed February 28, 2002).
10 .21 Settlement Agreement dated August 25, 1997, between the State of Florida and settling defendants in The State of Florida v. American Tobacco Co. (incorporated by reference to Exhibit 2 to R.J. Reynolds Tobacco Holdings, Inc.’s Form 8-K dated August 25, 1997).
~~II-12~~

Exhibit No. Description of Document

10 .22 Comprehensive Settlement Agreement and Release dated January 16, 1998, between the State of Texas and settling defendants in The State of Texas v. American Tobacco Co. (incorporated by reference to Exhibit 2 to R.J. Reynolds Tobacco Holdings, Inc.’s Form 8-K dated January 16, 1998).
10 .23 Settlement Agreement and Release in re: The State of Minnesota v. Philip Morris, Inc., by and among the State of Minnesota, Blue Cross and Blue Shield of Minnesota and the various tobacco company defendants named therein, dated as of May 8, 1998 (incorporated by reference to Exhibit 99.1 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 30, 1998, filed May 15, 1998).
10 .24 Settlement Agreement and Stipulation for Entry of Consent Judgment in re: The State of Minnesota v. Philip Morris, Inc., by and among the State of Minnesota, Blue Cross and Blue Shield of Minnesota and the various tobacco company defendants named therein, dated as of May 8, 1998 (incorporated by reference to Exhibit 99.2 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 30, 1998, filed May 15, 1998).
10 .25 Form of Consent Judgment by Judge Kenneth J. Fitzpatrick, Judge of District Court in re: The State of Minnesota v. Philip Morris, Inc. (incorporated by reference to Exhibit 99.3 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 30, 1998, filed May 15, 1998).
10 .26 Stipulation of Amendment to Settlement Agreement and for Entry of Agreed Order dated July 2, 1998, by and among the Mississippi Defendants, Mississippi and the Mississippi Counsel in connection with the Mississippi Action (incorporated by reference to Exhibit 99.2 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998, filed August 14, 1998).
10 .27 Stipulation of Amendment to Settlement Agreement and for Entry of Consent Decree dated July 24, 1998, by and among the Texas Defendants, Texas and the Texas Counsel in connection with the Texas Action (incorporated by reference to Exhibit 99.4 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998, filed August 14, 1998).
10 .28 Stipulation of Amendment to Settlement Agreement and for Entry of Consent Decree dated September 11, 1998, by and among the State of Florida and the tobacco companies named therein (incorporated by reference to Exhibit 99.1 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1998, filed November 12, 1998).
10 .29 Master Settlement Agreement, referred to as the MSA, dated November 23, 1998, between the Settling States named in the MSA and the Participating Manufacturers also named therein (incorporated by reference to Exhibit 4 to R.J. Reynolds Tobacco Holdings, Inc.’s Form 8-K dated November 23, 1998).
10 .30 Amended and Restated Directors and Officers Indemnification Agreement (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated February 1, 2005).
10 .31 Reynolds American Inc. Outside Directors’ Benefit Summary (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K, dated September 13, 2006).
10 .32 Amended and Restated Equity Incentive Award Plan for Directors of Reynolds American Inc., referred to as the EIAP.
10 .33 Form of Deferred Stock Unit Agreement between Reynolds American Inc. and the Director named therein, pursuant to the EIAP (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated August 30, 2004).
10 .34 Form of Deferred Stock Unit Agreement between R.J. Reynolds Tobacco Holdings, Inc. and the Director named therein, pursuant to the EIAP (incorporated by reference to Exhibit 10.9 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, filed August 16, 1999).
10 .35 Form of Stock Option Agreement (Initial) between R.J. Reynolds Tobacco Holdings, Inc. and the Director named therein, pursuant to the EIAP (incorporated by reference to Exhibit 10.10 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, filed August 16, 1999).
~~II-13~~

Exhibit No. Description of Document

10 .36 Amended and Restated Deferred Compensation Plan for Directors of Reynolds American Inc. (incorporated by reference to Exhibit 10.3 to Reynolds American Inc.’s Form 8-K dated February 1, 2005).
10 .37 Amendment No. 1 to Deferred Compensation Plan for Directors of Reynolds American Inc., amended and restated effective February 2, 2005, dated July 19, 2006 (incorporated by reference to Exhibit 10.12 to Reynolds American Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, filed August 4, 2006).
10 .38 Amended and Restated Reynolds American Inc. Long-Term Incentive Plan (incorporated by reference to Exhibit 10.42 to Reynolds American Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004, filed March 9, 2005).
10 .39 Form of Tandem Restricted Stock/ Stock Option Agreement dated July 28, 1999, between R.J. Reynolds Tobacco Holdings, Inc. and the grantee named therein (incorporated by reference to Exhibit 10.4 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, filed November 12, 1999).
10 .40 Amendment No. 1 to Tandem Restricted Stock/ Stock Option Agreement dated July 28, 1999, dated December 5, 2001 (incorporated by reference to Exhibit 10.32 to R.J. Reynolds Tobacco Holdings, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2001, filed February 28, 2002).
10 .41 Form of Amendment No. 2 to Tandem Restricted Stock/ Stock Option Agreement dated as of April 24, 2002, amending the Tandem Restricted Stock/ Stock Option Agreements dated June 15 and July 28, 1999, between R.J. Reynolds Tobacco Holdings, Inc. and the grantee named therein (incorporated by reference to Exhibit 10.3 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, filed August 6, 2002).
10 .42 Amendment No. 3 to Tandem Restricted Stock/ Stock Option Agreements dated December 10, 2002, amending the Tandem Restricted Stock/ Stock Option Agreements dated June 15 and July 28, 1999 (incorporated by reference to Exhibit 10.35 to R.J. Reynolds Tobacco Holdings, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002, filed March 3, 2003).
10 .43 Form of Performance Unit Agreement (one-year vesting) dated February 9, 2006, between Reynolds American Inc. and the grantee named therein (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated February 9, 2006).
10 .44 Form of Performance Share Agreement dated August 31, 2004, between Reynolds American Inc. and the grantee named therein (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K, dated August 31, 2004).
10 .45 Form of Performance Unit Agreement (three-year vesting) dated March 2, 2005, between Reynolds American Inc. and the grantee named therein (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K, dated March 2, 2005).
10 .46 Form of Performance Share Agreement, dated March 2, 2005, between Reynolds American Inc. and the grantee named therein (incorporated by reference to Exhibit 10.2 to Reynolds American Inc.’s Form 8-K, dated March 2, 2005).
10 .47 Offer of Employment Letter, dated July 29, 2004, by Reynolds American Inc. and Susan M. Ivey, accepted by Ms. Ivey on July 30, 2004 (incorporated by reference to Exhibit 10.22 to Reynolds American Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, filed November 5, 2004).
10 .48 Letter Agreement regarding Severance Benefits and Change of Control Protections dated October 7, 2004, between Reynolds American Inc. and Susan M. Ivey (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated October 7, 2004).
10 .49 Offer of Employment Letter dated July 29, 2004, by Reynolds American Inc. and Jeffrey A. Eckmann, accepted by Mr. Eckmann on July 29, 2004 (incorporated by reference to Exhibit 10.24 to Reynolds American Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, filed November 5, 2004).
~~II-14~~

Exhibit No. Description of Document

10 .50 Letter Agreement, dated February 2, 2005, between Reynolds American Inc. and Jeffrey A. Eckmann, amending July 29, 2004 offer letter (incorporated by reference to Exhibit 10.5 to Reynolds American Inc.’s Form 8-K dated February 1, 2005).
10 .51 Offer of Employment Letter dated August 18, 2006, by Reynolds American Inc. and E. Julia Lambeth, accepted by Ms. Lambeth on August 19, 2006 (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated August 19, 2006).
10 .52 Form of Amended Letter Agreement regarding Severance Benefits and Change of Control Protections between Reynolds American Inc. and the officer named therein (incorporated by reference to Exhibit 10.6 to Reynolds American Inc.’s Form 8-K dated February 1, 2005).
10 .53 Reynolds American Inc. Annual Incentive Award Plan, as amended (incorporated by reference to Exhibit 10.2 to Reynolds American Inc.’s Form 8-K dated November 30, 2005).
10 .54 Amendment No. 1 to Annual Incentive Award Plan, amended and restated as of January 1, 2006, dated July 18, 2006 (incorporated by reference to Exhibit 10.11 to Reynolds American Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, filed August 4, 2006).
10 .55 Retention Trust Agreement dated May 13, 1998, by and between RJR Nabisco, Inc. and Wachovia Bank, N.A. (incorporated by reference to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998, filed August 14, 1998).
10 .56 Amendment No. 1 to Retention Trust Agreement dated October 1, 2006, by and between R.J. Reynolds Tobacco Holdings, Inc. (formerly RJR Nabisco, Inc.) and Wachovia Bank, N.A.
10 .57 Supplemental Pension Plan for Executives of Brown & Williamson Tobacco Corporation (n/k/a Brown & Williamson Holdings, Inc.) (as amended through July 29, 2004) (incorporated by reference to Exhibit 10.67 to Reynolds American Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004, filed March 9, 2005).
10 .58 Form of Brown & Williamson Tobacco Corporation (n/k/a Brown & Williamson Holdings, Inc.) Trust Agreement for the executive officer named therein (incorporated by reference to Exhibit 10.68 to Reynolds American Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004, filed March 9, 2005).
10 .59 Brown & Williamson Tobacco Corporation (n/k/a Brown & Williamson Holdings, Inc.) Health Care Plan for Salaried Employees (as amended through July 29, 2004 by amendment nos. 1 and 2) (incorporated by reference to Exhibit 10.69 to Reynolds American Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004, filed March 9, 2005).
10 .60 Amendment No. 3, entered into as of December 31, 2004, to the Brown & Williamson Tobacco Corporation (n/k/a Brown & Williamson Holdings, Inc.) Health Care Plan for Salaried Employees (incorporated by reference to Exhibit 10.70 to Reynolds American Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004, filed March 9, 2005).
10 .61 Supply Agreement, dated May 2, 2005, by and between R. J. Reynolds Tobacco Company and Alcan Packaging Food and Tobacco Inc. (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated May 2, 2005).
10 .62 First Amendment to Supply Agreement, dated September 16, 2005, by and between R. J. Reynolds Tobacco Company and Alcan Packaging Food and Tobacco Inc. (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, filed November 3, 2005).
10 .63 Supply Agreement, dated May 2, 2005, by and between R. J. Reynolds Tobacco Company and Alcoa Flexible Packaging, LLC (incorporated by reference to Exhibit 10.2 to Reynolds American Inc.’s Form 8-K dated May 2, 2005).
10 .64 Supply Agreement, dated May 2, 2005, by and between R. J. Reynolds Tobacco Company and Mundet Inc. (incorporated by reference to Exhibit 10.3 to Reynolds American Inc.’s Form 8-K dated May 2, 2005).
10 .65 Registration Rights Agreement dated June 29, 2005, by and among R.J. Reynolds Tobacco Holdings, Inc, the guarantors listed in Schedule 1 thereto, Citigroup Capital Markets Inc., J.P. Morgan Securities Inc. and the initial purchasers named in Schedule 2 thereto (incorporated by reference to Exhibit 4.2 to Reynolds American Inc.’s Form 8-K dated July 6, 2005).
~~II-15~~

Exhibit No. Description of Document

10 .66 Performance Unit Agreement, dated March 6, 2006, between Reynolds American Inc. and the grantee named therein (incorporated by reference to Exhibit 10.3 to Reynolds American Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, filed May 5, 2006).
10 .67 Restricted Stock Agreement, dated March 6, 2006, between Reynolds American Inc. and the grantee named therein (incorporated by reference to Exhibit 10.4 to Reynolds American Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, filed May 5, 2006).
10 .68 Commitment Letter dated April 24, 2006, by and among Lehman Brothers Commercial Bank, Lehman Brothers Inc., JPMorgan Chase Bank, N.A., J.P. Morgan Securities Inc. and Reynolds American Inc. (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated April 24, 2006).
10 .69 Purchase Agreement, dated May 18, 2006, by and among Reynolds American Inc., the guarantors listed therein, and Lehman Brothers Inc., J.P. Morgan Securities Inc. and Citigroup Global Markets Inc., for themselves and as representatives of the initial purchasers listed therein (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, filed August 4, 2006).
10 .70 Registration Rights Agreement, dated May 31, 2006, by and among Reynolds American Inc., the guarantors listed in Schedule 1 thereto, Lehman Brothers Inc., J.P. Morgan Securities Inc. and Citigroup Global Markets Inc., and the initial purchasers named in Schedule 2 thereto (incorporated by reference to Exhibit 10.8 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
10 .71 Registration Rights Agreement, dated June 20, 2006, by and among Reynolds American Inc., the guarantors listed in Schedule 1 thereto, and The Bank of New York Trust Company, N.A. (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated June 20, 2006).
10 .72 Subsidiary Assumption and Joinder Agreement dated as of September 30, 2006, among JPMorgan Chase Bank, N.A., as administrative agent, R. J. Reynolds Global Products, Inc., RJR Packaging, LLC and Scott Tobacco LLC (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated October 2, 2006).
12 .1 Statement Regarding Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends.
21 .1 Subsidiaries of Reynolds American Inc.
23 .1 Consent of KPMG LLP, Greensboro, North Carolina.
23 .2 Consent of KPMG LLP, Memphis, Tennessee.
23 .3 Consent of Kilpatrick Stockton LLP (included in Exhibit 5.1).
23 .4 Consent of Betzer, Roybal & Eisenberg P.C. (included in Exhibit 5.2).
24 .1 Powers of Attorney of the Registrants (included on signature pages of this Part II).
25 .1 Form T-1 Statement of Eligibility and Qualification of The Bank of New York Trust Company, N.A., as trustee with respect to the new 6.500% Senior Secured Notes due 2007.
25 .2 Form T-1 Statement of Eligibility and Qualification of The Bank of New York Trust Company, N.A., as trustee with respect to the new 7.875% Senior Secured Notes due 2009.
25 .3 Form T-1 Statement of Eligibility and Qualification of The Bank of New York Trust Company, N.A., as trustee with respect to the new 6.500% Secured Notes due 2010.
25 .4 Form T-1 Statement of Eligibility and Qualification of The Bank of New York Trust Company, N.A., as trustee with respect to the new 7.250% Senior Secured Notes due 2012.
25 .5 Form T-1 Statement of Eligibility and Qualification of The Bank of New York Trust Company, N.A., as trustee with respect to the new 7.250% Senior Secured Notes due 2013.
25 .6 Form T-1 Statement of Eligibility and Qualification of The Bank of New York Trust Company, N.A., as trustee with respect to the new 7.300% Secured Notes due 2015.
25 .7 Form T-1 Statement of Eligibility and Qualification of The Bank of New York Trust Company, N.A., as trustee with respect to the new 7.625% Senior Secured Notes due 2016.
~~II-16~~

