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R. J. REYNOLDS TOBACCO COMPANY STATE GOVERNMENT RELATIONS LEGISLATIVE COUNSEL BRIEFING BOOK 1990-91

• R. J. REYNOLDS TOBACCO COMPANY STATE GOVERNMENT RELATIONS ~ LEGISLATIVE COUNSEL BRIEFING BOOK 1990-91

• INDEX I. The Tobacco Industry A. Economic Impact • Growers -- Tobacco Family B. Industry Trends • Sales Status -- Domestic And International C. Cigarette Manufacturing • Companies, Subsidiaries, Locations, Market Share II. RJR Nabisco, Inc. A. RJR Nabisco, Inc. B. Company Products 1. R.J. Reynolds Tobacco Company 2. Nabisco Brands, Inc. 3. Planters LifeSavers Company III. RJRT State Government Relations • A. Mission Statement B. Organization Chart C. Regional Directors and States D. Programs • Legislative Counsel • State Events Programs • Political Contributions • Honorariums • Charitable Contributions E. Resources 1. Internal • Public Issues • Internal Departments • Sports Marketing • Products 2. External • State Business Organizations • Legislative Organizations • Tobacco Organizations on 0 ~ ~ . ~ ~ ~ (0 N

• • IV. The Tobacco Institute A. Description • Mission • Member Companies • Policy Direction B. State Activities Division • Mission • Organizational Charts • Map • List of Employees C. Legislative Counsel • State • Local D. Major State Legislative Support Programs • Labor • Environmental Tobacco Smoke/IAQ Experts • Economist Programs • Information and Publications • Fire Service Organizations • Workplace Smoking: Legal and "Social Costs" Experts • Advertising/Sampling E. Pro-Active Programs V. RJRT Issues A. Environmental Issues B. Tort Reform C. Marketing D. Packaging E. Technology F. Toxic Substances G. Preemption/Federal VI. Tobacco Industry Issues A. Excise Taxation B. Marketing Restrictions C. Smoking Restrictions D. Fire Safe E. Tobacco Liability/Reckless Endangerment F. Death Certificates G. Environmental Tobacco Smoke/EPA H. Ballot Initiatives/Referenda 0 cn _ J VII. Agenda -- Tobacco Free America (0 ~ cn w

• POCKET MATERIALS FRONT POCKET • RJRT Reporting Requirements: Lobbying, Grassroots & Contribution Expenses BACK POCKET • State Cigarette Excise Tax Rates (July 1990) • Smoking Restrictions (July 1990) • •

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• A. ECONOMIC IIVIPACT The United States is the largest exporter of tobacco and tobacco products (cigarettes, cigars, snuff, and chewing and smoking tobacco) in the world, and the second largest tobacco producer (behind China). Tobacco is the nation's sixth largest cash crop, behind corn, soybeans, hay of all kinds, wheat and cotton. In 1989, American consumers spent $40.4 billion on tobacco products, a record high and an increase of more than $2.6 billion over 1988. More than $38.3 billion, or 95 percent of the money spent on tobacco products, was for cigarettes. A recent Price Waterhouse study estimates that the tobacco industry's spending-induced impact on America's GNP in 1986 was $59.9 billion -- far more than expenditures on tobacco products alone. Several types of tobacco (flue-cured, burley, Southern Maryland, fire-cured, dark air- cured and all cigar types) are grown on farms in 16 states and in Puerto Rico. Approximately 130,000 people are employed in the growing of tobacco throughout the United States. Tobacco growers, warehousers, manufacturers, wholesalers and retailers in 1986 numbered 422,462. In addition, the supply sector -- industries that produce and distribute goods and services that are used as inputs in the production and distribution of cigarettes and other tobacco products -- totaled 278,421. Since 1863, when cigarettes were added to the tobacco products taxed by the federal government, governments at all levels have collected over $213.3 billion in tobacco taxes. Cigarettes have accounted for 95.9 percent of that, or $204.4 billion. In fiscal year 1989 taxes on cigarettes and other tobacco products totaled nearly $11 billion. States collected $5.2 billion in excise taxes and $1.4 billion in sales taxes on all tobacco products. Cigarette taxes comprised approximately 99 percent of the total tobacco taxes collected. B. INDUSTRY TRENDS Domestic United States cigarette production is estimated to be down approximately 2.9 percent from last year. In 1989, factories in the U.S. produced 675 billion cigarettes. Total U.S. consumption, including overseas armed forces, was .533 billion cigarettes. Per capita U.S. cigarette consumption, based on population 18 and over, declined to 2,936 from a record high of 4,345 in 1963. The acreage harvested, however, was 683,500, up 8 percent from 1988. International • The U.S. is the leading exporter and importer of tobacco. Approximately 360 billion cigarettes are presently exported to 109 countries. In September 1990, RJRT International reached an agreement with the Soviet Union to ship 14 billion cigarettes by September 1991. Presently, RJRT International sells about 101 billion cigarettes overseas.

. C. CIGARETTE MANUFACTURING Listed below are the six major cigarette manufacturers in the United States. • Comnanv Market Share Subsidiaries Philip Morris Companies, Inc. 120 Park Avenue New York, NY 10017 (major presence in Richmond, VA) R J. Reynolds Tobacco Co. 401 N. Main Street Winston-Salem, NC 27102 Brown & Williamson 1500 Brown & Williamson Tower P.O. Box 35090 Louisville, KY 40202 Lorillard, Inc. One Park Avenue New York, NY 10016 The American Tobacco Company Six Stanford Forum P.O. Box 10380 Stanford, CT 06904 LJggett & Myers Tobacco Company, Ina 300 North Duke Street P.O. Box 1572 Durham, NC 27702 40.2% 31.6% 10.1% 6.7% 7.4% 4.1% General Foods Corp., Miller Brewing Co., Kraft Foods, Oscar Mayer Foods Corp., Birds Eye, Inc. Subsidiary of RJR Nabisco, Inc., whose other subsidiaries include Nabisco Brands, Inc., Planters + LifeSavers Company Subsidiary of BATtJS, Inc., whose other subsidiaries include Saks Fifth Avenue, Marshall Fields, Appleton Paper, and the Farmers Group Subsidiary of Loews Corp., whose principal owner is CBS News executive Lawrence A. Tisch and whose other subsidiaries include CNA Financial Corp. and Bulova Corp. A subsidiary of American Brands, Inc., whose other subsidiaries include Jim Beam Brands Co., Master Lock Co., Titleist Japan, Inc. and a variety of office equipment/products (e_.g, Day- Timers, Inc., Swingline, Inc.). Subsidiary of Liggett Group, a subsidiary of L. Holdings, Inc. and B.S. LeBow, Inc.

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S A. RJR NABISCO, INC. RJR Nabisco, Inc. is one of the world's leading consumer packaged goods companies, making and marketing a wide range of well-known food and tobacco products listed on the following pages. The corporation's operating companies produce more than 100 leading brands. RJR Nabisco's principal operating units are: Nabisco Brands, Inc. Planters LifeSavers Company R.J. Reynolds Tobacco Co. R.J. Reynolds Tobacco International The corporation has manufacturing plants around the world, and its food and tobacco products are sold in more than 160 markets and territories. Each day, more than 55 million packages of the companies' products are sold to consumers around the world. RJR Nabisco has approximately 65,000 employees worldwide. In 1989, RJR Nabisco was acquired by affiliates of Kohlberg, Kravis, Roberts & Co. The acquisition, valued at $25 billion, was the largest corporate transaction in history. 0

• B. COMPANY PRODUCTS 1. RJ. REYNOLDS TOBACCO COMPANY CAMEL NOW CENTURY RITZ DORAL SALEM MAGNA VANTAGE MORE WINSTON 2. NABISCO BRANDS, INC. COOKIES • *0 ALMOST HOME FAMILY STYLE BAKER'S OWN COOKIES BAKERS BONUS Oatmeal Cookies BARNUM'S ANIMAIS Crackers BISCOS Sugar Wafers BISCOS Waffle Cremes BROWN EDGE WAFERS BUGS BUNNY Graham Crackers CAMEO Creme Sandwich CHEWY CHIPS AHOY! CHIPS AHOY! CHIPS 'N MORE COOKIE BREAK COOKIES 'N FUDGE Striped Chocolate Chip COOKIES 'N FUDGE Striped Peanut Butter COOKIES 'N FUDGE Striped Shortbread COOKIES 'N FUDGE Party Grahams Devil's Food Cakes Famous Chocolate Wafers Famous Cookie Assortment FIG NEWTONS GIGGLES HEYDAY IDEAL Bars LORNA DOONE MALLOMARS Marshmallow Puffs Fudge Cakes Marshmallow Twirls Fudge Cakes NATIONAL ARROWROOT Biscuits NEWTONS Variety Pack NILLA Wafers NUTfiER BUTTER Peanut Butter Sandwich Cookies NUTTER BUTTER Peanut Creme Patties Old Fashion Ginger Snaps OREOS OREO DOUBLE STUF PANTRY Molasses Cookies Pecan Shortbread Cookies PINWHEELS Pure Chocolate Middles SOCIAL TEA Biscuits Striped CHIPS AHOY! SUDDENLY S'MORES TEDDY GRAHAMS ICE CE CREAM & FROZEN CONFECTIONS OREO Cookies n' Cream Ice Cream Chocolate, Mint, Vanilla* OREO Cookies n' Cream On- A Stick* OREO Cookies n' Cream Sandwich* * Produced under license from Nabisco Brands

. . • CRACKERS AMERICAN CLASSIC CRACKERS Bacon Flavored Crackers BETTER CHEDDARS Snack Thins BETTER SWISS Snack Thins Cheese TID-BIT Crackers CHICKEN IN A BISKIT Flavored Crackers CROWN PILOT Crackers DANDY Soup and Oyster Crackers ESCORT Crackers Graham Crackers HARVEST CRISPS Snack Crackers HONEY MAID HONEY MAID Honeycomb Graham Snacks MEAL MATES Sesame Bread Wafers NIPS Cheddar Cheese Snack Crackers OAT THINS Snack Crackers OYSTERETTES Soup & Oyster Crackers PREMIUM Saltine Crackers PREMIUM Bits PREMIUM Plus Whole Wheat Saltines Cheese RITZ BITS Mini RITZ Crackers RITZ BITS Mini RITZ Crackers RITZ BITS Sandwiches with Peanut Low Salt RITZ BITS RITZ Crackers RITZ Crackers-Low Salt ROYAL LUNCH Milk Crackers SOCIABLES Crackers SWISS CHEESE Snack Crackers TRISCUIT Bits TRISCUIT Wafers-Low Salt TRISCUIT Wafers Wheat 'N Bran TRISCUIT Wafers TWIGS-Sesame/Cheese Snack Sticks UNEEDA Biscuits VEGETABLE THINS Flavored Crackers WAVERLY Crackers Low Salt WAVERLY Crackers WHEATSWORTH - Stone Ground Wheat Crackers Cheese WHEAT THINS Snack Crackers Nutty WHEAT THINS Snack Crackers WHEAT THINS-Low Salt Snack Crackers WHEAT THINS Snack Crackers Zwieback OTHER PRODUCTS COMET Cups COMET Sugar Cones DOO DADS Snack Mix EASY CHEESE Pasteurized Process Cheese Spread Cheese Spread American Cheddar Cheese 'n Bacon Nacho Sharp Cheddar Graham Cracker Crumbs MISTER SALTY Pretzels Dutch Juniors Mini Mix Rings Sticks Twists NAB Packs Cheese Peanut Butter Sandwich Peanut Butter Toast Sandwich NABISCO FOODS COMPANY A.1. Steak Sauce BLUE BONNET Margarines BLUE BONNET Butter Blend BRER RABBIT Molasses, Syrups COLLEGE INN Broths CREAM OF RICE Cereal CREAM OF WHEAT Cereal DAVIS Baking Powder FLEISCHMANN'S EGG BEATERS Cholesterol-Free 99% Real Egg Product co

