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By-laws - REYNOLDS AMERICAN INC - 3-27-1998

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By-laws - REYNOLDS AMERICAN INC - 3-27-1998 Powered By Docstoc
					RJR NABISCO, INC. BY-LAWS As Amended Effective December 15, 1997 ARTICLE I MEETINGS OF STOCKHOLDERS Section 1. Place of Meetings. Meetings of the stockholders of the Corporation shall be held at such place either within or without the State of Delaware as the Board of Directors may determine. Section 2. Annual and Special Meetings. Annual meetings of stockholders shall be held, at a date, time and place fixed by the Board of Directors and stated in the notice of meeting, to elect a Board of Directors and to transact such other business as may properly come before the meeting. Special meetings of the stockholders may be called by the Chairman or the Chief Executive Officer for any purpose and shall be called by the Chairman, the Chief Executive Officer or the Secretary if directed by the Board of Directors or requested in writing by the holders of not less than 25% of the common stock of the Corporation. Each such stockholder request shall state the purpose of the proposed meeting. Section 3. Notice. Except as otherwise provided by law or by the Certificate of Incorporation, at least 10 and not more than 60 days before each meeting of stockholders, written notice of the time, date and place of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given to each stockholder. Section 4. Quorum. At any meeting of stockholders, the holders of record, present in person or by proxy, of a majority of the Corporation's issued and outstanding common stock shall constitute a quorum for the transaction of business, except as otherwise provided by law or by the Certificate of Incorporation. In the absence of a quorum, any officer entitled to preside at or to act as secretary of the meeting shall have power to adjourn the meeting from time to time until a quorum is present.

Section 5. Voting. Except as otherwise provided by law or by the Certificate of Incorporation, all matters submitted to a meeting of stockholders shall be decided by vote of the holders of record, present in person or by proxy, of a majority of the Corporation's issued and outstanding common stock. The date and time of the opening and closing of the polls for each matter upon which stockholders will vote shall be announced at the meeting. Section 6. Inspectors of Election. Prior to any meeting of the stockholders, the Board of Directors shall appoint one or more inspectors to act at the meeting and make a written report thereof in accordance with the Delaware General Corporation Law. The Board of Directors may designate one or more persons as alternate inspectors to replace any inspector who fails to act. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of his or her ability. ARTICLE II DIRECTORS Section 1. Number, Election and Removal of Directors. The number of Directors that shall constitute the Board of Directors shall be not less than one nor more than seventeen. The first Board of Directors shall consist of three Directors. Thereafter, within the limits specified above, the number of Directors shall be determined by the Board of Directors or by the stockholders. The Directors shall be elected by the stockholders at their annual meeting and shall serve until the next annual meeting of the stockholders and until their successors are elected and shall

Section 5. Voting. Except as otherwise provided by law or by the Certificate of Incorporation, all matters submitted to a meeting of stockholders shall be decided by vote of the holders of record, present in person or by proxy, of a majority of the Corporation's issued and outstanding common stock. The date and time of the opening and closing of the polls for each matter upon which stockholders will vote shall be announced at the meeting. Section 6. Inspectors of Election. Prior to any meeting of the stockholders, the Board of Directors shall appoint one or more inspectors to act at the meeting and make a written report thereof in accordance with the Delaware General Corporation Law. The Board of Directors may designate one or more persons as alternate inspectors to replace any inspector who fails to act. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of his or her ability. ARTICLE II DIRECTORS Section 1. Number, Election and Removal of Directors. The number of Directors that shall constitute the Board of Directors shall be not less than one nor more than seventeen. The first Board of Directors shall consist of three Directors. Thereafter, within the limits specified above, the number of Directors shall be determined by the Board of Directors or by the stockholders. The Directors shall be elected by the stockholders at their annual meeting and shall serve until the next annual meeting of the stockholders and until their successors are elected and shall qualify. Vacancies and newly created directorships resulting from any increase in the number of Directors may be filled by a majority of the Directors then in office, although less than a quorum, or by the sole remaining Director or by the stockholders, and any Director so chosen shall serve until the next annual meeting of the stockholders and until his or her successor shall be elected and shall qualify. A Director may be removed with or without cause by the stockholders. Section 2. Meetings. Regular meetings of the Board of Directors shall be held at such times and places as may from time to time be fixed by the Board of Directors or as may be specified in a notice of meeting. Special meetings of the Board of Directors may be held at any time upon the call of the Chairman or the Chief Executive Officer and shall be called by the Chairman, the Chief Executive Officer or the Secretary if directed by the Board of Directors. A meeting of the Board of Directors may be held without notice immediately after 2

the annual meeting of the stockholders. Notice need not be given of regular or special meetings of the Board of Directors. Section 3. Quorum. One-third of the total number of Directors shall constitute a quorum for the transaction of business. If a quorum is not present at any meeting of the Board of Directors, the Directors present may adjourn the meeting from time to time, without notice other than announcement at the meeting, until such a quorum is present. Except as otherwise provided by law, the Certificate of Incorporation of the Corporation, these ByLaws or any contract or agreement to which the Corporation is a party, the act of a majority of the Directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. Section 4. Executive Committee. The Board of Directors, by resolution adopted by a majority of the entire Board, may appoint from among its members an Executive Committee consisting of the Chief Executive Officer, if such officer is a member of the Board of Directors, or the Chairman, if the Chief Executive Officer is not a member of the Board of Directors, and at least two other Directors. Meetings of the Executive Committee shall be held without notice at such dates, times and places as shall be determined by the Executive Committee. The Executive Committee shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation that are permitted by law to be exercised by a committee of the Board of Directors, including the power to declare dividends, to authorize the issuance of stock and to adopt a certificate of ownership and merger of parent corporation and subsidiary or subsidiaries; provided, however, that the Executive Committee shall not have the power or authority of the Board of Directors in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation with

the annual meeting of the stockholders. Notice need not be given of regular or special meetings of the Board of Directors. Section 3. Quorum. One-third of the total number of Directors shall constitute a quorum for the transaction of business. If a quorum is not present at any meeting of the Board of Directors, the Directors present may adjourn the meeting from time to time, without notice other than announcement at the meeting, until such a quorum is present. Except as otherwise provided by law, the Certificate of Incorporation of the Corporation, these ByLaws or any contract or agreement to which the Corporation is a party, the act of a majority of the Directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. Section 4. Executive Committee. The Board of Directors, by resolution adopted by a majority of the entire Board, may appoint from among its members an Executive Committee consisting of the Chief Executive Officer, if such officer is a member of the Board of Directors, or the Chairman, if the Chief Executive Officer is not a member of the Board of Directors, and at least two other Directors. Meetings of the Executive Committee shall be held without notice at such dates, times and places as shall be determined by the Executive Committee. The Executive Committee shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation that are permitted by law to be exercised by a committee of the Board of Directors, including the power to declare dividends, to authorize the issuance of stock and to adopt a certificate of ownership and merger of parent corporation and subsidiary or subsidiaries; provided, however, that the Executive Committee shall not have the power or authority of the Board of Directors in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation with respect to the Corporation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, amending the By-Laws of the Corporation or adopting a certificate of ownership and merger of the Corporation (other than a certificate of ownership and merger of parent corporation and subsidiary or subsidiaries). The majority of the members of the Executive Committee shall constitute a quorum. Minutes shall be kept of the proceedings of the Executive Committee, which shall be reported at meetings of the Board of Directors. The Executive Committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors of the Corporation, fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other 3

class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorized the increase or decrease of the shares of any series. Section 5. Other Committees of Directors. The Board of Directors may, by resolution adopted by a majority of the Board of Directors, designate one or more other committees to have and exercise such power and authority as the Board of Directors shall specify. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or she or they constitute a quorum, may unanimously appoint another Director to act at the meeting in place of any such absent or disqualified member. ARTICLE III OFFICERS Section 1. Description and Terms. The officers of the Corporation shall be the Chairman, the Chief Executive Officer, a President, a Secretary, a Treasurer and such other additional officers with such titles as the Board of Directors shall determine, all of whom shall be chosen by and serve at the pleasure of the Board of Directors; provided that the Chief Executive Officer may appoint Senior Vice Presidents, Vice Presidents or Assistant Officers at his or her discretion. The Chairman shall be an employee of the Corporation. Subject to such limitations as may be imposed by the Board of Directors, the Chief Executive Officer shall have full executive power and authority with respect to the Corporation. The President, if separate from the Chief Executive Officer, shall have such powers and authority as the Chief Executive Officer may determine. If the Chief Executive Officer

class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorized the increase or decrease of the shares of any series. Section 5. Other Committees of Directors. The Board of Directors may, by resolution adopted by a majority of the Board of Directors, designate one or more other committees to have and exercise such power and authority as the Board of Directors shall specify. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or she or they constitute a quorum, may unanimously appoint another Director to act at the meeting in place of any such absent or disqualified member. ARTICLE III OFFICERS Section 1. Description and Terms. The officers of the Corporation shall be the Chairman, the Chief Executive Officer, a President, a Secretary, a Treasurer and such other additional officers with such titles as the Board of Directors shall determine, all of whom shall be chosen by and serve at the pleasure of the Board of Directors; provided that the Chief Executive Officer may appoint Senior Vice Presidents, Vice Presidents or Assistant Officers at his or her discretion. The Chairman shall be an employee of the Corporation. Subject to such limitations as may be imposed by the Board of Directors, the Chief Executive Officer shall have full executive power and authority with respect to the Corporation. The President, if separate from the Chief Executive Officer, shall have such powers and authority as the Chief Executive Officer may determine. If the Chief Executive Officer is absent or incapacitated, the Executive Committee shall determine the person who shall have all the power and authority of the Chief Executive Officer. Other officers shall have the usual powers and shall perform all the usual duties incident to their respective offices. All officers shall be subject to the supervision and direction of the Board of Directors. The authority, duties or responsibilities of any officer of the Corporation may be suspended by the Chief Executive Officer with or without cause. Any officer elected or appointed by the Board of Directors may be removed by the Board of Directors with or without cause. Subject to such limitations as the Board of Directors may provide, each officer may further delegate to any other officer or any employee or agent of the Corporation such portions of his or her authority as the officer shall deem appropriate, subject to such limitation as the officer shall specify, and may revoke such authority at any time. 4

Section 2. Stockholder Consents and Proxies. The Chairman, the Chief Executive Officer, each Vice Chairman, the President, the Secretary and the Treasurer, or any one of them, shall have the power and authority on behalf of the Corporation to execute any stockholders' consents or proxies and to attend and act and vote in person or by proxy at any meetings of the stockholders of any corporation in which the Corporation may own stock, and at any such meetings shall possess and may exercise any and all of the rights and powers incident to the ownership of such stock which as the owner thereof the Corporation might have possessed and executed if present. The Board of Directors, by resolutions from time to time, may confer like powers upon any other officer. ARTICLE IV INDEMNIFICATION To the fullest extent permitted by the Delaware General Corporation Law, the Corporation shall indemnify any current or former Director or officer of the Corporation and may, at the discretion of the Board of Directors, indemnify any current or former employee or agent of the Corporation against all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with any threatened, pending or completed action, suit or proceeding brought by or in the right of the Corporation or otherwise, to which he or she was or is a party or is threatened to be made a party by reason of his or her current or former position with the Corporation or by reason of the fact that he or she is or was serving, at the request of the Corporation, as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. The right to indemnification conferred in this Article shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such action, suit or proceeding in advance of its final disposition unless such action, suit or

Section 2. Stockholder Consents and Proxies. The Chairman, the Chief Executive Officer, each Vice Chairman, the President, the Secretary and the Treasurer, or any one of them, shall have the power and authority on behalf of the Corporation to execute any stockholders' consents or proxies and to attend and act and vote in person or by proxy at any meetings of the stockholders of any corporation in which the Corporation may own stock, and at any such meetings shall possess and may exercise any and all of the rights and powers incident to the ownership of such stock which as the owner thereof the Corporation might have possessed and executed if present. The Board of Directors, by resolutions from time to time, may confer like powers upon any other officer. ARTICLE IV INDEMNIFICATION To the fullest extent permitted by the Delaware General Corporation Law, the Corporation shall indemnify any current or former Director or officer of the Corporation and may, at the discretion of the Board of Directors, indemnify any current or former employee or agent of the Corporation against all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with any threatened, pending or completed action, suit or proceeding brought by or in the right of the Corporation or otherwise, to which he or she was or is a party or is threatened to be made a party by reason of his or her current or former position with the Corporation or by reason of the fact that he or she is or was serving, at the request of the Corporation, as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. The right to indemnification conferred in this Article shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such action, suit or proceeding in advance of its final disposition unless such action, suit or proceeding was initiated by the person seeking advances of expenses or was brought by or in the right of the Corporation with the approval of the Board of Directors or the Chief Executive Officer; provided however, that if the Delaware General Corporation Law then so requires, the payment of such expenses incurred by a Director or officer of the Corporation in advance of the final disposition of such action, suit or proceeding, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such Director or officer, to repay all amounts so advanced if it should be determined ultimately that such Director or officer is not entitled to be indemnified under this Article or otherwise. 5

ARTICLE V GENERAL PROVISIONS Section 1. Notices. Whenever any statute, the Certificate of Incorporation or these By-Laws require notice to be given to any Director or stockholder, such notices may be given in writing by mail, addressed to such Director or stockholder at his or her address as it appears on the records of the Corporation, with postage thereon prepaid. Such notice shall be deemed to have been given when it is deposited in the United States mail. Notice to Directors may also be given by telegram or facsimile transmission or be delivered personally or by telephone. Section 2. Fiscal Year. The fiscal year of the Corporation shall be fixed by the Board of Directors. 6 FOURTH AMENDMENT TO THE 3 YEAR CREDIT AGREEMENT SIXTH AMENDMENT TO THE 364 DAY CREDIT AGREEMENT FOURTH AMENDMENT, dated as of December 5, 1997, among RJR NABISCO HOLDINGS CORP., a Delaware corporation ("Holdings"), RJR NABISCO, INC., a Delaware corporation (the "Borrower"), and the lending institutions party to the 3 Year Credit Agreement referred to below and SIXTH AMENDMENT, dated as of December 5, 1997, among Holdings, the Borrower and the lending institutions party to the 364 Day Credit Agreement referred to below (collectively, the "Amendment"). All capitalized terms used herein and not otherwise defined herein shall have the respective meanings provided such terms in the respective Credit Agreements (as defined below).

ARTICLE V GENERAL PROVISIONS Section 1. Notices. Whenever any statute, the Certificate of Incorporation or these By-Laws require notice to be given to any Director or stockholder, such notices may be given in writing by mail, addressed to such Director or stockholder at his or her address as it appears on the records of the Corporation, with postage thereon prepaid. Such notice shall be deemed to have been given when it is deposited in the United States mail. Notice to Directors may also be given by telegram or facsimile transmission or be delivered personally or by telephone. Section 2. Fiscal Year. The fiscal year of the Corporation shall be fixed by the Board of Directors. 6 FOURTH AMENDMENT TO THE 3 YEAR CREDIT AGREEMENT SIXTH AMENDMENT TO THE 364 DAY CREDIT AGREEMENT FOURTH AMENDMENT, dated as of December 5, 1997, among RJR NABISCO HOLDINGS CORP., a Delaware corporation ("Holdings"), RJR NABISCO, INC., a Delaware corporation (the "Borrower"), and the lending institutions party to the 3 Year Credit Agreement referred to below and SIXTH AMENDMENT, dated as of December 5, 1997, among Holdings, the Borrower and the lending institutions party to the 364 Day Credit Agreement referred to below (collectively, the "Amendment"). All capitalized terms used herein and not otherwise defined herein shall have the respective meanings provided such terms in the respective Credit Agreements (as defined below). WITNESSETH: WHEREAS, Holdings, the Borrower and various lending institutions (the "3 Year Banks") are parties to a Credit Agreement, dated as of April 28, 1995, with respect to initial Commitments aggregating $2,750,000,000 on such date (as in effect on the date hereof, the "3 Year Credit Agreement"); WHEREAS, Holdings, the Borrower and various lending institutions (the "364 Day Banks" and, together with the 3 Year Banks, the "Banks") are parties to a Credit Agreement, dated as of April 28, 1995, with respect to initial Commitments aggregating $750,000,000 on such date (as in effect on the date hereof, the "364 Day Credit Agreement" and, together with the 3 Year Credit Agreement, the "Credit Agreements"); WHEREAS, Holdings, the Borrower and the 3 Year Banks wish to enter into the agreements with respect to the 3 Year Credit Agreement as herein provided; and WHEREAS, Holdings, the Borrower and the 364 Day Banks wish to enter into the agreements with respect to the 364 Day Credit Agreement as herein provided; NOW, THEREFORE, it is agreed: I. Amendment to the 3 Year Credit Agreement. 1. Section 8.07 of the 3 Year Credit Ageement is hereby amended by deleting the table appearing therein in its entirety and by inserting the following new table in lieu thereof:

"Period -------Initial Borrowing Date to and including December 31, 1995 January 1, 1996 to and including December 31, 1996

Amount ------$7,500,000,000

$7,600,000,000

FOURTH AMENDMENT TO THE 3 YEAR CREDIT AGREEMENT SIXTH AMENDMENT TO THE 364 DAY CREDIT AGREEMENT FOURTH AMENDMENT, dated as of December 5, 1997, among RJR NABISCO HOLDINGS CORP., a Delaware corporation ("Holdings"), RJR NABISCO, INC., a Delaware corporation (the "Borrower"), and the lending institutions party to the 3 Year Credit Agreement referred to below and SIXTH AMENDMENT, dated as of December 5, 1997, among Holdings, the Borrower and the lending institutions party to the 364 Day Credit Agreement referred to below (collectively, the "Amendment"). All capitalized terms used herein and not otherwise defined herein shall have the respective meanings provided such terms in the respective Credit Agreements (as defined below). WITNESSETH: WHEREAS, Holdings, the Borrower and various lending institutions (the "3 Year Banks") are parties to a Credit Agreement, dated as of April 28, 1995, with respect to initial Commitments aggregating $2,750,000,000 on such date (as in effect on the date hereof, the "3 Year Credit Agreement"); WHEREAS, Holdings, the Borrower and various lending institutions (the "364 Day Banks" and, together with the 3 Year Banks, the "Banks") are parties to a Credit Agreement, dated as of April 28, 1995, with respect to initial Commitments aggregating $750,000,000 on such date (as in effect on the date hereof, the "364 Day Credit Agreement" and, together with the 3 Year Credit Agreement, the "Credit Agreements"); WHEREAS, Holdings, the Borrower and the 3 Year Banks wish to enter into the agreements with respect to the 3 Year Credit Agreement as herein provided; and WHEREAS, Holdings, the Borrower and the 364 Day Banks wish to enter into the agreements with respect to the 364 Day Credit Agreement as herein provided; NOW, THEREFORE, it is agreed: I. Amendment to the 3 Year Credit Agreement. 1. Section 8.07 of the 3 Year Credit Ageement is hereby amended by deleting the table appearing therein in its entirety and by inserting the following new table in lieu thereof:

"Period -------Initial Borrowing Date to and including December 31, 1995 January 1, 1996 to and including December 31, 1996 January 1, 1997 to and including December 30, 1997 December 31, 1997 and thereafter

Amount ------$7,500,000,000

$7,600,000,000

$7,500,000,000

$7,000,000,000".

2. Section 8.08 of the 3 Year Credit Ageement is hereby amended by deleting the table appearing therein in its entirety and by inserting the following new table in lieu thereof:
"Period -------Initial Borrowing Date to and including December 31, 1995 Ratio -----1.60:1

"Period -------Initial Borrowing Date to and including December 31, 1995 January 1, 1996 to and including December 31, 1996 January 1, 1997 to and including December 30, 1997 December 31, 1997 and thereafter

Amount ------$7,500,000,000

$7,600,000,000

$7,500,000,000

$7,000,000,000".

2. Section 8.08 of the 3 Year Credit Ageement is hereby amended by deleting the table appearing therein in its entirety and by inserting the following new table in lieu thereof:
"Period -------Initial Borrowing Date to and including December 31, 1995 January 1, 1996 to and including December 31, 1997 January 1, 1998 to and including December 31, 1998 Thereafter Ratio -----1.60:1

1.50:1

1.40:1

1.50:1".

3. Section 8.09 of the 3 Year Credit Ageement is hereby amended by deleting the table appearing therein in its entirety and by inserting the following new table in lieu thereof: 2
"Period -------Initial Borrowing Date to and including December 31, 1995 January 1, 1996 to and including December 31, 1996 January 1, 1997 to and including December 31, 1997 January 1, 1998 to and including June 30, 1998 July 1, 1998 to and including December 31, 1998 Thereafter Ratio -----2.60:1

2.55:1

2.40:1

2.50:1

2.40:1

2.25:1".

4. Section 8.10 of the 3 Year Credit Ageement is hereby amended by deleting the table appearing therein in its

"Period -------Initial Borrowing Date to and including December 31, 1995 January 1, 1996 to and including December 31, 1996 January 1, 1997 to and including December 31, 1997 January 1, 1998 to and including June 30, 1998 July 1, 1998 to and including December 31, 1998 Thereafter

Ratio -----2.60:1

2.55:1

2.40:1

2.50:1

2.40:1

2.25:1".

4. Section 8.10 of the 3 Year Credit Ageement is hereby amended by deleting the table appearing therein in its entirety and by inserting the following new table in lieu thereof:
"Period -------Initial Borrowing Date to and including December 31, 1996 January 1, 1997 to and including December 31, 1997 January 1, 1998 to and including December 31, 1998 Thereafter Ratio -----3.50:1

3.75:1

3.50:1

3.75:1".

