AMENDED AND RESTATED
                            ARTICLES OF INCORPORATION
                                       OF
                             REYNOLDS AMERICAN INC.
 
 
                                 ARTICLE FIRST
 
         The name of the corporation is Reynolds American Inc. (the
"Corporation").
 
                                 ARTICLE SECOND
 
         The address of the registered office of the Corporation in the State of
North Carolina is 401 North Main Street, Winston-Salem, Forsyth County, North
Carolina 27102-2990. The person who is the registered agent at such address is
Charles A. Blixt, Esq., General Counsel.
 
                                 ARTICLE THIRD
 
         The name and address of the incorporator is Scott J. Reiners, Jones
Day, 222 East 41st Street, New York, NY 10017.
 
                                 ARTICLE FOURTH
 
         The address of the Corporation's principal office is 401 North Main
Street, Winston-Salem, Forsyth County, North Carolina 27102-2990.
 
                                 ARTICLE FIFTH
 
         The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the North Carolina
Business Corporation Act ("NCBCA") as the same exists or may hereafter be
amended; provided, however, that the Corporation shall not engage, directly or
indirectly, in any act or activity that it or its subsidiaries would be
prohibited to engage in pursuant to the terms of any covenant then running to
British American Tobacco p.l.c. ("PLC") or its affiliates or agreement with PLC
or its affiliates regarding non-competition by which the Corporation or any of
its subsidiaries is bound as in effect as of July 30, 2004 unless such act or
activity is approved by PLC, which approval may be given before or after the
occurrence of such act or activity. If any such covenant or agreement is held to
be unenforceable in whole or in part by a court of competent jurisdiction, it is
nevertheless the intent of the Corporation that the corporate purpose under this
ARTICLE
 
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FIFTH would exclude taking the actions covered by such covenant or agreement
(without operating as a legal restriction on the Corporation).
 
                                 ARTICLE SIXTH
 
         The total number of shares of capital stock that the Corporation is
authorized to issue is 500,000,000 shares of which 400,000,000 shares are Common
Stock, par value $.0001 each ("Common Stock"), and 100,000,000 shares are
Preferred Stock, par value $.01 each ("Preferred Stock"). The Corporation may
issue the Preferred Stock from time to time in one or more series with such
distinctive designations as may be stated in the resolution or resolutions
providing for the issue of such stock from time to time adopted by the Board of
Directors, after which the Corporation shall amend these Articles of
Incorporation to the extent required by the NCBCA. The resolution or resolutions
providing for the issue of shares of a particular series shall fix, subject to
applicable laws and the provisions of this ARTICLE SIXTH, for each such series
the number of shares constituting such series and the designations and powers,
preferences and relative participating, optional or other special rights and
qualifications, limitations or restrictions thereof, including, without limiting
the generality of the foregoing, such provisions as may be desired concerning
voting, redemption, dividends, dissolution or the distribution of assets,
conversion or exchange, and such other subjects or matters as may be fixed by
resolution or resolutions of the Board of Directors or a duly authorized
committee thereof in accordance with applicable law.
 
         Holders of the Common Stock are entitled to the entire voting power and
all net assets of the Corporation upon dissolution, subject to the rights and
preferences, if any, of the holders of Preferred Stock to such voting power and
assets upon dissolution pursuant to applicable law, these Articles of
Incorporation and the resolution or resolutions of the Board of Directors
providing for the issue of one or more series of Preferred Stock.
 
         The following is a statement of the number, designation, powers,
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions of the Series A Junior Participating
Preferred Stock (the "Series A Preferred Stock") of the Corporation:
 
         (1) Designation and Number of Shares. The shares of such series shall
be designated as "Series A Junior Participating
 
                                       2
<PAGE>
 
Preferred Stock, par value $0.01 per share", and the number of shares
constituting such series shall be 4,000,000. Such number of shares of the Series
A Preferred Stock may be increased or decreased by resolution of the Board of
Directors; provided that no decrease shall reduce the number of shares of Series
A Preferred Stock to a number less than the number of shares then outstanding
plus the number of shares issuable upon exercise or conversion of outstanding
rights, options or other securities issued by the Corporation.
 
         (2) Dividends and Distributions.
 
                  (a)      The holders of shares of Series A Preferred Stock
                           shall be entitled to receive, when, as and if
                           declared by the Board of Directors out of funds
                           legally available for the purpose, quarterly
                           dividends payable on January 1, April 1, July 1 and
                           October 1 of each year (each such date being referred
                           to herein as a "Quarterly Dividend Payment Date"),
                           commencing on the first Quarterly Dividend Payment
                           Date after the first issuance of any share or
                           fraction of a share of Series A Preferred Stock, in
                           an amount per share (rounded to the nearest cent)
                           equal to the greater of (i) $1.00 and (ii) subject to
                           the provision for adjustment hereinafter set forth,
                           100 times the aggregate per share amount of all cash
                           dividends or other distributions and 100 times the
                           aggregate per share amount of all non-cash dividends
                           or other distributions (other than (A) a dividend
                           payable in shares of Common Stock or (B) a
                           subdivision of the outstanding shares of Common Stock
                           (by reclassification or otherwise)) declared on the
                           Common Stock since the immediately preceding
                           Quarterly Dividend Payment Date, or, with respect to
                           the first Quarterly Dividend Payment Date, since the
                           first issuance of any share or fraction of a share of
                           Series A Preferred Stock. If the Corporation shall at
                           any time after July 30, 2004 (the "Rights Declaration
                           Date") pay any dividend on Common Stock payable in
                           shares of Common Stock or effect a subdivision or
                           combination of the outstanding shares of Common Stock
                           (by reclassification or otherwise) into a greater or
                           lesser number of shares of Common Stock, then in each
                           such case the amount to which holders of shares of
                           Series A Preferred
 
