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RAReynolds Industries, Inc. Winston-Salem, N.C: 27102 March 15, 1983 PROXY STATEMENT GENERAL INFORMATION The accompanying proxy is solicited by the Board of Directors of the Company. All shares represented by duly furnished proxies will be voted in accordance therewith. A stockholder furnishing the accompanying proxy may revoke it any time prior to the voting of the proxy. Solicitation may be made personally, by telephone, by telegraph or by mail by officers and employees of the Company who will not be additionally compensated therefor. The Company will request persons, such as brokers, nominees and fiduciaries, holding stock In their names for others, or holding stock for others who have the right to give voting Instructions, to forward proxy material to their principals and request authority for the execution of the proxy and will reimburse such persons for their expenses in so doing. Georgeson & Co. has been retained to assist in the solicitation of proxies at a cost not expected to exceed $14,500. The total cost of soliciting proxies will be borne by the Company. As of the close of business on February 28, 1983 there were outstanding and entitled to vote 112,604,089 shares of Common Stock, 7,053,478 shares of Series A CurrQative Preferred Stock and 2,881,912 shares of Series B Cumulative Preferred Stock. Holders of Common Stock, Series A Cumulative Preferred Stock and Series B Cumulative Preferred Stock of record as of the close of business on February 28, 1983 will be entitled to vote on all matters submitted to a vote at the meeting. Each share of Common Stock and Series B Cumulative Preferred Stock is entitled to one vote on all matters submitted at the meeting. Each share of Series A Cumulative Preferred Stock is entitled to three-fourths vote on all matters submitted at the meeting. 1

TABLE OF CONTENTS Paga General Information ........................................................................................... 1 Item 1-ELECTION OF DIRECTORS ................................................................. 2 Certain Information Concerning the Board of Directors ...................... 9 Remuneration ....................................................................................... 10 Transactions with Management and Others ........................................ 11 Stock Option and Other Plans ............................................................. 12 Retirement Pians .................................................................................. 16 Ownership of the Company's Securities .............................................. 18 Item 2-RATIFICATION OF APPOINTMENT OF AUDITORS ............................ 18 Item 3-AMENDMENTS TO RJR EMPLOYEES' SAVINGS AND INVEST- MENT PLAN :.......................................... :......................................... 18 .,,., General .......................................................... '........................................ 19 Member Contributions ..................................:..:................................... 19 Member Savings Plus Contributions .:................................................. 19 Company Contributions ....................................................................... 19 Special Rules on Contributions ............................................................ 19 Investment of Contributions ................................................................ 20 Withdrawals and Distributions ............................................................. 20 Termination and Amendment .............................................................. 20 Tax Consequences ............................................................................... 20 Item 4-STOCKHOLDER PROPOSAL CONCERNING PREEMPTIVE RIGHTS ............................................................................................ 20 Item 5-STOCKHOLDER PROPOSAL CONCERNING STOCK OPTION PLANS .............................................................................................. 21 Item 6-STOCKHOLDER PROPOSAL CONCERNING REPORT ON CIGA- RETTE PROMOTIONS IN THIRD WORLD NATIONS ....................... 23 M isceiianeous .................................................................................................... . 24 EXHIBIT A-RJR Employees' Savings and Investment Pian ............................. A-1

VERNON E. JORDAN, JR., 47, Partner, Akin, Gump, Strauss, Hauer & Feid. Mr. Jordan joined the law firm of Akin, Gump, Strauss, Hauer & Feld of Washington, D. C., and Dallas, Texas, as a Partner on January 1, 1982. Prior to this association, he served for ten years as President of the National Urban League, Inc., a non-profit community service organization. Mr. Jordan is a Director of American Express Company, Bankers Trust Company, Bankers Trust New York Corporation, Celanese Corporation, J. C. Penney Company, Inc., Xerox Corporation and Dow Jones & Co. He also serves on the Board of Directors of Atlanta University Center Corporation, Clark College, the John Hay Whitney Foundation, the Rockefeller Foundation and the Taconic Foundation. He has served as a member of the National Advisory Commission on Selective Service, the American Revolution Bi-Centennial Commission, the Presidential Clemency Board and the Advisory Council on Social Security. Mr. Jordan is a graduate of DePauw University and Howard University Law School. He is a member of the bar of the States of Arkansas and Georgia and is a member of the American Bar Association and the National Bar Association. Member: Audit Committee First became a Director: 1980 Public Policy Committee Shares owned: Common, 100 JUANITA M. KREPS, 62, former Secretary of Commerce. Dr. Kreps, who served as Secretary of Commerce from January 1977 to October 1979, was elected a Director of the Company on November 15, 1979. She previously served as a Director of the Company from April 1975 to January 1977, when she resigned to join the President's Cabinet. Dr. Kreps was Vice President of Duke University from 1973 to 1977 and James B. Duke Professor of Economics at Duke University from 1972 to 1977. She is the author of several leading books and articles in the field of economics. Dr. Kreps serves on the Board of Directors of American Telephone & Telegraph Company, Armco, Inc., Citicorp, Deere & Company, Eastman Kodak Company, J. C. Penney Company, Inc., UAL, Inc. and Zurn Industries. She also serves as a Trustee of the Duke Endowment. Dr. Kreps holds a Ph.D. degree from Duke University. Member: Executive Committee Public Policy Committee _ 0 First became: a Director: 1975 Shares owned: Common, 284 JOHN D. MACOMBER, 55, Chairman of the Board and Chief Executive Officer, Celanese Corporation. In 1973 Mr. Macomber was elected President and Director of Celanese Corporation, a diversified chemical company. He was named its Chief Executive Officer in 1977 and its Chairman of the Board in 1980. Before joining Celanese, Mr. Macomber had been associated for 20 years with McKinsey & Company, management consultants, serving as a Director from 1964 to 1973 and as a member of its Managing Committee. He is a Director of The Chase Manhattan Bank, N.A. and Bristol-Myers Company. He is a Trustee of the Carnegie Institution of Washington, the Whitehead Institute at M.I.T. and The Rockefeller University. Mr. Macomber is Vice Chairman of The Americas Society and a member of The Business Roundtable and the Council on Foreign Relations. Mr. Macomber is a graduate of Yale University and of Harvard Graduate School of Business Administration. Member: Compensation Committee First became a Director: 1975 Finance Committee Shares owned: Common, 1,666 Nominating Committee 5

HICKS B. WALDRON, 59, Executive Vice President, R. J. Reynolds Industries, Inc. and Chairman, President and Chief Executive Officer of Heublein, Inc. Mr. Waldron joined Heublein, Inc. as President and Chief Operating Officer In 1973 and served as Chief Executive Officer from 1975 through 1977 and from 1980 to present. He was elected Chairman in 1982. Mr. Waldron serves on the Board of Directors of CIGNA Corporation, CBT Corporation and Avon Products, Inc. He is also a Director of The Greater Hartford Arts Council, the Hartford Hospital, the Citizens Crime Commission of Connecticut and the Connecticut Business and Industry Association and is Vice Chairman and a member of the Executive Committee of National Junior Achievement, Inc. He is a member of The Conference Board. He is a Trustee of Green Mountain College, Western New England College and The Hartford Graduate Center. First became a Director: 1982 Shares owned6: Common, 11,051 Series B Preferred, 3,471 STUART D. WATSON, 66, Consultant and Former Chairman of the Board, Heublein, Inc. Mr. Watson joined Heublein, Inc. as President in 1966 and was elected Chairman In 1973. He retired as Chairman in 1982. Mr. Watson serves on the Board of Directors of Allied-Lyons PLC (London), Connecticut Mutual Life Insurance Company, Harte-Hanks Communications, Inc., Richardson-Vicks Inc., Mohasco Corporation, Nashua Corporation and The Stanley Works. He is a Trustee of DePauw University, the Institute of Living and Trinity College. He Is Chairman of the Finance Committee of The Advertising Council, Inc. and a senior member of The Conference Board. First became a Director: 1982 Shares owned5: Common, 31,127 Series B Preferred, 12,400 J. TYLEE WILSON, 51, President, R. J. Reynolds Industries, Inc. Mr. Wilson joined the Company in 1974 as President of RJR Foods, Inc. He was elected President of R. J. Reynolds Tobacco International, Inc. in January 1976 and became Chairman of the Board and Chief Executive Officer in May 1976, serving in that position until July 1978. Mr. Wilson was elected Executive Vice President of the Company in 1976 and was elected President in 1979. Before joining the Company, Mr. Wilson was with Chesebrough-Pond's Inc., where he served in various management positions, ultimately leading to his election as Group Vice President and Director. Before joining Chesebrough-Pond's, Mr. Wilson spent his professional career in sales management with The Procter & Gamble Company and Scott Paper Company. He is a Director of The Firestone Tire & Rubber Company, Sonoco Products Company, The Wachovia Corporation, Wachovia Bank & Trust Company, N.A., the Research Triangle Foundation of North Carolina, the Metropolitan YMCA of Winston-Salem and Forsyth County, and Reynolda House. He is a Trustee of the United States Council for International Business and of The Summit School, a member of the Board of Visitors of Wake Forest University and The University of North Carolina at Chapel Hill, and Chairman of the Governor's Business Council on the Arts and Humanities. He is also Chairman of the International Trade Subcommittee and a member of the International Policy Committee of the United States Chamber of Commerce. Mr. Wilson is a graduate of Lafayette College. Member: Executive Committee First became a Director: 1976 Finance Committee Shares owneds: Common, 9,8492 ~ ~ ~ 7 Z, e~

6 Includes 7,521 shares of Common Stock and 2,101 shares of Series B Cumulative Preferred Stock that are restricted and subject to forfeiture pursuant to the Heublein, Inc. Long-Term Growth Incentive Plan and the R. J. Reynolds Industries, Inc. 1982 Long Term Incentive Plan. Certain Information Concerning the Board of Directors During 1982 fifteen meetings of the Board of Directors were held. Each Director attended more than 75% of the meetings of the Board of Directors and the committees on which he or she served combined, except for Mrs. Wilson, who attended 73% of the combined total of such meetings. Among the standing committees of the Board of Directors of the Company are the Audit, Compensation and Nominating Committees. The duties performed by the Audit Committee include recommending to the Board of Directors the independent auditors to be employed by the Company; conferring with the independent auditors and the internal auditors concerning the scope of their examination of the books and records of the Company and its subsidiaries; reviewing with the independent and internai auditors, on completion of their audits, their findings and recommendations; reviewing the range and cost of audit and non-audit services performed by the independent auditors; reviewing the independent auditors' opinion rendered with respect to the annual financial statements; reviewing the adequacy of the Company's, system of internal accounting controls; reviewing and approving budgeted and actual audit costs of the independent auditors; and reviewing, when appropriate, investigations of matters within the scope of its duties. The Audit Committee held three meetings during 1982. The duties of the Compensation Committee inciude approving the salaries of officers of the Company and the Chairmen and Presidents of the Company's significant subsidiaries; reviewing the Company's wage and salary administration policies; reviewing, administering interpreting executive incentive compensation plans and granting bonuses, options and benefits under suc plans; approving individual transactions between the Company and executives or prospective executives that significantly affect the executive's benefits or remuneration; and reviewing and administering certain aspects of the Company's retirement and stock purchase plans. The Compensation Committee held six meetings during 1982. The duties of the Nominating Committee include reviewing and recommending changes in the size and composition of the Company's Board of Directors and recommending candidates for election to the Board. The Nominating Committee considers recommendations from all sources, including stockholders, regarding possible candidates. A stockholder who desires to propose a candidate to the Nominating Committee should submit a written recommendation, together with sufficient biographical information concerning the recom- mended individual, including age, employment and board memberships, if any, to the Secretary of the Company, R. J. Reynolds Industries, Inc., Reynolds Boulevard, Winston-Salem, North Carolina 27102. Although letters of recommendation may be submitted for consideration at any time, recommendations must be received prior to December 15 in any year for consideration in connection with the nomination and election of Directors at the Company's next annual meeting. The Nominating Committee held three meetings during 1982. Each Director who is not an employee of the Company or a subsidiary is compensat3d at the rate of $1,500 per month. In addition, each is paid a fee of $500 for a regular or annual meeting of the Board, $600 for a special meeting of the Board or for a committee meeting not held on the same day as a Board meeting, and $500 for a committee meeting held on the same day as a Board meeting or for any stockholder meeting. Committee chairmen are paid an additional $200 for attendance at committee meetings. The Company pays no additional remuneration to employees of the Company or its subsidiaries who are Directors. 9

Item 1-ELECTION OF DIRECTORS A board of eighteen Directors, to hold office until their successors have been elected and qualified, is to be elected at the meeting. It is intended that, unless authorization to do so is withheld, the proxies will be voted for the election of the nominees named below. If any nominee shall become unable to stand for election as a Director at the meeting, an event not now anticipated by the Board of Directors, the proxy may be voted for a substitute designated by the Board of Directors. The Board of Directors' nominees for election as Directors are listed on the following pages with brief statements of their principal occupations and other Information. If the year given in which a nominee first became a Director is prior to 1970, it is the year in which the nominee first became a Director of R. J. Reynolds Tobacco Company, of which the Company became the parent in a reorganization in 1970. All of the Board of -Directors' nominees were elected by the stockholders to their present terms at the annual meeting in 1982 except Messrs. Waldron and Watson. They are nominees for the first time and became Directors on October 21, 1982. Nominees for Directors, JOSEPH F. ABELY, JR., 54, Vice Chairman of the Board and Chairman of the Finance Committee, R. J. Reynolds Industries, Inc. Mr. Abely joined the Company in 1977. Previously, he was Vice Chairman and a Director of General Foods Corporation and also served that company as President of Its Food Service Products Division. Prior to 1963, Mr. Abely held various operating and financial positions with W. R. Grace & Co. He currently serves on the Board of Directors of Burlington Industries, Inc., Stauffer Chemical Company, Richardson-Vicks Inc., NCNB Corporation and NCNB National Bank of North Carolina. Mr. Abely also serves as a Governor of the National American Red Cross and is a member of its executive committee. He is a member of the Council on Foreign Relations and the Emergency Committee for American Trade. He is President of the Southeastern Center for Contemporary Art and a member of the National Business Committee for the Arts. Mr. Abely is a member of the Board of Visitors of the Fuqua School of Business at Duke University and a Trustee of Boston College and the James G. Hanes Memorial Fund/Foundation. He is a graduate of Boston College and holds a Master of Business Administration degree from Harvard Graduate School of Business Administration and a Juris Doctor from Harvard Law School. He is a member of the bar of the Commonwealth of Massachusetts. Member: Executive Committee Finance Committee First became a Director: 1977 Shares owned: Common, 5,5912 WILLIAM S. ANDERSON, 63, Chairman of the Board, NCR Corporation. Mr. Anderson has served since 1972 as a Director of NCR Corporation, which Is primarily engaged in the development, manufacturing, marketing and servicing of business equipment. Mr. Anderson has had a long career with NCR, beginning as Manager of its Hong Kong operation in 1946. He was elected Corporate President in 1972, Chief Executive Officer In 1973, Chairman and President in 1974, and Chairman of the Board in 1976. He is a Director of Consolidated Natural Gas Co., Chairman of the National Foreign Trade Council, an honorary member and past Chairman of the National Board of the Smithsonian Associates, and Vice Chairman of the Advisory Council on Japan-U.S. Economic Relations. He is a Trustee of The Conference Board and the University of Dayton, and a graduate member of The Business Council. He also serves on the International Council of Morgan Guaranty Trust Company of New York. Mr. Anderson is a graduate of Public and Thomas Hanbury School, Shanghai. Member: Compensation Committee First became a Director: 1977 Finance Committee Shares owned: Common, 200 Nominating Committee 2

any retirement allowance from previous employers. In the event the individual retires prior to age 65, the 70% retirement allowance is reduced by a lower percent of his primary Social Security benefit, by any retirement allowance from any previous employers and by 5% for each year or portion thereof remaining before he attains age 65. Upon his death while an employee, the individual's wife during her lifetime will receive an allowance equal to one-half of the retirement allowance to which he was entitled at the time of his death, actuarially reduced to recognize this survivorship benefit. In addition, a survivor's benefit may be elected by either individual upon retirement which, if elected, will reduce actuarially the benefits paid during his life. The 70% retirement allowance does not take effect until the individual attains age 55. Before that date, the annual retirement allowance payable upon termination of employment is $50,000. The agreements also provide for a severance allowance equal to one year's current base salary, but not less than $380,000 in Mr. Abely's case and $410,000 in Mr. Wilson's case, if the Company terminates their employment. The Company has entered into an agreement with Mr. Horrigan pursuant to which, if he remains an employee of the Company or its subsidiaries until July 1, 1988, he will receive upon retirement, benefits equivalent to those he would receive under the Company's retirement plan had he been a'n employee of the Company since October 1, 1964. The benefits under this agreement will be reduced by benefits payable to Mr. Horrigan or his contingent annuitant under any retirement plans of the Company and its subsidiaries or under plans of Mr. Horrigan's previous employers. The agreement also provides for a severance allowance equal to one year's current base salary, if the Company terminates his employment. 30n June 30, 1982, Mr. Watson, a nominee for Director, retired from Heublein, Inc., which has engaged him as a consultant through September 30, 1986 at a monthly fee of $16,667 through December 31, 1984, $10,417 through December 31, 1985, and $8,333 thereafter. Pursuant to Mr. Watson's original employment agreement with Heublein, Inc., $63,924'of compensation was set aside during the period October 20, 1966 through December 31, 1969 for deferred payment upon Mr. Watson's retirement or any time after his termination of employment. This amount, plus interest at the prime rate in effect from time to time, accruing from the respective dates of deferral, will be paid to him over a five-year period commencing July 1, 1985. 0 Transactions with Management and Others In 1982 two of the Company's subsidiaries, in the ordinary course of their business, made purchases (principally of cigarette filter tow) from Celanese Corporation or its subsidiaries aggregating approximately $29,668,000. These subsidiaries also made purchases (principally of cigarette filter tow) during 1982 from affiliates of Eastman Kodak Company aggregating approximately $60,476,000. Celanese and Eastman are the only domestic manufacturers of filter tow and such purchases were made at prevailing market prices. Dr. Kreps is a Director of Eastman Kodak Company, Mr. Macomber is Chairman of the Board and a Director of Celanese Corporation, and Mr. Sticht and Mr. Jordan are Directors of Celanese Corporation. Sea-Land Industries (Bermuda) Ltd., a subsidiary of Sea-Land Industries Investments, Inc., made payments of approximately $7,837,400 during 1982 to Paringer Investments, Ltd. and proposes to make payments of approximately $8,162,300 during 1983 pursuant to long-term charters of three vessels owned by Paringer. Mr. Cudd is Chairman of the Board of Directors of Paringer Investments, Ltd. The Company and its subsidiaries, in the ordinary course of business, made purchases of approximately $321,070 from Monsanto Company and its subsidiaries during 1982. It is anticipated that purchases of at least this amount will be made during 1983. Mr. Hanley is Chairman of the Board and Chief Executive Officer of Monsanto Company. The law firm of Akin, Gump, Strauss, Hauer & Feld of Washington, D. C. and Dallas, Texas, of which Mr. Jordan is a partner, has been retained by one of the Company's subsidiaries to represent it in certain litigation. During 1982 S. G. Warburg & Co. Ltd., of which Mr. Grierson is a Director, and Shearson/American Express Inc., a wholly-owned subsidiary of American Express Company, of which Mr. Jordan is a Director, prov~ded investment advisory services to the Company. 11