• • FLEISCHMANN'S EGG BEATERS WITH CHEEZ Cholesterol-Free 99% Real Egg Product with Low Cholesterol Imitation Cheese FLEISCHMANN'S EGG BEATERS Vegetable Omelette Mix FLEISCHMANN'S Margarines GREY POUPON Dijon Mustard GREY POUPON Country Dijon Mustard GREY POUPON Parisian Mustard BUTCHER BONES Dog Snacks MILK-BONE Brand Dog Biscuits MILK-BONE Brand Flavor Snacks, Dog Treats MY*T*FINE Puddings and Pie Fillings NABISCO 100% Bran NABISCO 100% Bran with Oat Bran NABISCO Instant Wholesome 'N Hearty Oat Bran Cereal 3. PLANTERS LWESAVERS COMPANY NABISCO Wholesome 'N Hearty Oat Bran Cereal FRUIT WHEATS Cereal NABISCO Shredded Wheat NABISCO SPOON SIZE Shredded Wheat ORTEGA Mexican Foods REGINA Cooking Wines and Wine Vinegars ROYAL Gelatins ROYAL SugarFree Gelatins ROYAL Puddings and Pie Fillings ROYAL Instant Puddings and Pie Fillings ROYAL SugarFree Instant Puddings and Pie Fillings ROYAL No Bake Desserts TEAM Flakes Cereal TEDDY GRAHAMS Breakfast Bears Cereal TOASTETTES VERMONT MAID Syrup WRIGHT'S Liquid Smoke PLANTERS NUTS PLANTERS SNACKS LIFESAVERS ROLL CANDY BREATHSAVERS SUGARFREE MINTS CARE*FREE SUGARLESS GUM BUBBLE YUM BUBBLE GUM 0

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• A. MISSION STATEMENT • To organize, direct and utilize all appropriate resources to protect/defend against external influences that would legislate/regulate the Company's ability to conduct normal business activity at the state and local level. • To provide assistance to affect issues at the federal level, • To support governmental proposals favorable to the Company. 0 0

B. STATE GOVE RELATIONS I JOE MURRAY REGIONAL DIRECPOR STATE GOVERNMENT RELATIONS HURST MARSHALIL REGIONAL DIRECI'OR STATE GOVERNMENT RELATIONS M.B. OGLESBY, JR. EXECUTIVE VICE PRESIDENT GOVERNMENT RELATIONS ROGER MOZINGO BRENDA HUTCHINS VICE PRESIDENT _ _ GOVERNMENT RELATIONS STATE ADMINISTRATIVE GOVERNMENT RELATIONS COORDINATOR JIM O'MALLEY REGIONAL DIRECTOR STATE GOVERNMENT RELATIONS KENT woLD REGIONAL DIRECTOR STATE GOVERNMENT RELATIONS HENRY STOKES MANAGER GOVERNMENT RELATIONS SUPPORT

C. RJRT STATE GOVERNMENT RELATIONS STATE ASSIGNMENTS AUGUST 1. 1990 REGION 1 .Larry Bewley (919 741-3217) North Carolina REGION II Joe Murray (919 741-63771 Alabama Arkansas Colorado D.C. Delaware Florida Georgia Kansas Kentucky Louisiana Maryland Mississippi Missouri Oklahoma South Carolina Tennessee Texas Virginia West Virginia REGION III Kent Wold (919 741-7228) Connecticut Maine Massachusetts New Hampshire New Jersey New York Ohio Pennsylvania Rhode Island Vermont REGION IV Hurst Marshall (919 741-6255) Illinois Indiana Iowa Michigan Minnesota Montana Nebraska North Dakota South Dakota Wisconsin Wyoming REGION V Jim O'Malley (916 446-8941) Alaska Arizona California Hawaii Idaho Nevada New Mexico Oregon Utah Washington 6081 ss/as

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• D. PROGRAMS • Government Relations draws upon and works closely with the expertise of a broad range of internal and external Company resources in dealing with legislative and regulatory actions nationwide. • LEGISLATIVE COUNSEL • STATE EVENTS PROGRAMS • POLITICAL CONTRIBUTIONS • HONORARIUMS • CHARITABLE CONTRIBUTIONS 0

RJRT 1990 STATE LEGISLATIVE COUNSEL • ALABAMA G. Ferrell Patrick 205 262-7111 (o) The Patrick Company 205 264-2617 (h) 400 S. Union Street, Suite 145 Montgomery, Alabama 36104 205 263-3363 (t) ARIZONA Rich Scheffel 602 274-7959 (o) Rich Scheffel & Associates 602 263-9505 (h) 204 Abacus Towers 602 390-4920 (car) 3030 N. Third Street 602 222-9606 (t) Phoenix, Arizona 85012 602 259-0411 (pager) ARKANSAS Joe D. Bell 501 376-2011 (o) Friday, Eldredge & Clark 501 663-5924 (h) 2000 First Commercial Bldg. Little Rock, Arkansas 72201 501 376-2147 (t) CALIFORNIA Nicholai Konovaloff (Nick) 916 446-5970 (o) Nicholai Konovaloff & Associates 916 481-0132 (h) 1024 Tenth Street, Suite 310 Sacramento, California 95814-3514 916 443-4694 (t) 0 COLORADO Wally R. Stealey 303 860-0733 (o) Stealey & Associates 303 296-6472 (h) Penn Center, Suite 760 1301 Pennsylvania Street Denver, Colorado 80203 303 860-0175 (t) CONNECTICUT Carroll J. Hughes 203 272-9955 (o) Public Affairs Consulting Association 203 276-0071 (h) Management, Inc. 19 Wallingford Road Cheshire, Connecticut 06410 203 271-1279 (t) FLORIDA Wilson W. Wright 904 224-5169 (o) Attorney at Law 904 562-3767 (h) P.O. Box 1386 (32303) 217 South Adams Street Tallahassee, Florida 32303 904 224-1033 (t) J. Larry Williams, Esq. 904 224-9634 (o) Suite 400, First Florida Bank Bldg. 904 222-2341 (h) (M-Th) 215 S. Monroe Street 912 872-3680 (h) Tallahassee, Florida 32301 904 224-0781 (t) 0

GEORGIA E. Culver Kidd, III (Rusty) 404 876-0353 (o) Kidd & Associates 404 881-6357 (h) 89 Huntington Road, N.E. 404 550-8739 (car) • P.O. Box 77102 (30357) Atlanta, Georgia 30309 404 876-0353 (t) HAWAII Cheryl K. Kakazu 808 544-8300 (o) Kobayashi, Watanabe, Sugita, Kawashima & Goda Eighth Floor, Hawaii Tower 745 Fort Street Honolulu, Hawaii 96813 808 544-8399 (t) IDAHO Jay L. Webb 208 342-6571 (o) Givens, Pursley, Webb & Huntley 208 344-9018 (h) 277 N. Sixth Street, Suite 200 P.O. Box 2720 Boise, Idaho 83701 208 343-9492 (t) ILLINOIS Lawrence J. Suffredin, Jr. (Larry) 312 641-1100 (o) Simon & Spitalli 55 W. Wacker Drive Suite 702 Chicago, Illinois 60601 312 641-1718 (t) • INDIANA James and Susan Smith 317 634-9777 (o) Johnson, Smith, Densborn, Wright 317 238-8800 (h) & Heath 1800 Indiana National Bank Tower One Indiana Square Indianapolis, Indiana 46204 317 636-9061 (t) IOWA Serge H. Garrison 515 243-7611 (0) Ahlers, Cooney, Dorweiler, Haynie, Smith 515 276-6581 (h) & Allbee 100 Court Avenue Des Moines, Iowa 50309-2231 515 243-2149 (t) KANSAS Ronald R. Hein (Ron) 913 273-1441 (o) Hein and Ebert, Chtd. 913 272-1592 (h) 5845 S. W. 29th Street Topeka, Kansas 66614 913 273-9243 (t) ~ KENTUCKY Lawrence E. Forgy, Jr. (Larry) 606 231-3000 (o) ~ ~ Keenon & Park Stoll 606 253-1093 (t) in , 1000 First Security Plaza Lexington, Kentucky 40508 (0 ; CD Y , W

LOUISIANA John D. Koch (Johnny) 504 383-1115 (o) • Cecil J. Blache (C.J.) 504 766-5368 (h) (Koch) Blache, Perkins & Koch 504 383-2111 (t) MAINE 412 N. Fourth Street, Suite 210 Baton Rouge, Louisiana 70802 Jon R. Doyle 207 622-6124 (o) Doyle & Nelson 207 737-2961 (h) 150 Capitol Street 207 623-1358 (t) MARYLAND P.O. Box 2709 Augusta, Maine 04330 George N. Manis 301 263-8855 (o) Manis, Snider, Buck & Migdal, Chtd. 301 268-3138 (h) 23 West Street 301 269-1667 (t) MASSACHUSETTS P.O. Box 2400 Annapolis, Maryland 21401 Robert P. Rodophele (Bob) 617 423-0830 (o) Ferriter, Scobbo, Sikora, Caruso & 617 723-7328 (h) Rodophele 617 423-0308 (t) • One Milk Street Boston, Massachusetts 02109 Roger Donoghue 617 426-0255 (o) Donoghue & Barrett 617 423-0308 (t) MICHIGAN One Milk Street Boston, Massachusetts 02109 John K. Schick (Jack) 517 482-5000 (0) Karoub Associates 517 655-1944 (h) 200 N. Capitol Building 517 482-9934 (t) MINNESOTA Suite 500 Lansing, Michigan 48933 Michael L. Flanagan (Mike) 612 347-0300 (0) Moss & Barnett 612 927-6456 (h) 4800 Norwest Center 612 339-6686 (t) 90 South Seventh Street Minneapolis, Minnesota 55402-4119 William R. McGrann (Bill) 612 343-2525 (o) McGrann Shea Franzen Carnival Straughn 612 925-4039 (h) & Lamb 612 338-4102 (t) . 1700 Lincoln Center 333 South Seventh Street Minneapolis, Minnesota 55402 MISSOURI Harry Gallagher 314 634-4898 (o) 101 Madison 314 636-6608 (h) Jefferson City, Missouri 65101 314 634-7429 (t)

MONTANA Roger Tippy 406 442-4448 (o) Tippy & McCue 404 443-6342 (h) P.O. Box 543 (Zip 59624) 406 442-7963 (t) 1215 Eleventh Avenue Helena, Montana 59601 NEBRASKA James H. Moylan (Jim) 402 342-0100 (o) Nye, Fellman, Moylan & Brown 402 393-5493 (h) 100 Continental Building 402 341-8159 (t) 19th and Douglas Streets Omaha, Nebraska 68102 NEVADA F. Harvey Whittemore 702 788-8666 (o) Lionel Sawyer & Collins 702 827-8854 (h) 1100 Valley Bank Plaza 702 788-8682 (t) 50 W. Liberty Street Reno, Nevada 89501 NEW HAMPSHIRE Thomas D. Rath (Tom) 603 226-2600 (o) Rath, Young, Pignatelli & Oyer 603 225-6145 (h) Two Capital Plaza 603 226-2700 (t) P.O. Box 854 Concord, New Hampshire 03302-0854 NEW JERSEY H. Donald Stewart (Don) 609 299-2171 (o) Robert Stewart (Bob) 609 299-5141 (t) The Stewart Agency 188 W. Main Street Penns Grove, New Jersey 08069 John P. Sheridan, Jr. 201 538-0800 (o) Riker, Danzig, Scherer, Hyland & Perretti 201 359-6406 (h) Headquarters Plaza 201 538-1984 (t) One Speedwell Avenue Morristown, NJ 07962 4 NEW MEXICO Robert J. Werner (Bob) 505 988-5521 (o) Sutin Thayer & Browne 505 982-0778 (h) 300 First Interstate Plaza 505 982-5297 (t) P.O. Box 2187 Santa Fe, New Mexico 87504 • • •