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<PAGE>
 
                           Stock were entitled immediately prior to such event
                           under clause 2(a)(ii) of the preceding sentence shall
                           be adjusted by multiplying such amount by a fraction
                           the numerator of which is the number of shares of
                           Common Stock outstanding immediately after such event
                           and the denominator of which is the number of shares
                           of Common Stock that were outstanding immediately
                           prior to such event.
 
                  (b)      The Corporation shall declare a dividend or
                           distribution on the Series A Preferred Stock as
                           provided in paragraph 2(a) above immediately after it
                           declares a dividend or distribution on the Common
                           Stock (other than as described in clauses 2(a)(ii)(A)
                           and 2(a)(ii)(B) above); provided that if no dividend
                           or distribution shall have been declared on the
                           Common Stock during the period between any Quarterly
                           Dividend Payment Date and the next subsequent
                           Quarterly Dividend Payment Date (or, with respect to
                           the first Quarterly Dividend Payment Date, the period
                           between the first issuance of any share or fraction
                           of a share of Series A Preferred Stock and such first
                           Quarterly Dividend Payment Date), a dividend of $1.00
                           per share on the Series A Preferred Stock shall
                           nevertheless be payable on such subsequent Quarterly
                           Dividend Payment Date.
 
                  (c)      Dividends shall begin to accrue and be cumulative on
                           outstanding shares of Series A Preferred Stock from
                           the Quarterly Dividend Payment Date next preceding
                           the date of issue of such shares of Series A
                           Preferred Stock, unless the date of issue of such
                           shares is on or before the record date for the first
                           Quarterly Dividend Payment Date, in which case
                           dividends on such shares shall begin to accrue and be
                           cumulative from the date of issue of such shares, or
                           unless the date of issue is a date after the record
                           date for the determination of holders of shares of
                           Series A Preferred Stock entitled to receive a
                           quarterly dividend and on or before such Quarterly
                           Dividend Payment Date, in which case dividends shall
                           begin to accrue and be cumulative from such Quarterly
                           Dividend Payment Date. Accrued but unpaid dividends
                           shall not bear interest. Dividends
 
                                       4
<PAGE>
 
                           paid on shares of Series A Preferred Stock in an
                           amount less than the total amount of such dividends
                           at the time accrued and payable on such shares shall
                           be allocated pro rata on a share-by-share basis among
                           all such shares at the time outstanding. The Board of
                           Directors may fix a record date for the determination
                           of holders of shares of Series A Preferred Stock
                           entitled to receive payment of a dividend or
                           distribution declared thereon, which record date
                           shall not be more than 60 days prior to the date
                           fixed for the payment thereof.
 
         (3) Voting Rights. In addition to any other voting rights required by
law, the holders of shares of Series A Preferred Stock shall have the following
voting rights:
 
                  (a)      Subject to the provision for adjustment hereinafter
                           set forth, each share of Series A Preferred Stock
                           shall entitle the holder thereof to 100 votes on all
                           matters submitted to a vote of shareholders of the
                           Corporation. If the Corporation shall at any time
                           after the Rights Declaration Date pay any dividend on
                           Common Stock payable in shares of Common Stock or
                           effect a subdivision or combination of the
                           outstanding shares of Common Stock (by
                           reclassification or otherwise) into a greater or
                           lesser number of shares of Common Stock, then in each
                           such case the number of votes per share to which
                           holders of shares of Series A Preferred Stock were
                           entitled immediately prior to such event shall be
                           adjusted by multiplying such number by a fraction the
                           numerator of which is the number of shares of Common
                           Stock outstanding immediately after such event and
                           the denominator of which is the number of shares of
                           Common Stock that were outstanding immediately prior
                           to such event.
 
                  (b)      Except as otherwise provided herein or by law, the
                           holders of shares of Series A Preferred Stock (and
                           any other class of Preferred Stock having the right
                           to vote together as a single class with holders of
                           shares of Common Stock) shall vote together as a
                           single class with the holders of shares of Common
                           Stock on all matters submitted to a vote of
                           shareholders of the Corporation.
 
                                       5
<PAGE>
 
                  (c)      (i)      If at any time dividends on any Series A
                                    Preferred Stock shall be in arrears in an
                                    amount equal to six quarterly dividends
                                    thereon, the occurrence of such contingency
                                    shall mark the beginning of a period (herein
                                    called a "default period") which shall
                                    extend until such time when all accrued and
                                    unpaid dividends for all previous quarterly
                                    dividend periods and for the current
                                    quarterly dividend period on all shares of
                                    Series A Preferred Stock then outstanding
                                    shall have been declared and paid or set
                                    apart for payment. During each default
                                    period, all holders of Series A Preferred
                                    Stock and any other series of Preferred
                                    Stock then entitled as a class to elect
                                    directors, voting together as a single
                                    class, irrespective of series, shall have
                                    the right to elect two Directors.
 