Exhibit No. Description of Document

25 .8 Form T-1 Statement of Eligibility and Qualification of The Bank of New York Trust Company, N.A., as trustee with respect to the new 7.750% Senior Secured Notes due 2018.
99 .1 Form of Letter of Transmittal.
99 .2 Form of Notice of Guaranteed Delivery.
99 .3 Form of Notice to Investors.
99 .4 Form of Notice to Broker Dealers.
Exhibit
No.
Description of Document
~~(b)~~ 4.1 ~~Financial Statement Schedules.~~ Rule 144A Form of Reynolds American Inc. old 3.500% Senior Notes due 2016 (incorporated by reference to Exhibit 4.1 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.2 Regulation S Form of Reynolds American Inc. old 3.500% Senior Notes due 2016 (incorporated by reference to Exhibit 4.2 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.3 Rule 144A Form of Reynolds American Inc. old 2.300% Senior Notes due 2017 (incorporated by reference to Exhibit 4.3 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.4 Regulation S Form of Reynolds American Inc. old 2.300% Senior Notes due 2017 (incorporated by reference to Exhibit 4.4 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.5 Rule 144A Form of Reynolds American Inc. old 8.125% Senior Notes due 2019 (incorporated by reference to Exhibit 4.5 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.6 Regulation S Form of Reynolds American Inc. old 8.125% Senior Notes due 2019 (incorporated by reference to Exhibit 4.6 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.7 Rule 144A Form of Reynolds American Inc. old 6.875% Senior Notes due 2020 (incorporated by reference to Exhibit 4.7 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.8 Regulation S Form of Reynolds American Inc. old 6.875% Senior Notes due 2020 (incorporated by reference to Exhibit 4.8 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.9 Rule 144A Form of Reynolds American Inc. old 3.750% Senior Notes due 2023 (incorporated by reference to Exhibit 4.9 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.10 Regulation S Form of Reynolds American Inc. old 3.750% Senior Notes due 2023 (incorporated by reference to Exhibit 4.10 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
      ~~Not applicable.~~
II-8
Exhibit
No.
Description of Document
4.11 Rule 144A Form of Reynolds American Inc. old 8.125% Senior Notes due 2040 (incorporated by reference to Exhibit 4.11 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.12 Regulation S Form of Reynolds American Inc. old 8.125% Senior Notes due 2040 (incorporated by reference to Exhibit 4.12 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.13 Rule 144A Form of Reynolds American Inc. old 7.000% Senior Notes due 2041 (incorporated by reference to Exhibit 4.13 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.14 Regulation S Form of Reynolds American Inc. old 7.000% Senior Notes due 2041 (incorporated by reference to Exhibit 4.14 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.15 Form of Reynolds American Inc. new 3.500% Senior Notes due 2016, 2.300% Senior Notes due 2017, 8.125% Senior Notes due 2019, 6.875% Senior Notes due 2020, 3.750% Senior Notes due 2023, 8.125% Senior Notes due 2040, and 7.000% Senior Notes due 2041.
4.16 Indenture, dated May 31, 2006, among Reynolds American Inc. and certain of its subsidiaries as guarantors and The Bank of New York Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.1 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
4.17 First Supplemental Indenture, dated September 30, 2006, to Indenture, dated May 31, 2006, among Reynolds American Inc. and certain of its subsidiaries as guarantors, and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.1 to Reynolds American Inc.’s Form 8-K dated September 30, 2006).
4.18 Second Supplemental Indenture, dated February 6, 2009, to Indenture, dated May 31, 2006, as supplemented by the First Supplemental Indenture, dated September 30, 2006, among Reynolds American Inc. and certain of its subsidiaries, as guarantors, and The Bank of New York Mellon Trust Company, N.A., f/k/a The Bank of New York Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.21 to Reynolds American Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed February 23, 2009).
4.19 Third Supplemental Indenture, dated September 17, 2013, to Indenture, dated May 31, 2006, by and among Reynolds American Inc., as issuer, and certain of its subsidiaries as guarantors, and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.3 to Reynolds American Inc.’s Form 8-K, dated September 12, 2013).
4.20 Fourth Supplemental Indenture, dated September 2, 2015, to Indenture dated May 31, 2006, among Reynolds American Inc. and certain of its subsidiaries as guarantors and The Bank of New York Mellon Trust Company, N.A. (incorporated by reference to Exhibit 4.1 to Reynolds American Inc.’s Form 8-K, dated August 31, 2015).
5.1 Opinion of Kilpatrick Townsend & Stockton LLP.
5.2 Opinion of Betzer, Roybal & Eisenberg P.C.
12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Kilpatrick Townsend & Stockton LLP (included in Exhibit 5.1).
23.2 Consent of Betzer, Roybal & Eisenberg, P.C. (included in Exhibit 5.2).
23.3 Consent of KPMG LLP.
23.4 Consent of Deloitte & Touche LLP.
24.2 Powers of Attorney of the Registrants (contained on the signature pages).
II-9
Exhibit
No.
Description of Document
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York Mellon Trust Company, N.A., as trustee under Reynolds American Inc.’s Indenture dated May 31, 2006.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Notice to Investors.
99.4 Form of Notice to Broker Dealers.
Item 22.Undertakings.
      ~~(a) The undersigned registrants hereby undertake:~~
(a) The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
      ~~(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933.~~
      (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end or the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.
      (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end or the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fideoffering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any ~~purchaser: If the registrants are subject to Rule 430C,~~purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness.Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
~~II-17~~
(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:
The undersigned registrants undertake that in a primary offering of securities of the undersigned registrants pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the
II-10
purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrants will be sellers to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrants relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrants or used or referred to by the undersigned registrants;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrants or their securities provided by or on behalf of the undersigned registrants; and
(iv) Any other communication that is an offer in the offering made by the undersigned registrants to the purchaser.
(b) The undersigned registrants hereby undertake that, for purposes of determining any liability under the Securities Act of 1933, each filing of the annual report of Reynolds American Inc. pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fideoffering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrants pursuant to the foregoing provisions, or otherwise, the registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrants will, unless in the opinion of their counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
(d) The undersigned registrants hereby undertake to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
(e) The undersigned registrants hereby undertake to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.
~~II-18~~
II-11
SIGNATURES
~~SIGNATURES~~
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Winston-Salem, State of North Carolina, on ~~October 3, 2006.~~
November 4, 2015.
~~Reynolds American Inc.~~
REYNOLDS AMERICAN INC.
By: /s/ Susan M. ~~Ivey~~
Cameron
Name:
Susan M. Cameron
Title: ~~Name: Susan M. Ivey~~
~~Title: Chairman of the Board,~~ President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints McDara P. Folan, III, ~~and~~ Robert A. Emken, Jr., and Constantine E. Tsipis, and each of them (with full power to act alone), as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, and (iii) take any and all actions which may be necessary or appropriate in connection therewith, granting unto each such attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each such attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities indicated as of ~~October 3, 2006.~~
November 4, 2015.
Signature

Title
/s/ Susan M. Cameron
Susan M. Cameron

~~Signature~~ ~~Title~~
~~/s/Susan M. Ivey~~
~~Susan M. Ivey~~ ~~Chairman of the Board,~~
President, Chief Executive Officer and Director ~~(Principal~~
(Principal Executive Officer)
/s/~~Dianne M. Neal~~
~~Dianne M. Neal~~ Andrew D. Gilchrist
Andrew D. Gilchrist

Executive Vice President and Chief Financial Officer ~~(Principal~~
(Principal Financial Officer)
/s/~~Michael S. Desmond~~
~~Michael S. Desmond~~ Frederick W. Smothers
Frederick W. Smothers

Senior Vice President and Chief Accounting Officer ~~(Principal~~
(Principal Accounting Officer)
/s/~~Betsy S. Atkins~~
~~Betsy S. Atkins~~ Thomas C. Wajnert
Thomas C. Wajnert

Chairman of the Board and Director
/s/John ~~T. Chain, Jr.~~
P. Daly
John ~~T. Chain, Jr.~~P. Daly

Director
~~II-19~~
Signature

Title
/s/ Martin D. Feinstein
Martin D. Feinstein

Director
~~Signature~~
/s/ Luc Jobin
Luc Jobin
   ~~Title~~
Director
/s/ Murray S. Kessler
Murray S. Kessler

Director
/s/~~Martin D. Feinstein~~
~~Martin D. Feinstein~~ Holly Keller Koeppel
Holly Keller Koeppel

Director
/s/~~E.V. Goings~~
~~E.V. Goings~~ Robert Lerwill
Robert Lerwill

Director
/s/Nana Mensah
Nana Mensah

Director
/s/~~Antonio Monteiro de Castro~~
~~Antonio Monteiro de Castro~~ Lionel L. Nowell III
Lionel L. Nowell III

Director
/s/~~H.G.L. (Hugo) Powell~~
~~H.G.L. (Hugo) Powell~~ Ricardo Oberlander
Ricardo Oberlander

Director
/s/~~Joseph P. Viviano~~
~~Joseph P. Viviano~~ Ronald S. Rolfe
Ronald S. Rolfe

Director
/s/~~Thomas C. Wajnert~~
~~Thomas C. Wajnert~~ Richard E. Thornburgh
Richard E. Thornburgh

Director
/s/~~Neil R. Withington~~
~~Neil R. Withington~~ John J. Zillmer
John J. Zillmer

Director
~~II-20~~
SIGNATURES
~~SIGNATURES~~
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Winston-Salem, State of North Carolina, on ~~October 3, 2006.~~
November 4, 2015.
~~R. J. Reynolds Tobacco Company~~
~~By:~~ ~~/s/ Lynn~~R. J. ~~Beasley~~REYNOLDS TOBACCO COMPANY
By:
/s/ Debra A. Crew
Name: ~~Name: Lynn J. Beasley~~ Debra A. Crew
Title: ~~Title:~~ President and Chief Operating Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints McDara P. Folan, III, ~~and~~ Robert A. Emken, Jr., and Constantine E. Tsipis, and each of them (with full power to act alone), as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, and (iii) take any and all actions which may be necessary or appropriate in connection therewith, granting unto each such attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each such attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities indicated as of ~~October 3, 2006.~~
November 4, 2015.
Signature

Title
/s/ Debra A. Crew
Debra A. Crew

President, Chief Operating Officer and Director
(Principal Executive Officer)
~~Signature~~
/s/ Mark A. Peters
Mark A. Peters
   ~~Title~~
~~/s/Susan M. Ivey~~
~~Susan M. Ivey~~ ~~Chairman of the Board,~~
Chief ~~Executive~~Financial Officer and Director (Principal ~~Executive~~
Financial Officer and Principal Accounting Officer)
/s/~~Dianne M. Neal~~
~~Dianne M. Neal~~ Daniel J. Herko
Daniel J. Herko
   ~~Executive Vice President and Chief Financial Officer (Principal Financial Officer)~~
~~/s/Michael S. Desmond~~
~~Michael S. Desmond~~ ~~Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)~~
~~/s/Lynn J. Beasley~~
~~Lynn J. Beasley~~
Director
~~/s/Daniel D. Snyder~~
~~Daniel D. Snyder~~ ~~Director~~
~~II-21~~
SIGNATURES
~~SIGNATURES~~
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Winston-Salem, State of North Carolina, on ~~October 3, 2006.~~
November 4, 2015.
~~R. J. Reynolds Tobacco Co.~~
~~By:~~ ~~/s/ Luis~~ R. ~~Davila~~J. REYNOLDS TOBACCO CO.
By:
/s/ McDara P. Folan, III
Name: ~~Name: Luis R. Davila~~ McDara P. Folan, III
Title: ~~Title:~~ President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints McDara P. Folan, III, ~~and~~ Robert A. Emken, Jr., and Constantine E. Tsipis, and each of them (with full power to act alone), as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, and (iii) take any and all actions which may be necessary or appropriate in connection therewith, granting unto each such attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each such attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities indicated as of ~~October 3, 2006.~~
November 4, 2015.
Signature

Title
/s/ McDara P. Folan, III
McDara P. Folan, III

President and Director (Principal Executive Officer)
~~Signature~~
/s/ Daniel A. Fawley
Daniel A. Fawley
   ~~Title~~
~~/s/Luis R. Davila~~
~~Luis R. Davila~~ ~~President (Principal Executive Officer)~~
~~/s/Daniel A. Fawley~~
~~Daniel A. Fawley~~
Vice President and Treasurer (Principal Financial ~~Officer)~~
~~/s/Angel L. Soto~~
~~Angel L. Soto~~ ~~Comptroller (Principal~~Officer and Principal Accounting Officer)
~~/s/McDara P. Folan, III~~
~~McDara P. Folan, III~~ ~~Director~~
~~II-22~~
SIGNATURES
~~SIGNATURES~~
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of ~~Winston-Salem,~~Wilmington, State of ~~North Carolina,~~Delaware, on ~~October 3, 2006.~~
November 4, 2015.
~~RJR Acquisition Corp.~~
~~By:~~ ~~/s/ McDara P. Folan, III~~REYNOLDS FINANCE COMPANY
By: /s/ Caroline M. Price
Name: ~~Name: McDara P. Folan, III~~Caroline M. Price
Title: ~~Title:~~ President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints McDara P. Folan, III, ~~and~~ Robert A. Emken, Jr., and Constantine E. Tsipis, and each of them (with full power to act alone), as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, and (iii) take any and all actions which may be necessary or appropriate in connection therewith, granting unto each such attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each such attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities indicated as of ~~October 3, 2006.~~
November 4, 2015.
Signature

Title
/s/ Caroline M. Price
Caroline M. Price

President and Director (Principal Executive Officer)
~~Signature~~
/s/ Dale L. Orrell
Dale L. Orrell
   ~~Title~~
Treasurer and Director (Principal Financial Officer)
/s/ Barbara J. Aldridge
Barbara J. Aldridge

Vice President and Director (Principal Accounting
Officer)
/s/~~McDara P. Folan, III~~
~~McDara P. Folan, III~~ Donald J. Puglisi
Donald J. Puglisi
   ~~President and~~
Director
~~(Principal Executive Officer)~~
/s/~~Caroline M. Price~~
~~Caroline M. Price~~ Gordon W. Stewart
Gordon W. Stewart
   ~~Vice President, Treasurer and~~
Director
~~(Principal Financial Officer and~~
~~Principal Accounting Officer)~~
~~/s/Kathryn A. Premo~~
~~Kathryn A. Premo~~ ~~Director~~
~~II-23~~
SIGNATURES
~~SIGNATURES~~
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Winston-Salem, State of North Carolina, on ~~October 3, 2006.~~
November 4, 2015.
~~FHS, Inc.~~
~~By:~~ ~~/s/ Caroline M. Price~~REYNOLDS INNOVATIONS INC.
By: /s/ David A. Shirlen
Name: ~~Name: Caroline M. Price~~David A. Shirlen
Title: ~~Title:~~ President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints McDara P. Folan, III, ~~and~~ Robert A. Emken, Jr., and Constantine E. Tsipis, and each of them (with full power to act alone), as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, and (iii) take any and all actions which may be necessary or appropriate in connection therewith, granting unto each such attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each such attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities indicated as of ~~October 3, 2006.~~
November 4, 2015.
Signature

Title
/s/ David A. Shirlen
David A. Shirlen

~~Signature~~ ~~Title~~
~~/s/Caroline M. Price~~
~~Caroline M. Price~~
President and Director (Principal Executive Officer)
/s/~~Kathryn~~ Daniel A. ~~Premo~~
~~Kathryn~~Fawley
Daniel A. ~~Premo~~Fawley

Treasurer ~~and Director~~ (Principal Financial Officer and Principal
Accounting Officer)
/s/~~Vernon A. Stewart~~
~~Vernon A. Stewart~~ McDara P. Folan, III
McDara P. Folan, III
   ~~Vice President (Principal Accounting Officer) and~~
Director
/s/~~Gordon W. Stewart~~
~~Gordon W. Stewart~~ William M. Bryner
William M. Bryner

Director
~~/s/Mark R. Tolland~~
~~Mark R. Tolland~~ ~~Director~~
~~II-24~~
SIGNATURES
~~SIGNATURES~~
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of ~~Winston-Salem,~~Oxford, State of North Carolina, on ~~October 3, 2006.~~
November 4, 2015.
~~GMB, Inc.~~
~~By:~~ ~~/s/ Steven F. Gentry~~SANTA FE NATURAL TOBACCO COMPANY, INC.
By: /s/ Michael A. Little
Name: ~~Name: Steven F. Gentry~~Michael A. Little
Title: ~~Title:~~ President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints McDara P. Folan, III, ~~and~~ Robert A. Emken, Jr., and Constantine E. Tsipis, and each of them (with full power to act alone), as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, and (iii) take any and all actions which may be necessary or appropriate in connection therewith, granting unto each such attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each such attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities indicated as of ~~October 3, 2006.~~
November 4, 2015.
Signature

Title
/s/ Michael A. Little
Michael A. Little

~~Signature~~ ~~Title~~
~~/s/Steven F. Gentry~~
~~Steven F. Gentry~~
President and Director (Principal Executive Officer)
/s/Daniel A. Fawley
Daniel A. Fawley

Vice President and Treasurer (Principal Financial
Officer and
Principal Accounting Officer)
/s/~~Guy M. Blynn~~
~~Guy M. Blynn~~ Robert A. Emken, Jr.
Robert A. Emken, Jr.