• S NEW YORK NORTH CAROLINA Lester M. Shulklapper Attorney at Law 230 Park Avenue New York, New York 10169 C. Stephen Heard, Jr. (Steve) McGarrahan & Heard 45 Rockefeller Plaza New York, New York 10011 Virgil McBride 1748 Parker Lane Henderson, North Carolina 27536 Zebulon D. Alley 112 N. Person Street P.O. Box 28107 Raleigh, North Carolina 27611-8107 Lawrence Bender Pearce & Durick Third Floor, 314 E. Thayer Avenue P.O. Box 400 Bismarck, North Dakota 58502 Harry J. Lehman Jones, Day, Reavis & Pogue 1900 Huntington Center 41 S. High Street Columbus, Ohio 43215 Mandell Matheson Matheson & Associates, Inc. 4246 S. Columbia Avenue Tulsa, Oklahoma 74105 Mark W. Nelson Public Affairs Counsel P.O. Box 12945 867 Liberty, N.E. Salem, Oregon 97309 212 682-1211 (o) 914 636-7815 (h) 212 682-1295 (t) 518 436-4077 (o) (Albany) 518 436-4636 (t) (Albany) 212 698-4600 (o) 212 831-2553 (h) 212 698-4647 (t) 919 880-0463 (o) 919 492-4383 (h) 919 832-4771 (o) 919 833-5352 (h) 919 832-2632 (t) 701 223-2890 (o) 701 255-3608 (h) 701 223-7865 (t) 614 469-3939 (0) 614 486-7166 (h) 614 461-4198 (t) 918 749-6215 (o) 918 749-6215 (h) 918 745-2432 (t) 503 363-7084 (o) 503 581-4274 (h) 503 371-2471 (t) 0

PENNSYLVANIA Robert H. Long, Jr. (Bob) 717 233-5731 (0) Nathan H. Waters, Jr. (Nate) 717 761-1712 (h) (Long) Rhoads & Sinon 717 236-7230 (h) (Waters) 410 N. Third Street 717 579-0447 (car) P.O. Box 1146 Harrisburg, Pennsylvania 17108 717 232-1459 (t) Evans Rose, Jr. 412 434-8600 (0) Rose, Schmidt, Hasley & Di Salle 412 741-4211 (h) 900 Oliver Building Pittsburgh, Pennsylvania 15222-5369 t 412 263-2829 (t) RHODE ISLAND Peter J. McGinn 401 456-1200 (o) Tillinghast, Collins & Graham 401 738-8110 (h) One Old Stone Square Providence, Rhode Island 02903 401 456-1210 (t) SOUTH James P. Fields (Jim) 803 799-9800 (o) CAROLINA The McNair Law Firm, P.A. 803 782-7715 (h) 1301 Gervais Street 803 799-9804 (t) P.O. Box 11390 (ZIP 29211) Columbia, South Carolina 29201 SOUTH DAKOTA Robert C. Riter, Jr. (Bob) 605 224-5826 (o) Riter, Mayer, Hofer & Riter Professional & Executive Building 605 224-5383 (h) • 319 South Coteau Street P.O. Box 280 Pierre, South Dakota 57501 TENNESSEE William M. Leech, Jr. (Bill) 615 244-6380 (o) Waller, Lansden, Dortch & Davis 615 682-2507 (h) 2100 One Commerce Place Nashville, Tennessee 37239 615 244-6804 (t) TEXAS Robert E. Johnson (Bob) 512 478-7777 (o) Johnson & Johnson 512 452-5610 (h) 1122 Colorado, Suite 208 Austin, Texas 78701 512 322-9605 (t) UTAH M. Byron Fisher 801 531-8900 (o) Fabian & Clendenin 801 277-9660 (h) 12th Floor 215 South State Street Salt Lake City, Utah 84111 801 596-2814 (t) Cn v 0

4 • • VERMONT VIRGINIA WYOMING David M. Wilson Primmer & Wilson City Center P.O. Box 159 Montpelier, Vermont 05602 William G. Thomas (Bill) Steve Pearson Hazel & Thomas 411 East Franklin Street Suite 600 Richmond, Virginia 23206 N. Dean Morgan P.O. Box 4307 (Zip 98501) 1500 Lake Park Drive, #3 Tumwater, Washington 98502 Richard M. Francis (Kitt) Bowles Rice McDavid Graff & Love P.O. Box 1386 (ZIP 25325-1386) 16th Floor, Commerce Square, Lee Street Charleston, West Virginia 25301 Michael R. Vaughan (Mike) Murphy & Desmond, S.C. Manchester Place 2 East Mifflin Street P.O. Box 2038 Madison, Wisconsin 53701-2038 t David D. Freudenthal (Dave) Herschler, Freudenthal, Salzburg, Bonds & Rideout, P.C. 314 East 21st Street P.O. Box 387 (ZIP 82003-0387) Cheyenne, Wyoming 82001 802 229-4914 (o) 802 244-8037 (h) 802 229-9839 (t) 804 344-3400 (o) (Richmond) 703 838-5111 (o) (Alexandria) 703 684-1155 (h) (Alexandria) 703 836-8062 (t) (Alexandria) 703 836-8000 (t) (Alexandria) 206 754-1204 (o/h) 304 347-1116 (0) 304 347-1196 (t) 608 257-7181 (o) 608 238-1667 (h) 608 575-2057 (car) 608 257-2508 (t) 307 634-2240 (o) 307 634-7228 (h) 307 634-0336 (t)

• E. RESOURCES 1. INTERNAL • PUBLIC ISSUES (See pages following) • INTERNAL DEPARTMENTS • SPORTS MARKETING • PRODUCTS 2. EXTERNAL • STATE BUSINESS ORGANIZATIONS Examples • - State Chambers of Commerce - North Carolina Citizens for Business and Industry - California Manufacturers Association • LEGISLATIVE ORGANIZATIONS Examples - American Legislative Exchange Counsel - National Council of State Legislatures - Legislative Leaders Foundation • TOBACCO ORGANIZATIONS Growers Organizations Wholesalers Leaf Dealers Retailers Warehousemen 0

• PUBLIC ISSUES Background • Since the Coalition on Smoking OR Health was formed in 1981, there has been a surge in anti-smoking activity at all levels. With greater coordination, funding and energy, anti-smoking forces have continued the shift in their strategies and tactics initiated in 1981. • Efforts to make smoking a public health issue using alleged affects of environmental tobacco smoke on non-smokers. • Increased restrictions on smoking in the workplace and in public places. • Efforts to drive the price of cigarettes even higher through exorbitant excise tax increases at the federal, state and local levels. • Most importantly, use of the political process to pass punitive legislation at all levels but particularly at the local level where they recognize the industry has difficulty defending it. • Public Issues • Public Issues was established in 1983 to respond to this increasingly hostile external environment. • As a result of increasing anti-smoker actions, smokers have become more and more frustrated. This heightened frustration, coupled with the fact that traditional industry methods of successfully dealing with anti-tobacco measures was becoming more difficult because of a lack of vocal public support, led to the development of Public Issues' current strategic thrust. Public Issues - Current • Primary objective: "To foster an informed and visible 'public voice' speaking out against biased and emotional rhetoric and unfair discrimination and harassment of smokers." A public voice that is: • independent of the Company and the Industry • nationwide • continuous and building over time • self-initiated • in opposition to all unfair actions • capable of being called on to respond to specific issues • • To accomplish this objective, a UNIFIED PARTISAN EFFORT was developed and implemented. This effort utilizes a three pronged approach designed to: 1. Foster actions from millions of individual smokers. 2. Foster the organization of grass roots groups in support of smokers' rights in every major locality. 3. Mobilize customers, suppliers and friends into an effective political force.

. • Individual Smokers - the PARTISAN PROJECT was implemented in lead states in 1987 to identify, educate and motivate selected smokers to actively voice their opposition to unfair anti-smoking actions. Several communication vehicles are now in place to accomplish this task including a newsletter (CHOICE), Action Alerts of emerging issues, directories of government officials, a "toll free hot line" number, and a guide on how to speak out effectively. Currently, 4 million selected households with over 6 million smokers receive CHOICE. • Grass Roots Groups - The PARTISAN MOVEMENT, designed to foster independent, local grass roots groups in every major locality, was initiated in late 1988. Smokers' rights meetings are used as a vehicle to identify potential leaders of such groups. A field force of trained state coordinators under contract to RJRT works with identified leaders, providing information and consultation on how to effectively organize, providing names of other interested smokers in their area and maintaining contact over time. When urgent issues arise, state coordinators also encourage local groups to respond. The program has been initiated in all 50 states. Thus far, over 700 smokers' rights meetings have been held with over 25,000 attendees. As a result, 560 local Smokers' Rights Groups have formed, covering 1,300 communities. • • • Customers, Suppliers and Friends - The PARTISAN ALLIED FORCE program was designed to accomplish the third element in the UNIFIED PARTISAN PROGRAM strategy. The program identifies categories and develops communication programs for those with a vested interest in the Company/Industry (i.e., the trade, suppliers and agricultural community). Additionally, groups and organizations interested in a specific issue (i.e., excise taxes) will be addressed. Public Issues has been meeting and working with such outside organizations over the past year to educate them on the issues. Thus far, about 20,000 Allied Forces have been added to the program. • Additionally, systems have been developed to insure rapid communication between all parties (smokers, grass roots field force, and Winston-Salem). All parties in the United Partisan Effort are connected by portable computers to allow immediate communication. A central communications center has been established with a toll free "hot line" for smokers to call to report alerts of emerging issues, request information, or to be put into contact with field coordinators. Smokers can obtain information ranging from their elected officials (names, addresses and telephone numbers) to voter registration information, or Tobacco Institute publications. • To respond to swiftly emerging issues, a special team called "The Morning Team" was initiated 18 months ago. Members of the team include Public Issues staff and representatives from State Government Relations, Public Relations and Walt Klein and Associates (Public Issues' grass roots agency). The Morning Team meets every morning at 8:30 a.m. in Public Issues 17th floor conference room (telephone 919/741-3980). The Team reviews alerts from the "hot line", The Tobacco Institute and State Government Relations each morning. Plans are then initiated to encourage grass roots response to these issues using the whole range of resources developed by Public Issues. Since its inception, the Morning Team has taken action on 175 issues at the federal, state and local levels.

VICE PRESIDENT PUBLIC ISSUES (919) 741-7530 T.L OGBURN, JR. ----------1 DIRECTOR PUBLIC ISSUES COMMUNICATIONS (919) 741-0617 JAY G. TOBIN MANAGER PUBLIC ISSUES (919) 741-6764 A.M. CURRY L ASSISTANT MANAGER PUBLIC ISSUES (919) 741-3713 RW. COLE DIREC'POR PUBLIC ISSUES (919) 741-7287 R.C. TOMPSON y DIRECTOR NATIONAL FIELD OPERATIONS (919) 741-6820 T.N. HYDE MANAGER FIELD OPERATIONS (919) 741-0440 M.W. PHILLIPS MANAGER FIELD OPERATIONS (919) 741-6684 M.D. SMITH MANAGER FIELD OPERATIONS PUBLIC ISSUES (919) 741-7706 RW. MEYNE FIELD OPERATIONS ADMINIS'TRATOR (919) 741-6299 C.G. BRIINKLEY ADMINISTRATIVE COORDINATOR (919) 741-7708 J.S. LOWS'IEETTER SEPTEMBER 1990 ZZ81 69409