3

5. The definition of "Adjusted Operating Income" appearing in Section 10 of the 3 Year Credit Agreement is hereby amended by (x) deleting the word "and" appearing at the end of clause (iv) of the proviso contained therein and inserting a comma in lieu thereof and (y) inserting the following new clauses (vi) and (vii) at the end of said definition: ", (vi) Adjusted Operating Income shall be adjusted by adding thereto the amount of all expenses accrued by Holdings and its Subsidiaries during any Test Period pursuant to (x) the settlement agreement, dated as of October 9, 1997, among R.J. Reynolds Tobacco Company, certain other tobacco companies and the plaintiffs' attorneys in Broin v. Philip Morris and (y) the settlement agreement, dated as of September 5, 1997, among R.J. Reynolds Tobacco Company and the other parties to Mangini v. R.J. Reynolds Tobacco Company, to the extent (and only to the extent) (I) the aggregate amount of all payments made by Holdings and its Subsidiaries pursuant to the aforementioned agreements (and for which an adjustment to Adjusted Operating Income is made) does not exceed $96,000,000 and (II) the amount of such payments are deducted in any determination of Adjusted Operating Income and (vii) for all purposes, for any period which includes the fourth quarter of Holdings' 1997 fiscal year, there shall be excluded in determining Adjusted Operating Income any pre-tax restructuring expense and related expenses and adjustments (including deloading) recorded or accrued in the fourth quarter of Holdings' 1997 fiscal year which serve to reduce operating income of Holdings and/or its Subsidiaries in such fiscal quarter, to the extent (and only

5. The definition of "Adjusted Operating Income" appearing in Section 10 of the 3 Year Credit Agreement is hereby amended by (x) deleting the word "and" appearing at the end of clause (iv) of the proviso contained therein and inserting a comma in lieu thereof and (y) inserting the following new clauses (vi) and (vii) at the end of said definition: ", (vi) Adjusted Operating Income shall be adjusted by adding thereto the amount of all expenses accrued by Holdings and its Subsidiaries during any Test Period pursuant to (x) the settlement agreement, dated as of October 9, 1997, among R.J. Reynolds Tobacco Company, certain other tobacco companies and the plaintiffs' attorneys in Broin v. Philip Morris and (y) the settlement agreement, dated as of September 5, 1997, among R.J. Reynolds Tobacco Company and the other parties to Mangini v. R.J. Reynolds Tobacco Company, to the extent (and only to the extent) (I) the aggregate amount of all payments made by Holdings and its Subsidiaries pursuant to the aforementioned agreements (and for which an adjustment to Adjusted Operating Income is made) does not exceed $96,000,000 and (II) the amount of such payments are deducted in any determination of Adjusted Operating Income and (vii) for all purposes, for any period which includes the fourth quarter of Holdings' 1997 fiscal year, there shall be excluded in determining Adjusted Operating Income any pre-tax restructuring expense and related expenses and adjustments (including deloading) recorded or accrued in the fourth quarter of Holdings' 1997 fiscal year which serve to reduce operating income of Holdings and/or its Subsidiaries in such fiscal quarter, to the extent (and only to the extent) the aggregate amount attributable pursuant to this clause (vii) does not exceed $449,000,000". 6. Section 12.07(a) of the 3 Year Credit Agreement is hereby amended by inserting the following sentence at the end of said Section: "Notwithstanding the foregoing, for purposes of the computations determining compliance with Section 8, all expenses and other charges arising from any tobacco litigation settlement and occurring in any fiscal quarter of Holdings ended after December 31, 1997 which are required by GAAP to be retroactively applied to a previous fiscal quarter of Holdings shall instead be accrued in the fiscal quarter in which such expenses and charges occur." II. Amendment to the 364 Day Credit Agreement. 1. Section 8.07 of the 364 Day Credit Ageement is hereby amended by deleting the table appearing therein in its entirety and by inserting the following new table in lieu thereof: 4
"Period -------Initial Borrowing Date to and including December 31, 1995 January 1, 1996 to and including December 31, 1996 January 1, 1997 to and including December 30, 1997 December 31, 1997 and thereafter Amount ------$7,500,000,000

$7,600,000,000

$7,500,000,000

$7,000,000,000".

2. Section 8.08 of the 364 Day Credit Ageement is hereby amended by deleting the table appearing therein in its entirety and by inserting the following new table in lieu thereof:
"Period -------Initial Borrowing Date to and including December 31, 1995 Ratio -----1.60:1

"Period -------Initial Borrowing Date to and including December 31, 1995 January 1, 1996 to and including December 31, 1996 January 1, 1997 to and including December 30, 1997 December 31, 1997 and thereafter

Amount ------$7,500,000,000

$7,600,000,000

$7,500,000,000

$7,000,000,000".

2. Section 8.08 of the 364 Day Credit Ageement is hereby amended by deleting the table appearing therein in its entirety and by inserting the following new table in lieu thereof:
"Period -------Initial Borrowing Date to and including December 31, 1995 January 1, 1996 to and including December 31, 1997 January 1, 1998 to and including December 31, 1998 Thereafter Ratio -----1.60:1

1.50:1

1.40:1

1.50:1".

3. Section 8.09 of the 364 Day Credit Ageement is hereby amended by deleting the table appearing therein in its entirety and by inserting the following new table in lieu thereof: 5
"Period -------Initial Borrowing Date to and including December 31, 1995 January 1, 1996 to and including December 31, 1996 January 1, 1997 to and including December 31, 1997 January 1, 1998 to and including June 30, 1998 July 1, 1998 to and including December 31, 1998 Thereafter Ratio -----2.60:1

2.55:1

2.40:1

2.50:1

2.40:1

2.25:1".

4. Section 8.10 of the 364 Day Credit Ageement is hereby amended by deleting the table appearing therein in its

"Period -------Initial Borrowing Date to and including December 31, 1995 January 1, 1996 to and including December 31, 1996 January 1, 1997 to and including December 31, 1997 January 1, 1998 to and including June 30, 1998 July 1, 1998 to and including December 31, 1998 Thereafter

Ratio -----2.60:1

2.55:1

2.40:1

2.50:1

2.40:1

2.25:1".

4. Section 8.10 of the 364 Day Credit Ageement is hereby amended by deleting the table appearing therein in its entirety and by inserting the following new table in lieu thereof:
"Period -------Initial Borrowing Date to and including December 31, 1996 January 1, 1997 to and including December 31, 1997 January 1, 1998 to and including December 31, 1998 Thereafter Ratio -----3.50:1

3.75:1

3.50:1

3.75:1".

6

5. The definition of "Adjusted Operating Income" appearing in Section 10 of the 364 Day Credit Agreement is hereby amended by (x) deleting the word "and" appearing at the end of clause (iv) of the proviso contained therein and inserting a comma in lieu thereof and (y) inserting the following new clauses (vi) and (vii) at the end of said definition: ", (vi) Adjusted Operating Income shall be adjusted by adding thereto the amount of all expenses accrued by Holdings and its Subsidiaries during any Test Period pursuant to (x) the settlement agreement, dated as of October 9, 1997, among R.J. Reynolds Tobacco Company, certain other tobacco companies and the plaintiffs' attorneys in Broin v. Philip Morris and (y) the settlement agreement, dated as of September 5, 1997, among R.J. Reynolds Tobacco Company and the other parties to Mangini v. R.J. Reynolds Tobacco Company, to the extent (and only to the extent) (I) the aggregate amount of all payments made by Holdings and its Subsidiaries pursuant to the aforementioned agreements (and for which an adjustment to Adjusted Operating Income is made) does not exceed $96,000,000 and (II) the amount of such payments are deducted in any determination of Adjusted Operating Income and (vii) for all purposes, for any period which includes the fourth quarter of Holdings' 1997 fiscal year, there shall be excluded in determining Adjusted Operating Income any pre-tax restructuring expense and related expenses and adjustments (including deloading) recorded or accrued in the fourth quarter of Holdings' 1997 fiscal year which serve to reduce operating income of Holdings and/or its Subsidiaries in such fiscal quarter, to the extent (and only to the extent) the aggregate amount attributable pursuant to this clause (vii)

5. The definition of "Adjusted Operating Income" appearing in Section 10 of the 364 Day Credit Agreement is hereby amended by (x) deleting the word "and" appearing at the end of clause (iv) of the proviso contained therein and inserting a comma in lieu thereof and (y) inserting the following new clauses (vi) and (vii) at the end of said definition: ", (vi) Adjusted Operating Income shall be adjusted by adding thereto the amount of all expenses accrued by Holdings and its Subsidiaries during any Test Period pursuant to (x) the settlement agreement, dated as of October 9, 1997, among R.J. Reynolds Tobacco Company, certain other tobacco companies and the plaintiffs' attorneys in Broin v. Philip Morris and (y) the settlement agreement, dated as of September 5, 1997, among R.J. Reynolds Tobacco Company and the other parties to Mangini v. R.J. Reynolds Tobacco Company, to the extent (and only to the extent) (I) the aggregate amount of all payments made by Holdings and its Subsidiaries pursuant to the aforementioned agreements (and for which an adjustment to Adjusted Operating Income is made) does not exceed $96,000,000 and (II) the amount of such payments are deducted in any determination of Adjusted Operating Income and (vii) for all purposes, for any period which includes the fourth quarter of Holdings' 1997 fiscal year, there shall be excluded in determining Adjusted Operating Income any pre-tax restructuring expense and related expenses and adjustments (including deloading) recorded or accrued in the fourth quarter of Holdings' 1997 fiscal year which serve to reduce operating income of Holdings and/or its Subsidiaries in such fiscal quarter, to the extent (and only to the extent) the aggregate amount attributable pursuant to this clause (vii) does not exceed $449,000,000". 6. Section 12.07(a) of the 364 Day Credit Agreement is hereby amended by inserting the following sentence at the end of said Section: "Notwithstanding the foregoing, for purposes of the computations determining compliance with Section 8, all expenses and other charges arising from any tobacco litigation settlement and occurring in any fiscal quarter of Holdings ended after December 31, 1997 which are required by GAAP to be retroactively applied to a previous fiscal quarter of Holdings shall instead be accrued in the fiscal quarter in which such expenses and charges occur." III. Miscellaneous Provisions 1. In order to induce the Banks to enter into this Amendment, each Credit Party hereby (i) makes each of the representations, warranties and agreements contained in Section 6 of each Credit Agreement and (ii) represents and warrants that there exists no Default or Event of Default, in each case on the date hereof and on Amendment Effective Date, after giving effect to this Amendment. 7

2. This Amendment is limited as specified and shall not constitute a modification, acceptance or waiver of any other provision of either Credit Agreement or any other Credit Document (as defined in each Credit Agreement). 3. This Amendment may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which counterparts when executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A complete set of counterparts shall be lodged with Holdings and the Payments Administrator. 4. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. 5. This Amendment shall become effective as of the date first written above on the date (the "Amendment Effective Date") when (i) each of the Credit Parties, (ii) 3 Year Banks constituting Required Banks under the 3 Year Credit Agreement and (iii) 364 Day Banks constituting Required Banks under the 364 Day Credit Agreement, shall have signed a copy hereof (whether the same or different copies) and shall have delivered (including by way of facsimile transmission) the same to White & Case, 1155 Avenue of the Americas, New York, New York 10036, Attention: Jacquiline Lawrence, Esq. (Facsimile No.: (212) 354-8113). After transmitting its executed signature page to White & Case as provided above, each of the Banks shall deliver executed hard copies of this Amendment to White & Case, Attention: Jacqueline Lawrence at the address

2. This Amendment is limited as specified and shall not constitute a modification, acceptance or waiver of any other provision of either Credit Agreement or any other Credit Document (as defined in each Credit Agreement). 3. This Amendment may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which counterparts when executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A complete set of counterparts shall be lodged with Holdings and the Payments Administrator. 4. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. 5. This Amendment shall become effective as of the date first written above on the date (the "Amendment Effective Date") when (i) each of the Credit Parties, (ii) 3 Year Banks constituting Required Banks under the 3 Year Credit Agreement and (iii) 364 Day Banks constituting Required Banks under the 364 Day Credit Agreement, shall have signed a copy hereof (whether the same or different copies) and shall have delivered (including by way of facsimile transmission) the same to White & Case, 1155 Avenue of the Americas, New York, New York 10036, Attention: Jacquiline Lawrence, Esq. (Facsimile No.: (212) 354-8113). After transmitting its executed signature page to White & Case as provided above, each of the Banks shall deliver executed hard copies of this Amendment to White & Case, Attention: Jacqueline Lawrence at the address provided above. *** 8 FIFTH AMENDMENT TO THE 3 YEAR CREDIT AGREEMENT SEVENTH AMENDMENT TO THE 364 DAY CREDIT AGREEMENT FIFTH AMENDMENT, dated as of February 13, 1998, among RJR NABISCO HOLDINGS CORP., a Delaware corporation ("Holdings"), RJR NABISCO, INC., a Delaware corporation (the "Borrower"), and the lending institutions party to the 3 Year Credit Agreement referred to below and SEVENTH AMENDMENT, dated as of February 13, 1998, among Holdings, the Borrower and the lending institutions party to the 364 Day Credit Agreement referred to below (collectively, the "Amendment"). All capitalized terms used herein and not otherwise defined herein shall have the respective meanings provided such terms in the respective Credit Agreements (as defined below). WITNESSETH: WHEREAS, Holdings, the Borrower and various lending institutions (the "3 Year Banks") are parties to a Credit Agreement, dated as of April 28, 1995, with respect to initial Commitments aggregating $2,750,000,000 on such date (as in effect on the date hereof, the "3 Year Credit Agreement"); WHEREAS, Holdings, the Borrower and various lending institutions (the "364 Day Banks" and, together with the 3 Year Banks, the "Banks") are parties to a Credit Agreement, dated as of April 28, 1995, with respect to initial Commitments aggregating $750,000,000 on such date (as in effect on the date hereof, the "364 Day Credit Agreement" and, together with the 3 Year Credit Agreement, the "Credit Agreements"); WHEREAS, Holdings, the Borrower and the 3 Year Banks wish to enter into the agreements with respect to the 3 Year Credit Agreement as herein provided; and WHEREAS, Holdings, the Borrower and the 364 Day Banks wish to enter into the agreements with respect to the 364 Day Credit Agreement as herein provided; NOW, THEREFORE, it is agreed: I. Amendment to the 3 Year Credit Agreement.

FIFTH AMENDMENT TO THE 3 YEAR CREDIT AGREEMENT SEVENTH AMENDMENT TO THE 364 DAY CREDIT AGREEMENT FIFTH AMENDMENT, dated as of February 13, 1998, among RJR NABISCO HOLDINGS CORP., a Delaware corporation ("Holdings"), RJR NABISCO, INC., a Delaware corporation (the "Borrower"), and the lending institutions party to the 3 Year Credit Agreement referred to below and SEVENTH AMENDMENT, dated as of February 13, 1998, among Holdings, the Borrower and the lending institutions party to the 364 Day Credit Agreement referred to below (collectively, the "Amendment"). All capitalized terms used herein and not otherwise defined herein shall have the respective meanings provided such terms in the respective Credit Agreements (as defined below). WITNESSETH: WHEREAS, Holdings, the Borrower and various lending institutions (the "3 Year Banks") are parties to a Credit Agreement, dated as of April 28, 1995, with respect to initial Commitments aggregating $2,750,000,000 on such date (as in effect on the date hereof, the "3 Year Credit Agreement"); WHEREAS, Holdings, the Borrower and various lending institutions (the "364 Day Banks" and, together with the 3 Year Banks, the "Banks") are parties to a Credit Agreement, dated as of April 28, 1995, with respect to initial Commitments aggregating $750,000,000 on such date (as in effect on the date hereof, the "364 Day Credit Agreement" and, together with the 3 Year Credit Agreement, the "Credit Agreements"); WHEREAS, Holdings, the Borrower and the 3 Year Banks wish to enter into the agreements with respect to the 3 Year Credit Agreement as herein provided; and WHEREAS, Holdings, the Borrower and the 364 Day Banks wish to enter into the agreements with respect to the 364 Day Credit Agreement as herein provided; NOW, THEREFORE, it is agreed: I. Amendment to the 3 Year Credit Agreement. 1. The definition of "Adjusted Operating Income" appearing in Section 10 of the 3 Year Credit Agreement is hereby amended by (x) deleting the word "and" appearing at the end of clause (vi) of the proviso contained therein and inserting a comma in lieu thereof and (y) inserting the following new clause (viii) at the end of said definition:

"and (viii) Adjusted Operating Income shall be adjusted by adding thereto the amount of all expenses accrued by Holdings and its Subsidiaries during any Test Period pursuant to the Comprehensive Settlement Agreement and Release, among R.J. Reynolds Tobacco Company, certain other tobacco companies and the State of Texas, to the extent (and only to the extent) (I) the aggregate amount of all payments made by Holdings and its Subsidiaries pursuant to the aforementioned agreement (and for which an adjustment to Adjusted Operating Income is made) does not exceed $140,000,000 and (II) the amount of such payments are deducted in any determination of Adjusted Operating Income." II. Amendment to the 364 Day Credit Agreement. 1. The definition of "Adjusted Operating Income" appearing in Section 10 of the 364 Day Credit Agreement is hereby amended by (x) deleting the word "and" appearing at the end of clause (vi) of the proviso contained therein and inserting a comma in lieu thereof and (y) inserting the following new clause (viii) at the end of said definition: "and (viii) Adjusted Operating Income shall be adjusted by adding thereto the amount of all expenses accrued by Holdings and its Subsidiaries during any Test Period pursuant to the Comprehensive Settlement Agreement and Release, among R.J. Reynolds Tobacco Company, certain other tobacco companies and the State of Texas, to the extent (and only to the extent) (I) the aggregate amount of all payments made by Holdings and its Subsidiaries pursuant to the aforementioned

"and (viii) Adjusted Operating Income shall be adjusted by adding thereto the amount of all expenses accrued by Holdings and its Subsidiaries during any Test Period pursuant to the Comprehensive Settlement Agreement and Release, among R.J. Reynolds Tobacco Company, certain other tobacco companies and the State of Texas, to the extent (and only to the extent) (I) the aggregate amount of all payments made by Holdings and its Subsidiaries pursuant to the aforementioned agreement (and for which an adjustment to Adjusted Operating Income is made) does not exceed $140,000,000 and (II) the amount of such payments are deducted in any determination of Adjusted Operating Income." II. Amendment to the 364 Day Credit Agreement. 1. The definition of "Adjusted Operating Income" appearing in Section 10 of the 364 Day Credit Agreement is hereby amended by (x) deleting the word "and" appearing at the end of clause (vi) of the proviso contained therein and inserting a comma in lieu thereof and (y) inserting the following new clause (viii) at the end of said definition: "and (viii) Adjusted Operating Income shall be adjusted by adding thereto the amount of all expenses accrued by Holdings and its Subsidiaries during any Test Period pursuant to the Comprehensive Settlement Agreement and Release, among R.J. Reynolds Tobacco Company, certain other tobacco companies and the State of Texas, to the extent (and only to the extent) (I) the aggregate amount of all payments made by Holdings and its Subsidiaries pursuant to the aforementioned agreement (and for which an adjustment to Adjusted Operating Income is made) does not exceed $140,000,000 and (II) the amount of such payments are deducted in any determination of Adjusted Operating Income." III. Miscellaneous Provisions 1. In order to induce the Banks to enter into this Amendment, each Credit Party hereby (i) makes each of the representations, warranties and agreements contained in Section 6 of each Credit Agreement and (ii) represents and warrants that there exists no Default or Event of Default, in each case on the date hereof and on the Amendment Effective Date, both before and after giving effect to this Amendment. 2. This Amendment is limited as specified and shall not constitute a modification, acceptance or waiver of any other provision of either Credit Agreement or any other Credit Document (as defined in each Credit Agreement). 3. This Amendment may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which counterparts when executed and delivered shall be an original, but all of which shall together constitute one and the same 2

instrument. A complete set of counterparts shall be lodged with Holdings and the Payments Administrator. 4. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. 5. This Amendment shall become effective as of the date first written above on the date (the "Amendment Effective Date") when (i) each of the Credit Parties, (ii) 3 Year Banks constituting Required Banks under the 3 Year Credit Agreement and (iii) 364 Day Banks constituting Required Banks under the 364 Day Credit Agreement, shall have signed a copy hereof (whether the same or different copies) and shall have delivered (including by way of facsimile transmission) the same to White & Case, 1155 Avenue of the Americas, New York, New York 10036, Attention: Jacquiline Lawrence, Esq. (Facsimile No.: (212) 354-8113). After transmitting its executed signature page to White & Case as provided above, each of the Banks shall deliver executed hard copies of this Amendment to White & Case, Attention: Jacqueline Lawrence at the address provided above. ***

instrument. A complete set of counterparts shall be lodged with Holdings and the Payments Administrator. 4. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. 5. This Amendment shall become effective as of the date first written above on the date (the "Amendment Effective Date") when (i) each of the Credit Parties, (ii) 3 Year Banks constituting Required Banks under the 3 Year Credit Agreement and (iii) 364 Day Banks constituting Required Banks under the 364 Day Credit Agreement, shall have signed a copy hereof (whether the same or different copies) and shall have delivered (including by way of facsimile transmission) the same to White & Case, 1155 Avenue of the Americas, New York, New York 10036, Attention: Jacquiline Lawrence, Esq. (Facsimile No.: (212) 354-8113). After transmitting its executed signature page to White & Case as provided above, each of the Banks shall deliver executed hard copies of this Amendment to White & Case, Attention: Jacqueline Lawrence at the address provided above. *** 3 FIRST AMENDMENT TO THE 364 CREDIT AGREEMENT FIRST AMENDMENT (this "Amendment"), dated as September 18, 1997, among NABISCO HOLDINGS CORP., a Delaware corporation ("Holdings"), NABISCO INC., a New Jersey corporation (the "Borrower") and the lending institutions party to the Credit Agreement referred to below (the "Banks"). All capitalized terms used herein and not otherwise defined herein shall have the respective meanings provided such terms in the Credit Agreement referred to below. W I T N E S S E T H: WHEREAS, Holdings , the Borrower and the Banks are parties to a Credit Agreement, dated as of October 31, 1996 (as amended, modified and supplemented to the date hereof, the "Credit Agreement"); and WHEREAS, the parties to the Credit Agreement wish to amend the Credit Agreement as herein provided; NOW THEREFORE, it is agreed: I. Amendment to Credit Agreement. On and after the First Amendment Effective (as defined below): 1. The definition of "Commitment Expiry Date" appearing in Section 10 of the Credit Agreement shall be amended to read in its entirely as follows: "Commitment Expiry Date" shall mean the date which is 364 days after the First Amendment Effective Date. 2. Section 10 of the Credit Agreement is hereby amended by adding the following definitions in appropriate alphabetical order. "First Amendment" shall mean the First Amendment to this Agreement, dated as of September 18, 1997. "First Amendment Effective Date" shall have the meaning provided in the First Amendment.

II. Conditions Precedent to First Amendment Effective Date. 1. This Amendment shall become effective on October 30, 1997 (the "First Amendment Effective Date"), so long as each of the following conditions shall have been met to the satisfaction of the Senior Managing Agents on or prior to the First Amendment Effective Date:

FIRST AMENDMENT TO THE 364 CREDIT AGREEMENT FIRST AMENDMENT (this "Amendment"), dated as September 18, 1997, among NABISCO HOLDINGS CORP., a Delaware corporation ("Holdings"), NABISCO INC., a New Jersey corporation (the "Borrower") and the lending institutions party to the Credit Agreement referred to below (the "Banks"). All capitalized terms used herein and not otherwise defined herein shall have the respective meanings provided such terms in the Credit Agreement referred to below. W I T N E S S E T H: WHEREAS, Holdings , the Borrower and the Banks are parties to a Credit Agreement, dated as of October 31, 1996 (as amended, modified and supplemented to the date hereof, the "Credit Agreement"); and WHEREAS, the parties to the Credit Agreement wish to amend the Credit Agreement as herein provided; NOW THEREFORE, it is agreed: I. Amendment to Credit Agreement. On and after the First Amendment Effective (as defined below): 1. The definition of "Commitment Expiry Date" appearing in Section 10 of the Credit Agreement shall be amended to read in its entirely as follows: "Commitment Expiry Date" shall mean the date which is 364 days after the First Amendment Effective Date. 2. Section 10 of the Credit Agreement is hereby amended by adding the following definitions in appropriate alphabetical order. "First Amendment" shall mean the First Amendment to this Agreement, dated as of September 18, 1997. "First Amendment Effective Date" shall have the meaning provided in the First Amendment.

