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American Tobacco

Merger of American Cigarette and Cigar Company Into the American Tobacco Company, 1953

Date: 1953
Length: 658 pages
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AGREEMENT OF MERGER ]~otv,'eell THE AMERICAN TOBACCO COMPANY (a New Jersey corporation) and the Directors thereof and AMERICAN CIGARETTE AND CIGAR COMPANY (a New Jersey corporation) and the Directors thereof ;!, For the merger of American Cigarette: and Cigar Company into The Ameriean To]meeo Company, pursuant to Chapler 12 of Title 14 of the Revised Slatutes of the State of New Jersey. ]'total oi tTL'lol~L,t" I~, I!/~,~
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AGREEMENT OF IViERGEE AGREEMENT made and entered into this 16th day ef October, 1~3, by a~?d'~b-£tween¸ T~E A~CA~ TO.ACe0 CO~pA~7, a ¢or.ooration o[ the State of New jersey (heroine{tar some- times called "American"), and tee Directors thereof~ parties of the first part, and AMERZC.~N CI~ZTTE AND CmA~ CO~FANY, a eorporat[oa of the State o£ New 3ersey (hereinafter sometimes calIed "Cigarette"), and the Directors thereof, parties of ~he ~econd part, sald twe corporations bcinff herelnafter collectively calIed the '~Co~sdtuent Companies"; WEE~Ea~ Lhe pr~¢~pal and I'egis~ered ofiSce of American in the State of New Jelsey ls at No, 117 M~n S~reet, in the Borough of Flcmington, in the County o[ Hl~nterdon~ New Jersey, = a~d George P~o~vle~ L~rg~ {~ the- A~e~t [her~in, it1 charge there.{, atld ~po~ whoa1 prc~e~s against said corporation may be served wlthln said State; a~ld WIIEREAS, the principal and regis[ered office of Cigarette {n the State of New Jersey is at No. U7 Main S~reet, in the Borough o~ ]?Iemington, in the Cotmty of l-[unterdon, New ~ersey, and George .~<nowle~ La.rg~e is the Agent therein, ir~ chs,rge ~hereo[, arid upon whom proees~ agalns~ sa{d corporation may be served within said State; and "~VBEREAS, the authorized Capital Stock of American conslszs of 10,000,000 shares of Common Stock, p~r value $25 pe~ share, of which 6,454,1t0 shares are issued and outstandlng and 540~106 shares of ]?referred Stock, par value $100 per share, of wtdoh 526]997 shares ~re ~ssued mad W~IEREAS, the authorized Capital Stock of Cigare[te conslsts of 500,000 shares of Common Stock, par value $70 per share, of which 200,000 shares are issued a:~d outstanding, includlug 4~500 shares held in its Treasury aad also inc]ud{ng 1~,225 shares owned by American and 3,989 shares ~f Preferred Stock, par value $100 per share, of which 3,989 shares ~re iasued artd outstanding, including 3,230 shares owned by Americ~i~ ; and WTIER~tS, the above-mentioned corl)orafions are organized for the purpose of carrying on ht~s~nes8 of lhe same or of a slmll~a" Ilatlxi"¢; a.Ild W~ZaE.~S, the Boards of Directors of said corporations deem {t to ±he benefit and advantage of the Co~s~itttent Colnpanies anti their stockho]der~ t~nder pre£ently exlsting ci~¢ums£ance~ ~o enter iuto this Agreement of ~{~rger nnder and ptlrsuan~ ~o the provisions of Chapter 12 o~ Title I4 o~ the Revised Statates of New Jersey and Ac[s supplemeatary thereto or ame~datory the:eo~, Now. TI~NREFORE, it~ considergtion of the premises &ud nlufual ~oTee~llen~s, provlslons, cove- n,~n!s and grants herela eontai~e4, it is hereby agreed, by and between the pardea hereto, ~nd {u accordance with said Acts of tile Legisla~are of [he State of New Jersey, that ~,aid Cigarette shall he and the same hereby {s merged into said Amelican, and said Amer;can does hereby merge into itse]f said Cigarette. Arid the parties lle['e~o by these presents agree to arid prescribe dm tertn3 and conditions ol said Ilierger &lid ~he mode of currying the same into ~ect, wldch [erilis and colldi[{ons and ~llode ol carrying the sai!l¢ ~lfo at'feet ~he sahl Etrtles hel?tto do UlLltuaily and severa]ly eovenailt to observe~ keep ~nd petrOl-hi, tb'~ is ~o ~z~ : 1
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ARTICLE I The American Tobacco Company, into which Cigarette is hereby merged, as aforesaid, shall be the corporation contlnulng after the merger and the name of the c~rporation shall be and remain the same. (Sald corporatlon shall hereinafter sometimes be referred to as the "Surv~ing Company"). ARTICLE II The number of the first Directors of the Surviving Company shall he nineteen (19) a~d thereafter the number of Directors ~hall be the number fixed from lime to time in the By-Laws of tile Surviviug Company. The names and post office addresses of the filst Directors of the Surviving C¢,mpany wlm shall hold o~ce until their ~uccessors are chosen or appointed according to the By-Laws of the Surviving Company are as follows: l~ames Orpheus D. Baxalps Alfred F. Bowden R~chard 5, Boylan Douglas W. Brashear Thomas P, Connors James R. Cooa John A. Crowe John S, Dowd A. Gordon Findlay Preston L. Fowler Charles Oanshow Paul M. Hahn I~iram R. Hanmer Edmund A. Harvey ~arry L, Hilyard John R, Hutehings, Jr. A. LeRoy janson William H. 0gsbury James F. StricMand post off'c@ Addresses Ill Fifth Avenue New York 3, New York ltI Fifth Avenue New York 3, New "fork 111 Fifth Avenue New York 3, New York F. O. Box 6-P R1chmond 16, Virginia I11 FKfh Avenue New York 3, New York 111 Fifth Avenue New York 3! New York ill Fifth Avenue New York 3, New York P. O. Box 808 Louisville I, Kentucky lll Fifth Avenue .... New York 3, New York 111 Fifth Avenue New Ydrk 3~ New York 111 Fifth Avenue New York 3, New York 111 ?~ifth Avenue Hew York 3, New York P. O. Box 417g Richmond 24, Virginia 111 Fifth Avenue New York 3, New York II 1 Fifth Avenue New York 3, New York Pettigrew & Blackwell Streets, Durlmm, North Carolina 111 Fiffll Avenue New York 3, New York Pettigrew & Blackwel[ Streets Durham, North Carolina PeRigrew & BIaekwel[ Streets, Durham, North Carolina
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The first ofl~cers of tile Surviving Company shall be fourteen (14) in number aud shall be a President, five (5) Vice Presidents, one of whom shall also he the Comptroller, a Secretary, a Treasurer, an altdit~lr, two A~sistaut Atldltors, ~qn Assistant Secretary, an Ass~staut Treasurer and all Assistant lo the President, and their nanle~ and post-oftice addresses are as follows : O lllcerB Fresident Vice President Vice Fresldeut and Coruptroller Vice President Vice Fresideut Vice I'residcut Treasurer Auditor Assistant to the President Secretary Assistant Auditor Assistant Auditor Assistant Secretary Assistant Treasurer Name~ Paul lkL Itahn I~.ichard J. Boylau James R. Coon John A. Crowe l'rcston L. Fowler Ednmnd A, Harvey /larry L. Hilyard A LeRoy Janson AlIred F. Bowden John W. IIanlon J. Wesley Dale Edward D. Flaherty Frederick W. Kenny Joseph R. Waterhouse ARTICLE III The total authorized Capital Stock of the Surviving Company is and shall be ten ml]lion (10,(Yd0,000) shares ~,f Ccmmlml Stock of the par value of $25 per share and five hundred forty thousand one hundred six (540,106) shares of Freleired Stock of the par value of SI0t) per share. The Transfer Agm/t and the Registrar of the stock of the Surviving Company shall be the perscms or corpc~J~ltlolls designated as such from thue to time by rcsolutloli of the Board of Directors. Post-ot~ca Addresses ~' 111 Fifth Avenue New York 3, New York 111 Filth Avenue New York 3, New York lll Fifth Avenue New York 3, New York 111 Filth Avenue New York ,3, New York 111 Fiith Avenue New York 3, New York 111 Fifth Avenue New York 3, New York iII Fifth Avenue New York 3, New York 111 Filth Avenue New York 3, New York 111 Fifth Avenue New York 3, New York 111 Fifth Avenue New York 3, New York ill Filth Avenue New York 3, New York 111 Fifth Avenue ,7 New York 3,: New York 111 Fikh Avenue New York 3, New York 111 Fifth Avenue New York 3, New York ARTICLE 1V The Ag*eenlcnt aud Act of Merge~ and Consolidation of American, dated Septenlber 9, 1904, pursuant to ~l]llcll Aulelicau was created, as such f~g/eelllel/t Ol Seplenlber 9, 1904 has heretofore heen anlendcd, shall, upon tile dale ou which tile merger becomes effective under the laws o~ the Stale of New Jcrse), be decnled to be anlended further by rids Agreenlent insofar as su¢~l Agree- lUelIt of Septelllllel 0, ]d0[, ~ heretofore alnended, is illconsistcllt with ~ny prov~$ioll Of this Agreeluent, ARTICLE V The l{y Lau's of the Snrl'i~inff Conlpany shall be the l~y-Law$ of American as those shall t'xist on the eflecti~e date of tile merger tlntil altered, anlended or repealed as therelu provided, 3
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ARTICLE VI The maturer of converting tim Capital Stock of the Constituent Companies into the Capital Stock of the Surviving Company shaIl be as follows: (a) Each share of Common Stock, par value $70 p& share, of Cigarette whlch shall he issued and outstanding on the effective date of the merger (excluding any shares then held Jn the Treasury of Cigarette and excluding any shares then owned by American, which shares shall cease to exist and the certificates representing such shares shall he canceled) shall be converted into~ (~) shares of Common Stock, par value $25 per share, of the Surviving Company and each share of Preferred Stock, par value $I00 per share~ of Cig~.rette which slmll be i~ued and outstanding on ffle effective date of lhe merger (excluding any shares then held in the Treasury of Cigarette and excluding any shares then owImd by Americas, which shares shall cease to exist and the certificates representing such shares shall be canceled) shallbe converted intot~ shares of Preferred Stock, par value $100 per shave, of the Survivin~ Company; and O',~x~Cmt 2~ (/ ~a) (b) Each share of Common Stock of American, pax- valne $25 per share, issued artd outstanding on the effective date of the merger shall continue to be one share of Common Stc~ek, par value $25 per share, of the Smvivlng Company and rack share of Preferred Stock of American, par value $100 per share, issued and outstanding on the eFlec~ive date of the merger shah continue to be one share of Preferred Stock, par value $100 per share, of tile SurvlvirLg Company: and (e) After the effective date of the merger each holder of an outstandlng certificate or certificates representing shares of Common Stock, par value $70 per share, of Cigarette skali sltrTender the same to the Snrvlving Company and such. holder shall be entitled upoa such surrender to receive ht e~Clla~lge there[or a certificate or certificates represelttitlg l ~L~(~llares of Common Stcmk, par value ~er sharel of the Surviving- Company 7 for e~cll share of Common Stock of Cigarette:~o'surren<[ered. Until so surrendered, each i L7 outstanding certificate which, prior to the effective date of the merger represented share~ i of Common Stock, par value $70 per sbarG of Cigarette, shall be deemed for alI corporate purpose*s, other than voting and the payment el dividends or other dlstril)ufions, to evidence the ownership of the shares o~ Com~non StI?ck, par xalue $25 per share, of the Survivitlg Company into which such shares have been so converted. Unless and until any such outstanding certificates shall be so surrendered, the holders thereof shall have no voting rights in respect thereof and no dividend or other distribution payable to tile holders of record of Common Stock 6f the Surviving Company as of any date subsequetlt t~ the effective date of the merger shall be paid to the holders of stlch outstanding certificates, but upon such surrender of an), such outstanding certigcate or certi~cates Lhere shall be pa~d to the record holder el the certificate er certificates for Common Stock of the Surviving Company issued in exchange therefor the amount of dividends or other distributions which theietolore became payable with ~especl lo the number of shares of Common Stock of the Suryiving Cbmpany represented by the certificate or certificates so issued in exchange. (d) After the effective date of the merger each holder of an outstanding certificate or certificates representing shares of Prefet~:ed Stock, par Yahle $100 per share, of Cigarette shall surrender tile same to the Surviving Conlpany and such holder shall be entitled upon 8nch surrender to receive in exchange therefor (subject to tile provisiQns of subdivision (e) hereof with respect to hactional shares) a eertificate or certificates repre3enting ~ o-~)~d~ ~vd'~ shares of Preferred Stock, par value $100 pet" share, of tire Surviving Company for each ( ~ 5 share of Preferred Stock of Cigarette so surrendered. Until so snrrendered, rack outskanding q' certificate which, prior to the effective date of the merger represented shares of Preferred Stock, par xalue $100 per share, of Cigarette, shall be deemed for all corporate purposes, other than vo inQ a I t e paynten~ of dividends or oLhei distributions, to evidence the ownership of the shares of Preferred Stock, par value $100 per share, of the Surviving Conlpany into which 8ach shares have beret so converted. Unless and until any such 4
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outstanding certificates shzll l)c so surrendered, tbe holders thereof shMl Imve ~o v~tlng rights in respect thereof and no divldcnd or other distr{bution payable to the holders of record of Preferred Stock oi the Surviving Company as of any date s~bscquent to the effective date of tbe merger shall be paid Lo the holders of such outstanding certificates, but upon such surrender of an). such outstanding certificate or certificates there shah be pa~d to tbe record holder of the certificate or certificates for Preferred Stock of the Su~y'~vlng Company issued in exchange therefor the amount of dividends or other dlstrlbutions which thereto[ore became p~yable with respect to Lhe number of sh~res of Preferred Stock of the Surviving Company represented by the certificate or certificates so ~ssued in exchai~ge. (e) No fractional shares of stuck shall be issued by the Surv~ving Company in respect of ~ock of Cigarette, but each bolder of shares of Pie[elled Stock of Cigarette entitled hereunder to rccclve a fraction of a ~hare ol Preferred Stock of the Surviving Company. shall receive for each such ~raction of a share a non-voting, non dividend and non-distribution paylng Scr{p Certificate of the Survlv[~g Company lot the ~ractfott of a share af Preferred Stock to which hc is entitled. Each Scrip Cetti~cate will entitle the holder (including the Surviving Company if it shaU have acquired the same) of such Scrip Certificate to receive, on sin-render [hereol within two years Rfter the date on which ~he merger becolne$ ~ic~ctivc, together w~tb olhel¸ Sclip Certidcates of llke tenol, representing in the aggregate rights in respec~ of one or more ~IIl shares o~ Preferred Stock of tile Surviving ~otnp~ny, certi~c;ites for shares ol Preferred Stock of the S~rvlving Company equal to the nmnber of full shares of Prefe~ed Stock in respect of ~.hi~h ~uch Scrip Certi~eates were ~ed ~nd ~he ~z~e~nt o~ divldcnds and other distribuSons tberetofnre declared in respect ol such full shares and new ~crlp Cer~ificaLes of a ]ike tenor for the remaining fraction of a ~h~re, if any. All such Scrip Ccrtifcates which are not surrendered with{n the time aforesald shall bc void and o~ ~io ~ffec~ ~vhat.~oever on and after a d~te which sha[l b~ two ycRrs a~ter the dR%e o11 which the merger is effective (hcreit~fter refe~xed~9 a~ ~h~e~piraHon date") ~xcept that the holders thereof shall be.cntitled to recelve within¸ tree.ears-and ten months after the expiration date ~hclr ~ro mt~ portlon of the procec~g ~c~hl~n~{r%~-the safe of~hc ¸full share~ _ of Preferred Stock represented hy the theretofore unsurrende~crip Ccrtlfcates, together wlth ~heir p~o r~Ic share of dividends and other distr{buS0hs theretolore declared in respect of such full shares ~pon surrender of such Scrip Cert~ffcatcs~uch sale shall be made within onc hundred clghty days after the explratlon dat~(publicly or prlvat~y at then ~-- currently preva~Hng market prices) by the Surviving C~rn~-lhe t~ans~er a~o~nt o£ the shar~ with respect to which such Scrip Certificates w4fe i~sued, as the agent for and on behalf of the holders of such Scrip Certificates, or, at the eleetlon of the Survlvlng Company, may be ~ade to the Stlr~-ivlng Company ~t a pr~c equal to the average closing price of the stock on the New York Stock ~xchange [or the f~yenty full business days hmnedlately following the expiration date. Any proceeds resulting frum such sale not claimed witbiu such two )rear and ~en month period shall be paid by the transfer age~It to the Surviving Company and be held by the Surv~vlng Company as part of its general funds free and clear ol any claim of those previously entitled tbereto. The share~ of stock of the Survlving Company represented by Scrlp CerHficates shall be issued upoi~ tbc merger b~eomlng effective aud shall be held and dlsposed of by the Surviv{ng Company or, at its option, by au ageut d~s~gnated by it, as ~ereln provided. ARTICLE VII ~xccpt insofar as in this Ag, eement othe*~vise specifically set forth, ar as provided by statute, the corporate name, purposes, powers, objects, franch{ses, entit)% existence, ldgil ls ;tnd orgm~izat{on of American shall remaln h/tact arid be vested in the Surviving Company, and the corporate franchlse, entity, existence and rlgbts of Cigarette shall be conthlued in and merged into the Survivlng ~ompany, and lbe Surviving Company shall be full)- vested tberewilb, and upon tile filing' hl the Office of the Secretary of State of N'ew ]eisey of thLs Ag*eement, when adopted by tbe stochhoIders of each Constituent Company as berchla{~er provided, the organization and 5
