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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