II. Conditions Precedent to First Amendment Effective Date. 1. This Amendment shall become effective on October 30, 1997 (the "First Amendment Effective Date"), so long as each of the following conditions shall have been met to the satisfaction of the Senior Managing Agents on or prior to the First Amendment Effective Date: (a) Execution of Amendment. On or prior to the First Amendment Effective Date, Holdings, the Borrower and each of the Banks shall have signed a copy hereof (whether the same or different copies) and shall have delivered (including by way of facsimile transmission) the same to the Payments Administrator at the Payments Administrator's Office. (b) No Default: Representations and Warranties. On the First Amendment Effective Date, both before and after giving effect to this Amendment, (i) there shall exist no Default or Event of Default and (ii) all representations and warranties contained in the Credit Agreement and in the other Credit Documents shall be true and correct in all materials respects. III. General Provisions 1. This Amendment is limited as specified and shall not constitute a modification, acceptance or waiver of any other provision of the Credit Agreement or any other Credit Document. 2. This Amendment may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which counterparts when executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A complete set of counterparts shall be lodged with Holdings and the Payments Administrator.

II. Conditions Precedent to First Amendment Effective Date. 1. This Amendment shall become effective on October 30, 1997 (the "First Amendment Effective Date"), so long as each of the following conditions shall have been met to the satisfaction of the Senior Managing Agents on or prior to the First Amendment Effective Date: (a) Execution of Amendment. On or prior to the First Amendment Effective Date, Holdings, the Borrower and each of the Banks shall have signed a copy hereof (whether the same or different copies) and shall have delivered (including by way of facsimile transmission) the same to the Payments Administrator at the Payments Administrator's Office. (b) No Default: Representations and Warranties. On the First Amendment Effective Date, both before and after giving effect to this Amendment, (i) there shall exist no Default or Event of Default and (ii) all representations and warranties contained in the Credit Agreement and in the other Credit Documents shall be true and correct in all materials respects. III. General Provisions 1. This Amendment is limited as specified and shall not constitute a modification, acceptance or waiver of any other provision of the Credit Agreement or any other Credit Document. 2. This Amendment may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which counterparts when executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A complete set of counterparts shall be lodged with Holdings and the Payments Administrator. 3. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ***

EXHIBIT 12.1 RJR NABISCO, INC. COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (DOLLARS IN MILLIONS)
YEARS END DECEMBER 3 -----------------------------1997 1996 1995 --------- --------- -------Earnings before fixed charges: Income before income taxes............................................. Less minority interest in pre-tax income of Nabisco Holdings........... Adjusted income before income taxes.................................... Interest and debt expense.............................................. Interest portion of rental expense..................................... Earnings before fixed charges............................................ 1,104 142 --------962 817 61 --------$ 1,840 ----------------817 61 6 --------$ 884 ----------------$ $ 1,288 22 --------1,266 832 56 --------$ 2,154 ----------------832 56 15 --------$ 903 ----------------$ $ 1,29 10 -------1,18 87 5 -------$ 2,11 --------------87 5 1 -------$ 93 --------------$ $

Fixed charges: Interest and debt expense.............................................. Interest portion of rental expense..................................... Capitalized interest................................................... Total fixed charges..................................................

EXHIBIT 12.1 RJR NABISCO, INC. COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (DOLLARS IN MILLIONS)
YEARS END DECEMBER 3 -----------------------------1997 1996 1995 --------- --------- -------Earnings before fixed charges: Income before income taxes............................................. Less minority interest in pre-tax income of Nabisco Holdings........... Adjusted income before income taxes.................................... Interest and debt expense.............................................. Interest portion of rental expense..................................... Earnings before fixed charges............................................ 1,104 142 --------962 817 61 --------$ 1,840 ----------------817 61 6 --------$ 884 ----------------2.1 ----------------$ $ 1,288 22 --------1,266 832 56 --------$ 2,154 ----------------832 56 15 --------$ 903 ----------------2.4 ----------------$ $ 1,29 10 -------1,18 87 5 -------$ 2,11 --------------87 5 1 -------$ 93 --------------2. --------------$ $

Fixed charges: Interest and debt expense.............................................. Interest portion of rental expense..................................... Capitalized interest................................................... Total fixed charges..................................................

Ratio of earnings to fixed charges.......................................

Exhibit 21
RJR NABISCO HOLDINGS CORP. Date of Name of Subsidiary Incorporation --------------------------------------------------------------------------------------------------------RJR Nabisco Holdings Corp. RJR Nabisco, Inc. ABCO Sp. z o.o Airco IHC, Inc. AO ISMA (60%) ** AO3T Kabisco (90%) *** A/O Nabisco * AO Vostanovlenniy Tabak (48.46%) *** Arjay Equipment Corporation Arjay Holdings, Inc. Arrimo Fomento Comercial Ltda. * Avare (I.C.P.A. Cerqeirense Ltda) Beech-Nut Life Savers (Panama) S.A. Beijing Nabisco Food Company Ltd. (91.9%) Bisco Services B.V. Bisco Services SA Camel Racing Inc. - Courses Camel Inc. * Carnes y Conservas Espanolas, S.A. (CARCESA) Cartera e Inversiones S.A.* CGM-Cooperation GmbH China-American Cigarette Company Limited (50%) *** Comercial Benut, S.A. de C.V. ** Companhia Produtos Pilar Compania Venezolana de Conservas C.A. (COVENCO) Consiber, S.A. Covenco Holding C.A. Oct 25, 1988 Mar 04, 1970 Sept 24,1991 Mar 22, 1989 Nov 09, 1992 Jul 05, 1994 Aug 16, 1994 Oct 26, 1994 Nov 08, 1968 May 07, 1984 Oct 27, 1987 May 11, 1971 Jul 12, 1963 Mar 16, 1995 Dec 22, 1988 Mar 01, 1998 Jun 22, 1989 Dec 02, 1975 Mar 05, 1979 Jan 15, 1990 May 29, 1984 Mar 16, 1977 June 23,1934 Jul 25, 1969 Mar 31, 1979 Nov 26, 1991

Exhibit 21
RJR NABISCO HOLDINGS CORP. Date of Name of Subsidiary Incorporation --------------------------------------------------------------------------------------------------------RJR Nabisco Holdings Corp. RJR Nabisco, Inc. ABCO Sp. z o.o Airco IHC, Inc. AO ISMA (60%) ** AO3T Kabisco (90%) *** A/O Nabisco * AO Vostanovlenniy Tabak (48.46%) *** Arjay Equipment Corporation Arjay Holdings, Inc. Arrimo Fomento Comercial Ltda. * Avare (I.C.P.A. Cerqeirense Ltda) Beech-Nut Life Savers (Panama) S.A. Beijing Nabisco Food Company Ltd. (91.9%) Bisco Services B.V. Bisco Services SA Camel Racing Inc. - Courses Camel Inc. * Carnes y Conservas Espanolas, S.A. (CARCESA) Cartera e Inversiones S.A.* CGM-Cooperation GmbH China-American Cigarette Company Limited (50%) *** Comercial Benut, S.A. de C.V. ** Companhia Produtos Pilar Compania Venezolana de Conservas C.A. (COVENCO) Consiber, S.A. Covenco Holding C.A. Dely, S.A. Distribuidora Pan Americana, S.A. Establecimiento Modelo Terrabusi S.A. (99.2%) Exhold Limited * Export "A" Inc. Fleischmann Argentina S.A. * Fleischmann Corporation, The Fleischmann International, Inc. Fleischmann Peruana Inc. Fleischmann Uruguaya S.A. Oct 25, 1988 Mar 04, 1970 Sept 24,1991 Mar 22, 1989 Nov 09, 1992 Jul 05, 1994 Aug 16, 1994 Oct 26, 1994 Nov 08, 1968 May 07, 1984 Oct 27, 1987 May 11, 1971 Jul 12, 1963 Mar 16, 1995 Dec 22, 1988 Mar 01, 1998 Jun 22, 1989 Dec 02, 1975 Mar 05, 1979 Jan 15, 1990 May 29, 1984 Mar 16, 1977 June 23,1934 Jul 25, 1969 Mar 31, 1979 Nov 26, 1991 Dec 18, 1960 Oct 22, 1974 Dec 20, 1929 Oct 03, 1989 Mar 31, 1989 Dec 13, 1990 Nov 02, 1929 Nov 20, 1944 Sep 01, 1939 Mar 09, 1961

* ** *** ****

Inactive In Liquidation Partnership/Joint Venture/Trust Nameholder

Page 1 SUB-Curr Revised 3/13/98

RJR NABISCO HOLDINGS CORP. Date of Name of Subsidiary Incorporation ---------------------------------------------------------------------------------------------------------

Freezer Queen Foods (Canada) Limited Fulmer Corporation Limited Galletas Artiach, S.A. Galletas Fontaneda, S.A. Gelatinas Ecuatorianas S.A. (66.7%) GEM: Global Event Management, Ltd. Global Events Management, Inc. GMB, Inc. Grupo Gamesa, S.A. de C.V. (1%) Hanover Servicing, Inc. Haus Neuerburg GmbH * Hervin Company, The Hervin Holdings, Inc. Industria de Colores y Sabores S.A. * Industria de Laticinios Gloria Ltda. *

Nov 03, 1967 May 15, 1981 Jul 23, 1932 ? Nov 21, 1978 Jun 27, 1991 Sep 05, 1991 May 09, 1996 Jul 29, 1981 Apr 13, 1992 Feb 25, 1977 May 28, 1965 Mar 29, 1988 Jun 21, 1967 Jan 18, 1978

RJR NABISCO HOLDINGS CORP. Date of Name of Subsidiary Incorporation ---------------------------------------------------------------------------------------------------------

Freezer Queen Foods (Canada) Limited Fulmer Corporation Limited Galletas Artiach, S.A. Galletas Fontaneda, S.A. Gelatinas Ecuatorianas S.A. (66.7%) GEM: Global Event Management, Ltd. Global Events Management, Inc. GMB, Inc. Grupo Gamesa, S.A. de C.V. (1%) Hanover Servicing, Inc. Haus Neuerburg GmbH * Hervin Company, The Hervin Holdings, Inc. Industria de Colores y Sabores S.A. * Industria de Laticinios Gloria Ltda. * Industrias Alimenticias Maguary Ltda. Iracema Industrias de Caju Ltda Joshua Partners & Co. Jupiter Produtos Alimenticios Ltda. Knox Company, The Landers Centro Americana Fabricantes de Molinos Marca "Corona", S.A. de C.V. (95%) ** Landers y Cia, S.A. Leite Gloria do Nordeste S.A. Life Savers Manufacturing, Inc. Lowney Inc. Luis Vizzolini e Hijos S.A.I.C. Marbu, S.A. Merola Finance B.V. * MEX Holdings, Ltd. MM Druck-und Verpackungstechnik Verwaltungsgesellschaft mbH Modi RJR Limited (50%) *** NABEC, S.A.

Nov 03, 1967 May 15, 1981 Jul 23, 1932 ? Nov 21, 1978 Jun 27, 1991 Sep 05, 1991 May 09, 1996 Jul 29, 1981 Apr 13, 1992 Feb 25, 1977 May 28, 1965 Mar 29, 1988 Jun 21, 1967 Jan 18, 1978 May 07, 1953 Aug 08, 1978 Mar 08, 1996 Mar 02, 1962 Dec 30, 1991 Jan 09, 1979 Oct 01, 1951 May 16, 1968 Apr 21, 1976 Jan 01, 1983 Jun 12, 1961 Oct 26, 1967 May 09, 1995 Nov 27, 1991 Aug 27 1990 Sep 24, 1993 Nov 17, 1982

* ** *** ****

Inactive In Liquidation Partnership/Joint Venture/Trust Nameholder

Page 2 SUB-Curr Revised 3/13/98

RJR NABISCO HOLDINGS CORP. Date of Name of Subsidiary Incorporation ---------------------------------------------------------------------------------------------------------

Nabisco Arabia Co. Ltd. *** (75%) Nabisco Argentina S.A. Nabisco Biscuit Manufacturing (Midwest), Inc. Nabisco Biscuit Manufacturing (West), Inc. Nabisco Brands Company Nabisco Brands Holdings Denmark Limited Nabisco Brands Nominees Limited * Nabisco Brazil, Inc. Nabisco Caribbean Export, Inc. Nabisco/Cetus Food Biotechnology Research Partnership (80%) *** Nabisco (China) Limited Nabisco Chongqing Food Company Ltd. * Nabisco de Nicaragua, S.A. (60%) Nabisco Direct, Inc. Nabisco Dominicana, S.A. Nabisco England IHC, Inc. Nabisco Enterprises IHC, Inc. Nabisco Europe, Middle East and Africa Trading, S.A. Nabisco Food (Suzhou) Co. Ltd. Nabisco Group Ltd. Nabisco Holdings I B.V. Nabisco Holdings II B.V. Nabisco Holdings Corp. (80.7%)

Jan Mar Dec Dec Aug Apr Aug May Jun Mar Aug Mar Dec Aug Dec Mar Mar Oct Mar Jun May May Apr

29, 14, 21, 21, 01, 17, 22, 10, 13, 01, 29, 01, 10, 23, 11, 29, 22, 28, 16, 02, 03, 28, 21,

1996 1994 1988 1988 1995 1989 1983 1990 1984 1984 1995 1995 1965 1995 1995 1989 1989 1992 1995 1995 1996 1996 1981

RJR NABISCO HOLDINGS CORP. Date of Name of Subsidiary Incorporation ---------------------------------------------------------------------------------------------------------

Nabisco Arabia Co. Ltd. *** (75%) Nabisco Argentina S.A. Nabisco Biscuit Manufacturing (Midwest), Inc. Nabisco Biscuit Manufacturing (West), Inc. Nabisco Brands Company Nabisco Brands Holdings Denmark Limited Nabisco Brands Nominees Limited * Nabisco Brazil, Inc. Nabisco Caribbean Export, Inc. Nabisco/Cetus Food Biotechnology Research Partnership (80%) *** Nabisco (China) Limited Nabisco Chongqing Food Company Ltd. * Nabisco de Nicaragua, S.A. (60%) Nabisco Direct, Inc. Nabisco Dominicana, S.A. Nabisco England IHC, Inc. Nabisco Enterprises IHC, Inc. Nabisco Europe, Middle East and Africa Trading, S.A. Nabisco Food (Suzhou) Co. Ltd. Nabisco Group Ltd. Nabisco Holdings I B.V. Nabisco Holdings II B.V. Nabisco Holdings Corp. (80.7%) Nabisco Holdings IHC, Inc. Nabisco Hong Kong Limited Nabisco Iberia Lda. Nabisco Iberia, S.L. (98.06%) Nabisco, Inc. Nabisco, Inc. Foreign Sales Corporation

Jan Mar Dec Dec Aug Apr Aug May Jun Mar Aug Mar Dec Aug Dec Mar Mar Oct Mar Jun May May Apr Mar Apr Dec Jul Feb Dec

29, 14, 21, 21, 01, 17, 22, 10, 13, 01, 29, 01, 10, 23, 11, 29, 22, 28, 16, 02, 03, 28, 21, 22, 12, 23, 15, 03, 17,

1996 1994 1988 1988 1995 1989 1983 1990 1984 1984 1995 1995 1965 1995 1995 1989 1989 1992 1995 1995 1996 1996 1981 1989 1994 1916 1993 1898 1991

* ** *** ****

Inactive In Liquidation Partnership/Joint Venture/Trust Nameholder

Page 3 SUB-Curr Revised 3/13/98

RJR NABISCO HOLDINGS CORP. Date of Name of Subsidiary Incorporation ---------------------------------------------------------------------------------------------------------

Nabisco Nabisco Nabisco Nabisco Nabisco Nabisco Nabisco Nabisco Nabisco Nabisco Nabisco Nabisco Nabisco Nabisco Nabisco Nabisco Nabisco Nabisco Nabisco Nabisco Nabisco Nabisco Nabisco Nabisco Nabisco Nabisco Nabisco

International, Inc. International Limited International M.E./Africa L.L.C. (49%) International Market Development Group, Inc. International, S.A. Investments, Inc. Korea Ltd. Ltd-Nabisco Ltee Music Publishers, Inc. Music Ventures, Inc. (New Zealand) Limited **** Pension Trust Limited Peru S.A. Philippines Inc. Royal Argentina Inc. Royal Chile Limitada Royal de Honduras, S.A. Royal del Ecuador, S.A. Royal, Inc. Royal Panama, S.A. S.A. de C.V. (99%) S.L. * South Africa (Proprietary) Limited (49%) Taiwan Corporation Technology Company Thailand Limited Trading AG

Jul 29, 1947 Dec 11, 1987 ? Mar 22, 1989 Nov 26, 1953 Mar 22, 1989 Feb 10, 1998 Jan 01, 1993 Mar 24, 1986 Mar 24, 1986 Mar 30, 1990 Aug 31, 1956 Jan 28, 1972 Oct 14, 1997 Sep 29, 1934 Mar 22, 1978 Jul 22, 1982 Sep 16, 1977 Sep 21, 1951 Mar 07, 1979 Jun 15, 1992 Jan 18, 1989 Jan 02, 1945 May 27, 1996 Dec 13, 1996 Oct 01, 1997 Aug 02, 1960

RJR NABISCO HOLDINGS CORP. Date of Name of Subsidiary Incorporation ---------------------------------------------------------------------------------------------------------

Nabisco International, Inc. Nabisco International Limited Nabisco International M.E./Africa L.L.C. (49%) Nabisco International Market Development Group, Inc. Nabisco International, S.A. Nabisco Investments, Inc. Nabisco Korea Ltd. Nabisco Ltd-Nabisco Ltee Nabisco Music Publishers, Inc. Nabisco Music Ventures, Inc. Nabisco (New Zealand) Limited **** Nabisco Pension Trust Limited Nabisco Peru S.A. Nabisco Philippines Inc. Nabisco Royal Argentina Inc. Nabisco Royal Chile Limitada Nabisco Royal de Honduras, S.A. Nabisco Royal del Ecuador, S.A. Nabisco Royal, Inc. Nabisco Royal Panama, S.A. Nabisco S.A. de C.V. (99%) Nabisco S.L. * Nabisco South Africa (Proprietary) Limited (49%) Nabisco Taiwan Corporation Nabisco Technology Company Nabisco Thailand Limited Nabisco Trading AG Nabisco Tunisia S.A. Nabisco Venezuela, C.A. National Biscuit Company **** Northern Brands International, Inc. Outdoor Traders International S.r.L. ** Planters & Biscuits Co. Posto Apolo Ltda. Productos Alimenticios Royal S.A. Productos Confitados Salvavidas de Guatemala, S.A. Productos Mayco S.A.I.C.I.F. Productos Royal S.A. * Produtos Alimenticios Fleischmann e Royal Ltda. PT Nabisco Foods (70%)

Jul 29, 1947 Dec 11, 1987 ? Mar 22, 1989 Nov 26, 1953 Mar 22, 1989 Feb 10, 1998 Jan 01, 1993 Mar 24, 1986 Mar 24, 1986 Mar 30, 1990 Aug 31, 1956 Jan 28, 1972 Oct 14, 1997 Sep 29, 1934 Mar 22, 1978 Jul 22, 1982 Sep 16, 1977 Sep 21, 1951 Mar 07, 1979 Jun 15, 1992 Jan 18, 1989 Jan 02, 1945 May 27, 1996 Dec 13, 1996 Oct 01, 1997 Aug 02, 1960 Jul 02, 1976 Nov 26, 1991 Jan 17, 1971 Dec 10, 1992 Jan 17, 1991 Jan 01, 1997 Dec 05, 1984 Jan 01, 1966 Jul 03, 1974 May 11, 1962 Dec 27, 1977 Nov 28, 1964 ?

* ** *** ****

Inactive In Liquidation Partnership/Joint Venture/Trust Nameholder

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RJR NABISCO HOLDINGS CORP. Date of Name of Subsidiary Incorporation ---------------------------------------------------------------------------------------------------------

R. R. R. R. R. R. R. R. R. R. R. R. R. R.

J. J. J. J. J. J. J. J. J. J. J. J. J. J.

Reynolds Berhad (60%) Reynolds (Consults) Limited Reynolds (Cyprus) Limited Reynolds-Da Nang Tobacco Company Limited (70%) *** Reynolds Espana, S.L. (50%) Reynolds Europe, Inc. Reynolds Finance S.A. Reynolds Finland OY Reynolds Iberia S.L. Reynolds, Inc. Reynolds International B.V. Reynolds Italia S.r.L. Reynolds (Korea) Ltd. ** Reynolds/M.C. Tobacco Company, Limited (70%)

Jan Feb Feb Jan Dec Apr Sep Apr Nov Oct Oct Feb Mar Jul

29, 20, 20, 24, 16, 24, 17, 27, 27, 09, 30, 09, 09, 01,

1970 1996 1990 1995 1992 1992 1982 1994 1996 1985 1995 1989 1989 1982

RJR NABISCO HOLDINGS CORP. Date of Name of Subsidiary Incorporation ---------------------------------------------------------------------------------------------------------

R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R. R.

J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J. J.

Reynolds Berhad (60%) Reynolds (Consults) Limited Reynolds (Cyprus) Limited Reynolds-Da Nang Tobacco Company Limited (70%) *** Reynolds Espana, S.L. (50%) Reynolds Europe, Inc. Reynolds Finance S.A. Reynolds Finland OY Reynolds Iberia S.L. Reynolds, Inc. Reynolds International B.V. Reynolds Italia S.r.L. Reynolds (Korea) Ltd. ** Reynolds/M.C. Tobacco Company, Limited (70%) Reynolds Overseas Finance Co. N.V. Reynolds (Portugal) Empresa Comercial de Tabacos, Ltda. Reynolds Processing (Romania) S.r.L. Reynolds (PVT) Limited Reynolds Reklam Ve Pazarlama A.S. Reynolds Scandinavia A.B. Reynolds (Sea) Sdn. Bhd. Reynolds (Slovakia) Spol. s.r.o. Reynolds (Thailand) Inc. Reynolds Tobacco A.G. Dagmersellen Reynolds Tobacco B.V. Reynolds Tobacco Company Reynolds Tobacco Company Reynolds Tobacco Company (Hong Kong) Limited Reynolds Tobacco Company, S.A.E. Reynolds Tobacco Company Sdn. Bhd. Reynolds Tobacco Company (Taiwan), Inc. Reynolds Tobacco (Croatia) Ltd. * Reynolds Tobacco Foreign Sales Corporation Reynolds Tobacco France S.A. Reynolds Tobacco GmbH Reynolds Tobacco Hellas A.E.B.E. Reynolds Tobacco International (Asia Pacific), Inc. Reynolds Tobacco International B.V. Reynolds Tobacco International (Hong Kong) Limited Reynolds Tobacco International, Inc. Reynolds Tobacco International (Korea), Inc. Reynolds Tobacco International (Mexico), Inc. Reynolds Tobacco International OY ** Reynolds Tobacco International S.A.