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existence of said Cigarette ahaff cease, except insofar as the sonic 8hap continue by statute or may be requishe for carrying out the purposes ni this Agreement. ARTICLE VIlI Upon the effective date of the merger herein provided for, all and singular the rights, privileges. powers and franchises of each of the Constituent Companies, both of a public and private nature, and all property, real, personal and mixed, and all debts due on whatever accounts, as well Ior stock sabseriptiollS as all ether things ia action, belonging to each of sold Constituent Companies shall be vested in the Survivinff Company wlthoul f~rtber act or need as effectually as they were ~ested in the Consfituent Companies; and nil and every other interest of the Constituent Com- panies shall hereafter be as effectually the property of the Surviving Company as they were of the Constituent Companies; and the title to any and all real estate, whether by deed or otherwEe, %'ested in either of said Constituent Companies shMl not revert or be in any way impaired by reason of the said merger; and all rights of creditors and all lien~ upon the property of the Constituent Companies shall be preserved unimpaired; and the Constituent Companies, parties hereto, may be deemed to continue in existence in order to pr~efve the same; and all debts, liabilities, restrictions and duties of the Constituent Companies shall forthwith attach to the Surviving Company and may be enforced against it to the same extent as if said debts, llabililie% r~strictlnns and duties had been incurred or contracted by it, it hclng expressly provided that the merger of the Constituent Cmnpanies shall not in any manner impair the rlgbts of any creditor or credhors of either of the Cc.:~stiluent Companies. If at any time the S~rviving Company shalt deem or be advised that any further assigItments, assurances in the law. or things are necessary or deairable to vest in the Surviving Company the title to any property of the Consthuent Companies, the Constituent Companies and their proper officers and directors shalI and will execute all proper assignments and assurances iil the law, and do aII firings necessary or proper to vest title to such property in the Surviving Company and otherwise to carry out the purposes of this ~reemept. -- ........ f ~t is expressly declared and American hereby covenants flint the SurvlvJag Company shall he subjee~ to the remedies and liabilities in such case prescrlbe¢[~n the said Chapter I2 of Title 14 of the Revised S~.atutes of New Jersey and the several s~pplements to and amendments thereof, " and shall be entitled to all of the rlghts, powers, priviIeges and immunities accorded to a corpo- ratign organized under ~ald Act, and the several supplements to and amendments thereof7 -~hetber " now or hereafter ellaeted. ARTICLE IX The Sure!ring Company sha[l pay all e.xpense~s of this merger. ARTICLE X The Surviving Company re~erven the right %o amend, affer~ Change or repeat any provision contained in the Agreement and Act of ~{erger and Consoliftation, dated September 9~ 1904. pursuant to which .A-llleriean was created, as sash Agreeznent of September 9, 1904 has heretofore been ~mended and as amended by ~h~s Ag~eenlent, or contained in this Agreement, in the manner now or hereafter prescribed by statut% and all rights conferred upon stockholders of the Survlvlng Company are granted subject to this reservak{on. ARTICLE Xl This Agreement shall be submitted to tbe stockholders el each of tile Constituent Companies as provided by law and shall take effect and be deemed and taken to be the agreement and act of merger of the Constituent Companies upon the adoption thereof by the votes of the holders of t~vo thirds oF all file capital stock of each of the Coustitutent Companies and upon the donig of such other acts and things as shaU be required by Chapter 12 ni Title id el the Revised Statutes of New Jersey and the several supplements thereto and acts alnelldator~ thereof. 6
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IN WITNESS I~I~IIF.RFDF, said Constituent Companies, parties ~.o this AgreemenL have caused their respective corporate seals to be hereunto afftxed and these preseuts to be slgneO, by their respective Presidents or one of lhclr respective Vice Presidents and attested by their respective Secretaries or Assistant Secretaries, all thereunto duly authorized, and the Directors of each of said Corporations have hereunto set their hands aud seals as of the day and year ~rst above mentioned` r~ THE AMERI¢&I~ TOBACCO COMPANy By ................................................................ PAUL M. HAHN President rlIE AMERICAN TOBACCO COMPANy CORPORATE SEAL ATTEST : JoHn W, HANLON Secretary Signatures of Directors of The American Tobacco Cotnpaay: ............................................... (L, S.) (Orpheus D. Baxaly~} ............................................................... (L.S.) (Patti M, Hahn) ..................... ......................................... (L. S.) (Alfred F, Bowden) ............................................... (L. S.) (Hiram R. Hanm~r) .............................................. (L. S.) (Richard J. Boylan) ............................................................... (LS.) (Edmuad A, Harvey) ................................ (L. SO (Douglas \V. llrash©ar) ...................................................... (L. S.) (Harry L Hilyard) .............. (L. S,) ('1 homas p Colmors} ............................................ (L. S.) (John R. Hut chlags, Jr,) ................ (L.S.) (James R, Coon} ............................................. (L. S.) (A, LeRoy Jansoa) .............. (L. S.) (John A. Crowe) .................................. (L. s.) (William It. Ogsbul~ ) • ....................... (L, S.) (]olin S, Dowd) ................................. (L. S.) (James F, Striekland) ........................... (L.S,) ( Preston I,. Ft~wler ) 7
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A~E~I~I~r CIGlkl~'Fl'E AND CIGlkR COMp.kI,~ ~RPO~IAT~ SKAL ATTEST : AI~IERIC&N CIGAR~ITTI~ ~ND CIG~ CON[I'ANy By ................................................. CHARLES GANS~0W Vice President GEO~GEE. BOLrVAR Secremry Signatures of Directors of American Cigarette and Cigar Company: ............................................................... (L.s.) (Alfred F. Bowde~ ................................................................ (L.S.) (Albert G~dl ................................................................ (L.S.) (John A. Cmwe) ................................................................ (L.S.) (Paul~LHahn) ............................................................. (L. S.) (A. Gordon Findlay) ............................................................... (L. S.) (Edm~a4 A, I~arvey) .................................. (L. S.) (preston L, Fowler) ........................................................... (L. S.) (tta*.ry L, I~ib ~rd) ............................................. (L. S.) (Charles Ca.show) ................................................. (L. S.) Ooha G. Lang) .............................................................. (L. s.) (Alan C. Garratt) ................................................... (L.S,) (Sidney Sc/1ou)
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STA'fIL Op NEV4 YOF, I< t COUNTy OF NZW YORK ~S$ B~ Ir Rr~MEMBERgO that on this 16th day of October, in the year One Thousand Nine Hundred and Fifty-three, before me, the subscriber, a Notary Ptlbffe of the State of New York, County of New York, authorized to take acknowledgments and proofs in sai6 County ~nd State, pers~ally l~ppeared John W. Hanlon, known to me to be the Secretary of Tbe American Tobacco Company, one of the companies 1lamed in the within Agreement, who being by me duly sworn on his oath said and made proof to my satisfaction that he is such Secretary, that he well knows the common seal of said C~mpa~y, that ~.be ~e~l ~faxcd to the '~,ithlu Agreeing.cut is such e~3tltg~ott ~e~f ~.9.d was thereto affixed by Paul M. Habn, the President Of said Company, and that said Agreement was by said President signed and delivered as and for the voluntary act and deed of said Company ill the presence of said deponent who tbereupon subscribed his name thereto as attesting witness, and that the within Agreement was signed by all the Directors of said Company. Sworn to and subserlhed beforc hie, a Notary Public in and for the County of New York in Ihe State of New York, in said County and State, Otis 16th day of October, 1953. JOHN "~V, HANLON Notary pu'0lle Sn Rn~ tot lhe I)oun~" Oi New "loxk in the State of New ~2'ork (SEAL) Date of I;xpiration of Comnfission , 19 , STATE OF" N~.%V YORK I CouWry ~ N~V,' Yo~K~ ss. : I3E IT RE~EMI~m{un that on this 16th day of October, it~ tile year One Thousand Nilae Hundred lind Fifty-three, before me, the subscriber, a Notary Public of the State of New York, County of New York, autborized to take acknowledgments and proofs in said County and State, personally r, ppeared George "tL 2~ollvar, known to me to lye the Secretary of American Cigarette and Cigar Company, one of tbe companies named in tbe withiu Agreement~ who being by me duly sworn, on bls oath said and nlade proof in my satisfaction that be is such Secretary, that be well knows tbe conuuotl seal of ~akl Company, tbat tbe seal a~xed to the within Agreement is such common ~ea/ and was ~hereto affixed by Charles Gal~show, a Vice President ~)f ~aid Company, a~.d that said Agreement was hy said Vice Pregldent signed and delivered as attd for the voluntary act ~nd deed of said Compan3 ill tb~ presence of ~aid deponent, who thereupon subscribed h[s tlanae thereto as atlesting witness, and that tile wiflliu Agreement was signed by all the Directors of ~ald C~mp~tty, Sw~rn to ~md subscribed before me, a Notary GEogd~ E, BOLIVAR Public ff~ and for the Couaty of New Yo~k in the State oi New York, in sa~d County and State, this 16tb day of October, 1953. Notary Public itt ~tad [or the COUtRV of New York in Ih~ State ot New York (SEAL) Date of Expiration of Commission , 19 .
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CERTIFICATE I, Jo~N W. HA~LO~, Secretary of The American Tobacco ~ompany, a ~orporation organlzed and ~xi~ting under a~d ~ vlrtue o~ the 1~ws oI the Sta~e ~f New Jersey, one o{ the Con~ituen~ Companies described in the foregoing Agreement of ~erger, do hereby ccrti~ in accordance wlth Title 14 o~ the New ~e~sey l{evi~ed Statutes as amended and partlcularly i~. S. 14:12-3 thereof that : I. The foregoiT:g Agreement of Merger of s~id corpor~tlon and American C~gar~te and C{gar Colnpany was entered {nto by the D~:ectors o: ~id The Arr~¢ric~ Tobacco Co:npany~ under the corporate ~eml of said corporation, pursuant to resolut:on~ adopted by the 13oard o{ Directors of said The ~m~ric~n Tobacco Company at a duly convened m~t~ng thereof held on October 16, 1953 at which meetin~ a Special ~leet:ng of the Preferred and Common stockholders of said corporation was ¢~lled, in accordance ~:th the I~y-Laws, to be held on the 2d d~y o~ December, 1953 for the purpose of consider:ng the ~an:~. 2. Sa:d Agreement was duly sub:i:~ted to the Preferred and Colnn:on stockholders o~ said The American Tobacco Company at a special meeting thereo~ called as a[oresaid and duly held at 34 Cour~ Street in the Borough of Flemington, in the County o~ Hunterdon, New ~er~ey, of which l::ceting twenty days' notice of the time, pl~ce and obje¢~ thereof ~s mailed to the las~ known po~t o~ce addres~ oi each o~ ~id stockholders. 3. Sa:d Agreement was consMered by the Preferred a.d Common ~ockholders at said meet{n~ and a vote o~ said s~ochh~Iders was duly taken by ballot for the adoption or rejection o~ said Agreement~ e~ch share of stock entitl~ng the holder thereof ~o one vote, and the ballots o~ the ~tockholders were duly ¢a~t by the stockholders in person or by proxy and stockholders owning rnor~ th~ ~wo-thirds o~ all the e~pi~al stock o~ ~aid The American Tobacco Co:nl~any voted i:l ~avor o£ the adoption of sa~d Agreement. 4. The meeting of the Pre~rred ~nd Comnao~ stochholders of Th~ American Tobacc~ Company and the s~d vote by b~llot upon the adoptlon of ~d Agreement were held and taken separately from the meeHng of the stockholders ~nd vote o{ s~id American Cigarette and Cigar Company. 5. The principal o~c~ o£ The A~nerlcan Tobacco Company in the State o~ New 3ersey is 117 Main Street in th~ ]3orough of Flemington, ~n the County of Hunterdo~, New ~er~ey, and George K~:owE~ Large :s th~ Agent therein, :n charge thereof, and upon whom process ~g~inst ~id corporation m~y be served w{th{n sa:d State. I~ WIT~E~S W~IF~OF, I have hcre1*nto s{~ned ir~y na~l¢ ~s S~cretary ~nd ai~xed i11e sea] o~ s~{d The A~ncrlcan Tobacco Comp~:y th:s 2d day o~ De~ember, 1953. (CORPONAFE SEA].) Io~W. IIANLO~ Secretary
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CERTIFICATE I~ (3zo~G~ ~. Bo~uv~, Se¢retary of Amcrlcan Cigarctte and Cigar Company, a corporation organized and existing under and by virtue of [he laws of the State of New Jersey, one of the Constltuent Companie~ described in the foregoing Agreement ol ~rger,'do hereby certify ia accordance with Title 14 of the New Jersey ReUsed St~tates as ameoded and particularl~ R. S, 14:12-3 thereof that: 1. The foregoing Agreement of Nferge~ of said corporation and The Amcrican Tobacco Company was cntcrcd into by the Directors of sMd American C~garette and Cigar Company, under the corporate seal of said corporation, pursuant to resolutions adopted by the Board of Directors of said American Cigarette and Cigar Company at a duly convened meeting thereol held on October 16, 1953 at which meet{rig a Special Meeting of the Preferred and Common stockholders of said corporation was called in accordance with the By-Laws, to be held on the 4ill day of December, 1953 for the purpose o~ eoasiderlng the same. 2. Said AgreemenL was duly submitted tc the Frelerr~d and Common stockholders o[ said America~ Cigarette and Cigar Company at a rpec{al meeting thereof culled as aforesaid and duly held at the office of the ~orporatlon at 117 Muln Strcet in the Borough of Flemington, in thc County of ~4unterdon, New Jersey, of which meeting twenty days' notlce o~ the time, place and object thereof was ma~[ed to the l~t known post-orate address of each ol said stockholders. 3. SMdAgreement was considcrod by the Preferred ~nd Common stockholders at said mccting and a vot~ of s~d stockholders was duly taken by ballot for the adoption or rejection of sMd Agreement, each share o{ stock entitling the holder thereof to one ~ote, and the ballots of the stockholders were duly cast by the stockholder~ Ln person or by proxy and stockholdcrs ov~ling more than two-thlrds of all the c~pital stock of sa~d American Cigarette and Cigar Company voted {n favor of the adoption of said Agreeme~. 4. The meeting of the Preferred and Common stockholders o]~ Am~r{~aa Cigarette and Cigar Company and the said vote by ballot upon the adopt{on of said Agreement were held and taken separately ~rom the meeting of the stockholders and vote of ~aid The American Tobacco Company. 5. The prlncipal office of American Cigarette and Cigar Company in the State of New J~rsey is at 117 Main Street ~n the 3~or~ugh of Ficmington, in the County of I~untcrdon, New ~ersey, and George Knowles Large is the Agen~ therein, in charge thereof, and ~pon whom process against s~id ~rporkti~n may be served within said State. IK WlTN]~S WI~F~OF, I h~ve hereunto nighed my nr~rne as ~ecretary ~nd affixed the sea[ Of saidAmerlcan Cigarette and Cigar Company th~s 4th day of December, 19~3. GEOalaE E. ~oLlv~¢ Secretary (CORPORATIg SEAL)
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MERGER of AMEEICAN CT~ARET~AND CIGAR COMFANY ~ereinbelow sometimes referred to as "Cigarette~) inbo TF~ AMERICAN TOBACCO COMPANY (here~nbelow ~ometime~ referred to ~s "Americ&D") TABLE 0F DONTENTS A~reement of Mer6er Agreement-of Merge~ between The Amerlcan'To- bacco Company and Am~rlcan Ciyarette and Cigar Con~any, dated October 16~ 1953, as filed in the Office of the Secretary of State of New Jersey on December 31~ 1955, with copies of Certificates of Payment of Corpora- tion Franchise Tax by The American Tobacco Company and Amg~ican Cigarette and ciya~ Com- pany attached, and as oe~tdfled by the Secre- tary of State of New Jersey on December ~l, 1953 Time Schedules American Time Schedule Cigarette Time Schedule Federal Income Tax Rulin~ and Opinion Letter dated August ~I, 1953 f~om American to Commissioner of In~ernal Revenue requeBtlng ruling as to the effee~ fo~ Federal ~noom~ tax purposes of proposed merger Power of Attorney dated August 2~, 1953 from American authorizing Company 0ounsel to act in connection with requeat for ruling as to tax effect of p~oposed merger Power of Attorney dated AUgUst 2~, 195~ from Cigarette authorizing Co~@any Counse~ to act in connection wi~h request for ruling as to tax ef£eot o~ proposed merger Letter dated September 9, 1953 from U. S. Treasury D~partment~ Office of Con~nisslo~ of Internal Reven~e~ to Company Counsel ~ul- iny on Federal inoome tax s%atus of proposed me~e~ Opinion of Company Counsel to American dated December 24, 1953 as ~o tax-free nature of me~e~ Fa~e 1-16 17-30 31-39 40-~5 ~6~47 ~8-49 5O-52 53 - 1 -
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Opinions of Mew Jerse~ Counsel Opinion of Stryker, T~ms & Homer dated Septem- ber 4, 1953 to company Counsel with respect to the power of Cigarette Preferred Stock to vote on the merger Opinion of Stryker~ Tams & Homer dated Septem- ber 4, 1953 to Company Counsel with respect to the power of American Preferred Stock to vote on the merger Opinion of Stryker, Tams & Homer dated Septem- ber ll, 1953 to Company Counsel with respect to drafts of proposes Agreement of Merger~ No- tice of Special Meeting of Stockholders, Proxy Statement and Time Schedule Opinion of Stryker, Tams & Homer dated Septem- ber 23, 1953 to Company Counsel with respect to effect of time of filing of Agreement of Merger on New Jersey franchise taxes; propriety of voting in directorsr meeting on question of merger or signing of Agreement of Merger by American directors holding stock of Cigarette; and with respect to form of proposed amendments to American charter Opinion of Stryker, Tams & Homer dated October 21, 1953approving minutes of Special Meeting of Cigarette Beard held October 16, 1953 and approving manner of execution of Agreement of Merger Mor~an StanleF & Co. Report Re~ort of Morgan Stanley & Co. dated geptember i~, 1953 on proposed merger of American and Cigarette Action taken by Board of Directors of American Call dated October 6, 1953 by the President of Special Meeting of American Board to be held October 16, 1953 Notice dated October 7~ 1953 of Special Meeting of Amerlcan Board to be held October 16~ 1953 to consider and take action on various mattersj including approval and execution of the pro- posed Agreement of Merger and the calling of a Special Meeting of Preferred and Common Stockholders of An~riean to vote thereon Resolutions adopted at Special Meeting of American Board held October 16, ±953 fixing rates of conversion of Cigarette Preferred and Co,men Stocks into A~erics/% Preferred and Common Stocks; approving Agreement of Merger~ ~alling Special Meeting of American Stockholders 54-55 56-59 60-63 64-71 72 73-!$5 1s6 127-129 - 2