                           (ii)     During any default period, such voting right
                                    of the holders of Series A Preferred Stock
                                    may be exercised initially at a special
                                    meeting called pursuant to subparagraph
                                    3(c)(iii) hereof or at any annual meeting of
                                    shareholders, and thereafter at annual
                                    meetings of shareholders; provided that
                                    neither such voting right nor the right of
                                    the holders of any other series of Preferred
                                    Stock, if any, to increase, in certain
                                    cases, the authorized number of Directors
                                    shall be exercised unless the holders of 10%
                                    in number of shares of Preferred Stock
                                    outstanding shall be present in person or by
                                    proxy. The absence of a quorum of holders of
                                    Common Stock shall not affect the exercise
                                    by holders of Preferred Stock of such voting
                                    right. At any meeting at which holders of
                                    Preferred Stock shall exercise such voting
                                    right initially during an existing default
                                    period, they shall have the right, voting as
                                    a class, to elect Directors to fill such
                                    vacancies, if any, in the Board of Directors
                                    as may then exist up to two Directors or, if
                                    such right is exercised at an annual
                                    meeting, to elect
 
                                       6
<PAGE>
 
                                    two Directors. If the number which may be so
                                    elected at any special meeting does not
                                    amount to the required number, the holders
                                    of the Preferred Stock shall have the right
                                    to make such increase in the number of
                                    Directors as shall be necessary to permit
                                    the election by them of the required number.
                                    After the holders of the Preferred Stock
                                    shall have exercised their right to elect
                                    Directors in any default period and during
                                    the continuance of such period, the number
                                    of Directors shall not be increased or
                                    decreased except by vote of the holders of
                                    Preferred Stock as herein provided or
                                    pursuant to the rights of any equity
                                    securities ranking senior to or pari passu
                                    with the Series A Preferred Stock.
 
                           (iii)    Unless the holders of Preferred Stock shall,
                                    during an existing default period, have
                                    previously exercised their right to elect
                                    Directors, the Board of Directors may order,
                                    or any shareholder or shareholders owning in
                                    the aggregate not less than 10% of the total
                                    number of shares of Preferred Stock
                                    outstanding, irrespective of series, may
                                    request, the calling of a special meeting of
                                    holders of Preferred Stock, which meeting
                                    shall thereupon be called by the Chairman,
                                    the Chief Executive Officer, the President,
                                    any Vice President or the Secretary of the
                                    Corporation. Notice of such meeting and of
                                    any annual meeting at which holders of
                                    Preferred Stock are entitled to vote
                                    pursuant to this paragraph 3(c)(iii) shall
                                    be given to each holder of record of
                                    Preferred Stock by mailing a copy of such
                                    notice to him at his last address as the
                                    same appears on the books of the
                                    Corporation. Such meeting shall be called
                                    for a time not fewer than 10 days nor more
                                    than 60 days after such order or request or
                                    in default of the calling of such meeting
                                    within 60 days after such order or request,
                                    such meeting may be called on similar notice
                                    by any shareholder or shareholders owning in
                                    the aggregate not less than 10%
 
                                       7
<PAGE>
 
                                    of the total number of shares of Preferred
                                    Stock outstanding, irrespective of series.
                                    Notwithstanding the provisions of this
                                    paragraph 3(c)(iii), no such special meeting
                                    shall be called during the period within 60
                                    days immediately preceding the date fixed
                                    for the next annual meeting of shareholders.
 
                           (iv)     In any default period, (x) the Directors
                                    elected by the holders of Preferred Stock
                                    voting as a class shall continue in office
                                    until their successors shall have been
                                    elected by such holders or until the
                                    expiration of the default period, and (y)
                                    any vacancy in the Board of Directors may
                                    (except as provided in paragraph 3(c)(ii)
                                    hereof) be filled by vote of a majority of
                                    the remaining Directors theretofore elected
                                    by the holders of the class of stock which
                                    elected the Director whose office shall have
                                    become vacant. References in this paragraph
                                    3(c) to Directors elected by the holders of
                                    a particular class of stock shall include
                                    Directors elected by such Directors to fill
                                    vacancies as provided in clause (y) of the
                                    foregoing sentence.
 
                           (v)      Immediately upon the expiration of a default
                                    period, (x) the right of the holders of
                                    Preferred Stock as a class to elect
                                    Directors shall cease, (y) the term of any
                                    Directors elected by the holders of
                                    Preferred Stock as a class shall terminate,
                                    and (z) the number of Directors shall be
                                    such number as may be provided for in the
                                    Articles of Incorporation or Bylaws
                                    irrespective of any increase made pursuant
                                    to the provisions of paragraph 3(c)(ii)
                                    hereof (such number being subject, however,
                                    to change thereafter in any manner provided
                                    by law or in the Articles of Incorporation
                                    or Bylaws). Any vacancies in the Board of
                                    Directors effected by the provisions of
                                    clauses (y) and (z) in the preceding
                                    sentence may be filled by a majority of the
                                    remaining Directors.
 