0 Public Issues Field Staff 'Ijm Hyde Dir - Natl Fld Ops (919) 741-6820 • • 0 0 0 0 0 0 0 I Rob Meyne Mgr - Field Ops (919) 741-7706 Frank Bickford Alaska/Hawaii (907) 563-8526 Anchorage, AK Ed Brady Illinois (309) 664-0033 Bloomington, IL Steve Caldeira NY, Conn (718) 852-6083 Darien, CT Bruce Hennes Ohio (216) 936-6336 Cleveland, OH Toby Spangler ID, MT, UT, NV (208) 377-8423 Boise, ID Elizabeth Veanus NYC, Long Island (212) 787-5692 Babylon, NY Ken Walton Florida (904) 942-2555 Tallahassee, FL M&e Phillips Mgr - Field Ops (919) 741-0440 0 Mathew Dowd Texas (512) 474-8848 Austin, TX 0 Bob Fackler MN, ND, SD, WI (612) 476-4616 Plymouth, MN 0 Will Fox AZ, CO, NM, WY (303) 797-1396 Littleton, CO 0 Janet Hughes GA, SC, FL (803) 749-1291 Columbia, SC 0 Ed Jenkins KY, TN, WV (304) 529-7427 Huntington, WV 0 Mark McCollum Oregon, Wash (503) 641-5805 Beaverton, OR 0 Bill Pashall AR, OK, TX (501) 376-3729 Little Rock, AR 0 Jeff Schmidt AL,LA,MS (205) 995-0930 Birmingham, AL 0 0 0 0 0 0 0 I Mark Smith Mgr - Field Ops (919) 741-6684 Pat Buckley DC,DE,MD,PA (703) 506-0011 McLean, VA Jim Ellis MA, ME, RI, VT (603) 778-3141 Exeter, NH Chris Holt IA, KS, MO, NE (515) 282-4504 Des Moines, IA T'zm Pueyo N. California (415) 474-6295 San Francisco, CA Gregg Rackin NJ, NY (201) 325-2525 West Orange, NJ John Rainey NC, VA, PA (919) 870-0799 Raleigh, NC Bob Schuman S. California (619) 276-5808 San Diego, CA

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A. DESCRIPTION • MISSION The basic mission of The Tobacco Institute (TI or the "Institute") is to lead and direct the resources of the tobacco industry in defending the industry against unwarranted restrictions on its right to engage in normal business activities. The Institute carries out its mission through legislative, regulatory and public affairs programs. MEMBER COMPANIES The Institute represents nearly all of the major American cigarette and other tobacco products manufacturing companies, including R.J. Reynolds Tobacco Company; Philip Morris, USA; Lorillard; The American Tobacco Company; United States Tobacco Company; Liggett Group, Inc.; Consolidated Cigar Corporation; Conwood Company, LP.; General Cigar Company, Inc.; Helme Tobacco Company; Larus & Brother Company, Inc.; John Middleton Incorporated; and the Pinkerton Tobacco Company. POLICY DIRECTION Institute operations are overseen by a 17-member Board of Directors. The Board operates principally through an Executive Committee of 10 member company leaders who are responsible for setting Institute policy on key legislative, regulatory and public affairs concerns. The Institute's legislative divisions and public affairs division work closely with committees consisting of company representatives and others. B. STATE AC'IIVITI£S DIVISION • MISSION Maintain the members' ability to engage in normal business activities in the states by (1) defeating adverse state and local legislation; (2) opposing unfair regulatory practices; (3) advancing, or defending against, relevant ballot measures; (4) seeking adoption of legislative and other opportunities that allow the members to engage in normal business activity.

• THE TOBACCO INSTITUTE ORGANIZATIONAL CHART BOARD OF DIRECTORS EXECUTIVE COMMITTEE PRESIDENT O H FEDERAL RELATIONS CONGRESSIONAL RELATIONS FEDERAL AGENCY RELATIONS ~ y FEDERAL PROGRAMS y STATE ACTIVIT'IES FIELD OPERATIONS Regions I - IX LEGISLATIVE SUPPORT PUBLIC AFFAIRS ISSUES MANAGEMENT 1. Public Smoking 2. Taxation 3. Advertising Restrictions 4. Self- Extinguishing Cigarettes ~ MEDIA RELATIONS INFORMATION SERVICES PRODUCTION SERVICES ADMINISTRATION ACCOUNTING PERSONNEL I DATA PROCESSING I OFFICE SERVICES September 1990

The Tobacco Institute State Activities Division Kmt Mslmgc en Seni« vwe President Pat Dono6o vice President Northern Sector Regional VPs (4) See Field Staff Chart I Lobbycsts c,eotge Mins6cw v~oe President Southern Soctor Regional VPs (5) See Field Staff Chart 8Z8t 6SLOS Bob McAdam vsce President Special Projaxa Initiative Management Team Bill Cannell Viae President L.egislaNMe Support & Admin Cathey Yoe Director L,egislatiMe Information Rita Senior Legislative Aaalysc Bill OszecLoaski Director Eoonomica/T Isaues Susan Mora Legislative Anatyst Walter Woodson Managin6 Dicector State Legislative Activitiaa Michele Bois,e Seaior Legislative Aoslyst Diana Avedon Senior Legislative Analyat

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• • • STATE ACTIVITIES DIVISION SECTOR/REGION ALIGNMENT NORTHERN SECTOR: ~ REGIONS I-IV ~ w~l i'I' SOUTHERN SECTOR: REGIONS V-IX I 1881 69LQ~ N Irwum ~r ma+~l, i `l[`1r-j"

• Kurt L MALMGREN, Sr. Vice President (202) 457-4857 (o) (703) 719-0515 (h) HOME: 6522 Summerton Way Springfield, VA 22150 Admin. Asst: Sheryl Carter (202) 457-4817 (o) Robert S. McADAM, VP- Special Projects (202) 457-9349 (o) (301) 229-4159 (h) HOME: 5810 Ogden Court Bethesda, MD 20816 Secretary: Michelle Nyman (202) 457-4851 (o) Cathey YOE, Director of Legislative Information (202) 457-4844 (o) (703) 920-3577 (h) HOME: 2238 South Randolph Arlington, VA 22204 Legislative Asst: Kellep Wallcer (202) 457-9365 (o) Michele BOISSE, Senior Legislative Analyst (202) 457-4885 (o) (703) 820-7069 (h) HOME: 5091 7th Road South, #102 Arlington, VA 22204 Secretary: Michelle Npmans (202) 457-4851 (o) S THE TOBACCO INSTITUTE STATE ACTIVITIES HEADQUARTERS STAFF 1875 I Street, NW, Suite 800 Washington, D.C. 20006 Patrick B. DONOHO, VP-Northern Sector (202) 457-4898 (o) (703) 329-8645 (h), (216) 650-4261 (h) HOME: 4321 Gypsy Ct. Alexandria, VA 22310 Georse R. MINSHEW, VP-Southern Sector (202) 457-4889 (o) (703) 866-3721 (h) HOME: 7727 Rockledge Court Springfield, VA 22152 Secretary: Debbie Carlow' (202) 457-4859 (o) William A. CANNELL, VP-Legislative Support (202) 457-4812 (o) (703) 820-7765 (h) HOME: 5820 Colfax Avenue Alexandria, VA 22311 Secretary: Michelle Nynnan• (202) 457-4851 (o) Bill OR7.BCHOWSKI, Director of Economic Issues (202) 457-4838 (o) (703) 631-1822 (h) HOME: 3151-C Anchorway Court Falls Church, VA 22046 Secretary: 1Yacy Mihas• (202) 457-4827 (o) Margaret Rita, Senior Legislative Analyst (202) 459-9333 (o) (202) 625-6344 (h) HOME: 825 New Hampshire Ave. NW #815 Washington, DC 20037 Legislative Asst: Kelley Walker (202 457-9365 (o) Secretary. Debbie Carlow (202) 457-4859 (o) Walter N. WOODSON, Managing Director of State Legislative Activities (202) 457-4814 (o) (703) 768-7970 (h) HOME: 1207 H Street Alexandria, VA 22307 Secretary: Ttacy Mffias• (202) 457-4827 Diana AVEDON, Senior Legislative Analyst (202) 457-9339 (o) (703) 418-1762 (h) HOME: 801 15th St. South #704 Arlington, VA 22202 Legislative Asst: Kellq Walker' (202) 457-9365 (o) Susan Mora, Legislative Analyst (202) 457-4826 (o) (301) 977-2053 (h) HOME: 18221 Lost Knife Circle #201 Gaithersburg, MD 20879 Secretary: Tracy Mihas* (202) 457-4827 (o) 'Revised 9/20/90 ZeST GSL(.?G

• S • Region I CT/ME/MA1NH/RI/VT Dennis M. DYER, Regional VP (508) 927-4142 (h) E. Barclay JACKSON, Regional Director (603) 431-1120 (h) P. O. Box 602 81 Hale Street Beverly, MA 01915 (508) 927-3990 (o) FAX (508) 927-6865 Secretary: Susie Gilligan Region III IL/IN/MI/OH Bill K. TRISLER, Regional VP (317) 842-9569 (h) Bob G. PRUETT, Regional Director (317) 535-9255 (h) 500 Investors Trust Building 107 North Pennsylvania Indianapolis, IN 46204 (317) 636-0764 (o) FAX (317) 636-0907 Secretary: Jeanie Leavitt *Revised 9/19/90 THE TOBACCO INSTITUTE NORTHERN SECTOR Patrick B. DONOHO Vice President (202) 457-4898 (o) HOME: 4321 Gypsy Ct. Alexandria, VA 22310 (703) 329-8645 (h) (216) 650-4261 (h) Secretary: Debbie Carlow (202) 457-4859 (o) Reeion II NJ/NY/PA John O'CONNOR, Regional VP (518) 271-7671 (h) Don D'ERRICO, Regional Director (518) 877-8055 (h) 7 Elk Street Albany, NY 12207 (518) 462-6501 (o) FAX (518) 462-6361 Secretary: Patty Bendall Region IV IA/MN/NB/NDISD/WI Daniel C. NELSON, Regional VP (608) 233-4945 (h) Alice O'CONNOR, Regional Director (608) 257-5457 (h) 22 North Carroll Street, Suite 202 Madison, WI 53703 (608) 251-3232 (o) FAX (608) 251-6146 Secretary: Nadya Nahirniak £e8T 69/-09

• THE TOBACCO INST'ITUT'E SOUTHERN SECTOR Region V George R. MINSHEW Re¢ion VI AK/HI/ID/MT/OR/WA Paul A. JACOBSON, Regional VP (206) 788-9766 (h) David HOOPER, Regional Director (206) 881-6699 (h) Vice President (202) 457-4889 (o) HOME: 7727 Rockledge Court Springfield, VA 22152 (703) 866-3721 (h) DE/DC/GA/MD/NC/SCNA/W V Richard L MORGAN, Regional VP (404) 564-0388 (h) Darmouth Bldg., Suite 304 3395 N.E. Expressway Atlanta, GA 30341 777 108th Ave., N.E., Suite 2230 Security Pacific Plaza Bellevue, WA 98004 (206) 646-3093 (o) FAX (206) 646-3091 Secretary: Debbie Carlow (202) 457-4859 (404) 455-6357 (o) FAX (404) 455-0728 Secretary: Joyce G. Carter Page H. SUTHERLAND, Regional Director Secretary: Kathy Watts (804) 272-0969 (h) egion VII egion VIII P. O. Box 35692 (2540 Devenvrood) Richmond, VA 23235 (804) 282-4275 (o) FAX (804) 330-4846 Rep.ion IX AL/AR/FUKY/LA/MS/rN Ronald C. MORRIS, Regional VP (502) 245-1264 (h) CO/KSlMO/MN/OKr1'X/WY Stanley M. BOMAN, Regional VP (303) 971-0848 (h) A7JCA/NV/UT Terrance EAGAN, Regional VP (916) 424-4712 (h) Patrick McWHORTER, Regional Director Denver West Office'Park 1225 8th Street, Suite 350 (502) 451-3039 (h) Building 7, Suite 150 Sacramento, CA 95814 1626 Cole Blvd. (916) 448-3543 (o) 10101 Linn Station Rd., Suite 525 Golden, CO 80401 FAX (916) 448-3939 Louisville, KY 40223 (303) 231-9315 (o) (502) 426-6927 (o) FAX (303) 232-5802 Secretary: Sharon Grey FAX (502) 429-0797 Randy Morris, Regional Director Ronald L SALDANA, Regional Director Secretary: Sarah F. Davis (816) 537-7150 (h) Secretaty: Linda McGregor (714) 970-8897 (h) 5753-G Santa Ana Canyon Road Anaheim Hills, CA 92807 (714) 779-6735 (o) FAX (714) 779-8376 Revised 9/19/90 V68t 6GLO5