reason within one year of the date of grant will cause forfeiture. The performance shares granted have a payment value per share at the end of an award cycle equal to the fair market value of a share of the Company's Common Stock at that time. The award cycle in effect for the performance shares granted to Heublein employees under the LTIP is from January 1, 1983 to June 30, 1985. A portion of the performance shares may be forfeited based upon the Company's performance during the award cycle using compound growth in earnings per share as the performance criterion. Mr. Waldron has been granted 2,107 restricted shares of the Company's Common Stock and 2,107 performance shares under the LTIP. Based on the fair market value of the Company's Common Stock on March 1, 1983, the potential (unrealized) value of these performance shares granted was $98,766. The table below shows for the individuals named under "Remuneration" and for all Directors and officers as a group, the following information with respect to ISOs, other stock options and related SARs: (i) the aggregate amount of Common Stock subject to ISOs granted from January 1, 1978 through March 1, 1983, ( ii ) the aggregate amount of Common Stock subject to options with related SARs granted from January 1, 1978 through March 1, 1983, (iii) the average per share option exercise price thereof, (iv) the net value (market value less option exercise price) of shares of Common Stock or cash realized during such period upon the exercise of such options or related rights during such period, (v) the sales of Common Stock from January 1, 1978 through March 1, 1983, (vi) the number of shares of Common Stock subject to ISOs outstanding as of March 1, 1983, (vii) the number of shares of Common Stock subject to options with related SARs outstanding as of March 1, 1983, (viii) the potential (unrealized) value (market value less option exercise price) of outstanding options and rights as of March 1, 1983, and (ix) the potential (unrealized) value (market value less option exercise price) of currently exercisable options and rights as of March 1, 1983. In addition, during the period employees were granted options with SARs for a total of 2,192,753 shares at an average option exercise price per share of $37.55, and ISOs without SARs for a total of 234,300 shares at an average option exercise price per share of $46.19. c 0 Stock Option,17 Granted-January 1, 1978 to March 1, 1983: Number of Incentive Stock Options Granted ............................................. Number of options granted with stock appreciation rights ............................ Average per share option exercise price .................................................. Exercised-January 1, 1978 to March 1. 1983: Net value (market value less option exercise price) realized in shares or cash ..............................................••••• Sales-January 1, 1978 to March 1, 1983: Number of shares ................................. Outstanding at March 1, 1983: Number of Incentive Stock Options ..... Number of options with stock appre- ciation rights ..................................... Potential ( unrealized ) value (market value less option exercise price) ...... Potential ( unrealized ) value (market value less option exercise price) currently exercisable ......................... J. F. Abely E. A. Horrigan R. G. Landis J. P. Sticht J. T. Wilson All Directors and officers as a group 1,500 1,500 1,250 0 1,750 10,600 17,145 26,642 8,479 80,500 18,590 239,435 $35.51 $41.00 $40.55 $30.82 $35.97 $35.13 $304,722 $ 0 $ 0 $1,194,220 $479,126 $3,651,639 0 0 0 0 0 6,725 1,500 1,500 1,250 0 1,750 10,600 22,598 26,642 8,479 74,000 16,590 214,212 $242,146 $174,994 $61,577 $1,186,125 $167,588 $2,467,412 $214,853 $149,948 $51,255 $1,186,125 $134,619 $2,190,741 13

H. C. ROEMER, 58, Senior Vice President, General Counsel and Secretary, R. J. Reynolds Industries, Inc. Mr. Roemer joined R. J. Reynolds Tobacco Company in 1958 as Associate Counsel. He was made Assistant General Counsel in 1968, and in 1970 he was elected Secretary and a Director. He was elected a Vice President and General Counsel of the Company In 1970 and Senior Vice President and Secretary in 1979. Prior to joining R. J. Reynolds Tobacco Company, Mr. Roemer was associated with the law firm of Davis Polk & Wardwell of New York. He is a member of the Board of Governors of the North Carolina Bar Association and of its Corporate Counsel and Finance committees. Mr. Roemer is also a member of The American Law Institute, the Association of General Counsel, the American Bar Association, the Committee on Transnational Corporations of the World Association of Lawyers and the Advisory Board of the International & Comparative Law Center of the Southwestern Legal Foundation. He serves on the Board of Visitors of Wake Forest University School of Law and Is a Trustee of Salem Academy and College. Mr. Roemer Is a graduate of Harvard College and Columbia University Law School. He is a member of the bar of the States of New York and North Carolina. Member: Executive Committee First became a Director: 1970 Shares owned5: Common, 2,3362 J. PAUL STICHT, 65, Chairman of the Board and Chief Executive Officer, R. J. Reynolds Industries, Inc. Mr. Sticht became a Director of the Company in 1968 and was elected Chairman of the Executive Committee In 1972. in 1973 he became President and Chief Operating Officer and In 1978 he was elected Chief Executive Officer of the Company. Mr. Sticht was elected Chairman of the Board in April 1979. Before joining the Company, Mr. Sticht was President of Federated Department Stores, Inc. He joined Federated In 1960 as an Executive Vice President and Director and became President in 1967. Previously, he was a Vice President of Campbell Soup Company and President of Campbell's international subsidiary. Earlier in his career he held various positions with United States Steel Corporation and Trans World Airlines, Inc. Mr. Sticht is a member of the Board of Directors of Celanese Corporation, The Wachovia Corporation, Wachovia Bank & Trust Company, N.A., Textron Inc., S. C. Johnson & Son, Inc. and The Chrysler Corporation. He is a member of The Rockefeller University Board of Trustees and of the Massachusetts Institute of Technology Corporation. Mr. Sticht Is a member of the Board of Governors of the Corporate Fund for the Performing Arts at the Kennedy Center, the Council on Foreign Relations, the Chamber of Commerce of the United States and The Business Roundtable. He also serves as Chairman of the North Carolina Council of Management and Development. Mr. Sticht is a graduate of Grove City College, from which he also holds an honorary doctor's degree. He serves on the College's Board of Trustees. Member: Executive Committee First became a Director: 1968 Finance Committee Shares owned5: Common, 32,8392, 3 Nominating Committee COLIN STOKES, 68, Retired Chairman of the Board, R. J. Reynolds Industries, Inc. Mr. Stokes joined R. J. Reynolds Tobacco Company in 1935 where he rose through successive supervisory and management positions to the office of Chairman of the Board in 1970. He was elected President of the Company in 1972 and Chairman and Chief Executive Officer in 1973, serving in the latter position until 1978. Mr. Stokes retired as Chairman of the Board in 1979. Mr. Stokes is a Director of NCNB Corporation, NCNB National Bank of North Carolina and 1st Home Federal Savings and Loan Association. He is a senior member of The Conference Board and a member of the Rockefeller University Council. He is Vice Chairman of the North Carolina State Ports Authority. Mr. Stokes serves on the University of North Carolina at Chapel Hill Institutional Development Foundation, the Medical Foundation and Board of Visitors of the Medical Center of the Bowman Gray School of Medicine, the Board of Trustees of Wake Forest University and the Tanglewood Park Board of Trustees. Mr. Stokes is a graduate of the University of North Carolina and holds an honorary Doctor of Laws degree from Wake Forest University. Member: Compensation Committee First became a Director: 1957 C~ Executive Committee Shares owned5: Co mon 39 0254 ~ , , m .~, Public Policy Committee .~ 6 '~ -4 ~

The Company maintains a Management Incentive Plan for selected key employees. Under this Plan, participants may be awarded bonuses based upon both individuai and corporate performance during each year. The amount of the award is determined by an evaluation of performance in light of various financial and nonfinancial goals established annually. The maximum potential bonus award is limited on the basis of an individual's position. The bonus awards for officers of the Company are approved by the Compensation Committee of the Board of Directors. The average annual bonus awarded to the individuals named under "Remuneration," to all Directors and officers as a group, and to all eligible employees during the five-year period from January 1, 1978 to March 1, 1983s was as follows: Mr. Abely, $115,360; Mr. Horrigan, $95,600; Mr. Landis, $85,165; Mr. Sticht, $285,400; Mr. Wilson, $134,580; all Directors and officers as a group, $1,073,072; and all eligible employees, $4,995,880. The Company also maintains a Performance Unit Plan for selected key employees of the Company and its subsidiaries. Under this Plan, participants are granted performance units, the value of which is equal to the average market price of the Company's Common Stock during the month of December of the year prior to the year in which the performance units are granted. The Compensation Committee determines which employees will participate in the Plan and the number of performance units each participant is awarded. The number of performance units Initially granted to an Individual Is based principally on his or her position. The ultimate number of the performance units awarded to a participant-is+determined at the end of an award cycle of not more than four years by reference to Company performanoe ~ criteria established by the Compensation Committee at the beginning of the award cycle. Three four-year award cycles ending December 31, 1983, December 31, 1984 and December 31, 1985, respectively, are now In effect. The performance criterion used to determine the ultimate number of performance units awarded for all of the award cycles now in effect Is compounded growth in average earnings per share during the cycle. The ultimate number of performance units paid at the end of an award cycle may range from 0% to 120% of the initial number of the units granted, depending upon earnings growth. The base earnings per share from which growth is measured is the average of the actual'earnings per share for the three-year period Immediately preceding the start of each award cycle. The average annual performance unit award, based upon the initiai number of units granted, made during the three-year period from January 1, 1980 to March 1, 1983 to the individuais named under "Remuneration," to all Directors and officers as a group, and to all eligible employees was as follows: Mr. Abely, $116,800; Mr. Horrigan, $110,267; Mr. Landis, $132,933; Mr. Sticht, $236,750; Mr. Wilson, $141,533; all Directors and officers as a group, $1,038,908; and all eligible employees, $2,307,886. The Initial four-year award cycle under the Plan ended December 31, 1982. Awards paid for this cycle to the eligible individuals named under "Remuneration," to all Directors and officers as a group, and to all eligible employees were as follows: Mr. Abely, $115,362; Mr. Horrigan, $74,646; Mr. Landis, none; Mr. Sticht, $237,510; Mr. Wilson, $128,934; all Directors and officers as a group, $556,452; and all eligible employees, $693,869. Under the Management Incentive Plan, the Performance Unit Plan and the Deferred Compensation Plan for Directors, a participant may elect to defer payment of all or a portion of any award or fees. Deferred amounts are credited on the books of the Company to an account in the name of the participant as a cash credit, a phantom Common Stock credit, or a combination as elected by the participant. Cash credit accounts are credited quarterly with an interest equivalent at a rate based upon the yield on long-term U.S. government bonds, but not less than 6%. The phantom share accounts are credited with a Common Stock dividend equivalent at the time dividends are paid on Common Stock. Deferred amounts are distributed when a participant's employment or service as a Director terminates. The table that follows shows for the individuals named under "Remuneration" who have phantom share accounts, for all Directors and officers as a group, and for all eligible employees, the following information for phantom share accounts under the Plans: (i) the aggregate amount of phantom shares acquired from January 1, 1978 through March 1, 1983, (ii) the average base price per share thereof, (iii) the net value (market value less base price) of shares or cash realized during such period, (iv) the aggregate amount of phantom shares in the Individual's account as of March 1, 1983, and (v) the potential (unrealized) value (market value less base price) of the phantom shares as of March 1, 1983. The table also includes phantom shares previously allocated to Mr. Landis while he was an active participant in deferred compensation plans of Del Monte Corporation, which are similar to the Company's plans. 14

The tables that follow show the estimated annual benefits payable upon retirement under the Company's retirement plan and the Lifetime Compensation Plan of Heublein, Inc. to persons In specified remuneration and years-of-service classifications. The retirement benefits shown are computed without regard to the Social Security offset and are based upon retirement at age 65 and the payment of a single-life annuity to the employees. R. J. REYNOLDS INDUSTRIES, INC. ESTIMATED ANNUAL RETIREMENT BENEFITS Years of Service Five Year Average Compensation 5 10 20 30 40 $150,000 ........................... $ 200, 000 ........................... $250,000 ........................... $300, 000 ........................... $350,000 ........................... $400,000 ........................... $450,000 ........................... $ 500, 000 ........................... $550,000 ........................... $600,000 ........................... $650,000 ........................... $700,000 ........................... $ 750, 000 ........................... $800,000 ........................... $ 850, 000 ........................... $900,000 ........................... $950,000 .................:......... Five Year Average Compensation $150,000 ........................... $200,000 ........................... $250,000 ........................... $300,000 ........................... $350,000 ........................... $400,000 ........................... $450,000 ........................... $500,000 ........................... $550,000 ........................... $600,000 ........................... $650,000 ........................... $700,000 ........................... $750,000 ........................... $800,000 ........................... $850,000 ........................... $900,000 ........................... $950,000 ........................... $13,125 $ 26,250 $ 52,500 $ 78,750 $105,000 17,500 35,000 70,000 105,000 140,000 21,875 43,750 87,500 131,250 175,000 26,250 52,500 105,000 157,500 210,000 30,625 61,250 122,500 183,750 245,000 35,000 70,000 140,000 210,000 280,000 39,375 78,750 157,500 236,250 315,000 43,750 87,500 175,000 , 262,500 350,000 48,125 96,250 192,500 288,750 385,000 52,500 105,000 210,000 315,000 420,000 56,875 113,750 227,500 341,250 455,000 61,250 122,500 245,000 367,500 490,000 65,625 131,250 262,500 393,750 525,000 70,000 140,000 280,000 420,000 560,000 74,375 148,750 297,500 446,250 595,000 78,750 157,500 315,000 472,500 630,000 83,125 166,250 332,500 498,750 665,000 HEUBLEIN, INCID ESTIMATED ANNUAL RETIREMENT BENEFITS Years of Service 5 10 20. 30 40 $15,000 $ 30,000 $ 60,000 $ 75,000 $ 86,250 20,000 40,000 80,000 100,000 115,000 25,000 50,000 100,000 125,000 143,750 30,000 60,000 120,000 150,000 172,500 35,000 70,000 140,000 175,000 201,250 40,000 80,000 160,000 200,000 210,000 45,000 90,000 180,000 225,000 258,750 50,000 100,000 200,000 250,000 287,500 55,000 110,000 220,000 275,000 316,250 60,000 120,000 240,000 300,000 345,000 65,000 130,000 260,000 325,000 373,750 70,000 140,000 280,000 350,000 402,500 75,000 150,000 300,000 375,000 431,250 80,000 160,000 320,000 400,000 460,000 85,000 170,000 340,000 425,000 488,750 90,000 180,000 360,000 450,000 517,500 95,000 190,000 380,000 475,000 546,250 The following are the approximate years of credited service (rounded to the nearest year) of the persons named in the remuneration table under the Company's Retirement Plan: Mr. Abely, 6; Mr. Horrigan, 4; Mr. Landis, 31; Mr. Sticht, 10; and Mr. Wilson, 9. Section 415 of the Internal Revenue Code places certain limitations on pensions which may be paid under the plans qualified under the Internal Revenue Code. The retirement benefits shown which exceed such limitations will be paid outside the qualified plan as a general and administrative expense. 17