Director
/s/~~Randel S. Springer~~
~~Randel S. Springer~~ Brent M. Sabo
Brent M. Sabo

Director
~~II-25~~
SIGNATURES
~~SIGNATURES~~
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Winston-Salem, State of North Carolina, on ~~October 3, 2006.~~
November 4, 2015.
~~Lane, Limited~~
~~By:~~ ~~/s/ Nicholas A. Bumbacco~~ROSSWIL LLC
By: /s/ McDara P. Folan, III
Name: ~~Name: Nicholas A. Bumbacco~~McDara P. Folan, III
Title: ~~Title:~~ President ~~and Chief Executive Officer~~
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints McDara P. Folan, III, ~~and~~ Robert A. Emken, Jr., and Constantine E. Tsipis, and each of them (with full power to act alone), as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, and (iii) take any and all actions which may be necessary or appropriate in connection therewith, granting unto each such attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each such attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities indicated as of ~~October 3, 2006.~~
November 4, 2015.
Signature

Title
/s/ McDara P. Folan, III
McDara P. Folan, III

President and Manager (Principal Executive Officer)
~~Signature~~
/s/ Daniel A. Fawley
Daniel A. Fawley
   ~~Title~~
~~/s/Nicholas A. Bumbacco~~
~~Nicholas A. Bumbacco~~ ~~President and Chief Executive Officer~~
~~(Principal Executive Officer)~~
~~/s/Mark A. Peters~~
~~Mark A. Peters~~
Vice ~~President-Finance,~~President, Treasurer and ~~Assistant Secretary~~Manager (Principal
Financial Officer and Principal Accounting Officer)
~~/s/Jeffrey A. Eckmann~~
~~Jeffrey A. Eckmann~~ ~~Director~~
~~/s/McDara P. Folan, III~~
~~McDara P. Folan, III~~ ~~Director~~
~~II-26~~
SIGNATURES
~~SIGNATURES~~
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of ~~Winston-Salem,~~Memphis, State of ~~North Carolina,~~Tennessee, on ~~October 3, 2006.~~
November 4, 2015.
~~Santa Fe Natural Tobacco Company, Inc.~~
~~By:~~ ~~/s/ Richard M. Sanders~~AMERICAN SNUFF COMPANY, LLC
By: /s/ Randall M. Spach
Name: ~~Name: Richard~~Randall M. ~~Sanders~~Spach
Title: ~~Title:~~ President ~~and Chief Executive Officer~~
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints McDara P. Folan, III, ~~and~~ Robert A. Emken, Jr., and Constantine E. Tsipis, and each of them (with full power to act alone), as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, and (iii) take any and all actions which may be necessary or appropriate in connection therewith, granting unto each such attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each such attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities indicated as of ~~October 3, 2006.~~
November 4, 2015.
Signature

Title
/s/ Randall M. Spach
Randall M. Spach

President and Manager (Principal Executive Officer)
~~Signature~~
/s/ Daniel A. Fawley
Daniel A. Fawley
   ~~Title~~
~~/s/Richard M. Sanders~~
~~Richard M. Sanders~~
Vice President and ~~Chief Executive Officer~~
~~(Principal Executive Officer)~~
~~/s/John E. Franzino~~
~~John E. Franzino~~ ~~Senior Vice President-Finance and Accounting,~~
~~Chief~~Treasurer (Principal Financial Officer and ~~Treasurer~~
~~(Principal Financial Officer and~~
Principal Accounting Officer)
/s/~~McDara P. Folan, III~~
~~McDara P. Folan, III~~ Daniel A. Range
Daniel A. Range
   ~~Director~~
Manager
/s/~~Michael O. Johnson~~
~~Michael O. Johnson~~ William Paul Scott
William Paul Scott
   ~~Director~~
Manager
/s/ David T. Turfler
David T. Turfler
Manager
~~II-27~~
SIGNATURES
~~SIGNATURES~~
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Winston-Salem, State of North Carolina, on ~~October 3, 2006.~~
November 4, 2015.
~~Rosswil LLC~~
~~By:~~ ~~/s/ Marshall J. Gerber~~CONWOOD HOLDINGS, INC.
By: /s/ McDara P. Folan, III
Name: ~~Name: Marshall J. Gerber~~McDara P. Folan, III
Title: ~~Title:~~ President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints McDara P. Folan, III, ~~and~~ Robert A. Emken, Jr., and Constantine E. Tsipis, and each of them (with full power to act alone), as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, and (iii) take any and all actions which may be necessary or appropriate in connection therewith, granting unto each such attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each such attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities indicated as of ~~October 3, 2006.~~
~~Signature~~ ~~Title~~
~~/s/Marshall J. Gerber~~
~~Marshall J. Gerber~~ ~~President (Principal Executive Officer)~~
~~/s/Daniel A. Fawley~~
~~Daniel A. Fawley~~ ~~Vice President and Treasurer~~
~~(Principal Financial Officer and~~
~~Principal Accounting Officer)~~
~~/s/McDara P. Folan, III~~
~~McDara P. Folan, III~~ ~~Manager~~
~~/s/Jeffrey A. Eckmann~~
~~Jeffrey A. Eckmann~~ ~~Manager~~
November 4, 2015.
~~II-28~~
~~SIGNATURES~~
      Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of~~Winston-Salem,~~ ~~State of North Carolina, on October 3, 2006.~~
~~Conwood Company, LLC~~
Signature
~~By:~~   ~~/s/ William McNeeley Rosson~~
Title
~~Name: William McNeeley Rosson~~
~~Title: President and Chief Executive Officer~~
~~POWER OF ATTORNEY~~
~~KNOW ALL MEN BY THESE PRESENTS,~~ that each person whose signature appears below hereby constitutes and appoints McDara P. Folan, III, and Robert A. Emken, Jr., and each of them (with full power to act alone), as his or her true and lawful~~attorneys-in~~-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, and (iii) take any and all actions which may be necessary or appropriate in connection therewith, granting unto each such~~attorney-in~~-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each such~~attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.~~
      ~~Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities indicated as of October 3, 2006.~~
/s/ McDara P. Folan, III
McDara P. Folan, III

President and Director (Principal Executive Officer)
/s/ Daniel A. Fawley
Daniel A. Fawley

~~Signature~~ ~~Title~~
~~/s/William McNeeley Rosson~~
~~William McNeeley Rosson~~ ~~President, Chief Executive Officer and Manager~~
~~(Principal Executive Officer)~~
~~/s/Mark A. Peters~~
~~Mark A. Peters~~
Vice President, ~~Chief Financial Officer~~Treasurer and
~~Manager~~ Director (Principal
Financial Officer and Principal Accounting Officer)
~~/s/William M. Rosson~~
~~William M. Rosson~~ ~~Manager~~
~~/s/Jeffrey A. Eckmann~~
~~Jeffrey A. Eckmann~~ ~~Manager~~
~~II-29~~
SIGNATURES
~~SIGNATURES~~
      Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of~~Winston-Salem,~~ ~~State of North Carolina, on October 3, 2006.~~
~~Conwood Sales Co., LLC~~
~~By:~~ ~~/s/ William McNeeley Rosson~~
~~Name: William McNeeley Rosson~~
~~Title: President and Chief Executive Officer~~
~~POWER OF ATTORNEY~~
~~KNOW ALL MEN BY THESE PRESENTS,~~ that each person whose signature appears below hereby constitutes and appoints McDara P. Folan, III, and Robert A. Emken, Jr., and each of them (with full power to act alone), as his or her true and lawful~~attorneys-in~~-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, and (iii) take any and all actions which may be necessary or appropriate in connection therewith, granting unto each such~~attorney-in~~-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each such~~attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.~~
      ~~Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities indicated as of October 3, 2006.~~
~~Signature~~ ~~Title~~
~~/s/William McNeeley Rosson~~
~~William McNeeley Rosson~~ ~~President, Chief Executive Officer and Manager (Principal Executive Officer)~~
~~/s/Mark A. Peters~~
~~Mark A. Peters~~ ~~Vice President, Chief Financial Officer and~~
~~Manager (Principal Financial Officer and~~
~~Principal Accounting Officer)~~
~~/s/William M. Rosson~~
~~William M. Rosson~~ ~~Manager~~
~~/s/Jeffrey A. Eckmann~~
~~Jeffrey A. Eckmann~~ ~~Manager~~
~~II-30~~
~~SIGNATURES~~
      Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of~~Winston-Salem,~~ ~~State of North Carolina, on October 3, 2006.~~
~~Conwood Holdings, Inc.~~
~~By:~~ ~~/s/ Jeffrey A. Eckmann~~
~~Name: Jeffrey A. Eckmann~~
~~Title: President~~
~~POWER OF ATTORNEY~~
~~KNOW ALL MEN BY THESE PRESENTS,~~ that each person whose signature appears below hereby constitutes and appoints McDara P. Folan, III, and Robert A. Emken, Jr., and each of them (with full power to act alone), as his or her true and lawful~~attorneys-in~~-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, and (iii) take any and all actions which may be necessary or appropriate in connection therewith, granting unto each such attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each such attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.
      ~~Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities indicated as of October 3, 2006.~~
~~Signature~~ ~~Title~~
~~/s/Jeffrey A. Eckmann~~
~~Jeffrey A. Eckmann~~ ~~President (Principal Executive Officer)~~
~~/s/Daniel A. Fawley~~
~~Daniel A. Fawley~~ ~~Vice President and Treasurer~~
~~(Principal Financial Officer and~~
~~Principal Accounting Officer)~~
~~/s/McDara P. Folan, III~~
~~McDara P. Folan, III~~ ~~Director~~
~~II-31~~
~~SIGNATURES~~
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Winston-Salem, State of North Carolina, on ~~October 3, 2006.~~
November 4, 2015.
~~R.J. Reynolds Tobacco Holdings, Inc.~~
~~By:~~ ~~/s/ Dianne M. Neal~~R.J. REYNOLDS TOBACCO HOLDINGS, INC.
By: /s/ Andrew D. Gilchrist
Name: ~~Name: Dianne M. Neal~~Andrew D. Gilchrist
Title: ~~Title:~~ President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints McDara P. Folan, III, ~~and~~ Robert A. Emken, Jr., and Constantine E. Tsipis, and each of them (with full power to act alone), as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, and (iii) take any and all actions which may be necessary or appropriate in connection therewith, granting unto each such attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each such attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities indicated as of ~~October 3, 2006.~~
November 4, 2015.
Signature

Title
~~Signature~~
/s/ Andrew D. Gilchrist
Andrew D. Gilchrist
   ~~Title~~
~~/s/Dianne M. Neal~~
~~Dianne M. Neal~~
President (Principal Executive Officer)
/s/Daniel A. Fawley
Daniel A. Fawley

Senior Vice President, Treasurer and Director (Principal
Financial Officer and Principal Accounting Officer)
/s/McDara P. Folan, III
McDara P. Folan, III

Director
~~II-32~~
SIGNATURES
~~SIGNATURES~~
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Winston-Salem, State of North Carolina, on ~~October 3, 2006.~~
November 4, 2015.
~~RJR Packaging, LLC~~
~~By:~~ ~~/s/ Andrew D. Gilchrist~~R. J. REYNOLDS GLOBAL PRODUCTS, INC.
By: /s/ Debra A. Crew
Name: ~~Name: Andrew D. Gilchrist~~Debra A. Crew
Title: ~~Title:~~ President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints McDara P. Folan, III, ~~and~~ Robert A. Emken, Jr., and Constantine E. Tsipis, and each of them (with full power to act alone), as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, and (iii) take any and all actions which may be necessary or appropriate in connection therewith, granting unto each such attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each such attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities indicated as of ~~October 3, 2006.~~
November 4, 2015.
Signature

Title
/s/ Debra A. Crew
Debra A. Crew

President and Director (Principal Executive Officer)
~~Signature~~
/s/ Daniel A. Fawley
Daniel A. Fawley
   ~~Title~~
~~/s/Andrew D. Gilchrist~~
~~Andrew D. Gilchrist~~ ~~President (Principal Executive Officer)~~
~~/s/Daniel A. Fawley~~
~~Daniel A. Fawley~~
Vice President, Treasurer and ~~Treasurer~~Director (Principal
Financial Officer and Principal Accounting Officer)
~~R. J. Reynolds Tobacco Company~~
/s/ McDara P. Folan, III
McDara P. Folan, III
   ~~Sole Member~~
~~By:~~ ~~/s/Daniel A. Fawley~~
~~Name: Daniel A. Fawley~~
~~Title: Senior Vice President and Treasurer~~
~~/s/Susan M. Ivey~~
~~Susan M. Ivey~~
Director ~~of Sole Member~~
~~/s/Lynn J. Beasley~~
~~Lynn J. Beasley~~ ~~Director of Sole Member~~
~~/s/Daniel D. Snyder~~
~~Daniel D. Snyder~~ ~~Director of Sole Member~~
~~II-33~~
SIGNATURES
~~SIGNATURES~~
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City ofWinston-Salem, State of North Carolina, on ~~October 3, 2006.~~
November 4, 2015.
~~R. J. Reynolds Global Products, Inc.~~
~~By:~~ ~~/s/ Luis R. Davila~~RAI SERVICES COMPANY
By: /s/ Susan M. Cameron
Name: ~~Name: Luis R. Davila~~Susan M. Cameron
Title: ~~Title:~~ President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints McDara P. Folan, III, ~~and~~ Robert A. Emken, Jr., and Constantine E. Tsipis, and each of them (with full power to act alone), as his or her true and lawful~~attorneys-in-fact~~ attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, and (iii) take any and all actions which may be necessary or appropriate in connection therewith, granting unto each such~~attorney-in-fact~~ attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each such~~attorney-in-fact~~ attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities indicated as of ~~October 3, 2006.~~
November 4, 2015.
Signature

Title
/s/ Susan M. Cameron
Susan M. Cameron

President (Principal Executive Officer)
~~Signature~~
/s/ Andrew D. Gilchrist
Andrew D. Gilchrist
   ~~Title~~
Executive Vice President, Chief Financial Officer, Chief
Information Officer and Director (Principal Financial
Officer)
/s/ Daniel A. Fawley
Daniel A. Fawley

~~/s/Luis R. Davila~~
~~Luis R. Davila~~ ~~President and Director~~
~~(Principal Executive Officer)~~
~~/s/Daniel A. Fawley~~
~~Daniel A. Fawley~~
Senior Vice President and Treasurer
~~(Principal Financial~~ (Principal
Accounting Officer)
/s/~~R. Scott Schmalfeldt~~
~~R. Scott Schmalfeldt~~ Lisa J. Caldwell
Lisa J. Caldwell
   ~~Vice President-Finance~~
~~(Principal Accounting Officer)~~
Director
/s/~~Jeffrey A. Eckmann~~
~~Jeffrey A. Eckmann~~ Martin L. Holton III
Martin L. Holton III

Director
~~/s/McDara P. Folan, III~~
~~McDara P. Folan, III~~ ~~Director~~
~~/s/Marcus S. Shore~~
~~Marcus S. Shore~~ ~~Director~~
~~II-34~~
SIGNATURES
~~SIGNATURES~~
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City ofWinston-Salem, State of North Carolina, on ~~October 3, 2006.~~
November 4, 2015.
~~Scott Tobacco LLC~~
~~By:~~ ~~/s/ Danny A. Howell~~LORILLARD LICENSING COMPANY LLC
By: /s/ David A. Shirlen
Name: ~~Name: Danny~~David A. ~~Howell~~Shirlen
Title: ~~Title:~~ President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints McDara P. Folan, III, ~~and~~ Robert A. Emken, Jr., and Constantine E. Tsipis, and each of them (with full power to act alone), as his or her true and lawful~~attorneys-in-fact~~ attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, and (iii) take any and all actions which may be necessary or appropriate in connection therewith, granting unto each such~~attorney-in-fact~~ attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each such~~attorney-in-fact~~ attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities indicated as of ~~October 3, 2006.~~
November 4, 2015.
Signature

Title
/s/ David A. Shirlen
David A. Shirlen

President and Manager (Principal Executive Officer)
~~Signature~~
/s/ Daniel A. Fawley
Daniel A. Fawley
   ~~Title~~
Treasurer (Principal Financial Officer and Principal
Accounting Officer)
/s/ William M. Bryner
William M. Bryner

Manager
/s/~~Danny A. Howell~~
~~Danny A. Howell~~ McDara P. Folan, III
McDara P. Folan, III
   ~~President and~~
Manager
~~(Principal Executive Officer)~~
EXHIBIT INDEX
~~/s/Daniel A. Fawley~~
Exhibit
~~Daniel A. Fawley~~No.
   ~~Vice President and Treasurer~~
~~(Principal Financial Officer and~~
~~Principal Accounting Officer)~~
Description of Document
~~/s/William McNeeley Rosson~~
~~William McNeeley Rosson~~4.1    ~~Manager~~Rule 144A Form of Reynolds American Inc. old 3.500% Senior Notes due 2016 (incorporated by reference to Exhibit 4.1 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
~~/s/Jeffrey A. Eckmann~~
~~Jeffrey A. Eckmann~~4.2    ~~Manager~~Regulation S Form of Reynolds American Inc. old 3.500% Senior Notes due 2016 (incorporated by reference to Exhibit 4.2 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.3 Rule 144A Form of Reynolds American Inc. old 2.300% Senior Notes due 2017 (incorporated by reference to Exhibit 4.3 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.4 Regulation S Form of Reynolds American Inc. old 2.300% Senior Notes due 2017 (incorporated by reference to Exhibit 4.4 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.5 Rule 144A Form of Reynolds American Inc. old 8.125% Senior Notes due 2019 (incorporated by reference to Exhibit 4.5 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.6 Regulation S Form of Reynolds American Inc. old 8.125% Senior Notes due 2019 (incorporated by reference to Exhibit 4.6 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.7 Rule 144A Form of Reynolds American Inc. old 6.875% Senior Notes due 2020 (incorporated by reference to Exhibit 4.7 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.8 Regulation S Form of Reynolds American Inc. old 6.875% Senior Notes due 2020 (incorporated by reference to Exhibit 4.8 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.9 Rule 144A Form of Reynolds American Inc. old 3.750% Senior Notes due 2023 (incorporated by reference to Exhibit 4.9 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.10 Regulation S Form of Reynolds American Inc. old 3.750% Senior Notes due 2023 (incorporated by reference to Exhibit 4.10 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.11 Rule 144A Form of Reynolds American Inc. old 8.125% Senior Notes due 2040 (incorporated by reference to Exhibit 4.11 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.12 Regulation S Form of Reynolds American Inc. old 8.125% Senior Notes due 2040 (incorporated by reference to Exhibit 4.12 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.13 Rule 144A Form of Reynolds American Inc. old 7.000% Senior Notes due 2041 (incorporated by reference to Exhibit 4.13 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.14 Regulation S Form of Reynolds American Inc. old 7.000% Senior Notes due 2041 (incorporated by reference to Exhibit 4.14 to Reynolds American Inc.’s Form 8-K dated July 15, 2015).
4.15 Form of Reynolds American Inc. new 3.500% Senior Notes due 2016, 2.300% Senior Notes due 2017, 8.125% Senior Notes due 2019, 6.875% Senior Notes due 2020, 3.750% Senior Notes due 2023, 8.125% Senior Notes due 2040, and 7.000% Senior Notes due 2041.
4.16 Indenture, dated May 31, 2006, among Reynolds American Inc. and certain of its subsidiaries as guarantors and The Bank of New York Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.1 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
4.17 First Supplemental Indenture, dated September 30, 2006, to Indenture, dated May 31, 2006, among Reynolds American Inc. and certain of its subsidiaries as guarantors, and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.1 to Reynolds American Inc.’s Form 8-K dated September 30, 2006).
~~II-35~~
Exhibit
No.
Description of Document
4.18 Second Supplemental Indenture, dated February 6, 2009, to Indenture, dated May 31, 2006, as supplemented by the First Supplemental Indenture, dated September 30, 2006, among Reynolds American Inc. and certain of its subsidiaries, as guarantors, and The Bank of New York Mellon Trust Company, N.A., f/k/a The Bank of New York Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.21 to Reynolds American Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed February 23, 2009).
4.19 Third Supplemental Indenture, dated September 17, 2013, to Indenture, dated May 31, 2006, by and among Reynolds American Inc., as issuer, and certain of its subsidiaries as guarantors, and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.3 to Reynolds American Inc.’s Form 8-K, dated September 12, 2013).
4.20 Fourth Supplemental Indenture, dated September 2, 2015, to Indenture dated May 31, 2006, among Reynolds American Inc. and certain of its subsidiaries as guarantors and The Bank of New York Mellon Trust Company, N.A. (incorporated by reference to Exhibit 4.1 to Reynolds American Inc.’s Form 8-K, dated August 31, 2015).
5.1 Opinion of Kilpatrick Townsend & Stockton LLP.
5.2 Opinion of Betzer, Roybal & Eisenberg P.C.
12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Kilpatrick Townsend & Stockton LLP (included in Exhibit 5.1).
23.2 Consent of Betzer, Roybal & Eisenberg, P.C. (included in Exhibit 5.2).
23.3 Consent of KPMG LLP.
23.4 Consent of Deloitte & Touche LLP.
24.2 Powers of Attorney of the Registrants (contained on the signature pages).
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York Mellon Trust Company, N.A., as trustee under Reynolds American Inc.’s Indenture dated May 31, 2006.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Notice to Investors.
99.4 Form of Notice to Broker Dealers.
~~EXHIBIT INDEX~~

