1. The Situation Analysis The 2004 Tandem Program was well received by the trade, being widely recognized as a success. As a recognition of our efforts, JTI launched a similar program. The preliminary reports show a high rate of compliance in trade. There is no trade program in place to optimize our volume and presence at the wholesale channel (around 30% of our business). By the end of 2004 we will introduce PPOSMs in the top 500 HORECA locations. According to the Bucharest Census preliminary data, there are more than 1500 HORECA locations only in the Bucharest area. We need to continue to expand our presence in this channel and also to protect our investments via a trade program. The distribution and the merchandising capacity of the EZDs’ sales agents could be improved based on the nationwide introduction of the DSMS by Sept. 2004.

2. The 2005 TM Main Objectives To continue the Tandem trade program, including the HORECA. To develop a trade program for the wholesale channel. To optimize the merchandising capacity of the EZDs sales agents based on the introduction of the DSMS nationwide. To increase our investment in the permanent category platform and to secure our position in trade by signing long term contracts. To continue the FB program, in spite of the anticipated ad –ban introduction (generic materials installation). To get the full TM Department team on board no later than Feb. 2005.

3. The TM 2005 Budget Summary Key budget items impacting 2005 OB vs. 2004 LE (USD)  PPOSM Trade +305 K  Tandem 2005+ 70 K  Tactical Programs+232 K èThe PPOSM Trade increase due to the larger number of SKUs in our portfolio (new, bigger units). èThe Tandem Program 2005 will include the best HORECA locations èThe tactical programs cover the new 200 K wholesale program and the sales cycle related TM activities

4. The TM 2005 Budget Summary DESCRIPTION 2004 LE 2005 OB 05-LEDetails FULL BRANDING PROGRAM 300,000350,00050,000Total Cash & Equivalents60,000100,00040,000 FB Contracts for 410 + 90 existing POS branded at the end of 2004 and 100 new POS in 2005 Production200,000 0 100 POS with branded or non branded materials and maintenance for all the branded POS Taxes40,00050,00010,000Taxes & Authorization for FB locations  We grow the number of the FB locations, therefore the related costs increase as well.

5. The TM 2005 Budget Summary  The difference under Production Retail comes from the Evolution units (70K), the check out units for KAs (60K) and the generic dispensers (50K).  The Miniflex maintenance fee continues the one introduced this year.  We plan to sign contracts with 600 POS by the end of next year. DESCRIPTION 2004 LE 2005 OB OB05- LE Details PPOSM935,000 1,240,0 00 305,00 0 Total Production Retail650,000835,000 185,00 0 80 Mega 900 Evolution (60k); 20 Mega 600 Evolution (10k); 500 Horeca (150k); 900 PMU 100 with pushers and extensions (360k); Overhead 200 (70k); 50 Kiosks (25k); PF 2500 (35k); 100 48-face Checkout units (60k); 100 Illuminated L&M Logo signs (15k); 5000 Generic dispensers (50k) Cash & Equivalents for Miniflex 225,000325,000 100,00 0 EZDs Miniflex maintenance ($18/year x18,000POS) Taxes20,000 0Taxes & Authorizations for outdoor materials Cash & Equivalents for POSM 40,00060,00020,000PPOSM contracts - 600 POS (with fee 100USD/locations)

6. The TM 2005 Budget Summary  The Tandem 2005 starts in Jan, being an improved version of the 2004 edition.  The new program includes HORECA, thus being more expensive.  The ongoing support of the program was not budgeted in 2004.  We could save money from a less expensive sales meeting DESCRIPTION 2004 LE 2005 OB OB05- LE Details TRADE PROGRAM750,000820,00070,000Total Free goods580,000650,00070,000For 4,500 POS, min. 40% in Bucharest (HORECA included) Launch event90,00020,000 (70,000 ) Back to back program requiring a less expensive field communication. Development & Production of trade mat 070,000 Introductory pack plus the ongoing program support in trade Gifts for the participating stores 80,000 0 Offered during the program in 2004 and at the end of the program in 2005 (TBC)

7. The TM 2005 Budget Summary  We continue offering free packs for the Miniflex maintenance according to each sales cycle objectives  The newly proposed P2P WS program will support our SC activities in the WS segment.  The Sales Cycle TM support is getting more and more complex. For instance, the L&M CF launch cost was around $50K (supported from the TM budget). Considering 6 major SCs in 2005, the proposed budget is $300K. DESCRIPTION 2004 LE 2005 OB OB05- LE Details TACTICAL PROGRAM328,000695,000 367,00 0 Total Free goods273,000175,000 (98,000 ) Free packs for the Miniflex units as sales cycle support (21,000 Miniflex x 2 packs x $0.7 x 6 cycles) Wholesale Program50,000200,000 150,00 0 The "Path to Profit" WS program (TBD) Trade Materials and Sales Aids 5,00020,00015,000Trade leaflets and sales detailers Sales Cycle support activities 135,000300,000 165,00 0 Includes all the SC related activities (trade, EZDs or field force incentives)

8. The TM 2005 Budget Summary  No changes under Trade communication  The minimum requirement for dummy packs: 20,000 outlets x 2 waves x 35 packs (on average) x $.07 = around $100K. Next year we will change all the existing dummy packs in the market due to the new health warning and descriptors.  Next year we will use the new PMI recommended Pro/Space application DESCRIPTION 2004 LE 2005 OB OB05- LE Details TRADE COMMUNICATION 50,000 0Total Trade Shows/Events - Prizes 3,000 0Participation at different events Trade Shows / Events2,000 0Participation at different events Trade Advertising30,000 0"Magazinul Progresiv" Contract Trade event15,000 0Distributors participation at events SUPPLIES FOR MERCH. ACTIV. 30,000 0Price labels, scotch, sleeves, etc Dummy packs80,000100,00020,000Dummy packs (2 waves X 50k). For in-store displays only. Shelf Management Application 020,000 Including licence, training, upgrading. Requires a dedicated user.

9. The TM Organization Chart Mircea Boboc Manager TM Luiza Serbanescu TM Executive Bogdan Militaru TM Executive Ioana Filip TM Executive Tunde Szedlacsek TM Executive

10. Trade Marketing OB 2005 vs. LE 2004 (000’ USD) Main ChangesLE’04 OB’05 Chg. Full Branding300 350 +16% PPOSM Trade – Development/Production650 835 +28%  Enhanced design factors and more items Tandem 2005 750 820 +9%  The 2005 program proposal will include the best HORECA locations in Bucharest Tactical Programs463 695 +50%  Include the P2P WS program and the sales cycle related activities TOTAL 2960 3606 +22%