Stock Option and Other Plans The Company has granted options to purchase shares of Common Stock at fair market value on the date of the grant to officers and other key employees of the Company and its subsidiaries under the Career Executive Stock Plan ("CESP"), the 1977 Stock Option Plan ("1977 Plan") and the 1982 Long Term Incentive Plan ("LTIP" ), which were approved by its stockholders in 1974, 1977 and 1982, respectively. The Plans are administered by the Compensation Committee of the Board of Directors. No optionee may be granted options to purchase more than 60,000 shares under the CESP, 100,000 shares under the 1977 Plan and 250,000 shares under the LTIP. The option price of Common Stock for options granted to date under all three Plans is the fair market value on the date of the grant, but-under the LTIP, options other than incentive stock options (as defined in Section 422A of the Internal Revenue Code )("ISOs" ) may be granted at an option price of up to 15% below fair market value on the date of grant. Upon exercise of an option, the option price must be paid in full. Options granted under the CESP, the 1977 Plan and the LTIP are not exercisable In whole or in part until one year after the date of the grant. The CESP permits the exercise of all options one year after the date of grant. Options granted under the 1977 Plan and options other than ISOs that have been granted under the LTIP are exercisable in successive installments of 25% of the number of option shares on the first through fourth anniversary dates of the grant. ISOs may be exercised only in the order in which they were granted, and they provide certain income tax advantages to the optionee on exercise if compared to other stock options. Specifically, the optionee will recognize no taxable income upon exercise of an ISO and, assuming certain holding period requirements are met, the excess, if any, of the sale price above the option price will be taxed at capital gains rates on subsequent disposition. No option granted under any of the Plans may be exercisable more than ten years after the date of the grant. The Company also has granted stock appreciation rights ("SARs" ) for options other than ISOs granted under all three Plans. SARs are exercisable only upon surrender of the related option and only to tho extent that the related option is exercisable. The SAR terminates when the related option expires. If an SAR is exercised, the holder is entitled to receive the excess of the fair market value of the shares for which the right is exercised over the option price of the related option. The Compensation Committee may at any time amend, suspend or terminate any SAR. Employees are selected to receive options and SARs based upon their responsibilities and present and potential contributions to the success of the Company as determined by management's evaluation of the position occupied. In addition, the LTIP allows Incentive awards in the form of restricted stock, performance units, performance shares and dividend equivalent rights. To date no performance units or dividend equivalent rights have been granted under the LTIP. No award under the LTIP becomes payable if the grantee's employment terminates within one year of the date of grant. Prior to its merger with the Company, Heublein, Inc. maintained the Heublein, Inc. Long-Term Growth Incentive Plan pursuant to which Mr. Waldron held 8,407 shares of Heublein, Inc. Common Stock, subject to forfeiture in the event his employment is terminated prior to three years from the date of grant except for reasons of death, disability or retirement. Pursuant to the merger, these shares were converted into 5,514 shares of the Company's Common Stock and 2,101 shares of the Company's Series B Cumulative Preferred Stock subject to forfeiture restrictions. Dividends on this stock are not paid when declared, but are accumulated with interest and may be forfeited in the same manner as the stock. In addition, and as previously indicated in the Company's Joint Proxy Statement dated September 10, 1982, Mr. Watson and Mr. Waldron were paid in 1982, $2,633,323 and $2,994,810, respectively, for surrender of stock options and performance shares granted under this Plan prior to the merger. Subsequent to the merger, certain Heublein employees, including Mr. Waldron, were granted restricted shares of the Company's Common Stock and performance shares under the LTIP. The restricted shares are subject to forfeiture in the event of termination of employment within three years of the date of grant, except for reasons of retirement with the consent of the Company, death or disability. Termination of employment for any 12

Ownership of the Company's Securities The following table lists the stockholders known to the Company to be beneficial owners of more than five percent of any class of the Company's voting securities as of December 31, 1982: Amount and Nature tn Name and Address of of Beneficial Percent 0 Title of Class Beneficial Owner Ownership of Class 0) v Series A Cumulative Preferred Stock ..................... General Electric Credit 388,200 shares 5.50% v Corporation ' ' 260 Long Ridge Road (Jt Stamford, Connecticut N 0 Series B Cumulative Preferred Stock ..................... General Cinema Corp. 1,023,255 shares 35.08% A 570 Lexington Avenue New York, New York See Notes beginning on page 8 of this proxy statement for management's ownership of securities. General Electric Credit Corporation Is a wholly owned subsidiary of General Electric Company, a publicly held corporation. General Cinema Corp. is a publicly held corporation. Item 2-RATIFICATION OF APPOINTMENT OF AUDITORS Subject to stockholder ratification, the Board of Directors has appointed the firm of Ernst & Whinney as auditors for the year 1983 and until their successors are selected. The appointment was made upon the recommendation of the Audit Committee, which Is composed of Directors who are not employees of the Company or Its subsidiaries. Representatives of Ernst & Whinney are expected to be present at the meeting with the opportunity to make a statement If they desire to do so and are expected to be available to respond to appropriate questions. The Board of Directors considers Ernst & Whinney to be well-qualified and recommends that the stockholders vote "FOR" ratification. Item 3-AMENDMENTS TO EMPLOYEES' SAVINGS AND INVESTMENT PLAN The Board of Directors, upon the recommendation of the Compensation Committee, amended the RJR Employees' Savings and Investment Plan (the "Pian" ) effective April 1, 1983, or such later date as may be approved by the Board of Directors, and authorized the submission of the amendments to the stockholders of the Company for their approval. The Plan was approved by the stockholders at the Company's 1982 annual meeting. The amendments increase the Company's matching contribution from 100% of the first 1% of compensation contributed and 50% of up to the next 4% of compensation contributed to 100% of the first 6% of compensation a member contributes. The amendments also add a so-called "Cash or Deferred" feature to the Plan pursuant to Section 401(k) of the Internal Revenue Code of 1954 (the "Code"), which permits members to make contributions from pre-tax compensation. The amendments are being submitted to stockholders for approval for the purpose of permitting employees who are officers of the Company to continue to acquire the Company's Common Stock under the Plan on the same basis as other employees by exempting such acquisitions from the operation of Section 16(b) of the Securities Exchange Act of 1934. The vote on this item will have no effect on the implementation of these amendments. Should the amendments fail to receive stockholder approval, it is anticipated that some officers may decide not to participate in the Plan. The Board of Directors believes that the amendments to the Plan will enhance the Company's ability to attract and retain qualified employees by providing them with the opportunity to make more tax-effective savings from their current earnings and by affording them an additional incentive to acquire an equity interest in the Company. The benefits provided under the Plan are intended to supplement the retirement benefits provided under other plans of the Company and the federal Social Security Act. The essential features of the Plan, as amended, are outlined below. The full text of the amended Plan appears as Exhibit A to this Proxy Statement, and the following summary is qualified in its entirety by reference to the text. The terms with initial capital letters in the following summary are defined in the Plan. 18

SUPPORTING STATEMENT "Last year 3,434 owners of 2,604,108 shares voted in favor of our similar resolution. The vote against inciuded the unmarked proxies. "The importance of pre-emptive rights has been noted in the following words by the Securities and Exchange Commission in an Advisory Report on the proposed plan of reorganization of Yale Express: 'The plan should ... be amended to provide for pre-emptive rights to stockholders. Without such rights, the interests of the stockholders of the reorganized company would be subject to dilution by a distribution of additional common stock, and the plan would be incompatible with the safeguards for stockholders provided for in 216 (11) .' (We recognize that this statement was made in a specific factual situation which may not be applicable to R. J. Reynolds. In our opinion, however, the principles enunciated are generally valid. ) "An argument against the pre-emptive rights has been market fluctuations. The new ruling by the Securities and Exchange Commission allowing 'shelf registration', in our opinion, takes care of this problem. "If you agree, please mark your proxy for this resolution; otherwise it is automatically cast against It, unless you have marked to abstain." The Board of Directors recommends voting "AGAINST" adoption of this resolution. THE BOARD OF DIRECTORS' OBJECTION TO PROPOSED RESOLUTION This resolution was rejected at the annual meetings in 1976, 1977 and 1982. At all of these meetings at least 93% of the votes cast were against the resolution. The Board of Directors opposes this proposal because it believes adoption could seriously hamper the Company's ability to raise funds on the most favorable terms under any and all economic conditions, which of course cannot now be foreseen. Contrary to the proponents' supporting statement, the Board of Directors does not believe that market fluctuations have any bearing orl,preemptive rights or that the availability of "shelf registrations would have a bearing on market fiuctuations.% any event, the Board of Directors must be In a position to act promptly and effectively in financing the Company's needs, which it could not always do if it were necessary each time to offer shares and securities convertible into shares to the stockholders first. The question of whether rights to subscribe should be granted to stockholders should be left for determination at that time in light of all the relevant circumstances. The Company should continue to be able to take prompt advantage of any financing opportunity or need with complete flexibility should the occasion arise. The Board of Directors Is of the opinion that the interests of the Company and the stockholders will be best served by preservation of the freedom to consider in each instance the various factors affecting the desirability of a rights offering to stockholders. The affirmative vote of shares representing at least a majority of the votes cast on this item will be required to approve the proposal. Item 5-STOCK OPTION PLANS The same stockholders have advised that they will introduce the following resolution at the meeting: "RESOLVED: The stockholders of R. J. Reynolds Industries, Inc., hereby request any new stock option plans be made subject to the following provisions: (a) Shares to be optioned will be optioned in yearly installments; the right to purchase shares in each installment will not be cumulative and will expire to the extent not exercised during the applicable installment period; (b) The aggregate purchase price of the shares covered by an option may not exceed 150% of an individual's annual cash compensation; (c) No options will be granted in any year to executives within 18 months of their automatic retirement date; 21

Investment of Contributions Contributions will be invested at a Member's direction in a Reynolds Common Stock Fund, which consists of the Company's Common Stock, an Equity Fund, or a Fixed Income Fund. Company contributions generally will be invested entirely in the Reynolds Common Stock Fund. Under certain conditions, Members have the right to transfer all or any portion of their accounts in the Plan from one fund to another. Nevertheless, no portion of a Member's account in the Reynolds Common Stock Fund resulting from Company contributions may be transferred unless the Member has attained 55 years of age. 4 . t Withdrawals and Distributions Members have the right to withdraw various portions of their accounts under the Plan during employment. Certain withdrawals may be subject to a penalty. Unless a Member can show financial hardship, or is disabled or has reached age 591/2, he or she may not withdraw Savings Plus Contributions during active employment. Withdrawals during employment may be made only in cash. Upon termination of employment, distributions from the Plan may be in the form of a lump sum payment, a lump sum payment deferred for one year, an annuity purchased from a life insurance company, or payment In installments not exceeding fifteen years. Distributions on termination of employment from the Reynolds Common Stock Fund may be made in the form of cash or Common Stock, at the Member's election, while distributions from the other Funds are made only in cash. Termination and Amendment The Plan may be amended or terminated by the Company's Board of Directors at any time without stockholder approval, except that no amendment may reduce the benefits of any Member or Beneficiary accrued under the Plan prior to the date the amendment is adopted or divert any part of the assets of the Trust Fund for purposes other than providing benefits to Members and Beneficiaries and defraying the reasonable expenses of administering the Plan. In the event of the termination or partial termination of the Plan, each Member or beneficiary affected will remain 100% vested in his or her accounts. It is intended that no part of the assets of the Plan will revert to the Company at any time. Tax Consequences As amended, the Plan Is Intended to meet the requirements of Sections 401(a), 401(k) and related sections of the Code. Accordingly, the Trust Fund under the Plan should be exempt from taxation under Section 501 of the Code. The federal income tax rules applicable to a plan that is qualified under Section 401 and related sections of the Code and that meets the requirements of Section 401( k) of the Code generally provide that Members will pay no income tax on Company Contributions, Savings Plus Contributions, dividends, Interest or gains on the assets of the Trust Fund until the amounts are distributed. The Board of Directors recommends a vote "FOR" the following resolution which will be presented at the meeting: "RESOLVED that the RJR Employees' Savings and Investment Plan as amended, the text of which is set forth in the Proxy Statement for this meeting as Exhibit A, is hereby approved." The affirmative vote of the shares representing a majority of the votes entitled to be cast by the holders of stock present at the meeting, in person or by proxy, will be required to approve this item proposed by the Board of Directors. Item 4-PREEMPTIVE RIGHTS Lewis D. Gilbert and John J. Gilbert, 1165 Park Avenue, New York, New York 10028, who state that each of them is the registered owner of 120 shares of the Company's Common Stock and that they represent an additional family interest of 240 shares of the Company's Common Stock, have advised the Company that they will introduce the following resolution at the meeting: "RESOLVED: That the stockholders of R. J. Reynolds Industries, Inc., assembled in annual meeting in person and by proxy, hereby request that the Board of Directors take the steps necessary to restore limited pre-emptive rights to the shareholders." 20

JOHN W. HANLEY, 61, Chairman of the Board and Chief Executive Officer, Monsanto Company. In 1972 Mr. Hanley was elected President, Chief Executive Officer and a Director of Monsanto Company, a multinational corporation engaged in the manufacture and sale of a widely diversified line of chemicals, plastics, fibers and other products. Prior to joining Monsanto, he served in The Procter & Gamble Company, rising to Executive Vice President and Director. Mr. Hanley is a Director of Citicorp, Citibank, N.A. and The May Department Stores Company. He is also a Trustee of The Conference Board and Washington University (St. Louis). He is a member of The Business Council and The Business Roundtabie. Mr. Hanley is a graduate of Pennsylvania State University, from which he received the Dis- tinguished Alumnus Award. He also hoidq a master's degree from Harvard Graduate School of Business Administration and four honorary doctorates. . Member: Compensation Committee First became a Director: 1981 Shares owned: Common, 430 EDWARD A. HORRIGAN, JR., 53, Executive Vice President, R. J. Reynolds Industries, Inc. and Chairman and Chief Executive Officer, R. J. Reynolds Tobacco Company. Mr. Horrigan joined the Company in July 1978 as Chairman and Chief Executive Officer of R. J. Reynolds Tobacco International, Inc. He was elected to the Board of Directors of R. J. Reynolds Tobacco Company in April 1979 and was elected its President, Chairman and Chief Executive Officer In February 1980. Mr. Horrigan was elected Executive Vice President of the Company in September 1981. Immediately prior to joining R. J. Reynolds Tobacco International, Inc., he served as Chairman of the Board and President of Buckingham Corporation, a subsidiary of Northwest Industries, Inc. He was associated with Thomas J. Lipton, Inc. from 1961 to 1973, where he rose to Division Vice President. Mr. Horrigan was General Manager of Ebonite Company from 1958 to 1961, having begun his career in 1954 as a Unit Sales Manager for The Procter & Gamble Company. Mr. Horrigan is a Director of Euclid Equipment, Inc., the Northwest Region Board of Wachovia Bank & Trust Company, N.A. and the Tobacco Institute and is a member of the Board of Visitors of the University of Connecticut's School of Business Administration. He serves on the International Committee on Smoking Issues. He also serves as a Trustee of Salem Academy and College and as a Director of the Winston-Salem Foundation. Mr. Horrigan is a graduate of the University of Connecticut from which he received the Distinguished Alumnus Award. He also holds an honorary Doctor of Humane Letters degree from Winston- Salem State University. First became a Director: 1981 Shares owned: Common, 1,9882 JEROME W. HULL, 70, Retired Chairman of the Board, The Pacific Telephone and Telegraph Company. Mr. Hull began his career with The Pacific Telephone and Telegraph Company in 1935 in Los Angeles. He held various positions with Pacific Telephone and in 1959 became an Assistant Vice President of American Telephone and Telegraph Company in New York. He later returned to Pacific Telephone in San Francisco and in 1960 was appointed a Vice President and General Manager. He became Vice President-Operations in 1962, Executive Vice President in 1966, President in 1968 and Chairman of the Board in 1975. He retired in 1977 from his position as Chairman of the Board and in 1980 from his position as a Director of Pacific Telephone. Mr. Hull is a Director of Ampex Corporation, Carl Holvick Company, Carter Hawley Hale Stores, Inc., Crocker National Bank, Crocker National Corporation, New York Life Insurance Company and Pacific Southwest Airlines. He is an Emeritus Trustee of Occidental College in Los Angeles of which he is a graduate. Member: Audit Committee First became a Director: 1979 Finance Committee m O ~ Shares owned: Common, 481 J 4

MARGARET S. WILSON, 52, Chairman and Chief Executive Officer, Scarbroughs Stores. Mrs. Wilson joined Scarbroughs, a department store group in Austin, Texas, in 1952 as a department manager. In 1965 she became President ard Chief Executive Officer and assumed her current position In 1974. She is also a Director of Scarbroughs. She is a former Director of the Federal Reserve Bank of Dallas and the United States Chamber of Commerce and presently serves as a Director of the Texas Research League. She is a senior member of The Conference Board, and a member'of the Banking, Monetary and Fiscal Affairs Committee and the International Policy Committee of the United States Chamber of Commerce. She Is also a member of The World Business Council, the National Council of U.S.-China Trade, the Austin World Affairs Council and the Foreign Policy Association. She is a Trustee and member of the Executive Committee of the United States Council-for International Business and a Trustee of St. Stephen's Episcopal School. Mrs. Wilson is a graduate of the University of Texas. Member: Audit Committee First became a Director: 1978 Shares owned5: Common, 400 I Shareholdings given are the number of shares beneficially owned directly or Indirectly by each nominee as of March 1, 1983. The number Includes shares credited to an Individual's account in trusts established under the Company's Employees' Stock Purchase Plan, Individual Retirement Account Plan, Stock Bonus Plan, Employees' Savings and Investment Plan as well as the Profit Sharing Incentive Plan of R. J. Reynolds Tobacco Company. Contributions to the last trust were discontinued after 1969. All shares listed are subject to the sole investment and voting power of each nominee, except for some of the shares of Messrs. Macomber and Sticht. Mr. Macomber shares investment power over 1,000 of the shares listed with trustees of certain trusts. Mr. Sticht shares Investment and voting power over 40 shares with his wife. As of March 1, 1983, all Directors and officers beneficially owned 187,684 shares of Common Stock, 4,855 shares of Series A Cumulative Preferred Stock and 16,404 shares of Series B Cumulative Preferred Stock, representing less than 1% of the outstanding shares of each class, respectively, which also Includes 21,306 shares of Common Stock and 4,855 shares of Series A Cumulative Preferred Stock held by Mr. R. G. Landis, a Director. Mr. Landis has disclaimed beneficial ownership of 1,000 shares of Common Stock and 4,807 shares of Series A Cumulative Preferred Stock. These shares are held in the names of members of Mr. Landis' immediate family. Mr. Landis also holds stock options for 4,896 shares of Common Stock, which are exercisable currently or within 60 days. 2 The number of shares of Common Stock shown does not include shares subject to stock options granted by the Company which are exercisable currently or within 60 days. The following is the number of such options held by the listed nominee: Joseph F. Abely, Jr.-17,638; Edward A. Horrigan, Jr.-12,990; H. C. Roe- mer-14,185; J. Paul Sticht-74,000; and J. Tylee Wilson-10,647. Directors and officers of the Company as a group have the right to acquire 157,724 shares of Common Stock currently or within 60 days pursuant to options granted by the Company. 3Includes 2,194 shares of Common Stock held in three trusts in which Mr. Sticht has a reversionary interest. 4 Excludes 9,990 shares of Common Stock in trusts of which Mr. Stokes is the income beneficiary and of which he disclaims beneficial ownership. 5 The number of shares of Common Stock listed after the name of each of the following nominees was held in the name of members of their immediate families: H. H. Cudd, 57 shares; H. C. Roemer, 342 shares; J. Paul Sticht, 6,111 shares; Colin Stokes, 2,660 shares; S. D. Watson, 800 shares; J. Tylee Wilson, 402 shares; and M. S. Wilson, 29 shares. In addition, 493 shares of Series B Cumulative Preferred Stock were held in the name of members of Mr. Watson's immediate family. Each of these nominees has advised the Company that he or she disclaims any beneficial ownership of such shares. 8