Exhibit No. Description of Document

2 .1 Purchase Agreement dated April 24, 2006 by and among Reynolds American, Inc., Reynolds American Inc.’s direct, wholly owned acquisition subsidiary, Pinch Acquisition Corporation, Karl J. Breyer, Marshall E. Eisenberg and Thomas J. Pritzker, not individually, but solely as co-trustees of those certain separate and distinct trusts listed therein, and GP Investor, L.L.C. (incorporated by reference to Exhibit 2.1 to Reynolds American Inc.’s Form 8-K dated April 24, 2006).
2 .2 Amendment No. 1, dated as of May 31, 2006, to the Purchase Agreement, dated as of April 24, 2006, by and among Karl J. Breyer, Marshall E. Eisenberg and Thomas J. Pritzker, as trustees, GP Investor, L.L.C., Reynolds American Inc. and Conwood Holdings, Inc. (f/k/a Pinch Acquisition Corporation) (incorporated by reference to Exhibit 2.1 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
3 .1 Amended and Restated Certificate of Incorporation of Reynolds American Inc. (incorporated by reference to Exhibit 1 to Reynolds American Inc.’s Form 8-A filed July 29, 2004).
3 .2 Amended and Restated Bylaws of Reynolds American Inc. (incorporated by reference to Exhibit 3.1 to Reynolds American Inc.’s Form 8-K dated February 1, 2005).
3 .3 Amended and Restated Certificate of Incorporation of R.J. Reynolds Tobacco Holdings, Inc. (incorporated by reference to Exhibit 3.3 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .4 Amended and Restated Bylaws of R.J. Reynolds Tobacco Holdings, Inc. (incorporated by reference to Exhibit 3.4 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .5 Amended and Restated Certificate of Incorporation of RJR Acquisition Corp. (incorporated by reference to Exhibit 3.5 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .6 Bylaws of RJR Acquisition Corp. (incorporated by reference to Exhibit 3.6 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .7 Amended and Restated Articles of Incorporation of R. J. Reynolds Tobacco Company (incorporated by reference to Exhibit 3.7 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .8 Amended and Restated Bylaws of R. J. Reynolds Tobacco Company (incorporated by reference to Exhibit 3.8 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .9 Certificate of Incorporation of R. J. Reynolds Tobacco Co. (formerly R. J. Reynolds Company), as amended (incorporated by reference to Exhibit 3.9 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .10 By-Laws of R. J. Reynolds Tobacco Co. (formerly R. J. Reynolds Company) (incorporated by reference to Exhibit 3.10 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .11 Certificate of Formation of RJR Packaging, LLC (incorporated by reference to Exhibit 3.11 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .12 Operating Agreement of RJR Packaging, LLC (incorporated by reference to Exhibit 3.12 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .13 Certificate of Incorporation of FHS, Inc. (incorporated by reference to Exhibit 3.13 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .14 Bylaws of FHS, Inc. (incorporated by reference to Exhibit 3.14 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .15 Articles of Incorporation of GMB, Inc. (formerly Interim, Inc.), as amended (incorporated by reference to Exhibit 3.15 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .16 Bylaws of GMB, Inc. (formerly Interim, Inc.) (incorporated by reference to Exhibit 3.16 to Reynolds American Inc.’s Form S-4 filed December 7, 2005).
3 .17 Restated Articles of Incorporation of Santa Fe Natural Tobacco Company, Inc., as amended.
3 .18 Restated By-Laws of Santa Fe Natural Tobacco Company, Inc.
3 .19 Certificate of Incorporation of Lane, Limited (formerly M.D. Tabac, LTD.).
3 .20 By-Laws of Lane, Limited.
3 .21 Certificate of Incorporation of Conwood Holdings, Inc. (formerly Pinch Acquisition Corporation), as amended.

Exhibit No. Description of Document

3 .22 Bylaws of Conwood Holdings, Inc. (formerly Pinch Acquisition Corporation), as amended.
3 .23 Certificate of Formation of Conwood Company, LLC.
3 .24 Limited Liability Company Agreement of Conwood Company, LLC.
3 .25 Certificate of Formation of Conwood Sales Co., LLC.
3 .26 Limited Liability Company Agreement of Conwood Sales Co., LLC.
3 .27 Certificate of Formation of Rosswil LLC.
3 .28 Limited Liability Company Agreement of Rosswil LLC.
3 .29 Restated Certificate of Incorporation of R. J. Reynolds Global Products, Inc. (formerly MSSH, Inc. and R.J. Reynolds International Business Group, Inc.), as amended.
3 .30 Bylaws of R. J. Reynolds Global Products, Inc. (formerly MSSH, Inc. and R.J. Reynolds International Business Group, Inc.), as amended.
3 .31 Certificate of Formation of Scott Tobacco LLC.
3 .32 Limited Liability Company Agreement of Scott Tobacco LLC.
4 .1 Rights Agreement, between Reynolds American Inc. and The Bank of New York, as rights agent (incorporated by reference to Exhibit 3 to Reynolds American Inc.’s Form 8-A filed July 29, 2004).
4 .2 Amended and Restated Indenture dated as of July 24, 1995, between RJR Nabisco, Inc. and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to RJR Nabisco, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1995, filed August 8, 1995).
4 .3 First Supplemental Indenture and Waiver dated as of April 27, 1999, between RJR Nabisco, Inc. and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee, to the Amended and Restated Indenture dated as of July 24, 1995, between RJR Nabisco, Inc. and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 10.3 to R.J. Reynolds Tobacco Holdings, Inc.’s Form 8-A filed May 19, 1999).
4 .4 Indenture dated as of May 15, 1999, among RJR Nabisco, Inc., R. J. Reynolds Tobacco Company and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 10.2 to R.J. Reynolds Tobacco Holdings, Inc.’s Form 8-A filed May 19, 1999).
4 .5 Guarantee dated as of May 18, 1999, by R. J. Reynolds Tobacco Company to the holders and to The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee, issued in connection with the Indenture dated as of May 15, 1999, among RJR Nabisco, Inc., R. J. Reynolds Tobacco Company and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 10.6 to R.J. Reynolds Tobacco Holdings, Inc.’s Form 8-A filed May 19, 1999).
4 .6 First Supplemental Indenture dated as of December 12, 2000, among RJR Acquisition Corp., R.J. Reynolds Tobacco Holdings, Inc., R. J. Reynolds Tobacco Company and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee, to the Indenture dated as of May 15, 1999, among RJR Nabisco, Inc., R. J. Reynolds Tobacco Company and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.6 to R.J. Reynolds Tobacco Holdings, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2000, filed March 1, 2001).
4 .7 Second Supplemental Indenture dated as of June 30, 2003, among GMB, Inc., FSH, Inc., R. J. Reynolds Tobacco Co., Santa Fe Natural Tobacco Company, Inc., RJR Packaging, LLC, R.J. Reynolds Tobacco Holdings, Inc., R. J. Reynolds Tobacco Company, RJR Acquisition Corp. and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee, to the Indenture dated May 15, 1999, among RJR Nabisco, Inc., R. J. Reynolds Tobacco Company and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, filed August 8, 2003).

Exhibit No. Description of Document

4 .8 Third Supplemental Indenture, dated as of July 30, 2004, among R.J. Reynolds Tobacco Holdings, Inc., Reynolds American Inc., R. J. Reynolds Tobacco Company, RJR Acquisition Corp., GMB, Inc., FHS, Inc., R. J. Reynolds Tobacco Co., RJR Packaging, LLC, BWT Brands, Inc. and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee, to the Indenture dated May 15, 1999, among RJR Nabisco, Inc., R. J. Reynolds Tobacco Company and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.2 to Reynolds American Inc.’s Form 8-K dated July 30, 2004).
4 .9 Fourth Supplemental Indenture, dated July 6, 2005, to Indenture dated May 15, 1999, by and among R.J. Reynolds Tobacco Holdings, Inc., Reynolds American Inc. and various subsidiaries of Reynolds American Inc. as guarantors, and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to Reynolds American Inc.’s From 8-K dated July 11, 2005).
4 .10 Fifth Supplemental Indenture dated May 31, 2006, to Indenture dated May 15, 1999, among R.J. Reynolds Tobacco Holdings, Inc., Reynolds American Inc. and certain subsidiaries of R.J. Reynolds Tobacco Holdings, Inc. as guarantors and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.5 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
4 .11 Sixth Supplemental Indenture dated June 20, 2006, to Indenture dated May 15, 1999, among R.J. Reynolds Tobacco Holdings, Inc., Reynolds American Inc. and certain subsidiaries of R.J. Reynolds Tobacco Holdings, Inc. as guarantors and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.6 to Reynolds American Inc.’s Form 8-K dated June 20, 2006).
4 .12 Seventh Supplemental Indenture dated September 30, 2006, to Indenture dated May 15, 1999, among R.J. Reynolds Tobacco Holdings, Inc., Reynolds American Inc. and certain subsidiaries of R.J. Reynolds Tobacco Holdings, Inc. as guarantors and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.3 to Reynolds American Inc.’s Form 8-K dated October 2, 2006).
4 .13 Indenture dated as of May 20, 2002, by and among R.J. Reynolds Tobacco Holdings, Inc., R. J. Reynolds Tobacco Company, RJR Acquisition Corp. and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.3 to R.J. Reynolds Tobacco Holdings, Inc.’s Form 8-K dated May 15, 2002).
4 .14 First Supplemental Indenture dated as of June 30, 2003, among GMB, Inc., FSH, Inc., R. J. Reynolds Tobacco Co., Santa Fe Natural Tobacco Company, Inc., RJR Packaging, LLC, R.J. Reynolds Tobacco Holdings, Inc., R. J. Reynolds Tobacco Company, RJR Acquisition Corp. and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee, to the Indenture dated as of May 20, 2002, among R.J. Reynolds Tobacco Holdings, Inc., R. J. Reynolds Tobacco Company, RJR Acquisition Corp. and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.2 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, filed August 8, 2003).
4 .15 Second Supplemental Indenture, dated as of July 30, 2004, among R.J. Reynolds Tobacco Holdings, Inc., Reynolds American Inc., R. J. Reynolds Tobacco Company, RJR Acquisition, GMB, Inc., FSH, Inc., R. J. Reynolds Tobacco Co., RJR Packaging, LLC, BWT Brands, Inc. and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee, to the Indenture dated May 20, 2002, among R.J. Reynolds Tobacco Holdings, Inc., R. J. Reynolds Tobacco Company, RJR Acquisition Corp. and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.3 to Reynolds American Inc.’s Form 8-K dated July 30, 2004).
4 .16 Third Supplemental Indenture dated May 31, 2006, to Indenture dated May 20, 2002, among R.J. Reynolds Tobacco Holdings, Inc., Reynolds American Inc. and certain subsidiaries of R.J. Reynolds Tobacco Holdings, Inc. as guarantors and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.6 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).

Exhibit No. Description of Document

4 .17 Fourth Supplemental Indenture dated June 20, 2006, to Indenture dated May 20, 2002, among R.J. Reynolds Tobacco Holdings, Inc., Reynolds American Inc. and certain subsidiaries of R.J. Reynolds Tobacco Holdings, Inc. as guarantors and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.7 to Reynolds American Inc.’s Form 8-K dated June 20, 2006).
4 .18 Fifth Supplemental Indenture dated September 30, 2006, to Indenture dated May 20, 2002, among R.J. Reynolds Tobacco Holdings, Inc., Reynolds American Inc. and certain subsidiaries of R.J. Reynolds Tobacco Holdings, Inc. as guarantors and The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as trustee (incorporated by reference to Exhibit 4.2 to Reynolds American Inc.’s form 8-K dated October 2, 2006).
4 .19 Indenture dated May 31, 2006, among Reynolds American Inc. and certain of its subsidiaries as guarantors and The Bank of New York Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
4 .20 First Supplemental Indenture dated September 30, 2006, to Indenture dated May 31, 2006, among Reynolds American Inc. and certain of its subsidiaries as guarantors and The Bank of New York Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 to Reynolds American Inc.’s Form 8-K dated October 2, 2006).
4 .21 Form of Reynolds American Inc. old 6.500% Senior Secured Note due 2007 (incorporated by reference to Exhibit 4.1 to Reynolds American Inc.’s Form 8-K dated June 20, 2006).
4 .22 Form of Reynolds American Inc. old 7.875% Senior Secured Note due 2009 (incorporated by reference to Exhibit 4.2 to Reynolds American Inc.’s Form 8-K dated June 20, 2006).
4 .23 Form of Reynolds American Inc. old 6.500% Senior Secured Note due 2010 (incorporated by reference to Exhibit 4.3 to Reynolds American Inc.’s Form 8-K dated June 20, 2006).
4 .24 Form of Reynolds American Inc. old 7.250% Senior Secured Note due 2012 (incorporated by reference to Exhibit 4.4 to Reynolds American Inc.’s Form 8-K dated June 20, 2006).
4 .25 Form of Reynolds American Inc. old 7.250% Senior Secured Note due 2013 (incorporated by reference to Exhibit 4.2 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
4 .26 Form of Reynolds American Inc. old 7.300% Senior Secured Note due 2015 (incorporated by reference to Exhibit 4.5 to Reynolds American Inc.’s Form 8-K dated June 20, 2006).
4 .27 Form of Reynolds American Inc. old 7.625% Senior Secured Note due 2016 (incorporated by reference to Exhibit 4.3 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
4 .28 Form of Reynolds American Inc. old 7.750% Senior Secured Note due 2018 (incorporated by reference to Exhibit 4.4 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
4 .29 Form of Reynolds American Inc. new 7.250% Senior Secured Notes due 2013, 7.625% Senior Secured Notes due 2016 and 7.750% Senior Secured Notes due 2018.
4 .30 Form of Reynolds American Inc. new 6.500% Senior Secured Notes due 2007, 7.875% Senior Secured Notes due 2009, 6.500% Senior Secured Notes due 2010, 7.250% Senior Secured Notes due 2012 and 7.300% Senior Secured Notes due 2015.
5 .1 Opinion of Kilpatrick Stockton LLP regarding the validity of securities being registered.
5 .2 Opinion of Betzer, Roybal & Eisenberg P.C., special New Mexico counsel.
10 .1 Fourth Amended and Restated Credit Agreement, dated as of May 31, 2006, among Reynolds American Inc., the agents and other parties named therein, and the lending institutions listed from time to time on Annex I thereto (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
10 .2 Second Amended and Restated Pledge Agreement, dated as of May 31, 2006, among Reynolds American Inc., certain of its subsidiaries as pledgors and JPMorgan Chase Bank, N.A. as collateral agent (incorporated by reference to Exhibit 10.2 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
10 .3 Second Amended and Restated Security Agreement, dated as of May 31, 2006, among Reynolds American Inc., certain of its subsidiaries as assignors and JPMorgan Chase Bank, N.A. as collateral agent (incorporated by reference to Exhibit 10.3 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).