                                       8
<PAGE>
 
                  (d)      The Articles of Incorporation of the Corporation
                           shall not be amended in any manner so as to adversely
                           affect the rights, preferences or limitations of the
                           Series A Preferred Stock without the affirmative vote
                           of the holders of a majority of the outstanding
                           shares of Series A Preferred Stock, voting separately
                           as a class.
 
                  (e)      Except as otherwise provided herein, holders of
                           Series A Preferred Stock shall have no special voting
                           rights, and their consent shall not be required for
                           taking any corporate action.
 
         (4) Certain Restrictions.
 
                  (a)      Whenever quarterly dividends or other dividends or
                           distributions payable on the Series A Preferred Stock
                           as provided in Section 2 are in arrears, thereafter
                           and until all accrued and unpaid dividends and
                           distributions, whether or not declared, on
                           outstanding shares of Series A Preferred Stock shall
                           have been paid in full, the Corporation shall not:
 
                           (i)      declare or pay dividends on, or make any
                                    other distributions on, any shares of stock
                                    ranking junior (either as to dividends or
                                    upon liquidation, dissolution or winding up)
                                    to the Series A Preferred Stock;
 
                           (ii)     declare or pay dividends on, or make any
                                    other distributions on, any shares of stock
                                    ranking on a parity (either as to dividends
                                    or upon liquidation, dissolution or winding
                                    up) with the Series A Preferred Stock,
                                    except dividends paid ratably on the Series
                                    A Preferred Stock and all such other parity
                                    stock on which dividends are payable or in
                                    arrears in proportion to the total amounts
                                    to which the holders of all such shares are
                                    then entitled;
 
                           (iii)    redeem, purchase or otherwise acquire for
                                    value any shares of stock ranking junior
                                    (either as to dividends or upon liquidation,
                                    dissolution or winding up) to the Series A
                                    Preferred Stock; provided that the
                                    Corporation may at any time redeem,
 
                                       9
<PAGE>
 
                                    purchase or otherwise acquire shares of any
                                    such junior stock in exchange for shares of
                                    stock of the Corporation ranking junior (as
                                    to dividends and upon dissolution,
                                    liquidation or winding up) to the Series A
                                    Preferred Stock; or
 
                           (iv)     redeem, purchase or otherwise acquire for
                                    value any shares of Series A Preferred
                                    Stock, or any shares of stock ranking on a
                                    parity (either as to dividends or upon
                                    liquidation, dissolution or winding up) with
                                    the Series A Preferred Stock, except in
                                    accordance with a purchase offer made in
                                    writing or by publication (as determined by
                                    the Board of Directors) to all holders of
                                    Series A Preferred Stock and all such other
                                    parity stock upon such terms as the Board of
                                    Directors, after consideration of the
                                    respective annual dividend rates and other
                                    relative rights and preferences of the
                                    respective series and classes, shall
                                    determine in good faith will result in fair
                                    and equitable treatment among the respective
                                    series or classes.
 
                  (b)      The Corporation shall not permit any subsidiary of
                           the Corporation to purchase or otherwise acquire for
                           value any shares of stock of the Corporation unless
                           the Corporation could, under paragraph 4(a), purchase
                           or otherwise acquire such shares at such time and in
                           such manner.
 
         (5) Reacquired Shares. Any shares of Series A Preferred Stock redeemed,
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock without designation as to series and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors as permitted by the Articles of Incorporation or as
otherwise permitted under North Carolina law.
 
         (6) Liquidation, Dissolution and Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (1)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation,
 
                                       10
<PAGE>
 
dissolution or winding up) to the Series A Preferred Stock unless, prior
thereto, the holders of shares of Series A Preferred Stock shall have received
$1.00 per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment;
provided that the holders of shares of Series A Preferred Stock shall be
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock, or (2) to the holders of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except distributions made ratably
on the Series A Preferred Stock and all such other parity stock in proportion to
the total amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. If the Corporation shall at any time
after the Rights Declaration Date pay any dividend on Common Stock payable in
shares of Common Stock or effect a subdivision or combination of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case the aggregate
amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
 
         (7) Consolidation, Merger, Etc. If the Corporation shall enter into any
consolidation, merger, share exchange, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash or any other property, then in any such case the shares of
Series A Preferred Stock shall at the same time be similarly exchanged for or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash or any other property, as the case may be, into which or for
which each share of Common Stock is changed or exchanged. If the Corporation
shall at any time after the Rights Declaration Date pay any dividend on Common
Stock payable in shares of Common Stock or effect a subdivision or combination
of the outstanding shares of Common Stock (by reclassification or otherwise)
into a greater or lesser number of shares of Common Stock, then in each such
case the amount set forth in the
 
                                       11
<PAGE>
 
preceding sentence with respect to the exchange or change of shares of Series A
Preferred Stock shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
 
         (8) No Redemption. The Series A Preferred Stock shall not be
redeemable.
 
         (9) Rank. The Series A Preferred Stock shall rank junior (as to
dividends and upon liquidation, dissolution and winding up) to all other series
of the Corporation's preferred stock except any series that specifically
provides that such series shall rank junior to the Series A Preferred Stock.
 