. C THE TOBACCO INSTITUTE STATE LEGISLATIVE CONSULTANTS Northern & Southern Sector ALABAMA Mr. Calvin M. Whitesell 205/262-1967 (o) Whitesell Lewis and Whitesell, P.C. 205(L64-2950 (h) P.O. Box 2450 Montgomery, AL 36103-2450 OR 316 Bailey Building 400 South Union Street Montgomery, AL 36104 • ALASKA Mr. Wes Coyner 907/586-1931 (o) 3111 Douglas Highway Juneau, AK 99801 Mr. Neal D. Cooper 907/562-0063 (o) 200 West 34th Street Suite 822 Anchorage, AK 99503 ARI7ANA Mr. Ernest Hoffman 602/ 190-2797 (o) Executive PR Corporation 602/750-4938 (h) 655 N. Alvernon, Suite 226 Tucson, AZ 85711-1825 OR P.O. Drawer 12629 Tucson, AZ 85732-2629 ARKANSAS Paul R. Bosson, Esq. 501/623-3700 (o) 501 Quachita Avenue 501/525-2111 (h) Hot Springs, AR 71901 CTI 0 y W N W W CTt

CALIFORNIA Mr. Tom Konovaloff 916/446-7505 (o) . A-K Associates, Inc. 916/962-1478 (h) 1024 Tenth Street, Suite 300 Sacramento, CA 95814 916/443-4694 (t) Mr. Grant H. Kenyon 916/442-5773 (o) Grant H. Kenyon, Inc. 1228 N. Street #5 Sacramento, CA 94814 916/925-8158 (h) Alan Edelstein, Esq. Law Offices of Alan Edelstein 1225 8th Street, Suite 570 Sacramento, CA 95814 916/443-6400 (o) COLORADO Mr. Frank L Hays, III 303/860-1616 (o) Hays, Hays and Wilson 3031150-4938 (h) Penn Center, Suite 760 1301 Pennsylvania Street Denver, CO 80203 303/860-0175 (t) James C. Wilson, Esq. 303/860-1616 (o) Hays, Hays and Wilson 303/759-2103 (h) Penn Center, Suite 760 1301 Pennsylvania Street Denver, CO 80203 303/860-0175 (t) • CONNECTICUT Bourke Spellacy, Esq. 203/548-2600 (o) Updike, Kelly & Spellacy, P.C. 203/525-7434 (h) P.O. Box 31277 Hartford, CT 06103-3176 OR One State Street, Suite 2400 Hartford, CT 06103-3176 John C. King, Esq. 203/548-2608 (o) Updike, Kelly & Spellacy, P.C. 203/229-0490 (h) P.O. Box 31277 Hartford, GT 06103-3176 OR One State Street, Suite 2400 Hartford, CT 06103-3176 Carol S. Clapp, Esq. Tt 203/548-2600 (o) 0 Updike, Kelly & Spellacy, P.C. 203/668-6238 (h) -4 in P.O. Box 31277 Hartford, CT 06103 tD • txD w t37

OR • • DELAWARE DISTRICT OF COLUMBIA FLORIDA GEORGIA HAWAII One State Street, Suite 2400 Hartford, CT 06103 Mr. David D. Poffenberger, III 43 The Green Dover, DE 19901 302/674-4393 (o) 302r378-4807 (h) 302/674-4629 (t) James M. Christian Sr., Esq. Laxalt, Washington, Perito & Dubic 1120 Connecticut Avenue, NW Washington, DC 20036 Mr. Guy Spearman Spearman Mgmt., Inc. 402 High Point Drive Cocoa, FL 32926 Mr. Arthur R. Collins President Public Private Partnership, Inc. 419 Tanbark Place Tallahassee, FL 32301 Mr. William D. Rubin First Florida Bank Bldg. 215 South Monroe, Suite 400 Tallahassee, FL 32301 Mr. Jim Hammock, President Omni Research Group, Inc. 2840 Mt. Wilkerson Parkway Suite 110 Atlanta, GA 30339 Mr. James A. Gray, III Bell & Stanton 38 Camden Road, N.E. Atlanta, GA 30309 Norman H. Suzuki, Esq. Suite 1805 Century Square 1188 Bishop Street Honolulu, HI 96813 202l857-4466 (o) 407/631-2750 (o) 407/636-5488 (h) 904/656-0300 (o) 904/561-0397 (t) 904/545-5866 (mobile) 904R24-9643 (o) 904/222-0103 (t) 404/435-7400 (o) 404/426-7380 (h) 404/875-1444 (o) 404/352-2576 (h) 808/521-2661 (o) 808/595-2964 (h) 808/521-2663 (t)

Wendell K. Kimura, Esq. 808/531-8301 (o) DAHO 1001 Bishop St., Suite 1220 Pauahi Tower Honolulu, HI 96813 William C. Roden, Esq. 08/336-7930 (o) Roden, Arkoosh & Riceci 208/362-3705 (h) P.O. Box 2110 Boise, ID 83701-2110 AND Roger Seiber, Esq. 208/336-7930 (o) Roden, Arkoosh & Riceci P.O. Box 2110 Boise, ID 83701-2110 OR 816 W. Bannock Street Suite 303 Boise, ID 83701-2110 ILLINOIS Mr. William Ward Johnson 217/529-8206 (o) P.O. Box 11045 217/529-4066 (h) Springfield, IL 62791-0145 Thomas Lyons, Esq. 312/621-0400 (o) O'Keefe, Ashendon, Lyons & 312/621-0297 (t) NDIANA Ward One First National Plaza Suite 5100 Chicago, IL 60603 Terrence P. Pehler, Esq. 17/635-4500 (o) LeMond, Carson, Yockey, Pehler 317293-9868 (h) & Caplin, Associates 600 Union Federal Bldg. 45 North Pennsylvania St. Indianapolis, IN 46204 Mr. Thomas Fruechtenicht 17/634-4242 (o) Soards & Fruechtenicht 317/283-4456 (h) 143 W. Market Street Suite 700, Harrison Bldg. Indianapolis, IN 46204 •

IOWA Charles F. Wasker, Esq. 515243-1164 (o) • Wasker, Sullivan & Ward 5151276-0143 (h) 2100 Financial Center Des Moines, IA 50309 KANSAS William L Mitchell, Esq. 316/665-5211 (o) Mitchell & Henry 316/662-6490 (h) P.O. Box 604 913234-5500 (Lobbyist center Hutchinson, KS 67504-0604 in Topeka) OR 119 W. Sherman Street Hutchinson, KS 67501 Alan F. Alderson, Esq. 913232-0753 (o) Alderson, Alderson & 913272-6922 (h) Montgomery 913232-1866 (t) 1610 SW Topeka Avenue P.O. Box 237 Topeka, KS 66612 • KENTUCKY William E. Scent, Esq. 502/442-3223 (o) Scent and Scent, P.S.C. 502/442-6020 (h) Suite 209 Executive Inn Riverfront Paducah, KY 42002 Ms. Judith A. Taylor 502/227-4450 (Frankfort) 3957 Terrace Woods Lane 506/254-3412 (Keenland) Lexington, KY 40513 606224-4272 (h) LOUISIANA Mrs. Joe G. Wood 504/'924-3765 (o) Joe G. Wood & Associates 504/924/4827 (t) 970 Monterey Boulevard Baton Rouge, LA 70815 MAINE Severin M. Beliveau, Esq. 207/623-5167 (o) Preti, Flaherty, Beliveau & Pachios One Memorial Circle Augusta, ME 04330 MARYLAND Bruce C. Bereano, Esq. 301/267-0410 (o) Bereano and Resnick 301r157-5577 (h) 195 Duke of Gloucester Street 301/267-0177 (t) Annapolis, MD 21401 ~ ~ ~ (0 1-" m w (0

MASSACfiLJSETTS William F. Coyne, Sr., Esq. 617241-8743 (h) William F. Coyne, Jr., Esq. Coyne, Coyne & Cronin 617l269-5016 (h) 617(2b&-5100 (0) • MICHIGAN 546 East Broadway South Boston, MA 02127-4407 Mr. Bobby D. Crim, President 517/484-6216 (0) Governmental Consultant Services, Inc. 530 W. Ionia Street, Suite B L-Aasing, MI 48933 Mr. Pat Laughlin 17/484-6216 (o) UNTNESOTA Governmental Consultant Services, Inc. 530 W. Ionia Street, Suite B Lansing, MI 48933 Mr. Thomas A. Kelm 12/379-1411 (o) North State Advisers & Associates 612/448-4589 (h) 43 Main Street, S.E 612,r378-0479 (t) Suite EH 500 Minneapolis, MN 55414 Mr. Doug Kelm 612r379-1411 (o) North State Advisers & Associates 43 Main Street, S.E. 612/378-0479 (t) • MISSISSIPPI Suite EH 500 Minneapolis, MN 55414 Ellis B. Bodron, Esq. 601/634-8968 (o) Way, Field & Bodron 601/636-8288 (h) P.O. Box 1113 Vicksburg, MS 39180 OR 1001 Locust Street Vicksburg, MS 39180 MISSOURI Mr. John Britton 314/634-2777 (o) John Britton Associates 314/893-3590 (h) 415 E. High Street Jefferson City, MO 65101 IvLs. Jennifer Durham 314/634-2777 (o) John Britton Associates 415 E High Street Jefferson City, MO 65101 S

• MONTANA Jerome Anderson, Esq. 406/449-3118 (o) Anderson, Brown,Gerbase, Cebull, 406/443-3605 (h) Fulton, Harman, & Ross, P.C. 406/449-3668 (t) P.O. Box 866 Helena, MT 59624 OR • Power Block Building, 4th Floor, Suite 4-E Helena, MT 59624 NEBRASKA William Peters, Esq. 402/474-1003 (o) Peters & Chunka, P.C. 402/423-2849 (h) 411 S. 13th Street Suite 320, Farm Credit Center Lincoln, NE 68508-2582 NEVADA VACANT NEW HAMPSHIRE NEW JERSEY John W. Mitchell, Esq. 603/2242341 (o) Sulloway, Hollis & Soden 603/224-6904 (h) 9 Capitol Street Concord, NH 03301 Mr. Joseph W. Katz 609/396-9121 (o) Katz Martin & Company 609/924-8511 (h) Public Affairs 609/396-2580 (t) 142 West State Street Trenton, NJ 08608 NEW MEXICO Bob Barberousse, Esq. 505/984-2818 (o) 125 Lincoln Avenue 505/983-4086 (h) Suite 400 Santa Fe, NM 87501 NEW YORK Jeffrey L Hill, Esq. 518/462-5301 (o) Degraff, Foy, Conway, Holt-Harris 315/733-6510 (h) & Mealey 518/436-0210 (t) 90 State Street Albany, NY 12207 Mr. Daniel J. Adams 518/877-8225 (o) & (h) Daniel J. Adams Associates P.O.Box898 Clifton Park, NY 12065

OR NORTH CAROLINA 47 Sweetbrier Drive Ballston Lake, NY 12019 Jim D. Featherstonhaugh, Esq. Roemer and Featherstonhaugh, P.C. Capital Center 99 Pine Street Albany, NY 12207-2704 Elizabeth K. Ctyne, Esq. Roemer & Featherstonhaugh, P.C. Capital Center 99 Pine Street Albany, NY 12207-2704 Mr. Norman Adler 313 Stratford Road Brooklyn, NY 11218 Mr. Roger W. Bone 210 N. Person Street Raleigh, NC 27611 518/436-7663 (o) 518/426-5853 (t) 518/436-7663 (0) 518/426-5853 (t) 718/941-4661 (o) 718/469-3821 (t) 919/832-0207 (o) 919/443-1270 (h) 919/821-9070 (t) NORTH DAKOTA Al Wolf, Esq. Wheeler & Wolf P.O. Box 2056 Bismark, ND 58502 OR 116 N. 4th Street Bismark, ND 58502 701/223-5300 (o) 701223-5366 (t) OHIO Mr. Eugene P. O'Grady 614/464-3640 (o) Peter O'Grady & Associates 614/870-6202 (h) 16 East Broad Street, Suite 310 Columbus, OH 43215 Mr. Rick Baird Government Consultant Grp., Inc. 88 East Broad St., Suite 1490 Columbus, Ohio 43215 John Kelley, Jr., Esq. Kohnen Patten & Hunt 1400 Carew Tower 441 Vine Street Cincinnati, OH 45202-2994 614R21-2770 (0) 614221-7228 (t) 513/381-0656 (o) 513/871-3098 (h) 513/381-5823 (t) N • •