Exhibit No. Description of Document

10 .4 Fifth Amended and Restated Subsidiary Guaranty, dated as of May 31, 2006, among certain of the subsidiaries of Reynolds American Inc. as guarantors and JPMorgan Chase Bank, N.A. as administrative agent (incorporated by reference to Exhibit 10.4 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
10 .5 Form of First Amended and Restated Deed of Trust, Security Agreement, Assignment of Leases, Rents and Profits, Financing Statement and Fixture Filing (North Carolina) made as of May 31, 2006, by R. J. Reynolds Tobacco Company, as the Trustor, to The Fidelity Company, as Trustee (incorporated by reference to Exhibit 10.5 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
10 .6 Form of First Amended and Restated Deed to Secure Debt, Security Agreement, Assignment of Leases, Rents and Profits (Bibb County, Georgia) made as of May 31, 2006, by R. J. Reynolds Tobacco Company, as the Grantor, to JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent for the Secured Creditors, as the Grantee (incorporated by reference to Exhibit 10.6 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
10 .7 Form of First Amended and Restated Mortgage, Security Agreement, Assignment of Leases, Rents and Profits, Financing Statement and Fixture Filing (Cherokee County, South Carolina) made as of May 31, 2006, by R. J. Reynolds Tobacco Company, as the Mortgagor, to JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent for the Secured Creditors, as the Mortgagee (incorporated by reference to Exhibit 10.7 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
10 .8 Formation Agreement, dated as of July 30, 2004, among Brown & Williamson Tobacco Corporation (n/k/a Brown & Williamson Holdings, Inc.), Brown & Williamson U.S.A., Inc. (n/k/a R. J. Reynolds Tobacco Company) and Reynolds American Inc. (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated July 30, 2004).
10 .9 Governance Agreement, dated as of July 30, 2004, among British American Tobacco p.l.c., Brown & Williamson Tobacco Corporation (n/k/a Brown & Williamson Holdings, Inc.) and Reynolds American Inc. (incorporated by reference to Exhibit 10.2 to Reynolds American Inc.’s Form 8-K dated July 30, 2004).
10 .10 Amendment No. 1 to the Governance Agreement, dated as of November 18, 2004, among British American Tobacco p.l.c., Brown & Williamson Holdings, Inc. and Reynolds American Inc. (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated November 18, 2004).
10 .11 Non-Competition Agreement, dated as of July 30, 2004, between Reynolds American Inc. and British American Tobacco p.l.c. (incorporated by reference to Exhibit 10.3 to Reynolds American Inc.’s Form 8-K dated July 30, 2004).
10 .12 Contract Manufacturing Agreement, dated as of July 30, 2004, by and between R. J. Reynolds Tobacco Company and BATUS Japan, Inc. (incorporated by reference to Exhibit 10.4 to Reynolds American Inc.’s Form 8-K dated July 30, 2004).
10 .13 October 2005 Amendments to the Contract Manufacturing Agreement, dated as of July 30, 2004, by and between R. J. Reynolds Tobacco Company and BATUS Japan, Inc. (incorporated by reference to Exhibit 10.2 to Reynolds American Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, filed November 3, 2005).
10 .14 Contract Manufacturing Agreement, dated as of July 30, 2004, by and between R. J. Reynolds Tobacco Company and B.A.T. (U.K. & Export) Limited (incorporated by reference to Exhibit 10.5 to Reynolds American Inc.’s Form 8-K dated July 30, 2004).
10 .15 Purchase Agreement dated as of March 9, 1999, as amended and restated as of May 11, 1999, among R. J. Reynolds Tobacco Company, RJR Nabisco, Inc. and Japan Tobacco Inc. (incorporated by reference to Exhibit 2.1 to R.J. Reynolds Tobacco Holdings, Inc.’s Form 8-K dated May 12, 1999).
10 .16 Tax Sharing Agreement dated as of June 14, 1999, among RJR Nabisco Holdings Corp., R.J. Reynolds Tobacco Holdings, Inc., R. J. Reynolds Tobacco Company and Nabisco Holdings Corp. (incorporated by reference to Exhibit 10.1 to R.J. Reynolds Tobacco Holdings, Inc.’s Form 8-K dated June 14, 1999).

Exhibit No. Description of Document

10 .17 Amendment to Tax Sharing Agreement dated June 25, 2000, among Nabisco Group Holdings Corp., R.J. Reynolds Tobacco Holdings, Inc., Nabisco Holdings Corp. and R. J. Reynolds Tobacco Company (incorporated by reference to Exhibit 10.2 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000, filed August 7, 2000).
10 .18 Agreement dated as of May 20, 1999, among Pension Benefit Guaranty Corporation, RJR Nabisco Holdings Corp. and R. J. Reynolds Tobacco Company (incorporated by reference to Exhibit 10.16 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, filed August 16, 1999).
10 .19 Amendment effective as of June 14, 1999, to the Agreement effective as of May 20, 1999, by and among the Pension Benefit Guaranty Corporation, R.J. Reynolds Tobacco Holdings, Inc. and R. J. Reynolds Tobacco Company (incorporated by reference to Exhibit 10.3 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000, filed August 7, 2000).
10 .20 Second Amendment effective as of January 7, 2002, to the Agreement effective as of May 20, 1999, by and among the Pension Benefit Guaranty Corporation, R.J. Reynolds Tobacco Holdings, Inc. and R. J. Reynolds Tobacco Company (incorporated by reference to Exhibit 10.9 to R.J. Reynolds Tobacco Holdings, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2001, filed February 28, 2002).
10 .21 Settlement Agreement dated August 25, 1997, between the State of Florida and settling defendants in The State of Florida v. American Tobacco Co. (incorporated by reference to Exhibit 2 to R.J. Reynolds Tobacco Holdings, Inc.’s Form 8-K dated August 25, 1997).
10 .22 Comprehensive Settlement Agreement and Release dated January 16, 1998, between the State of Texas and settling defendants in The State of Texas v. American Tobacco Co. (incorporated by reference to Exhibit 2 to R.J. Reynolds Tobacco Holdings, Inc.’s Form 8-K dated January 16, 1998).
10 .23 Settlement Agreement and Release in re: The State of Minnesota v. Philip Morris, Inc., by and among the State of Minnesota, Blue Cross and Blue Shield of Minnesota and the various tobacco company defendants named therein, dated as of May 8, 1998 (incorporated by reference to Exhibit 99.1 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 30, 1998, filed May 15, 1998).
10 .24 Settlement Agreement and Stipulation for Entry of Consent Judgment in re: The State of Minnesota v. Philip Morris, Inc., by and among the State of Minnesota, Blue Cross and Blue Shield of Minnesota and the various tobacco company defendants named therein, dated as of May 8, 1998 (incorporated by reference to Exhibit 99.2 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 30, 1998, filed May 15, 1998).
10 .25 Form of Consent Judgment by Judge Kenneth J. Fitzpatrick, Judge of District Court in re: The State of Minnesota v. Philip Morris, Inc. (incorporated by reference to Exhibit 99.3 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 30, 1998, filed May 15, 1998).
10 .26 Stipulation of Amendment to Settlement Agreement and for Entry of Agreed Order dated July 2, 1998, by and among the Mississippi Defendants, Mississippi and the Mississippi Counsel in connection with the Mississippi Action (incorporated by reference to Exhibit 99.2 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998, filed August 14, 1998).
10 .27 Stipulation of Amendment to Settlement Agreement and for Entry of Consent Decree dated July 24, 1998, by and among the Texas Defendants, Texas and the Texas Counsel in connection with the Texas Action (incorporated by reference to Exhibit 99.4 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998, filed August 14, 1998).
10 .28 Stipulation of Amendment to Settlement Agreement and for Entry of Consent Decree dated September 11, 1998, by and among the State of Florida and the tobacco companies named therein (incorporated by reference to Exhibit 99.1 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1998, filed November 12, 1998).

Exhibit No. Description of Document

10 .29 Master Settlement Agreement, referred to as the MSA, dated November 23, 1998, between the Settling States named in the MSA and the Participating Manufacturers also named therein (incorporated by reference to Exhibit 4 to R.J. Reynolds Tobacco Holdings, Inc.’s Form 8-K dated November 23, 1998).
10 .30 Amended and Restated Directors and Officers Indemnification Agreement (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated February 1, 2005).
10 .31 Reynolds American Inc. Outside Directors’ Benefit Summary (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K, dated September 13, 2006).
10 .32 Amended and Restated Equity Incentive Award Plan for Directors of Reynolds American Inc., referred to as the EIAP.
10 .33 Form of Deferred Stock Unit Agreement between Reynolds American Inc. and the Director named therein, pursuant to the EIAP (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated August 30, 2004).
10 .34 Form of Deferred Stock Unit Agreement between R.J. Reynolds Tobacco Holdings, Inc. and the Director named therein, pursuant to the EIAP (incorporated by reference to Exhibit 10.9 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, filed August 16, 1999).
10 .35 Form of Stock Option Agreement (Initial) between R.J. Reynolds Tobacco Holdings, Inc. and the Director named therein, pursuant to the EIAP (incorporated by reference to Exhibit 10.10 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, filed August 16, 1999).
10 .36 Amended and Restated Deferred Compensation Plan for Directors of Reynolds American Inc. (incorporated by reference to Exhibit 10.3 to Reynolds American Inc.’s Form 8-K dated February 1, 2005).
10 .37 Amendment No. 1 to Deferred Compensation Plan for Directors of Reynolds American Inc., amended and restated effective February 2, 2005, dated July 19, 2006 (incorporated by reference to Exhibit 10.12 to Reynolds American Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, filed August 4, 2006).
10 .38 Amended and Restated Reynolds American Inc. Long-Term Incentive Plan (incorporated by reference to Exhibit 10.42 to Reynolds American Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004, filed March 9, 2005).
10 .39 Form of Tandem Restricted Stock/ Stock Option Agreement dated July 28, 1999, between R.J. Reynolds Tobacco Holdings, Inc. and the grantee named therein (incorporated by reference to Exhibit 10.4 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, filed November 12, 1999).
10 .40 Amendment No. 1 to Tandem Restricted Stock/ Stock Option Agreement dated July 28, 1999, dated December 5, 2001 (incorporated by reference to Exhibit 10.32 to R.J. Reynolds Tobacco Holdings, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2001, filed February 28, 2002).
10 .41 Form of Amendment No. 2 to Tandem Restricted Stock/ Stock Option Agreement dated as of April 24, 2002, amending the Tandem Restricted Stock/ Stock Option Agreements dated June 15 and July 28, 1999, between R.J. Reynolds Tobacco Holdings, Inc. and the grantee named therein (incorporated by reference to Exhibit 10.3 to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, filed August 6, 2002).
10 .42 Amendment No. 3 to Tandem Restricted Stock/ Stock Option Agreements dated December 10, 2002, amending the Tandem Restricted Stock/ Stock Option Agreements dated June 15 and July 28, 1999 (incorporated by reference to Exhibit 10.35 to R.J. Reynolds Tobacco Holdings, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002, filed March 3, 2003).
10 .43 Form of Performance Unit Agreement (one-year vesting) dated February 9, 2006, between Reynolds American Inc. and the grantee named therein (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated February 9, 2006).

Exhibit No. Description of Document

10 .44 Form of Performance Share Agreement dated August 31, 2004, between Reynolds American Inc. and the grantee named therein (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K, dated August 31, 2004).
10 .45 Form of Performance Unit Agreement (three-year vesting) dated March 2, 2005, between Reynolds American Inc. and the grantee named therein (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K, dated March 2, 2005).
10 .46 Form of Performance Share Agreement, dated March 2, 2005, between Reynolds American Inc. and the grantee named therein (incorporated by reference to Exhibit 10.2 to Reynolds American Inc.’s Form 8-K, dated March 2, 2005).
10 .47 Offer of Employment Letter, dated July 29, 2004, by Reynolds American Inc. and Susan M. Ivey, accepted by Ms. Ivey on July 30, 2004 (incorporated by reference to Exhibit 10.22 to Reynolds American Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, filed November 5, 2004).
10 .48 Letter Agreement regarding Severance Benefits and Change of Control Protections dated October 7, 2004, between Reynolds American Inc. and Susan M. Ivey (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated October 7, 2004).
10 .49 Offer of Employment Letter dated July 29, 2004, by Reynolds American Inc. and Jeffrey A. Eckmann, accepted by Mr. Eckmann on July 29, 2004 (incorporated by reference to Exhibit 10.24 to Reynolds American Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, filed November 5, 2004).
10 .50 Letter Agreement, dated February 2, 2005, between Reynolds American Inc. and Jeffrey A. Eckmann, amending July 29, 2004 offer letter (incorporated by reference to Exhibit 10.5 to Reynolds American Inc.’s Form 8-K dated February 1, 2005).
10 .51 Offer of Employment Letter dated August 18, 2006, by Reynolds American Inc. and E. Julia Lambeth, accepted by Ms. Lambeth on August 19, 2006 (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated August 19, 2006).
10 .52 Form of Amended Letter Agreement regarding Severance Benefits and Change of Control Protections between Reynolds American Inc. and the officer named therein (incorporated by reference to Exhibit 10.6 to Reynolds American Inc.’s Form 8-K dated February 1, 2005).
10 .53 Reynolds American Inc. Annual Incentive Award Plan, as amended (incorporated by reference to Exhibit 10.2 to Reynolds American Inc.’s Form 8-K dated November 30, 2005).
10 .54 Amendment No. 1 to Annual Incentive Award Plan, amended and restated as of January 1, 2006, dated July 18, 2006 (incorporated by reference to Exhibit 10.11 to Reynolds American Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, filed August 4, 2006).
10 .55 Retention Trust Agreement dated May 13, 1998, by and between RJR Nabisco, Inc. and Wachovia Bank, N.A. (incorporated by reference to R.J. Reynolds Tobacco Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998, filed August 14, 1998).
10 .56 Amendment No. 1 to Retention Trust Agreement dated October 1, 2006, by and between R.J. Reynolds Tobacco Holdings, Inc. (formerly RJR Nabisco, Inc.) and Wachovia Bank, N.A.
10 .57 Supplemental Pension Plan for Executives of Brown & Williamson Tobacco Corporation (n/k/a Brown & Williamson Holdings, Inc.) (as amended through July 29, 2004) (incorporated by reference to Exhibit 10.67 to Reynolds American Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004, filed March 9, 2005).
10 .58 Form of Brown & Williamson Tobacco Corporation (n/k/a Brown & Williamson Holdings, Inc.) Trust Agreement for the executive officer named therein (incorporated by reference to Exhibit 10.68 to Reynolds American Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004, filed March 9, 2005).
10 .59 Brown & Williamson Tobacco Corporation (n/k/a Brown & Williamson Holdings, Inc.) Health Care Plan for Salaried Employees (as amended through July 29, 2004 by amendment nos. 1 and 2) (incorporated by reference to Exhibit 10.69 to Reynolds American Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004, filed March 9, 2005).

Exhibit No. Description of Document

10 .60 Amendment No. 3, entered into as of December 31, 2004, to the Brown & Williamson Tobacco Corporation (n/k/a Brown & Williamson Holdings, Inc.) Health Care Plan for Salaried Employees (incorporated by reference to Exhibit 10.70 to Reynolds American Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004, filed March 9, 2005).
10 .61 Supply Agreement, dated May 2, 2005, by and between R. J. Reynolds Tobacco Company and Alcan Packaging Food and Tobacco Inc. (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated May 2, 2005).
10 .62 First Amendment to Supply Agreement, dated September 16, 2005, by and between R. J. Reynolds Tobacco Company and Alcan Packaging Food and Tobacco Inc. (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, filed November 3, 2005).
10 .63 Supply Agreement, dated May 2, 2005, by and between R. J. Reynolds Tobacco Company and Alcoa Flexible Packaging, LLC (incorporated by reference to Exhibit 10.2 to Reynolds American Inc.’s Form 8-K dated May 2, 2005).
10 .64 Supply Agreement, dated May 2, 2005, by and between R. J. Reynolds Tobacco Company and Mundet Inc. (incorporated by reference to Exhibit 10.3 to Reynolds American Inc.’s Form 8-K dated May 2, 2005).
10 .65 Registration Rights Agreement dated June 29, 2005, by and among R.J. Reynolds Tobacco Holdings, Inc, the guarantors listed in Schedule 1 thereto, Citigroup Capital Markets Inc., J.P. Morgan Securities Inc. and the initial purchasers named in Schedule 2 thereto (incorporated by reference to Exhibit 4.2 to Reynolds American Inc.’s Form 8-K dated July 6, 2005).
10 .66 Performance Unit Agreement, dated March 6, 2006, between Reynolds American Inc. and the grantee named therein (incorporated by reference to Exhibit 10.3 to Reynolds American Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, filed May 5, 2006).
10 .67 Restricted Stock Agreement, dated March 6, 2006, between Reynolds American Inc. and the grantee named therein (incorporated by reference to Exhibit 10.4 to Reynolds American Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, filed May 5, 2006).
10 .68 Commitment Letter dated April 24, 2006, by and among Lehman Brothers Commercial Bank, Lehman Brothers Inc., JPMorgan Chase Bank, N.A., J.P. Morgan Securities Inc. and Reynolds American Inc. (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated April 24, 2006).
10 .69 Purchase Agreement, dated May 18, 2006, by and among Reynolds American Inc., the guarantors listed therein, and Lehman Brothers Inc., J.P. Morgan Securities Inc. and Citigroup Global Markets Inc., for themselves and as representatives of the initial purchasers listed therein (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, filed August 4, 2006).
10 .70 Registration Rights Agreement, dated May 31, 2006, by and among Reynolds American Inc., the guarantors listed in Schedule 1 thereto, Lehman Brothers Inc., J.P. Morgan Securities Inc. and Citigroup Global Markets Inc., and the initial purchasers named in Schedule 2 thereto (incorporated by reference to Exhibit 10.8 to Reynolds American Inc.’s Form 8-K dated May 31, 2006).
10 .71 Registration Rights Agreement, dated June 20, 2006, by and among Reynolds American Inc., the guarantors listed in Schedule 1 thereto, and The Bank of New York Trust Company, N.A. (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated June 20, 2006).
10 .72 Subsidiary Assumption and Joinder Agreement dated as of September 30, 2006, among JPMorgan Chase Bank, N.A., as administrative agent, R. J. Reynolds Global Products, Inc., RJR Packaging, LLC and Scott Tobacco LLC (incorporated by reference to Exhibit 10.1 to Reynolds American Inc.’s Form 8-K dated October 2, 2006).
12 .1 Statement Regarding Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends.
21 .1 Subsidiaries of Reynolds American Inc.
23 .1 Consent of KPMG LLP, Greensboro, North Carolina.
23 .2 Consent of KPMG LLP, Memphis, Tennessee.