         (10) Fractional Shares. Series A Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
 
         The following is a statement of the number, designation, powers,
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions of the Series B Preferred Stock (the
"Series B Preferred Stock") of the Corporation:
 
         (11) Designation and Number of Shares. The shares of such series shall
be designated as "Series B Preferred Stock, par value $0.01 per share", and the
number of shares constituting such series shall be 1,000,000. Such number of
shares of the Series B Preferred Stock may be increased or decreased by
resolution of the Board of Directors.
 
         (12) Dividends and Distributions. The holders of shares of Series B
Preferred Stock will be entitled to receive cumulative dividends on the Series B
Preferred Stock at a rate equal to 11.25% per annum. Such dividends will be
payable in cash or, at the option of the Corporation, in additional shares of
Series B Preferred Stock valued at the Liquidation Preference Amount (as defined
below) per share of Series B Preferred Stock or in other non-cash consideration.
Such dividends will accumulate commencing as of the original issuance date of
such Series B Preferred Stock, compounded on each Quarterly Dividend Payment
Date, commencing on the first Quarterly Dividend Payment Date
 
                                       12
<PAGE>
 
after the first issuance of any such share or fraction of a share of Series B
Preferred Stock, whether or not they have been declared and whether or not the
Corporation may legally pay the dividends. Such dividends will become due and
payable with respect to any shares of Series B Preferred Stock when, as and if
declared by the Board of Directors and under the circumstances provided in
Sections 14 and 16. Accrued but unpaid dividends shall not bear interest and
shall not prevent the Corporation from paying dividends on the Common Stock, the
Series A Preferred Stock or any series of capital stock of the Corporation that
shall be junior to, or pari passu with, the Series B Preferred Stock.
 
         (13) Voting Rights. In addition to any other voting rights required by
law, each share of Series B Preferred Stock shall entitle the holder thereof to
one vote per share on all matters submitted to a vote of shareholders of the
Corporation. Except as otherwise provided herein or by law, (i) the holders of
shares of Series B Preferred Stock and the holders of shares of Common Stock
(and any other class of Preferred Stock having the right to vote together as a
single class with holders of shares of Common Stock) shall vote together as a
single class on all matters submitted to a vote of shareholders of the
Corporation and (ii) the holders of Series B Preferred Stock shall have no
special voting rights and their consent shall not be required for taking any
corporate action.
 
         (14) Liquidation Preference. Upon any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary (in each case, a
"Liquidation Event"), each holder of outstanding shares of Series B Preferred
Stock will be entitled to be paid out of the assets of the Corporation legally
available for distribution to shareholders, whether such assets are capital,
surplus or earnings, and before any amount will be paid or distributed to the
holders of Series A Preferred Stock, Common Stock or other capital stock of the
Corporation ranking junior to the Series B Preferred Stock, an amount in cash,
equal to (A) $378.00 per share of Series B Preferred Stock held by such holder
(adjusted appropriately for stock splits, stock dividends, recapitalizations and
the like with respect to the Series B Preferred Stock) plus (B) any accumulated
but unpaid dividends (as if such dividends had been declared) to which such
holder of outstanding shares of Series B Preferred Stock is then entitled (the
sum of clauses (A) and (B) being referred to herein as the "Liquidation
Preference Amount"). After the payment or distribution to the holders of the
Series B Preferred Stock of the aggregate Liquidation Preference Amount, the
 
                                       13
<PAGE>
 
holders of all capital stock of the Corporation ranking junior to the Series B
Preferred then outstanding will be entitled to receive all remaining assets of
the Corporation as herein provided.
 
         (15) Non-Cash Consideration. In the event the Corporation elects to
make a payment under Section 12 or 14 to the holders of Series B Preferred Stock
consisting of consideration other than cash or Series B Preferred Stock, any
securities or other property to be delivered to the holders of the Series B
Preferred Stock will be valued as follows:
 
                  (a)      Securities will be valued as follows:
 
                           (i)      if traded on a securities exchange, the
                                    value will be deemed to be the average of
                                    the closing prices of the securities on such
                                    exchange over the 20-day period ending three
                                    days prior to the date of payment;
 
                           (ii)     if actively traded over-the-counter, the
                                    value will be deemed to be the average of
                                    the closing bid prices over the 20-day
                                    period ending three days prior to the date
                                    of payment; and
 
                           (iii)    if there is no active public market, the
                                    value will be the fair market value thereof,
                                    as determined by the Board of Directors in
                                    good faith.
 
                  (b)      All other property shall be valued at the fair market
                           value thereof, as determined by the Board of
                           Directors in good faith.
 
         (16) Conversion. The holders of shares of Series B Preferred Stock will
not be entitled to cause any of the outstanding shares of Series B Preferred
Stock held by such holder to be converted into shares of Common Stock.
 
         (17) Redemption.
 
                  (a)      The Corporation, at its option, may redeem the Series
                           B Preferred Stock, at any time or from time to time,
                           in whole or in part, after August 1, 2024, at a
                           redemption price of the Liquidation Preference Amount
                           per share.
 
                                       14
<PAGE>
 
                  (b)      If less than all of the outstanding shares of Series
                           B Preferred Stock are to be redeemed, the shares to
                           be redeemed shall be selected pro rata as nearly as
                           practicable, by lot, or by such other method as the
                           Corporation may determine to be fair and appropriate.
 