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to be held December R, 1953; fixing record date for stockholders entitled to notice of and to vote at said meeblng~ providing fo~ Secretary~S certification of adoption by stQekholders of Agreement of Merger~ and authorizing the filing of Agreement of Merger (if approved by stock- holders of both merging co~poratlons) in office of Secretary of State ~f New Jersey at time be be subsequently determined by American Bdard 130~13~ Resolution adopted at Special Meeting of American Board held October 16~ 1953 appointing Inspec-¸ tore¸ of the Vote to act at Special Meeting of Stockholders to be held December P, 1953 134 Resolution adopted at Special Meeting of American Board held October 16, 1953 appointing proxies for Special Meeting of Stockholders to be held December 2, 1953 134-135 Resolutions adopted at Special Meeting of American Board held October 16~ 1953 approving preliminary proxy material filed wlth Securities and Exchange Commission and form of Notice for Special Meeting of Stockholders be be held December 2, 1953 135-136 Resolutions Kdopted at Special Meeting of Aii~rlean Board held October 16, 1953 authorizing listing on New York Stock Exchange and registration under Seouritles Exchange get of 1934 of additional shares of Preferred and common Stock of American to be issued on merger 136-137 Resolution adopted at Special Meeting of Amerloan Board held October 16~ 1953 designating proxies for American be vote at Special Meeting of Stock- holders of Cigarette to be held December 4, 1953 137-138 Resolution adopted at Special Meeting of gmerloKn Beard held October 16, 1953 specifying order of business for Special Meeting of Stockholders to be held December 2, 1953 138-139 Resolutions ~dopted at Speoi~l Meetln~ of American Board held October 16, 1953 Inoreaslng authority of Transfer Agent and Registrar with respect to additional shares of preferred and Common Stock . of American to be issued pursuant to the provl- 139-140 sions Of the Agreement of Me~er Resolutions adopted at Special Meeting of American Board held October 16, 1953 authorizlng qualiflca- tion under Blue Sky Laws and Securities Laws of va~lous states 140 Resolution adopted at Special Meeting of American Board held October 16~ 1953 authorizing execution of instrb~nents, doeulilenbs Or papers ~equlred ~nder Indent~tTes of American 141 -3-
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Resolutions adopted at Regular Meeting of American Board held January 26, 1954 determining falr value of 58~S00 shares of Common Stock and 834 shares of Preferred Stock to be recorded on boo~s of American, and the amounts per ~hare to be eredlted to I'un- issued common stock", ~'~nissued preferred StOCk" and "Excess of net proceeds from capital stocks issued over par value"; Rrovidlng that assets of Cigarette be recorded on Americanls books at the same values at which carried on books of Cigarette; and providing for capitalization ~s "Brands, trade- marks~ patents, good-will, etc," Df excess of fair value of minority interest in Cigarette over portion of net worth of Cigarette represented by minority interest Resolution adopted at Regular Meeting of American Board held February 16, 1954 l~Ith respect to wrlte-off of intangibles acquired from Cigarette on the merger Action taken by Board of Directors of Cuban Tobacco Compan~ Inc. Resolutions adopted at meeting of Board of Direc- tors of Cuban Tobacco Company Inc. held January SO, 1954~ ratifying conversion of ~,823~000 of 3% notes of Cuban Tobacco Company Inc. (received by American from Cigarette as a result of the merger) to open book account indebtedness, ratifying $145,000 loan from American and authorizing borrowings up to $4~000,000 from American 15~-155 156 157-158 Action taken b~' Board of Directors of Cigarette Call dated 0otober 6, 1953 by the President of Special Meeting of Cigarette BOard to be held October 16, 1953 159 Notice dated October 7, 19~3 of Speclal Meeting of Cigarette Board to be held October 16~ 1953 160-163 Resolution adopted at Speolal Meeting of Cigarette Board held October 16~ 1953 amending By-Laws of Cigarett~ wQt~h respect to record date for stock- holdersr meeblngs 164-165 Resolutions adopted at Special Meeting of Cigarette Beard held October 16, 1953 fixing rates of oon- version of Cigarette Preferred and Co~on Stocks into American Preferred and Co~on Stocks; approv- ins Agreement of Merger; calling ~pecla] Meeting of Cigarette Stockholders to be held December 4, 1953; fixing record date for stockholdehs entitled to notice bP and to vote at said meeting; providing ,i for Secretary s certification of adoption by stock- holders of Agreement of ~erger; a~d authorizing the filing of A~reement of M~rger (if approved by stock- holders of both merging corporatloI~s) in Office of Secretary of Static of New Jersey at ~ime to be sub~ sequently determined by Cigarette Board 166~169 ~5 - a
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Page Besolutlon adopted at Special Meeting of Ciga~ rette Board held October 16, 1953 appointing Inspectors of the Vote to act at Special Meet- InS of Stockholders to be held December 4, 1953 169-170 Resolution adopted'at Special Meeting of Ciga- rette Board hold October 16, 1953 appointing Proxles for Special Meeting of Stockholders to be held December 4; 1953 170 Eesolution adopted at Special Meeting of Ciga- rette Board held October 16~ 1953 approving form of Notice of Special Meeting of Stock- holders to be held December 4~ 1953 and provid- InS for the mailing therewith of copy of Proxy Statement of American 170 Resolution adopted at Special Meeting of Ciga- rette Board held october 16~ 1953 specifying Order of ~slness for gp~eial Meetlr~ of Sbo0k- holdeD6 te he held December 4, 1953 170-171 Resolutions adopted at Special Meeting of Ciga- rette Board held October 16, 1953 authorizing quKllfi~tion und~ Blu~ Sky ~5 ~d ge~uPi- tle8 L~ws of various states 171-172 Resolution adopted at Speolal M~etlhg of SAga- Torte BO~d held 0ctob~r 16, 1953 subhcrizlng the execution of other documents and pape~8 to evidence vesting in the survlvi~g company of rights, property, etc., of each of the constit- uent compandeB 172 Resol~tlon adopted at adjourned Regular Meeting of Cigarette Board held December 16~ 1953 author- izing filing of Agreement Of Merge~ with Bec~ebaz~ of State of New Jersey on such date as the P~esl- dent or any Vice P~esident of American might de- termine 173 Press Release Press Release dated October 16~ 1953 announol~g that American and Cigarette Boards of Directors had entered into an agreement (subject to approv- al of stockholders) to merge Cigarette into ~me~- Scan and that Special Meetings of Stockholders of American and Cigarette to vote on the merger would he held Dec~mbe~ 2, 1955 and December 4, 195~ respectively Clearance of American Broz$ Material fo~ Special Beetin~ of Stockholders h~Id Dedembor ~ 195~ under dEC g~les and Related dEC Correspondene~ Questionnaire dated September 18, 1953 for of- ricers and directors of American and cigarette in connection with proposed merger 174-176 177-180 -6-
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Letter dated September 23, 1953 from Company ac- Countant8 to SEC with ~espect to omission of financial statcm~nt~ of Cuban Tobacco Company ~nc. and it~ co~olldated subsidiaries and of AmerLean, separately, f~om Proxy Statement Letter dated Septembe~ ~5~ 1953 from SEC to Com- pany accountants advi~iD~ that no obJeotlon would be rai~ed to omission of financial 8tat~- ment~ of American on an uncon~olldated basls o~ of Cuban Tobacco Company Inc. and its Consoll- dated sub~idlari~ Letter dated October 2~ 1953 from Ame~Lean to SEC filing three copies of ~he follo~i~g pre- llmlzary proxy ~ollci~ing "mat~ri~l (~) Form of proxy to be solicited by the manage~ ~en~ (b) P~id~nt~ Letbe~ to stockholders (c) Notice of ~e~ting and Proxy Statem~nt~ in- 01udlng ~bit~, to be fu~nlsh~d ~tock- holders by th~ management (d) Form of l~tte~ to ~. Philip G. Ca~ron outlini~g'i~truction~ to be observed by Philip G. Cameron Company in ~oliclting proxi~B (~) Form of ide~tlfic~tlo~ l~tter to be fur~ ni~hed employ~e~ of Philip ~. C~mero~ Company who solicit proxle~ for the ~t- (f) Form of letter and enclosure to be sent to v~rlous b&n~s ~equ~tlng their coop~ablon in forwarding pPoxy materi~l to ~tockholder~ Letter d~ted Octobe~ 8~ 1953 from SEC to Amerlca~ a~knowled~in~ receipt¸ of preliminary proxy ~odlo- itingmat~rlal Letter dated October 16~ 1953 from Company Counsel to SEC advising of the conve~slo~ ~at~s under the Agreement of ~er~e~ Letter dated October 20, 1953 from ~merlcan to SEC filing thr~e copies of each of th~ following: (~)~Form of l~tt~r to be Buppli~d to brokers to request voting in~tructlon~ with r~pect to stock of American held by them for the ac~ Cou~t of cli~nt~ (b) Form of return po~t card to be supplied brokers fo~ cli~nt~ to indicate their voting Page 181-182 183 z85 186-18y ~88-23~ 23~ 234 ~$5-~36 239 24o -7-
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Lmtter dated October 23, 1953 from American to • SEC fillng three sets of definitive proxy ma- terlal consisting of the following~ (a) Proxy for December 2, 1953 Special Meeting of Stockholders of American (b) Presldent's Letter dated October 26, 1953 to Freferred ~r~d Common Stockholders of Amerloan (c) Stamped self-addresBed return envelope (d) Notice of December 2, 1953 Special Meeting of Stockholders of American and Proxy Statement Letter dated November 4, 1953 from SEC to American acknowledging receipt of definitive proxy solic- iting material Letter dated November 6~ 1953 from Amerlcan to SEC filing one oopy Of Proxy Statement with manually signed opinions of independent certi- fied public account&nts Letter dated De0embe~ 23j 1953 from SEC New York Regional AdminLetrato~ to Mr. P. M* Hahn~ PreBi- dent of Cigarette~ reque~tlng ±nfo~matlon as to da~e o~ Which merger proposal Was fi~s~ and ~ub- sequently dl~cussed between offioerB and direc- tor~ of Cig&rette ~d Am~Icanj det&ilB of suoh di~cusB±on~ &rid ~r&nsc~Ipt of all purchase8 ~nd Bales in Cigarette securities from 0ctobe~ i, 1953 to date by any person who was an officer or director of both companle~ at any time du~ing the period Memorandum dated January 4, 1954 from American Auditor to offloe~8 and di~ecto~ o~ American and 0igar~tt~ req~e~tlng ±nfo~m~tion a~ to Brock transaotlon~ called for by letter dated December 23, 1953 from SEC New York Regional i Admlni~t~ator Letter dated January 20~ 195~ f~o~ Mr. Paul M. Hahn, Pre81den~ Of A~erica~, to ~EC New Yor~ ~eglo~&l Admln~str&~or~ supplyIDg i~£or~tlon requested in letter da~ed December 23, 1953 Correspondence b$ Amerloan with New York Stock Exchange regardil~g SDeclal Meetln~ Of Stock- holders,of American ~IC Decembe~ ~ 1~5~ Letter dated October 16, 1953 from American to New York Stock Exchange gi~Ing notice that 8peclal Meeting of Stockholders of American wa~ oall~d to be held on Deoember 2, I~53 to ~ke action on proposed merge~ with C~re~te and that October 28, 1953 ha~ been fixed as r~cord d&te 242 e43 244-2Z~5 246 247-291 292 293 294 ~gS
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Letter dated October 19, 1953 from American to New York Stock Exo~nge transmitting six copies of Proxy, PresidentJs Lette~ to Stockholders and Notice of Special Me~blng a~d Proxy Statement for Bpe~i~l Neet~ cf gtocNh~lde~ of A~e~ican to be held December g, 1955 Letter dated October 23, 1953 from American to New Yo~ Stock Exahange encloslng three seb~ of definitive proxy material for Specdal Meet- ing of Stockholders of American to be held December 2, 1955, e0nsistin~ of Proxy, Presi- dentf8 I~tterl rebu~n envel~pe, Notlce of Sge~lal Meeting ~u~Proxy ~t~tement Correspondence with American TransferA~ent rer A ent re- Ste o1111 , nolompbe ?rox~ Material for ~cial Mee~ holders ef American held Dee~~ Letter dated October 8, 1953 from Guaranty Trust Company of New York to Secr~tarN of American with respect to time required to prepare p~oxy material for mailing Letter dated Oetobe~ 16, 195~ from Secretary of Amerlu~u to Guaranty ~U~% Company of ~ ~ork giving detailed instructions for the enclosing and mailing of proxy material for tbe Special Meeting of Stockholders Of American held December 2~'1953 Letter dated October 16, 1953 from secretary of American to Guaranty Trust Company of New York giving notloe of deslgnabio~ of October ~8 as recoTd date ~o~ Sp~i~l ~ebi~ of Sto~khol~er~ of A~erlcan held December 2, 195~, giving fur- ~her instructions with respect to stencilling of proxies and requesting c~rtlfied lists of stoekholder~ for us~ in conaection with t~bu- lation of proxies American S ecial Meebin~ Stockholders held Letter da~ed November 12, 19~3 from ~eriean Sec- retary to New Jersey Statutory Agent with ~espect , to accessibility of certified lists of stock- holders of American and Cigarette Letter dated November 20~ 1953 from Americas Sec- retary to New Jersey Statutory Agent transmitting certified lists of gtockholders of ~erica~ of record October 28, 1953, be be kept on file at registered office i~ Plemington for IO days prior to meeting pa_~ 299 3OO 301 302-30~ 305-306 3o7 508 -9-
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preBldent's Letter dated October 26, 1953 to preferred and Common stockholders of American t~a~smittingthe following: (a) Notice of Special Meeting of Stockholders of American held Dec~mb~ S, 1953 (b) Proxy Statement for Special Meeting of gtockhold~rs of American h~Id December 2~ 1953 (c) proxy for Special Meeting of Stockholders of American held December 2, 1953 (d) Stamped self-addressed r~turn envelope Synopsis of Special Meeting of Stockholders of American held December 2, 1953 Minutes of Special Meeting 0£ Stockholders of American held December 2, 1953 Affidavit of hailing of Notice of Special Meet- ing of Stockholders of American held December 2 1953 Form of sllp filled in by stockholders for Sec- retary's record of those present at Special Meeting of Stocgholders of American held Decem- ber 2, 1953 Order of Business distributed to stockholders -attending Spepial M~eting of Stockholders Of American held December 2, 1953 Oath o£ Inspectors acting at Special Meeting of Stockholders Of American held December 2~ 1953 Form of Ballot on resolution to ~dopt Agreement of Merger at Special Meeting of Stockholders of American held December 2~ 1953 Certifloate of Inspectors Of the Vote On resolu- tion to adopt A2reement of Merger at Special Meeting of Stockholders of American held Decem- ber 2, 1953 Cumulative Summary Of Proxies received for Special Meeting of Stockholders of American held December 2, 1953 Notice dated December 21, 1953 from American See~ ret~ry to Amerioa~ stockholders advising of ap- proval of merger by American and Cigarette stock- holders Summary of Special MeetiD~ of Stockholders of American held December 2~ 1953 sent to stock- holders requesting same P a_~bl 244-245 247 248-291 243 g46 309-315 316-323 324-325 326 327 328 329 330-331 332 333 334-337 - I0
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Ccrre~onden0e with Cigarette T~ansfer ~nt ~e- ardi~ Pre~aratlons fo~ Madli of Prox Material held Deoem~er ~, I~51 Letter dated October 16, 1953 from Secretary of Clg~r~tte to Guaranty Trust Cempa~y of Hew York requesting certified lists of stockholders of Ciga~etue o~ re~ord October 28, 1953 for use in connection with prepar~tlon fo~ n~illng o~ ne0essary papers to Cigarette stockholders Oi~arette Special Meetln$ of Stockholders held December #, i~5~ Letter d~ted November 12, 1953 Prom American See- rotary to New Jersey statutory agent with respect to accessibility of certified lists of stoe~- holders of American and Cigarette Letter dated Movember 19, 195B f~om Cigarette Sec- retary to N~W J~rsey Statutory Agent transmitting c~rtlfied liBt~ of ~tookhold~ of cigaret%~ of record October ~8: 195~ to be kep~ on file at ~egi~tered offi~ i~ Fi~mlr~ton fo~ iO d~ya prlo~ to meeting Pre~ident)s Letter dated October 26, 1955 to Fro- Ported ~d Co~on stoe~holde~ of Clgare~te transmitting the following: (a) Notice of Special Meeting of Stockholders of Cigarette held Decembe~ ~, 1953 (b) American Proxy Statement for Special Me~t~ Ing of Stockholders of American held Decem- ber ~, 1955 (c) Proxy for Special Meeting of Stockholders of Oiga~tte held D~cember 4, 1953 (d~ Stamped ~if-add~e~ed ~eturn ~u~elope Form, of lett~ ~)$pplled to b~o~er~ t~ request voting i~st~uctlons with respect to stock of ~Igarette held bY them fa~ th~ account of clients Form of return post card supplle~ brokers for clients to indicate thei~ voting ±nstructlo~s Proxy fro~ A~erlcan to Paul M. hahs, James R. Coon and Richard J. Boylan to vote Cigarette stock held by American at Special Meeting of Stockholders of Cigarette held December 4, 1953 Substitutions Cf proxy by Paul M. hahn to Cyril ~. ~t~go for Spec~l Meetln~ of gtockhold~r~ of Cigarette held Decembe~ 4, 1953 (Similar substl- ~tlon~ ~lere ~iven by ~ R. Coon to Cha~le~ ~anshow and by Richard J. Boylan to John G. Lsng) - ll - 338 307- 339 340-3~1 3~2 S~8-291 3~3 385 3h6 3~7 3a8-35o
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Synopsls of Special Meeting of Stockholders of Cigarette held December 4, 1953 Minutes of Special Meeting of stock~olders of Clgarette held December 4, 1953 Affidavit of Mailing of Notice of Special Meet- Ingof Stockholders of Cigarette held D~cemb~r 4, 1953 FO~ of sllp filled in by stockholders for Bee- retaryls reeoFd of those present a~ Spe0ial Meeting of Stockholders of Cigarette held Decem- ber h, 1953 Order of Business distributed to sto~kholder~ attending Special Meeting of Stockholders of Cigarette ~eld December 4, 1953 Oath of Inspectors acting at Special Meeting cf Stockholders of Cigarette held December 4, 1953 Form of Ballot on resolution to adopt Agreement of Merger at Special Meeting of Stockholders of Cigarette held December 4, 1953 Certificate of Inspectors of the Vote on resolu- tion to adopt Agreement of Merger at Special Meeting of Stockholders of Clgar~tte held Decem- ber 4, 1953 Notice dated December 21, 1953 from Cigarette Secretary $0 Cigarette stockholders advising of approval of merger by American and ClgareCbe stockholders Certiflca~ion to American Transfer A ent and H~istrar a@ to ~doptlon of ~sreeme~ of Me~e~ and as to Ihcrease in ~hei~ Aut~orit~ with Re- spect to Addltlo~al Shares of Preferred Stock a~IdSo~mon Stock' of A~eri~an I~uahS~ ud~eP ~re~ m~nt Of Mere~ [etb~r dated D~ember 10, 1953 from Company Counsel to American Transfer Agent enclosinS the following: (a) Certificate of Secretary of American certi- fying as to resolutions of Board of American adopted October $6, 1953 approving the A~eement of Merger, identifying the Agree~ ment of Merger as signed and certifying as to adoption of Agreement of Merger by the stockholders of Amerlcan (b) Certificate of secretary of Cigarette eerti- fylng as to resolutions of Board of Ciga- rette adopted OoCober 16, 1953 approving Agreement of Merger, identifying the agree- ment of Merger as signed and certifying as to adoption of Ag~eemsnt of [~e~ger b~ the stockholders of Slgar~tte - 12 - 3DI-357 358-361 362-364 365 366 ~6? 368 369 370 371 37~ 3?3