Exhibit No. Description of Document

23 .3 Consent of Kilpatrick Stockton LLP (included in Exhibit 5.1).
23 .4 Consent of Betzer, Roybal & Eisenberg P.C. (included in Exhibit 5.2).
24 .1 Powers of Attorney of the Registrants (included on signature pages of this Part II).
25 .1 Form T-1 Statement of Eligibility and Qualification of The Bank of New York Trust Company, N.A., as trustee with respect to the new 6.500% Senior Secured Notes due 2007.
25 .2 Form T-1 Statement of Eligibility and Qualification of The Bank of New York Trust Company, N.A., as trustee with respect to the new 7.875% Senior Secured Notes due 2009.
25 .3 Form T-1 Statement of Eligibility and Qualification of The Bank of New York Trust Company, N.A., as trustee with respect to the new 6.500% Secured Notes due 2010.
25 .4 Form T-1 Statement of Eligibility and Qualification of The Bank of New York Trust Company, N.A., as trustee with respect to the new 7.250% Senior Secured Notes due 2012.
25 .5 Form T-1 Statement of Eligibility and Qualification of The Bank of New York Trust Company, N.A., as trustee with respect to the new 7.250% Senior Secured Notes due 2013.
25 .6 Form T-1 Statement of Eligibility and Qualification of The Bank of New York Trust Company, N.A., as trustee with respect to the new 7.300% Secured Notes due 2015.
25 .7 Form T-1 Statement of Eligibility and Qualification of The Bank of New York Trust Company, N.A., as trustee with respect to the new 7.625% Senior Secured Notes due 2016.
25 .8 Form T-1 Statement of Eligibility and Qualification of The Bank of New York Trust Company, N.A., as trustee with respect to the new 7.750% Senior Secured Notes due 2018.
99 .1 Form of Letter of Transmittal.
99 .2 Form of Notice of Guaranteed Delivery.
99 .3 Form of Notice to Investors.
99 .4 Form of Notice to Broker Dealers.


North Carolina	2111	20-0546644
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(IRS Employer Identification No.)


Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	¨


	Page
GLOSSARY		i
SUMMARY		1
RISK FACTORS		1819
FORWARD-LOOKING STATEMENTS		31
INDUSTRY DATA		35
~~INDUSTRY DATA~~THE EXCHANGE OFFERS		36
~~THE EXCHANGE OFFER~~		37
~~USE~~RATIO OF ~~PROCEEDS~~EARNINGS TO FIXED CHARGES		48
~~CAPITALIZATION~~		49
~~UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT~~USE OF ~~INCOME~~PROCEEDS		50
~~SELECTED FINANCIAL DATA~~CAPITALIZATION		50
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME		52
~~BUSINESS~~		54
DESCRIPTION OF MATERIAL INDEBTEDNESS		57
~~DESCRIPTION OF THE NEW NOTES~~		59
DESCRIPTION OF THE NEW NOTES		60
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES		75
~~PLAN OF DISTRIBUTION~~		79
~~LEGAL MATTERS~~		80
~~EXPERTS~~PLAN OF DISTRIBUTION		8085
LEGAL MATTERS		86
EXPERTS		86
WHERE YOU CAN FIND MORE INFORMATION		8087
INCORPORATION BY REFERENCE		8087
~~Ex-3.17~~
~~Ex-3.18~~
~~Ex-3.19~~
~~Ex-3.20~~
~~Ex-3.21~~
~~Ex-3.22~~
~~Ex-3.23~~
~~Ex-3.24~~
~~Ex-3.25~~
~~Ex-3.26~~
~~Ex-3.27~~
~~Ex-3.28~~
~~Ex-3.29~~
~~Ex-3.30~~
~~Ex-3.31~~
~~Ex-3.32~~
~~Ex-4.29~~
~~Ex-4.30~~
~~Ex-5.1~~
~~Ex-5.2~~
~~Ex-10.32~~
~~Ex-10.56~~
~~Ex-12.1~~
~~Ex-21.1~~
~~Ex-23.1~~
~~Ex-23.2~~
~~Ex-25.1~~
~~Ex-25.2~~
~~Ex-25.3~~
~~Ex-25.4~~
~~Ex-25.5~~
~~Ex-25.6~~
~~Ex-25.7~~
~~Ex-25.8~~
~~Ex-99.1~~
~~Ex-99.2~~
~~Ex-99.3~~
~~Ex-99.4~~


Background		On ~~May 31, 2006, in order to help finance the Conwood acquisition,~~July 15, 2015, RAI issued ~~and sold $1.65~~approximately $3.12 billion aggregate principal amount of ~~Category A~~ old notes pursuant to ~~a group of initial purchasers in a~~the private ~~offering exempt from the registration and prospectus delivery requirements of the Securities Act.~~exchange offers. In connection with the ~~issuance of the Category A old notes,~~private exchange offers, RAI and certain guarantors of ~~these~~the old notes entered into a registration rights agreement with the ~~initial purchasers~~dealer managers for the private exchange offers, pursuant to which RAI and the guarantors agreed, among other things, to complete an exchange offer registered under the Securities Act for the ~~Category A~~ old notes within 210 days following their issuance.

		On June 20, 2006, RAI issued $1.29 billion aggregate principal amount of Category B old notes pursuant to the prior RJR exchange offer, in a private offering exempt from the registration and prospectus delivery requirements of the Securities Act. In connection with this transaction, RAI and certain guarantors of the Category B old notes entered into a registration rights agreement with the trustee under the indenture related to the notes pursuant to which RAI and the guarantors agreed, among other things, to complete an exchange offer registered under the Securities Act for the Category B old notes within 210 days following their issuance.

		See “The Exchange ~~Offer —~~ Offers—Purpose and Effect of the Exchange ~~Offer.~~Offers.”

Exchange ~~Offer~~Offers		In order to satisfy the obligations of RAI and the guarantors under the registration rights ~~agreements,~~agreement, RAI is hereby offering to exchange, upon the terms and conditions set forth in this prospectus, up to the aggregate principal amount of the series of old notes listed on the cover of this prospectus for an equal principal amount of corresponding series of new notes described in this prospectus. See “The Exchange ~~Offer —~~ Offers—Terms of the Exchange ~~Offer.~~Offers.”

		If the ~~exchange offer is~~Exchange Offers are not completed by ~~December 27, 2006, in the case of the Category A old notes, or by January 16, 2007, in the case of the Category B old notes,~~February 10, 2016, then we will pay additional interest ~~at the rate of 0.5% per year,~~ to the holders of the old notes until the ~~exchange offer is~~Exchange Offers are completed.

Expiration		Each Exchange Offer will expire at p.m., New York City time, on , 2015, or a later date and time to which RAI extends any Exchange Offer. RAI does not currently intend to extend the expiration date of any Exchange Offer, although we reserve the right to do so. See “The Exchange Offers—Expiration Date; Extensions; Amendment; Termination.”

Procedures for Participating in the Exchange ~~Offer~~Offers		If your old notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, and you wish to tender those old notes, you should contact the registered holder promptly and instruct the registered holder to tender your old notes on your behalf by the expiration of the Exchange Offers. If you hold old notes through DTC in the form of book-entry interests, and wish to participate in one or more Exchange Offers, then by the expiration of the Exchange Offers, you must cause the book-entry transfer of your old notes to the exchange ~~offer, you~~agent’s account at DTC, and the exchange agent must ~~complete, sign~~receive: • a confirmation of book-entry transfer and ~~date~~ • either: • an original or facsimile of the accompanying letter of transmittal, completed, signed and dated in accordance with the instructions contained in this prospectus and the letter of ~~transmittal, and send the letter of transmittal,~~transmittal; or a facsimile of the letter of transmittal, and the old notes you wish to exchange and any other required documentation to the exchange agent at the address set forth on the cover page of the letter of transmittal. These materials must be received by the exchange agent prior to the expiration of the exchange offer.



		• an agent’s message transmitted pursuant to ATOP, by which each tendering holder will agree to be bound by, and to make the representations, warranties and agreements in, the letter of transmittal; and any other required documentation. RAI understands that the old notes are held solely through DTC; however, if old notes are subsequently issued in certificated form registered in the name of an individual noteholder, such holder wishing to participate in an Exchange Offer should send its certificated old notes with a properly completed and validly executed letter of transmittal (and any other required documentation) to the exchange agent by the expiration of the Exchange Offers. In any event, tendering holders of old notes should allow sufficient time to permit the procedures for tendering to be completed in advance of the expiration of the Exchange Offers. See “The Exchange Offers—Procedures for Tendering Old Notes.”

Certain Representations		By executing or agreeing to be bound by the letter of transmittal, you will represent to us and agree that, among other things:

		• the new notes to be ~~issued~~acquired pursuant to ~~you in~~ the ~~exchange offer~~Exchange Offers are being acquired in the ordinary course of ~~your business;~~

		business for you or any beneficial owner of the old notes tendered by such letter of transmittal; • neither you ~~have no~~nor any beneficial owner of the old notes tendered by such letter of transmittal is engaged in, intends to engage in, or has any arrangement or understanding with any person ~~to participate,~~ or ~~any intention~~entity to participate in, a “distribution” of the ~~distribution (within~~new notes within the meaning of the Securities ~~Act)~~Act; • neither you nor any beneficial owner of the ~~new~~old notes ~~to be issued to you in~~tendered by such letter of transmittal is an “affiliate” of any of RAI or the ~~exchange;~~

		~~• you are not an affiliate (as defined in~~guarantors within the meaning of Rule 405 promulgated under the Securities ~~Act) of RAI or a guarantor;~~

		Act; • if you ~~are~~or any beneficial owner of the old notes tendered by such letter of transmittal is a broker-dealer, neither you ~~did not purchase your~~nor any such beneficial owner purchased the old notes directly from RAI for resale pursuant to ~~Rule 144A~~an exemption from registration under the Securities ~~Act or any other available exemption from registration;~~

		Act; • if you ~~are~~or any beneficial owner of the old notes tendered by such letter of transmittal is a broker-dealer, you further represent that ~~will receive new notes for your own account in exchange for~~you or such other beneficial owner (1) acquired the old notes ~~that were acquired~~ as a result of market-making or other trading activities ~~you~~




	Amount to be	Proposed Maximum Offering	Proposed Maximum	Amount of
Title of Each Class of Securities to be Registered	Registered	Price Per Unit(1)	Aggregate Offering Price(1)	Registration Fee

6.500% Senior Secured Notes due 2007	$236,449,000	100%	$236,449,000	$25,300

Guarantees of 6.500% Senior Secured Notes due 2007	—	—	—	(2)

7.875% Senior Secured Notes due 2009	$185,731,000	100%	$185,731,000	$19,873

Guarantees of 7.875% Senior Secured Notes due 2009	—	—	—	(2)

6.500% Senior Secured Notes due 2010	$299,265,000	100%	$299,265,000	$32,021

Guarantees of 6.500% Senior Secured Notes due 2010	—	—	—	(2)

7.250% Senior Secured Notes due 2012	$367,927,000	100%	$367,927,000	$39,368

Guarantees of 7.250% Senior Secured Notes due 2012	—	—	—	(2)

7.250% Senior Secured Notes due 2013	$625,000,000	100%	$625,000,000	$66,875

Guarantees of 7.250% Senior Secured Notes due 2013	—	—	—	(2)

7.300% Senior Secured Notes due 2015	$199,445,000	100%	$199,445,000	$21,341

Guarantees of 7.300% Senior Secured Notes due 2015	—	—	—	(2)

7.625% Senior Secured Notes due 2016	$775,000,000	100%	$775,000,000	$82,925

Guarantees of 7.625% Senior Secured Notes due 2016	—	—	—	(2)

7.750% Senior Secured Notes due 2018	$250,000,000	100%	$250,000,000	$26,750

Guarantees of 7.750% Senior Secured Notes due 2018	—	—	—	(2)

Total	$2,938,817,000			$314,453



Title of Each Class of Securities to be Registered	Amount to be Registered	Proposed Maximum Offering Price Per Unit(1)	Proposed Maximum Aggregate Offering Price(1)	Amount of Registration Fee
3.500% Senior Notes due 2016	$414,793,000	100%	$414,793,000	$41,769.66
Guarantees of 3.500% Senior Notes due 2016	—	—	—	(2)
2.300% Senior Notes due 2017	$447,092,000	100%	$447,092,000	$45,022.16
Guarantees of 2.300% Senior Notes due 2017	—	—	—	(2)
8.125% Senior Notes due 2019	$668,689,000	100%	$668,689,000	$67,336.98
Guarantees of 8.125% Senior Notes due 2019	—	—	—	(2)
6.875% Senior Notes due 2020	$641,462,000	100%	$641,462,000	$64,595.22
Guarantees of 6.875% Senior Notes due 2020	—	—	—	(2)
3.750% Senior Notes due 2023	$473,689,000	100%	$473,689,000	$47,700.48
Guarantees of 3.750% Senior Notes due 2023	—	—	—	(2)
8.125% Senior Notes due 2040	$236,748,000	100%	$236,748,000	$23,840.52
Guarantees of 8.125% Senior Notes due 2040	—	—	—	(2)
7.000% Senior Notes due 2041	$240,197,000	100%	$240,197,000	$24,187.84
Guarantees of 7.000% Senior Notes due 2041	—	—	—	(2)
Total	$3,122,670,000			$314,452.87


					Outstanding
Old Notes to be Exchanged		CUSIP Nos.			Principal Amount

Category A
	7.250% Senior Secured Notes due 2013	761713 AA 4	U8001F AA 3	$	625,000,000
	7.625% Senior Secured Notes due 2016	761713 AB 2	U8001F AB 1	$	775,000,000
	7.750% Senior Secured Notes due 2018	761713 AC 0	U8001F AC 9	$	250,000,000
Category B
	6.500% Senior Secured Notes due 2007	761713 AG 1	U8001F AD 7	$	236,449,000
	7.875% Senior Secured Notes due 2009	761713 AJ 5	U8001F AE 5	$	185,731,000
	6.500% Senior Secured Notes due 2010	761713 AL 0	U8001F AF 2	$	299,265,000
	7.250% Senior Secured Notes due 2012	761713 AN 6	U8001F AG 0	$	367,927,000
	7.300% Senior Secured Notes due 2015	761713 AQ 9	U8001F AH 8	$	199,445,000


Old Notes to be Exchanged	CUSIP Nos.		Outstanding Principal Amount
3.500% Senior Notes due 2016	761713 BH8	U8001F AL9	$414,793,000
2.300% Senior Notes due 2017	761713 BJ4	U8001F AM7	$447,092,000
8.125% Senior Notes due 2019	761713 BK1	U8001F AN5	$668,689,000
6.875% Senior Notes due 2020	761713 BL9	U8001F AP0	$641,462,000
3.750% Senior Notes due 2023	761713 BM7	U8001F AQ8	$473,689,000
8.125% Senior Notes due 2040	761713 BN5	U8001F AR6	$236,748,000
7.000% Senior Notes due 2041	761713 BP0	U8001F AS4	$240,197,000


	•	We will exchange all old notes validly tendered and not properly withdrawn prior to the expiration of the exchange offer for an equal principal amount of new notes. You may withdraw tenders of the old notes at any time prior to the expiration of the exchange offer.

	•	The exchange offer is not conditioned upon any minimum principal amount of old notes being tendered for exchange. The exchange offer is not subject to any condition other than that it not violate applicable law or any applicable interpretation of the staff of the Securities and Exchange Commission.

	•	~~An exchange of old notes for new notes will not be a taxable transaction for U.S. federal income tax purposes.~~

	•	~~We will not receive any cash proceeds from the exchange offer.~~

	•	There is no existing market for the new notes and we do not intend to apply for their listing on any securities exchange or arrange for them to be quoted on any quotation system. An active trading market for the new notes may not develop, which could make selling the new notes difficult.


