Youth Smoking Prevention

It is our position that tobacco use in general and cigarette smoking, in particular, are adult activities and that no one below legal age should smoke cigarettes or otherwise use tobacco products. Accordingly, our companies reiterate their long-standing policy that they will not engage in tobacco product advertising, marketing, or promotion that is directed toward or intended to appeal to persons under age 21. In addition, both Liggett Group and Vector Tobacco are parties to the Master Settlement Agreement ("MSA"). It is the policy of both Liggett Group and Vector Tobacco to comply with all obligations under the MSA, including the provisions intended to reduce or eliminate youth access to and use of tobacco products.

In 1996, Liggett Group became the first tobacco company to settle smoking-related litigation brought by the Attorneys General of several states. That settlement agreement was followed by settlement agreements with additional states in 1997 and 1998.

Under these landmark settlement agreements, Liggett Group was the first in the industry to agree to significant limitations on the advertising and marketing of tobacco products. Most of these limitations were designed to reduce or eliminate youth access to and use of tobacco products. The limitations included not using cartoon characters, eliminating billboard advertising, and not advertising in magazines with youth readership above 15%. In addition, Liggett Group was the first tobacco company to publicly acknowledge that smoking causes lung cancer and other diseases, and added the warning "SMOKING IS ADDICTIVE" to its cigarette packaging.

Many of the tobacco advertising and marketing restrictions in the MSA were derived directly from Liggett Group's prior settlement agreements. Our companies comply with the MSA, including its advertising and marketing restrictions. All employees are required to be familiar with the advertising and marketing restrictions of the MSA. We have been a long-standing leader in the efforts to reduce and eliminate youth use of tobacco.

In addition to advertising and marketing restrictions, the MSA requires tobacco companies to make certain commitments to the reduction or elimination of youth use of tobacco products. We encourage all employees to identify additional methods to reduce or eliminate youth access to or use of tobacco products. Any employee who wishes to express an idea or make a suggestion on this subject may do so by communicating with his or her supervisor, or department head, or directly with the General Counsel.