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(C) Certified copy of resolutions of Board of American adopted October 16~ 1953 increasA ingauthor~ty of Alneri~an Transfer Agent wlth respect to additional shares of Pre- ferred Stock and Co.non Stock of American isBuable under the Agreement of Merger 139-140 Letter dated December I0. 1953 from Company Counsel to American Registrar enclosing thQ following: 374 (a) Certificate of Secretary of American ce~tl- fylng as to resolutlons of Board of Amerloan adopted October 16, 1953 aDprovlng the Agree- me~t of M~I~er, identifying the Agreement of Merger as signed and certifying as to adoption of Agreement of Merger by the stockholders of American 372 (b) Certificate of Secretary of Cigarette certi~ fylng as to resolution8 of Board of Cigarette adopted October 16. 1933. approving Agree- ment of Merge~, identlfyl~g the Agreement of Merger as Si~ed &rid certigyir~ as to adoption of Agreement of Merger by the stockholders of Cigarette 373 (c) Certified copy of resolutions of Beard of American adopted October 16. 1953 increas- ing authority of American Registrar with re- spect to additional shares cf Preferred Stock and Common Brock of American ~ssuable under the Agreement of Merger 139-140 Certificates of Payment of New Jersey Cor~oratlon Franchise Tax Letter dated December 4, 1953 from American to New Jersey Corporation T~X Bureau enclosing applica- tions of Cigarette and American for certificates of payment of New Jersey Corporation Franchise Tax and requesting that the certificates of pay- ment be filed with the Secretary of State 375 Application dated December 4. 1953 of American for certificate of payment of New Jersey Cor- poration Franchise Tax 3761377 Application dated December ~, 1953 of Cigarette for certificate of payment of New Jersey Cor- poration Franchise Tax 378-379 Letter dated December 7. 195~ from New Jersey Coi~orat~on Tax Bureau to American advising that the certifleate of the Bureau dated Decem- ber 7, 1953 evidencing payment of Corporation Franchise Tax by American bad been delivered to th~ Secretary of State 380 Certificate of payment of Corporation Franchise Tax by American dated December 7, 1933 13 - 13 -
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L Letter dated December 7, 1953 from New Jersey Corporation Tax Bureau to Cigarette advising that the certificate of the Bureau dated December 7, 1953 evidencing payment of Cor- poratlon Fr~nchlse T~X by American had bee~ delivered to the Secretary of State Cer$1flcate of payment of CorRoraflo~ Franchise Tax by Cigarette d~ted December 7, 1953 Fllln$ of A~reement of Merger, Notice to Stock- holder~ Transfer A~e~t and Re~istra~ and ~inions to TrUstee udd@r #~merican Indentures ~tter datsd December 16j 1953 from gtryker~ Tams & Homer to Company Cou~isel with respect to preparations for filing and certlfio~tlon of Agreement of Merger Letter dated December 17, 1953 from Company Counse~ to Stryker~ Tams & Morner wlth respect to preparations for filing and certlflcatlon of Agreement of Mer@~r Letter dated December $9, 1953 from President of American to Secretary of American directing that Agreement of Merge~ be filed in the Office of the Secretary of ~tate of New Jersey on December 31~ 1955 Letter dated D~cember 30, 1953 from Secretary of Amerlcan to COmpany Counsel enclosing a copy of bhe foregoing letter of December 29, 1953 f~om Presld~nt of Amerlca~ and requesting Company Counsel to file Agre~meat of Merger Letter dated January ~, 1954 from Company Counsel to Secretary of American transmitting certified copy of Agreement of Merger filed in the Office of the Secretary of State of New Jersey on December 31, 1953 bearing endorsement showing fillngdate Letter dated January 8, 1954 from President of American to holders of Yreferred and gem[non Stock of American notifying them of the filing of the Agreement of Merger on December 31, 1955 Letter ~ated January 2, 1954 from Co~gany Counsel to American Transfer Agent giving notice of the filing of Agreement Of Merger and transmitting certlfi~d copy thereof Lette~ dated January 2~ 1954 from Company Counsel to Amel,lcan RegIstra~ giving notice of the filing of Agreement of Merger and transmittinga ~erti- fled copy thereof 381 58g-383 584 385 386 587 388 989 39O - 14 -
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Oplnion letters dated January 12, 1954 from Company Counsel to Guaranty Trust Company of ~ew York as ~rusuee u~der I~dent~res of Amer- lean dated Aprll 15, 1942, October 15~ 1944. Jasuary i, 1948 &rid February ij 1952~ trans- mltting certified ooDie~ of Agreement of Merger LtsZin5 on New York Stock Exchange of 834 Shares ot! Amerlca~ Preferred S~o~k and ~GOO Sha~e~ of Amerloan Common Stock Resolutions adopted at Special Meeting of Board ef American held October ~6~ 1953 authorizing llstlng of above-mentloned shares on New York Stock Exchange Letter da~ed October 27~ 1953 from New York Stock Exchange to Company Counsel advising that the minimum ilstSng fee of $250 would be applicable Letter da~ed December 9~ 1953 £ro~ Company Counsel to New York Stock Exchange transmitting coples of Listing Applleatlon In preliminary form and ~he following supporting papers: • (a) Fee Agreement dated December 9, 1953 which ~a~ a~co~panied by ~heck for $250 fe~ (b) Certlflc~te of Secretary o£ American cer- tifying as to resolutions of Board of Amer- ican adopted October 16~ 1953~ approving Agreement of Merger, iaentifying the Agree- ment of ~rge~ as signed and certSfyln~ as to adoption of A~reemen~ of ~erge~ by the stockholder8 of American (c) Ce~tlficate of Secretary o£ Cigarette oer- tlfying as to resoiutlpn~ of Board of Oiga- retie adopted October 16, 1953~ approving Agreement of Merger, identifying Agreement of Merge~ as ~i~ned and ce~tlfy~nS as to adopt±on o£ Agreement of Merger by 8~ook- he&dens of Cigarette (d) Certif~.ed copy o£ resolut~on~ of ~oard of American adopted O~tober 16~ 1953 authoriz~ ins li~ting on New York Stock ~xcha~ge and registration Under the Seeurltle8 Exchange ~ct o£ 1934 of the 834 share~ of Preferred and 58,200 shares of Common S~ock of American (e) Certified flnan~laz statements of American and Cigarette (f) Certlfted copy of resolutlons of ~oard of Amerloan adopted October 16, 1953 increas- ing authorlty of American T~ansfe~ Agent and Segistrar with ~espect to addlt~onal ~h~r~s of P~eferred and Common ~to~k of Amerl0an issuable under Agreement of Me~ger 391-392 136-137 393 394-395 396-399 372 373 136-137 214-~32 139-140 - 15 -
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(~) Opinion letter dated December 9, 1953 from Company Counsel to New York Stoe~ Exchange with respect to authorization of the merger and the legality and validity of the issue of the ~hares of Preferred and Corm~on S~ook of American i~su&ble under the Agreement of Merger 400-40?- Letter dated December 15, 1953 from New York Stock Excl~azge ~o ~erloan advis~ng of approval of llsting 403 Letter dated Deoember 23~ 1953 from New York Stoc~ Exchange to American advising that reg Istration under the Securitles Excha~Ige Aot of 1934 and llst~ng on the New York Stock Exchange o£ the 834 shares of Preferred and 58,~00 ~hares of Common ~tock of Amerloan Would become effeo- tlve on of£1clal natlee of i~suan~e 404 Lette~ dated December ~3, 1953 from Company Coun- s~l to New York Stook EXchange transmitting re- vised draft of Listing Application and r~ferring to quantlty of Listing Applicatlon to be printed ~05 Letter dated December 28~ ~953 from New York Stock Exchan~ to Sorg Printing Comp&ny Ine~ giving instructions for printing of flnal List- ing A~plloatlon 406 Leb~e~ dated January ~, ~9~4 from Cem~Jan~T Coun- sel to New York ~tock Exchange conflrming tele- gram d~ted December 31, 1953 advising of the fll~ng of th~ Agreement of M~ger in the Office of th~ ~ecret~r~- of State of New Jersey on December 31, 1953 407 Letter dated J~nuary 4, 1954 from Company Couns~l ~o New York Stock Exchange transI~ttlng ~igned copy of Listing Application in final form ~08 Final Listing ApplLeation NO~ A-14938 dated D~cember ~, 1953 ~09-412 Letter da~ed January 6~ 195~ from American to ~ew York Stook Exchange transm~tting two copies (one c~rtlfled) of Amendment of S~ctlon i of Artlole I of American By-Laws effective Decem- ber 31J 1953 ~13 C~rtlPi~d ~opy of Amend~e~t o£ S~¢tlon I of Article I of the B~y~Laws of American effectlv~ P~cember 31, ~953 as transmitted to New York Stock Exchange with foregoing letter 414~15 Lett~ date~ January 7, 195~ from Company Coun- ~l to Ame~'~can Transfer Agent enclosing coples of opinion letter dated December 9 ]953 to New York Stock Exchang~ (S~e Pages 400-40~) and ad- vislng that listing on the New Y~rk Stock Exchange ~nd ~eg~tratlon under th~ Securities Exchange Act of 1934 had become effectlve ~16
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Order of SEC dated December ~2~ 1959 declaring registration of above-mentioned shares of Pre- ferred Sto0E and Common Stock of American under Securities Exchange Act of 1984~ effective on notice ef issuance 491 Current Report under Securities Exchange Act of Letter dated January 8~ 1954 from American to SEC t~ansmittlng current report for month of December 1953 on Form 8-K 492 Letter da~ed January 8, 195~ from American to New Y0rkStock Exchange transmitting current report for month of December 1959 on Form 8-K 493 Current report on Foz~ 8-K for mo~th Of December 1953 reporting on Special Meeting of Stock- holders of American held Describer 2, 1955~ adoption of Agreement of Merge~ and Amendment of Sectlcn 1 of Artlole I of By-Laws of American 49~-500 Letter dated January 8~ 1854 from American to Guarant# Trust Company of New York as Trustee u0der Indenture dated April 15, ]8~2 tPansmitting .copy of current report on Fox~ 8-K (Silni!ar let- ters were sent to Guaranty Trust Conlpany Of New York as Trustee under Indentures dated October 15, 1944, January i, 1948 and February I~ 1952) 501 Letter dated January 8, 1954 from American to The Equitable Life Assurance Society of the United States transmlttlng copy of current report on Form 8-K in accordance with Indenture dated January i, 1948 502 Wisconsin Blue Sky Letter dated January 8~ 1954 From Counsel for Unde~rlters in 1952 financing be Company Coun- sel forwarding copy of Order of Wisconsin De- partment of Securitie~ amending the Order of March 6~ 1952 covering the registration of Amer- ican Fo[r~mon Sto~k Wisconsin Department of Securities Amendment d~ted December 3i~ 1959 to Order of Registration dated March 6, 1952 Exch~n$e of Certificates For Cigarette Stock held by Public and Cancellation of Certificates ~or Cigarette Stock held by American Letter dated January 5, 1954 from Company to Amerloan E~nk Note Company and executed authorl- zation enclosed therewith ooverlng preparatlon of Scrlp Certificates 5O3 504 5o5-5o6 -18 -
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(o) Notice dated January 8, 195~ from Secretary of Imeric~ to hodder~ of certlficates fo~ Common Stock of Cigarette ~ith respect to the exchange of such c~rtlflcates~ ~Ith ¸form of letter of transmittal and instruc- tions annexed 5d8-5~O (d) Opinion letter dated January 8~ 195~ from Company Counsel ~o Gua-?'~ty Trust Co~pany of New York ~Ith respect to effect of merge~ on sto~k of Cigarette3 dnapplleabillty of Federal income tax, Inapplicability of regi~- tratlon r~qui~e~ents of Securities Act of 1933 and advising that the ~34 ~ha~e8 of Pre~ fe~ed Stock and 58~200 shares of 0ommon Stock of i~er±ca~j res~ltlng fro~ the co~- version of Ci~tt~ ~to~k~ had bee~ ld~te~ on the N~ York S~ock Excha~g~ and ~egi~ter~d under the Se~u~Itle~ Exchange Act of l~ 521 ~emorsndum dated January ~l~ 1~5~ from Company Counsel to off~ol~l~ of A~rlca~ a~ 0dgarett~ ~ith ~espe~t to the del~ver~ to Gua~a~t~ T~st Company of N~ ~ork fo~ ~ancedl~t±o~ by it a~ Transfer Ige~t of ~ert~ficate~ fo~ P~eferred and 0o~mon ~to~k of Cigarette ~hich had been held by C±garette An its tr~asur~ 8/~d the cer~dficates fo~ Cigarette ~tock o%naed by American 522 Lette~ dated January l~ 195~ from A~i~tant TPeasu~e~ of¸ ime~ic&n to Guara~t~ T~st Company of Ne~ Yo~k ~ith r~sp~ to oa~cedlatdo~ of ce~tlflcate~ f~r Cigarette ~tock registered in the name of Aze~icau and Cigarette sto~k regis- tered in the name of Cigarette and di~t of such Cigarette stock certlflcates enclosed therewith 523-52~ Letter dated February 10, ~54 from Guaranty T~t Company o~ Ne~ ~or~ to Tre~su~e~ of A~er- ican ~dth respect to divldend~ on ~tock of A~er- i~au represented by ~u%excha~ed Cigarette ~e~ii- fi~ate~ 525 ~emora~dum da~ed February 16, 195~ from ~ssdstant T~ea~u~e~ Of Ame~i~a/l to C~i~ Cle~k o~ A~ioa~s T~easurer'~ DePartment ~ith ~esp~0t to the ~ayment ~f dlvidend~ o~ unexchanged Ciga~bte ~to~k 5~6 Fo~ lette~ f~o~ T~easu~er of A~e~dcan to ~u~nty Trust Company of ~e~ ~or~ to accompany check8 re~- ~e~entlng divldend~ p~yable on sha~e~ ~f sto~k of imerlaa~ ~ep~ese~ted by tu%ex~hanged Cigarette 0ertiflcates 527 Letter dated February 17, 1954 f~om Treasurer of i~e~dcan ho Gua~allty T~ush Co~p~y of ~e~ ~o~k ~ith respect to the ~ch ~j 1954 Anlerlca~ Co~nmo~ dividend on American Common ~tock represented b~ unexchanged Cigarette ~ertiflcates 528 - 20 -
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~tter dated February 16, 1954 from Treasurer of Ama~ican to Guaranty ~u~t Company of New York extending from Febrt~ary 17, 1954 to March lO, 1954 bhe period for buying or selling fractAonal Scrip Certificates ~epre~entlng fractional in berests in Preferred Stock of American 529-530 Letter d~ted February 19, 1954 frc~ Gua~a~ty Trust Co, any of New York to Treasure~ of AmericaD acknow~edglng instructions bo exbend to March lO~ 1954 the period for buying or selling fractlonal Scrlp Certificates representlng fractional inter- ests in Preferred ~ook of American and enclosing copies of the following letters as two types of lebbers which were sent to stockholders: 531 (a) Letter (of the type sent to Cigarette B~ock- holders who had surrendered for exchang~ their ce~tlfdoat~s for Cigarette Preferred Stock) dated February 17~ 1954 from Guaranty Tr~st Co~any of New York to James T. H~mlln, J~ ~nd ~ll D. Hamlin giving notic~ of the extension of time for the purchase and ~ale of Scrip C~rtdf~cates to March lO, 1954~ and requesting authorization either to purchase Scrip Certificates for additional fractional shares to equal a full share or to sell bhe Scrip Certificate the~e stockholders be~e entitled to on the surrender for exchange of their certificage fo~ on~ share of Cigarette 5~2 (b) Letter (Of the type sent to Cigarette S~ock- ~olders who bad ~ot previously surrendered their certificates for cigarette Preferred Stock) d~ted FebrUary 17, 19~4 from Guaranty Trust company of New York ~o Elizabeth M. S. Davison giving notLee of the extension Of ~ime for the purchas~ and Bale of S~rip C~rti- ft~at~ mp M~h lO, 195~ aud u~glug thi~ ~tockho~der to forward her Cigarette Fre~ ferred S~ook ~ertifioate for exohange 53~ Form cf S1 nature and Endorse end for Use by Amerlcau a~ter~ Merger on Ciga~et~ Documents and Cheoks and~Form of S~lo~eF £'d~ A~erlcan Checks used to pay Ci~arette'Ob~at±ons Memorandu~ dated December 31, 1953 from Company Counsel to Mr. J. R. Coon suggesting fozml of signature to be used by A~erlcan afSer merger in signing papers formerly calling for Cigarette ~ign~t~re and ~ndorsing checks made payable to Cigarette Form of sticker to be attached to American c~ecks used to pay Cigarette obligations after merger 53~ 535 - 21 -
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Paag_e Me,ice of Met er to Customers, Banks~ Parties to ~[-~ Cisarette and Collectd~S of 0~ms ~e~ican Circular No. 3650 dated December 31, 1953 to customers giving notice of the merger and oontalnlng instructions for orders for Pall Mall clgarettes and payment~ therefor 536 Letter dated December 31, 1953 from American to various banks with which Cigarette had accounts, giving instructlon8 as to the closing out o£ such a~ceunts 537-538 Letter dated December 31, 1953 from American to Havatampa Ci~r Company, tenant under a lea~e with Cigarette dated October i, 194~, giving notice of the merger and r~questing an endorse- ment substituting American for Cigarette in the O~nera and Tenants Liability Insurance Policy 539 Letter dated January 7, 1954 from Havat&mpa Cigar Company to American enoloslng endorsement substi- t~tin~ g~erLe~u for Clg~ette in Ownera ~nd Te~ts ~Liabllity Insuranc~ Policy 540 Letter dated January 5, 1954 from American to Sullivan, Stauffer, gold,ell ~ Ba~le~ Inc., ad- vertising agency for P~ll Mall cigarettes, request- ing this agency to give notice of the merge~ to all parties who had entered Jute contracts with Cigarette through thls agency 5~1 Letter dated January ~l, 1955 ~rom Sulldvan~ Stauffer, Colwell & Bayles~ Xnc.~ advertialng ~n~ for ~iI ~ali elg~rette~, to N~tdonal Broadcastlng CO., Inc. giving notice of the mer- ger (Letters similar to this were sent bY this agensy to all parties to contracts with Cigarette ha~dng to do wdth radio and tel~vd~ion advertising) 5~2 Letter dated January 5, 195~ from American to City of Tmmpa Water Department giving notice of merger an6 requ~tlng transfer of deposit from gigarett~ to American 5~5 Lette~ dated January 5, 195~ from American to Electro ~ustproofing Col~poratlon giving notice of me~ge~ in connection with contract with Cigarette dated M~y 26~ 19~7 5A4 Letter dated January 5~ 1954 from American to g. C. A. Service Company, Inc~ giving notice of merger in conneotlon with contract with Cigarette dated May i0, 195B 545 LetteP dated January 7~ 195~ from A~erlean to TT~e Equitable Life Assurance Society of the United States giving notice of merger in connection with gro~ppolioies issued to American 5~6 - 22 -
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Letter dated January 7, 1954 from American to Metropol~t~n L~fe Insu~ce Company giving no-. tlce of merge~ in conneotlon with g~oup policy i~sued to American Letter dated January 12, 1954 from American to Collector of C~stoms~ Norfolk~ Virginia~ can- 0elling authority of agent of Cigarette for p~eparatlon Of shlpDer1~ export deela~atlons ab Norfolk, Vi~glnia (An Identical letter was w~itte~ to the collector of Customs, Newport New~, Virginia) Letter dated January 12, 1954 from Amerlcan to Collector of C~stoms~ Durham, North CarolinK~ cancelling authority of former employees of Cigarette to execute shippe~Is expart deelara- tlon8 at Durham, North Carolina (glmilar let- te~ were ~ritt~n to Collectors o~ Custo~ ~t Philadelphia, Miami, Tampa, West Palm Beach, NeWport News Norfolk~ New York~ Baltimore ~nd Charleston Notice of Discontinuance of Cigarette as an Em- ~loyer in Connection with Social~ Sta~e Unemployment TaxI State Disabilit~._i~ws and Disability Insurance Carrier Cove~ 0utllne of procedure followed with regard to noti- fication of discontinuance relating to Social Security Tax, State Unemployment Tax, State Dis- ability Laws and Disability Insurance Carrier Coverage Determination of Fair Value for Accou~tin~Pur- ~oses of the S~,~oo Shares of Common Stock and ~ Sha~es of Preferred Stock of American Re- ~ultln~ from the Conversion of Cigarette Stock and Wrlt~-0ff of Intangibles Acquired from Lette~ dated December 2~, 1953 from American to Morgan Stanley ~ Co, requesting thei~ opinion as to the fair value as of D~cembe~ 31, 1953 of the 58,~00 aha~es of Common Stock and 83~ shares of P~eferred gtcck of An~erioan i~suable in conneo- tlon with the me~ge~ Letter dated January 5, 1954 from Morgan Stanley & CO. to American givlr~ thei~ opinion a~ to the fair value as of December 31, 1953 of the 58,200 8hare8 of Common Stock and 834 shares of Preferred Sto0k of American issu~ble in connection with the m~rger Resolutions adopted at Regular Meeting of American Board held January ~6, 1954 determining fair value of 58,200 sha~es of Common Stock and 834 shares of Preferred Stock to be re~ord~d on books of Am~rlo~ - 23 - 547 548 549 55o-551 552 553-554