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General As a rule, any individual who Is regularly employed by the Company or its participating subsidiaries is eligible to participate in the Plan on the date he or she is employed. Participation in the Plan 1s entirely voluntary. As of December 31, 1982, approximately 18,250 of the estimated 20,500 eligible employees were actively participating in the Plan, The Plan is administered by a Committee whose members are appointed by the Board of Directors. Interests in the Plan and shares of the Company's Common Stock subject to the Plan have been registered at the Company's expense pursuant to the Securities Act of 1933. Member Contributions A Member may elect to contribute 1% to 16% of Compensation in 1% increments. Member contributions that do not exceed 6% of Compensation are known as "Basic Contributions" and are credited to a Member's Basic Investment Account. Contributions by a member that exceed 6% of Compensation are known as "Supplemental Contributions" and are credited to a Member's Supplemental Investment Account. Members may change the percentage of their contributions, suspend contributions, or resume contributions by giving 30 days' advance written notice to the Committee administering the Plan. Members always are vested 100% in their contributions. Member Savings Plus Contributions A member may elect to designate further some or all of his previously designated Basic Contributions, and an additional 1% to 4% of his Compensation previously designated as Supplemental Contributions, as Savings Plus Contributions. No more than 10% of Compensation may be designated as Savings Plus Contributions. Savings Plus Contributions are contributed by the Company on behalf of the Member in lieu of an equal amount being paid to him or her as Compensation. Amounts so contributed by the Company are not includable in his or her gross income for federal Income tax purposes. Savings Plus Contributions are credited to`a Member's Savings Plus Investment Account. From time to time, Basic and Supplemental Contributions not designated as Savings Plus Contributions may be referred to herein as "F"ular Contributions." Company Contributions The Company will contribute to each Member's account an amount equal to 100% of the Compensation that a Member contributes, not to exceed 6% of Compensation. A Member becomes fully vested in the Company contributions made on his or her behalf after five years' employment with the Company and its affiliates, or two years' consecutive participation in the Plan, whichever is earlier; provided, however, that two years' consecutive participation will only vest a Member in Company contributions made since the Member's most recent date of enrollment in the Plan. Assuming that the amendments to the Plan had been effective January 1, 1982 and that each eligible employee had elected to participate to the maximum extent possible and was fully vested, the amount of Company contributions that would have been distributable on December 31, 1982 to the individuals listed under "Remuneration," to all Directors and officers as a group, and to all eligible employees is as follows: Mr. Abely, $22,200; Mr. Horrigan, $18,750; Mr. Landis, $19,200; Mr. Sticht, $30,200; Mr. Wilson, $23,900; all Directors and officers as a group, $185,125; and all eligible employees, $32,360,115. Special Rules on Contributions The Savings Plus feature of the Plan is intended to meet the requirements of Section 401( k) of the Code. That section generally requires that deferrals by highly compensated Members not inordinateiy exceed deferrals by other Members. In order to assure continued compliance with Section 401( k), the Company may, without limitation, redesignate contributions designated as Savings Plus Contributions by highly compensated Members as Basic or Supplemental Contributions in such amounts and at such times as may be deemed appropriate by the Company. Any Savings Plus Contributions redesignated as Basic or Supplemental Contributions will be treated as Regular Contributions and can be taxable to Members. Any of the actions taken by the Company in this regard will be final and will not be subject to review by the Trustee, the Committee or Members. 19

The Company maintains a deferred compensation plan for Directors of the Company. This plan allows non-employee Directors to defer their fees under provisions substantially identical to the cash credit and stock credit deferral provisions of the Company's Management Incentive Plan, described on page 14 of this proxy statement. The deferred amounts are credited with interest equivalents at current long-term government bond rates. Accounts are distributed upon the participant's termination of service as a Director. The Company also maintains a retirement plan for Directors of the Company who are not and never have been employees of the Company. The plan provides each eligible Director who has served on the Board of Directors for five or more years with a monthly allowance payable once his or her service as a Director ends. The amount of the allowance is equal to one-half of the basic monthly Director's fee in effect on the date the Director's service terminates. The allowa*.is payable until 120 monthly payments have been made, until the number of monthly payments made equals the number of months of service by the individual as a Director, or until the individual's death, whichever occurs first. Remuneration The following information is given for the five most highly paid Directors or executive officers of the Company who received direct remuneration for 1982 from the Company and its subsidiaries of more than $50,000 and for all Directors and officers of the Company as a group. Cash and cash-equivalent forms of remuneration ame of individual or person in group apacities in which remuneration received Salaries, fees, directors' fees, commis- sions, and bonuses Securities or property, insurance benefits or reimburse- ment, and personal benefits ggregate contingent forms of remu- neration' Joseph F. Abely, Jr.2 .................. Vice Chairman of the Board $ 546,622 $ 21,417 $ 104,340 Edward A. Horrigan, Jr.2............ Executive Vice President of the Com- pany and Chairman and Chief Ex- ecutive Officer, R.J. Reynolds To- bacco Company 70,726 ,243 07,325 R. G. Landis ............................... President-Pacific 400,000 10,068 120,700 J. Paul Sticht2 ............................ Chairman of the Board 908,143 19,382 211,524 J. Tylee Wilson2 ......................... President 600,087 92,235 126,440 All Directors and Officers $5,230,425 $230,776 $ 937,341 (28 in number) as a group3.. 1 The amounts shown include any expense accrued during 1982 for award cycles not yet ended pursuant to the Company's Performance Unit Plan described on page 14 of this proxy statement. 2 Pursuant to an agreement with the Company, Mr. Sticht will receive upon retirement an annual retirement allowance equal to 70% of his average final compensation, as such compensation is defined under the Company's retirement plan, less ( i) any amount paid under the Company's retirement plan, ( ii ) 30% of his primary Social Security benefit and (iii) $50,000. Upon Mr. Sticht's death while an employee, his wife during her lifetime will receive an allowance equal to one-half of the retirement allowance to which he was entitled at the time of his death, actuarially reduced to recognize this survivorship benefit. In addition, a survivor's benefit may be elected upon retirement which, if elected, will reduce actuarially the benefit paid to Mr. Sticht during his life. The Company has also entered into agreements with Messrs. Abely and Wilson. Under these agreements, each individual will receive upon retirement at age 65 an annual retirement allowance equal to 70% of his average final compensation, as such compensation is defined under the Company's retirement plan, less (i) any amount paid under the Company's retirement plan, ( ii ) 30% of his primary Social Security benefit and ( iii ) 10

6-REPORT ON CIGARETTE PROMOTIONS IN THIRD WORLD NATIONS The Province of St. Joseph of the Capuchin Order, Office for Corporate Responsibility, 1016 N. Ninth SWeet, Milwaukee, Wisconsin 53233,. The Premonstratensian Fathers, 1016 North Broadway, De Pere, y~„uonsin 54115, and the Sisters of the Sorrowful Mother Finance Inc., 6618 N. Teutonia Avenue, Milwaukee, W,sconsin 53209, who state that they are the beneficial owners of 10 shares, 2,500 shares, and 1,000 shares, mspectively, of the Company's Common Stock, have advised the Company that they will introduce the Witowing resolution at the meeting: --WHEREAS the nature of business demands that our Company increase markets in the highly competitive cigarette industry; --WHEREAS cigarette industry executives estimate 'annual consumption for the next several years will slow to between a 0.3% decline and a 0.7% gain' (Business Week 12/15/80); "WHEREAS these facts make the relatively untapped market in developing nations a potential target for increased promotion of cigarettes; ~"WHEREAS some tobacco firms are using aggressive promotion tactics to create new markets, even In remote corners of the Third World, which have had little traditional consumption of cigarettes as well as little information about health-related effects of smoking; "WHEREAS many cigarettes in the Third World are relatively more expensive and carry up to 76% more grams of tar than those same brands sold in developed nations; "THEREFORE BE IT RESOLVED that the shareholders request the Board of Directors to make available to requesting shareholders a report, produced at reasonable cost and excluding proprietary information, which shall cover the following: '-C 1. A description of Third World regions of Afric~Asia, and Latin America where our Company manufactures and/or markets cigarettes. 2. A description of the market size and market share as well as advertising costs in these areas annually since 1976, including projects for the next five years. 3. A description of our Company's present policy related to: a. The World Health Organization's recommendation on banning promotion of tobacco, especially in Third World nations. b. A limitation of cigarette tar and nicotine levels in Third World nations equal to that in the United States. c. Informing consumers of the risks of tobacco use in countries where there may be little or no governmental regulations concerning health risks for smokers." SUPPORTING STATEMENT "While U.S. domestic cigarette sales have been increasing, signs of decline are being projected: Tobacco consumption in new Third World markets is increasing dramatically. This raises concern about future health prospects there. Heretofore, previously uncommon smoking-related diseases are now beginning to appear. "WHO warned in a recent report that smoking-related diseases will appear in developing nations before communicable diseases and malnutrition have been controlled. Its Committee on Smoking Control has recommended that all nations ban the promotion of tobacco and limit cigarette tar and nicotine content. 23

We are concerned that some current practices of tobacco companies in developing nations may vitiate against such recommendations of WHO. "Tobacco consumption Is growing fastest in countries with the greatest poverty, illiteracy, and food shortages. While tobacco can add to a nation's balance of payments, we believe people's health and welfare cannot be sacrificed for financial considerations alone." The Board of Directors recommends voting "AGAINST" adoption of this resolution. THE BOARD OF DIRECTORS' OBJECTION TO PROPOSED RESOLUTION This resolution was presented at the Annual Meeting of the Company in 1982 and was rejected by at least 96% of the votes cast. The Company continued to be the leader in the domestic cigarette market during 1982, increasing both its unit volume and share of market. Its commitment to the domestic cigarette Industry has been demonstrated not only by its performance but also by its 10-year construction and modernization plan, which commenced in 1982. Resources have not and will not be diverted to the detriment of our domestic commitment in order to take advantage of market opportunities In the Third World nations. The cigarette business is one of the most competitive businesses In the world. Throughout the world, smoking preferences vary as do the legal and economic environments in which cigarettes are marketed. In serving all its customers, the Company's offered products are positioned as superior to competitive brands, and it markets those products not only in compliance with legal and other restrictions but also with deference to the various consumer demands of the countries and territories in which it operates. Over the past quarter century, governments, the tobacco industry and various research groups have expended millions of dollars on smoking-related research. The controversy over smoking and health is an old, and as yet unresolved, question. No ingredient or group of ingredients as found in tobacco smoke has been proven to produce disease in humans. Finally, the Company could not prepare the requested reports without expending considerable time and money and, contrary to the proponents' assertion, without disclosing information of a proprietary nature. The Board of Directors believes that such a report would be of no benefit to the Company or its stockholders. The affirmative vote of shares representing at least a majority of the votes cast on this item will be required to approve this proposal. MISCELLANEOUS The Board of Directors has no knowledge of any other matters to be acted upon pursuant to the proxy. If any other matters should properly come before the meeting, it is the intention of the persons designated in the proxy to vote thereon according to their best judgment. A summary of the proceedings of the Annual Meeting will be sent to the stockholders. Proposals of stockholders intended to be presented at the next Annual Meeting must be received by the Secretary, R. J. Reynolds Industries, Inc., Reynolds Boulevard, Winston-Salem, North Carolina 27102, no later than December 15, 1983. Use of certified mail is suggested. Stockholders are urged to forward their proxies without delay. A prompt response will be greatly appreciated. R. J. REYNOLDS INDUSTRIES, INC. Winston-Salem, N. C. March 15, 1983 24

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ALBERT L. BUTLER, JR., 64, President, The Arista Company. Mr. Butler is also Treasurer and a member of the Board of Directors of The Arista Company, which is the holding company for Arista Information Systems, Inc., a Winston-Salem based data processing services bureau. He has been with The Arista Company (formerly Arista Mills Co.) since 1946. He is a member of the Board of Directors of The Wachovia Corporation, Wachovia Bank & Trust Company, N.A., Summit Communications, Inc., Standard Savings & Loan Association, Turnpike Proper- ties, Inc., The Northwestern Mutual Life Insurance Co., Hayes-Albion Corporation and Wachovia International Bank of New York. He is a member of the Board of Visitors of the Medical Center of the Bowman Gray School of Medicine and a Director of the North Carolina Citizens Association. He is also a Trustee of Wake Forest University. Mr. Butler is a graduate of Princeton University and holds an honorary Doctor of Laws degree from Wake Forest University. Member: Compensation Committee First became a Director: 1976 Executive Committee Shares owned: Common, 3,786 Finance Committee Nominating Committee HERSCHEL H. CUDD, 70, former Senior Vice President, Standard Oil Company (Indiana). From 1963 to 1974 Mr. Cudd served as President of Amoco Chemicals Corporation, a worldwide manufacturer and marketer of chemicals and plastics and a subsidiary of Standard Oil. He Is also a former Director of Standard Oil. Before joining Standard Oil in 1963, he was President of Avisun Corporation, then jointly owned by American Viscose Corporation and Sun Oil Company. From 1954 to 1960 he was a Vice President of American Viscose. Earlier he had been Director of the Engineering Experiment Station of Georgia Institute of Tech- nology and a Division Manager for West Point Manufacturing Company, and held research management positions with Internationai Minerals and Chemical Corporation and E. I. du Pont de Nemours & Company. Mr. Cudd Is an Honorary Life Trustee of the Museum of Science and Industry in Chicago. He has served twice as a Director of the Manufacturing Chemists Association and has served on its executive committee. Mr. Cudd is a graduate of Texas A&%niversity and received master's and doctor's degrees in chemistry from the University of Texas. Member: Audit Committee First became a Director: 1974 Compensation Committee Shares owned5: Common, 1,172 Executive Committee RONALD H. GRIERSON, 61, Director, The General Electric Company Ltd. (Great Britain). Mr. Grierson began his career on the editorial staff of "The Economist." After a short period of service in this position, he entered the private banking firm of S. G. Warburg & Co. Ltd. in 1948 and In 1958 became its Executive Director. He resigned that position in 1966 on being appointed Deputy Chairman and Managing Director of the government-sponsored Industrial Reorganization Corporation. In 1968 he became Vice Chairman of the Gerleral Electric Company, a British manufacturer of electrical products. In January 1973 Mr. Grierson gave up all business appointments to assume the position of Director General for Industry and Technology at the European Commission In Brussels. In October 1974 he resumed his directorship of General Electric Company and subsequently became Chairman of its U.S. subsidiary, G.E.C. (America) Inc. He was appointed to the Company's International Advisory Board in 1975. Mr. Grierson is also a Director of The Chrysler Corporation, S. G. Warburg & Co. Ltd. and a Director and Vice Chairman of its U.S. associates, Warburg Paribas Becker Incorporated and A. G. Becker & Co. Inc. He is also a Director of The Becker and Warburg-Paribas Group Incorporated, S. G. Warburg-North America Ltd. and Safic-Alcan & Cie (Paris). He is the Chairman of the Philharmonia Trust and of the European Foundation for Cancer Treatment Research and is a member of the Ernst von Siemens Music Foundation. Mr. Grierson holds a Master of Arts degree from Oxford University. Member: Audit Committee First became a Director: 1978 Finance Committee Shares owned: Common, 1,000 3

compensation or retainer, and If applicable, who pays taxes in respect of his compensation imposed by the Federal Insurance Contributions Act; provided, that except as the Board of Directors or the Committee, pursuant to authority delegated to It by the Board of Directors, may otherwise provide on a basis uniformly applicable to all persons similarly situated, no person shall be an "Eligible Employee" for purposes of the Plan: (a) who Is excepted by the Board of Directors or the Committee, or (b) whose terms and conditions of employment are determined by a collective bargaining agreement with the Company which does not make this Pian applicable to him. 1.17 "Employee" shall mean any person employed by an Employer. , 1.18 "Employer" shall mean the R. J. Reynolds Industries, Inc. or any Affiliated Company. 1.19 "Entry Date" shall mean with respect to an Eligible Employee the first day of any payroll period applicable to him commencing with the Effective Date of the Plan. 1.20 "Insurance Company" shall mean a legal reserve life insurance company. 1.21 "Investment Fund" or "Funds" shall mean the separate funds in which Member and Company contributions to the Plan are invested in accordance with Article 5. 1.22 "Member" shall mean any person inciuded In the membership of the Plan as provided in Article 2. 1.23 "Membership Service" shall mean service while a Member of the Plan. 1.24 "Participating Unit" shall mean any United States unit of employees of the Company which is approved by the Board of Directors or its specifically authorized. representative to participate in the Plan. The term shall not inciude any foreign corporations, or units thereof, or a corporation, or unit thereof, which is a Dqmestic International Sales Corporation within the meaning of § 992 of the Code. 1.25 "Plan" shall mean the RJR Employees' Savings and Investment Plan, as described herein or as hereafter amended. 1.26 "Plan Year" shall mean the calendar year. 1.27 "Prior Plan" shall mean any plan which is approved for transfer of all or a portion of its assets and liabilities to this Plan as provided in Article 13. 1.28 "Retirement" means early or normal retirement under any other retirement plan of the Company unless otherwise specified by the Committee, provided such retirement results in the Member's termination. "Retirement" for Members not covered by such a pian shall mean Termination of Employment after attaining age 65. 1.29 "Severance from Service Date" shall mean the earlier of the date of an Employee's Retirement, death, resignation or discharge, or the first anniversary of the first day of a period in which he remains absent from service, with or without pay, with all Employers for any reason. 1.29.1 "Savings Plus Contributions" shall mean the contributions of a Member which are credited to his Savings Plus Investment Account In accordance with Section 4:02.1. 1.29.2 "Savings Plus Investment Account" shall mean that portion of the Trust fund which, with respect to any Member, is attributable to his own Savings Plus Contributions, and any investment earnings and gains or losses thereon. 1.30 "Supplemental Contributions" shall mean the contributions of a Member which are credited to his Supplemental Investment Account in accordance with Section 4.02. 1.31 "Supplemental Investment Account" shall mean that portion of the Trust fund which, with respect to any Member, is attributable to his own Supplemental Contributions, and any investment earnings and gains or losses thereon. 1.32 "Termination of Employment" shall mean separation from the employment of the Company for any reason, including, but not limited to, Retirement, death, Disability, resignation or dismissal by the Company; provided, however, that transfer in employment between the Company and an Affiliated Company shall not be deemed to be "Termination of Employment." With respect to any leave of absence or any period of service in the Armed Forces of the United States ("Armed Forces" ), Article 3 shall govern. 1.33 "Trustee" shall mean a trustee or trustees at any time acting as such under a trust agreement or agreements established for purposes of this Plan. 1.34 "Trust Fund" shall mean the cash and other properties arising from contributions made by Members and by the Company in accordance with the provisions of this Plan and funds transferred from a Prior Plan which are held and administered by the Trustee pursuant to Article 5. A-2