                  (c)      Notice of any redemption shall be delivered by first
                           class mail, postage prepaid, and mailed not less than
                           10 nor more than 60 days prior to the date fixed for
                           redemption, to the holder(s) of record of the Series
                           B Preferred Stock at their respective addresses
                           appearing on the books of the Corporation. Notice so
                           mailed shall be conclusively presumed to have been
                           duly given whether or not actually received. Such
                           notice shall state (i) the date fixed for redemption;
                           (ii) the Liquidation Preference Amount; (iii) the
                           number of shares of Series B Preferred Stock to be
                           redeemed and, if less than all the shares held by
                           such holder are to be redeemed, the number of such
                           shares to be redeemed from such holder; (iv) the
                           place where such shares are to be paid at the
                           Liquidation Preference Amount; and (v) that after
                           such date fixed for redemption, the shares to be
                           redeemed shall not accrue dividends. If (A) such
                           notice is mailed as aforesaid, and is on or before
                           the date fixed for redemption and (B) funds
                           sufficient to redeem the shares called for redemption
                           are set aside by the Corporation in trust for the
                           accounts of the holder(s) of the shares to be
                           redeemed, on and after the redemption date the shares
                           represented thereby so called for redemption shall be
                           deemed to be no longer outstanding, distributions
                           thereon shall cease to accrue, and all rights of the
                           holder(s) of such shares shall cease, except the
                           right to receive the Liquidation Preference Amount,
                           without interest.
 
                  (d)      At the option of the Corporation, if (A) notice of
                           redemption is mailed as aforesaid and (B) prior to
                           the date fixed for redemption funds sufficient to pay
                           in full the aggregate Liquidation Preference Amount
                           are deposited in trust, for the account of the
                           holders of the shares to be redeemed, with a bank or
                           trust
 
                                       15
<PAGE>
 
                           company named in such notice on and after such date
                           of deposit, the shares represented thereby called for
                           redemption shall be deemed to be no longer
                           outstanding and all rights of the holder(s) of such
                           shares as stockholders of the Corporation shall
                           cease, except the right of the holder(s) thereof to
                           receive out of the funds deposited in trust the
                           Liquidation Preference Amount, without interest. Any
                           funds deposited with such bank or trust company that
                           remain unclaimed by that holder of shares called for
                           redemption at the end of two years after the
                           redemption date shall be repaid to the Corporation,
                           on demand, and thereafter the holder(s) of any such
                           shares shall look only to the Corporation for
                           payment, without interest, of the Liquidation
                           Preference Amount.
 
         (18) No Reissuance of Series B Preferred Stock. No share or shares of
Series B Preferred Stock acquired by the Corporation by reason of purchase,
conversion or otherwise will be reissued, and all such shares will be canceled,
retired and eliminated from the shares which the Corporation will be authorized
to issue.
 
         (19) Amendment; Waiver. Except as expressly prohibited by law, the
rights, qualifications, limitations and restrictions of the Series B Preferred
Stock may be amended or waived with the approval of the holders of a majority of
the Series B Preferred Stock and the Board of Directors. Any amendment or waiver
so effected shall be binding upon each holder of Series B Preferred Stock.
 
         (20) Rank. The Series B Preferred Stock shall rank senior (upon
liquidation, dissolution and winding up, but not with respect to the payment of
dividends) to all other series of the Corporation's capital stock, except any
series that by its terms ranks senior to or pari passu with the Series B
Preferred Stock.
 
         (21) Fractional Shares. Series B Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series B Preferred Stock.
 
                                       16
<PAGE>
 
                                ARTICLE SEVENTH
 
         The Board of Directors of the Corporation, acting by the affirmative
vote of a majority of the Whole Board (as defined below), may alter, adopt,
amend or repeal the Bylaws of the Corporation. The shareholders may alter,
adopt, amend or repeal the Bylaws of the Corporation only with the affirmative
vote of the holders of not less than 66-2/3% of the voting power of the
outstanding Voting Stock (as defined below), voting together as a single class.
The shareholders may alter, adopt, amend or repeal this ARTICLE SEVENTH only
with the affirmative vote of the holders of not less than 66-2/3% of the voting
power of the outstanding Voting Stock, voting together as a single class. "Whole
Board", at any time, means the total number of directors of the Corporation at
such time then in office. "Voting Stock" means stock of the Corporation of any
class or series entitled to vote generally in the election of directors.
 
                                 ARTICLE EIGHTH
 
         (1) The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. Officers of the Corporation shall
be elected by, or in the manner approved by, the Board of Directors in
accordance with the Bylaws.
 
         (2) Subject to the rights, if any, of the holders of any series of
Preferred Stock, the Board of Directors shall consist of not less than nine nor
more than twenty directors, with the exact number of directors to be determined
from time to time by resolution adopted by the Board of Directors.
 