OKLAHOMA Mr. William A. Reynolds 405/842-7672 (o) & (h) 3129 W. Wilshire Blvd. Oklahoma City, OK 73116 Kenneth R Nance, Esq. 405/631-2371 (o) 5224 S. Western 405/691-2070 (h) Oklahoma City, OK 73109 • OREGON VACANT PENNSYLVANIA William A. Cornell, Esq. 717/L36-0512 (o) Lipsen, Whitten Diamond & 717r/37-2212 (h) Carnell 717R36-5683 (t) Mary Sachs Building 208 N. Third Street, Suite 210 Harrisburg, PA 17101 Ronald A. White, Esq., P.C. 215/790-4500 (o) 1822 Spruce Street Philadelphia, PA 19103 RHODE ISLAND Governor Dennis J. Roberts 401/521-7000 (o) Roberts, Carroll, Feldstein 401/751-3784 (h) & Tucker 404/521-1328 (t) One Old Stone Square Providence, RI 02903 R. Kelly Sheridan, Esq. 401/521-7000 (o) Roberts, Carroll, Feldstein 401/521-0779 (h) & Tucker One Old Stone Square Providence, RI 02903 SOU'IH CAROLINA Mr. Sterling Smith 803/799-7122 (o) P.O. Box 12007 803/779-3511 (h) Columbia, SC 29211 OR Keenan Building 1310 Lady Street Suite 619 Columbia, SC 29201 CD 4 (t3

SOU'IH DAKOTA Jeremiah D. Murphy, Esq. Boyce, Murphy, McDowell & Greenfield P.O. Box 5015 Sioux Falls, SD 57117 OR 101 North Phillips Suite 505 Sioux Falls, SD 57102 Mr. George Valentine P.O. Box 1037 Pierre, SD 57501 605/336-2424 (o) 605/332-1123 (h) 605/224-6377 (o) • OR TENNF.SSEE 110 West Capital Pierre, SD 57501 Mr. Cleve Smith 615l255-2643 Smith & Johnson Associates 615298-9913 (h) The Tower, Suite 2702 6152.54-4866 (t) 'rEXAS 611 Commerce Street Nashville, TN 37273 J. Gaylord Armstrong, Esq. 512-476-6982 (o) • McGinnis, Lochridge & Kilgore 512/478-4954 (h) 1300 Capitol Center 512/495-6093 (t) UTAH 919 Congress Avenue Austin, TX 78701 James W. Stewart, Esq. 801/521-3200 (0) Jones, Waldo, Holbrook & McDonough 1500 First Interstate Plaza 170 S. Main Street Salt Lake City, UT 84101 Susan Vogel, Esq. 04/521-3200 (0) ERMONT Jones, Waldo, Holbrook & McDonough 1500 First Interstate Plaza 170 S. Main Street Salt Lake City, UT 84101 Edward A. Miller, Esq. 02/485-8396 (Northfield) 9 North Main Street 802/229-4311 (Montpelier) ~ ~ Northfield, VT 05663 U1 502229-0422 (h) ta I- • tb

s VIRGINIA Anthony F. Troy, Esq. 804/697-1317 (o) Mays & Valentine 804r794-8414 (h) P.O. Box 1122 804/697-1339 (t) Richmond, VA 23208 OR 1111 East Main Street Richmond, VA 23219 WASHINGTON Mr. William J. Fritz 206/325-9870 (o) Public Affairs Associates, Inc. 206/325-9871 (h) 2600 Fairview Avenue, East Dock #11 Seattle, WA 98102 Mr. Stuart A. Halsan 206/736-0774 (o) P.O. Box 1049 Centralia, WA 98531 OR 114 West Pine Centralia, WA 98531 • WEST VIRGINIA Mr. Roger K. Price, President 304/345-4710 (o) Price Management Corporation 304/343-4012 (h) 815 Quarrie Street Morrison Building, #415 Charleston, WV 25301 WISCONSIN Mr. James W. Wimmer, Jr. 608/256-5223 (o) Executive Vice President 608/241-0821 (h) Wisconsin Assn. of Tobacco & Candy Distributors, Inc. 22 North Carroll Street, Suite 200 Madison, WI 53703 Paul Sicula, Esq. 414271-8100 (o) Atinski, Kahn, Sicula & Teper 414/351-3714 (h) Germania Building 135 W. Wells Street, Suite 604 Milwaukee, WI 53203 WYOMING William J. Thomson, Esq. 307/634-8891 (o) Dray, Madison & Thomson 307/634-7242 (h) 204 East 22nd Street 0 Cheyenne, WY 82001 4 tQ ~. to ~ Ui

• • • THE TOBACCO INSTITUTE LOCAL LEGI:SLATIVE COUNSEL Northern & Southern Sectors ARIZONA CALIFORNIA GEORGIA HAWAII ILLINOIS LOUISIANA Ms. Elaine Arena Arena Associates 7119 E. Shea Blvd., #106-247 Scottsdale, AZ 85285 Mr. Gary Rubenstein Sierra Research 1521 1 Street Sacramento, CA 95814 Antonio L Thomas, Esq. Thomas & Dotson P.O. Box 54867 Atlanta, GA 30308 Norman H. Suzuki, Esq. Suite 1805 Century Square 1188 Bishop Street Honolulu, HI 96813 Thomas Lyons, Esq. O'Keefe, Ashenden, Lyons & Ward One First National Plaza Suite 5100 Chicago, IL 60603 Ms. Denise Charrier Haras, Inc. 3632 Canal Street New Orleans, LA 70119 MASSACHUSEI'IS Mr. John J. Twomey, P.C. 4 Longfellow Place Penthouse Suite 3802 Boston, MA 02114 William F. Coyne, Jr., Esq. Coyne, Coyne & Maloney 546 East Broadway South Boston, MA 02127 8W/521-2661 (o) 808/595-2964 (h) 808/521-2663 (t) 312/621-0400 (o) 312/621-0297 (t) 504/486-4433 (o) 617/523-7111 (o) 617/721-2772 (h) 617P,68-5100 (0) 617/269-5016 (h)

I~IISSOURI NEW YORK OHIO PENNSYLVANIA Ms. Datra J. Herzog Datra Herzog & Company 232 North Kingshighway Suite 202 St. Louis, MO 63108 Mr. Norman Adler 313 Stratford Road Brooklyn, NY 11218 Aldo V. Vitagliano, Esq. Law Offices of Aldo V. Vitagliano, Atty. at Law 150 Purchase Street Rye, NY 10580 Mr. John P. Griffin, Esq. Hennessy & Plummer 111 Washington Avenue, Suite 705 Albany, NY 12210 John Kelley, Jr., Esq. Kohnen Patten & Hunt 1400 Carew Tower 441 Vine Street Cincinnati, OH 45202-2994 Robert J. Cohen, Jr., Esq. 6202 Walnut Street Pittsburgh, PA 15206 Ronald A. White, Esq., P.C. 1822 Spruce Street Philadelphia, PA 19103 Obra Kernodle, Esq. 260 South Broad Street 10th Floor Philadelphia, PA 19102 Mr. Ken Benson Ken Benson & Associates 4310 Gaston Avenue Suite 200 Dallas, TX 75246 314/361-4846 (o) 718/941-4661 (o) 718/469-3821 (t) 914/921-0333 (o) 914/632-7000 (h) 914/921-0332 (t) 518/436-0786 (o) 518/432-9707 (t) 531/381-0656 (o) 531/871-3098 (h) 531M1-5823 (t) 412/363-0366 (o) 215/790-4500 (o) 215/545-0006 (o) 215/985-4604 (t) 214/821-9944 (o) VIRGINIA Ms. Laura Zambardi 804/340-9046 (o) Zambardi Associates 2852 Shearwater Cove Virginia Beach, VA 23454 • 0 S

• • • D. MAJOR STATE LEGISLATIVE SUPPORT PROGRAMS LABOR Through the independent Tobacco Industry Labor Management Committee (LMC), elements of the labor community have been encouraged to participate in legislative activities of mutual concern to labor and the tobacco industry. Members of the LMC include unions that work within the tobacco industry: the machinists, firemen & oilers, BC&T, sheet metal workers, and the carpenters & joiners. Typically, interests of joint concern include indoor air quality, excise taxes and occasionally other issues. At the state level, the LMC has hired consultants in New England, Washington, Minnesota, Wisconsin, Ohio, Michigan, Illinois and Iowa. Additional LMC representatives may be added in 1991. ENVIRONMENTAL TOBACCO SMOKE/IAQ EXPERTS The Institute has identified a number of scientific and medical experts who are willing and able to speak out on the science on ETS and on the real problems of indoor air pollution. These experts can testify and otherwise brief lawmakers, allies and others; conduct and monitor ETS research; and speak with the media. The IAQ consultants can also perform indoor air quality inspections of selected buildings. The Institute also has identified a number of academic scientists who -- although not on the front lines through testimony or press briefing -- can become more closely involved with the scientific community and contribute to the literature on ETS. All ETS scientists are prepared to discuss recent activities and draft reports from the EPA and other groups. ECONOMIST PROGRAMS A group of several Institute-identified, but independent, economists is prepared to deliver testimony or talk with the media and others on excise taxes and the so- called "social costs" of smoking. These economists also write and publish op-eds, conduct research and make presentations to their peers. The Institute also has two economists on the State Activities staff. INFORMATION AND PUBLICATIONS The Institute maintains an information center which has access to virtually any tobacco-related topic. In addition, the Institute publishes -- and keeps in quantity -- publications on key legislative and social issues related to tobacco.

• • FIRE SERVICE ORGANIZATIONS Although primarily federal in nature, The Institute has developed relationships with many key leaders within the firefighter community. Many of these firefighters share the industry's view on the "fire-safe" cigarette issue and are willing to say so. WORKPLACE SMOKING: LEGAL AND "SOCIAL COSTS" EXPERTS Legal and academic consultant experts are available to publish articles; conduct seminars and meetings with lawmakers, employers, attorneys, business groups; and handle interviews. These consultants can rebut erroneous claims put forth by elements of the anti-tobacco community. ADVERTISINGISAMPLING The Institute has identified sampling experts who are willing to speak to the issue in legislative settings to explain their operations and the economic importance of their work to a given community. In addition, The Institute works with advertising associations, the ACLU and other First Amendment proponents on the right of the tobacco industry to engage in commercial speech. In addition, The Institute will launch a new program this fall to combat misconceptions about the industry's views on "youth smoking". The five-pronged program will include a retailer education program, a guide to help parents, educators and young people better understand that smoking is an adult custom as well as provisions for legislative suggestions, and new industry guidelines on various issues associated with youth smoking. (n 0 4 (n 7 (D r

• • E. PRO ACTIVE PROGRAMS The Tobacco Institute's pro-active program for 1990-91 is presently under consideration. Information will be provided as soon as it becomes available. 0

5

I vi. TOBACCO INDUSTRY ISSUES En ~ 0 1 U1 GD F. co N N

A. EXCISE TAXATION • ISSUE Cigarettes are subject to excise taxes at the federal, state and at some local government levels. Increased taxation at federal and state levels will adversely impact volume and pricing flexibility. BACKGROUND ° The federal excise tax was doubled in 1983 to 16 cents per pack; the weighted average tax has risen 78% at the state and local level, from 13.1 cents per pack in 1980 to 23.4 cents 1990. The combined state and federal tax in 1990 is 39.4 cents per pack. ° Current state excise tax rates range from 2 cents (North Carolina) to 41 cents (Texas) per pack. ° California's successful 25 cent cigarette tax increase initiative in 1988 fostered other tax initiatives in Colorado, Montana and Oregon in 1990. The Montana initiative may appear on the November ballot. The Colorado and Oregon initiatives were invalidated because of an insufficient number of valid signatures. ° In 1990, the majority of states with legislative sessions this year have/are considering excise tax increases; 8 states have enacted increases from 3 to 15 cents per pack; bills are pending in 5 states; and bills were defeated in 22 states. Two states (Alabama and Virginia) granted authority for local taxes, while similar bills died in 5 states. ° Tax increases have been proposed in 28 localities; approved in 15; defeated in 9; and are pending in 4. STRATEGY ° Defeat all federal, state and local proposals to increase tobacco excise taxes. ° Seek opportunities to include "sunset" provisions in tax measures and ensure such provisions take effect. INDUSTRY POSITION ° The industry opposes cigarette excise taxes because: They are regressive and thus unfair. They do not consider "ability to pay". They adversely affect the economy. They are used to attempt to influence consumer behavior and thus are punitive. ° The defeat of excise tax proposals is a priority issue for the industry. RJRT works with the TI and all possible coalitions to defeat such measures.