	•	~~“Conwood”~~ ~~means Conwood Company, LLC, Conwood Sales Co., LLC, Scott Tobacco LLC and Rosswil LLC, collectively;~~
	•	~~“Conwood Company”~~ ~~means Conwood Company, LLC;~~
	•	~~“Conwood Holdings”~~ ~~means Conwood Holdings, Inc.;~~
	•	~~“Conwood Sales”~~ ~~means Conwood Sales Co., LLC;~~
	•	~~“FHS”~~ ~~means FHS, Inc.;~~
	•	~~“GMB”~~ ~~means GMB, Inc.;~~
	•	~~“GPI”~~ ~~means R. J. Reynolds Global Products, Inc.;~~
	•	~~“Lane”~~ ~~means Lane, Limited;~~
	•	~~“RJR”~~ ~~means R.J. Reynolds Tobacco Holdings, Inc.;~~
	•	~~“RJR Acquisition”~~ ~~means RJR Acquisition Corp.;~~
	•	~~“RJR Packaging”~~ ~~means RJR Packaging, LLC;~~
	•	~~“RJR Tobacco”~~ ~~means R. J. Reynolds Tobacco Company;~~
	•	“RJR Tobacco, ~~Co.”~~ ~~means R. J. Reynolds Tobacco Co.;~~
	•	~~“Rosswil”~~ ~~means Rosswil LLC;~~
	•	~~“Santa Fe”~~ ~~means Santa Fe Natural Tobacco Company, Inc.; and~~
	•	~~“Scott Tobacco”~~ ~~means Scott Tobacco LLC.~~

(1)
~~(1)~~	~~RJR, RJR Packaging, GPI and Scott Tobacco became guarantors~~Also guarantor of the ~~old notes effective September 30, 2006.~~Lorillard Tobacco notes.



	(and not directly from RAI for resale), (2) may be considered a statutory “underwriter” under the Securities Act and (3) will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of new notes received in the Exchange Offers; provided, however, that, by acknowledging that you or such beneficial owner, as such a broker-dealer, will deliver, and by delivering, a prospectus meeting the requirements of the Securities Act in connection with any resale of new ~~notes;~~notes, you or such beneficial owner will not be deemed to admit that you are an “underwriter” within the meaning of the Securities Act; and

	• you are not acting on behalf of any ~~persons~~person or ~~entities who~~entity that could not truthfully make the foregoing ~~representations.~~

	representations, warranties and agreements. See “The Exchange ~~Offer —~~ Offers—Procedures for Tendering Old Notes” and “— “—Resale of the New Notes.”

		If you hold old notes through The Depository Trust Company, referred to as DTC, in the form of book-entry interests, and wish to participate in the exchange offer, you must cause the book-entry transfer of the old notes to the exchange agent’s account at DTC, and the exchange agent must receive a confirmation of book-entry transfer and either:

	~~• a completed letter of transmittal; or~~

	~~• an agent’s message transmitted pursuant to DTC’s Automated Tender Offer Program, referred to as ATOP, by which each tendering holder will agree to be bound by the letter of transmittal.~~

	~~See “The Exchange Offer — Book-Entry Transfers; Tender of Notes Using DTC’s Automated Tender Offer Program.”~~

Resale of the New Notes	Based on interpretations by the staff of the ~~Securities and Exchange Commission, referred to as the~~ SEC as set forth inno-action letters issued to third parties unrelated to us, we believe that the new notes may be offered for sale, resold or otherwise transferred by you without compliance with the registration and prospectus delivery requirements of the Securities Act, provided that you can make the representations that appear above under “— ~~Procedures for Participating in the Exchange Offer.~~Certain Representations.” Any holder of old notes who cannot make these representations may not rely on the staff’s interpretations discussed above or participate in the ~~exchange offer~~Exchange Offers and must comply with the registration and


		prospectus delivery requirements of the Securities Act in order to resell the old notes.

		If you are a broker-dealer that will receive new notes for your own account in exchange for old notes that were acquired as a result of market-making or other trading activities, you must represent and agree in the letter of transmittal that you will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of the new notes. Such a broker-dealer may use this prospectus to resell the new notes. We have agreed ~~that~~to allow participating broker-dealers to use this prospectus in connection with the resale of the new notes, subject to RAI’s and the guarantors’ right to suspend use of the prospectus under the conditions described in “The Exchange Offers—Shelf Registration.” RAI and the guarantors have also agreed to amend or supplement this prospectus for a period ending upon the earlier of ~~up to~~(1) 180 days after the ~~registration statement~~completion of ~~which this~~the Exchange Offers and (2) the first day after the completion of the Exchange Offers when participating broker-dealers no longer have a prospectus ~~is a part is declared effective, we will make this prospectus, as amended~~delivery obligation, if requested by one or ~~supplemented, available~~more participating broker-dealers, in order to expedite or facilitate the disposition of any ~~such broker-dealer that requests copies~~new note by participating broker-dealers consistent with the positions of ~~this prospectus in~~ the ~~letter of transmittal for use in connection with any such resale.~~

		SEC staff described herein. The SEC has not considered ~~this exchange offer~~the Exchange Offers in the context of a no-action letter, and we cannot be sure that the staff of the SEC would make a similar determination with respect to ~~this exchange offer~~the Exchange Offers as it did in the no-action letters to the unrelated persons upon which we are relying. See “The Exchange ~~Offer —~~ Offers—Resale of the New Notes.”



~~Expiration~~ Withdrawal		The exchange offer will expire at 5:00 p.m., New York City time, on , 2006, or a later date and time to which RAI extends it. RAI does not currently intend to extend the expiration date, although we reserve the right to do so. See “The Exchange Offer — Expiration Date; Extensions; Amendment; Termination.”

~~Withdrawal~~		You may withdraw your tender of old notes pursuant to the ~~exchange offer~~Exchange Offers at any time prior to the expiration of the ~~exchange offer~~Exchange Offers by complying with the procedures for withdrawal described in “The Exchange ~~Offer —~~ Offers—Withdrawal of Tenders.”

~~Condition~~ Minimum Tender Amounts		Each series of old notes may be tendered only in minimum principal amounts equal to minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. See “The Exchange Offers—Terms of the Exchange ~~Offer~~Offers.”

Delivery of the New Notes		The new notes issued in exchange ~~offer is subject to~~for old notes will be delivered promptly following the ~~condition that it does not violate applicable law or any applicable interpretation~~expiration of the ~~staff~~Exchange Offers.

Conditions of the ~~SEC.~~ Exchange Offers		The ~~exchange offer is~~Exchange Offers are not conditioned upon any minimum principal amount of old notes being tendered for exchange. The Exchange Offers are subject to certain conditions. See “The Exchange ~~Offer — Condition.~~Offers—Conditions.”

~~Special Procedures for Beneficial Owners~~		If you are a beneficial owner of old notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, and you wish to tender those old notes in the exchange offer, you should contact the registered holder promptly and instruct the registered holder to tender those old notes on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your old notes, either make appropriate arrangements to register ownership of the old notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time and may not be able to be completed prior to the expiration of the exchange offer. See “The Exchange Offer — Procedures for Tendering Old Notes.”


Guaranteed Delivery Procedures		If you wish to tender your old notes and your old notes are not immediately available or you cannot deliver your old notes, the applicable letter of transmittal or any other required documents, or you cannot comply with the procedures for transfer of book-entry interests prior to the expiration of the ~~exchange offer,~~Exchange Offers, you may tender your old notes according to the guaranteed delivery procedures set forth in this prospectus under “The Exchange ~~Offer —~~ Offers—Guaranteed Delivery Procedures.”

Acceptance of Old Notes and Delivery of New Notes		Subject to the satisfaction or waiver of the ~~condition~~conditions to the ~~exchange offer~~Exchange Offers as discussed above, RAI will accept for exchange any and all old notes validly tendered and not properly withdrawn prior to the expiration of the ~~exchange offer.~~Exchange Offers. The new notes issued pursuant to the ~~exchange offer~~Exchange Offers will be issued and delivered promptly following the expiration of the ~~exchange offer.~~Exchange Offers. We will return to you any old notes not accepted for exchange for any reason without expense to you promptly after the expiration of the ~~exchange offer.~~Exchange Offer. See “The Exchange ~~Offer —~~ Offers—Acceptance of Tendered Old Notes.”

Federal Income Tax Considerations		The exchange of old notes for new notes in the ~~exchange offer~~Exchange Offers will not be a taxable event for U.S. federal income tax purposes. See “Material U.S. Federal Income Tax Consequences.”

Consequences of Not Exchanging Old Notes		If you are eligible to participate in the ~~exchange offer~~Exchange Offers and you do not tender your old notes, or your tendered old notes are not accepted for exchange, following the completion of the ~~exchange offer~~Exchange Offers your old notes will remain outstanding and continue to accrue interest in accordance with their terms, but will not retain any rights under the ~~applicable~~ registration rights agreement and will continue to be



		subject to the existing restrictions on transfer. In general, the old notes may not be offered or sold unless registered under the Securities Act, or pursuant to an exemption from the registration requirements of, or in a transaction not subject to, the Securities Act. Except under limited circumstances as described in “The Exchange ~~Offer —~~ Offers—Shelf Registration,” upon completion of the ~~exchange offer,~~Exchange Offers, RAI will have no further obligation to provide for the registration under the Securities Act of the old notes. In addition, the trading market for the old notes will become more limited to the extent holders of old notes participate in the ~~exchange offer.~~Exchange Offers.

Use of Proceeds		We will not receive any cash proceeds from the ~~exchange offer.~~Exchange Offers. We will bear the expenses of the ~~exchange offer. We used the net proceeds of the sale of the Category A old notes to help finance the Conwood acquisition.~~Exchange Offers.

Exchange Agent		The Bank of New York Mellon Trust Company, N.A. is serving as exchange agent for the ~~exchange offer.~~Exchange Offers. The address and the facsimile and telephone numbers of the exchange agent are provided in this prospectus under “The Exchange ~~Offer —~~ Offers—Exchange Agent” and in the letter of transmittal.


Issuer		Reynolds American Inc.

Notes Offered		The new notes will be the direct obligations of RAI and will consist of up to:

		• ~~$236,449,000~~$414,793,000 initial principal amount of new ~~6.500%~~3.500% Senior ~~Secured~~ Notes due ~~2007, which mature on June 1, 2007;~~

		2016; • ~~$185,731,000~~$447,092,000 initial principal amount of new ~~7.875%~~2.300% Senior ~~Secured~~ Notes due ~~2009, which mature on May 15, 2009;~~

		2017; • ~~$299,265,000~~$668,689,000 initial principal amount of new ~~6.500%~~8.125% Senior ~~Secured~~ Notes due ~~2010, which mature on July 15, 2010;~~

		2019; • ~~$367,927,000~~$641,462,000 initial principal amount of new ~~7.250%~~6.875% Senior ~~Secured~~ Notes due ~~2012, which mature on June 1, 2012;~~

		2020; • ~~$625,000,000~~$473,689,000 initial principal amount of new ~~7.250%~~3.750% Senior ~~Secured~~ Notes due ~~2013, which mature on June 1, 2013;~~

		2023; • ~~$199,445,000~~$236,748,000 initial principal amount of new ~~7.300%~~8.125% Senior ~~Secured~~ Notes due ~~2015, which mature on July 15, 2015;~~

		2040; and • ~~$775,000,000~~$240,197,000 initial principal amount of new ~~7.625%~~7.000% Senior ~~Secured~~ Notes due ~~2016, which mature on June 1, 2016; and~~

		~~• $250,000,000 initial principal amount of new 7.750% Senior Secured Notes due 2018, which mature on June 1, 2018.~~

~~Form and Terms of New Notes~~		2041. The form and terms of each series of new notes will be ~~substantially~~ the same as the form and terms of the corresponding series of old notes, except that the offer and sale of the new notes have been registered under the Securities Act and the new notes will not have transfer restrictions, registration rights or certain rights to additional interest that the old notes have. The new notes will be issued under the ~~indenture dated May 31, 2006, among~~ RAI ~~The Bank of New York Trust Company, N.A., as trustee, and the guarantors party thereto, referred to as the 2006~~ indenture, ~~which is~~ the indenture under which the old notes were issued. See “Description of the New Notes” for a full description of the new notes.

Maturity and Interest ~~Payment Dates~~		Each series of new notes to be issued in the Exchange Offers will have the same interest rate provisions, maturity dates and interest payment dates as the corresponding series of old notes for which they are being offered in exchange.

		Generally, each series of new ~~note~~notes will bear interest from the most recent interest payment date on which interest has been paid on the corresponding series of old ~~note.~~notes and such interest will be paid on the next interest payment date for such series of new notes succeeding the settlement of the Exchange Offers. If no interest has been paid on an old note, then the corresponding new note will bear interest from ~~May 31, 2006, in the case of Category A old notes, or from~~ the most recent date on which interest was paid on the ~~RJR~~Lorillard Tobacco note tendered in exchange for ~~a Category B~~an old ~~note, in the case of Category B old notes.~~note. Generally, holders of old notes ~~that~~whose old notes are accepted for exchange will be deemed to have waived the right to receive any payment ~~in respect~~ of interest accrued from the date of the last interest payment ~~date~~ in respect of their old notes until the settlement of the Exchange Offers.


		Interest Rates and Maturity Dates		Interest Payment Dates

		3.500% Senior Notes due August 4, 2016 2.300% Senior Notes due August 21, 2017 8.125% Senior Notes due June 23, 2019 6.875% Senior Notes due May 1, 2020 3.750% Senior Notes due May 20, 2023 8.125% Senior Notes due May 1, 2040 7.000% Senior Notes due August 4, 2041		February 4 and August 4 February 21 and August 21 June 23 and December 23 May 1 and November 1 May 20 and November 20 May 1 and November 1 February 4 and August 4


		~~notes until~~See “Description of New Notes—Maturity and Interest.”

Interest Rate Adjustment on the ~~date of~~2019 New Notes		The interest rate on the ~~issuance of the new notes. Consequently, holders of~~2019 new notes will ~~receive~~be subject to adjustment for certain credit rating agency activity as described under “Description of New Notes—Interest Rate Adjustment on the ~~same interest payments that they would have received had they not exchanged their old notes in the exchange offer.~~

		2019 New Notes.”
~~New Notes Series~~		~~Annual Interest Payment Dates~~

~~6.500% Senior Secured Notes due 2007~~		~~June 1 and December 1~~
~~7.875% Senior Secured Notes due 2009~~		~~May 15 and November 15~~
~~6.500% Senior Secured Notes due 2010~~		~~January 15 and July 15~~
~~7.250% Senior Secured Notes due 2012~~		~~June 1 and December 1~~
~~7.250% Senior Secured Notes due 2013~~		~~June 1 and December 1~~
~~7.300% Senior Secured Notes due 2015~~		~~January 15 and July 15~~
~~7.625% Senior Secured Notes due 2016~~		~~June 1 and December 1~~
~~7.750% Senior Secured Notes due 2018~~		~~June 1 and December 1~~


Guarantees		Upon issuance, payment of principal and interest on the new notes will be jointly, severally, fully and unconditionally guaranteed on a senior unsecured basis by certain direct and indirect domestic subsidiaries of RAI, including RAI’s material domestic subsidiaries. These same entities guarantee RAI obligations under its existing notes in the current aggregate outstanding principal amount of approximately $17.2 billion and any RAI obligations under its revolving credit facility (under which there are no outstanding borrowings, and $8 million of letters of credit outstanding as of the date hereof). Each subsidiary of RAI that, in the future, guarantees RAI’s obligations under its revolving credit ~~facilities~~facility (or any replacement or refinancing thereof) will guarantee RAI’s obligations under the ~~new notes. RAI’s subsidiaries that will guarantee~~debt securities issued under the RAI indenture, including the new notes ~~are Conwood Company, Conwood Holdings, Conwood Sales Co., FHS, GMB, Lane, RJR Acquisition, RJR Packaging, GPI, RJR Tobacco Co., RJR Tobacco, RJR, Rosswil, Santa Fe~~offered hereby and ~~Scott Tobacco.~~RAI’s existing notes. Any guarantor that is released from its guarantee under ~~the~~RAI’s revolving credit ~~facilities~~facility (or any replacement or refinancing thereof) also will be released automatically ~~released~~ from its guarantee of the debt securities issued under the RAI indenture, including the new notes offered hereby and RAI’s existing notes. See “Description of the New ~~Notes —~~ Notes—The Guarantees.”