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Novatlon A~reement ~ubstitutin~ American forru~Ci a- ~et~e in Contracts ente~e~ Into b~ Ci~aret~ Nav~p~dor to Me~er Letter dated Mar~h 3, 1954 from Navy to American reque~tlng llst of Navy oontraet~ with Cigarette affected by me~ger Letter dated March 9~ 1954 from American to Navy llsti~guncempleted so,tracts at December 31, 1953 between Navy and Cigarette Letter dated March 15, d95~ from Navy to America~ advising that invoices under dt~ contracts with Cigarette could not be cleared until a t~ov~tlon agreement was executed az~d requesting certain documents with respect to merge~ Letter dated March 18~ 1954 from American to Navy t~ans~ittlng the followdng~ (a) Two certified copies of Agreement of Nerger, i~eluded i~ which were 1. Certificate of ~ecretary of Ameri~a~ as ,to adoption of Agreement of Merge~ by its Board and its stockholders 2. Certificate of ~ecretary of Cigarette as to adoption of Agreement of Merge~ by its Board and its sto~kholder~ (b) TWO copies of opinion le~te~ dated March 17, 1954 f~om Company Counsel to Navy Novatlon agreement entered into as of 1 January 1954 between Cigarette, Amerlca~ and the United State~ of America, represented by a Contracting 0~fLeer of the Navy 555 556-557 558 559-560 I~16 ll 12 561 562-564
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Amendment of Army Purchase Notice Atreement Suppl~ Bulletins Letter dated Janusryll: 1954 from Headquarters Quartermaster Ma?ket Center System, U, S. grmy~ Chicago, to American requiring a request by Oigarette to can~el its Supply Bulletin and a request by~nerdes.n to incorporate into its Supply Bulletin the items fo~llerly covered by Cigarette Supply Bulletin Letter dated January 18~ 1954 from American to Headquarters Quartermaster Market Center Systemj U. S. Army, Chicago, requesting that item8 previously listed in Cigarette Purchase Notlee Agreement S11ppiy Bulletin be incorporated in Amerl0an Purchase Notice Agreement Supply Bul- letin Letter dated January 18 1954 from American (as SUOOeSSO~ to CigaretteI to Headquarters Quarter- •aster Market Center System, U. S. A~my~ Chicago, with respect to the release of Cigarette and Headquarters QUartermaster Market Cente~ System from liabilities and obllgatlons unde~ Nigh%retie Purchase Notice Agreelnent Supply Bulletin Amendment dated January BS, 195~ to Cigarette Purchase Notloe Agree~e~t S~pply Bulletin can- ceiling Supply Bulletin effeetlve January i~ 1954 Amen@]~nt dated JahuaryNS, 1954 to American PurchKse gotlce Agreement Supply Bulletin in- corporating iter~s ~ormerly covered by Cigarette Purchase Notice Agreement Supply Buldetdn Amendment to General Servlce8 Ad~inlstratdon Co~tras~ Letter dated January ll~ 1954 from American to General Services Administration with respect to addition of Pall Mall cigarettes to American General Services Administration contract Letter dated January ll, 1954 from Alaerdcan (as successor to Cigarette) to General Services Ad- mlnlstratlon with respect to the release of Cigarette and General Services Administration from llabilltlesang obli~atlons under Cigarette contract wlth General Services Administration Amendment effective January l, 195~ to American contract with General Services A~ainlstratlon (See page 571 for letter dated January ll~ 1954 referred to in the amendment as attached thereto) 565 566 567 568 569-57o 571 572 573 - 25 -
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Examples of Correspondence with Government Activi- ble~ que~tlonln~ Payment to American under Con~ tracts enteredinto with Citarette prior to Merger Letter dated January 5~ 1954 from American te Fur- chmsing and Contracting Office, Fort gill, Okla- homa, giving notice of merger and requesting amendment of a purchase order issued to Cigarette before the merger and filled by American after the merger Letter dated January 7, 1954 from Purchasing and Contraetlng Offlce, Fort Sillj Oklahoma, to Cig- arette suggesting that billing be made by Ciga- rette Letter dated January 15, 1954 from American to purchasing and Contracting Office, Fort Sill, Oklahoma, discussing effect of merger~ enclosing copy of Am~rlcan'8 Circular Me, 3650 dated December 31, 1955 which gave notice of the n~r- get and requesting payment of the questioned invoice (Letters similar to this ~ere written to the Armed Forces and instltutlonal officers who raised questions with respect to ~king pay- mmnt to American instead of Cigarette Letter dated January 7, 1954 from American to the Sales Officer, geese Air Force Base, Texas, acknowl- edging a purchase order directed to Cigarette before the n~rger, giving notice of the merger and requesting a change order Letter dated January 20, 1954 from the Office of the Purchasing and Contracting Officer, Hesse Air Force Base, T~xas, to American stating that they dld not have authority to issue a change order and referring American to Headquarters Quartermaster Market Center System, Chloago Letter dated January 28, 1954 from American to the Purchasing and Contracting Officer, geese Air Force Base, Texas~ discussing effect of mer- ger and requesting payment of an invoice for Pall Mall cigarettes shipped by American on January 4, 1954 after the merger Letter dated January28, 1956 from Headquarters Quartermaster M~rket Center System, Chieago~ to Amerlean referring to correspondence with g~ese Air Force Base, Texas, and stating in effect that orders placed prior to December 31, 1953 must be processed in the name of Cigarette Letter dated February 8, 1954 from the Office of the Purchasing and Contracting Officer, geese Air Force Base, Texas, to American returning the questioned invoice and again referring A~ner- lean to Headquarters Market denter System~ Ohlea~o 26 - 574 575 576 577 578 579 58O 581
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... . pa~f~ ~ttey dated Februaz'y 19, 1954 frola American to H~ad~Uarters Quartex~nas0er M~rket Cente~ SystemJ Chicago, relating the facts With respect t¢ th~ o~er and the subsequent correspondence with ~ese Air Force Base~ Texas 582-585 ~tte~ dated FeDruary 24~ 1954 from Headquarters ~r~e~te~ M~rket Ue~%te~ gy~te~, Chlc&go~ ~plying to the above l~tter enclosing a copy of tBalr letter of January 2~, 1954 to American (s~e pag~ 58o) 58~ ~tter dated April 5~ 19~4 from American to Of- floe 'of the Purchasing and Contracting 0ffilcer~ Reese Air Force Base, Texas~ referring to a call made to Headquarters Quartermaster Market Center System, Chicago, made by Credit Msnager of Amer- loan and to the suggestions made by Lt. Baldwin gC ~adquar~e Quarter~te~ ~arket Cente~ Sys- tem, Chlcsgo, enclosing a cectifled copy of the A6reement'of Merger and requesting payment of ~he guestloned invoice 585-586 ~tter dated Jazu&ry 1B~ 1954 from Purchasing and Contracting Officer, James Connally Air Force Base, Waco, Texas, enclosing form of supplemental a~emeat to a purchase order fo~ execution by American 587 ~tte~ dated January ~i~ 195~ from ~l~ri~e~ to pur- chasing and Contracting Officer, James Co~mally Air Force Base, Waeo, Texa~, enclosing copies of ~pplemental ag~een~nt as redrafted and executed by American 588 Supplemental agreement date~ January 21, 195~ be~ tween American and the United States of America ~epresented by the Cont~a0ting Qfflcer, Ja~es Cennally Air Force Bas~ Waco, Texas 589 59O 591-592 593-596
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~tLer dated November 20, 1953 from Trade-mark Qounsel Co Company Court,e2 mequestdng infor~a- ~ion in connection with the preparations for ~he transfer of foreign registrations 597 Memorandum dated Novembe~ 20, 1953 from Cigarette ~o Company Counsel supplying information for use in connec$ion with preparations for the transfer of foreign trade-~rk registrations (For the list referred to in this memorandum ~ ~ee Pages 591-592) 598-599 r- ~tter dated December io, 1953 from Trade-,mark L] QOUnBel to Company Counsel en~losing arld dis~ Cussing powers of attorney to be executed by ~erLea~ to record i~ergsr in connection with [ ~Orelgn reglstrKtlons of Pall Mall trade-mark 600 LQtter dated Decemb~ 16, 1953 from Comping ~o~sel to TDade-mark Co~8el supplylD~ info~a- tion for us~ in preparir~ assignment of United 8tares and forsign Pall Mall trade-ma~k regis- i t~ations Co be ~eeoTded in the United States " Patent office 601-602 Letter dated December 17~ 195~ f~om Trade-mark C0tunsel to Company counsel with respect to as- slg~en~ of the gnlted States and forelgn Pall 1 M~I trade-~rk re~Is~atlon~ to be recorded i~ the United States Pa~nt Office 603 Lette¢ dated December 2~, 1953 from Trade-mark Counsel to Company Counsel enclosing proposed a~ig~ment of Pall Mall yrad~-~ark registrati~%s in the United States and in forelgn countries to be r%corded in the Unitod States Pat~ilt Of- fice 60~ Letter d~ted January 5, 195~ fz,om Company Coun- sel to Trade-mark Counssl returninE executed C~py of asslgD/uent of Un~te~ Sta~es and forei~ Pall Mall re~istratlons from Cigarette to Ar~er- IGan to be recorded in the United States Patent Office 605 Assignment of trade~ma~ks from Cigarette to Amer- i~snreoor~ed in the United StaYes Patent Offl~e January 14, 195~ covering United States and foreign Pall Mall meglst~atlons 696-608 Letter dated January 7~ 1954 f~om Company Coun- 8@~ to Trade-msrk Counsel encloslD~ powems of a~torney and oertlfied copies of Agreement of M~rger for use in effecti~ the trsnsfer of P~ll Mall re~istratlons from Cigarette to American in V&~iou8 forelgn eountrles 609 Letter dated J~nuary II, 195~ from Trade-ma~k Counsel to Co~pany Co~sel acknowledging reoelpt of powers of attorney and oople8 of Agreement of Merger forwarded with foregoing letter 610 - 28 -
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t
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- 31 - ~tter dated October 27~ 1953 from Florida Local Counsel to Company Counsel giving their cotangents aB to the ne0e~slty for confirmatory conveyances fFam Cigarette to American of pe~8onal property and real property in Florida 643-644 ~tter dated December 4, 1953 from Company Counsel to Florida Local Counsel submitting for approval draft of proposed d~ed from Cigarette to Ameri~a~~- ~overinE real property in Hill~borough County, Flo~ida 645-646 Letter dated December II, 1953 from Florida Local COunsel to Company Counsel approving proposed form of deed ~overlng real property in Hills- borough County, Florida, and discussing taxes and o~hem related mattems 647-648 Letter dated November "18, 195B from Kentucky Local ~ounsel to Company Counswl giving their opinion to the necessity for confirquatory conveyances from Cigarette to American of personal property and real property in Kentucky 649-650 Letter dated December 4, 1953 from Company Counsel ~o Kentucky Local counsel subl~dtting fo~, approval draft of proposed deed from Cigarette to American ooverlng real property in the City of Louisville, Kentucky 651 Letter dated December 14, 1953 from Kentucky Local counsel to Company Counsel suggesting changes in draft of deed being prepared to confirm transfer of Kentucky real esbate from Clgarette to American and discussing taxes and other related matters 652-653 Letter dated October 26, 1953 from South Carolina ~cal Counsel to Company Counsel giving their o0~ents as to the neoesslty for confirmatory aonveyances from Cigarette to ~unerican of per- sonal property and real property in South Carolina 654-656 Letter dated December 3~ 1953 from Company Counsel to South Carolina Local Counsel submitting for approval draft of proposed deed from Cigarette to American Covering real property in th~ City Of Charleston, South Carolina 657-658 Letter dated Deeembe~ 8, 1953 from South Carolina Local Counsel to Company Counsel approving pro~ posed form of deed covering real property in the City of Charleston, South Carolina, and discuss- ing taxes and other related matters 659-660 letter dated November 5~ 1953 from Virginia Local Counsel to Company CoUnsel giving their cc~ents as to the necessity for confi~atory conveyances from Cigarette to American of personal property and real property in Virginia 661-662
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663~664 665 666 667 668-6T0 671 672-676 677 678-680 681 68~-684 685 686-~88 689
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~.firn~tory deed from Clgaretbe to Amemdcan cover- ~ ~real property located in the City of Norfolk ~i~ and the 0itg of Petersburg, VlrglnIz 690-693 ~ao~dal data with respect to foregoing confir~na- ~ to~ deed covering real p~operty located in the ~ity of Norfolk ~.nd the City of Petersb~g~ ~rglnla 69~ ~- ~ansfe~ of Automobd}es from Cl~arette to American M0morandum of procedure followed in transfer of automobiles from Cigarette to Amerlean 695 ; ~rocedures followed in the Var1~ t~a, New Jersey, the Star4 Of lieor~ratlon) in C~nneetion with Wlthdrawa~-~f Clgarette and " ~allfication of'Ame-ric&h -- ~nera_____! ~tter da~ed September 2~, ]953 from A~erdcan to ~ Cempany Counsel listing states in Which it was ~hen qualified to do business ~tter dated September 2~, 1953 fro~ cigarette n ~0 Company Counsel listing states in which it Was then qualified to do business ~enda for withdrawal and qualification proce- ~ ~res to be followed in the various stat~a (othe~ than New JerseN the state of Incoz~or~- ~ion including. 696 697-699 700-708 - 33 (a) Withdrawal of Ciga~tte from s~at~s where qualified ~b) Filing of certified ooples of Agreemenf of Mer~er and incidental pap~s on behalf of American in states wher~ qualified (¢) ~Ualifying American in th~ Sta~e of Florida ~i~st supplement to agenda for wlthdr~wal and . qualification procedures to be followed in the Various stat~s ~ 709-716 ~et~er da~ed Dece~be~ 31, 1953 from Company Com~- eel to Ameri0an referring to the followtD4~ three letters which constitute th~ fln~l ~ppl~mont to th~ agenda for withdrawal and quallficatlon p~o- cedures to be followed in the various stat~s 717 ! (a) L~tter dated December ~4, 195S from Company • C0un~el to Th~ Corporation Trust Company outlining procedu~ in the three stat~s from whi0h Cigarette wa~ to be withdrawn on December ~!. 1955 718-720
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(b) letter dated December 30, 1953 from Company Counsel to The Corporation Trust Company Outldnlng procedures in various states (other than Pennsylvania and the three B~tes f~om which Cigarette was Co be with- d~awn on December 31, 1953) (C~ ~tter dated December 31, 1953 from Company " Counsel to Pennsylvania. CoUnsel giving in- structions for filing of enclosed certified copies of Agreement of Merger in Pennsylvania merlc~n and to effect with- r of dates upon which principal withdrawal papers were filed in the ap- ~riate state offices l~tter dated December 31~ 1953 from The Corpora- tio~ Trust Company to Se0retaz~ of State en- Oioslng certified copy of Agreement of Me~ger ~or filing on behalf of American dated Janllary ~, 1954 f~om Secretary of State to The Corporation Trust Company as to fi1~ng of Agreement of Merger on behalf of As~r~ ~$er dated January 13~ 1954 from The Corporation ~/mt Company to Secretary of State requesting letter confirm~tlon of filing of Agreement of Mer- ger on behalf of American ~tter dated January 18, 1954 from Secretary of State to The Corporation Trust Company oonflrm- ~fillng of Agreement of Merger on behalf of ~rlcan ~allfornla latter dated December 31, 1953 Prom The Corpora- tion Trust Company to Secretar~J of State en- closing $7.50 check and certified copies of Agreement of ~erger fo~ fildn~ on behalf of American and to effect removal of Cigarette a~d requesting conflrisatlon of the lat~e~ upon enclosed carbon copy of letter ~legram dated January 4, 1954 from Scot,tamp¸ of State to The Corporatlon Trust Company a~ to ~lling of Agreement of Merger ~ ~ece~pt o£ Secretarq of State dated January 5~ ~ 1954 for payment of Piling fees Memorandum dated January 4, 1954 from The Corpora- tion Trust Company's New York office to its San ~r~nci~o office g~vdng in~truction~ fo~ filing of ce~tlfied copies of Agreement of Me~g~r with the County Clerk of San Francisco on behalf of ~i ~m~rlcan and Cigarette - 34 - 7e!-728 729-730 731 73~ 735 734 735 736 737 738 739
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M~morandum daSed JanUary 7, 1954 from The Corpo- ration Trust Companyrs San Francisco office to Its New York office r~porting filing of Agree- ment of Merger with the County Clerk of San Fran¢$B~o on behalf of American and Cigarette RQaelpt af Coumty Clerk of Ban Francisco dated January 7, 1954 for payment of filing fee on behalf of American Re~elpt of County Clerk of San F~anclsco dated January 7, 1954 for payment of filing fee on behalf of Cigarette Colorado Letter dated December 31, 1953 from The Corpo- ration Trust CompanyIs New York office to it~ Denwr office enclosing $5 ch~ck and certified copy of Agreement of Merge~ fop filing on be- half of American and to effec~ r~moval of Cig- a~st~e Letter dated D~c~mber 31, 1953 from The Corpo~ ~atlan Trust Company's New York office to It~ Denver office enclosing extra oertlfi~d copy of Agreement of Merger for filing on behalf of Cigarette Telegram dated January 4~ 1954 from The Corpo- ration Trust Companyls Denver office to It~ New York offic~ confirming filing of Agreement of ~r~r o~ b~h~If of ~m~rlcan ~nd to ~ff~ot removal of Cigarette Memorandum dated January 12, 1954 from The Corpo~ ~atlon Trust Co~pa~ Denve~ office to ±t~ New York office confirming t~legram dated January 4~ 195~ and giving further filing detailB Receipt of S~cretary of State d~ted January 4~ 1954 for payment of filing fee Florida Letter dated December 18~ 1953 from Company Coun- sel to Secretary of S~ate a~ ~o qualification fees theretofore paid by Cigarette Telegram dated Decembe~ 21, 1953 from Secretary o~ ~tate to Company Counsel as to quallflca- tlon fees theretofore p~id by Cdg~rett~ Letter dated December 22, 1953 from Secretary o~ State to The CorPoration Trust Company ad- vising comp~slte certificate of incorporation a~ceptable in ~onnection w~th qualification of American Page 739 740 74O 741 742 743 744 745 746-747 748 749 - 35 -