         (3) The members of the Board of Directors, other than those directors
elected solely by the holders of any series of Preferred Stock, shall be divided
into three classes, designated Class I, Class II and Class III. Each class shall
consist, as nearly as may reasonably be possible, of one-third of the total
number of directors constituting the Board of Directors. Each director shall
serve for a term ending on the date of the third annual meeting of shareholders
next following the annual meeting at which such director was elected, provided
that directors initially designated as Class I directors shall serve for a term
ending on the date of the year 2005 annual meeting, directors initially
designated as Class II directors shall serve for a term ending on the date of
the year 2006 annual meeting, and directors initially designated as Class III
directors shall serve for a term ending on the date of the year 2007 annual
meeting. Notwithstanding the foregoing, each director shall
 
                                       17
<PAGE>
 
hold office until such director's successor shall have been duly elected and
qualified or until such director's earlier death, resignation or removal. In the
event of any change in the number of directors, the Board of Directors shall
apportion any newly-created directorships among, or reduce the number of
directorships in, such class or classes as shall equalize, as nearly as may
reasonably be possible, the number of directors in each class. In no event will
a decrease in the number of directors shorten the term of any incumbent
director.
 
         (4) There shall be no cumulative voting in the election of directors.
Election of directors need not be by written ballot unless the Bylaws so
provide. Directors need not be shareholders.
 
         (5) Except as otherwise provided by law, vacancies on the Board of
Directors resulting from death, resignation, removal or otherwise and
newly-created directorships resulting from any increase in the number of
directors shall be filled only by a majority of the directors then in office
(although less than a quorum) or by the sole remaining director and not by the
shareholders, and each director so elected shall hold office for a term that
shall coincide with the term of the Class to which such director shall have been
elected and until such director's successor has been elected and qualified.
 
         (6) Each member of the Board of Directors shall have one vote on all
matters presented to the Board of Directors, and a majority of the total number
of directors at any time shall constitute a quorum for the transaction of
business at that time. The Board of Directors may act by the unanimous written
consent of the directors.
 
         (7) Any director or directors may be removed from office only for
cause.
 
         (8) The Board of Directors shall not adopt, enter into or maintain a
plan, agreement, contract, bylaw or other instrument or arrangement limiting or
purporting to limit the ability of the Board of Directors to take action only
upon the approval of one or more directors on the basis that such director(s)
were in office at any particular time relative to such plan, agreement,
contract, bylaw or other instrument or arrangement or were recommended or
approved successors of any such director, or on any similar basis, including
without limitation any designation commonly referred to as "continuing
directors." The shareholders may alter, adopt, amend or repeal this ARTICLE
EIGHTH, SECTION (7) or SECTION (8) only with the affirmative
 
                                       18
<PAGE>
 
vote of the holders of not less than 66-2/3% of the voting power of the
outstanding Voting Stock, voting together as a single class.
 
         (9) Notwithstanding the foregoing, whenever the holders of one or more
classes or series of Preferred Stock shall have the right, voting separately as
a class or series, to elect directors, the election, term of office, filling of
vacancies, removal and other features of such directorships shall be governed by
the terms of the resolution or resolutions adopted by the Board of Directors
pursuant to ARTICLE SIXTH applicable thereto, and not the provisions of this
ARTICLE EIGHTH unless otherwise provided in such resolution or resolutions.
 
                                 ARTICLE NINTH
 
         (1) To the fullest extent permitted by the NCBCA as it exists or may
hereafter be amended, 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. No amendment
or repeal of this ARTICLE NINTH, nor the adoption of any provision to these
Articles of Incorporation inconsistent with this ARTICLE NINTH, shall eliminate
or reduce the protection granted herein with respect to any matter that occurred
prior to such amendment, repeal or adoption.
 
         (2) Each person who is or was a director or officer of the Corporation
(and the heirs, executors or administrators of such person) who was or is a
party or is threatened to be made a party to, or is involved in any threatened,
pending or completed action, suit or proceeding (including an action, suit or
proceeding by or in right of the Corporation), whether civil, criminal,
administrative or investigative, by reason of the fact that such person is or
was a director or officer of the Corporation or, while a director or officer of
the Corporation, is or was serving at the request of the Corporation as a
director, officer, partner, trustee, employee, or agent of another foreign or
domestic corporation, partnership, joint venture, trust, employee benefit plan,
or other enterprise, shall be indemnified by the Corporation against liability
in any such action, suit or proceeding to the fullest extent permitted by the
NCBCA as it exists or may hereafter be amended. Expenses incurred in connection
with any such action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of any action, suit or proceeding upon receipt
of an unsecured written promise by or on behalf of any such person to repay such
amount unless it shall ultimately be determined that such person is entitled to
be indemnified by the Corporation
 
                                       19
<PAGE>
 
against such expenses. The right to indemnification conferred in this ARTICLE
NINTH shall be a contract right.
 
         (3) The Corporation may, by action of its Board of Directors, provide
indemnification to such of the employees and agents of the Corporation to such
extent and to such effect as the Board of Directors shall determine to be
appropriate and authorized by the NCBCA.
 
         (4) The Corporation shall have power to purchase and maintain
insurance, at its expense, 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, partnership, joint venture, trust or other enterprise, against any
expense, liability or loss incurred by such person in any such capacity or
arising out of his status as such, whether or not the Corporation would have the
power to indemnify such person in any such capacity and whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the NCBCA.
 
         (5) The rights and authority conferred in this ARTICLE NINTH shall not
be exclusive of any other right which any person may otherwise have or hereafter
acquire under any statute, provision of the Articles of Incorporation or Bylaws
of the Corporation, agreement, vote of shareholders or disinterested directors
or otherwise.
 