has filed an effective claim for a benefit a written statement of the amount of his benefit or a notice of denial of his claim on or before the 90th day following the Committee's receipt of such claim. If special circumstances require additional time for processing the claim, the Committee may delay issuing its statement or notice for an additional 90 days provided that the Member or Beneficiary is notified of the circumstances necessitating the delay and the date the Committee expects to render its final opinion. A claim for benefits is pot effective unless filed on forms prescribed by the Committee. Each notice of whole or partial denial of claimed benefits shall set forth the specific reasons for the denial, the time within which an appeal must be made by the Member or Beneficiary or his duly authorized representative, and shall contain such other information as may be required by applicable law. If a statement or notice is not issued within the prescribed period, the claim shall be deemed denied. 14.02 Review. Each Member or Beneficiary whose claim for benefits has been wholly or partially denied shall have such rights to review documents and submit comments as applicable law and regulations of the Committee may provide, and shall also have the right to request the Committee to review such denial; such request to be made on forms prescribed by the Committee. A request for review shall be filed by the Member or Beneficiary or his duly authorized representative on or before the 60th day following the earlier of the Member or Beneficiary's receipt of notice of denial of his claim or the expiration of the prescribed period for issuing a statement of benefits or notice of denial. The Committee shall issue a written statement on or before the 60th day following its receipt of such request stating the Committee's decision on review and the reasons therefor, including specific references to pertinent Plan provisions on which the decision is based, and any other information required by applicable law. If special circumstances require additional time for processing such review, the Committee may delay issuing its decision for an additional 60 days provided that the Member or Beneficiary is notified of such circumstances and the date the Committee expects to render Its final decision. If the decision is not issued within the prescribed period, the appeal shall be deemed denied.

Notice of Annual Meeting and Proxy Statement Annual Meeting of Stockholders April 27, 1983 R.J.Reynolds Industries, Inc. Winston-Salem NC 27102

5.09 Investment Managers. The Company may, by action of the parties authorized under Article 11, enter into a written agreement with or direct the Trustee to enter into an agreement with one or more investment managers to manage the investments of one or more of the Investment Funds. Such investment managers may inciude one or more Insurance Companies which enter into group annuity contracts with the Trustee. The Company from time to time may remove any such investment manager or any successor investment manager, or direct the Trustee to do so, and any such investment manager may resign. The Company may, upon removal or resignation of an investment manager, provide for the appointment of a successor investment manager. 5.10 Member Responsibility For Selection of Funds. Each Member is solely responsible for the selection of his Investment Funds. Neither the Trustee, the Committee, the Company nor any of the officers or supervisors of the Company are empowered to advise a Member as to the manner in which his accounts shall be invested. The fact that a security is available to members for investment under the Plan shall not be construed as a recommendation for the purchase of that security, nor shall the designation of any Investment Fund impose any liability on the Company, its directors, officers or employees, the Trustee, or the Committee. 5.11 Voting by Members. Each Member shall have the right and shall be afforded the opportunity to instruct the Trustee how to vote at any meeting of R. J. Reynolds Industries, Inc. shareholders that proportionate number of the total number of shares of Common Stock held in Reynolds Common Stock Fund which is the same proportion that the value of his interest in Reynolds Common Stock Fund bears to the total value of such Fund. Instructions by Members to the Trustee shall be in such form and pursuant to such regulations as the Committee may prescribe. Any such instructions shall remain in the strict confidence of the Trustee. Any share for which no such instructions are received by the Trustee shall be voted by the Trustee in the same proportion as the shares for which instructions were received. Each Member (or In the event of his death, his Beneficiary) shall have the right to instruct the Trustee in writing as to the manner in which to respond to a tender or exchange offer for any or all shares of Common Stock credited to such Member's Account under the Trust Fund. The Company shall notify each Member (or Beneficiary) and utilize its best efforts to timely distribute or cause to be distributed to him such information as will be distributed to shareholders of the Company in connection with any such tender or exchange offer. Upon its receipt of such instructions, the Trustee shall tender such shares of Common Stock as and to the extent so instructed. If the Trustee shall not receive instructions from a Member (or Beneficiary) regarding any such tender or exchange offer for Common Stock, the Trustee shall have no discretion in such matter and shall take no action with respect thereto. .. _- ID ARTICLE 6 Valuation of Units and Credits to Members' Accounts 6.01 Units. At the end of the first month in which the Plan is in effect and operation, the amount or extent of each Members' interest in each of the Investment Funds (Section 5.04) shall be expressed and credited in "Units" at the rate of one Unit for each dollar of contributions by the Member and one Unit for each dollar of Company Contributions on behalf of the Member only for that first month in which the Plan is in operation. 6.02 Valuation of Assets. At the end of each month after the first month in which the Plan is in operation, the Trustee shall determine the total fair market value of all assets then held by it in each Fund. 6.03 Valuation of Units. At the end of each month when the value of all assets in each Fund has been determined pursuant to Section 6.02, the Trustee shall determine the value of each Unit in each of the Investment Funds credited to Members' Accounts in previous months by dividing (a) the total fair market value of all assets in each Fund as determined pursuant to Section 6.02 by (b) the total number of Units in that Fund credited to the Accounts of all Members immediateiy prior to the end of such month, not inciuding Units to be credited for new contributions to that Fund at the end of that month for that month. 6.04 Determination of Members' Additional Units for Each Monthly Contribution. As of the end of each month for which the Units of each Fund have been valued pursuant to Section 6.03, the Trustee shall determine the number of additional Units to be credited to the Accounts of each Member in each of the Investment Funds for the new contributions for that month by the following computations: (a) For each of the Investment Funds, separately, the amount of each Member's contribution to that Fund for that month shall be divided by the value of each Unit of such Fund prior to such contribution as determined pursuant to Section 6.03. (b) For each of the Investment Funds, separately, the amount of Company Contribution for that Member to that Fund for that month shall be divided by the value of each Unit of such Fund prior to such contribution as determined pursuant to Section 6.03. (c) The resuit of each computation shall be carried to the third decimal place and shall be the number of additional Units to be credited by the Trustee to the Account of that Member for that Fund for that month. A-7

I the aggregate amounts which are credited for such Plan Year to the accounts of Members for periods while they are Employees of each such company subject to the provisions of Article 10. The amount which each such company is to so contribute will be paid by it only to the extent that the payment does not exceed the total of such company's current and accumulated earnings or profits before adjustment for such payment. If, however, such company is eligible under the Internal Revenue Code to be included in a consolidated Federal income tax return, as a member of the affiliated group including R. J. Reynolds Industries, Inc. and Is prevented by insufficient earnings and profits from making the full contribution which it would otherwise make, the portion of the contribution which such deficit company is so prevented from making may be made up by additional payments from the other such companies which are eligible to join in filing such a consolidated return. If a company does not meet any of the foregoing criteria, its contributions shall be determined on such basis as the Committee may decide. (c) For purposes of this Section 4.05, current earnings or profits shall be computed as of the close of the calendar year without diminution by reason of any dividends during the year, and accumulated earnings or profits shall be computed as of the beginning of the calendar year. (d) In satisfaction of its obligation under Section 4.05, R. J. Reynolds Industries, Inc. may, at its option, either pay its contribution in cash or deliver shares of Common Stock held in the treasury, said stock to be valued at the closing price on the New York Stock Exchange-Composite Transactions as reported in The Wall Street Journal for the trading day next preceding the day of transmittal. (e) In the event that the Commissioner of Internal Revenue, on timely application made after the adoption or subsequent amendment of the Plan, determines that the Plan and the impiementing trust do not qualify for tax-exempt status, or refuses, in writing, to issue a favorable determination with respect to the Plan and such trust, the Company's contributions made on or after the date on which such determination or refusal Is applicable shall be returned to the Company without interest. In the event that a Company contribution to the Plan Is made by a mistake of fact or all or part of the Company's deductions under Section 404 of the Internal Revenue Code for contributions to the Plan are disallowed by the Internal Revenue Service, the portion of the contributions attributable to such mistake of fact or to which such disallowance applies shall be returned to the Company without interest. Any such return shall be made within one year after the making of such contribution by mistake of fact or the denial of qualification or disallowance of deductions, as the case may be. (f) If the Company shall-determine that the Company Contributions and/or Savings Plus Contributions on behalf of any Member or group of Members might result in discrimination in favor of employees who are officers, shareholders or highly compensated employees or ht cause the Plan to violate the requirements for a qualified cash or deferred arrangement under Section 40k) of the Internal Revenue Code, the Company shall have the right to cause such adjustments to be made in the past, current or future Savings Plus Contributions on behalf of such Members and in the amount and allocation of current or future Company Contributions as will, in the Company's opinion, avoid such discrimination and satisfy the requirements of Section 401( k) of the Internal Revenue Code, including, without limitation, the right to treat any Savings Plus Contributions on behalf of a Member as current compensation of the Member which was contributed as a Regular Contribution and the right to make additional Company Contributions which are allocated to the accounts of such Members as the Company may select and which are subject to such terms and conditions as will cause the Plan to meet the requirements for a qualified cash or deferred arrangement under Section 401( k) of the Internal Revenue Code. The decision of the Company in this regard shall be final and shall not be subject to question by the Trustee, the Committee or by any Member or group of Members. 4.06 Limitation of Contributions. Company and Member contributions shall be limited as described in Schedule B. ARTICLE 5 Trust Fund and Investment Funds 5.01 The Trust Agreement. The Company shall enter into a trust agreement which shall contain such provisions as shall render It impossible for any part of the corpus of the Trust or income therefrom to be at any time used for, or diverted to, purposes other than for the exclusive benefit of Participants. Any or all rights or benefits accruing to any person under the Plan with respect to any Company contributions deposited under, the Trust Agreement shall be subject to all the terms and provisions of the Trust which shall specifically incorporate and be subject to the provisions of the Plan. 5.02 The Trustee. The Trustee will be a corporate trustee appointed by the Board of Directors to serve at its pleasure. 5.03 Separate Funds. The Trustee will maintain three separate Investment Funds within the Trust Fund: the Fixed Income Fund, the Equity Fund and the Reynolds Common Stock Fund. Member contributions and A-5

ARTICLE 4 Contributions 4.01 Member Basic Contributions. Each Member may contribute a percentage of his Compensation; such percentage shall be 1% to 6% of Compensation in 1% increments. The contributions of a Member shall be made through payroll deductions and will be paid to the Trustee as soon as practicable after the end of each month. 4.02 Member Supplemental Contributions. A Member who has authorized the maximum Basic Contribution rate of 6% may also make ad4itional contributions under the Plan by authorizing additional payroll deductions of 1% to 10% of his Compensation in 1% increments which shall be paid to the Trustee as soon as practicable after the end of each month. = 4.02.1 Member Savings Plus Contributions. (a) Subject to Section 4.05(f), any Member, except a Member subject to the tax laws of Puerto Rico, may elect that all of his Basic Contributions, and in addition to that election, 1% to 4% of his Compensation, which has been designated as Supplemental Contributions, be further designated In 1% increments as Savings Plus Contributions to be contributed by the Company to the Plan on his behalf in lieu of an equal amount being paid to him as compensation by the Company. Such Savings Plus Contributions shall be paid to the Trustee as soon as practicable after the end of each month. Any Basic and Supplemental Contribution not designated by a Member to be a Savings Plus Contribution may, from time to time, be referred to herein as a"Reguiar Contribution." (b) The Committee shall have the right to establish rules with respect to the making of elections pursuant to this Section, Including, without limitation, the right to require that any such election be made at such time prior to its becoming effective as the Committee shall determine and the right to restrict the Member's right to change such election. Such Savings Plus Contributions are intended to be treated for federal income tax purposes as contributions made by the Company under a qualified cash or deferred arrangement (as defined In Section 401 (k) of the Internal Revenue Code), but shall be treated as if they were contributions by a Member for the purpose of the Plan except where the Plan expressly Indicates otherwise. - 4.03 Change in Member Contributions. Subject to the provisions of Sections 4.01, 4.02 and 4.02.1, and not rpore than once In any three month period, a Member may change the percentage of his authorized payroll deduction by giving 30 days' prior written notice to the Committee. Such changed percentage shall become effective beginning with the first payroll period as specified by the Member commencing after the expiration of the notice period. The initial election under Section 4.02.1 of a Member, who was a Member prior to April 1, 1983, is a special election which shall have no effect on the restrictions of this section. In addition, where Member contributions by payroll deduction are or may be prohibited by law, in the opinion of counsel to the Company, a Member, upon approval by the Committee, may make contributions directly to the Trustee for each payroll period by a method satisfactory to the Committee as long as such deposits are timely made on the same schedule as payroll deductions. The Trustee shall not accept direct contributions not timely made by a Member. 4.04 Suspension of Member Contributions. (a) A Member may suspend his contributions at any time by notifying the Committee in writing on a form supplied by it at least 30 days, or such shorter period as the Committee may approve, in advance of the date on which such a suspension shall become effective. The suspension shall become effective on the first day of the first payroll period commencing on or after the expiration of the notice period. During such a period of suspension no Company contributions on behalf of such a Member shall be made by the Company. (b) A Member who has suspended his contributions may apply to the Committee to have them resumed in accordance with Sections 4.01, 4.02 and 4.02.1 on the first Entry Date next following at least 30 days' written notice of such intent. (c) A Member who has ceased to make contributions under the Plan because he Is on an unpaid absence from service shall again be eligible to resume making contributions on the date he returns to service as an Eligible Employee. No contributions may be made by a Member for any unpaid period of absence from service including, but not limited to, absence due to sickness, leave of absence, or service in the Armed Forces. (d) A Member who has ceased to make contributions under the Plan because he has ceased to be an Eligible Employee but, nevertheless, continues to be an Employee shall again be eligible to resume making contributions on the date he again becomes an Eligible Employee and gives written notice to the Committee on the prescribed form. 4.05 Company Contributions. (a) With respect to each payroll period, the Company shall contribute out of estimated current or accumulated earnings or profits on behalf of each Member an amount equal to 100% of such Member's Basic Contributions to the* Plan for such payroll period. Company contributions under this paragraph will be paid to the Trustee as soon as practicable after the end of each month. (b) Except as hereinafter provided, each company participating in the Plan shall for any Plan Year contribute a portion of the total Company contributions, made pursuant to subparagraph (a) above, equal to A-4

(b) If the Member has not attained age 59'/z or Is not totally disabled, as such term is defined by the Social Security Administration, he may withdraw the value of the Units in his Savings Plus Investment Account; provided, however, such Member first must withdraw from the Plan the value of the Units withdrawable pursuant to Section 9.02 and must also satisfy the financial hardship rule as set forth in subsection (c) below, and further provided, that a Member who has attained age 59'/z may apply for a hardship withdrawal, at his option, pursuant to subsection (c) below. (c) Financial hardship for purposes of this section shall mean that a Member requires a withdrawal of money for an immediate and heavy financial need. Such withdrawal cannot exceed the value of the Units required to meet such need and such Member must demonstrate that he does not have funds readily available from other sources to meet such need. Purchase by a Member of a primary residence, college tuition for a Member or his dependents and any non-reimbursed medical expense of a Member or his dependents may generally be considered situations of heavy financial need, unless otherwise governed by law or regulation. The Committee may, under rules established by it which are uniformly applicable to all similarly situated Members, determine other circumstances where a Member has a heavy financial need and the decision of the Committee as to whether a Member satisfies the financial hardship rule shall be conclusive, unless otherwise governed by law or regulation. (d) A Member making a withdrawal, othar than a hardship withdrawal as set forth in subsection (c) above, pursuant to (a) above, which necessarily results in an application to the value of the Units in his Savings Plus Investment Account (i) attributable to Basic Contributions redesignated as Savings Plus Contributions and (fi) made less than 24 months prior to Withdrawal Valuation Date, shall be suspended from receiving Company Contributions for a period of 6 months from the instant Withdrawal Valuation Date; provided, however, a Member may continue to have Savings Plus Contributions made to his Savings Plus Investment Account. , ARTICLE 10 Forfeitures 10.01 Forfeiture on Termination of Employment. If a Member's employment is terminated prior to attainment of age 65 for reasons other than Retirement, Disability, or death, the portion, if any, of his Company Contribution Account in which he is not vested pursuant to Article 7, shall be forfeited at the time he incurs a Break In Service. = 10.02 Disposition of Forfeitures. Ali forfeitures arising#yt of the application of the provisions of Section 10.01 shall be used to reduce Company Contributions otherJ6fse payable to the Plan. 10.03 Effect of Withdrawal Under Article 9. The non-vested Company Account of a Member who makes a withdrawal described in Article 9 shall not be forfeited by reason thereof. ARTICLE 11 Administration of Plan 11.01 Committee. (a) The general administration of the Plan and the responsibility for carrying out the provisions of the Plan shall be placed in a Committee of not less than three persons appointed from time to time by the Board of Directors to serve at the pleasure of the Board of Directors. (b) Any person appointed a member of the Committee shall signify his acceptance by filing written acceptance with the Secretary of the Committee. Any member of the Committee may resign by delivering his written resignation to the Secretary of the Committee and such resignation shall become effective upon the date specified therein. (c) The Committee shall elect from its members a Chairman, and shall also elect a Secretary who may be but need not be one of the members of the Committee. The Committee may appoint from its members such committees with such powers as it shall determine, and may authorize one or more of its members, or any agent, to execute or deliver any instrument or make any payment in its behalf. (d) The Committee shall hold meetings upon such notice, at such place or places, and at such time or times as it may from time to time determine. (e) A majority of the members of the Committee shall constitute a quorum for the transaction of business. All resolutions or other action taken by the Committee shall be by the vote of a majority of the members of the Committee present at any meeting or without a meeting by an instrument in writing signed by a majority of the members of the Committee. (f) No member of the Committee shall receive any compensation for his service as such, and, except as may be required by applicable law, no bond or other security is required of him in such capacity in any jurisdiction. A-11

