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   &lt;div align="left" style="font-size: 10pt; margin-top: 12pt"&gt;&lt;b&gt;Note 4 &amp;#8212; Asset Impairment and Exit Charges&lt;/b&gt;
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   &lt;div align="left" style="font-size: 10pt; margin-top: 6pt"&gt;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;On May&amp;#160;28, 2010, RAI announced that its operating companies are taking steps to optimize
   cigarette-manufacturing efficiencies, while complying with new regulatory requirements. One of RJR
   Tobacco&amp;#8217;s cigarette factories in Winston-Salem, North Carolina will close by mid-2011 and a factory
   in Yabucoa, Puerto Rico closed in August&amp;#160;2010. Production from those facilities will transfer to
   RJR Tobacco&amp;#8217;s facility in Tobaccoville, North Carolina. As a result of these actions,
   approximately 60 manufacturing positions in Puerto Rico were eliminated, and affected employees
   received severance benefits. In connection with these actions, during the second quarter of
   2010, RJR Tobacco recorded an asset impairment of $24&amp;#160;million, and $14&amp;#160;million was recorded in
   the All Other segment, primarily for asset impairment, and to a lesser extent, severance that will
   be paid during 2010.
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