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! dated December 31, 1953 from Th~ Corpo- M~iGn Trust Company be SecretarY of State ~n- 010alngchecks for $437.50 and $6 and qualifi- ~tlon papers for filing on behalf of American ~I~ Of addltloDal ce~tlfled copy of Agreement ~rger to effect removal of Cigarette ~ter dated December 31~ 1953 £rcm A~erlcan to 8earetary of State transmitting $437.50 check quallfieatlon f#e ~Idavit of American officer~ dated December 30~ ~3 a~ to amount of capital employed or to be ~loyed In Florida Certifieate of American dated December 30, 1953 ~t~Ignatlng statutory off$~ ~nd agentj with ~QntT8 acceptance of designation dated Decem~ bet 31, 1953 Statement a~ to Agreement of Merger and Consoll- ~ion dated October 19, 190~, filed with Sec- ~ary of State, and certificate of Secretary O~ State of New Jersey attached thereto~ d~ted ~e~ember 30, 1953 ~leg~am dated JanuarY 4, 1954 from Se~etary of Company confirm- ~quallficatlon of American and ~i]ing of Agree- • ent of Me~ger ! ~etter dated January ~ 1954 from gecret~ry of Company ~onflrmlng ~ili~gof Agreement of ~erger and pay~enP of ¸fees Certificate of Secretary of State dated JanuarY 4, 19~4a~ to filing of Agreement of Merge~ Certiflcate of ~ecretary of Stat~ dated January ~, ~954 as to qualification of A~erlcan ~eQeipt of Secretary of State d~ted J~n~ary 4~ 1954for pa~ent of qualification and filing fQ~ December 31~ 1953 from The Corpora- tion TrUst Company to Sec~'etary of State enclos- Ing $IO check and certified copy of Agreement of to be filed on behal~ of Americao ~etter dated January 4~ 1953 (1954) from Secretary Of 8tare to The Co~poratlon Trust Company confirm- ~g filing of Agreement of Merger on behalf Of ! American h ~Qcelpt of secretary of State dated January 4~ 195~ for payment of filing fee I - 36 ~ 75O 751 752 753 754 755 756 757 758 759 760 761 762
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~@gramdated January 4~ 1954 from Secretary Of State to The Corporation Trust Company con- filing of Agreement of Merger on behalf ~erlcan P~ 762 ~tter dated December 3!, 1953 from The Corpora- tlG~ TPUst Company to Secretary of State enclos- ing $6.50 check and certified copy of Agreement Of Me~ger for filing on behalf of A~Lerican and tO effect removal of Cigarette (with filing en- g0rsement of Secretary of State thereon, dated Janual~ ii~ 1954) ~tter from The Co1~oratlon Trust Company to Sec- retary of share dated December 31, 1953 enclosing $5 check, guarantee and additional certified copy Of Agreement of Merger for filing on behalf of Cigarette copy of resolution of American Board Rdopted December 22, 1953 whereby American as~ liability to the Department of State Rev- enue for any unpaid taxes of Cigarett~ accrued the merger under th~ Gross Income Tax get of 1933 Certlficate of Secretary of State dated January i], I~5~ a~ be filing of Agreement of Merger Re~elpt of Secretary of State dated January Ii, ~954 fop payu~ent of American filing fe~ Secretary of State dated January i!~ for payment of Cigarette filing fee 763 764 765 766 767 767 Letter dated December 31, 1953 from The Corpora- tion Trust Company to Secx,etary of State enclos~ Ing $1o check and certified copy of Agreement of on behalf of American and to ~ffsct removal of Cigarette Telegram dated January 5, 1954 from Secretary of 3tare to The Corporation Trust Company confirming "filing of Agreement of Merger on behalf of Amer- IQan Telegram dated January 7, 1954 from Secretary of Sta~ t~ The Corporation Trust Company confi~ ~emoval of Cigarette ! ~tlficate of Secretary of State dated January 5, 1954 as to filing of Agreement of Merger 768 769 769 770
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~bt~r dated December 31, 1958 from The Co-po- tation TrUst Company to Louisiana agent en- OZO~ing certified copy of Agreement of Merger ~or filing on behalf of American - : ~tter d~bed December 81, 1953 from TT~e CO~pO- Company to Louisiana agent en- @loBing statement as to capital employed for on behalf of American ~kGment dated December 30, 1953 ~.s to capital e~p~o~ed by American ~legram dated January 6, 1954 from Louisiana ~gnt to The Oorpo~atlon Trust Company con- ~Irmlng filing of Agreement of Me~ger on be- half of American Ce~tlflcate of Secretary of State dated January ~ 195~ as to filing of Agreement of Merger Ro0elpt of Secretary of State dated January 6, 19~4 for payment of filing fee 77] 772 773-774 775 776 777 ~hter dated December 31, 1953 from The Corpo- r~ti0n Trust Company to Secretary of Sta~e en- a10slng $i.~5 check and certified copy of Agree- me~t of Merger for filing on behalf of American dated January 7, 1954 from Secretary of ; S~ata to The Corporation Trust Company confirm- • ~ng filing of Agreement of Merger on behalf of American t of Secretary of State dated January 7, payment of filing fee citer dated January 7: 193h from S~oretary of Stat~ to The Corpo~atlon T~st Cow,any confirm+ i~ filing of Agreement of Merger on behalf of ~erican ~tter dated December 31, 1955 from The Corpora- ~ion Trust Company to Secretary of State enolo~- ~Affldavlt as to capital employed for fillns ~ b~half 9f American • ~ffidavit dated December 30, 1953 as to ~apital #m~loyed by A~rican ~tter dated January 5, 1954 from Secretary of State to The Corpo~atlon Trust Compsny returning ~ffidavlt as to capital employed by American as not ~equired to be filed ~York Memorandum dated December 28, 1953 from Thc Corpora- tlon Trust Sompany+s New York office to its Albany ~ffloe enclosing Oertiflcate of Surrender of Author- island Tax Fo~m 15-ST on behalf of CigaTeSte and ~questing receipt of Secretary of State be obtained 1~on enclosed carbon copy of Cigarettels letter, ! ~ated December 31, 1953 779 779 78O 78m 782-784 785 786
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795 Carolina I~tte~ dated December 31, 195B from The Corpora- ~i~nTrust Con~an~ to Secretary of State encloz- ~ertlfied copy of Agreement of Merge~ for ~d~d~g ~ ~balf of dm~rfnan 796 5~ 1954 from Secretary of tO The Co~por~tion Trust Company oonfdrmlng fil~ng of Agreement of Merger on behalf of Amer- ~a~ 797 ~etter dated January 15, 1954 from Secretary of 8~te to The Corporation Trust Company ooufirm- fil~ng of Agreement of ~erger on be~&If of ~rican 79~ ~tter dated December 17 1953 from Company Coun- sel to The Corporation ~rust Company enclosing papers ~equi~ed bo ob$~d~ releases for Cigarette froi~Bu~e~u of Unemployment dompen~atlo~ a~d Franchise Tax Divbalon 799-800 ~e~bar dated December 18, 1953 from The Corpora- tlo~ Trust Company to ~ranchlse Tax Division pe- release ~or Cigarette 801 dated December 16, 1955 f~om C~garette to Tax Division requesting release 802 : {m~bar d~ted December 18~ 1953 f~om The corpcra- tlo~ Tr~st Company to Burea~ of Unemployment requesting release for Cigarette 0~ basis of en01osed advance final reburrl and ~,98 check in pa~uent of contributions shown e thereon 803 Dette~ dated December 16, 1953 f~om Cigarette ~o Bureau of Une~loyment Compensation request- Ingrele&se on th~ ba~ds of letter and e~losed ~dvanoe final return ~nd $3.98 ~heck in pa~rment ~ ~f ¢ont~ib~tlon2 ~hown due thereon $O~-~O~
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E~ploycrls Contribution Report for alendar Quarter~ 1953 of Cigarette, December 16, 1953 ~t~r dated December 51, 1955 from Bureau of Un- to The Corporation T~st r enclosing release for Cigarette ~$ter dated December 22, 1953 from Bureau of Un- ~ioyment Compensation to Cigarette returning oheoM forwarded with advance final return as @x~esslve due to legislative reduction of con- t~ibution rate and requesting cheek in proper Dmount ~ter dated December 29, 1958 from Colnpany Coun- Sel to Bureau of Unemployment Compensation en- ~Io~Ing $1.33 check of Cigarette in payment of "p~per amount of contributions due ~tter dated DeeemDer $8, 1953 from Tt~e Corpora- ~on Trust Compan~ to Secretary of State enclos- ~ $i0 check and requesting removal of Cigarette ~ baals of enclosed papers of License of Cigarette dated December 1953 ~: ~atter dated December 21, 1953 from Bureau of Un Densation to Secretary of State ~hat Cigarebte had paid all contribu- + t~ons due Certifleate of Dspartment of Taxation to Secretary of State dated December 21~ 1953 advising that C18arette had paid all taxes due ~rtlfloate of Secretary of State dated December ~la 1958 as to filing of Certificate of Surrender Of License of Cigarette ~tter dated December 31, 1953 frbm The Corporation ~%~/st Co,any to Secretary of State enclosing $5 and certified copy of Agreement of Merger for filing on behalf of American ~eeelpt of Secretary of State dated December 81~ ~9~ for payment of filing fee on behalf of glgarette Reaelpt of Secretary of State dated January 4, 195~ for payment of filing fee on behalf of Amer- loan ~legram dated January 4, 1954 from Secretary of grate to The Co~poratlon Trust Co,~any confirming Piking of Agreement of Merger on behalf of "Amer- 10~n Certificate of Secretary of State (undated) as to filing of Agreement of Merger on be~mlf of Amer- ican P~ 8O7 8O8 809 810 811 81g 813 814 815 816' 817 817 818 819
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g ~tter dated Decembe~ 31, 1953 from The Corpora- tion T~ust Co~0~ahy to Secretary of State enolos- In~ $ii cheek and certified copies of Agreement Of Merger fo~ filing on b~half of A~e~ican 820 821 822 823-824 825 826 827 828 829 830-831 832
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833 83a 835
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Page ~ffidavit on behalf of Cigarette dated 4, 1954 14, 1954 ~rom Pennsyl~anla to Company Cour~el co~flrmlzg f~ibg of Affidavit on behal~ of' Cigarette dated April 21, 1954 from American to of gmp~oymenb Secur~tF e~clo~lng Report of Statement o~ Contrlbutlo~s ~h~If of Cigarette of State.eat of Contrlbu- pril 15, 1954~ and certlflcat~ thereto, dated April 15, 84~-845 729-73O 846-847 848 849 850 851 85e 85~ 85~ 855 856 857-859
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86O 86~ 862 863 864 865 ~tte~ dated December 31, !953 from The Compora- tiQn Tr~st Company to Secretary of S~ate enclos- ing $10 check and certlfded copy of Agreement of M~er for filln~ on behalf of Amerdca~ ~legram dated January 4~ 195~ from Secretary of ~tat~ to The corporation Trust Company confirming rillngof Agreement of Merger o~ ~ehalf of Amer- ican Secretary of State da~ed January 4, of Agreement of ~e~ger on be- half of American of Secretary of State dated January 4~ of filing fee Ut~ ~tter dated December 31, 1953 from Th~ corpora- tion Trust Company to Utah agent enclosing $5 ~c~ a~d certified and ~ertlfled oople~ of ~I~emen~ of Mer~er and Stabem~nt of Fore~ Co~oration fo~ filing on behalf of American ~d to effect removal of Cigarette ~tatement of Foreign Co~o~atlon of American dated ~oember 30, 1953 - 44 - 866 867 868 869 87o 871~873
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~ ~t~eP dated December 31, 1953 f~om The Corpora- ~10~ Trust Company to Utah agent enclosing extra ~ ~Optlfled and unoer~ified copies of Agreement of ~rGe:r' for filing on behalf of Oig~rett~ i dated January 4, 195~ fpom Utah agent to Co~po~atlon Trust Company confirming filing o~ Agreement of Merger on behalf of American and ~O remove Cigarette pa~f~ 875 875 $76 877 878 879 880 88~ 882-883 884 885 885
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~ted January 6, 1954 from State Corpora- commission to The Corporation Trust Company additional copy of Agreement of Merger for filing on behalf of Cigarette as to be filed Pa{f~ 886 88? 888 889 889 890 891
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1 and AMERICAN CIGARE~Ff~E AND CIGA~ COMPA~ (a New le=seT eer~orattou) aria t~e Directors tltereof Fee the merger of Am0vlcan CigBrette aud C~ur Company into The Tobacco Company+ pursuant to Chapter 12 of Tide 14 of the RevlJetl Statute~ of the State of New Jersey. J I
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~, "]'UI~It-~L, hi consideration of the premi~gs and mutual agre~luents, provisions, cove- *.~*t~* ,~.f reaa:* herein colltalned, it is hereby agreed by at~d bet~.'een the parfles hereto, and in ~'~,t~. ~ ~.~h ~ahi Acts oi the Legislature o| the State of i.lew Jersey, that ~ald Ctga~ette ~gl ~,~ ,~.f e a e } e ebb s merged Ix o sad Amerlean, and said American does h0rehy merge ¢~ht ¢~[f tlld C~gatette. ~'~9,f I:'.t par{it* hereto b? these presents agree to and prescribe the terms and conditions of ~t*~t ~,-;T1 the In.de o~ carrying the s~tnte n o effect, which terms ~nd ¢onthtlon~ and tlaode ~ :l;e ~anle into effect the sa~d a.rtle~ hereto do inutualiy arid ~everal]y ¢ovenatlt lo • . let,i, ~n.] p~rl~r]n, that ~ t~ ~ay : p
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ARTICLE I The American Tobacco Company, into which Cigarette is hereby merged, he the corporation coittinuirtg aR~r th~ merger 0.ttd the tt~.tne n~ the corpor~.t{oll sha.lf h~ remain tfie same. (Sald corporation shall hereinafter ~omethnes be referred Comfiany"). ARTICLE II The mnnber nf the first Directors of the Surviving Compatly shall be ulneteen (19) thereafter the mnnher of Directors shall be the number fixed from time to tithe in the B of ~he Sur,.ivlng Corn]tony. The names and post-office aIldresses of the first Directors of Surviving Company who shall hold office until their successors are chose~ or appolnted to the ]By-Laws of the Surviving Company are as follows: Name~ Post~office Addr¢lwes Orpheus D. ~axalys ]1! FHth Avenue Alfred P. Bowden Richard J. Boylan Douglas W. Brashear Thomas P. Connors James R. Coon John A. Crowe J~hu S. D~wd A. Gordon Findlay Preston L. Fowler Charles Ganshow Paol M. Hahn Hiram R. Iqanmer Edmtlnd A. Harvey Harry L. Hilyard John R. Hutehlngs, Jr. A. L~Roy Jansen WilHam H. Ogsbury James F. Strlekland New York 3, New York 111 Fifth Avenue. New York 3, New York lll Fifth Avenue ~ew "/ork 3, New York P. O. Box 6-P R{d~mnn4 16, Virgitd~ Ill Fifth Avenue New York 3, New York 111 Fifth Avenue New York 3, New York lll Fiifll Avenue New york 3, New York P. O. Box LOuisville I, Kentucky 111 Fifth Avenue New York 3, New York 111 Fifth Avenue New york 3, New York 111 Fifth Avenue New Y~rk 3, N~w York llI Fifth Avenue New York 3, New York P. O. Box 4178 Richmond 24, Virginia Ill Fifth Avenue New York 3, New York 111 Fifth Avenue New York 3, New York l~ettigrew & Blaekw¢ll Streets Durham, North Carolina Ill Fifth A';e~',ue New York $, New York Fettigrew & Blaekwell Streets Durham, North Carolina Pettlgrew & Blarkwell Streets I)urham, North Carolina I,,/
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2~L The first officers of the Surviving Company shMI oe fourteen (1 .) hi number and Mlafl be =re-ldent, five (5) Vice Presidents, one of whom shall a/uo be the Comptroller, a Secretary, a Tw~urer, an Auditor, two Assistant Auditors, an Assistant Secretary, an Assistant Treasurer ~1 an Assistant ~o the President, and their names and post-office addresses are as follows: Post-o~ce Addr~ses N~rn~S m Panl M. ttahn Richard J. Boylan James R. Coon John A. Crowe Preston L. Fowler Edmund A. Harvey Hart7 L. IIilyard A. LeRoy Janson Alfred F. I3owden John W. Hanlon J. Wesley Dale Edward D. Flaherty Frederlek W. Kenny . Joseph R. Waterhouse 111 Fifth Avenue New York 3, New York 11I Fifth Avenue New York 3, New York 111 Fifth Avenue New York 3, New York 111 Fifth Avenue New York 3, New York I tl Filth Avenue New York 3, New York 111 F~th Avenue New York 3, New York 111 Fifth Avenue New York 3, New York 11I FifLh Avenue New York 3, New York llf Fifth Avenue New York 3, New York 11I Fifth Avenue New York 3, New York 111 Fifth Avenue New York 3, New York Ill Fifth Avenue New York 3, New York II1 Fiith Avenue New York 3, New York Ill Fifth Avenue New York 3, New York ARTICLE III The tot.n1 ~uthoriz~d C~plt~l Stock o~ the Surviving Company is and shall be ten million FI0.gN?0.0CO) slu%res of Common Stock of the par value o~ ~2S per share and five kundred forty !hou~a~d one hundred six (540,106) shares of Preferred Stock of the par value of $100 per share. The Transfer Agent and the Reglstrar o{ the stock of the Survbing Company shah be the persons or corporations designated as such from time tn time by resolutlon o~ the Board o~ Directors. ARTICLE IV The Agreement and Act of Merger and ConsoIidation of American, dated September 9, 1904, pursuant to which Americ~u w~s created, a~ such Agreement of September 9, 1904 has heretofore ~,een amencted~ sh~I1, upon the date on which the merger becomes elrecth, e under the laws of the S~r~te of New Jersey, be deemed to be amended farther by this Agreemen~ f~sofar as ~uah Ag~ee- men~ of September 9, I904, as heretofore amended, is inconsister~t with any prov{sion of this -\~reetnent. ARTICLE V The Ey~L~ws of the Surviving Company sh~ll be the By Laws of American as those sh~l} ~xist on the effeetlve date o[ the merger until altered, amended or repe~led as therein provided. 3
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5