Jan Feb Feb Jan Dec Apr Sep Apr Nov Oct Oct Feb Mar Jul Oct Jul Dec Dec Mar Apr Aug Sep Aug Mar Sep Apr Aug Apr Apr Oct Apr Dec Dec Aug Nov Sep Nov Sep Jul Jan Jan Jun Jun Nov

29, 20, 20, 24, 16, 24, 17, 27, 27, 09, 30, 09, 09, 01, 21, 20, 28, 28, 22, 12, 29, 20, 06, 03, 24, 04, 08, 07, 27, 10, 14, 21, 19, 21, 30, 24, 27, 02, 28, 12, 17, 24, 14, 03,

1970 1996 1990 1995 1992 1992 1982 1994 1996 1985 1995 1989 1989 1982 1977 1980 1995 1994 1990 1969 1992 1993 1992 1966 1973 1899 1969 1970 1971 1973 1988 1992 1984 1976 1957 1981 1978 1963 1987 1976 1991 1981 1995 1966

* ** *** ****

Inactive In Liquidation Partnership/Joint Venture/Trust Nameholder

Page 5 SUB-Curr Revised 3/13/98

RJR NABISCO HOLDINGS CORP. Date of Name of Subsidiary Incorporation ---------------------------------------------------------------------------------------------------------

R. R. R. R. R. R. R. R. R. R.

J. J. J. J. J. J. J. J. J. J.

Reynolds Reynolds Reynolds Reynolds Reynolds Reynolds Reynolds Reynolds Reynolds Reynolds

Tobacco-Kazakhstan (80%) *** Tobacco (Kiev) JSC Tobacco-Kremenchuk (70%) *** Tobacco Limited * Tobacco Luxembourg Tobacco Ltd Tobacco-Lviv JSC (70%) *** Tobacco (MAK) * Tobacco (Philippines), Inc. Tobacco (Poland) Sp. zo.o.

Jun Apr Jun Jun Feb May Oct Jul Apr Jan

30, 09, 10, 18, 07, 16, 28, 25, 22, 07,

1994 1993 1993 1975 1997 1995 1993 1994 1992 1991

RJR NABISCO HOLDINGS CORP. Date of Name of Subsidiary Incorporation ---------------------------------------------------------------------------------------------------------

R. J. Reynolds Tobacco-Kazakhstan (80%) *** R. J. Reynolds Tobacco (Kiev) JSC R. J. Reynolds Tobacco-Kremenchuk (70%) *** R. J. Reynolds Tobacco Limited * R. J. Reynolds Tobacco Luxembourg R. J. Reynolds Tobacco Ltd R. J. Reynolds Tobacco-Lviv JSC (70%) *** R. J. Reynolds Tobacco (MAK) * R. J. Reynolds Tobacco (Philippines), Inc. R. J. Reynolds Tobacco (Poland) Sp. zo.o. R. J. Reynolds Tobacco (Romania) Ltd. R. J. Reynolds Tobacco Spol. s.r.o. R. J. Reynolds Tobacco (UK) Limited R. J. Reynolds Trading Company Sdn. Bhd. R. J. Reynolds Tunisia R. J. Reynolds Tutun Sanayi A.S. Reynolds Manufacturing (Bulgaria) Ltd. (67%) * Reynolds Manufacturing (Romania) S.r.L. (99%) Reynolds Technologies, Inc. REYTAB Tutun Sanayi ve Ticaret AS Ritz Biscuit Company Limited **** RJR-Armavirtabak (91.25%) *** RJR (Bulgaria) Ltd. * RJR Central Asia * RJR Comercial Ltda. ** RJR Group, Inc., The RJR Industries, Inc. RJR Industries (U.K.) Limited ** RJR-Macdonald Inc. RJR-Macdonald Investments Inc. RJR Marketing and Sales JSC RJR Mauritius Private Limited RJR Merchandise Marketing Company RJR Nabisco & Company *** RJR Nabisco China Limited RJR Nabisco (Cyprus) Limited RJR Nabisco Holdings Capital Trust I (3%) *** RJR-Nabisco Industries, Inc. RJR Nabisco Securities Ltd.-Titres RJR Nabisco Ltee

Jun 30, 1994 Apr 09, 1993 Jun 10, 1993 Jun 18, 1975 Feb 07, 1997 May 16, 1995 Oct 28, 1993 Jul 25, 1994 Apr 22, 1992 Jan 07, 1991 Jul 06, 1993 Apr 12, 1991 Nov 18, 1980 Nov 06, 1987 Mar 17, 1997 Jan 21, 1993 Dec 29, 1993 Jul 12, 1993 Mar 01, 1994 Jun 10, 1986 Sep 28, 1989 Oct 24, 1994 Oct 27, 1993 Mar 10, 1995 Aug 18, 1977 Dec 13, 1985 Dec 29, 1975 Jun 01, 1982 Sep 12, 1978 June 21,1996 Feb 16, 1995 Sep 27, 1993 Aug 22, 1994 Mar 20, 1992 Dec 28, 1979 Mar 29, 1990 Jun 20, 1995 Dec 13, 1985 Sep 28, 1987

* ** *** ****

Inactive In Liquidation Partnership/Joint Venture/Trust Nameholder

Page 6 SUB-Curr Revised 3/13/98

RJR NABISCO HOLDINGS CORP. Date of Name of Subsidiary Incorporation ---------------------------------------------------------------------------------------------------------

RJR-Petro (92%) *** RJR Realty Relocation Services, Inc. RJR Sales Co. RJR Technical Company RJR Tobacco Company, Inc. RJR Tobacco Consolidated IHC, Inc. RJR Tobacco Eurasia, Inc. RJR Tobacco Holdings II, B.V. RJR Tobacco Holdings IHC, Inc. R.J.R. Tobacco International Holding B.V. RJR Tobacco Russia RJR Trade Promotion Company Royal Beech-Nut (Namibia) (Pty) Ltd. Royal Holding C.A. Royal Productos Alimenticios, C.A. S.A. Marketers & Brokers (Pty) Ltd.

May Nov Feb May Dec Mar May Apr Mar Nov Dec Feb Aug Nov Jul Feb

07, 01, 18, 16, 30, 22, 26, 17, 22, 22, 05, 18, 08, 26, 26, 12,

1992 1994 1993 1991 1982 1989 1994 1985 1989 1996 1991 1993 1989 1991 1971 1987

RJR NABISCO HOLDINGS CORP. Date of Name of Subsidiary Incorporation ---------------------------------------------------------------------------------------------------------

RJR-Petro (92%) *** RJR Realty Relocation Services, Inc. RJR Sales Co. RJR Technical Company RJR Tobacco Company, Inc. RJR Tobacco Consolidated IHC, Inc. RJR Tobacco Eurasia, Inc. RJR Tobacco Holdings II, B.V. RJR Tobacco Holdings IHC, Inc. R.J.R. Tobacco International Holding B.V. RJR Tobacco Russia RJR Trade Promotion Company Royal Beech-Nut (Namibia) (Pty) Ltd. Royal Holding C.A. Royal Productos Alimenticios, C.A. S.A. Marketers & Brokers (Pty) Ltd. Salem Holidays Sdn. Bhd. Salem Power Station Sdn. Bhd. Salem Servicing, Inc. Salvavidas S. de R.L. de C.V. ** S. F. Imports, Inc. Smoker's Connection, The Smooth Events, Inc. Sports Marketing Enterprises, Inc. **** STAR Cooperation GmbH * Stella D'oro Biscuit Co., Inc. Tabandor S.A. (33%) Tanzania Cigarette Company (51%) *** Targacept, Inc. Tevalca Holding C.A. Transapolo-Transportes Rodoviarios Apolo Ltda. Transnational Services, Inc. 20th Century Denmark Limited Vantage Arts Inc. - Arts Vantage Inc. * WBI (International) S.A. ** West Indies Yeast Company Limited (72%) Worldwide Brands, Inc. Worldwide Brands Inc. Sdn. Bhd. Worldwide Brands International (Hong Kong) Limited Yili-Nabisco Biscuit & Food Company Limited (51%) ***

May Nov Feb May Dec Mar May Apr Mar Nov Dec Feb Aug Nov Jul Feb Oct Sep Jan Mar May Feb Jan Apr Jan Jan Feb Jan Mar Nov Oct Jan Mar Jun Nov Nov Oct Mar Jan Jan

07, 01, 18, 16, 30, 22, 26, 17, 22, 22, 05, 18, 08, 26, 26, 12, 03, 18, 12, 30, 26, 18, 26, 14, 29, 02, 28, 28, 07, 26, 24, 06, 06, 22, 22, 29, 18, 30, 19, 29,

1992 1994 1993 1991 1982 1989 1994 1985 1989 1996 1991 1993 1989 1991 1971 1987 1994 1993 1990 1967 1994 1993 1996 1988 1960 1948 1995 1995 1997 1991 1984 1988 1990 1989 1988 1965 1983 1991 1988 1985

TOTAL:

260

* Inactive Page 7 ** In Liquidation SUB-Curr *** Partnership/Joint Venture/Trust **** Nameholder Revised 3/13/98

EXHIBIT 23 CONSENT OF DELOITTE & TOUCHE LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in Registration Statement Nos. 33-39791, 33-39725, 33-40400, 33-40395, 33-40396, 33-66084, 33-54397, 33-54399, 33-54393 and 33-40702 of RJR Nabisco Holdings Corp. on Form S-8 and Registration Statement Nos. 33-60803 and 333-39995 of RJR Nabisco, Inc. on Form S-3 of our report dated January 26, 1998 (March 3, 1998 as to note 10) appearing in this Annual Report on Form 10-K of RJR Nabisco Holdings Corp. and RJR Nabisco, Inc. for the year ended December 31, 1997.
/s/ DELOITTE & TOUCHE LLP New York, New York

March 23, 1998

EXHIBIT 23 CONSENT OF DELOITTE & TOUCHE LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in Registration Statement Nos. 33-39791, 33-39725, 33-40400, 33-40395, 33-40396, 33-66084, 33-54397, 33-54399, 33-54393 and 33-40702 of RJR Nabisco Holdings Corp. on Form S-8 and Registration Statement Nos. 33-60803 and 333-39995 of RJR Nabisco, Inc. on Form S-3 of our report dated January 26, 1998 (March 3, 1998 as to note 10) appearing in this Annual Report on Form 10-K of RJR Nabisco Holdings Corp. and RJR Nabisco, Inc. for the year ended December 31, 1997.
/s/ DELOITTE & TOUCHE LLP New York, New York

March 23, 1998

POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being a director or officer, or both, of each of RJR NABISCO HOLDINGS CORP. and RJR NABISCO, INC., each a Delaware corporation (the "Companies"), do hereby make, constitute and appoint William L. Rosoff, H. Colin McBride, Sara L. Silbiger and David F. Sternlieb, and each of them, attorneys-in-fact and agents of the undersigned with full power and authority of substitution and resubstitution, in any and all capacities, to execute for and on behalf of the undersigned the Annual Report on Form 10-K of RJR Nabisco Holdings Corp. and RJR Nabisco, Inc., for the fiscal year ended December 31, 1997, and any and all amendments or supplements to the foregoing Annual Report and any other documents and instruments incidental thereto, and to deliver and file the same, with all exhibits thereto, and all documents and instruments in connection therewith, with the Securities and Exchange Commission, and with each exchange on which any class of securities of the Companies is registered, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing that said attorneys-in-fact and agents, and each of them, deem advisable or necessary to enable the Companies to effectuate the intents and purposes hereof, and the undersigned hereby fully ratify and confirm all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute or substitutes, shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, each of the undersigned has subscribed his or her name, this 20th day of March, 1998.
/s/Steven F. Goldstone -----------------------Steven F. Goldstone /s/ David B. Rickard -----------------------David B. Rickard /s/ Richard G. Russell -----------------------Richard G. Russell

Chairman of the Board, President, Chief Executive Officer and Director

Senior Vice President and Chief Financial Officer

Senior Vice President and Controller

Page 2
/s/John T. Chain, Jr. ---------------------John T. Chain, Jr. /s/Julius L. Chambers -----------------------

Director

Director

POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being a director or officer, or both, of each of RJR NABISCO HOLDINGS CORP. and RJR NABISCO, INC., each a Delaware corporation (the "Companies"), do hereby make, constitute and appoint William L. Rosoff, H. Colin McBride, Sara L. Silbiger and David F. Sternlieb, and each of them, attorneys-in-fact and agents of the undersigned with full power and authority of substitution and resubstitution, in any and all capacities, to execute for and on behalf of the undersigned the Annual Report on Form 10-K of RJR Nabisco Holdings Corp. and RJR Nabisco, Inc., for the fiscal year ended December 31, 1997, and any and all amendments or supplements to the foregoing Annual Report and any other documents and instruments incidental thereto, and to deliver and file the same, with all exhibits thereto, and all documents and instruments in connection therewith, with the Securities and Exchange Commission, and with each exchange on which any class of securities of the Companies is registered, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing that said attorneys-in-fact and agents, and each of them, deem advisable or necessary to enable the Companies to effectuate the intents and purposes hereof, and the undersigned hereby fully ratify and confirm all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute or substitutes, shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, each of the undersigned has subscribed his or her name, this 20th day of March, 1998.
/s/Steven F. Goldstone -----------------------Steven F. Goldstone /s/ David B. Rickard -----------------------David B. Rickard /s/ Richard G. Russell -----------------------Richard G. Russell

Chairman of the Board, President, Chief Executive Officer and Director

Senior Vice President and Chief Financial Officer

Senior Vice President and Controller

Page 2
/s/John T. Chain, Jr. ---------------------John T. Chain, Jr. /s/Julius L. Chambers ----------------------Julius L. Chambers /s/John L. Clendenin ---------------------John L. Clendenin /s/Ray J. Groves -------------------Ray J. Groves

Director

Director

Director

Director

-----------------------L. Dennis Kozlowski

Director

----------------------H. Eugene Lockhart /s/Theodore E. Martin ---------------------Theodore E. Martin

Director

Director

Page 2
/s/John T. Chain, Jr. ---------------------John T. Chain, Jr. /s/Julius L. Chambers ----------------------Julius L. Chambers /s/John L. Clendenin ---------------------John L. Clendenin /s/Ray J. Groves -------------------Ray J. Groves

Director

Director

Director

Director

-----------------------L. Dennis Kozlowski

Director

----------------------H. Eugene Lockhart /s/Theodore E. Martin ---------------------Theodore E. Martin /s/John G. Medlin, Jr. ----------------------John G. Medlin, Jr. /s/Rozanne L. Ridgway ---------------------Rozanne L. Ridgway

Director

Director

Director

Director

ARTICLE 5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM RJRN HOLDINGS' CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. CIK: 0000847903 NAME: RJR NABISCO HOLDINGS CORP. MULTIPLIER: 1,000,000

PERIOD TYPE FISCAL YEAR END PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES

12 MOS DEC 31 1997 DEC 31 1997 348 0 1,122 0 2,617 4,625 9,179 (3,240) 30,678 4,145 9,456 953 520 3 9,108 30,678 17,057

ARTICLE 5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM RJRN HOLDINGS' CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. CIK: 0000847903 NAME: RJR NABISCO HOLDINGS CORP. MULTIPLIER: 1,000,000

PERIOD TYPE FISCAL YEAR END PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS PRIMARY EPS DILUTED

12 MOS DEC 31 1997 DEC 31 1997 348 0 1,122 0 2,617 4,625 9,179 (3,240) 30,678 4,145 9,456 953 520 3 9,108 30,678 17,057 17,057 8,206 8,206 935 0 912 1,016 530 402 0 (21) 0 381 1.05 1.03

ARTICLE 5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM RJRN'S CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS. CIK:0000083612 NAME:RJR NABISCO, INC. MULTIPLIER: 1,000,000

PERIOD TYPE FISCAL YEAR END PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON

12 MOS DEC 31 1997 DEC 31 1997 348 0 1,118 0 2,617 4,621 9,179 (3,240) 30,657 3,942 9,456 0 0 0

ARTICLE 5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM RJRN'S CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS. CIK:0000083612 NAME:RJR NABISCO, INC. MULTIPLIER: 1,000,000

PERIOD TYPE FISCAL YEAR END PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS PRIMARY EPS DILUTED

12 MOS DEC 31 1997 DEC 31 1997 348 0 1,118 0 2,617 4,621 9,179 (3,240) 30,657 3,942 9,456 0 0 0 11,079 30,657 17,057 17,057 8,206 8,206 935 0 817 1,104 566 454 0 (21) 0 433 0.00 0.00

EXHIBIT 99 EXPANDED LITIGATION DISCLOSURE TOBACCO-RELATED LITIGATION OVERVIEW. Various legal actions, proceedings and claims are pending or may be instituted against R. J. Reynolds Tobacco Company ("RJRT") or its affiliates (including, with increasing frequency, RJRN and RJRN Holdings) or indemnitees, including legal actions claiming that lung cancer and other diseases as well as addiction have resulted from the use of or exposure to RJRT's tobacco products. During 1997, 492 new actions were filed or served against RJRT and/or its affiliates or indemnitees and 212 such actions were dismissed or otherwise resolved in favor of RJRT and/or its affiliates or indemnitees without trial. There have been noteworthy increases in the number of these cases pending. On December 31, 1997 there were 516 cases pending as compared to 234 on December 31, 1996, 132 on December 31, 1995 and only 54 on December 31, 1994. As of March 3, 1997, 540 active cases were pending against RJRT and/or its affiliates or indemnitees, 534 in the United States, two in Canada, two in Puerto Rico, and one in each of the Marshall Islands and Nigeria. The United States cases are in 46 states and are distributed as follows: 198 in Florida, 101 in New York, 21 in Louisiana, 17 in each of Texas and Pennsylvania, 14 in California, 12 in each of Alabama and Ohio, 11 in Tennessee, nine in each of the District of Columbia, Illinois and Mississippi, seven in each of Indiana, New Jersey and West Virginia, six in Georgia, five in each of Maryland and

EXHIBIT 99 EXPANDED LITIGATION DISCLOSURE TOBACCO-RELATED LITIGATION OVERVIEW. Various legal actions, proceedings and claims are pending or may be instituted against R. J. Reynolds Tobacco Company ("RJRT") or its affiliates (including, with increasing frequency, RJRN and RJRN Holdings) or indemnitees, including legal actions claiming that lung cancer and other diseases as well as addiction have resulted from the use of or exposure to RJRT's tobacco products. During 1997, 492 new actions were filed or served against RJRT and/or its affiliates or indemnitees and 212 such actions were dismissed or otherwise resolved in favor of RJRT and/or its affiliates or indemnitees without trial. There have been noteworthy increases in the number of these cases pending. On December 31, 1997 there were 516 cases pending as compared to 234 on December 31, 1996, 132 on December 31, 1995 and only 54 on December 31, 1994. As of March 3, 1997, 540 active cases were pending against RJRT and/or its affiliates or indemnitees, 534 in the United States, two in Canada, two in Puerto Rico, and one in each of the Marshall Islands and Nigeria. The United States cases are in 46 states and are distributed as follows: 198 in Florida, 101 in New York, 21 in Louisiana, 17 in each of Texas and Pennsylvania, 14 in California, 12 in each of Alabama and Ohio, 11 in Tennessee, nine in each of the District of Columbia, Illinois and Mississippi, seven in each of Indiana, New Jersey and West Virginia, six in Georgia, five in each of Maryland and Massachusetts, four in each of Kansas, Michigan, Minnesota and South Dakota, three in each of Arizona, Arkansas, Colorado, Hawaii, Iowa, Missouri, Nevada, Oklahoma, and Rhode Island, two in each of Connecticut, Montana, New Hampshire, New Mexico, Oregon, South Carolina, Utah, Washington, and Wisconsin, and one each in Alaska, Idaho, Kentucky, Maine, North Carolina, and Vermont. Of the 534 active cases in the United States, 426 are in state court and 108 in federal court. Most of these cases are brought by individual plaintiffs, but an increasing number, discussed below, seek recovery on behalf of states or large classes of claimants. THEORIES OF RECOVERY. The plaintiffs in these actions seek recovery on a variety of legal theories, including, among others, strict liability in tort, design defect, negligence, special duty, voluntary undertaking, breach of warranty, failure to warn, fraud, misrepresentation, unfair trade practices, conspiracy, aiding and abetting, unjust enrichment, antitrust, Racketeer Influenced and Corrupt Organizations Act ("RICO"), indemnity, medical monitoring and common law public nuisance. Punitive damages, often in amounts ranging into the hundreds of millions or even billions of dollars, are specifically pleaded in a number of cases in addition to compensatory and other damages.