• B. MARKETING RESTRICTIONS ISSUE State and local legislation could significantly impact advertising, vending, sampling and the licensing of cigarettes. BACKGROUND ° Opponents of smoking have been particularly strident in their attacks on the advertising, vending and sampling practices of tobacco manufacturers, arguing that such practices are geared to appeal to young people and those who otherwise would quit smoking. ° Consistently, the Coalition on Smoking OR Health has advocated a ban on all tobacco advertising and promotional practices (including sampling and sponsorship of sporting and cultural events). ° Anti-smoking advocates have also called for enactment of a federally-mandated minimum age for the purchase of cigarettes as well as a prohibition of cigarette vending machine sales., Legislation imposing licensing requirements for retailers is also increasing. ° Pending federal bills would: Ban use of models, scenery, logos, colors in advertising, promotions. Ban all sports related promotions. Ban distribution of free samples, coupons. Deny tax deductions for tobacco advertising and promotion expenses. Prohibit payment for placement of tobacco brand names/logos in movies, television shows or other forms of entertainment. Ban vending machines. Establish a national minimum age (18) for cigarette purchase. Raise prices in military commissaries, VA canteens. Regulate cigarette ingredients. ° Proposed state/local legislation ADVERTISING I ° Cigarettes are advertised through billboards, print media, placards in transit facilities, point of sale ads, and sponsorship of cultural and sporting events. ° Thus far in 1990, ad bans/restrictions have been proposed in 13 states; defeated in 10 states and the District of Columbia; and are pending in 3 states. Advertising restrictions were considered in 11 cities; defeated in 2; and are pending in 9.

• ° 1991 may see increased pressure from anti-tobacco groups and the Coalition for Scenic Beauty to ban all outdoor ads. VENDING ° Thus far in 1990, legislation to ban or restrict sales through vending machines was considered in 24 states; adopted in 3 states (Alabama, Indiana, and Minnesota); defeated in 16 states; and is pending in 5 states. ° In 1990, sales or tobacco vending restrictions were considered in 113 localities; adopted in 47; rejected in 11; and remain pending in 57 cities and counties. SAMPLING ° Cigarette sampling is conducted through the distribution of free samples in public places, coupon redemption, "two for one" sales offers, direct mail. sampling, and toll-free telephone numbers to request samples. ° In 1990, sampling bans on tobacco products were proposed in 18 states; rejected in 13 states; adopted in Wisconsin; and are pending in 5 states and the District of Columbia. ° At the local level, sampling restrictions were considered by 19 localities; adopted in 4; defeated in 3; and are pending in 12. RETAII.. LICBNSING ° In 1990, 9 states considered measures which would require retailers to obtain a license to sell tobacco products. Six states defeated such bills. An Alaskan bill awaits the governor's signature. STRATEGY ° Support the TI in: Defeating legislation/regulations at all levels that ban or restrict advertising, vending or sampling. Defeating legislation that would repeal or restrict federal or state income tax deductions for tobacco advertising and promotion. - Defeating federal/state proposals requiring additional warnings or labels. - Seeking opportunities to adopt state legislation that preempts local bans on sampling and other promotional activities. INDUSTRY POSITION The industry opposes as unfair restraint of trade any legislation that would limit or ban the sale of a legal product to adult customers. Smoking is a choice to be made freely by mature and informed adults.

C. SMOKING RESTRICTIONS • ISSUE The continued enactment of state and local measures that restrict public and private smoking effectively bans smoking in many areas and could impact cigarette sales. BACKGROUND ° Historically, smoking restrictions had been viewed as a state/local government decision. But in 1986, the General Services Administration changed the policy in federal buildings under its control from allowing smoking except in restricted areas to banning smoking except in designated areas. ° 1986 Surgeon General's report on health effects of non-smokers' exposure to Environmental Tobacco Smoke (ETS) resulted in record levels of local, state and federal proposals to restrict smoking in public and private places. ° In 1990, 35 states considered smoking restrictions; 12 states (Alaska, Arizona, California, Iowa, Maine, Massachusetts, New Hampshire, Rhode Island, South Carolina, Tennessee, Virginia and Wisconsin) and the District of Columbia passed measures; legislation failed in 18 states and is pending in 6 states. ° Approximately 136 localities have considered restrictions thus far this year and 46 localities have approved them. Ten localities have defeated such measures, while proposals are pending in 82 localities. STRATEGY Support the TI in defeating all smoking restrictions. INDUSTRY POSITION The tobacco industry opposes public smoking laws for the following reasons: - ETS has not been shown to cause disease in nonsmokers; - public smoking laws are unnecessary governmental regulation of personal behavior and lifestyles; and - legislation proposing smoking restrictions is often vague and arbitrary and denies constitutional guaranties of due process and equal protection. 0

• I • D. "FIRE SAFE" CIGARETTF.S ISSUE State legislation mandating "fire safety" standards for cigarettes could dramatically alter current cigarette design, decrease sales and increase exposure to lawsuits. BACKGROUND ° In 1987, the federal Interagency Committee on Cigarette and Little Cigar Fire Safety (IAC) released a study concluding that it was technically feasible to reduce ignition propensity of cigarettes but that additional work was needed to address commercial feasibility. This prompted bills at the state and federal levels to establish mandatory "fire safety" standards for cigarettes that would virtually ban current forms of cigarettes within two years. ° Since 1980, legislation to require cigarettes to be "fire safe" has been considered in 18 states. Similar legislation has been pending before the New York City Council since 1981. In 1983 alone, 11 states considered "fre safe" legislation. No state or locality has enacted these requirements. ° At the federal level, the Cigarette Fire Safety Act of 1990 was signed by President Bush on August 10, 1990. It created a 36-month "study" on "fire-safe" cigarettes. Currently, no money has been appropriated for this study, and it is questionable whether the Consumer Protection Safety Commission, which is charged with implementing the study, has other funds available for the study. ° Proponents of "fire safe" standards believe (1) the issue has been adequately studied, (2) the industry has a responsibility to attempt to reduce the number of deaths resulting from fires caused by careless smoking, and (3) sufficient technology exists for the manufacture of such a product (Premier is cited as evidence). ° In 1990, "fire safe" legislation was considered in 6 states (Massachusetts, Michigan, Minnesota, New York, Pennsylvania and Wisconsin) and has been defeated in Minnesota and Wisconsin. STRATEGY Defeat all state and local "fire safety" proposals through the TI and other available coalitions. INDUSTRY POSITION ° To date, a satisfactory technology for producing "fire safe" cigarettes has not been: developed. Any proposed standard must be obtainable. ° The industry participated fully in the Technological Study Group in Cigarette and Little Cigar Fire Safety and fully supports federal legislation to implement the Interagency Committee's recommendations.

0 • • R TOBACCO LIABII.ITY/RECKLESS ENDANGERMENT ISSUE Since 1985, four state legislatures have considered so-called "cigarette accountability acts", designed to create a new cause of action against cigarette manufacturers (in addition to existing tort law) for various diseases allegedly resulting from cigarette smoking. Other legislation would establish criminal penalties for manufacturers of products that "endanger" public health. BACKGROUND ° Cigarette manufacturer liability proposals have been introduced in Illinois (1985), Louisiana (1988), Texas (1989), Washington (1989), Wisconsin (1988, 1985) and Rhode Island (198b); all bills died in committee at adjournment of their state legislature, except for the Louisiana measure which was defeated on the House floor. ° The liability bills have many troubling features: Permit state and local governments to sue cigarette manufacturers to recover Medicaid and/or public assistance funds expended for treatment. Impose liability without proof of causation; manufacturer bears burden of rebutting presumption that smoking caused disease. - Abolish traditional common-law defenses (e.g., assumption of risk). ° In 1990, no cigarette manufacturer liability legislation has been proposed. A 1989 "reckless endangerment" bill is pending in Massachusetts, but has been placed in a study committee where no further action is expected. STRATEGY Assist the TI and other manufacturer coalitions in defeating all legislation that would increase cigarette and/or product manufacturers' liability for consumer use of their products. INDUSTRY POSITION The tobacco industry opposes cigarette manufacturers liability legislation for the following reasons: such legislation repudiates the fundamental premise of tort law that a plaintiff must prove causation; the presumption of causation and the singling out of the tobacco industry are unconstitutional.

F. DEATH CERTIFICATES . ISSUE The inclusion of notations on death certificates regarding tobacco use of the decedent will result in grossly misleading data, is intended solely for the purpose of generating public sentiment adverse to the tobacco industry, and is contrary to sound public health policy. BACKGROUND ° The U. S. Standard , Certificate of Death, prepared as a model for states' use, does not include specific reference to smoking or tobacco use, but (as revised this year) directs physicians to include "other significant conditions" and references smoking as an example. ° In 1988, the AMA's House of Delegates approved a resolution calling for legislation allowing physicians to list tobacco use as a "contributing cause" of death. ° In 1988, three states (Washington, Oregon and Utah) revised their death certificates to include a question regarding the decedent's tobacco use. In 1989, Nebraska similarly revised its death certificate. Action in all four states was by regulatory bodies, not legislatures. ° In 1990, 10 states have introduced legislation to require that tobacco use be placed on death certificates; bills have been defeated in 7 states and are pending in Michigan, New York and Pennsylvania. STRATEGY Support the TI in monitoring and defeating all regulatory and legislative attempts to place specific tobacco use or "contribution" questions on death certificates. INDUSTRY POSITION The tobacco industry strongly opposes attempts to place specific tobacco use or "contribution" questions on death certificate forms, because: such questions are likely to undermine efforts to achieve national uniformity in death certificate information by scrambling rather than clarifying the national data; - questions about lifestyle choices will turn death certificates into propaganda tools; ~ ~ - 4 °.! if death certificates are used to target controversial lifestyle choices, other ~ intrusive inquiries are likely to follow. , j tzD o? t0

• • • G. ENVIRONMENTAL TOBACCO SMOKE./EPA ISSUE The EPA is considering listing environmental tobacco smoke ("ETS") as a Group A (known human) carcinogen. Although EPA currently has no statutory authority to regulate indoor air, listing ETS as a Group A carcinogen is likely to spur further health-based state and local smoking regulation. BACKGROUND ° The 1986 Surgeon General's Report on ETS and health fostered many local, state and federal proposals to restrict smoking. ° In May 1990, EPA's draft report on ETS was leaked to the press and indicated that ETS would soon be declared a known carcinogen. ° In June 1990, EPA issued a proposal urging businesses to adopt a voluntary plan to "shield" employees from ETS in the workplace. ° In July 1990, OSHA announced that it would review EPA's data to assess whether restrictions in the workplace were needed. ° Poor ventilation has resulted in poor indoor air quality and the "sick building syndrome". Tobacco smoke has often been cited as a cause of poor indoor air quality when it is actually only an indicator that a ventilation problem exists. ° Indoor air quality legislation has been adopted in 8 states. Thus far in 1990, 35 states have considered indoor air quality proposals; 12 states have passed restrictions; and 18 states have rejected them. Proposals are pending in 6 states. STRATEGY Support the TI in defeating smoking restrictions based on ETS and health. INDUSTRY POSITION The tobacco industry opposes public smoking laws because: ° ETS has not been shown to cause disease in non-smokers. ° Inadequate ventilation, not ETS, is the primary cause of poor indoor air quality. 0 Government regulation of personal behavior, such as smoking, is unnecessary.