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outstaedlng certi~cates shall be so surrendered, tile holders thereog shalI have no voting rights in rc~pec~ thereo~ and no di~dend or ot[ler dlstrlbufion payable to the hoIdcrs of record of Preferred Stock o~ th~ Surviving Company as of ally date subsequent to thc edcctivc,date of the merger shall be paid to tile hoffie~'s of such outstanding certificates, but ~P~ such sttrrender of any such outstanding cerfi~cate o1" certlflcate~ there ~hall be paid to the record holder of the certificate or certificates ~or Preferred Stock o~ the Surviving Company ~$$ued i~ ~cha~gc therefor the amount o{ dlv~dends c*r other distrihutinns which therctofere became payable with respect l:o the number of shares of Preferred Stock of the Sur~alng C~mpav*~ ~p~e~rited Dy the ¢el'tificate ~ cerli~m~e~ sO ~sued in exchange. (c) No fract[onaI shares o~ s~ock thall be issued by th~ Su~v~ving Company in respec~ ~ st~ck of Cigarel~e, but each holder o]~ sh~res of Prc2erred Stock o~ Cigarette entitled hereunder to receive a ~r~etlo~ of a share o~ Preferred Stock of the Surviving Company sl~al/receive ~r each s~ch frac~icJ~ of a share a non-voting, non divldend and non-dlstribution p~!i~g Scrip Cerfi~cate o~ the Su~vivi~g Company for the ~t~ctlon o~ a share of Preferred Stock to which h~ is enti~Ied. Each Scrip Certiflc~te will entltl~ the holder (i~clud~xg the Surviving Company if i~ shall have acquired the ~ame) of sllch Scrip C~iftc~t~ to recelve, o~ surrender thereof wlthil: two years after the d~tc cn which th~ merge~ becomes effective, together with other Scrip Certil~c~tcs of like teaor, representing i~ the ~ggregate right~ in respecl of one oc more full shares o~ Preferred Stock of the Surviving Company, cerfi~ca~es for shares o~ Preferred Stock of the Surviving" Company equal ta the number o~ thIl sh~res o~ PreFerred Stock in respect o~ which such Scrip Certlhcates were issued and the amouu~ o~ dividends ~Ild other dl~tribu~iolls there~o~ore declared ~n respect of such hill sh~res and n~w Scrip Certillcates of a like tenor ~or the remaining ~raction of ~ share, if any. AR suth Scrip Certi~e~tes which are not surrendered within file tlme aforesald shall he void and of no effect whatsoever on and after a date which shall be ~wo year~ a~ter the date on wh[th the merger is effective (hereinafter referred to ~s the "~plra~io~ d~te') except tha~ ~ h~Ider~ ~heze~ s~ii be entitled t~ r~¢eivc ~itiiin two yeats a~d te~ month~ ~Ite¢ th~ expiration d~e the~r pro rata portlon of the prodeeds re~ul'ling from the sale oI" the full sh~rea ~ P~e~red Stock reprcseIlted by the there~ofore unsurrendexed Scrip Certificates, together w~th thci~ l~ro r~l~ ~h,~re ~{ div~elxds ~nd other di~triht~t~o~ thc~tofo~e decinr~d it~ r~s~ect cf such ftfiI sha~es upon s~rrender o~ such S¢l'ip Certlf~catea; such ~ale shall he m~de¸ within on~ hundred eighty days after tim expiration date (publicly or prlvately a~ then ~rrently ~revalli~g market prlces) by the Surviving C~mpar~y or the transl,/" agent of the share~ wlth r~spect [o which such Scrip Certi~cate~ were ~ssued, as the agent ~or ~nd on behalf of the l~fders of such Scrip Ce~tii~c~tes, or, at the elecfio~ o[ th~ Snrvlving Company, may be made to the S~rvlvlng CorapaI~y at a price e~af to the aver*age cfos~ng price of the stock on the New York S~(~ek Exchange ~or the twenty full business dayg immediately foIlowlng the expiration d~te. A~y proceeds res~.Ifing l:rom such sale not claimed w~thin such two year and te~ month period sh~II be paid by the transfer agent to the Surv~vlag Company and b~ held by the Survinlng Ccml~imy as part ~f its ge~erai i~mds free and c~e~r o~ any claim ~f thos~ previously entitled thereto. The sha~cs of stock of the Su~dffing Company represented by Scrip Ce~tiflc~t~s shall be i~sue[l upon the /nerger /,ccoming ef~ecrive and shall he heId a~d disposed o~ by the Surviviag Compauy or, at its ~ption, by an agc~ designated by it, as herein pro~dded. ARTICLE VII • ~ Excep! inso~ar as in this Agreement otherwise spe¢~ficaIly set forth, or a~ pravidcd by ~tatute, "~ ~r?~rate name, l~urposes powers ob ects, fra~chls~s, entlt~, exls~e~ce, rlgh~s and organlza~o~ "' '~merlcan sh~l~ remain int~c~ and be vested i~ the Surviving Company, and ~[~ corporate !~-.ch~se,. ~ " en~ity. ~istence a~d rlghts of C~garcttc sl~all he ¢onthmed in and merged into the ~i~r'd~.ing Company, and the Surviving Company shall he fully vested £herewlth, and upon the .~.ng m the Office of the Secret~ry o~ State of New Jersey o~ tffis Agreel~ent, w~-m~ ~dopted by ~e ~tockholders of each Coi2s~lttl~.t CQrtlpatly ~s hereinafter provided, the orga~izatinn and 5
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, i 7 existence of said Cigarette shall cease, except inso[ar as the same shall continue h) statut ,may be requisite for carrying out the purposes of this Agreement.. ARTICLE VIII Upon the effective date of the merger herein provided for, ail and singular the rights, ptivlh powers and franchises of each of the Constituent Companies, both of a public and private hal and all property, real, personal and mb:ed, and all debts due on whatever accounts, as well stock subscriptions as ail other thlngs in action, belonging to, ~ck of said Constltuen~ Corapaa~ shall be vested in the Surviving Company without further act or deed as cffectuaily as they w~ vested in the CoasF~tuent Companies; and all and every other interest o~ the Constituent Cc panles shall hereafter be as effectually the property of the Surviving Company as they were the Constituent Companies; and the title to any and all reaI estate, wi~ether by deed or otherw[ "costed il~ either of said Constituen~ Companies shall not revert or he h* any way ~mpalred reasol~ of the said merger; arid ali rights of creditors and all liens upon the proper~y of Constituent Companies shall be presr.r~'cd unimpaired; a~d the Cons~huerlt Companies, hereto, may be deemed to continue in ezistcn~e im o~der to preserve the same; and all dl liabilities, restrictions and duties of the Constituent Companies shall forthwith the Surviving Company and may be enforced against i~ 'to the same extent as if said liabilities, restrictions and duties had been incurred or contracted by it it being e~ that th~ merger of the Constituent Compunlcs ~hal~ not in ;my m~nne~ impair %he rights of eredlt~r or credltor~ of either of the Con~tltuciIt Companies. If at any shail deem or be ~dvlsed that any further assignments, assurances l~ the law, or things : necessary or desirable to vest in the Surviving Company the title to any property Companies, the Constituent Companies and their proper officers and directors shall and exee~tte air proper assignments aug assurances in tha law, and do ~dl thh~gs R~caas~ry to vest title to such property n the Surv v g Company and otherw se to carry out the of thls Agreement. It is expressly declared and American hereby covenants that the Surviving he subject to the remedies and li~biIities in such case prescribed ia the said Cllapter 12 of Title ] o£ the Revised Statutes of New Jersey and the and shall be entitled to all ~f the rights, powers, privilege~s and ration organized under said Act, and the several supplements to and amendment; now or hereafter enacted. ARTICLE IX The Surviving Company shall pay all expense~ of th!s merger. ARTICLE X The Surviving Company reserves the right to amend, a]ter, change or repeal any plovisi~ contained kI the Agreement and Act of i~Ierger and Consolidation, dated September 9, l~ pursuant to which American wgs created, as such Agreemen£ of Septe bar 9, 1904 has heretoio: been ~mended and ~s amended by this Agreement, or contained in this Agreement, in the manta now or hereafter prescribed by statute, and aP rights conferred upon Stockholders of It Surviving Cumpany are granted subject to this ~eservation, AI~TICLE XI This Agreement shall be submltted to the stockilo!ders of each of the Constituent Compani( as provided by Ia,w and shall take effect and he deemed and taken to he the agreemerlt nil act of merger of the Constituent Companies upon the adoption thereof by the votes of the hold~ of t~0-thlrds of eli the capital stock of each of the Constituent Companies and upon tl~e doing such other acts and thh~gs as sh~ll he required by Chapter I2 of Title 14 of the Revised Statut~ of iqew Jersey and the several stlpplements thereto ~nd acts ameadatot'y thereof, 6
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IN WITNF~SS WnEalmg, said Constituent Companies, parties to this 2~greemen% have caused the2r respective corporate seals to be hereunto al~xcd and the~e p~'e~ents to be .~igned by tbelr ~¢~ectlve Presidents or ~ne of their respect{re Vice l°resident~ and attested by their respective .Secre~arie~ ot As$~stanf Secretaries, all thereunto duly authori£.ed, and the Dire¢~ocs of each of ~icl Corporations have hereunto sct their hands and scaI~ as o~ the day and year first above ~aentio~ed. TH~ ~-~ERxc.~ig TOBACCO CO~I*ANY By PAUL M. ]~A~ (Pa~d M. Hahn) President TI~II ,t~rERrC$.N TO~.a-C¢O C~[FANW ¢0ltFORA'f~ SEAL ~rrEST: .TO~[~ W. ]-IANLO~ (Joha W. IIa~llon) S~cretary Sig~.~turea o~ Directors o~ The Amcrlcan Tobac¢o Company: OaP~m:s D. BAX~.LYS (L. S.) PAUL IYL IEA~ (L. S.) (Or~heu~ D, BazMy~) (]?a~I ~. l:Iahn) (Alfre4 :F~ B~dea) (l]ir~m ~ Hasher) (R~char ~ J. B~ylan) fEd~d A. ~.~ey) (Douglas "W. Bva~hvar) (tlatry L* Hity~rd] (Yhonms p. Con~or~) (Joh~ R. H utchmg~, Jr.) 7a~s R. Ct~ (I~ S.) A. L~RoF JA~SON (L. S.) (James E. Coos) (A. LeRO¥ Jmnson) (lohn A_ Crawe) (Willi~xa H, Og~bury) dorar S. ~I~dD (L. S-) J~A}{fE$ F. STRYC~L~kI~ (L, S.) (lobs $. Dowd) (Jame~ F. StrlcMa, d) Pa~sTON k Yowaga (L. S.) 4{
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9 AMERICAN CIGARETTE AND CIGAR Cfl~tpANY CORPORATE, ~EAL ATTEST~ GEORGE E, BOLIVAR (Georg© E. Bolivar) Secretary AMERICAU CXOA~'elE AND CIGAR COMpAN'~ BY C~rARLE$ GANSHOW (Charles Ganshow) Vice President Signatmes of Directors of American Cigarette and Cigar Company: ALFRED F' ~:~°~x"DEiq (L. S.) (Alfred F. Bowden) ALbeRT GOLD (Albert Gold) Jollrq A. CROWE (John A, Crowe) A, GoRno~- PINDLAy CA. Gordon Findlay) PRESTON L, FowLmR (Preston L. Fowler) CI{ARLES GANSHOW (CharlesGaashow) ALAS C. GARP, Arr (Alan C. Garratt) (L.S.) PAUL IVL HAnu (Paul M. Hahn) (L. S.) EDMUND A, HARVEy (Edmund A. Harvey) (L.S.) HARRy L. HlayAm~ (Harry L, HUyard) (L,S.) JOHN G. LANO (john G, Lang) i (L. S.) SIONEV Scnov (Sidney Sehou) (L.S (L.s, (L.S. (L.S. (L.S.) (L.S.) [7
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-1.O / Bs lr aEME~I~EgED that on this 16th day bf October, in the year One Thousand Nine Hundred Fi/ty-three, before me, the subscriber, a Notary Public of the State of New York, County of Net York. authorized to take acknowledgments and proofs in said County and. State, personally ed J0hn \\. Nanlon, known to me to be the Secretary of The American Tobacco Company. a~¢A ft'*tol• .~ eonlnanieJ~ named the w t n Agreem en , who be'ng by me du y sworn on his oath tam and made proof to tuy satisfaction that he is such Secretary, that he well knows the common ~1 of said Company, that the sea[ affixed to the within Agreement is such common seal and ~a* thereto affixed by Paul M. ~tahn, the President of said Company, and tltat said Agreement .~ by said President signed and delivered as and for the voluntary act and deed of said Company ~ the presence of said deponent who thereupon subscribed his name thereto as attesting wltnes~, ~d t~at Ihe wiflfin Agreement was signed by all the Directors of said Company. Jo~" w, HA~LO.~ -~,~rll t~ and subscribed before me, a Notary (John W, Hialon) I'uhlie in and for the County of New York in the State of New York. |n said County and State, this 16th day of October, 1953. 31A~ZE ~. HE;~'F~NA>r Notary public in an¢l for tho Cotmty o| Nmw York it* t~e 8~te ~ N~av Yor~t {SEAL) Date of Expiration of Commission March 30, 1955. ~¢ATE O~ ~'EW ~ZOR~ COU~7"¢ Or N~W ¥OR~~SS': ll~ x~ ~z~az~a~g~ that on this 16th day of October. in the year One Thousand Nine Hundred and Fifty-three, before me, the subscriber, a Notary Public of the State of New York, CottBty of Non' York, authorized to take a¢kaowledgTaeats and proofs in ~a~d County and State, pers0~aSy appeared George E. Bolivar, known to me to be the Secretary of American Cigarette and Cigar Company, one of the companies named in tile within Agreement. who being by me duly sworn, .: !li~ oath said ~nd made proof to my satisfaction that he is st*oh Seerelary, their he well knows I!:c conlnlon seal of Bald Company, that the seal af~xed to the within Agreement is such common , :[ a~rl was thereto affixed by Charles Ganshow. a Vice President of said Company, and that • .d,l Agreement Was by said Vice President signed and delivered as and ~or the voluntary act 1::,! deed of said Company in the presence o| said deponent, who thereupon subscribed his name :!:tr~to as attesting witness, and that the within Agreement we.s signed by nil the Directors of -aid Company. ~EORGE ~. ~OLIVAR • ,rn t~ and subscribed before me, a Notary (George E, Bolivar) ! ~blic ire and for the County of New York in :::o State of New York, in said County and <:ate this 16th day of October, 1953. MARIZ S. H~FFEg~Ar~ Notary Pabl£e in tnd for the Cotm~' o~ New York m th~ IStt, teol Nme */'ork ,.AL) f)at~ of Expiration of Commission March 30, 19~E 9
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11 CERTIt~ICATE :[, avo~¢ W. H~trrLON, Secretary of The Americaa2 Tobacco Company, a corporation and existing raider and by virtue of the laws o~ the State of New ~ers~y, one o[ tile Companies described in the ~orego[~g Agreement of Merger, do hereby eertKy in accordance ~ Title 14 o~ the New Jersey RevVed Statlite~ as a~nendcd and particularly R. S. 14:12-3 thereof W 1. The foregoing Agreeme~]~ o~ }£erger of said corporatign and American Cigarette Cigax Company ~as entered into by tkc Directors of said The 2 the corporate seal of said corpgration, pursuaat to of said The American Tobacco Company at a duly convened meeting thereof held on October t953, at wb~cll meeting a Special bei~etiag o~ the Preferred and Commo~ stockholders ot corporation was called, in accordance with the By~L;L~v~ to be helrl on the 2d day o~ 1953 for the purpose o~ consid~rlag the same, t 2. Said Agreement was duly submitted to ~he Preferr~A and Common ~tockhoiders of The American Tobacco Company al a special meeting thereof called as a[oresaid and duly h at 34 Cour~ S~rec~ in the Borough of Flemington, in the County of Hun[erdon, New jersey. which meetinK ~v'en~days' notice o~ fll~ ~[me, plate ~,~d object thereof wa~ m~iled to the I, known post-office address o~ each o~ said stockholders, d. Said Agreement was cons{tiered by [be ~r~ferred and Common stoekhoffiers at ~ meeting and a vote of said stockholders was dtgy taken by ballot for the adoption or said Agreement, each ~hare o:~ st~ck cntitllng the and the tim s~ockholders were duly cast by ~he stockholders ia pcr~o* or by p~mxy • more than two~tffirds of all the capital stock o~ said The America~ Tobacco Compa~y vo~e~ favor of the adoption of said Agreement. 4. The meeting of the Preferred and Common stockholders of The American Company and the said vote by ballot t~pon the adoption of said se/x~aleiy from the meeting of tbe stockholders and "cote of ~aid American Cigarette and C Company. 5, The principal office o~ The American Tobacco Company in the State o~ New Jerse of llu~terdon, New jersey. ~' 117 Main Street i~ th~ Borough o~ Flemington, fn the County and upon wbam prcee~s,~ ags,ini~ George Knowles Large is the Agent therein, in charge tbereoi, said corporation may be served wlthin said State, l~ WIT~ES~ W~ER~O~ I have her~nn~o ~i~ned my name as Secretary and a.ffi~ed the scaI said The American Tobacco Company this 2d day of December, 1953. (fohn W. ~/anlon) S~eretary (CORPORATE SEAL) 10
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CERTIFICATE f. ~a~x~c.z E. BOLIV~, Secretary of Ameriear* Cigarette and Cigar Company, ~ corp~ratlou - ~ and e.Kistlng under and by vlrtue of the laws of the State of New J-ersey, one of the ac~'z~Com anies descr bed in the foregoing Agrecmemt oi hlerger, do hereby eev~ily in C~ti~jet~v~th P'RIe t4 of the New Jersey Revised Statutes as amended and particularly R. S. tdzl~ th~reo~ that: L The foregoing Agreement oi ~erger of said corporation and The American Tobacco ~Fa~y was entered Lifo by the Dk'ee~ocs of sald Arnerica~ Cigarette arid Cigar Company, under t~ ¢orl~rate seal of said corporation, pursuant to resolutions adopted by the Board of Directors t,~id American Cigarette and Cigar Company at ~ duly convened meeting thereof held on C~teJ~er 16, I953, a~ whic~ raeeting a Spe~ia| Mee~ing of the pleferred and Common s~ockhoIder3 M said corporation was called in azeordanee with the By-Laws, to be held on the 4th day of tk.~ember, 1953 for the p~rpose of e, onsidering the same, 2, Said Agreement was duly submBted to the l~referred and Commota stockholders of said A~ctican Cigarette and Cigar Company at a speci~l meeting thereof called ~,s aforesaid ~ud duly ~¢24 ~t ~be office o[ the co~oration at lt7 ~f~dlx Street in the Borough of FlemingLon, in the C~aty o{ Humterdon, New ~er~ey, of which meeting t~.enty days' notice of the time, place and object thereof was mailed to the last known post-office address of each of said stockholders. 3. Said Agreement w~s considered by the Preferred ~nd Common stockholders ~t said nteeBng lad a vote of s~id stockholders wa~ d~ty taken by ballot for the adoptiot~ or rejection of said gg~teemeat, each share oi stock entitling the holder thereof to one vote, and the ballots of the *~oekholder~ were duly cast by the ~toekholders in person or by proxy and stocld~olders onvnlng m~te than two thirds o~ all the c~pi~t s~ock of said American C~g~rette a~d C~gar Covapat~.y voted b~ favor oi the adoption of ~aid Agreement. 4. The mee+/ng o{ the ~'referred and Common stockhoIders of American Cigarette and Cigar C~mpauy and the s~id vote by ballot upon the adoption of sa~d Agreement were held and taken ~parate[y from the meeting of the stockhoIders and vote of said The American Tobacco Company. , 5. The principal office of American Cigarette and Cigar Compauy in the State of New Jersey u al fly Main Street in tim Borough of Fleminglon: in the County of Hunfevdon, Nev¢ Jersey, a~d C~r.r~e Knowtes Large is ~he .Bgent therein, in charge thereof, a~d upon whom process against ~a:d corporation may he served ~dthin said grate. I~ tv~z~ss ~V~X~EOIt, I have hereunto signed my nam~ as Secretary and affixed the ~ea[ of "azd American Cigarette and Cigar Company this 4th day of December, 1953. (G~org~ E. I~oEvar) Secretary "CORPOraTE S~AL) II
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13 Dep~r~ne~t of the Treasury DL~sion of Taxation ~aIe aI ~rm ~Jrr~rg Corporation Tax Bureau Stat~ Ho~se Trenton 7 Certificate No A 6248 Appllc~tlon No. 6604 F~e $5.00 1953 ~rrtifira~ ~ ~tayatent ~f (~arparati~a ~ra~l~i~e ~ax T~zs Is To C~Trt~ that aiI Corporation ~ranehlae ta~es, fnes, permitie~ and interest le~ed upon or assessed against THE fi~t~RICA~ TOBACCO COmPANy (Incorporated 1/21/1890) by the State of New Jersey, it~ ~ord2alce ~gth the provisions of Ch~pters ten A, thlrtccn attd llfir ty-two A of Title 54 of the Revised Statutes and all arts mnendatory thereof or antecedent or supplementary thereto, have been1 paid, or ave deemed f~lIy secure& This ¢,¢#dficate is being ia~ucd only in o3~mecllon ~th the merger of The American Tobacco Company (a New ]exsey Cor~*ra~o~) and A~rlcaa Cigarette and Cigar Company (a ~N*ew Jersey Corporation) for the purpose of enabllug the ~aid The American Tobzcco Company to complete the filing of the said ~nerger proceedings with the Seeret~ry of State. 12
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u F i4 Department of tile Tremaury Divlslon of Taxa~on @ta~ uf Nem 1953 Certificate o~ ~a~eut of ~orporat~on ~ranrhi~e ~ax i Corporation Tax ~tlr¢a- State House Trenton 7 Certificate No A 6249 , AppIication No, 6605 Fee $5.00 t i 1 THZS IS TO CEI~TIFy that nil Corporation Franchise taxes, fees, penalties and interest levied upon or assessed against ANIEPACAIg Clf;~IIETTE AND CIGAR C0~PAlgy --" (Incorporated 6/12/1901) by the State of New Jersey, in accordance with the provisions of Cl~upters ten A, thirteen and thirty-two A of Title 54 o1 the Revised Statutes and all acts asnendatory thereol or antecedent or supplenmtttary thereto, have heeu pakl, [S~L/ ~¢V~r-~ss my hexad and off[c/al seal at Trenton, this 7th d~y of Dcu~mber A. D, 1953. AA~O~ K. NZELD Deputy Director, Division of Taxation E~.~DORSED RILED AND RECORDED DEC 31 1985 LLOYD B. MARSH Secretary of Sts%!