~~Security~~		Upon issuance, the new notes and the related guarantees will be secured by any principal property (as defined in the 2006 indenture) of RAI and the guarantors, as and to the extent described herein, and the stock, indebtedness or other obligations of RJR Tobacco. These assets also constitute a portion of the security for the obligations of RAI and the guarantors under RAI’s credit facilities (which are secured by substantially all the assets of these entities). If these assets are no longer pledged as security for the obligations of RAI and the guarantors under RAI’s credit facilities (or any other indebtedness) for any reason, generally, they will automatically be released as security for the notes and the guarantees. Under the terms of RAI’s credit facilities, generally, the security therefor will be automatically released at such time, if any, as the term loan is paid in full and RAI obtains investment grade corporate ratings (with not worse than stable outlooks) from each of Moody’s


Ranking		Investors Service, Inc., referred to as Moody’s, and Standard & Poor’s, a division of the McGraw Hill Companies, Inc., referred to as S&P. In addition, whether or not there is any change in the rating of RAI or any debt of RAI, the lenders under the credit facilities have the right, at any time, in their sole discretion, to instruct the collateral agent thereunder to release all or any portion of the security for both such credit facilities and the notes without obtaining any consent or approval from any holders of the notes. See “Description of the New Notes — Security for the New Notes and the Guarantees.”

~~Ranking~~		~~Upon issuance, RAI’s obligations under the new notes will be guaranteed by certain of its direct and indirect domestic subsidiaries, including its material domestic subsidiaries.~~ The new notes will be the ~~direct,~~ senior ~~secured~~unsecured obligations of RAI and will:

		• rank equally in right of payment with RAI’s existing and future senior obligations, ~~and, while secured, equally in right of security and priority with RAI’s existing and future senior obligations that are secured by the same assets. As of June 30, 2006, not~~ including RAI’s guarantee of the obligations of RJR Tobacco (as successor to Lorillard Tobacco) under the Lorillard Tobacco notes that were not exchanged for the old notes in the private exchange offers. As of September 30, 2015, RAI had senior obligations ~~of $5.185 billion~~ (including current liabilities and excluding long-term retirement benefits and intercompany obligations)~~. Of these obligations, $1.575 billion are secured by a first priority security interest in substantially all the assets~~ of RAI; the notes, in the aggregate principal amount of $2.939 billion, are secured by a first priority security interest in only a portion of these same assets; and $671 million are unsecured. In addition, as of June 30, 2006, RAI had obligations of $161 million related to its guarantee of RJR’s obligations under the RJR notes;approximately $18.4 billion;


		• rank senior in right of payment to any existing and future obligations from time to time of RAI that are, by their terms, expressly subordinated in right of payment to the new notes. As of ~~June~~September 30, ~~2006,~~2015, RAI had no such expressly subordinated obligations;


		• be structurally subordinated to the obligations of any non-guarantor subsidiaries of RAI. As of ~~June~~September 30, ~~2006,~~2015, RAI’s non-guarantor subsidiaries had obligations (including current liabilities and excluding long-term retirement benefits and intercompany obligations) of ~~$98~~approximately $14 million; and


		• be effectively subordinated to ~~RAI’s obligations under its credit facilities and~~all of our future secured indebtedness, if any, ~~future obligations of RAI~~ to the extent of the value of ~~those~~the assets securing ~~the credit facilities and such future obligations~~ that ~~do not secure the notes.~~indebtedness. As of ~~June~~September 30, ~~2006,~~2015, RAI had ~~$1.575 billion of indebtedness (consisting of borrowings and letters of credit issued under RAI’s credit facilities)~~no such secured by substantially all the assets of RAI. Only a portion of these same assets secures the notes, in the aggregate principal amount of $2.939 billion. In addition, as of June 30, 2006, RAI had $525 million of availability under its revolver, all of which, if borrowed, would be secured by substantially all the assets of RAI.obligations.


		Similarly, the guarantees related to the new notes will be the senior ~~secured~~unsecured obligations of the guarantors and will:

		• rank equally in right of payment with the existing and future senior obligations of the guarantors, including, in the case of RJR Tobacco (as successor to Lorillard Tobacco), the Lorillard Tobacco notes that were not exchanged for the old notes in the private exchange offers, and ~~while secured, equally~~ in ~~right~~the case of ~~security and priority with~~RJR (as successor guarantor to Lorillard), its guarantee of the ~~guarantors’ other existing and future senior obligations that are secured by the same assets.~~unexchanged Lorillard Tobacco notes. As of ~~June 30, 2006 (after giving effect to certain transactions that occurred effective~~ September 30, ~~2006, relating to intercompany obligations that existed on June 30, 2006),~~2015, the guarantors had senior obligations ~~of $11.823 billion~~ (including ~~the RJR notes, tobacco settlement~~guaranteed RAI debt obligations, and ~~related accruals and current liabilities~~excluding long-term retirement benefits, deferred income taxes and intercompany obligations)~~. Of these obligations, $1.575 billion are secured by a first priority security interest in substantially all the assets~~ of the guarantors; the notes, in the aggregate principal amount of $2.939 billion, are secured by a first priority security interest in only a portion of these same assets of the guarantors; and $7.309 billion are unsecured;

		approximately $21.7 billion; • rank senior in right of payment to any existing and future ~~subordinated~~ obligations from time to time of the guarantors that are, by their terms, expressly subordinated in right of payment to the new notes. As of ~~June~~September 30, ~~2006,~~2015, the guarantors ~~did not have any obligations that were~~had no such expressly subordinated ~~to their guarantees of the notes;~~

		obligations; • be structurally subordinated to ~~all of~~ the obligations of any non-guarantor subsidiaries of the ~~guarantors. As of June 30, 2006, the guarantors’ non-guarantor subsidiaries had obligations of $98 million;~~guarantors; and

		• be effectively subordinated to ~~their guarantees~~all of ~~RAI’s current and~~the guarantors’ future ~~obligations under the credit facilities and~~secured indebtedness, if any, ~~future additional obligations of RAI~~ to the extent of the value of ~~those~~the assets securing ~~the guarantees of the credit facilities and such other future obligations~~ that ~~do not secure the guarantees of the notes.~~indebtedness. As of ~~June~~September 30, ~~2006,~~2015, the guarantors had ~~$1.575 billion of indebtedness (consisting of their guarantees of borrowings and letters of credit issued under RAI’s credit facilities)~~no such secured by substantially all their assets. The notes, in the aggregate principal amount of $2.939 billion, and related guarantees are secured by only a portion of these assets. In addition, as of June 30, 2006, RAI had $525 million of availability under its revolver, all of which, if borrowed, would be secured by substantially all the assets of the guarantors.

		obligations. See “Description of the New ~~Notes —~~ Notes—Ranking.”

Change of Control Repurchase Event		Upon a change of control, as defined in the new notes, of RAI that is accompanied or followed by a downgrading by each of Moody’s and S&P from an investment grade rating to a non-investment grade rating of any series of new notes within a specified period after public notice of an arrangement that could result in a change of



		control, RAI is required to offer to purchase such series of new notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the date of repurchase. See “Description of New Notes—Change of Control Repurchase Event.”

~~Redemption~~ Registration Rights		In connection with the private exchange offers, RAI, the guarantors of the old notes and the dealer managers for the private exchange offers entered into a registration rights agreement for the benefit of the holders of the old notes obligating RAI and such guarantors to use their reasonable best efforts to file a registration statement with the SEC so that holders of the old notes (and related guarantees) can exchange such unregistered notes for SEC-registered RAI notes (referred to in this prospectus as the “new notes”) having substantially similar terms as the applicable series of unregistered old notes (and related guarantees) and evidencing the same indebtedness as the applicable series of unregistered old notes (and related guarantees). RAI also agreed to file a shelf registration statement for the resale of the old notes (and related guarantees) if RAI cannot complete the Exchange Offers within the time period listed below and in certain other circumstances. See “The Exchange Offers—Shelf Registration.” In the event the Exchange Offers for new notes are not completed within 210 days after the issue date of the old notes, or in the event RAI does not comply with certain of its other obligations under the registration rights agreement, holders of the old notes will be entitled to additional interest on the old notes as described in “The Exchange Offers—Shelf Registration.”

Redemption		At our option, ~~and subject to certain restrictions under our credit facilities,~~ we may redeem any series of new notes, other than the 2023 new notes, in whole at any time or in part from time to time, at any time after their issuance, at a redemption price equal to the greater ~~of (1)~~of: • 100% of the principal amount of the applicable series of new notes being redeemed, and ~~(2)~~ • the sum of the present values of the remaining scheduled payments of principal and interest on the applicable series of new notes being redeemed discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a yield equal to (1) the applicable Treasury Rate (as defined herein), plus (2) 10 basis points, plus accrued and unpaid interest on the principal amount of the series of new notes being redeemed to the redemption date. At our option, we may redeem the 2023 new notes, in whole at any time or in part from time to time, at any time after their issuance and prior to February 20, 2023, at a redemption price equal to the greater of: • 100% of the principal amount of the 2023 new notes being redeemed, and



		• the sum of the present values of the remaining scheduled payments of principal and interest on the 2023 new notes being redeemed discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a yield equal to (1) the applicable Treasury Rate, plus (2) 10 basis points, plus accrued and unpaid interest on the principal amount of the 2023 new notes being redeemed to the redemption date. In addition, on and after February 20, 2023, the 2023 new notes are redeemable at our option, at any time or from time to time, either in whole or in part, at a ~~“make-whole” premium, as described under~~redemption price equal to 100% of the ~~heading~~principal amount of the 2023 new notes being redeemed, plus accrued and unpaid interest on such principal amount to the redemption date. See “Description of the New ~~Notes —~~ Notes—Optional Redemption.”

Covenants		We will issue the new notes under the ~~2006~~RAI indenture, which contains covenants that, ~~will,~~ with certain exceptions, restrict the ability of RAI and certain of its subsidiaries to:

		• mortgage or pledge certain of their assets to secure indebtedness;

		• engage in sale/leaseback transactions; or

		• consolidate, merge or transfer all or substantially all of their property and assets.

Governing Law		The RAI indenture and the new notes will be governed by and construed in accordance with the laws of the State of New York.

Trustee		The trustee for the RAI indenture is The Bank of New York Mellon Trust Company, N.A.

Risk Factors		See “Risk Factors” for a discussion of some of the risks you should carefully consider, along with the other information in this prospectus, before deciding to participate in the ~~exchange offer.~~Exchange Offers.

Absence of Market for the New Notes		The new notes generally will be fully transferable but will be new securities for which there is no existing trading market. We do not intend to apply for listing of the new notes on any securities exchange or to arrange for any quotation system to quote them. An active trading market for the new notes may not develop, or if it does, it may not be liquid or it may not continue.


	•	~~RJR through July 30, 2004;~~

	•	~~RAI and the acquired operations of B&W and Lane subsequent to July 30, 2004; and~~

	•	~~Conwood subsequent to May 31, 2006.~~


	For the Year Ended December 31,															For the Nine Months Ended September 30,
	2010			2011			2012			2013			2014			2014			2015
																(Unaudited)
Results of Operations:
Net sales (1)	$	8,551		$	8,541		$	8,304		$	8,236		$	8,471		$	6,337		$	7,621
Cost of products sold (1)(2)(3)(4)		4,544			4,464			4,321			3,678			4,058			2,923			3,338
Selling, general and administrative expenses		1,480			1,606			1,470			1,389			1,871			1,168			1,415
Gain on divestiture		—			—			—			—			—			—			(3,506	)
Amortization expense		25			24			21			5			11			8			12
Asset impairment and exit charges		38			—			—			—			—			—			99
Trademark and other intangible asset impairment charges		6			48			129			32			—			—			—
Goodwill impairment charges		26			—			—			—			—			—			—
Restructuring charge		—			—			149			—			—			—			—

Operating income		2,432			2,399			2,214			3,132			2,531			2,238			6,263
Interest and debt expense		232			221			234			259			286			197			385
Interest income		(12	)		(11	)		(7	)		(5	)		(3	)		(3	)		(4	)
Other (income) expense, net		7			3			34			137			(14	)		(9	)		8

Income from continuing operations before income taxes		2,205			2,186			1,953			2,741			2,262			2,053			5,874
Provision for income taxes		868			780			681			1,023			817			756			2,900

Income from continuing operations		1,337			1,406			1,272			1,718			1,445			1,297			2,974
Income (losses) from discontinued operations, net of tax		(216	)		—			—			—			25			25			—

Net income	$	1,121		$	1,406		$	1,272		$	1,718		$	1,470		$	1,322			2,974


	As of December 31,										As of September 30,
	2010		2011		2012		2013		2014		2014		2015
											(Unaudited)
Balance Sheet Data:
Cash and cash equivalents and short-term investments	$	2,195	$	1,956	$	2,502	$	1,500	$	966	$	1,289	$	2,920
Total current assets		4,802		4,307		4,812		3,655		3,323		3,456		6,423
Property, plant and equipment, net		1,002		1,070		1,037		1,074		1,203		1,198		1,218
Trademarks and other intangibles, net		2,675		2,602		2,455		2,417		2,421		2,424		29,473
Goodwill		8,010		8,010		8,011		8,011		8,016		8,017		16,223
Total assets		17,078		16,254		16,557		15,402		15,196		15,332		53,774
Tobacco settlement and related accruals		2,589		2,530		2,489		1,727		1,819		1,703		2,687
Current maturities of long-term debt		400		457		60		—		450		—		958
Total current liabilities		4,372		4,276		3,769		3,076		3,544		3,286		5,678
Long-term debt, less current maturities		3,701		3,206		5,035		5,099		4,633		5,087		16,972
Total liabilities		10,568		10,003		11,300		10,235		10,674		10,339		35,297
Shareholders’ equity		6,510		6,251		5,257		5,167		4,522		4,993		18,477


	Year Ended December 31,															Nine Months Ended September 30,
	2010			2011			2012			2013			2014			2014			2015
																(Unaudited)
Cash Flow Data:
Net cash from operating activities	$	1,265		$	1,420		$	1,568		$	1,308		$	1,623		$	1,124		$	(469	)
Net cash from (used in) investing activities		(126	)		60			(54	)		(113	)		(205	)		(175	)		(10,043	)
Net cash used in financing activities		(1,349	)		(1,714	)		(971	)		(2,207	)		(1,918	)		(1,135	)		12,488


	Year Ended December 31,												Six Months Ended June 30,

										2005									2006
	2003			2004			2005			Pro Forma			2005			2006			Pro Forma

										(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Results of Operations:
Net sales(1)	$	5,267		$	6,437		$	8,256		$	8,709		$	4,060		$	4,251		$	4,453
Cost of products sold(1)(2)		3,218			3,872			4,919			5,014			2,352			2,441			2,482
Selling, general and administrative expenses		1,327			1,455			1,611			1,714			776			734			779
Amortization expense		—			24			41			41			24			14			14
Fixture impairment		106			—			—			—			—			—			—
Restructuring and asset impairment charges		368			5			2			2			(1	)		—			—
Loss on sale of assets		—			—			24			24			25			—			—
Goodwill and trademark impairment charges		4,089			199			200			200			—			—			—
Operating income (loss)		(3,841	)		882			1,459			1,714			884			1,062			1,178
Interest and debt expense		111			85			113			357			50			87			188
Interest income		(29	)		(30	)		(85	)		(73	)		(30	)		(59	)		(54	)
Provision for (benefit from) income taxes		(229	)		202			431			431			325			390			394
Income (loss) from continuing operations		(3,689	)		627			985			984			532			647			653
Net income (loss)		(3,446	)		688			1,042			1,041			532			721			727


	Pro Forma Year Ended December 31, 2014			Pro Forma Nine Months Ended September 30, 2015
	(Unaudited)
Results of Operations:
Net sales	$	11,275		$	9,025
Cost of products sold		5,256			3,921
Selling, general and administrative expenses		2,140			1,502
Amortization expense		25			19
Asset impairment and exit chargers		—			99

Operating income		3,854			3,484
Interest and debt expense		761			567
Interest income		(10	)		(6	)
Other (income) expense, net		(14	)		8

Income from continuing operations before income taxes		3,117			2,915
Provision for income taxes		1,145			1,100

Income from continuing operations		1,972			1,815
Income from discontinued operations, net of tax		25			—

Net income	$	1,997		$	1,815


		As of December 31,						As of June 30,

		2003		2004		2005		2005		2006

								(Unaudited)
Balance Sheet Data:
	Cash, cash equivalents and short-term investments	$	1,630	$	1,972	$	2,706	$	2,138	$	1,822
	Total current assets		3,331		4,624		5,065		4,490		4,083
	Property, plant and equipment, net		894		1,129		1,053		1,094		1,065
	Trademarks, net		1,759		2,403		2,188		2,395		2,182
	Goodwill, net		3,292		5,685		5,672		5,684		9,059
	Total assets		9,677		14,428		14,519		14,205		16,934
	Tobacco settlement and related accruals		1,629		2,381		2,254		1,463		1,499
	Current maturities of long term debt		56		50		190		555		314
	Total current liabilities		2,865		4,055		4,149		3,668		3,549
	Long-term debt, less current maturities		1,671		1,595		1,558		1,580		4,413
	Total liabilities		6,620		8,252		7,966		8,011		10,022
	Shareholders’ equity		3,057		6,176		6,553		6,194		6,912


											Six Months
		Year Ended December 31,									Ended June 30,

		2003			2004			2005			2005			2006

											(Unaudited)
Cash Flow Data:
	Net cash from (used in) operating activities	$	581		$	736		$	1,273			(40	)		103
	Net cash from (used in) investing activities(3)		641			260			(989	)		(224	)		(2,921	)
	Net cash (from) used in financing activities		(1,122	)		(467	)		(450	)		209			2,590