Eight of the 534 active cases in the United States involve alleged non-smokers claiming injuries purportedly resulting from exposure to environmental tobacco smoke. Forty-seven cases purport to be class actions on behalf of thousands of individuals. Purported classes include individuals claiming to be addicted to cigarettes, individuals and their estates claiming illness and death from cigarette smoking and Blue Cross Blue Shield subscribers claiming reimbursement for premiums paid. One hundred two of the active cases seek, among other things, recovery of the cost of Medicaid payments or other health-related costs paid for treatment of individuals suffering from diseases or conditions allegedly related to tobacco use. Four, brought by entities administering asbestos liability, seek contribution for liabilities incurred relating to asbestos exposure. DEFENSES. The defenses raised by RJRT and/or its affiliates, where applicable, include preemption by the Federal Cigarette Labeling and Advertising Act ("the Cigarette Act") of some or all claims arising after 1969; the lack of any defect in the product; assumption of the risk; comparative fault; lack of proximate cause; statutes of limitations or repose; and, in the attorneys general cases (discussed below), various constitutional defenses. RJRN has asserted additional defenses, including jurisdictional defenses, in many of the cases in which it is named. In June, 1992, the United States Supreme Court in CIPOLLONE V. LIGGETT GROUP, held that claims that tobacco companies failed adequately to warn of the risks of smoking after 1969 and claims that their advertising and promotional practices undermined the effect of warnings after that date were preempted by the Cigarette

Eight of the 534 active cases in the United States involve alleged non-smokers claiming injuries purportedly resulting from exposure to environmental tobacco smoke. Forty-seven cases purport to be class actions on behalf of thousands of individuals. Purported classes include individuals claiming to be addicted to cigarettes, individuals and their estates claiming illness and death from cigarette smoking and Blue Cross Blue Shield subscribers claiming reimbursement for premiums paid. One hundred two of the active cases seek, among other things, recovery of the cost of Medicaid payments or other health-related costs paid for treatment of individuals suffering from diseases or conditions allegedly related to tobacco use. Four, brought by entities administering asbestos liability, seek contribution for liabilities incurred relating to asbestos exposure. DEFENSES. The defenses raised by RJRT and/or its affiliates, where applicable, include preemption by the Federal Cigarette Labeling and Advertising Act ("the Cigarette Act") of some or all claims arising after 1969; the lack of any defect in the product; assumption of the risk; comparative fault; lack of proximate cause; statutes of limitations or repose; and, in the attorneys general cases (discussed below), various constitutional defenses. RJRN has asserted additional defenses, including jurisdictional defenses, in many of the cases in which it is named. In June, 1992, the United States Supreme Court in CIPOLLONE V. LIGGETT GROUP, held that claims that tobacco companies failed adequately to warn of the risks of smoking after 1969 and claims that their advertising and promotional practices undermined the effect of warnings after that date were preempted by the Cigarette Act. The Supreme Court also held that claims of breach of express warranty, fraud, misrepresentation and conspiracy were not preempted. VERDICTS. Juries have found for plaintiffs in three smoking and health cases in which RJRT was not a defendant, but in one such case, no damages were awarded and the judgment was affirmed on appeal. The jury awarded plaintiffs $400,000 in another such case, CIPOLLONE V. LIGGETT GROUP, but the award was overturned on appeal and the case was subsequently dismissed. In the third such case, on August 9, 1996, a Florida jury awarded damages of $750,000 to an individual plaintiff. The defendants in that case, CARTER V. BROWN & WILLIAMSON, are seeking to reverse the judgment on appeal. On May 5, 1997, in an individual case filed against RJRT, brought by the same attorney who represented plaintiffs in the CARTER case, a Florida state court jury found no RJRT liability. On October 31, 1997, in still another case (KARBIWNYK V. R.J. REYNOLDS TOBACCO COMPANY) brought by the same attorney, another state court jury found no RJRT liability. On March 19, 1998, an Indiana state court jury also found for RJRT, RJRN Holdings and other defendants in an individual case, DUNN V. RJR NABISCO HOLDINGS CORP., in which plaintiffs had sought damages for the alleged harm caused to a non-smoker by environmental tobacco smoke ("ETS"). In addition, during 1997 and early 1998, RJRT and other tobacco industry defendants have settled five lawsuits. These settlements are described in the Registrants' Form 10-K for the fiscal year ended December 31, 1997 (the Page 2

"1997 Form 10-K") to which this exhibit 99 relates. See, Item 1, "Business -- Tobacco -- Litigation Affecting the Cigarette Industry - Interim Agreements." CLASS ACTIONS A smoking and health class action against United States cigarette manufacturers including RJRT, in which a class was certified consisting of "all non-smoking flight attendants who are or have been employed by airlines based in the United States" and who are allegedly suffering from exposure to ETS aboard aircraft, BROIN, ET AL. V. PHILIP MORRIS, INC., ET AL., Circuit Court of the Eleventh Judicial Circuit in and for Dade County, Florida, Case No. 91- 49738-CA-20, was settled in October, 1997. The settlement's principal terms are described in the 1997 Form 10-K. See Item 1, "Business -- Tobacco Litigation Affecting the Cigarette Industry -- Interim Agreements." In another smoking and health class action against United States cigarette manufacturers including RJRT, pending in Florida state court since May 1994, a class has been certified consisting of all Florida citizens and residents and their survivors who have suffered injury "caused by their addiction to cigarettes that contain nicotine." ENGLE, ET AL., V. R.J. REYNOLDS TOBACCO COMPANY, ET AL., Circuit Court of the Eleventh Judicial Circuit in and for Dade County, Florida, Case No. 94-08273-CA-20. Various challenges to the class

"1997 Form 10-K") to which this exhibit 99 relates. See, Item 1, "Business -- Tobacco -- Litigation Affecting the Cigarette Industry - Interim Agreements." CLASS ACTIONS A smoking and health class action against United States cigarette manufacturers including RJRT, in which a class was certified consisting of "all non-smoking flight attendants who are or have been employed by airlines based in the United States" and who are allegedly suffering from exposure to ETS aboard aircraft, BROIN, ET AL. V. PHILIP MORRIS, INC., ET AL., Circuit Court of the Eleventh Judicial Circuit in and for Dade County, Florida, Case No. 91- 49738-CA-20, was settled in October, 1997. The settlement's principal terms are described in the 1997 Form 10-K. See Item 1, "Business -- Tobacco Litigation Affecting the Cigarette Industry -- Interim Agreements." In another smoking and health class action against United States cigarette manufacturers including RJRT, pending in Florida state court since May 1994, a class has been certified consisting of all Florida citizens and residents and their survivors who have suffered injury "caused by their addiction to cigarettes that contain nicotine." ENGLE, ET AL., V. R.J. REYNOLDS TOBACCO COMPANY, ET AL., Circuit Court of the Eleventh Judicial Circuit in and for Dade County, Florida, Case No. 94-08273-CA-20. Various challenges to the class certification have been denied on appeal. That case is scheduled to go to trial sometime in 1998. In March 1994, a smoking and health class action was filed in Alabama state court against three United States cigarette manufacturers including RJRT and was subsequently removed to federal court. LACEY, ET AL., V. LORILLARD TOBACCO COMPANY, INC., ET AL., United States District Court, Northern District of Alabama, Jasper Division, Civil Action No. 94-4-B-0901-J. Plaintiffs, claiming to represent all smokers who had smoked or were smoking cigarettes sold by defendants in the State of Alabama, sought compensatory and punitive damages not to exceed $48,500 per each class member as well as injunctive relief arising from defendants' alleged failure to disclose additives used in their cigarettes. On January 31, 1997, the judge granted defendants' motion for summary judgment based on preemption by the Cigarette Act. Plaintiffs did not appeal, and the case has been closed. In March 1994, a smoking and health class action was filed in federal district court in Louisiana against United States cigarette manufacturers, including RJRT, and others, including RJRN, seeking certification of a purported class consisting of all United States residents who allege that they are addicted, or are the legal survivors of persons who were addicted, to tobacco products. CASTANO, ET AL., V. THE AMERICAN TOBACCO COMPANY, INC., ET AL., United States District Court, Eastern District of Louisiana, Case No. 94-1044. Plaintiffs alleged that the cigarette manufacturers concealed and/or misrepresented information regarding the addictive nature of nicotine and manipulated Page 3

the levels of nicotine in their tobacco products to make such products addictive. In February 1995, the trial court certified the class and in May 1996, the Fifth Circuit Court of Appeals reversed the trial court's class certification and remanded the case with instructions that the class allegations be dismissed. The class has been decertified. Summary judgment motions against the two remaining named plaintiffs in this case were denied on February 21, 1997. The parties have agreed to move for dismissal of the remaining individual case with a right to replead after November 15, 1998. In September 1994, a smoking and health class action was filed in federal district court in Louisiana against United States cigarette manufacturers, including RJRT, and others, including RJRN, seeking certification of a purported class of all residents or domiciliaries of the United States who used and became addicted to tobacco products. GRANIER V. THE AMERICAN TOBACCO COMPANY, ET AL., United States District Court, Eastern District of Louisiana, Case No. 94-3096. In November 1994, on the plaintiffs' motion, a motion to consolidate the case with CASTANO was stayed pending the decision on the issue of class certification in CASTANO. The case remains inactive. Following the announcement of the Fifth Circuit's class decertification decision in CASTANO, lawyers for the

the levels of nicotine in their tobacco products to make such products addictive. In February 1995, the trial court certified the class and in May 1996, the Fifth Circuit Court of Appeals reversed the trial court's class certification and remanded the case with instructions that the class allegations be dismissed. The class has been decertified. Summary judgment motions against the two remaining named plaintiffs in this case were denied on February 21, 1997. The parties have agreed to move for dismissal of the remaining individual case with a right to replead after November 15, 1998. In September 1994, a smoking and health class action was filed in federal district court in Louisiana against United States cigarette manufacturers, including RJRT, and others, including RJRN, seeking certification of a purported class of all residents or domiciliaries of the United States who used and became addicted to tobacco products. GRANIER V. THE AMERICAN TOBACCO COMPANY, ET AL., United States District Court, Eastern District of Louisiana, Case No. 94-3096. In November 1994, on the plaintiffs' motion, a motion to consolidate the case with CASTANO was stayed pending the decision on the issue of class certification in CASTANO. The case remains inactive. Following the announcement of the Fifth Circuit's class decertification decision in CASTANO, lawyers for the plaintiffs announced that they would file "state-wide" class actions in state courts. Subsequently, class actions based on claims similar to those in CASTANO (a "nicotine-dependence class action") and, in some cases, claims of physical injury (a "physical injury class action") and medical monitoring were filed in a number of states, as described below. Immediately prior to the Fifth Circuit's decision in the CASTANO case, a purported nicotine-dependence class action was filed in Indiana state court against United States cigarette manufacturers, including RJRT, and others, including RJRN Holdings. In June 1996, defendants removed the case to federal court. Plaintiffs' motion to remand the case to state court was granted. NORTON, ET AL. V. RJR NABISCO HOLDINGS CORPORATION, ET AL., Superior Court, Madison County, Indiana, Case No.48D01-9605-CP-0271. In May 1996, a purported physical injury and nicotine-dependence class action was filed in Maryland state court against United States cigarette manufacturers, including RJRT, and others, including RJRN. The case was removed by defendants to federal court and was subsequently remanded to state court. RICHARDSON, ET AL. V. PHILIP MORRIS, INC., ET AL., Circuit Court for Baltimore City, No. 96145050. On January 28, 1998, the Circuit Court for Baltimore City granted plaintiffs' motion for class certification. In May 1996, a purported nicotine-dependence/medical monitoring class action was filed in Louisiana state court against four United States cigarette manufacturers, including RJRT, and others, including RJRN. SCOTT, ET AL. V. THE AMERICAN TOBACCO COMPANY, INC., ET AL., Civil District Court for the Parish of Orleans, State of Louisiana, Page 4

Docket No. 96-8461. On April 16, 1997, the Civil District Court of Orleans Parish granted plaintiffs' motion for class certification on behalf of Louisiana residents who require medical monitoring. In the class certification ruling, the court also granted the exception of no cause of action on behalf of the wholesaler defendants and dismissed them from the action. The remaining defendants removed the case to federal court on April 16, 1997. On December 2, 1997, plaintiffs' motion to remand the case to the Civil District Court of Orleans Parish was granted. In June 1996, a purported nicotine-dependence class action was filed in New York state court against RJRT, RJRN, The Tobacco Institute and The Council for Tobacco Research. HOSKINS, ET AL., V. R.J. REYNOLDS TOBACCO COMPANY, ET AL., Supreme Court of the State of New York, County of New York, Case No. 96110951. In December 1996, defendants filed motions to dismiss the complaint and to deny class certification. On October 28, 1997, the trial court denied defendants' motions to dismiss and granted plaintiffs' motion for class certification. The class is defined as: "All residents of the State of New York who, on or after June 19, 1980 have smoked cigarettes manufactured by the manufacturing defendants, and who bought those cigarettes in New York." Defendants'

Docket No. 96-8461. On April 16, 1997, the Civil District Court of Orleans Parish granted plaintiffs' motion for class certification on behalf of Louisiana residents who require medical monitoring. In the class certification ruling, the court also granted the exception of no cause of action on behalf of the wholesaler defendants and dismissed them from the action. The remaining defendants removed the case to federal court on April 16, 1997. On December 2, 1997, plaintiffs' motion to remand the case to the Civil District Court of Orleans Parish was granted. In June 1996, a purported nicotine-dependence class action was filed in New York state court against RJRT, RJRN, The Tobacco Institute and The Council for Tobacco Research. HOSKINS, ET AL., V. R.J. REYNOLDS TOBACCO COMPANY, ET AL., Supreme Court of the State of New York, County of New York, Case No. 96110951. In December 1996, defendants filed motions to dismiss the complaint and to deny class certification. On October 28, 1997, the trial court denied defendants' motions to dismiss and granted plaintiffs' motion for class certification. The class is defined as: "All residents of the State of New York who, on or after June 19, 1980 have smoked cigarettes manufactured by the manufacturing defendants, and who bought those cigarettes in New York." Defendants' appeal of the class certification is pending. In June 1996, a purported physical injury and nicotine-dependence class action was filed in the Superior Court of the District of Columbia against United States cigarette manufacturers, including RJRT, and others, including RJRN. RJRN has been voluntarily dismissed from this case. REED V. PHILIP MORRIS INCORPORATED, ET AL., Superior Court of the District of Columbia, Case No. CA-05070-96. Plaintiffs' motion for class certification was denied on August 18, 1997. Plaintiffs' motion for leave to file an amended complaint is pending. In August 1996, a purported nicotine-dependence class action was filed in Pennsylvania state court against United States cigarette manufacturers, including RJRT, and others, including RJRN, and was subsequently removed to federal court. BARNES/ARCH, ET AL., V. AMERICAN TOBACCO COMPANY, INC., ET AL., United States District Court for the Eastern District of Pennsylvania, Case No. 96-5903-CN. Plaintiff filed a renewed motion for class certification on June 17, 1997. Defendants filed opposition. On August 22, 1997, Judge Clarence Newcomer granted plaintiff's motion for class certification for medical monitoring. The class definition was: "All current residents of Pennsylvania who are cigarette smokers as of December 1, 1996 and who began smoking before age 19 while they were residents of Pennsylvania." Defendants filed a Motion for Summary Judgment on August 25, 1997 based on plaintiff's claims for medical monitoring. On October 17, 1997 Judge Newcomer granted defendants' motion for summary judgment against each of the six class representatives (five on statute of limitations grounds and one on a medical monitoring issue). Judge Newcomer also decertified the class, finding that plaintiffs' claims of nicotine dependence and theories of negligence and strict liability raised too many individual issues for class certification. Page 5

Plaintiffs filed a Notice of Appeal to the United States Court of Appeal for the Third Circuit on 10/17/97. The first named plaintiff, Arch, has been dismissed from the case and the second named plaintiff (Barnes) has taken his place. The appeal is pending. In August 1996, a purported nicotine-dependence class action was filed in Alabama state court, on behalf of Alabama and North Carolina residents, against four United States cigarette manufacturers, including RJRT, and others. In September 1996, the case was removed by defendants to federal court. LYONS, ET AL., V. THE AMERICAN TOBACCO CO., INC., ET AL., United States District Court for the Southern District of Alabama, Southern Division, Civil Action No. 96-0881-BH-S. Plaintiffs' motion to remand the case to state court was denied. In August 1996, a purported nicotine-dependence class action was filed in Ohio state court against United States cigarette manufacturers, including RJRT, and others, including RJRN, on behalf of Ohio residents and was subsequently removed to federal court in September, 1996. CHAMBERLAIN, ET AL., V. THE AMERICAN TOBACCO CO., ET AL., United States District Court, Northern District of Ohio, Case No. 1:96CV2005. Plaintiffs' motion to remand the case to state court was denied. The case is stayed until May 19, 1998.

Plaintiffs filed a Notice of Appeal to the United States Court of Appeal for the Third Circuit on 10/17/97. The first named plaintiff, Arch, has been dismissed from the case and the second named plaintiff (Barnes) has taken his place. The appeal is pending. In August 1996, a purported nicotine-dependence class action was filed in Alabama state court, on behalf of Alabama and North Carolina residents, against four United States cigarette manufacturers, including RJRT, and others. In September 1996, the case was removed by defendants to federal court. LYONS, ET AL., V. THE AMERICAN TOBACCO CO., INC., ET AL., United States District Court for the Southern District of Alabama, Southern Division, Civil Action No. 96-0881-BH-S. Plaintiffs' motion to remand the case to state court was denied. In August 1996, a purported nicotine-dependence class action was filed in Ohio state court against United States cigarette manufacturers, including RJRT, and others, including RJRN, on behalf of Ohio residents and was subsequently removed to federal court in September, 1996. CHAMBERLAIN, ET AL., V. THE AMERICAN TOBACCO CO., ET AL., United States District Court, Northern District of Ohio, Case No. 1:96CV2005. Plaintiffs' motion to remand the case to state court was denied. The case is stayed until May 19, 1998. In September 1996, a purported class action was filed in Tennessee state court against four United States cigarette manufacturers, including RJRT, and others, on behalf of all individuals and entities in the United States who have paid premiums to a Blue Cross or Blue Shield organization for medical insurance. The complaint alleges that defendants' actions have resulted in increased medical insurance premiums for all class members and seeks recovery under various consumer protection statutes as well as under theories of breach of special duty and unjust enrichment. This case was removed by defendants to federal court. Plaintiffs' motion to remand the case to state court was granted. PERRY, ET AL., V. PHILIP MORRIS, INC., ET AL., Circuit Court, Coffee County, Tennessee, Case No. 27,960. In September 1996, a purported nicotine-dependence class action was filed in Minnesota state court against four United States cigarette manufacturers, including RJRT, and others, including RJRN. The case was removed by defendants to federal court in September 1996. THOMPSON/MASEPOHL, ET AL. V. THE AMERICAN TOBACCO CO., INC., ET AL., United States District Court, District of Minnesota, Third Division, Case No. CV3-96-888. Plaintiffs' motion to remand the case to state court was denied. In October 1996, a purported nicotine-dependence class action was filed in New Mexico state court against four United States cigarette manufacturers, including RJRT, and others, including RJRN. RJRN has been dismissed from this case. CONNOR, ET AL., V. THE AMERICAN TOBACCO CO., ET AL., Second Judicial District Court, County of Bernalillo, State of New Mexico, Case No. CV-96-9422. Page 6

In October 1996, a purported nicotine-dependence class action was filed in federal court in Puerto Rico against four United States cigarette manufacturers, including RJRT, and others. RUIZ, ET AL., V. THE AMERICAN TOBACCO CO., ET AL., United States District Court for the District of Puerto Rico, Civil Action No. 962300. Plaintiffs' motion for class certification was denied on March 17, 1998. In November 1996, a purported nicotine-dependence class action was filed in federal court in Arkansas against United States cigarette manufacturers, including RJRT, and others, including RJRN. HANSEN/MCGINTY, ET AL., V. THE AMERICAN TOBACCO CO., ET AL., United States District Court for the Eastern District of Arkansas, Western Division, Case No. LRC 96-881. In January 1995, a purported class action was filed in the Ontario Court of Justice, Toronto, Canada against RJR-MacDonald, Inc. and two other Canadian cigarette manufacturers. LETOURNEAU V. ROTHMANS ET AL., Ontario Court of Justice, Toronto, Canada, Court File No. 95-CU-82186 (now captioned CAPUTO V. IMPERIAL TOBACCO LIMITED, ET AL.). The lawsuit seeks damages in the amount of $1,000,000 (Canadian) per class member and punitive and exemplary damages and an order requiring the funding of rehabilitation centers. Plaintiffs seek certification of a class of persons consisting of all current and former cigarette smokers in Ontario, their families and the estates of deceased smokers. Plaintiffs have filed class certification materials, most recently in January, 1997, but no motion has yet been made for class certification.

In October 1996, a purported nicotine-dependence class action was filed in federal court in Puerto Rico against four United States cigarette manufacturers, including RJRT, and others. RUIZ, ET AL., V. THE AMERICAN TOBACCO CO., ET AL., United States District Court for the District of Puerto Rico, Civil Action No. 962300. Plaintiffs' motion for class certification was denied on March 17, 1998. In November 1996, a purported nicotine-dependence class action was filed in federal court in Arkansas against United States cigarette manufacturers, including RJRT, and others, including RJRN. HANSEN/MCGINTY, ET AL., V. THE AMERICAN TOBACCO CO., ET AL., United States District Court for the Eastern District of Arkansas, Western Division, Case No. LRC 96-881. In January 1995, a purported class action was filed in the Ontario Court of Justice, Toronto, Canada against RJR-MacDonald, Inc. and two other Canadian cigarette manufacturers. LETOURNEAU V. ROTHMANS ET AL., Ontario Court of Justice, Toronto, Canada, Court File No. 95-CU-82186 (now captioned CAPUTO V. IMPERIAL TOBACCO LIMITED, ET AL.). The lawsuit seeks damages in the amount of $1,000,000 (Canadian) per class member and punitive and exemplary damages and an order requiring the funding of rehabilitation centers. Plaintiffs seek certification of a class of persons consisting of all current and former cigarette smokers in Ontario, their families and the estates of deceased smokers. Plaintiffs have filed class certification materials, most recently in January, 1997, but no motion has yet been made for class certification. In March, 1996, PRO SE prisoners filed a purported class action against United States cigarette manufacturers including RJRT, and others, seeking class certification on behalf of prisoners in two Mississippi prisons based on alleged exposure to ETS. LYLE, ET AL., V. BROWN & WILLIAMSON TOBACCO CORPORATION, ET AL., United States District Court for the Northern District of Mississippi, Civil Action No. 3:96-CV-268WS. In October 1996, the court issued an order dismissing the action. Plaintiff has filed a motion for relief from said dismissal. In September 1996, a purported physical injury class action was filed in Florida state court against United States cigarette manufacturers, including RJRT, and others. WALTERS, ET AL., V. BROWN & WILLIAMSON TOBACCO CORP., ET AL., Circuit Court, Fourth Judicial District, Duval County, Florida. RJRT was not served within the 120 days that Florida law provides to effect service.. In January 1997, a purported nicotine-dependence class action was filed in West Virginia state court against United States cigarette manufacturers, including RJRT, and others, including RJRN. Despite the fact that RJRT and RJRN had not been served, they joined with other defendants in removing the case to federal court in February 1997. MCCUNE V. THE AMERICAN TOBACCO COMPANY, ET AL., Circuit Court, Kanawha County, Page 7

West Virginia, Case No. 2:97-0204. Plaintiffs' motion to remand the case was granted on January 30, 1998. In February 1997, a purported nicotine-dependence class action was filed in Hawaii state court against United States cigarette manufacturers, including RJRT, and others, including RJRN. PETERSON V. THE AMERICAN TOBACCO COMPANY, ET AL., United States District Court for the District of Hawaii. Defendants removed this case in March, 1997. Plaintiffs' motion to remand is pending. In February 1997, a purported nicotine-dependence class action was filed in Kansas state court against United States cigarette manufacturers, including RJRT, and others, including RJRN. EMIG V. THE AMERICAN TOBACCO COMPANY, ET AL., United States District Court, District of Kansas, Case No. 97-1121. This case was removed to federal court in March, 1997. Plaintiffs' motion for class certification is pending. In February 1997, a purported medical monitoring class action was filed in state court in Michigan against United States cigarette manufacturers, including RJRT, and others. BAKER V. AMERICAN TOBACCO, ET AL., Circuit Court, Wayne County, Michigan, Case No. 97-703444. In March 1997, a purported physical injury class action was filed in state court in West Virginia against United

West Virginia, Case No. 2:97-0204. Plaintiffs' motion to remand the case was granted on January 30, 1998. In February 1997, a purported nicotine-dependence class action was filed in Hawaii state court against United States cigarette manufacturers, including RJRT, and others, including RJRN. PETERSON V. THE AMERICAN TOBACCO COMPANY, ET AL., United States District Court for the District of Hawaii. Defendants removed this case in March, 1997. Plaintiffs' motion to remand is pending. In February 1997, a purported nicotine-dependence class action was filed in Kansas state court against United States cigarette manufacturers, including RJRT, and others, including RJRN. EMIG V. THE AMERICAN TOBACCO COMPANY, ET AL., United States District Court, District of Kansas, Case No. 97-1121. This case was removed to federal court in March, 1997. Plaintiffs' motion for class certification is pending. In February 1997, a purported medical monitoring class action was filed in state court in Michigan against United States cigarette manufacturers, including RJRT, and others. BAKER V. AMERICAN TOBACCO, ET AL., Circuit Court, Wayne County, Michigan, Case No. 97-703444. In March 1997, a purported physical injury class action was filed in state court in West Virginia against United States cigarette manufacturers, including RJRT, and others. Defendants removed this case to federal court in April, 1997. WOODS V. PHILIP MORRIS INC., ET AL. United States District Court for the Southern District of West Virginia. Plaintiff filed a First Amended Complaint on September 26 1997, dropping plaintiff Ima Jean Ingle. Plaintiffs' motion to remand based on an amended complaint is pending. In March 1997, a purported nicotine dependence class action was filed in state court in Nevada against United States cigarette manufacturers, including RJRT, and others. SELCER, ET AL., V. R. J. REYNOLDS TOBACCO COMPANY, ET AL., United States District Court, District of Nevada, Case No. CVS-97-00334 PMP. In April 1997, a purported physical injury class action was filed in Wisconsin state court against United States cigarette manufacturers, including RJRT, and others. Defendants removed the case to federal court in May 1997. Plaintiffs' motion to remand the case to the Circuit Court for Rock County was granted August 27, 1997. INSOLIA V. PHILIP MORRIS INC., ET AL.,. Circuit Court, Rock County, Wisconsin. Case No. 97-CV230J. In April 1997, a nicotine dependence class action was filed in state court in New Jersey against United States cigarette manufacturers, including RJRT, and others, including RJRN. COSENTINO, ET AL., V. PHILIP MORRIS INC., ET AL., Superior Court, Middlesex County, New Jersey, Case No. L-5135-97. Page 8