         (6) Without limiting the generality of the other provisions of this
ARTICLE NINTH, (a) neither PLC or any of its subsidiaries or affiliates nor any
director of the Corporation who is affiliated with, or employed by, PLC or any
of its subsidiaries or affiliates shall have any obligation, duty or
responsibility (whether arising under law or otherwise) to present any
transaction, relationship, arrangement or other opportunity that is not a
transaction, relationship, arrangement or other opportunity primarily relating
to the United States (collectively, a "business opportunity") to the
Corporation, the Board of Directors of the Corporation or any officer or
employee thereof, (b) the Corporation renounces any expectancy or interest of
the Corporation in, or in being offered an opportunity to participate in, any
such business opportunity, and (c) PLC and its subsidiaries and affiliates shall
be entitled to act upon any such business opportunity and will not be liable to
the Corporation or any of its shareholders for taking any such action or not
presenting such business opportunity to the Corporation. If the provisions of
this
 
                                       20
<PAGE>
 
Section 6 are held invalid, illegal or incapable of being enforced under any law
or public policy with respect to any particular business opportunity, then the
provisions of this Section 6 shall nevertheless remain in full force and effect
as to all other business opportunities, specifically including, without
limitation, any business opportunity that the Corporation would be restricted
from engaging in under ARTICLE FIFTH.
 
         (7) The rights granted herein shall not be limited by the provisions
contained in Section 55-8-52 of the NCBCA or any successor statute.
 
         (8) Neither the amendment nor repeal of this ARTICLE NINTH, nor the
adoption of any provision of this Articles of Incorporation or the Bylaws of the
Corporation, nor, to the fullest extent permitted by the NCBCA, any modification
of law, shall eliminate or reduce the effect of this ARTICLE NINTH in respect of
any acts or omissions occurring prior to such amendment, repeal, adoption or
modification.
 
                                 ARTICLE TENTH
 
         Any action required or permitted to be taken at any annual or special
meeting of shareholders may be taken only upon the vote of shareholders at an
annual or special meeting duly noticed and called in accordance with the NCBCA
and may not be taken by written consent of shareholders without a meeting. The
shareholders may alter, adopt, amend or repeal this ARTICLE TENTH only with the
affirmative vote of the holders of not less than 66-2/3% of the voting power of
the outstanding Voting Stock, voting together as a single class.
 
                                ARTICLE ELEVENTH
 
         Special meetings of the shareholders may be called by the Board of
Directors, the Chairman of the Board of Directors, the Chief Executive Officer
or the President or the Secretary of the Corporation upon the direction of the
Board of Directors, and may not be called by any other person. At a special
meeting of shareholders only such business may be conducted or considered as is
properly brought before the meeting. To be properly brought before a special
meeting, business must be specified in the notice of meeting (or supplement
thereto) given by or at the direction of the Board of Directors, the Chairman of
the Board of Directors, the Chief Executive Officer or the President.
Notwithstanding the foregoing, whenever holders of one or more classes or series
of Preferred Stock shall have the right,
 
                                       21
<PAGE>
 
voting separately as a class or series, to elect directors, such holders may
call, pursuant to the terms of the resolution or resolutions adopted by the
Board of Directors pursuant to ARTICLE SIXTH hereof, special meetings of holders
of such Preferred Stock. The shareholders may alter, adopt, amend or repeal this
ARTICLE ELEVENTH only with the affirmative vote of the holders of not less than
66-2/3% of the voting power of the outstanding Voting Stock, voting together as
a single class.
 
                                ARTICLE TWELFTH
 
         The provisions of Article 9 and Article 9A of the NCBCA entitled "The
North Carolina Shareholder Protection Act" and "The North Carolina Control Share
Acquisition Act," respectively, shall not be applicable to the Corporation.
 

[As Filed: 07-29-2004]

 

ARTICLES OF AMENDMENT
OF
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
REYNOLDS AMERICAN INC.

     Pursuant to Section 55-10-06 of the General Statutes of North Carolina, the undersigned corporation hereby submits the following Articles of Amendment for the purpose of amending its Amended and Restated Articles of Incorporation:

          1. The name of the corporation is Reynolds American Inc.

          2. The text of the amendment adopted is as follows:

     The first sentence of Article Sixth of the undersigned corporation’s Amended and Restated Articles of Incorporation is hereby deleted in its entirety and the following sentence is substituted in lieu thereof:

“The total number of shares of capital stock that the Corporation is authorized to issue is 900,000,000 shares, of which 800,000,000 shares are Common Stock, par value $.0001 each (“Common Stock”), and 100,000,000 shares are Preferred Stock, par value $.01 each (“Preferred Stock”).”

          3. The foregoing amendment was approved by shareholder action as required by Chapter 55 of the North Carolina General Statutes on May 11, 2007.

          4. These Articles of Amendment will be effective upon filing.

     This the 11th day of May, 2007.

 

 

 

 

 

 

 

REYNOLDS AMERICAN INC.

 

 

 

 

 

 

 

By:

 

/s/ McDara P. Folan

 

 

 

 

 

 

 

Name: McDara P. Folan, III

 

 

Title: SVP, Deputy General Counsel and Secretary

[As Filed: 08-02-2007]