100% of his or her contributions not in excess of 1% of compensation and 50% of his or her contributions not in excess of 5% of his or her compensation. Contributions to this Plan, as well as the savings plans described below, are limited by Section 415 of the Internal Revenue Code. In order to insure that all employees are treated equally under the plans, Company contributions that exceed the statutory limitation will be provided to affected employees outside the plans as a general and administrative expense. The amendments to the Plan provide for Company contributions equal to_ each employee's contributions not in excess of 6% of com- pensation. Company contributions generally are invested in the Company's Common Stock. The amendments also added a "cash or deferred" feature to the Plan pursuant to Section 401( k) of the Internal Revenue Code. This feature allows employees to designate "a portion of their pre-tax earnings as contributions under the Plan. Employee contributions so designated are subject to more stringent withdrawal provisions than other employee contributions. This designation has no effect on the amount of the employer contributions made for the employee. Amounts contributed by the Company during 1982 to the accounts of each of the individuals listed under "Remuneration," to all Directors and officers as a group, and to all eligible employees were as follows: Mr. Abely, $11,100; Mr. Horrigan, $9,375; Mr. Landis, $9,000, Mr. Sticht, $15,100; Mr. Wilson, $11,950; all Directors and officers as a group, $88,930; and all eligible employees, $13,036,991. Heublein contributes to the Heublein Savings and Investment Plan. Under the Plan, Heublein and employee contributions are invested by the Trustee in shares of the Company's Common Stock, a fixed income fund, a diversified equity fund or an aggressive equity fund, pursuant to the employee's instructions. Subject to certain limitations, Heublein contributes to the Trust Fund an amount equal to an employee's contributions not In excess of 6% of his or her compensation. During the past five years, the amounts contributed by Heublein to the accounts of Mr. Waldron and Mr. Watson were $188,513 and $135,925, respectively. In addition, Del Monte contributes to the Del Monte Savings-Investment Plan. Under the Plan, employee contributions are invested by the Trustee in shares of the Company's Common Stock, a fixed income fund, or an equity fund, pursuant to the employee's instructions. Subject to certain limitations, Del Monte contributes to the Trust Fund an amount equal to 50% of an employee's contributions not in excess of 5% of his or her compensation. Del Monte contributions are invested in the Company's Common Stock. During the past five years, the amount contributed by Del Monte to the account of Mr. Landis was $18,678. Retirement Plans The Company's retirement plan is a unit benefit plan which pays an annual benefit at normal retirement of one and three-fourths percent of an employee's average final compensation, multiplied by his or her number of years of credited service not exceeding 40. Generally, average final compensation is defined in the Plan as the employee's highest average annual compensation in any consecutive five-year period during his or her last ten years of credited service. Compensation includes base salary and bonus awards under the Company's Management Incentive Plan unless payment of the bonus is deferred. Company contributions to employee benefit plans and awards made pursuant to the Company's Performance Unit Plan are not included. The amount determined by this formula is reduced by three-fourths percent of the employee's Social Security benefit multiplied by the number of years of credited service. Heublein maintains the Lifetime Compensation Plan of Heublein, Inc. The Plan is a unit benefit plan which pays an annual benefit to salaried employees at normal retirement equal to the total of (i) 2% of average final compensation for his or her years of credited service not in excess of 20, ( ii ) 1% of average final compensation for his or her years of credited service in excess of 20 but not in excess of 35 and ( iii )1/2% of average final compensation for his or her years of credited service in excess of 35. The amount determined by this formula is reduced by 2 percent of the employee's Social Security benefit multiplied by the number of years of credited service not in excess of 25. Generally, average final compensation is defined in the Plan as the employee's highest average annual compensation in any consecutive five-year period during his or her last ten years of credited service. Compensation includes base salary and bonus awards under Heublein plans similar to the Company's Management Incentive Plan. Neither of the Plans requires contributions from employees in order to participate. Both of the Plans provide for reduced early retirement benefits. In addition, survivor's benefits may be available to the employee's spouse. Contributions to the Plans are made on the basis of recommendations by the actuaries engaged by the Company to provide assistance In plan administration. During the five-year period beginning on January 1, 1978, the Company contributed approximately $20,315,000 to its plan. 16

(d) It shall be a negative factor in granting new options if an optionee has sold optioned stock to pay off a loan, enabling optionee to pick up new options; (e) Option price be not less than the per share net working capital value; (f) There shall be no 'performance shares' offered to executives without cost; (g) Each optionee will be required, at the time of exercise of an option, to certify in writing to the Company that at least 60% of the stock theretofore and then being acquired pursuant to options was and is purchased for investment purposes, and the Company reserves the right to cause a legend to this effect to be placed on the certificates issued at time of exercise to evidence and Implement this certification; (h) That there shall be a maximum number of options any one person is allowed; (i) No options shall be granted to outside directors; (j) The aggregate number of outstanding stock options held by any officer or director of each such corporation shall not exceed two percent (2%) of the outstanding stock of such corporation on whose stock he has an option; (k) The aggregate number of outstanding stock options held by all officers and directors (as a group) of each such corporation shall not at any time exceed five percent (5%) of the outstanding stock of any such corporation on which stock they have options." SUPPORTING STATEMENT "In 1976, 9,744 owners of 1,993,058 shares voted in favor of our similar resolutions. The vote against included the unmarked proxies. "The case against options may be summed up as follows: 1) Profiting from the business cycle-During business recessions managements are often granted stock options at near the low of the stock during the recession. If the market should go still lower, new options are granted-and the old ones not exercised. Here managment has an opportunity to profit from a change In the business cycle. 2) Profiting from management's own errors-If a major management error in judgment should cost a company say half a year's earnings, the stock would normally have a considerable decline in the market as a result. Such a decline affords management a new low base for granting options. "For these reasons we believe there should be stringent protection, as we ask, where stock options are concerned. "If you agree, please mark your proxy for this resolution; otherwise It is automatically cast against it, unless you have marked to abstain." The Board of Directors recommends voting "AGAINST" adoption of this resolution. THE BOARD OF DIRECTORS' OBJECTION TO PROPOSED RESOLUTION A resolution substantially similar to this resolution was rejected at the annual meetings in 1975 and 1976. At both of these meetings, at least 94% of the votes cast were against the resolution. The Board of Directors believes that sufficient restrictions to protect the stockholders' interests exist in current stock option plans, some of which are similar or identical to restrictions proposed in the above resolution. The Board of Directors opposes this proposal because It believes that it should have the flexibility to determine the structure of future stock option plans. Imposition of some of the restrictions described above could seriously hamper the Board's ability to vary the form of compensation, which is necessary to attract and retain highly qualified employees, or to enable the Company to take advantage of future economic, tax or regulatory changes. The affirmative vote of shares representing at least a majority of the votes cast on this item will be required to approve the proposal. 22

ARTICLE 12 Amendments, Termination, Permanent Discontinuance of Contributions, Merger or Consolidation 12.01 Amendments. The Board of Directors reserves the right at any time and from time to time, both retroactively and prospectively, to modify or amend, in whole or in part, any or all of the provisions of the Plan; provided, however, that no such modification or amendment shall make it possible for any part of the funds of the Plan to be used for, or diverted to, purposes other than for the exclusive benefit of Members, spouses, former Members, retired Members or Beneficiaries under the Plan; and that no modification or amendment shall be made which has the effect of decreasing retroactively the Accounts of any Member or of reducing the nonforfeitabie percentage of the Company Contribution Account of a Member below the nonforfeitabie percentage thereof computed under the Plan as in effect on the later of the date on which the amendment Is adopted or becomes effective. 12.02 Termination or Permanent Discontinuance of Contributions. R. J. Reynolds Industries, Inc. may by action of its Board of Directors terminate the Plan with respect to all participating companies or any of them or direct complete discontinuance of contributions hereunder by all or any of the participating companies for any reason at any time. In case of such termination or complete discontinuance of contributions hereunder, there shall automatically vest In the appropriate Members nonforfeitable rights to the Company contributions credited to their Accounts and the total amount in each Member's Accounts shall be distributed, as the Committee shall direct, to him or for his benefit. 12.03 Partial Termination. In the event of a partial termination of the Plan, the provisions of Section 12.02 shall be applicable only to the Members affected by such partial termination. 12.04 Benefits in Case of Merger or Consolidation. The Plan may not be merged or consolidated with, nor may its assets or liabilities be transferred to, any other plan unless each Member, spouse, former Member, retired Member or Beneficiary under the Plan would, if the resulting plan were then terminated, receive a benefit immediately after the merger, consolidation, or transfer which is equal to or greater than the benefit he would have been entitled to receive immediateiy before the merger, consolidation, or transfer If the Plan had then terminated. ARTICLE 13 Miscellaneous 13.01 Benefits Payable from Trust Fund. All persons wlth any interest in the Trust Fund shall look solely to the Trust Fund for any payments with respect to such interest. 13.02 Elections. Elections hereunder shall be made by a Member in writing by the completion and delivery to the Committee of forms prescribed by the Committee for such purposes, within the time limits set forth hereunder with respect to each such election or, if no time limit is set forth, such limit as may be established by the Committee. 13.03 No Right to Continued Employment. Neither the establishment of the Plan nor the payment of any benefits thereunder nor any action of the Company, the Board of Directors, the Committee or the Trustee shall be held or construed to confer upon any person any legal right to be continued In the employ of the Company. 13.04 Inalienability of Benefits and Interests. No benefit payable under the Plan or Interest In the Trust Fund shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encum- brance or charge, and any such attempted action shall be void and no such benefit or interest shall be in any manner liable for or subject to debts, contracts, liabilities, engagements or torts of any Member or Beneficiary. If any Member or Beneficiary shall become bankrupt or shall attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any benefit payable under the Plan or interest in the Trust Fund, then to the extent permitted by law, the Committee in its discretion may hold or apply such benefit or interest or any part thereof to or for the benefit of such Member, or his Beneficiary, his spouse, children, blood relatives, or other dependents, or any of them, in such manner and in such proportions as the Committee may consider proper. Notwithstanding the foregoing, any Member may direct that benefits payable pursuant to Articles 8 or 9 from the Trust Fund shall be paid to the trustee of a trust created by him for his own benefit or for the benefit of his immediate family. 13.05 Payments for Exclusive Benefits of Members. Payments of benefits in respect of the Interest of a Member under the Plan to any person other than such Member in accordance with the provisions of the Plan shall be deemed to be for the exclusive benefit of such Member. 13.06 North Carolina Law to Govern. All questions pertaining to the construction, regulation, validity and effect of the provisions of the Plan shall be determined in accordance with the laws of the State of North Carolina, except as provided in Section 514 of ERISA. A-13

Company contributions and the earnings thereon will be invested ( i) by the Trustee alone, or ( ii ) pursuant to the instructions of an investment manager. Earnings or gains derived from the assets of any Investment Fund will be invested in that Fund. Appropriate Accounts for each Member shall be established and maintained in each Investment Fund in which a Member has an interest. 5.04 Investment Funds. (a) The Reynolds Common Stock Fund. The Reynolds Common Stock Fund shall consist of all Common Stock held by the Trustee hereunder and all cash held by the Trustee which is derived from dividends on Common Stock held hereunder, Company and Member contributions which are to be invested in Common Stock, and sales of Common Stock held hereunder. All dividends on Common Stock held hereunder, and all proceeds of saies.Qf Common Stock held hereunder shall be invested in the Reynolds Common Stock Fund. Such Common Stock shall be purchased by the Trustee regularly on the open market, in accordance with a nondiscretionary purchase program, by the exercise of stock rights or private purchase; provided, however, that at the option and direction of R. J. Reynolds Industries, Inc. treasury stock or newly issued shares of Common Stock previously authorized and unissued may be contributed to, or purchased by, the Trustee and valued as described in Section 4.05(d). All shares of Common Stock held in the Trust Fund shall be held in the name of the Trustee or its nominee. (b) The Equity Fund. The Equity Fund shall consist of such capital, common and preferred stocks, or other equity securities (inciuding any common or commingled trust fund maintained by the Trustee which is invested primarily in equity securities) as may be selected by the Trustee from time to time, cash derived from Member contributions which are to be Invested In the Equity Fund, and from earnings on or sales of other assets In such Fund, and such interim investments ( inciuding, without limitation, certificates of deposit, bankers' acceptances and treasury bills) as may be selected by the Trustee from time to time. All earnings qn assets held in the Equity Fund and all proceeds from the sale of such assets, shall be invested in the Equity Fund. All assets In the Equity Fund shall be held in the name of the Trustee or Its nominee. (c) The Fixed Income Fund. The Fixed Income Fund shall consist of assets which are Invested or held for investment Intended to provide income on a fixed Income basis, inciuding, but not limited to, governmental, corporation or personal obligations, trust and participation certificates and mortgages. In addition, the Trustee will from time to time purchase or hold such property meeting the requirements for Investments in the Fixed Income Fund as the Finance Committee of the Board of Directors directs, including without limitation one or more group annuity contracts providing for the accumulation of contributions thereunder at rates of interest which may be changed from time to time but which are guaranteed for a period of at least one year. As applicable, all assets in the Fixed Income Fund shall be held in the name of the Trustee or its nominee or in bearer form. 5.05 Temporary Investment. Pending permanent investment of the assets of any Investment Fund, the Trustee temporarily may hold cash or make short-term investments in obligations of the United States Government, commercial paper, an Interim Investment fund for tax qualified employee benefit plans established by the Trustee unless otherwise provided by applicable law, or other Investments of a short-term nature. 5.06 Investment of Member Contributions. (a) Election. All Member contributions will be invested at the election of the Member in multiples of 25% in the Reynolds Common Stock Fund, the Fixed Income Fund and/or the Equity Fund. The Initial election under Section 4.02.1 of a Member, who was a Member prior to April 1, 1983, is a special election which shall have no effect on the restrictions of this section. A Member may makQ an election under this Section 5.06 or, once in any 12-month period, change a prior election, effective as to future contributions. Any such election or change of election will be effective only if the Committee Is given prior written notice of 30 days or such shorter period as the Committee may approve. (b) Transfer of Investments. A Member may elect, by prior written notice to the Committee of 30 days to have all or any multiple of 25% of the value of his Account in the Reynolds Common Stock Fund, the Fixed Income Fund or the Equity Fund as of'any future Valuation Date transferred to the Reynolds Common Stock Fund or the Equity Fund and/or the Fixed Income Fund, as the case may be; provided, however, that a Member may make only one such election within any 24-month period. The amount removed from any Investment Fund will be based upon values as of such future Valuation Date, and the change in investments shall be made as soon as reasonably possible thereafter. 5.07 Investment of Company Contributions. Except for the provisions of Section 5.08 Company contributions to the Company Contribution Account will be invested in the Reynolds Common Stock Fund. 5.08 Investment Option at Age 55. By giving to the Company 30 days prior written notice on a form approved by the Committee for such purpose, any Member of the age of 55 years or more, including a Member who is more than 55 years of age when he joins the Plan, shall have an option which may be exercised only once by such Member, to elect one or both of the following: (a) to have transferred to the Equity Fund and/or the Fixed Income Fund on any future Valuation Date all or part in multiples of 25% of his previously credited Company Contributions Account, and/or (b) to have invested in the Equity Fund or the Fixed Income on any Valuation Date all or part in multiples of 25% of the future Company contributions. A-6

1.35 "Unit" shall mean the Unit referred to in Article 6. 1.36 "Valuation Date" shall mean the date or dates, as applicable, on which the Trust Fund is valued in accordance with Article 6. 1.37 "Vesting Service" shall mean sarvice recognized for the purpose of determining eligibility for certain benefits under the Plan, determined as provided in Article 3. 1.38 "Withdrawal Valuation Date" shall mean, with respect to a Member, the last day of the calendar month coinciding with or immediately following the date on which his request for a withdrawal under the Plan is filed with the Company. ARTICLE 2 Membership 2.01 Eligibility. (a) Every Employee shall become eligible for membership in the Plan as of the first Entry Date, commencing with the Effective Date of the Plan, coincident with or next following the date he becomes an Eligible Employee. (b) All Eligible Employees of a Participating Unit who participate in this Plan shall particip9te under the terms and conditions herein stated. 2.02 Membership Application. An Eligible Employee may become a Member on any Entry Date by completing and submitting to the Committee an application form supplied by the Committee on which he selects the percentage of his Compensation he wishes to contribute to this Plan by means of deductions from his Compensation, he designates whether he will participate in the Savings Plus Investment Account, he chooses one or more Investment Fund(s), and he names a Beneficiary. Participation in the Plan by an Eligible Employee is voluntary. ARTICLE 3 Vesting Ser~lce 3.01 Vesting Service. Except as hereinafter provided, an Employee's period of employment with an Employer shall be Vesting Service for the purposes of the Plan. Vesting Service shall terminate on an Employee's Severance from Service Date. If an Employee's employment Is terminated and he is subsequently reempioyed by an Employer within 12 months from his Severance from Service Date, the period between his Severance from Service Date and the date of his reemployment by an Employer shall be inciuded in his Vesting Service. 3.02 Absence in Military Service. If an Employee shall have been absent from the service of an Employer because of service in the Armed Forces of the United States and if he shall have returned to the service of an Employer within the period during which reemployment rights are extended by law, such absence shall not count as a period of severance. Any period of such absence which is not otherwise inciuded in his Vesting Service determined in accordance with Section 3.01 shall, nevertheless, be considered as Vesting Service. 3.03 Approved Leave of Absence. A period during which an Employee is on a leave of absence approved by an Employer not otherwise recognized as Vesting Service shall, if the Committee so determines, be considered as Vesting Service under rules established by the Committee uniformly applicable to all Employees similarly situated. 3.04 Break In Service. A Break In Service shall occur if an Employee is not reemployed within one year after a Severance from Service Date. -3.05 Return Without a Break In Service. If a former Member who has not incurred a Break in Service is restored to service as an Eligible Employee, he shall again be eligible to become a Member of the Plan on his date of reemployment and his Vesting Service recognized at the time of his previous Severance from Service Date shall be restored to him. 3.06 Return With a Break In Service. If a former Member is restored to service as an Eligible Employee after having incurred a Break in Service, he shall again be eligible to become a Member of the Plan on bis date of reemployment, and his Vesting Service recognized at the time of his previous Severance from Service Date shall be restored to him, but any portion of his Company Contribution Account at such time which forfeited pursuant to Section 10.01 shall remain forfeited and shall not be affected by any Vesting Service rendered after his restoration to service. A-3