In May 1997, a purported physical injury class action was filed in the federal court in Texas against United States cigarette manufacturers, including RJRT, and others. COLE V. THE TOBACCO INSTITUTE, ET AL., United States District Court for the Eastern District of Texas, Case No. 1:97-CV-0256. In May 1997, a purported physical injury class action was filed in the state court in New York against United States cigarette manufacturers, including RJRT, and others including RJRN. GEIGER, ET AL., V. AMERICAN TOBACCO, ET AL., Supreme Court, Queens County, New York, Case No. 010687. In July, 1997, the court certified an interim class of all New York smokers with lung and/or throat cancer and their survivors. Defendants' appeal of that decision is pending. In May 1997, a purported nicotine-dependence class action was filed in state court in Tennessee against United States cigarette manufacturers, including RJRT, and others, including RJRN. Defendants removed this case to the federal court in June, 1997. ANDERSON, ET AL., V. AMERICAN TOBACCO, ET AL., United States District Court, Eastern District of Tennessee. Plaintiffs' motion to remand was denied. In May 1997, a purported nicotine-dependence class action was filed in state court in New Jersey against United States cigarette manufacturers, including RJRT, and others, including RJRN. ENRIGHT V. AMERICAN TOBACCO, ET AL. Superior Court, Camden County, New Jersey, Case No. 699. On October 14, 1997, the

In May 1997, a purported physical injury class action was filed in the federal court in Texas against United States cigarette manufacturers, including RJRT, and others. COLE V. THE TOBACCO INSTITUTE, ET AL., United States District Court for the Eastern District of Texas, Case No. 1:97-CV-0256. In May 1997, a purported physical injury class action was filed in the state court in New York against United States cigarette manufacturers, including RJRT, and others including RJRN. GEIGER, ET AL., V. AMERICAN TOBACCO, ET AL., Supreme Court, Queens County, New York, Case No. 010687. In July, 1997, the court certified an interim class of all New York smokers with lung and/or throat cancer and their survivors. Defendants' appeal of that decision is pending. In May 1997, a purported nicotine-dependence class action was filed in state court in Tennessee against United States cigarette manufacturers, including RJRT, and others, including RJRN. Defendants removed this case to the federal court in June, 1997. ANDERSON, ET AL., V. AMERICAN TOBACCO, ET AL., United States District Court, Eastern District of Tennessee. Plaintiffs' motion to remand was denied. In May 1997, a purported nicotine-dependence class action was filed in state court in New Jersey against United States cigarette manufacturers, including RJRT, and others, including RJRN. ENRIGHT V. AMERICAN TOBACCO, ET AL. Superior Court, Camden County, New Jersey, Case No. 699. On October 14, 1997, the case was transferred to the Middlesex County Superior Court. In May 1997, a purported physical injury class action was filed in state court in Georgia against United States cigarette manufacturers, including RJRT, and others, including RJRN. LYONS V. BROWN & WILLIAMSON, ET AL., Superior Court, Fulton County, Georgia, Case No E59346. In May 1997, a purported nicotine dependence class action was filed in state court in New Jersey against United States cigarette manufacturers, including RJRT, and others, including RJRN. TEPPER, ET AL., V. PHILIP MORRIS INCORPORATED, ET AL., Superior Court, Bergen County, New Jersey, Case No. L-4983-97-E. On October 14, 1997, the case was transferred to Middlesex County Superior Court. In May 1997, a purported physical injury class action was filed in federal court in Illinois against United States cigarette manufacturers, including RJRT, and others, including RJRN. CLAY, ET AL., V. AMERICAN TOBACCO, ET AL., Case No. 97-4167-JPG. In May 1997, a purported physical injury and nicotine dependence class action was filed in federal court in Georgia against United States cigarette manufacturers, including RJRT, and others. MCCAULEY V. BROWN & WILLIAMSON TOBACCO CORPORATION, ET Page 9

AL., United States District Court for the Northern District of Georgia, Case No. 1:97-cv-1744. In June 1997, a purported physical injury class action was filed in the Tribal Court of the Lower Brule Sioux Tribe against United States cigarette manufacturers, including RJRT, and others. LANGDEAU V. AMERICAN TOBACCO, ET AL., Tribal Court of the Lower Brule Sioux Tribe, Case No. 97-5-0056. In June 1997, a purported physical injury/nicotine dependence class action was filed in state court in New Jersey against United States cigarette manufacturers, including RJRT, and others, including RJRN. LIPPINCOTT V. AMERICAN TOBACCO, ET AL., Superior Court, Camden County, New Jersey, Case No. L-4702-97. On October 14, 1997 the case was transferred to Middlesex County Superior Court. In June 1997, a purported physical injury class action was filed in state court in Iowa against United States cigarette manufacturers, including RJRT, and others, including RJRN. BRAMMER, ET AL., V. R. J. REYNOLDS TOBACCO COMPANY, ET AL., District Court, Polk County, Iowa, Case No. 73061. The case is stayed through April 30, 1998. In June 1997, a purported physical injury class action was filed in federal court in Oklahoma against United States cigarette manufacturers, including RJRT, and others. WALLS, ET AL., V. AMERICAN TOBACCO,

AL., United States District Court for the Northern District of Georgia, Case No. 1:97-cv-1744. In June 1997, a purported physical injury class action was filed in the Tribal Court of the Lower Brule Sioux Tribe against United States cigarette manufacturers, including RJRT, and others. LANGDEAU V. AMERICAN TOBACCO, ET AL., Tribal Court of the Lower Brule Sioux Tribe, Case No. 97-5-0056. In June 1997, a purported physical injury/nicotine dependence class action was filed in state court in New Jersey against United States cigarette manufacturers, including RJRT, and others, including RJRN. LIPPINCOTT V. AMERICAN TOBACCO, ET AL., Superior Court, Camden County, New Jersey, Case No. L-4702-97. On October 14, 1997 the case was transferred to Middlesex County Superior Court. In June 1997, a purported physical injury class action was filed in state court in Iowa against United States cigarette manufacturers, including RJRT, and others, including RJRN. BRAMMER, ET AL., V. R. J. REYNOLDS TOBACCO COMPANY, ET AL., District Court, Polk County, Iowa, Case No. 73061. The case is stayed through April 30, 1998. In June 1997, a purported physical injury class action was filed in federal court in Oklahoma against United States cigarette manufacturers, including RJRT, and others. WALLS, ET AL., V. AMERICAN TOBACCO, ET AL., United States District Court for the Northern District of Oklahoma, Case No. 97-CV-218-H. In July 1997, a purported physical injury class action was filed in state court in Louisiana against United States cigarette manufacturers, including RJRT, and others, including RJRN. KNOWLES, ET AL., V. AMERICAN TOBACCO, ET AL., District Court, Parish of Orleans, Louisiana, Case No. 97-11517. In July 1997, a purported physical injury class action was filed in state court in Illinois against United States cigarette manufacturers, including RJRT, and others, including RJRN. Defendants removed the case to federal court in December, 1997. DALEY, ET AL., V. AMERICAN BRANDS, INC., ET AL., United States District Court, Northern District of Illinois, Case No. 97L07963. In August 1997, a purported physical injury class action including those who desire to participate in smoking cessation programs was filed in state court in California against United States cigarette manufacturers, including RJRT, and others, including RJRN. BROWN, ET AL., V. AMERICAN TOBACCO, ET AL., Superior Court, County of San Diego, California, Case No. 711400. In September 1997, a purported physical injury/nicotine-dependence class action was filed in federal court in Texas against United States cigarette manufacturers, Page 10

including RJRT, and others. BUSH V. PHILIP MORRIS, INC., ET AL., United States District Court for the Eastern District of Texas, Case No. 597CV180. The case is stayed until May 11, 1998. In October 1997, a purported physical injury class action was filed in federal court in Tennessee against United States cigarette manufacturers, including RJRT, and others. NEWBORN, ET AL., V. BROWN & WILLIAMSON TOBACCO CORPORATION, ET AL., United States District Court for the Western District of Tennessee, Case No. 97-2938. In October 1997, a purported ETS class action on behalf of casino workers was filed in federal court in Nevada against United States cigarette manufacturers, including RJRT, and others, including RJRN. BADILLO, ET AL., V. AMERICAN TOBACCO, ET AL., United States District Court, District of Nevada, Case No. CV-N-9700573-DWH. In November 1997, a purported physical injury class action was filed in federal court in South Carolina against United States cigarette manufacturers, including RJRT, and others, including RJRN. AKSAMIT, ET AL., V. BROWN & WILLIAMSON TOBACCO, ET AL., United States District Court, District of South Carolina, Case No. 6-97-3636-21.

including RJRT, and others. BUSH V. PHILIP MORRIS, INC., ET AL., United States District Court for the Eastern District of Texas, Case No. 597CV180. The case is stayed until May 11, 1998. In October 1997, a purported physical injury class action was filed in federal court in Tennessee against United States cigarette manufacturers, including RJRT, and others. NEWBORN, ET AL., V. BROWN & WILLIAMSON TOBACCO CORPORATION, ET AL., United States District Court for the Western District of Tennessee, Case No. 97-2938. In October 1997, a purported ETS class action on behalf of casino workers was filed in federal court in Nevada against United States cigarette manufacturers, including RJRT, and others, including RJRN. BADILLO, ET AL., V. AMERICAN TOBACCO, ET AL., United States District Court, District of Nevada, Case No. CV-N-9700573-DWH. In November 1997, a purported physical injury class action was filed in federal court in South Carolina against United States cigarette manufacturers, including RJRT, and others, including RJRN. AKSAMIT, ET AL., V. BROWN & WILLIAMSON TOBACCO, ET AL., United States District Court, District of South Carolina, Case No. 6-97-3636-21. In December 1997, a purported physical injury, ETS class action was filed in state court in Louisiana. Defendants removed this case to the United States District Court for the Eastern District of Louisiana on December 12, 1997. YOUNG V. AMERICAN TOBACCO COMPANY ET AL., Circuit Court, New Orleans, Louisiana. The case was remanded to state court on February 2, 1998. In December 1997, a purported physical injury class action was filed in federal court in Texas against United States cigarette manufacturers, including RJRT, and others. MASON, ET AL., V. AMERICAN TOBACCO, ET AL., United States District Court for the Northern District of Texas, Case No. 7-97CV-293-X. In February 1998, a purported physical injury class action was filed in state court in Utah against United States cigarette manufacturers,. including RJRT and others, including RJRN. HERRERA V. AMERICAN TOBACCO, ET AL., District Court, Utah County, Utah, Case No. 9804-3567. In April 1997, a purported class action was filed in state court in Mississippi against United States cigarette manufacturers, including RJRT and others, including RJRN. WHITE, HL V. PHILIP MORRIS, INC., ET AL., Chancery Court, Jefferson County, Mississippi, Case No. 97-0053. HEALTH CARE COST RECOVERY LITIGATION Page 11

In certain of the pending proceedings, state and local government entities and others seek reimbursement for Medicaid and/or other health care expenditures allegedly caused by tobacco products. The claims asserted in these health care cost recovery actions vary. Generally, plaintiffs assert the equitable claim that the tobacco industry was "unjustly enriched" by plaintiffs' payment of health care costs allegedly attributable to smoking and seek reimbursement of those costs. The plaintiffs in these various health care cost recovery actions also assert one or more of the following additional claims: the equitable claim of indemnity, common law claims of negligence, strict liability, breach of express and implied warranty, violation of a voluntary undertaking or special duty, fraud, negligent misrepresentation, conspiracy, public nuisance, claims under state and federal statutes governing consumer fraud, antitrust, deceptive trade practices and false advertising, and claims under federal or state RICO statutes. Each plaintiff seeks reimbursement of Medicaid and/or other health care costs. Other relief sought by some but not all plaintiffs includes punitive damages, treble damages for alleged antitrust law violations, injunctions prohibiting alleged marketing and sales to minors, disclosure of research, disgorgement of profits, funding of antismoking programs, disclosure of nicotine yields and payment of attorney and expert witness fees. Defenses raised by defendants include failure to state a valid claim, lack of benefit, adequate remedy at law, "unclean hands" (namely, that plaintiffs cannot recover because they participated in, and benefited from, the sale

In certain of the pending proceedings, state and local government entities and others seek reimbursement for Medicaid and/or other health care expenditures allegedly caused by tobacco products. The claims asserted in these health care cost recovery actions vary. Generally, plaintiffs assert the equitable claim that the tobacco industry was "unjustly enriched" by plaintiffs' payment of health care costs allegedly attributable to smoking and seek reimbursement of those costs. The plaintiffs in these various health care cost recovery actions also assert one or more of the following additional claims: the equitable claim of indemnity, common law claims of negligence, strict liability, breach of express and implied warranty, violation of a voluntary undertaking or special duty, fraud, negligent misrepresentation, conspiracy, public nuisance, claims under state and federal statutes governing consumer fraud, antitrust, deceptive trade practices and false advertising, and claims under federal or state RICO statutes. Each plaintiff seeks reimbursement of Medicaid and/or other health care costs. Other relief sought by some but not all plaintiffs includes punitive damages, treble damages for alleged antitrust law violations, injunctions prohibiting alleged marketing and sales to minors, disclosure of research, disgorgement of profits, funding of antismoking programs, disclosure of nicotine yields and payment of attorney and expert witness fees. Defenses raised by defendants include failure to state a valid claim, lack of benefit, adequate remedy at law, "unclean hands" (namely, that plaintiffs cannot recover because they participated in, and benefited from, the sale of cigarettes), lack of antitrust injury, federal preemption, lack of proximate cause and statute of limitations. In addition, defendants argue that they should be entitled to "set-off" any alleged damages to the extent a state benefits economically from the sale of cigarettes through the receipt of excise taxes or otherwise. Defendants also argue that all of these cases are improper because plaintiffs must proceed under principles of subrogation and assignment. Under traditional theories of recovery, a payor of medical costs (such as an insurer or a state) can seek recovery of health care costs from a third party solely by "standing in the shoes" of the injured party. Defendants argue that plaintiffs should be required to bring an action on behalf of each individual health care recipient and should be subject to all defenses available against the allegedly injured party. In several states certain cigarette companies, including RJRT have filed related declaratory judgment actions which challenge the ability of the plaintiffs to use contingency fee counsel to prosecute these actions and/or the procedural capacity of the state attorney general to bring the health care cost recovery action absent the approval of the relevant executive officer charged with responsibility for certain of the health care programs at issue. Page 12

The following is a summary of certain developments in each of the health care cost recovery suits pending against RJRT and, in some cases, RJRN, and the related declaratory judgment actions filed by certain of the cigarette manufacturers. FLORIDA. In February 1995, the State of Florida filed a health care cost recovery action under a special statute in Florida state court. STATE OF FLORIDA, ET AL. V. AMERICAN TOBACCO COMPANY, ET AL., Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida, Case No. CL 95 1466 AO. In September 1996, the trial court dismissed all of the state's claims except for its negligence and strict liability counts arising from Medicaid payments made after July 1, 1994, and its count for injunctive relief. The case was entering the trial phase when, during jury selection, the parties announced that they had entered into a settlement agreement. (For a description of the terms of the settlement see the 1997 Form 10-K, Item 1, "Business-Tobacco-Litigation Affecting the Cigarette Industry -- Interim Agreements.") MISSISSIPPI. In May 1994, the Attorney General of Mississippi filed a health care cost recovery action in Mississippi state court. MOORE V. THE AMERICAN TOBACCO COMPANY, ET AL., Chancery Court of Jackson County, Mississippi, Case No. 94-1429. A trial in this case began in June 1997, but on July 2, 1997, a settlement was agreed to based on a Memorandum of Understanding and subject to a number of conditions. (For a description of the terms of the settlement see the 1997 Form 10-K, Item 1, "Business-Tobacco-Litigation Affecting the Cigarette Industry- Interim Agreements.") MINNESOTA. In August 1994, the Attorney General of Minnesota and Blue Cross and Blue Shield of

The following is a summary of certain developments in each of the health care cost recovery suits pending against RJRT and, in some cases, RJRN, and the related declaratory judgment actions filed by certain of the cigarette manufacturers. FLORIDA. In February 1995, the State of Florida filed a health care cost recovery action under a special statute in Florida state court. STATE OF FLORIDA, ET AL. V. AMERICAN TOBACCO COMPANY, ET AL., Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida, Case No. CL 95 1466 AO. In September 1996, the trial court dismissed all of the state's claims except for its negligence and strict liability counts arising from Medicaid payments made after July 1, 1994, and its count for injunctive relief. The case was entering the trial phase when, during jury selection, the parties announced that they had entered into a settlement agreement. (For a description of the terms of the settlement see the 1997 Form 10-K, Item 1, "Business-Tobacco-Litigation Affecting the Cigarette Industry -- Interim Agreements.") MISSISSIPPI. In May 1994, the Attorney General of Mississippi filed a health care cost recovery action in Mississippi state court. MOORE V. THE AMERICAN TOBACCO COMPANY, ET AL., Chancery Court of Jackson County, Mississippi, Case No. 94-1429. A trial in this case began in June 1997, but on July 2, 1997, a settlement was agreed to based on a Memorandum of Understanding and subject to a number of conditions. (For a description of the terms of the settlement see the 1997 Form 10-K, Item 1, "Business-Tobacco-Litigation Affecting the Cigarette Industry- Interim Agreements.") MINNESOTA. In August 1994, the Attorney General of Minnesota and Blue Cross and Blue Shield of Minnesota filed a health care cost recovery action in Minnesota state court. MINNESOTA, ET AL. V. PHILIP MORRIS, INCORPORATED, ET AL., Minnesota District Court, Second Judicial District, County of Ramsey, Case No. C1-94-8565. In July 1996, the Minnesota Supreme Court ruled that Blue Cross did not have standing to pursue its tort claims against defendants, but that it could proceed against defendants for claims brought under antitrust and consumer protection statutes. The Supreme Court also held that Blue Cross could pursue directly its equitable claims, but only for injunctive (not monetary) relief. The trial began in January 1998 and is continuing. During pre-trial discovery and during the course of the trial to date, the court in this case made a number of rulings adverse to the defendants. These rulings, among other things, limit the defenses available to the defendants and require production by the defendants of thousands of documents for which privilege had been asserted. The tobacco companies are defending this case vigorously, but the court's rulings could have an adverse effect on their ability to present their defenses effectively. WEST VIRGINIA. In September 1994, the Attorney General of West Virginia filed a health care cost recovery action in West Virginia state court. MCGRAW V. THE AMERICAN TOBACCO COMPANY, ET AL., Circuit Court of Kanawha County, West Virginia, Case No. 94-1707. In October 1995, the court dismissed eight of ten counts of the complaint and Page 13

granted defendants' motion to prohibit prosecution of this case pursuant to a contingent fee agreement with private counsel. In June 1996, the Attorney General filed a second amended complaint that added the Public Employees' Insurance Agency as a plaintiff. In November 1996, the Attorney General filed a third amended complaint that added the West Virginia Department of Health and Human Resources as a plaintiff, and three law firms as defendants, and asserted additional counts under theories of indemnity, negligent misrepresentation, negligence, and strict product liability. In December 1996, the court heard oral argument on defendants' motion to dismiss common law and equitable claims contained in plaintiffs' third amended complaint. In a letter ruling issued February 13, 1997, the court ruled that neither of the West Virginia agencies had implied or express statutory authority to maintain the challenged causes of action. Motions to dismiss the remaining counts of the third amended complaint are pending. TEXAS. In March 1996, the Texas Attorney General filed a health care cost recovery action in federal court in Texas. STATE OF TEXAS V. AMERICAN TOBACCO COMPANY, ET AL., United States District Court, Eastern District of Texas, Civil No. 5-96CV91. Trial in this action is set for September 1997 and defendants have filed a number of motions to dismiss it. Defendants and others had previously filed an action in Texas state

granted defendants' motion to prohibit prosecution of this case pursuant to a contingent fee agreement with private counsel. In June 1996, the Attorney General filed a second amended complaint that added the Public Employees' Insurance Agency as a plaintiff. In November 1996, the Attorney General filed a third amended complaint that added the West Virginia Department of Health and Human Resources as a plaintiff, and three law firms as defendants, and asserted additional counts under theories of indemnity, negligent misrepresentation, negligence, and strict product liability. In December 1996, the court heard oral argument on defendants' motion to dismiss common law and equitable claims contained in plaintiffs' third amended complaint. In a letter ruling issued February 13, 1997, the court ruled that neither of the West Virginia agencies had implied or express statutory authority to maintain the challenged causes of action. Motions to dismiss the remaining counts of the third amended complaint are pending. TEXAS. In March 1996, the Texas Attorney General filed a health care cost recovery action in federal court in Texas. STATE OF TEXAS V. AMERICAN TOBACCO COMPANY, ET AL., United States District Court, Eastern District of Texas, Civil No. 5-96CV91. Trial in this action is set for September 1997 and defendants have filed a number of motions to dismiss it. Defendants and others had previously filed an action in Texas state court in November 1995, seeking a declaration that the Texas Attorney General cannot pursue a health care cost recovery action. PHILIP MORRIS, INC., ET AL. V. DAN MORALES, ATTORNEY GENERAL FOR THE STATE OF TEXAS, ET AL., District Court of Travis County, Texas, No. 94-14807. A trial in this case had begun when, on January 16, 1998, the parties entered into a settlement agreement. (For a description of the terms of the settlement see the 1997 Form 10-K, Item 1, "Business-Tobacco-Litigation Affecting the Cigarette Industry- Interim Agreements.") MASSACHUSETTS. In December 1995, the Massachusetts Attorney General filed a health care cost recovery action in Massachusetts state court. COMMONWEALTH OF MASSACHUSETTS V. PHILIP MORRIS, INC., ET AL., Superior Court, Middlesex County, Civil Action No. 95-7378. Defendants have moved to dismiss the complaint. Defendants had previously filed an action in Massachusetts federal court in November 1995, seeking to enjoin the Attorney General from prosecuting a health care cost recovery action. PHILIP MORRIS INCORPORATED, ET AL. V. SCOTT HARSHBARGER, United States District Court, District of Massachusetts, Case No. 95-12574-GAO. In November 1996, the federal district court denied the Attorney General's motion to dismiss the complaint and stayed the injunction action. Trial is scheduled to begin in the Commonwealth case on February 1, 1999. MARYLAND. In May 1996, the State of Maryland filed a health care cost recovery action in Maryland state court. STATE OF MARYLAND V. PHILIP MORRIS INC., ET AL., Circuit Court for Baltimore County, Maryland, Case No. 96-122017/CL211017. Defendants' motion to dismiss the state's complaint was argued on January 28, 1997. The trial is scheduled for January 1999. Defendants and others had previously filed a separate action in Maryland state court seeking to enjoin the Maryland Attorney General from Page 14