• • H. BALLOT INITIATIVFS/REFERENDA ISSUE Well organized special interest groups are becoming more effective at qualifying initiatives for placement on the election ballot. Smoking restrictions and taxes are becoming popular ballot issues that are extremely difficult to defeat. BACKGROUND ° Approximately 26 states and D.C. give citizens the ability to petition to place initiatives on the ballot to become law by popular vote. ° In 1988, California voters approved a 25 cent per pack excise tax increase (10 to 35 cents). The measure represents the first such increase by that state in 21 years and opens the door for initiatives in other states. In 1990, Colorado, Montana and Oregon proposed cigarettes excise tax initiatives. The Oregon initiative failed to qualify for placement on the ballot, and the Colorado initiative was invalidated by the Colorado Secretary of State. Voters will go to the polls on the Montana increase in November. ° Packaging initiatives which could affect the tobacco industry are also on the increase. A Massachusetts' initiative requiring "environmentally acceptable" packaging was recently invalidated by the states' supreme court, but a similar initiative in Oregon may appear on the November ballot. STRATEGY ° Work with the TI and other coalitions to keep ballot initiatives affecting tobacco from qualifying for placement in the general ballot. ° Defeat all ballot measures affecting tobacco products. INDUSTRY POSPITON The industry opposes ballot initiatives because: - they undermine the legislative process; - they allow for no amendment or compromise; - they historically result in poor public policy.

CahdilYal6

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A. ENVIRONMENTAL ISSUES S ISSUE Legislation enacted on Chlorofluorocarbons ("CFCs") in 1989-90 at the federal, state and local levels could potentially impact the Company if the purpose of such legislation is broadened beyond its original intent and includes prohibitions against the use of all CFCs. BACKGROUND ° During 1989, over 76 CFC bills were introduced in 21 states and one locality. Proposals included: total bans on products containing or manufactured with CFCs; recycling requirements for CFCs; labelling requirements for products containing CFCs; the imposition of taxes on products containing CFCs; and studies on standards to limit CFC use. ° In 1990, CFC legislation similar to 1989 measures was introduced in 25 states. Fifteen states have considered the proposed legislation. ° As a result of a 1989 local CFC ordinance passed in Irvine, California, increased activity at the local level has resulted in many comprehensive local proposals which could severely impact the Company. ° Congress is presently considering sweeping amendments to the Clean Air Act that would preempt state and local regulations, require warning labels, and phase-out CFCs by the year 2000. STRATEGY The Company will monitor federal, state and local legislative and regulatory activity through a broad-based coalition of industries, legislative counsel and other organizations of which the Company is a member. In addition, the Company will also work with and support efforts of the Alliance for Responsible CFC Policy. The Company will also coordinate the activities of Government Relations and Research and Development to protect alternatives considered by the Company. II3DUSTRY POSITION The Company, through its participation in the Alliance and other industry organizations, opposes: any bans on CFCs which take effect before 1995; any labelling requirements which take effect before 1995; any bans on HCFCs; and any bans or labels which would impact alternatives being considered by the Company.

• • B. TORT REFORM ISSUE Continued tort and product liability reform is necessary at the federal and state level to reduce exposure to product liability lawsuits. BACKGROUND ° Liberal developments in the tort systems of some states, combined with jury awards in the millions of dollars, have encouraged business and industry to focus their efforts on tort reform. ° With approximately 55 product liability cases pending against the tobacco industry, including 28 cases against RJRT, the Company has been actively involved in state and federal legislative efforts at tort reform through the industry's Ad Hoc Committee on tort reform. ° The tobacco industry seeks to make the defense of existing cases less onerous, reduce the likelihood of inflated verdicts, and discourage the filing of future claims. Reform efforts are directed at the plaintiffs' burden of proof, punitive damages, and the defense of contributory negligence. ° During the past 4-5 years, more than 30 states have enacted tort and product liability reform legislation. ° In 1990, several states were targeted for tort reform legislation. To date, none of these states has enacted a tort reform measure. STRATEGY Support the TI and other coalitions (state medical, dental, hospital associations, chambers of commerce, business and industry associations, insurance groups, municipalities, manufacturers) in (1) instituting tort reform legislation and (2) defending past reform efforts from roll-back attempts by the plaintiffs' bar. INDUSTRY POSITION The industry, through its Ad Hoc Committee on tort reform, supports federal and state tort and product liability reform efforts to establish an equitable and predictable business environment. U1 0 _ 4 o; (a r OD 0) Lq

C,ertain RJRT sales promotions and marketing strategies/new products require changes in existing laws to allow their introduction. t:b:st•J.ls • The 'willlionaire Cash Quiz", an on-pack contest introduced by RJRT in 1988, required changes in existing promotional contest registration laws in some states and negotiations with regulatory officials in other states. The law was changed in Arizona to allow that state to participate in future promotions involving "games of chance". • The Introductlon of RJRrs "Century" brand cigarette (containing 25 cigarettes per pack) required changes in tax laws of 17 states that based taxes on packs of 20 cigarettes. • RJRT is attempting to enact legislation where feasible for a "per stick" excise tax rate so that packs containing more or less than 20 cigarettes will not be taxed disproportionately (5 states use 20 cigarettes as a base; 6 states base taxes on a multiple of ten). Montana and Nevada adopted a "per stick" tax law in 1989. Hawaii's governor vetoed a bill which would have converted its current ad valorem basi.c to a "per stick" tax basis. 9j$ATEGY Obtain favorable amendments to statutes/regulations inhibiting promotions and new product introductions. Marketing and sales measures are primarily RJRT-oriented. Thus, the industry generally neither supports nor opposes the Company's efforts.

• • D. PACKAGING ISSUE Restrictions and taxes on packaging at the federal, state and local levels could adversely affect sales and pricing flexibility. BACKGROUND ° Legislative solutions to the growing volume of solid waste include the imposition of beverage container deposits, degradability requirements, bans, restrictions and taxation on types of materials and recycling quotas. ° Nearly a dozen states have approved taxes on manufacturers, wholesalers or retailers of products (including cigarettes) deemed to contribute to the litter problem. ° In 1990, packaging bills that could impact the tobacco industry were considered in 21 states; defeated in 8 states; passed in 8; and remain pending in 6. A comprehensive initiative on packaging was presented for legislative review in Massachusetts and was nullified by the Massachusetts Supreme Court. An Oregon packaging initiative may appear on the state's November ballot. ° In January 1990, the Coalition of Northeastern Governors (CONEG) released model legislation to reduce heavy metals in packaging. The model legislation has been introduced in 12 states and has passed in 8. STRATEGY ° Through state legislative counsel and coalitions/allies, closely monitor all state packaging bills that could affect the Company. ° Work through coalitions/allies Grocery Manufacturers of America, Flexible Packaging Association, and Society of the Plastics Industry) to defeat such measures. INDUSTRY POSITION The industry opposes legislation to tax or ban packaging materials, because: - the industry opposes all legislation to tax specific products and industries; - packaging taxes would increase the cost of consumer products; - restrictions on packaging could ban the use of certain materials without the availability of feasible alternatives; - the nation's waste management problems cannot be cured by such "quick fix" methods. The industry closely monitors all packaging legislation and takes an active role in opposing restrictive measures. The Company supports the industry but may also take an active role when a measure becomes critical to an RJRN operating unit.

Legislature: may mandate that tobacco companies develop alternative technologies which may not be technically feasible or practical to develop at the present time. BACRC3R UND • Technology has allowed companies to develop new products which conform to consumer wishes, such as low tar cigarettes. However, alternative technologies are not always technically fcasible, nor acceptable to the consumer. • The tobacco industry has come under pressure to develop a cigarette with low ignition propensity (i.e., "6re-safe" cigarettes), lower sidestream smoke, as well as lower "tar" cigarettes. • Legislation which may indirectly impact the tobacco industry and place preuure on it to develop "new technology products" may arise in the following areas: health claims; advertising restrictions; medical device definitions; addiction warnings; health care costs; and environmental laws. STRATEC3Y The tobacco industry will continue to (1) monitor legislation which tends to place pressure on the industry to develop alternative products, (2) evaluate the feasibility of proposed alternatives, and (3) oppose those alternat'rve technologies which are not technically feasible or practical to develop. POSTI70N INDjJsSM The tobacco industry favors the development of new technology and products which meet consumer desires and needs, but opposes the imposition of onerous requirements by legislatures when prevailing technology makes it infeasible to comply with the requirements.,

F. TOXIC SUBSTANCES • • ISSUE California's Proposition 65 and similar proposed measures requiring warnings for listed suspected carcinogens and reproductive toxicants create unnecessary and costly obligations for business, disrupt uniformity of packaging and distribution on a nationwide basis, and potentially encourage businesses to ban smoking on their premises. BACKGROUND ° In November 1986, California voters approved Proposition 65, which requires that businesses with 10 or more employees provide a "clear and reasonable warning" whenever they knowingly expose a person to a chemical "known to the state to cause cancer or reproductive toxicity" (e.g., the chemical is listed by the Governor upon recommendation by a Scientific Advisory Panel). To date, over 200 chemicals have been so listed as carcinogens and reproductive toxicants. Proposition 65 is enforceable by stiff fines and penalties up. to $2,500 per day per violation. ° On April 1, 1988, "tobacco smoke" was listed as a carcinogen and "tobacco smoke (excluding environmental tobacco smoke)" was listed as a reproductive toxicant under Proposition 65. ° In 1990, 6 states (California, Illinois, Louisiana, Maryland, Massachusetts, and New York) considered Proposition 65-type legislation; to date 4 states (California, Illinois, Louisiana and Maryland) have defeated such measures. ° In addition to Proposition 65-type measures, toxic use reduction bills, which seek to reduce the use of toxics at the production point, were introduced in 5 states (California, Georgia, Nebraska, New Jersey and Washington); to date, 3 states (Georgia, Nebraska and Washington) have defeated such measures. STRATEGY Support the TI and other coalitions (manufacturers' associations, chambers of commerce, farm bureaus, chemical, oil and electronics industries, restaurants and consumer products companies) in defeating Proposition 65-type and toxics initiatives and legislation. INDUSTRY POSITION The tobacco industry opposes Proposition 65-type and toxic use reduction legislation, because: - inadequate scientific evidence exists to support a listing of complex tobacco mixtures such as "tobacco smoke" as either a carcinogen or reproductive cn . toxicant; y° ta - such measures constitute poor public policy, mislead the public, impose ,..D burdensome and costly labelling requirements, drive up prices and result in ~ inconsistent regulation by various states. (0

State and local regulation of dgarctta advertising and warnIngx Inconsistent with federal or internattonal regulations leads to oonflictiu,g law~s, Inconsistent pactiaging, and restrictions on Interstate commerea DACRa$OUI~D ' In 1965, Congress passed the Federal Cigarette Labelling and Advertising Act, requiring manufacturers to place a health warning on cigarette packages and preempted the states from imposing any requirement or prohibition (based on smoking and health concerns) on the advertising and promotion of any cigarettes. • In 1969, Congress banned all radio and television advertising of tobacco products. • In 1970, Congress changed the wording of the warning labela required on cigarettes. • By Consent Agreement with the Federal Trade Commission in 1972, the industry agreed to place the Surgeon General's warning on all cigarette advertising. • In 1984, Congress adopted 4 rotating'warnings to be placed on cigarette packages and advertising. In response to conflicting state and local regulations on tobacco advertising and labelling, the industry will support "preemption" provisions in state legislation which prohibit localities from enacting more stringent restrictions than the state restrictions. The industry also supports state regulations that are patterned after or parallel to federal regulations. The tobacco industry opposes all state and local legislation which defeats the purpose of the uniform labelling. and advertising requirements imposed under the Federal Cigarette Labelling and Advertising Act' and supports the adoption of uniform legislation which prevents fragmented regulation at the state and local levels.

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