Exhibit A RJR EMPLOYEES' SAVINGS AND INVESTMENT PLAN As amended effective April 1, 1983 or such later date as may be approved by the Board of Directors ARTICLE 1 Definitions 1.01 "Accounts," unless otherwise indicated, shall mean, with respect to any Member, his Basic and Supplemental Investment Accounts, his Savings Plus Investment Account and his Company Contribution Account. 1.02 "Affiliated Company" shall mean any Company more than 50% of the voting stock of which is directly or indirectly owned by R. J. Reynolds Industries, Inc. or by any successor, and each trade or business (whether or not incorporated) controlled by the Company or with which the Company is under common control. 1.03 "Basic Contributions" shall mean the contributions of a Member which are credited to his Basic Investment Account in accordance with Section 4.01. 1.04 "Basic Investment Account" shall mean that portion of the Trust Fund which, with respect to any Member, is attributable to his own Basic Contributions and any investment earnings and gains or losses thereon. 1.05 "Beneficiary" shall mean any person or persons, (who may be designated contingently or successively and who may be an entity other than a natural person) designated by a Member, on a form supplied by the Committee, to receive benefits payable in the event of the death of the Member. Section 13.09 should be referred to for payments In the event of death with no designated survivor or incompetency of a survivor. 1.06 "Board of Directors" shall mean the Board of Directors of R. J. Reynolds Industries, Inc. and any committee of directors authorized by such Board to act in its behalf with reference to the Plan. 1.07 "Break In Service" shall mean a period of at iea t one year from an Employee's Severance from Service Date to his date of reemployment by an Employer. 1.08 "Code" shall mean the Internal Revenue Code of 1954 as amended from time to time. Reference to any section or subsection of the Code includes reference to any comparable or succeeding provisions of any legislation which amends, supplements or replaces such section or subsection. 1.09 "Committee" shall mean the Committee as provided in Article 11. 1.10 "Common Stock" shall mean the Common Stock, without par value, of R. J. Reynolds Industries, Inc. or any successor company thereto. 1.11 "Company" shall mean R. J. Reynolds Industries, Inc., a Delaware corporation, or any successor by merger, purchase or otherwise, with respect to its Employees; or any other Affiliated Company which Is participating in the Plan as provided in Section 13.04 with respect to its Employees. 1.12 "Company Contribution Account" shall mean that portion of the Trust Fund which, with respect to any Member, is attributable to any contributions made in his behalf by the Company, and any investment earnings and gains or losses thereon. 1.13 "Compensation" shall mean the basic compensation and such other forms of compensation paid for employment as the Committee has determined shall be included and which are listed in Schedule A which shall be attached hereto after adoption by the Committee and incorporated by reference. Schedule A shall be revised as the Committee from time to time modifies the forms of compensation which are to be included. 1.14 "Disability" shall mean, (i) being disabled within the meaning of any pension plan or long-term disability plan of an Employer under which a Member is entitled to receive benefits and which results in Termination of Employment or ( ii ), if ( i) is not applicable, as provided in Internal Revenue Code § 72(m) ( 7), being unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of a long continued and indefinite duration which results in a Termination of Employment. 1.15 "Effective Date" shall mean January 1, 1982, in respect of R. J. Reynolds Industries, Inc. and the date as of which the Plan is adopted by an Affiliated Company, in respect of such company. 1.16 "Eligible Employee" shall mean any person regularly employed by a Participating Unit, who is paid from a United States dollar payroll maintained in the United States, who receives a regular and stated A-1

6.05 Statement of Accounts. Each Member shall be furnished at least annually a statement setting forth the value of his Accounts. ARTICLE 7 Vesting of Contributions 7.01 Vesting of Member's Contributions. Each Member's Basic Investment Account, Supplemental Investment Account and Savings Pius Investment Account shall at all times be fully vested. 7.02 Vesting of Company Contribiiitions. A Member shall become fully vested in his Company Contribution Account upon completion of the earlier of (i) 60 months of Vesting Service (Article 3) or (ii) 9d consecutive months of Membership Service (Article 1) or (iN) in the event of any one of the following: 0 (a) attainment of age 65, p 0) ( b ) Retirement, J (c) Disability, J (d) death, N U1 I-- (e) termination of the Plan, or co (f) complete discontinuance of Company contributions. Provided, however, that the provisions of (11). above. shafi fully vest a Member In only Company Contributions made since his most recent date of enrollment In the Plan. 7.03 Vesting of Prior Plan. Contributions. Contributions transferred from a Prior Plan pursuant to Section 13.11 shall at all times be fully vested. ARTICLE 8 Distributions 8.01 General. (a) Upon the Termination of Employment of a Member at or after the attainment of age 65 or for reasons of Retirement, Disability, or death, the entire amount to the credit of all of his Accounts determined as of the Valuation Date of the calendar month in which such termination occurs or the distribution application is received, whichever is later, shall be distributed as provided in Section 8.02 to the Member, if living, or to his Beneficiary in the event of his death (see Section 8.03), after a written notice on a form approved by the Committee for such purpose has been filed with the Company. (b) Upon the Termination of Employment of a Member prior to attaining age 65 for reasons other than Retirement, Disability, or death, the value of his Accounts with reference to Article 7 (Vesting of Contributions) shall be determined as of the Valuation Date of the calendar month in which such termination occurs and shall be.distributed as provided in Section 8.02(a) or (b) only, after a written notice on a form approved by the Committee for such purpose has been filed with the Company. 8.02 Methods of Distribution. As soon as practicable after the Termination of Employment occurs, and subject to the approval of the Committee under rules established by the Committee uniformly applicable to all persons similarly situated, distributions provided under the Plan shall be made in the following manner: (a) All distributions from the Equity Fund and the Fixed Income Fund shall be made in cash; (b) Unless the Member or his Beneficiary elects to take cash (or cash and Common Stock) for distributions from the Reynolds Common Stock Fund, distributions from the Fund shali be in Common Stock, except that any fractional interest in a share of Common Stock shall be paid in cash; (c) All distributions of both cash or Common Stock shall be made as soon as practicable at one time but not later than 60 days after the latest of the close of the Plan Year In which occurs (A) the date on which the Member attains the earlier of age 65 or normal retirement age, or (B) the tenth anniversary of the year in which the Member commenced membership in the Plan, or (C) termination of the Member's service with the Company; except that, If the Member's Termination of Employment results from his Retirement or Disability, then, by written notice on a form approved by the Committee, for such purpose, delivered to the Company at least 30 days prior to his Termination of Employment, and subject to the approval of the Committee, the Member may irrevocably elect to receive his distribution in any one of the following methods of payment: (i) By purchase of a non-transferable annuity from a legal reserve life insurance company. If such annuity contract provides for payment in the form of a life annuity and the Member is married on the A-8

adjusted as aforesaid, to the Member. To the extent the excessive credit was an excessive Company contribution, as determined by the Committee, such excessive portion, adjusted as aforesaid, will be credited in the same manner as a forfeiture incurred. In addition to other limitations set forth In the Plan and notwithstanding any other provisions of the Plan, contributions (and contributions to all other defined contribution plans required to be aggregated with this Plan under the provisions of Section 415 of the Internal Revenue Code of 1954) shall not be made in an amount in excess of the amount permitted under Section 415 of the Internal Revenue Code of 1954, as amended by the Tax Equity and Fiscal Responsibility Act of 1982. A-20

SCHEDULE B - LIMITATIONS TO COMPLY WITH SECTION 415 OF THE INTERNAL REVENUE CODE (a) The following definitions shall be applied in construing this Schedule B: (1) "Defined Benefit Plan" means any defined benefit plan (as defined in Section 415(k) of the Internal Revenue Code) maintained by the Company. (2) "Reiated Plan" means any Defined Contribution Plan (as defined in Section 415 (k) of the Internal Revenue Code), other than the Plan, maintained by the Company or any Individual account maintained for voluntary contributions made by a Member under a Defined Benefit Plan. (3) "Total Compensation" means all remuneration paid to an Employee by the Company. (4) "Annual Addition" means, in the case of any Member, when used with respect to the Plan or a Related Plan, the sum for any Plan Year of (i) the amount of contributions made by the Company for a Member's benefit under the Plan (or the Related Plan), (ii) the lesser of (A) the amount of the Member's contributions for such Year under the Plan (or the Related Plan ) In excess of 5% of his Total Compensation or (B) one-half of the Member's contributions for such Year, and (iii) any forfeitures allocated to the Member for such Year under the Plan (or the Related Plan). (b) Limitations Applicable to Participants in Defined Contribution Plans Only. (1) The Annual Addition credited to a Member's Account under the Plan for any Plan Year must not exceed the lesser of (A) $25,000 (or such larger amount as may be specified by the Secretary of the Treasury or his delegate on account of Increases in the cost ofaiving, as provided in Section 415(d) of the Internal Revenue Code) or (B) 25% of the Member's Total Compensation for such Plan Year. ( ii ) In the case of any Member who also participates in a Related Plan, the sum of his Annual Addition under the Plan and his Annual Addition under all Related Plans for any Plan Year must not exceed the lesser of (A) the amount set forth in (i) (A) above or (B) 25% of the sum of the Member's Total Compensation for such Plan Year and his remuneration for such Plan Year from all employers maintaining such Related Plans. ( iii ) To the extent necessary to satisfy the Iimitat~ens contained in (i) and (11) above, the Committee will reduce the amount of contributions which may`be made with respect to the Member under the provisions of Articles 4 and 5 for the applicable Plan Year. (c) Limitations Applicable to Members Who Also Participate in a Defined Benefit Plan. In the case of any Member who participates both in the Plan and in a Defined Benefit Plan, the following limitation will apply unless such Defined Benefit Plan provides that the Member's benefit thereunder is to be limited for this purpose. The Member's Annual Addition under the Plan for any Plan Year will be limited so that the sum of his Defined Benefit Plan fraction and his Defined Contribution Plan fraction for such Plan Year does not, subject to the restrictions and exceptions contained in Section 2004 of ERISA, exceed 1.4. For purposes of this limitation: a Member's Defined Benefit Plan fraction for any Plan Year is a fraction (I) whose numerator is the Member's projected annual benefit under all Defined Benefit Plans as a group (determined as of the close of the Plan Year and reflecting any limitation thereof required under the terms of any Defined Benefit Plan or Plans), and (ii) whose denominator is the projected annual benefit which the Member would have under all Defined Benefit Plans (determined as of the close of the Plan Year) if the Defined Benefit Plans as a group provided the maximum benefit allowed under Section 415(b) of the Internal Revenue Code; and a Member's Defined Contribution Plan fraction for any Plan Year is a fraction (A) whose numerator is the sum of the Member's Annual Additions for all Plan Years under the Plan and all Related Plans determined as of the close of the Plan Year and (B) whose denominator is the sum of the maximum Annual Additions which could have been made for the Member under the Plan and all Related Plans in accordance with the limitations of Section 415(c) of the Internal Revenue Code for such Plan Year and for each prior year of service with the Company. (d) Adjustments on Account of Excessive Credits. If it is determined at any time that the amount credited to a Member's account for any Plan Year was in excess of the amount permitted under the limitations of (b) or (c) above, the Trustee will, in accordance with the instructions of the Committee, charge against the Member's account an amount (adjusted to reflect income, expenses, gain or loss of the Trust properly attributable to the excessive credit) sufficient to permit the remaining credits for such Plan Year to satisfy the foregoing limitations and make adjustments in the order provided below. To the extent the excessive credit was an excessive Member contribution, as determined by the Committee, the Trustee will refund such portion, A-19

13.07 No Guarantee. Neither the Company nor the Trustee guarantee the Trust Fund in any manner against loss or depreciation. 13.08 Address of Record. Each individuai or entity with an actual or potential interest in the Plan shall file and maintain a current record address with the -Plan. Communications mailed by the Company, Trustee, or Committee to such record address fulfills all obligations to provide required information to Members, including former employees and Beneficiaries, in regard to the Plan. if no record address is filed, it may be presumed that the address used by the Company In forwarding statements of a Member's Account is the record address. 13.09 Payments in the Event of Death with no Designated Survivor or Incompetency. In the event of (i) the death of a Member or Beneficiary not survived by a person designated to receive any payment then due, or (ii) the Committee finding that a Member or other person entitled to a benefit is unable to care for his affairs because of iliness or accident or is a minor or has died, or (111) no Beneficiary being designated, the Committee may direct that any benefit payment due him, unless claim shall have been made therefor by a duly appointed legal representative, be paid to his spouse, a child, a parent or other blood relative, or to a person with whom he resides, and any such payment so made shall be a complete discharge of the liabilities of the Plan therefor. 13.10 Participating Companies. The Board of Directors may include a designated unit of the employees of an Affiliated Company in the Plan as a Participating Unit upon appropriate action by such Affiliated Company necessary to adopt the Plan. In such event, or if any persons become Employees of the Company as the result of merger or consolidation or as the result of acquisition of all or part of the assets or business of another company, the Board of Directors shall determine to what extent, if any, previous service with such company shall be recognized as Vesting Service, but subject to the continued qualification of the Trust for the Plan as tax exempt under the Code. Any such company may terminate its participation in the Plan with respect to a designated unit of its employees upon appropriate action by it, in which event the funds of the Plan held on account of Members in the employ of such company and any unpaid balances of the Accounts of Members who have separated from the employ of such company, shall be determined by the Committee and shall be distributed as provided in Section 12.02 in the event of termination of the Plan, or shall be segregated by the Trustee as a separate trust fund, pursuant to direction to the Trustee by the Committee, continuing the Plan as a separate plan for such employees of such company under which the board of directors of such company shall succeed to all the powers and duties of the Board of Directors, including the appointment of the members of the Committee. 13.11 Transfer of Prior Plan Assets and Liabilities to This Plan. Effective as of a date established by the Committee after receipt of Internal Revenue Service determinations that (i) this Plan meets the applicable requirements of Section 401(a) of the Internal Revenue Code and (ii) the amendments to a Prior Plan made for the purpose do not adversely affect its qualification under Section 401 (a) of the internal Revenue Code, the assets in cash or Common Stock and liabilities (or only assets not in payout status and related liabilities if directed by the Committee) of a Prior Plan may be transferred to this Plan if the Committee so directs. Any such transfer shall take place only on a Valuation Date. In the absence of an applicable Member election, assets transferred from a Prior Plan shall be invested in the Investment Funds under this Plan corresponding most nearly in the judgment of the Committee to the Investment funds in which such assets were invested under the Prior Plan; and the accounts of members and beneficiaries under the Prior Plan will become their Accounts as Members and Beneficiaries under this Plan, effective as of the transfer date. 13.12 Headings. Headings of Articles'and Sections of the Plan are inserted for convenience of reference. They constitute no part of the Plan. 13.13 Use of Masculine Pronoun. The masculine pronoun shall inciude the feminine wherever appropriate. 13.14 Payment of Expenses. (a) Direct charges and expenses arising out of the purchase or sale of securities, and taxes levied on or measured by such transactions shall be charged against the Investment Fund or Funds for which the transactions took place. (b) The Company shall pay all other expenses reasonably Incurred in administering the Plan, inciuding expenses of the Committee and the Trustee(s), such compensation to the Trustee(s) as from time to time may be agreed between the Committee and Trustee(s), fees for legal services, all taxes, if any, other than those charged to the Funds under (a), and the brokerage fees arising out of the purchase of Common Stock for the Reynolds Common Stock Fund and the reinvestment of dividends on such Common Stock. ARTICLE 14 Claim Procedure 14.01 Initial Determination. The initial determination of a Member or Beneficiary's eligibility for, and the amount of, a benefit shall be made by the Committee which shall mail or deliver to each covered individual who A-14