prosecuting a health care cost recovery action pursuant to a contingent fee arrangement with special counsel. PHILIP MORRIS, ET AL., V. PARRIS N. GLENDENING, GOVERNOR OF THE STATE OF MARYLAND, ET AL., Circuit Court for Talbot County, Maryland, Case No. CG 2829. In August 1996, the court granted the attorney general's motion for summary judgment and dismissed the injunction action. An appeal of this decision is pending. LOUISIANA. In March 1996, the Attorney General of Louisiana filed a health care cost recovery action in Louisiana state court. IEYOUB, ET AL., V. THE AMERICAN TOBACCO COMPANY, ET AL., 14th Judicial District Court, Parish of Calcasieu, Louisiana, Case No. 96-1209. In January 1997, the court denied defendants' motion to dismiss which argued that the Attorney General lacked the authority to bring this action. Defendants are seeking a supervisory writ of review of this decision. On March 14, 1997 and again on April 3, 1997, the State filed a Supplemental and Amending Petition naming over 150 insurance companies as defendants pursuant to Louisiana Direct Action Statute, La.R.S.22:655. The State alleged that it was a third-party beneficiary of the tobacco manufacturer defendants' insurance policies, including certain policies sold to R. J. Reynolds, and that those policies provide coverage for the damages claimed by the State of Louisiana. In June, 1997, A.C.E. Insurance Company, Ltd. filed a notice of removal of the matter to federal court. A.C.E. based its removal on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 9 U.S.C. section

prosecuting a health care cost recovery action pursuant to a contingent fee arrangement with special counsel. PHILIP MORRIS, ET AL., V. PARRIS N. GLENDENING, GOVERNOR OF THE STATE OF MARYLAND, ET AL., Circuit Court for Talbot County, Maryland, Case No. CG 2829. In August 1996, the court granted the attorney general's motion for summary judgment and dismissed the injunction action. An appeal of this decision is pending. LOUISIANA. In March 1996, the Attorney General of Louisiana filed a health care cost recovery action in Louisiana state court. IEYOUB, ET AL., V. THE AMERICAN TOBACCO COMPANY, ET AL., 14th Judicial District Court, Parish of Calcasieu, Louisiana, Case No. 96-1209. In January 1997, the court denied defendants' motion to dismiss which argued that the Attorney General lacked the authority to bring this action. Defendants are seeking a supervisory writ of review of this decision. On March 14, 1997 and again on April 3, 1997, the State filed a Supplemental and Amending Petition naming over 150 insurance companies as defendants pursuant to Louisiana Direct Action Statute, La.R.S.22:655. The State alleged that it was a third-party beneficiary of the tobacco manufacturer defendants' insurance policies, including certain policies sold to R. J. Reynolds, and that those policies provide coverage for the damages claimed by the State of Louisiana. In June, 1997, A.C.E. Insurance Company, Ltd. filed a notice of removal of the matter to federal court. A.C.E. based its removal on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 9 U.S.C. section 205. Also in June 1997, ICAROM, plc, another insurer-defendant, filed a separate notice of removal based on the Foreign Sovereign Immunities Act of 1976, 28 U.S.C. section 1330 (a). Plaintiff filed two motions to remand, one addressed to the removal by A.C.E. and the other addressed to the removal by ICAROM. On September 11, 1997, the federal district court denied plaintiff's motion to remand. An appeal of the denial of the motion to remand is now pending and a stay of the proceeding, pending appeal, is in effect. SAN FRANCISCO. In June 1996, the City and County of San Francisco filed a health care cost recovery action in California federal court and has since been joined by ten other California counties. CITY AND COUNTY OF SAN FRANCISCO, ET AL., V. PHILIP MORRIS, INC. ET AL., United States District Court, Northern District of California, Civil No. C 96-2090. The current plaintiffs in this matter are various counties of the State of California seeking, among other things, the recovery of smoking-related costs incurred by county governments. In January 1997, the court denied defendants' motion to disqualify plaintiffs' contingency-fee counsel. In February 1997, the court dismissed all of the plaintiffs' claims. Two clams (implied warranty and conspiracy) were dismissed with prejudice. Plaintiffs were granted leave to file an amended complaint with respect to their remaining claims. On March 3, 1998, the Court granted defendants' motion to dismiss only the intentional breach of special duty cause of action. Answers are due on March 31, 1998. No discovery has taken place. In September 1996, plaintiffs in the federal court action, joined by several medical associations, filed an action in California state court seeking, among other things, injunctive relief and disgorgement of profits for alleged violations of California's consumer protection statutes. PEOPLE OF THE STATE OF CALIFORNIA, ET AL., V. PHILIP MORRIS, INC., ET AL., San Francisco Superior Court, County of San Francisco, Case No. 980864. In Page 15

January 1997, the court granted in part defendants' motion to dismiss by requiring plaintiffs to replead certain causes of action and denied the motion on other grounds. WASHINGTON. In June 1996, the Attorney General of the State of Washington filed a health care cost recovery action in Washington state court. STATE OF WASHINGTON V. AMERICAN TOBACCO CO., INC., ET AL., Superior Court of Washington, King County, No. 96-2-15056-8. In November 1996, the court dismissed claims based on special duty, unjust enrichment and restitution to the state, but did not dismiss claims brought under Washington's antitrust laws. The State of Washington recently moved to amend its complaint with the stated intention of correcting deficiencies found by the court to exist in the special duty and unjust enrichment claims and to add a claim for restitution under Washington's consumer protection statute. Trial is scheduled for September 1998. CONNECTICUT. In July 1996, the State of Connecticut filed a health care cost recovery action in Connecticut state court. STATE OF CONNECTICUT V. PHILIP MORRIS INC., ET AL., Superior Court, Judicial

January 1997, the court granted in part defendants' motion to dismiss by requiring plaintiffs to replead certain causes of action and denied the motion on other grounds. WASHINGTON. In June 1996, the Attorney General of the State of Washington filed a health care cost recovery action in Washington state court. STATE OF WASHINGTON V. AMERICAN TOBACCO CO., INC., ET AL., Superior Court of Washington, King County, No. 96-2-15056-8. In November 1996, the court dismissed claims based on special duty, unjust enrichment and restitution to the state, but did not dismiss claims brought under Washington's antitrust laws. The State of Washington recently moved to amend its complaint with the stated intention of correcting deficiencies found by the court to exist in the special duty and unjust enrichment claims and to add a claim for restitution under Washington's consumer protection statute. Trial is scheduled for September 1998. CONNECTICUT. In July 1996, the State of Connecticut filed a health care cost recovery action in Connecticut state court. STATE OF CONNECTICUT V. PHILIP MORRIS INC., ET AL., Superior Court, Judicial District of Litchfield, Case No. CV-96-01534405. Defendants had previously filed an action in federal district court in June 1996, seeking to enjoin the Connecticut Attorney General from bringing the health care cost recovery action. PHILIP MORRIS INC., ET AL. V. RICHARD BLUMENTHAL, United States District Court, District of Connecticut, Case No. 396CV01221 (PCD). This injunction action was dismissed in December 1996 and, in January 1997, plaintiffs appealed the dismissal. UTAH. In September 1996, the Utah Attorney General filed a health care cost recovery action in federal court in Utah. STATE OF UTAH V. R.J. REYNOLDS TOBACCO COMPANY, ET AL., United States District Court, District of Utah, Case No. 2:96CV 0829W. Defendants had previously filed an action in Utah state court in July 1996, challenging the right of the Attorney General to bring such an action and to prosecute the case pursuant to a contingent fee arrangement with special counsel. PHILIP MORRIS INCORPORATED, ET AL. V. JANET C. GRAHAM, ATTORNEY GENERAL OF THE STATE OF UTAH, ET AL., Third Judicial District Court of Salt Lake County, Utah, Case No. 960904948CV. The parties have agreed that the state court action will be stayed while the federal action is proceeding, except for the challenge to the Attorney General's contingent fee arrangement with special counsel. In December 1996, a motion for partial summary judgment challenging the contingent fee arrangement was argued before the state court. In February 1997, the court denied the cigarette manufacturers' motion and granted the state's motion to dismiss three counts of the declaratory judgment action. Page 16

LOS ANGELES. In August 1996, the County of Los Angeles filed a health care cost recovery action in California state court. COUNTY OF LOS ANGELES V. R.J. REYNOLDS TOBACCO COMPANY, ET AL., Superior Court of California, San Diego County, No. 707651. On February 14, 1996, defendants demurred to four of the five causes of action asserted by plaintiffs. The court granted defendants' demurrer and plaintiffs have now filed a Fifth Amended Complaint on January 22, 1998. ALABAMA. In August 1996, a health care cost recovery action was filed in Alabama state court as a putative class action on behalf of taxpayers of the State of Alabama. Following local rules, the state court entered an order conditionally certifying the class. This action was subsequently removed by defendants to federal court. CROZIER, ET AL., V. THE AMERICAN TOBACCO COMPANY, ET AL., Circuit Court, Montgomery County, Alabama, Case No. CV-96-1508. Plaintiffs' motion to remand to state court was granted on March 25, 1997. Defendants filed a motion to dismiss based on plaintiffs' lack of standing to bring this lawsuit on April 14, 1997. On September 29, 1997, Judge Charles Price granted in part defendants' motion to dismiss, dismissing plaintiffs' claims asserted on behalf of the State of Alabama. Judge Price denied that motion to dismiss as it relates to plaintiffs' individual claims and those claims asserted on behalf of children in the State of Alabama. KANSAS. In August 1996, the Attorney General of Kansas filed a health care cost recovery action in Kansas state court. STATE OF KANSAS, EX REL. CARLA J. STOVALL, ATTORNEY GENERAL, V. R.J. REYNOLDS TOBACCO CO., ET AL., District Court of Shawnee County, Kansas, Case No. 96-CV-919. Defendants filed a motion to dismiss this case. On October

LOS ANGELES. In August 1996, the County of Los Angeles filed a health care cost recovery action in California state court. COUNTY OF LOS ANGELES V. R.J. REYNOLDS TOBACCO COMPANY, ET AL., Superior Court of California, San Diego County, No. 707651. On February 14, 1996, defendants demurred to four of the five causes of action asserted by plaintiffs. The court granted defendants' demurrer and plaintiffs have now filed a Fifth Amended Complaint on January 22, 1998. ALABAMA. In August 1996, a health care cost recovery action was filed in Alabama state court as a putative class action on behalf of taxpayers of the State of Alabama. Following local rules, the state court entered an order conditionally certifying the class. This action was subsequently removed by defendants to federal court. CROZIER, ET AL., V. THE AMERICAN TOBACCO COMPANY, ET AL., Circuit Court, Montgomery County, Alabama, Case No. CV-96-1508. Plaintiffs' motion to remand to state court was granted on March 25, 1997. Defendants filed a motion to dismiss based on plaintiffs' lack of standing to bring this lawsuit on April 14, 1997. On September 29, 1997, Judge Charles Price granted in part defendants' motion to dismiss, dismissing plaintiffs' claims asserted on behalf of the State of Alabama. Judge Price denied that motion to dismiss as it relates to plaintiffs' individual claims and those claims asserted on behalf of children in the State of Alabama. KANSAS. In August 1996, the Attorney General of Kansas filed a health care cost recovery action in Kansas state court. STATE OF KANSAS, EX REL. CARLA J. STOVALL, ATTORNEY GENERAL, V. R.J. REYNOLDS TOBACCO CO., ET AL., District Court of Shawnee County, Kansas, Case No. 96-CV-919. Defendants filed a motion to dismiss this case. On October 15, 1997 the trial court ordered the release of approximately 2,500 Liggett documents to plaintiff, holding that the joint defense privilege does not apply. Defendants noticed an appeal on December 12, 1997 to the Kansas Court of Appeal. MICHIGAN. In August 1996, the Attorney General of Michigan filed a health care cost recovery action in Michigan state court. FRANK J. KELLEY, ATTORNEY GENERAL, EX REL. STATE OF MICHIGAN V. PHILIP MORRIS, INC., ET AL., Circuit Court for the 30th Judicial Circuit, Ingham County, Michigan, Case No. 96-84281-CZ. In October 1996, defendants moved to dismiss certain counts of the complaint and to strike claims for compensatory and punitive damages. In January 1997, plaintiff filed a motion to summarily dispose of defendants' affirmative defenses and defendants' claims that assignment and/or subrogation are the state's exclusive remedies for obtaining reimbursement of monies spent providing healthcare for Michigan citizens with smoking related diseases. On May 27 1997, the court issued oral rulings granting the motion for summary disposition filed by the plaintiff as to subrogation and directed defendants to file amended affirmative defenses. The Court granted with prejudice the motion to dismiss filed by defendants as to plaintiffs' anti-trust claims, claims of breach of special duty and injunctive relief, Page 17

dismissed plaintiff's punitive damages claim and denied the motion to disqualify plaintiffs' contingency fee counsel. Plaintiff has leave to amend. OKLAHOMA. In August 1996, the Attorney General of Oklahoma filed a health care cost recovery action in Oklahoma state court. STATE OF OKLAHOMA ET AL. R.J. REYNOLDS TOBACCO CO., ET AL., District Court for Cleveland County, Oklahoma, Case No. CJ-96-1499-L. Trial is scheduled for November 11, 1998. Discovery is ongoing. ARIZONA. In August 1996, the Attorney General of Arizona filed a health care cost recovery action in Arizona state court. STATE OF ARIZONA, ET AL., V. AMERICAN TOBACCO CO., INC. ET AL., Superior Court, Maricopa County, Arizona, No. CV 96-14769. The Governor of Arizona has instructed the Attorney General to dismiss the case. Subsequently, the Attorney General filed an amended complaint that abandons claims for Medicaid payments, but seeks recovery of other health care costs as well as other damages and forms of relief. On July 14, 1997, the court dismissed count 5 (RICO) of plaintiff's complaint. Both sides filed motions for reconsideration of the rulings concerning RICO and antitrust claims. The motions to reconsider are to be heard simultaneously with opposition to the amended complaint. Discovery is to be completed by July 31, 1998. Trial is scheduled for October 7, 1998.

dismissed plaintiff's punitive damages claim and denied the motion to disqualify plaintiffs' contingency fee counsel. Plaintiff has leave to amend. OKLAHOMA. In August 1996, the Attorney General of Oklahoma filed a health care cost recovery action in Oklahoma state court. STATE OF OKLAHOMA ET AL. R.J. REYNOLDS TOBACCO CO., ET AL., District Court for Cleveland County, Oklahoma, Case No. CJ-96-1499-L. Trial is scheduled for November 11, 1998. Discovery is ongoing. ARIZONA. In August 1996, the Attorney General of Arizona filed a health care cost recovery action in Arizona state court. STATE OF ARIZONA, ET AL., V. AMERICAN TOBACCO CO., INC. ET AL., Superior Court, Maricopa County, Arizona, No. CV 96-14769. The Governor of Arizona has instructed the Attorney General to dismiss the case. Subsequently, the Attorney General filed an amended complaint that abandons claims for Medicaid payments, but seeks recovery of other health care costs as well as other damages and forms of relief. On July 14, 1997, the court dismissed count 5 (RICO) of plaintiff's complaint. Both sides filed motions for reconsideration of the rulings concerning RICO and antitrust claims. The motions to reconsider are to be heard simultaneously with opposition to the amended complaint. Discovery is to be completed by July 31, 1998. Trial is scheduled for October 7, 1998. HAWAII. In January 1997, the Attorney General of Hawaii filed a health care recovery action in Hawaii state court. STATE OF HAWAII, ET AL., V. BROWN & WILLIAMSON TOBACCO CORPORATION, ET AL., Circuit Court of the First Circuit, No. 97-0441-01. In February 1997, the state filed its first amended complaint. Motions to dismiss have been filed and are to be heard on April 30, 1998. Discovery is ongoing. OHIO. In September 1996, two Ohio local officials filed a health care cost recovery action in Ohio state court, purportedly on behalf of the State of Ohio and all Ohio taxpayers. Defendants removed the case to federal court in Ohio and have filed a motion to dismiss challenging the standing of plaintiffs to bring this action. STATE EX REL. COYNE, JR., ET AL., V. THE AMERICAN TOBACCO CO., ET AL., United States District Court, Northern District of Ohio, Case No. 96-2247. Plaintiffs' motion to remand this action to state court is pending. Defendants filed a Motion to Dismiss based on failure to state a claim upon which relief can be granted on October8, 1997. Trial in this case is scheduled for May 4, 2000. In May 1997, the Attorney General of the State of Ohio filed a health care cost recovery action in Ohio state court. STATE OF OHIO EX REL. BETTY D. MONTGOMERY V. PHILIP MORRIS, ET AL., Case No. 97-CVH-05-5114. Discovery cut-off has been scheduled for December 16, 1999. This case is currently scheduled for trial for May 4, 2000. Motions to dismiss have been filed. Briefing on these motions was completed on March 17,1998. Oral argument has not been scheduled. Page 18

NEW JERSEY. In September 1996, the New Jersey Attorney General filed a health care cost recovery action in New Jersey state court. THE STATE OF NEW JERSEY V. R.J. REYNOLDS TOBACCO COMPANY, ET AL. Chancery Court, Middlesex County, Case No. C-254-96. In August 1996, defendants filed a separate suit challenging the right of the Attorney General to bring such an action and to prosecute the case pursuant to a contingent fee arrangement with special counsel. PHILIP MORRIS, INC., ET AL., V. PETER VERNIERO, ATTORNEY GENERAL OF THE STATE OF NEW JERSEY, ET AL., Superior Court of New Jersey, Chancery Division, Mercer County, Case No. MER-C-000114-96. Defendants' motion to dismiss the complaint and plaintiffs' motion for summary judgment are pending. Plaintiff filed an Amended Complaint on December 3, 1997 adding two new counts under the state's RICO and antitrust statutes. Defendants responded to the amended complaint on January 23, 1998 by filing a motion to strike Counts Five (unjust enrichment/restitution) and Six (indemnity) of plaintiff's amended complaint and limiting to subrogation plaintiff's common law right to seek reimbursement of Medicaid expenses. NEW YORK CITY. In October 1996, the City of New York and the New York City Health and Hospitals Corporation filed a health care cost recovery action in New York state court. CITY OF NEW YORK, ET AL., V. THE TOBACCO INSTITUTE, ET AL., Supreme Court of the State of New York, County of New York, Case No. 406225/96. In January 1997, plaintiffs filed an amended complaint. In February 1997, the case was removed to the United States District

NEW JERSEY. In September 1996, the New Jersey Attorney General filed a health care cost recovery action in New Jersey state court. THE STATE OF NEW JERSEY V. R.J. REYNOLDS TOBACCO COMPANY, ET AL. Chancery Court, Middlesex County, Case No. C-254-96. In August 1996, defendants filed a separate suit challenging the right of the Attorney General to bring such an action and to prosecute the case pursuant to a contingent fee arrangement with special counsel. PHILIP MORRIS, INC., ET AL., V. PETER VERNIERO, ATTORNEY GENERAL OF THE STATE OF NEW JERSEY, ET AL., Superior Court of New Jersey, Chancery Division, Mercer County, Case No. MER-C-000114-96. Defendants' motion to dismiss the complaint and plaintiffs' motion for summary judgment are pending. Plaintiff filed an Amended Complaint on December 3, 1997 adding two new counts under the state's RICO and antitrust statutes. Defendants responded to the amended complaint on January 23, 1998 by filing a motion to strike Counts Five (unjust enrichment/restitution) and Six (indemnity) of plaintiff's amended complaint and limiting to subrogation plaintiff's common law right to seek reimbursement of Medicaid expenses. NEW YORK CITY. In October 1996, the City of New York and the New York City Health and Hospitals Corporation filed a health care cost recovery action in New York state court. CITY OF NEW YORK, ET AL., V. THE TOBACCO INSTITUTE, ET AL., Supreme Court of the State of New York, County of New York, Case No. 406225/96. In January 1997, plaintiffs filed an amended complaint. In February 1997, the case was removed to the United States District Court for the Southern District of New York, Case No. 97CIV0904(LMM). Plaintiff filed a motion for remand which was granted . ILLINOIS. In November 1996, the Attorney General of Illinois filed a health care cost recovery action in Illinois state court. PEOPLE OF THE STATE OF ILLINOIS V. PHILIP MORRIS, INC., ET AL., Circuit Court of Cook County, Illinois, Case No. 96 L 13146. On November 14, 1997 the court dismissed some of plaintiff's claims, but denied the motion as to plaintiff's negligence, civil conspiracy, and anti-trust claims. Defendants have filed a motion for reconsideration, or in the alternative asking the court to certify the order for interlocutory appeal to the Illinois Court of Appeals. This case has been consolidated with the COUNTY OF COOK case pending in the same court, for discovery and pre-trial purposes. IOWA. In November 1996, the State of Iowa filed a health care cost recovery action in Iowa state court. STATE OF IOWA, EX REL. THOMAS J. MILLER, IN HIS CAPACITY AS ATTORNEY GENERAL OF THE STATE OF IOWA, V. R.J. REYNOLDS TOBACCO CO., ET AL., District Court for Polk County, Iowa, Case No. CL71048. Defendants filed motions to dismiss. On June 13, 1997, plaintiff filed a First Amended Petition adding Count X (Iowa Ongoing Criminal Conduct), Count XI (Prima Facie Tort), and Count XII (Common Law Indemnity). On August 26, 1997, the court granted defendants' motion to dismiss four counts of the petition, but denied it with respect to five others. Plaintiffs have appealed Page 19

this ruling and briefing has been completed. Oral argument was heard on March 19, 1998. ALASKA. In January 1997, Reynolds and three other cigarette manufacturers filed suit against the Alaska Attorney General in federal district court seeking declaratory and injunctive relief to prohibit a threatened health care cost recovery action by Alaska on grounds that it would violate federal law. PHILIP MORRIS, INC., ET AL., V. BRUCE BOTELHO, United States District Court, Alaska, No. A 97-003 Civil (JWS). ERIE COUNTY. In January 1997, the County of Erie filed a health care cost recovery action in New York state court. COUNTY OF ERIE V. THE TOBACCO INSTITUTE, INC., ET AL., Supreme Court of the State of New York, County of Erie, Case No. I1997/359. NEW YORK. In January 1997, the Attorney General of New York filed a health care cost recovery action in New York state court. STATE OF NEW YORK, ET AL., V. PHILIP MORRIS, INC., ET AL., Supreme Court of the State of New York, County of New York, Case No. 400306/97. In February 1997, the case was removed to federal court, but it was remanded to state court on January 5, 1998. Defendants filed motions to dismiss on March 18, 1998.

this ruling and briefing has been completed. Oral argument was heard on March 19, 1998. ALASKA. In January 1997, Reynolds and three other cigarette manufacturers filed suit against the Alaska Attorney General in federal district court seeking declaratory and injunctive relief to prohibit a threatened health care cost recovery action by Alaska on grounds that it would violate federal law. PHILIP MORRIS, INC., ET AL., V. BRUCE BOTELHO, United States District Court, Alaska, No. A 97-003 Civil (JWS). ERIE COUNTY. In January 1997, the County of Erie filed a health care cost recovery action in New York state court. COUNTY OF ERIE V. THE TOBACCO INSTITUTE, INC., ET AL., Supreme Court of the State of New York, County of Erie, Case No. I1997/359. NEW YORK. In January 1997, the Attorney General of New York filed a health care cost recovery action in New York state court. STATE OF NEW YORK, ET AL., V. PHILIP MORRIS, INC., ET AL., Supreme Court of the State of New York, County of New York, Case No. 400306/97. In February 1997, the case was removed to federal court, but it was remanded to state court on January 5, 1998. Defendants filed motions to dismiss on March 18, 1998. WISCONSIN. In February 1997, the Attorney General of Wisconsin filed a health care cost recovery action in Wisconsin state court. STATE OF WISCONSIN V. PHILIP MORRIS, INC., ET AL., Circuit Court (Dane County), Case No. 97CV0328. INDIANA. In February 1997, the Attorney General of Indiana filed a health care cost recovery action in Indiana state court. STATE OF INDIANA V. PHILIP MORRIS, INC., ET AL., Marion County Superior Court, Case No. 49D079702 CT0236. In April, 1997 the County of Cook filed a health care cost recovery action in Illinois state court. COUNTY OF COOK V. PHILIP MORRIS, Circuit Court, Cook County, Illinois, Case No. 97L01550. BECKOM Plaintiffs are residents of Tennessee who seek reimbursement of the funds expended by the state's taxpayers in providing health care for citizens. Plaintiffs are represented by J. D. Lee, the Tennessee attorney who has filed several cases against cigarette manufacturers since 1984. BECKOM V. AMERICAN TOBACCO, ET AL., United States District Court, Knoxville, Tennessee. ARKANSAS On December 12, 1997, RJRT was served with a reimbursement suit filed by the Attorney General for the State of Arkansas. ARKANSAS V. AMERICAN TOBACCO, ET AL., Chancery Court, Little Rock, Arkansas. Page 20

PENNSYLVANIA In April, 1997 the Attorney General of Pennsylvania filed a health care cost recovery action in state court. PENNSYLVANIA V PHILIP MORRIS, INC., ET AL. Court of Common Pleas, Philadelphia County. SOUTH CAROLINA In May, 1997, the Attorney General of South Carolina filed a health care cost recovery action in state court. SOUTH CAROLINA V. BROWN & WILLIAMSON, ET AL., Case No. 97-CP401686. MONTANA In May, 1997, the Attorney General of Montana filed a health care cost recovery action in state court. MONTANA V. PHILIP MORRIS, INC., ET AL., Montana First Judicial Court, Lewis and Clark County, Montana, Case No. 9700306. MISSOURI In May, 1997, the Attorney General of Missouri filed a health care cost recovery action in state court. MISSOURI V. AMERICAN TOBACCO COMPANY, ET AL., Circuit Court, City of St. Louis, Missouri, Case No. 972-1465. COLORADO In June 1997, the Attorney General of Colorado filed a health care cost recovery action in state court. COLORADO V. R. J. REYNOLDS TOBACCO CO., ET AL., District Court, City and County of

PENNSYLVANIA In April, 1997 the Attorney General of Pennsylvania filed a health care cost recovery action in state court. PENNSYLVANIA V PHILIP MORRIS, INC., ET AL. Court of Common Pleas, Philadelphia County. SOUTH CAROLINA In May, 1997, the Attorney General of South Carolina filed a health care cost recovery action in state court. SOUTH CAROLINA V. BROWN & WILLIAMSON, ET AL., Case No. 97-CP401686. MONTANA In May, 1997, the Attorney General of Montana filed a health care cost recovery action in state court. MONTANA V. PHILIP MORRIS, INC., ET AL., Montana First Judicial Court, Lewis and Clark County, Montana, Case No. 9700306. MISSOURI In May, 1997, the Attorney General of Missouri filed a health care cost recovery action in state court. MISSOURI V. AMERICAN TOBACCO COMPANY, ET AL., Circuit Court, City of St. Louis, Missouri, Case No. 972-1465. COLORADO In June 1997, the Attorney General of Colorado filed a health care cost recovery action in state court. COLORADO V. R. J. REYNOLDS TOBACCO CO., ET AL., District Court, City and County of Denver, Colorado, Case No 97-CV-3432. NEW MEXICO In May 1997, the Attorney General of New Mexico filed a health care cost recovery action in state court. NEW MEXICO V. AMERICAN TOBACCO, ET AL., District Court, County of Santa Fe, New Mexico, Case No. SF97-1235. VERMONT In May 1997, the Attorney General of Vermont filed a health care cost recovery action in state court. VERMONT V. PHILIP MORRIS INC., ET AL., Chittenden Superior Court, Case No. 744-97. IDAHO In June 1997, the Attorney General of Idaho filed a health care cost recovery action in state court. IDAHO V. PHILIP MORRIS, INC., ET AL. District Court, County of Ada, Idaho, Case No. CV-970239D. NEW HAMPSHIRE In June 1997, the Attorney General of New Hampshire filed a health care cost recovery action in state court. NEW HAMPSHIRE V. R. J. REYNOLDS TOBACCO COMPANY, ET AL., Superior Court, Merrimack County, New Hampshire, Case No. 97-E-0165. OREGON In June 1997, the Attorney General of Oregon filed a health care cost recovery action in state court. OREGON V. AMERICAN TOBACCO, ET AL., Circuit Court, Multnomah County, Oregon, Case NO. 9706-04457. Page 21

NEVADA In August 1997, , the Attorney General of Nevada filed a health care cost recovery action in state court. NEVADA V. PHILIP MORRIS, INC., ET AL., District Court, Wash County, Nevada, Case No.CV97-03279. GEORGIA In September 1997, , the Attorney General of Georgia filed a health care cost recovery action in state court. GEORGIA V. PHILIP MORRIS, INC., ET AL., Superior Court, Fulton County, Georgia, Case No. E61692. MAINE In September 1997, the Attorney General of Maine filed a health care cost recovery action in state court. MAINE V. PHILIP MORRIS, INC., ET AL., Superior Court, Kennebec County, Maine, Case No. 97134. RHODE ISLAND In October 1997, the Attorney General of Rhode Island filed a health care cost recovery action in state court. RHODE ISLAND V. BROWN & WILLIAMSON TOBACCO, ET AL., Superior Court, Providence, Rhode Island, Case No. 97-3058. SOUTH DAKOTA In February 1998, the Attorney General of South Dakota filed a health care costs recovery

NEVADA In August 1997, , the Attorney General of Nevada filed a health care cost recovery action in state court. NEVADA V. PHILIP MORRIS, INC., ET AL., District Court, Wash County, Nevada, Case No.CV97-03279. GEORGIA In September 1997, , the Attorney General of Georgia filed a health care cost recovery action in state court. GEORGIA V. PHILIP MORRIS, INC., ET AL., Superior Court, Fulton County, Georgia, Case No. E61692. MAINE In September 1997, the Attorney General of Maine filed a health care cost recovery action in state court. MAINE V. PHILIP MORRIS, INC., ET AL., Superior Court, Kennebec County, Maine, Case No. 97134. RHODE ISLAND In October 1997, the Attorney General of Rhode Island filed a health care cost recovery action in state court. RHODE ISLAND V. BROWN & WILLIAMSON TOBACCO, ET AL., Superior Court, Providence, Rhode Island, Case No. 97-3058. SOUTH DAKOTA In February 1998, the Attorney General of South Dakota filed a health care costs recovery action in state court. SOUTH DAKOTA V. PHILIP MORRIS, INC., ET AL., Circuit Court, County of Hughes, South Dakota, Case No. 98-65. PUERTO RICO In June 1997, Pedro Rosello, as Governor of the Commonwealth of Puerto Rico, filed a health care cost recovery action in federal court. ROSELLO V. BROWN & WILLIAMSON TOBACCO, ET AL., United States District Court for the District of Puerto Rico, Case NO. 97-1910. In four cases, one or more asbestos companies seek reimbursement for a portion of the expenses, including settlements and judgments, they allege they have paid as a consequence of tobacco-related diseases. In those cases, they take the position that though asbestos claimants may have asbestos-related disease, those diseases are also associated with or caused by cigarettes. The four asbestos cases are as follows: FALISE, ET AL., V. AMERICAN TOBACCO, ET AL., United States District Court for the Eastern District of New York. Case No. CV 97 7640; KEENE CREDITORS TRUST V. BROWN & WILLIAMSON TOBACCO, ET AL., Supreme Court, County of New York, New York, Case No. 606479/97; RAYMARK INDUSTRIES, INC. V. R. J. REYNOLDS TOBACCO COMPANY, ET AL., Circuit Court, Duval County, Florida, Case No. 97-0525; and FIBREBOARD CORPORATION, ET AL., V. AMERICAN TOBACCO, ET AL., Superior Court, County of Alameda, California, Case No 791919-8 In addition to the actions brought by the various state attorneys general, lawsuits based on similar theories have been brought by union health and welfare funds (44 such cases are currently pending), a university and four American tribes seeking to recover expenses paid on behalf of their members for smoking-related illnesses. Page 22

UNIONS THE NORTHWEST LABORERS-EMPLOYERS HEALTH & SECURITY TRUST FUND, ET AL., V. PHILIP MORRIS INC., ET AL., United States District Court for the Western District of Washington, Case No. C97-849-WD. On December 24, 1997 United States District Court Judge William Dwyer granted plaintiffs' motion for class certification as to "all existing jointly administered and collectively bargained-for health and welfare trusts in (the State of) Washington, and/or the trustees of such entities, that have provided or paid for health care and/or addiction treatment costs or services for employees or other beneficiaries." Judge Dwyer held that plaintiffs' class certification motion met the various requirements of Federal Rule of Civil Procedure 23(a) and (b)(3). IRON WORKERS UNION INSURANCE FUND, ET AL., V. PHILIP MORRIS, INC., ET AL, United States District Court for the Northern District of Ohio, Case No. 1:97 CV 144 STATIONARY ENGINEERS LOCAL 39 HEALTH & WELFARE TRUST FUND, ET AL., V.

UNIONS THE NORTHWEST LABORERS-EMPLOYERS HEALTH & SECURITY TRUST FUND, ET AL., V. PHILIP MORRIS INC., ET AL., United States District Court for the Western District of Washington, Case No. C97-849-WD. On December 24, 1997 United States District Court Judge William Dwyer granted plaintiffs' motion for class certification as to "all existing jointly administered and collectively bargained-for health and welfare trusts in (the State of) Washington, and/or the trustees of such entities, that have provided or paid for health care and/or addiction treatment costs or services for employees or other beneficiaries." Judge Dwyer held that plaintiffs' class certification motion met the various requirements of Federal Rule of Civil Procedure 23(a) and (b)(3). IRON WORKERS UNION INSURANCE FUND, ET AL., V. PHILIP MORRIS, INC., ET AL, United States District Court for the Northern District of Ohio, Case No. 1:97 CV 144 STATIONARY ENGINEERS LOCAL 39 HEALTH & WELFARE TRUST FUND, ET AL., V. PHILIP MORRIS, INC., et al., United States District Court for the Northern District of California, Case No. C97-1519-MMC KENTUCKY LABORERS DISTRICT COUNCIL HEALTH AND WELFARE TRUST FUND, ET AL., V. PHILIP MORRIS, INC., ET AL, United States District Court for the Western District of Kentucky, Case No. 3:97CV-394-H MASSACHUSETTS LABORERS HEALTH AND WELFARE FUND, ET AL, V. PHILIP MORRIS, INC., ET AL., United States District Court, District Court of Massachusetts, Case No. 97-11552-GAO ARK-LA-MISS LABORERS WELFARE FUND, ET AL., United States District Court for the Eastern District of Louisiana, Case No. 97-1944 c/w 97-2570 HAWAII HEALTH & WELFARE FUND FOR OPERATING ENGINEERS V. PHILIP MORRIS, INC., ET AL., United States District Court, District of Hawaii, Case No. 97-00833 This case is currently stayed. CONNECTICUT PIPE TRADES HEALTH FUND, ET AL., V. PHILIP MORRIS, INC., ET AL., United States District Court for the District of Connecticut, Case No. 397CV01305 UNITED FED OF TEACHERS WELFARE FUND, ET AL., V. PHILIP MORRIS, INC., United States District Court for the Southern District of New York, Case No.97CIV4676 LABORERS LOCAL 17 HEALTH & BENEFIT FUND, ET AL., V. PHILIP MORRIS, INC., United States District Court for the Southern District of New York, Case Number 97CIV4550 WEST VIRGINIA LABORERS PENSION FUND V. PHILIP MORRIS, INC., ET AL., United States District Court for the Southern District of West Virginia, Case No. 3:97-0708 Page 23

OREGON LABORERS-EMPLOYERS HEALTH & WELFARE TRUST FUND, ET AL., V. PHILIP MORRIS, INC., ET AL., United States District Court for the District of Oregon, Case No. 9706-04707 Plaintiffs filed a motion for class certification. LABORERS' AND OPERATING ENGINEERS' UTILITY AGREEMENT HEALTH & WELFARE TRUST FUND V. PHILIP MORRIS, INC., ET AL., United States District Court for the District of Arizona, Case No. 97-1406-PHXSMM This case is currently stayed.

OREGON LABORERS-EMPLOYERS HEALTH & WELFARE TRUST FUND, ET AL., V. PHILIP MORRIS, INC., ET AL., United States District Court for the District of Oregon, Case No. 9706-04707 Plaintiffs filed a motion for class certification. LABORERS' AND OPERATING ENGINEERS' UTILITY AGREEMENT HEALTH & WELFARE TRUST FUND V. PHILIP MORRIS, INC., ET AL., United States District Court for the District of Arizona, Case No. 97-1406-PHXSMM This case is currently stayed. SEAFARERS WELFARE PLAN, ET AL., V. PHILIP MORRIS, INC., ET AL. United States District Court for the District of Maryland, Case No. MJG-97-2127 TEAMSTERS NO. 142 HEALTH AND WELFARE TRUST FUND, ET AL., V. PHILIP MORRIS, INC., ET AL., United States District Court for the Northern District of Indiana, Case No. 3:97CV00667RM EASTERN STATES HEALTH & WELFARE FUND, ET AL., V. PHILIP MORRIS, INC., ET AL., United States District Court for the Southern District of New York, Case No.97CV7346 WEST VIRGINIA-OHIO VALLEY AREA I.B.E.W. WELFARE FUND V. AMERICAN TOBACCO COMPANY, ET AL., United States District Court for the Southern District of West Virginia Case No: 97-C2135 CONSTRUCTION LABORERS OF GREATER ST. LOUIS WELFARE FUND, ET AL., V. PHILIP MORRIS, INC., ET AL., United States District Court For the Eastern District of Missouri, Case No. 4:97CV02030ERW STEAMFITTERS LOCAL UNION 420 WELFARE FUND, ET AL., V. PHILIP MORRIS, INC., United States District Court for the Eastern District of Pennsylvania, Case No. 97-CV-5344 NEW JERSEY CARPENTERS HEALTH FUND, ET AL., V. PHILIP MORRIS, INC., United States District Court for the District of New Jersey, Case No. 97-1728 S. E. FLORIDA LABORERS DISTRICT COUNCIL HEALTH AND WELFARE TRUST FUND V. PHILIP MORRIS, INC., United States District Court for the Southern District of Florida, Case No. 97-8715civRyskamp RHODE ISLAND LABORERS' HEALTH & WELFARE FUND V. AMERICAN TOBACCO COMPANY, United States District Court for the District of Rhode Island, Case No. 97-500L CENTRAL STATES JOINT BOARD HEALTH AND WELFARE TRUST FUND V. PHILIP MORRIS, INC., United States District Court for the Northern District of Illinois, Case No. 97C8114 Page 24

TEXAS CARPENTERS HEALTH BENEFIT FUND, ET AL., V. PHILIP MORRIS, INC., United States District Court for the Eastern District of Texas, Case No. 97-CV-0625 CENTRAL LABORERS WELFARE FUND, ET AL., V. PHILIP MORRIS, INC., ET AL., United States District Court for Southern District of Illinois, Case No. 97-568-WDS BAC LOCAL 32 INSURANCE TRUST FUND, ET AL., V. PHILIP MORRIS INC., ET AL., United States District Court for the District of Michigan, Case No. 97-75675 INTERNATIONAL BROTHERHOOD OF TEAMSTERS LOCAL 734 HEALTH AND WELFARE TRUST

TEXAS CARPENTERS HEALTH BENEFIT FUND, ET AL., V. PHILIP MORRIS, INC., United States District Court for the Eastern District of Texas, Case No. 97-CV-0625 CENTRAL LABORERS WELFARE FUND, ET AL., V. PHILIP MORRIS, INC., ET AL., United States District Court for Southern District of Illinois, Case No. 97-568-WDS BAC LOCAL 32 INSURANCE TRUST FUND, ET AL., V. PHILIP MORRIS INC., ET AL., United States District Court for the District of Michigan, Case No. 97-75675 INTERNATIONAL BROTHERHOOD OF TEAMSTERS LOCAL 734 HEALTH AND WELFARE TRUST FUND V. PHILIP MORRIS, INC., ET AL., United States District Court for the Northern District of Illinois, Case No. 97C8113 IBEW LOCAL 363 WELFARE FUND V. PHILIP MORRIS, INC., ET AL., United States District Court for the Southern District of New York, Case No. 97CIV9396 IBEW LOCAL 25 WELFARE FUND V. PHILIP MORRIS, INC., ET AL., United States District Court for the Southern District of New York, Case No. 97-9395 LOCAL 138, 138A, AND 138B INTERNATIONAL UNION OF OPERATING ENGINEERS WELFARE FUND V. PHILIP MORRIS, INC., ET AL., United States District Court for the Southern District of New York, Case No. 97-9402 LOCAL 840, INTERNATIONAL BROTHERHOOD OF TEAMSTERS HEALTH & INSURANCE FUND V. PHILIP MORRIS, INC., ET AL., United States District Court for the Southern District of New York, Case No. 97CIV9398 PUERTO RICAN ILGWU HEALTH & WELFARE FUND V. PHILIP MORRIS, INC., ET AL., United States District Court for the Southern District of New York, Case No. 97CV9396 LONG ISLAND REGIONAL COUNCIL OF CARPENTERS WELFARE FUND V. PHILIP MORRIS, INC., ET AL., Supreme Court of New York for the County of New York, Case No. 97/122258 UNITED FOOD & COMMERCIAL WORKERS UNION V. PHILIP MORRIS, INC., ET AL., United States District Court for the Northern District of Alabama, Case No. CV-97-1340 LOCAL 1199 V. PHILIP MORRIS, INC., ET AL., United States District Court for the Southern District of New York, Case No. 97CV9401 LOCAL 1199 HOME CARE INDUSTRY BENEFIT FUND V. PHILIP MORRIS, INC., ET AL., United States District Court for the Southern District of New York, Case No. 97-9401 Page 25

ASBESTOS WORKERS LOCAL 53 HEALTH AND WELFARE FUND, ET AL., V. PHILIP MORRIS, INC., United States District Court for the Eastern District of Louisiana, Case No. 97-1944c/w972570 SCREEN ACTORS GUILD-PRODUCERS HEALTH & WELFARE FUND PLAN, ET AL. V. PHILIP MORRIS, INC., ET AL., Superior Court of California, County of Los Angeles, Case No. BS181603 DAY CARE COUNCIL - LOCAL D.C. 1707 WELFARE FUND V. PHILIP MORRIS, INC., ET AL., United States District Court for the Southern District of New York, Case No. 97/606240

ASBESTOS WORKERS LOCAL 53 HEALTH AND WELFARE FUND, ET AL., V. PHILIP MORRIS, INC., United States District Court for the Eastern District of Louisiana, Case No. 97-1944c/w972570 SCREEN ACTORS GUILD-PRODUCERS HEALTH & WELFARE FUND PLAN, ET AL. V. PHILIP MORRIS, INC., ET AL., Superior Court of California, County of Los Angeles, Case No. BS181603 DAY CARE COUNCIL - LOCAL D.C. 1707 WELFARE FUND V. PHILIP MORRIS, INC., ET AL., United States District Court for the Southern District of New York, Case No. 97/606240 OPERATING ENGINEERS LOCAL 12 HEALTH & WELFARE FUND V. AMERICAN TOBACCO COMPANY, ET AL., United States District Court for the Northern District of California, Case No. BC177968 STEAMFITTERS LOCAL UNION 614 HEALTH & WELFARE FUND, ET AL., V. PHILIP MORRIS, INC., ET AL., Circuit Court of Tennessee at Memphis, Case No. 92260-2 ARKANSAS CARPENTERS HEALTH & WELFARE FUND V. PHILIP MORRIS, INC., ET AL., United States District Court for the District of Arkansas, Case No. LR-C-97-0754 CARPENTERS & JOINERS WELFARE FUND, ET AL V. PHILIP MORRIS, INC., ET AL., United States District Court for the District of Minnesota, Case No. 98-515JMR/FLN NEW MEXICO AND WEST TEXAS MULTI-CRAFT HEALTH & WELFARE FUND, ET AL., V. PHILIP MORRIS, INC., ET AL., United States District Court for the District of New Mexico, Case No. CV97-0009118 UNIVERSITIES UNIVERSITY OF SOUTH ALABAMA V. THE AMERICAN TOBACCO COMPANY, ET AL., United States District Court for the District of Alabama, Case No. 97-0552-BH-S. INDIAN TRIBES
MUSCOGEE CREEK NATION V. THE AMERICAN TOBACCO COMPANY, ET AL., Creek Tribal Court, Case No. CV 97-27. CROW CREEK SIOUX TRIBE V. THE AMERICAN TOBACCO COMPANY, ET AL., Court of the Crow Creek Sioux, Case No. CV 97-09-082. THE CROW TRIBE V. THE AMERICAN TOBACCO COMPANY, ET AL., Case No. 97-181. Muscogee

Tribal

Crow Tribal Court,

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LOWER BRULE SIOUX NATION V. THE AMERICAN TOBACCO COMPANY, Lower Brule Sioux Tribal Court, Case No. 97-5-0057. Other state and local government entities have announced that they are considering filing similar health care cost recovery actions. Page 27

LOWER BRULE SIOUX NATION V. THE AMERICAN TOBACCO COMPANY, Lower Brule Sioux Tribal Court, Case No. 97-5-0057. Other state and local government entities have announced that they are considering filing similar health care cost recovery actions. Page 27