First The value of the Units, determined pursuant to Article 6 (Valuation of Assets), in his Supplemental Investment Account. Second The value of the Units attributable to contributions made at least 24 months prior to the Withdrawal Valuation Date in both his Basic Investment Account and his Company Contribution Account. Third The value of the Units In his Basic lnvestment Account attributable to contributions made within 24 months of the Withdrawal Valuation Date. Fourth Provided that the Member has 60 or more cumulative months of Membership Service, the value of the Units in his Company Contribution Account attributable to contributions made within 24 months of the Withdrawal Valuation Qate. 9.03 Rules Applicable to Withdrawals Prior to Termination of Employment. The following rules shall, except as noted in Section 9.04, apply to withdrawals under this Article 9: (a) Withdrawals may only be made on at least 30 days (or such shorter period as the Committee, or a specific delegatee thereof, may approve) prior written notice to the Committee on a form approved by the Committee. (b) Excluding withdrawals pursuant to 9.04(b) and (c), no more than one withdrawal may be made in any six-month period. (c) In no event may a Member make a withdrawal In an amount less than $100, unless such amount represents the total withdrawable from his Accounts. ,. (d) In no event may a Member elect an order of withdrawal other than set forth In Section 9.02, nor may a Member select the classification or Account from which his stated amount of withdrawal election will be withdrawn. (e) A Member making a withdrawal which necessarily results in an application beyond classification "Second" In Section 9.02 shall be suspended from receiving Company Contributions for a period of six months from the instant Withdrawal Valuation Date. If by error more than one withdrawal is permitted or made during a single six-month period, each such withdrawal resulting in an application beyond classification "Second" shall separately incur a six-month suspension period, but such periods shall run concurrently (for example, a withdrawal two months after the start of a suspension period due to one prior withdrawal will result in a total concurrent suspension period for both withdrawals of eight months and not 12 months). (f) To the extent feasible, the Committee, upon receipt of a withdrawal application, will inform a Member of any suspensions that will occur as a result of the withdrawal. (g) Payments of withdrawal amounts will be made as soon as practicable after a Member's election to withdraw. (h) In no event may a Member with less than 60 cumuiative months Membership Service make a withdrawal which results in an application to classification "Fourth" in Section 9.02. (i) Withdrawals from a Prior Plan of an Employer prior to the transfer of its assets and liabilities to this Plan in accordance with Section 13.11 shall be treated as a withdrawal from this Plan and shall be subject to the suspension period described herein; provided, however, that any such suspension period shall be measured from the date of withdrawal under the Prior Plan of an Employer. (j) Amounts received from any Prior Plan which are attributable to Company Contributions under such Prior Plan may not be withdrawn from this Plan within 24 months of the date such amounts are transferred to this Plan. (k) A Member may not specify the Fund from which his withdrawal is made; provided, however, a Member having an interest in any funds designated by the Committee as frozen (the "Frozen Funds" ) may specify that a withdrawal be made solely from such Funds. All withdrawals shall be made from all Funds in which the Member has an interest, other than Frozen Funds, on a pro rata basis determined by the current fair market value of the Member's interest in such Funds. A Member with an interest in a Frozen Fund or Frozen Funds may make withdrawals from both the Frozen Funds and all other Funds on the same date, and such withdrawals shall be deemed to be one withdrawal for purposes of this Plan. 9.04 Withdrawals from Savings Plus Investment Account. Withdrawals as described in Section 9.01 and subject to the rules of Section 9.03 (except 9.03(e) and (h) ) may be made against a Member's Savings Plus Investment Account as follows: (a) Provided that the Member has attained age 59'/Z or Is totally disabled, as such term is defined by the Social Security Administration, he may withdraw the value of the Units in his Savings Plus Investment Account. A-10

Phantom Share Accounts R. G. Landis J. T. Wilson All Directors and officers as a group All Eligible Employees Acquired-January 1, 1978 to March 1, 1983: Number of phantom shares acquired' ................. 67,767 1,047 74,177 93,208 Average per share base price2 ............................. 0 0 0 0 Reaiized-January 1, 1978 to March 1, 1983: Net value (market value less base price) real- ized In shares or cash........................................ $ 0 $ 0 $27,585 $121,040 Outstanding at March 1, 1983: Number of phantom shares .................................. 78,795 1,047 85,205 99,415 Potential (unrealized) value (market value less base price) ........................................................ $3,693,516 $49,078 $3,993,984 $4,660,078 1 The number of phantom shares shown was determined by dividing the amount of compensation deferred by the fair market value of a share of the Company's Common Stock at the time that the phantom shares were acquired. 2 The average base price of phantom shares is shown as zero since the amount the individual ultimately will receive for his account depends solely on the market value of the Company's Common Stock. Applicable regulations require disclosure of a zero base price under such circumstances. Heublein maintains a program pursuant to which certain key employees have been given the opportunity to purchase life insurance in addition to that provided by Heublein's group Insurance plans. Under this program, Heublein participates in the payment of premiums and the receipt of policy proceeds. The program has been designed so that Heublein will own the policy cash values and, in the event of the individual's death, will receive an amount of the proceeds equal to the premiums it has paid. Proceeds in excess of this amount are paid to the employee's beneficiary. Mr. Waldron is covered by a policy maintained pursuant to this program. The Company maintains the Employees' Stock Purchase Plan. Under this Plan, eligible employees of the Company and participating subsidiaries may have up to 10% of their base pay withheld to purchase the Company's Common Stock. The Company or the participatinoubsidiary contributed an amount equal to 30% of the employee's contribution. The Plan was amended effective January 1, 1982 to eliminate the Company's and participating subsidiaries' contributions. During the four-year period commencing on January 1, 1978, the Company contributed $21,062,400 to the Plan. The average annual contribution made during the four-year period from January 1, 1978 to December 31, 1981 for the individuals named under "Remuneration," for all Directors and officers as a group and for all eligible employees was as follows: Mr. Abely, $4,829; Mr. Horrigan, $3,112; Mr. Landis, none; Mr. Sticht, $450; Mr. Wilson, $7,777; all Directors and officers as a group, $27,944; and all eligible employees, $5,265,600. The Company contributes to the R. J. Reynolds Industries, Inc. Stock Bonus Plan under which eligible employees of the Company and participating subsidiaries receive an allocation of Common Stock purchased by the Plan trustee with Company contributions. The allocation is based upon each participant's compensation, but compensation in excess of $100,000 is not considered. The Plan was approved by stockholders in 1982. Company contributions to the Plan are equal to 1% of the amount of the Company's investments made during the year that qualified for investment tax credit under Section 38 of the Internal Revenue Code. For Plan years after 1982, the Company intends to amend the Plan so that the amount of the Company's contribution and the corresponding tax benefit will be based upon a percentage of the compensation of the Plan's participants. For Plan years 1983 and 1984, the percentage will be .5%; for Plan years 1985 through 1987, it will be .75%. The average annual contribution by the Company for the 1980 and 1981 Plan years for each of the individuals listed under "Remuneration," for all Directors and officers as a group, and for all eligible employees was as follows: Mr. Abely, $767; Mr. Horrigan, $767; Mr. Landis, $767; Mr. Sticht, $767; Mr. Wilson, $767; all Directors and officers as a group, $10,720; and all eligible employees, $4,869,638. The Company also contributes to the RJR Employees' Savings and Investment Plan, which was approved by stockholders in 1982. Amendments to this Plan are the subject of Item 3 of this Proxy Statement. Under the Plan, employee contributions are invested by the Trustee, in shares of the Company's Common Stock, a fixed income fund, or an equity fund, pursuant to the employee's instructions. During 1982, the initial year the Plan was in effect, the Company, subject to certain limitations, contributed for each employee an amount equal to 15

SCHEDULE A ADMINISTRATIVE RULES REGARDING THE DEFINITION OF "COMPENSATION" UNDER SECTION 1.13 OF THE RJR EMPLOYEES' SAVINGS AND INVESTMENT PLAN 1. The following payments by the Company are excluded from "compensation" (if applicable to the Unit): (a) Payments pursuant to the following Plans: -Employee Educational Plan -Profit Sharing Incentive Plan -Employees' Stock Purchase Plan -Suggestion Plan -Vacation with Pay Plan payments received in lieu of vacation taken and -Management Incentive Plan payments; ( b ) Moving Expenses; ( c ) Severance Pay; (d) Commissions, overtime pay and bonuses other than bonuses expressly included in Section 2 of this Action; (e) Payments of prizes won in employee benefit contests; (f) Monthly foreign service premiums and allowances paid by the Company to employees located overseas; ( g ) Attendance bonuses; (h) Compensation or awards not monetary in nature; ( i) Payments or economic benefits under programs involving stock options or stock appreciation rights; (j) Extra Compensation for exempt employees; and (k) Compensation paid by arrangement with the Cor4pany by distributors, licensees or affiliates of the Company to members in the Plan stationed in foreign countries, whether or not on leave of absence from the Company, shall constitute "compensation" to the extent reimbursement is made by the Company to the distributor, licensee or affiliated company paying such compensation. 2. The following payments by the Company are included in "compensation": (a) Payments pursuant to the following Plans and policies: -Shift Premium Pay -Vacation with Pay Plan, except to the extent payments thereunder are excluded in Section 1(a) (The exclusion in Section 1(a) does not apply to vacation pay received after retirement by an employee absent from work without compensation during the calendar year in which he retires, if he could have received such vacation pay prior to retirement. The amount of such vacation pay is limited to such pay for the lesser of: ( i) the number of days the employee was absent from work without pay; or ( ii ) the number of days of vacation represented by such vacation pay. ) -Paid Holiday Plan -Funeral Leave Pay Plan -Paid Absence Policy; (b) The compensation of an employee during any period for which he receives payment pursuant to the Company's Policy on "Employee Compensation While Performing Emergency Duty" shall be deemed to be his regular pay for such period without deduction for pay received from governmental sources for such duty; and (c) The compensation of any employee who is required to be absent from work for the purposes of serving as a juror or as a witness in court, shall, for the period that such employee is so required to be absent, be deemed to be his regular pay without deduction for any amount received for serving as a juror or as a witness in court. A-l7

date payments commence, the normal form of payment shall include a 50% survivorship benefit In favor of the Member's spouse, unless the Member duly elects otherwise. ,( 9i ) By payment at one time as soon as practicable after the last day of January of the next succeeding calendar year based on the value of his Accounts as of such date. ( iii ) By payment in installments over a period of up to fifteen years as follows: the amount of each installment to be paid to each Member making such an election shall be based upon the value of his assets as of the Valuation Date coinciding with or next following the date of Retirement or Disability and each Valuation Date thereafter, and shall be determined by multiplying each such value by a fraction, the numerator of which shall be one and the denominator of which shall be the number of unpaid installments. However, the Committee In its absolute discretion may accelerate the payment of any installment or installments if it determines the existence of undue financial hardship In the case of any Member or if any installment represents an amount less than a certain minimum determined by the Committee. If a Member's Beneficiary under any method of distribution is other than his spouse, the present value of payments to the Member shall not be less than 51% of the value of the total payments to be made to the Member and his Beneficiary. If distribution is deferred, or made in installments as provided In (11) and (iii) above and the Member dies before payment is made or before all the installments are paid, the remaining value of his Accounts shall be paid to his Beneficiary at one time; provided, however, that a Member who elects instaliments as provided In ( iii ) above, may further elect that, should he die before all installments are paid, the remaining value of his Accounts shall continue to be paid to his Beneficiary In installments as provided In (iii) above. 8.03 Alternate Form of Distribution to a Beneficiary. Notwithstanding the foregoing, a Member may, prior to Retirement, elect to have the distribution of the amounts remaining In his Accounts upon his death payable after his death to his Beneficiary made In installments as provided In Section 8.02(c) (ill), or In the form of a non-transferable annuity from a legal reserve life insurance company, or, with the written consent of the Committee, in any other manner approved by the Committee. Any such election may be revoked by the Member at any time. ' 8.04 Proof of Death and Right of Beneficiary or Other Person. The Committee may require and rely upon such proof of de$th and such evidence of the right of any Beneficiary or other person to receive the undistributed value of the Accounts of a deceased Mem as the Committee may deem proper and its determination of death and of the right of such Benefici~ ii or other person to receive payment shall be conclusive. 8.05 Completion of Appropriate Forms. The Committee has prescribed forms providing written notice to the Company in order for a distribution to be made under the Plan. In the event a Member or a Beneficiary does not complete, execute and return such forms to the Company before the end of the calendar month following the date a distribution becomes payable under the terms of the Plan, such Member's or Beneficiary's Accounts may, at the option of the Committee (taking into account Section 13.09), be mailed after distribution, as provided in Section 8.02(a) (cash) and/or Section 8.02(b) (Common Stock), to the Address of Record as provided in Section 13.08. The Valuation Date for purposes of this Section 8.05 shall be the last day of the calendar month coincident with or next following the date of a Member's termination. 8.06 Deferred Distribution. Any amounts being held for deferred distribution In installments as provided in Section 8.02(c) ( iii ) will be segregated by the Trustee and invested In the Fixed Income Fund. Persons receiving any form of deferred distribution shall be treated as former Members and shall not be credited with Company Contributions after Termination of Employment. 8.07 Minimum Value. Notwithstanding the foregoing provisions of Article 8, if the entire value of the Accounts of a Member amounts to less than $1,750, it shall, if the Committee so directs, be distributed In one lump sum payment. ARTICLE 9 Withdrawal Prior to Termination of Employment 9.01 Election to Withdraw from Accounts. As of any Withdrawal Valuation Date as defined in Article 1 and subject to Sections 9.02, 9.03 and 9.04, a Member may elect to withdraw, In cash only and in a stated amount, all or a portion of the value of vested amounts in his Accounts. 9.02 Order of Withdrawal For All Accounts (Except a Member's Savings Plus Investment Account). Withdrawals as described in Section 9.01 and subject to the rules of Section 9.03 shall be applied by the Committee against a Member's Accounts in the order and classification as follows: A-9

lr,9rity and Duties of Various Fiduciaries. (a) Except as to matters required by the terms of 11 •G'~ ,~/ trre Trust to be decided by the Board of Directors, the Finance Committee of the Board of the Plan ~~4 " ~,ref Flrrancial Officer (as defined in the Trust ), or the Trustee or Trustees, the Committee shall Director3 rigiit to interpret the Plan and to decide any and all matters arising under the Plan or in have thA "~I, r, ns adlrlinistration, including determination of eligibility for, and the amount of distributions and connect,')' •« Carnpany shall have no power to direct or modify any interpretations, determinations, or withdra,W' ~*- Y~ :ommlttee. The Committee may recommend amendments to the Board of Directors. The decisior ^`, 1rom time to time adopt rules for the aministration of the Plan and the conduct of its business, Commi+"'• ~~:oa oe Congistent with the provisions of the Plan. which rv ' ~~yard Of Directors, the Comrraittee, and any other named fiduciary may each employ counsel, (b) and accounting serwices as it may require in carrying out Its responsibilities under the agents, ~~~~ ,,,~,rres shnll be entitled to rely upon tables, valuations, certificates, opinions, and reports furnished Plan. Ait by any a-*!' Uccour,tant, or legal counsel appointed under the provisions of the Plan. 1 ,~ ///nmittrt9 shall keep In convenient form such personnel data as may be necessary for the Plan. ~c )n~Il ,t~,"v x,nall prhpare, distribute, and file such reports and notices as may be required by applicable law ~ The or or regulerV/' / 0,,; j,,6,-ord of Directors shall control and manage the Plan assets if it has not delegated its power to do so. Suctt ~i'''t,``~~ion Of power may Include the right to appoint and remove investment managers as such term y,r~r,c Employee Retirement Income Security Act of 1974, as amended ("ERISA '), and Trustees. is definetl y~, may be accomplished by a separate instrument or by appropriate provisions in the Trust. Such de1M:l/'~ e' I~* f(,~rvrnbers of the Committee shall use that degree of care, skill, prudence and diligence that a ( pr~ *rAin9 in a like capacity and familiar with such matters would use In his conduct of a similar prudent lll~ ~ry~ber of the Committee shall not be liable for the breach of fiduciary responsibility of another situatiorl.l//4*0 (i) h® participates knowingly in, or knowingly undertakes to conceal, an act or omission of fiduciar~/~/ f„yyXary, knowing such act or omission is a breach; or (ii) by his failure to discharge his duties such otlr• N N~,~est Of the Members and Beneficiaries for the exclusive ur ose of rovidin their benefits and solely in t~~~~,,r,abie ~xpenses of administering the Plan not met by the Company, he has enabled such other defrayint/ft, ,,,,(i,rnit a breach; or (iii) he has knowledge of a breach by such other fiduciary and does not make fiduciarVN,~f,,rts to rnmedy the breach; or (iv) if the Committee improperly allocates among themselves or reasonaf~ +t~ ,^r„ers, or fails to properly review such allocation or delegation of fiduciary responsibilities. delegatg ~,N t;~impany will indemnify and save harmless the members of the Committee and any person to who(1) l~~ ~''/"r / r~por1sibllities are delegated under this Plan against any cost or expense (including attorneys' fees) or ~~~ tt; ~/ sionrtto act any e csum etandthe case of willful mas o the approval of the Company) arising out of any np Trusteo shall maintain accounts showing the fiscal transactions of the Trust established hereug~i"' I t'a Boarrt of Directors or the Committee, if delegated power, or both, shall keep in convenient for shall form su~•i' ~~~j~jprnena qttfina caial transactions of the P ainnand the T ustnually cause to be prepared a balance sheet an +~ ( h 1't I i,t'tji is rautl oreltad i i iminatoian~anner s so that Iy a required, wiile receive exNr''i"y y in a nond sc ry persons si Y s tuated shall substar'ri~~ii~ ri'a same treatment. 11 r,,' +ia''ined Fiririciaries. (a) The Board of Directors and the Committee shall each constitute named fiduciari++" sijch teml is defined in ERISA. ';r,mmittc,t, of the Board of Directors or other fiduciary appointed as a named fiduciary by the (t~~~t „I,,,,,tors by rosolution or appointed by an appropriate instrument executed by an officer of the Board ~/11,,,t„into auti~orized by resolution of the Board of Directors, shall also constitute a named fiduciary Compn~ "„1 lI,H dutic+;i rfele ated to him or it in such resolution or instrument. In resi~r"'i g 1 I~~ //i,r/egatia,r. Any named fiduciary designated herein or appointed as provided herein, unless preclu~l+~i 1'""' doing !in by the terms of such appointment, may by appropriate instrument designate any such d~+~'~I"i"'9 he nnr ed fiduclary shall haveano I aout bilipty,, except assimp sied by appl cab~e lawilifor any act or omissi~+~+ ''I "'1`'i~ Pers~• The foregoing does not preclude any other fiduciary to the extent allowed by ERISA and thr+ ':' `'t his a piointment from delegating part or all of such fiduciary's responsibilities with respect to the Plnl/ 111 11 A t,1itiple C;roacities. Any fiduciary may serve in more than one fiduciary capacity with respect to the Pl:+ir A-12