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4J 15 I, ~ ~. ~, Secretary of State of the Stat~ of NB~ Jersey, ~j (~]~i~ that the foregoing is a true ~opy of agreement of merger between The 2anerlean Tobacco Company, a New Jersey corporation, and the direc- tors thereof and -4nnerlcan Oigarette and Cigar Company, a New Jersey corporation, and the directors thereof m~der which the 7unerlcan Cigarette and G~gar Company is merged into The Axnerican Tobacco Company, the surviving corporation, and of the endorsements thereon as the samB is taken from and compared with the orlglnal filed in my office on the Thlr~y-first day of December, A.D. ]959, and now remMnlng on file and of record therein. ~[1~ ~moraJ ~r~, I have hereunth set my ha~d and affixed m.~ Official Seal at Trenthn this Tlfirty-first day of December, A.D. 1953. L~)~ B. MAaSII Secretary of State.
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16 ENDORSED FILED AND RECORE~D 4:46 P.~; DEC 81 1953 LLOYD B. MARSH Secretsry of State
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17 THE AMERICAN TOBACCO COMPANY SCHEDULE SPECIAL MEETING OF STOCKHOLDERS Copy to: Messrs. Paul M. Hahn H. J. Boylan J, R, Coon H. L. Hilyard A, L. Janson C. F, Hetsko (3) F, Mallg~af J, W. Hanlon A. F, Bowden F. W. Kenny C, F. Matula
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18 Mr. Hanlon Morning of ~ptember 18 Mr. Coon September 23 Written request for ruling filed with commis- sioner of Internal Revenue re tax aspect of merger. Letter from Commissioner of Internal Revenue ruling on tax aspect of merger. Write Guaranty Trust Company of New York to furnish information as to shares of stock of both classes of The American Tobacco Company registered in the names of Officers and Direc- tors of The American Tobacco Company and American Cigarette and Cigar Company, as of the ciose of business September 15, 1953. Mr. Hanlon will attend to the above and report to the Auditor, Deliver to Mr. Mallgraf of Purchasing Department the following: 1 - Approved proof of window envelope (Office of Secretary). 2 - Approved proof of return envelope. Mr. Hanlon wlll approve proofs and deliver to Mr. Mallgraf. Send out Questionnaire for Officers and Direc- tors of The American Tobacco Company and American Cigarette and Cigar Company in Connec- tion with Proposed Merger. Mr. Coon will send out Questionnaires. Conference at Securities and Exchange Commission in Washington, D. C., re: financial information to be included in Proxy Statement. Messrs. Ganshow~ Eyre and Case wi/l attend con- fe~ence. Letter to Securities and Exchange Commission re: financlals in Proxy Statement. Mr. Case will attend to above.
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- g - september 2S October 1 Mr. coon October 2 ~F. Hot eke October 6 .Mr. Hahn October 7 Mr. Hanlon O~tober 8 Afternoon of OCtober 9 Mr. Hetsko Mr. Jansen Morning of OCtober 13 Sorg Printing C~n y Morning of October 16 Letter from Securities and Exchange Commission re: financials in Proxy Statement. Send 9-50-53 proofs of proxy material to the Directors and Officers. Mr, Coon will attend to above, File preliminary proxy material with Securities and Exchange Commission (in triplicate), Mr. Hetsko will attend to filing the above with the Seourltles and Exchange Conlmlselon in Wash- Ington, D. C. Call of Speelal Meeting of the Board of Direc- tors of The American Tobacoo Con~any to be held October 16, at ii:00 o'clock a.m. Mr. Hahn will attend to the above. Send out Notice of Special Meeting of the Board of Directors to be held on October 16. Mr. Hanlon will attend to the above. Deflciencyletter from Securities and Exchange Com~isslon. Deliver to Sorg Printing Company, for printing, approved final proof of Proxy. Messrs. Hetsko and Jansen will attend to the above. Deliver to Guaranty Trust Company of New York Proxies for stencilling names and addresses of Stockholders. Sorg Printing Company will attend to above delivery. Hold Special Meeting of Board of Directors at ll:OO o'clock a.m. to: 1 - Fix conversion rates for Merger. 2 - Approve Agreement cf Merger.
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2O -3- 3 - Call Special Meeting of Stockholders for December ~, fix October 28 as the record " date and designate 34 Court Street, Flemington, N. J., as the place at which the Special Meeting of Stockholders shall be held and appoint 1:30 olclock in the afternoon as the hour therefor. 4 - Appoint Inspectors of the Vote for Spe- cial Meeting of Stockholders. 5 - Designate Paul M. Hahn, James R. Coon and Richard J. Boylan as the persons to be named as proxies for Stockholders in form of Proxy to be distributed by Company for use at Special Meeting of Stockholders. 6 - Approve preliminary proxy material filed with Sec~ities and E~change Commission on October 2. 7 - Approve form of Proxy, Notice of Special Meeting and Proxy Statement and President's letter for Special Meeting of Stockholders and authorize. Officers te cause same to be mailed. 8 - Authorize listing on New York Stock Ex- change and registration under Securities and Exchange Act of 1934 of additional shares necessary for exchange with minor- ity Stbckholders of American Cigarette and Cigar Company Common and Preferred Stock. 9 - Authorizatlon of Proxy for Special Meet- ing of Stockholders of American Cigarette and Cigar Company. i0 - Adopt order of business for Special Meet- ing of Stockholders. ll - Extend authority of Transfer Agent and Registrar to include additional shares. 1S - Adopt Blue Sky resolutions. 13 - Authorize execution of any instruments, etc., required under Indentures. 14 - Authorize execution of other documents and papers in connection wish Merger.
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Nr. Hanlon ~. Bowden Mr- Hetsks M~. Metsks Mm, Hanlon Morning of "October 19 - 4 - Notify New York Stock Exchsnge, in writing, of determination to call Special Meeting of Stock- holders. Include the following in notice: Date of Recerd~ D~te of Meeting; Details and Purpose of Meeting. Mr. Hanlon will attend to above. Press Release regarding Merger. Mr. Bowden will attend to above. Notify Mr. Frank W. Mendell, of the Securities and Exchange Co~iesion staff, of the conversion Tares. Mr. Metsko will Kttend to Kbove. Belease t~ Sorg Printing Company, fo~ printing, epproved final proofs of: i o ~oti~e of Sp~clal Meeting and Proxy S~atement. ~ Presldent~s letter. 5 - Letter ~nd Pest Card for Brokers. Mess~s. Hetsko and Janson will attend to above. Write letter of instructions tQ Gusranty Trust ComPany of New York regardlng procedure for stencilling Proxies, etc. W~Ite letter of instructions to Guaranty Trust Company of New York ~ga~ding procedure to be followed in enclosing and mailing of Proxies, etc., to StoeMholders. Mr. Hanlon wlll attend to above. 8end N~w York Stock Exchar~e six copies of proxy material for Stockholders. Mr. Hanlon will attend to above, Delive~ to Guaranty Trust Company of New York, the following: I - Notice of Special Meeting and Proxy S~atement. 2 - pFeside~t~s letter.
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-5 - Morning of October 19 (Continued) So:~ Printing Guaranty Trust Company of ~. York Mo~ing of October 20 '. 3 - Window envelopes# 4 - Return envelopes. Sorg Printing Company wlll see that all of the above are delivered to Guaranty Trust Company of New York. Commence enclosing material to be mailed to Stockholders. Guaranty Trust Company of New York will attend to above, File three copies of BrokerTs letter and Post Card with Securities and Exchange Commission in Washington,-D. C. Mr. Coon will attend to above. File LdstingApplioation with New York Stock Ex- change and Form 8-A with Securlti~s and Exchange Commission and New York Stock Exchange covering listing and registration of additional shares of Come, on and Preferred ~tock of The American Tobacco Company. (N~tethat it will probably be necessary to request the Securities and Exchange Com/nlsslon for acaeleratlon of Form 8-A effec- tive date.) Messrs. Hetsko and Hughes will attend to above. Notify Guaranty Trust Company, City Bank Farmers Trust Company and George M. Large of record date for Special Meeting of Stockholders. Notify Inspectors of the Vote of their appoint- ment. Notify Messrs. Hahn, Coon and Boyish of their designation as the persons to be named as proxies for Stockholders in the form of Proxy to be dis- tributed by the Company for use at Special Meet- ing of Stockholders. Notify Messrs. Hahn, Coon and Boylan of their designation as proxies for The American Tobacco Company to vote at Special Meeting of Stockholders
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October 21 (continued) Morning of . October 23 ' Mr. Hanlon ~fternoon of OCtober 23 Mr. Hanlon Mr. Hanlon Afternoon of October 24 of American Cigarette and Cigar Company expected to be held on December @~ 1953~ upon the adop- tlon or rejection of the Agreement of Merger between American Cigarette and Cigar Company and its Directors and The American Tobacco Company and its Directors, etc. Arrange with Post Office to keep separate from regular mail, return, self-addressed envelopes containing Proxies and to deliver eash day to a properly identi£ied repressntatlve of Lybrandj Ross Bros. & Montgomery. Arrange with Master Reporting Company Inc. for r~portlng of SpeQial Meeting of Stockholders. Mr, Hanlon will attend to the foregoing. Arrange for trahsportation, as follows: I - Railroad aoconkmodstlons of Official Party aad Stoskholders to Flemlngton, N. J., and return. 2 - Buses from Flemington Junction to Fleming- ton, N. J., and return 3 - Buses from Flemington, N. J., to New York City for Stockholders who have requested return by bus. Mr, Manlon will attend to above, File three definitive copies of proxy material wlth Secu~Itles and Exchange Con~isslon and New York Stock Exchange. Mr. Hanlon will file. Ascertain from Miss Regan number of sets re- q~.Ired for he~ flles~ Mr. Hanlon wlll attend to above. Mail proxy material to Stockholders. Guaranty Trust Company of New York Guaranty Trust Company of New York Will mail. MOrning of Mall ~roxy soliciting material to Equitable Life Octobe~ 26 Assurance Society of the United States.
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October 27 Kr. ~anlon ~fternoon of November 6 -7 - Mr, Janson will attend to above. Request Transfer A6ent to furnish outstanding number of each Clae3 of voting ~ecurltl@8 of CompanY, ~8 or close of bu~inesB October 28. Mr. Hanlon will obSaln above &nd deliver to Inspectors of ~he Vote as promptly as possible after close of business on October 28. Record date for Stockholders' speolal Meeting. Mail proxy soliciting material to new Stock- holders becoming of record subsequent to October 13, to and including October 28. Guaranty Trust Company of Mew York will ~il. Prepare substitutions of proxy for Paul M. Hahn, James R. Coon and Richard J. Boylan. Mr. Hanlon will prepare and submit to Legal Department for approval. Obtain cePtified lists, in duplicate, of Pre~ farted and Cocoon Stockholders entitled to vote at Special Meeting. guaranty Trust Company of New York will deliver to Mr. Hanlon. DeliveT origlu~l ~et to Lybrand, ~os3 Bro~. & Montgomery for tabulation of proxies received. Mr. Hanlon will attend to the above. Commence tabulatlen of proxies received. Mr. Ca~e of Lybrand, Ross Bros. & Montgomery will supervise tabulation. Arrange with carey Cadillac Renting Corporation for transportation of Special Meeting Records to Flemington, N. J., on December I and return on December 2; also for Official Party from ll~ Fifth Avenue to Pennsylvania Station on December 2,
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Mr. Manlon - 8 - Mr. Hanlon will attend to the above. prepare the following: 1 - Oath of Inspectors of the Vote. 2 -'Ce~tlficate of Inspectors of the Vote on Agreement of Merger. 3 - Certificate of Inspectors of the Vote on other Resolutions which may be introduced at Special Meeting and voted on by stock vote. 4 - Ballot (Agreement of Merger). 5 - Ballot for other Resolutions which may be introduced at Special Meeting on which a stock vote is called. 6 - Affidavits of guaranty Trust Co~koany em- ployees as to addressing and mailing of proxy material. 7 - Form of Secretary's Record of S£ockholders present at Meeting. 8 ~ O~der of Business for distribution to Stock,holders st Special Meeting, Mr. Hanlon will prepare above and submit to Legal Department for approval. File duplicate set of certified lists of Common and Preferred StockholdeTs in Home Office with instructions that they are to be made available for examination by Stockholders. Arrange with Mr. Kinnamon of The Hunterdon County N&tional Bank to have Stock Rooks, including the transfer records, present ~t Special Meeting, M~. Hanlon will attend to the foregoing. Deliver ~o Mr. Mellgraf of Purchasing Department for printing, approved proofs of: i - Ballot (Agreement of Merger). 2 - Ballot for other Hesolutlons which may be introduced at Special Meeting On which a stock vote is called.
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Morning of ~vember 20 (C~ntlnued) -9- 3 - Form of Secretary's Record of Stockholders present at Meeting. - Order of Business for distribution to 4 Stockholders at Special Me~tlng. Mr. Hanlon will submit proofs of all of the foregoing to Mr. H~tsko for approval, and deliver to Mr. Mallgraf. Arrange for the following: 1 - Luncheon at Grandvlew Grange in Fleming- ton, N. J. - Telephone service. 3 ~ Installation of public address system at 3~¢ourt Street, Flemlngbon, N. J. Arrange with Insurance Department to s~e that Company is fully covered for its legal li~billty in connection with all transportation facilities. Mr. Hanlon will attend to the foregoing. Obtain from the printer the following: i - Ballot (Agreement of Merger). 2 - Ballot For other Resolutions which may be introduced at Special Meeting on which a stock vote is called. 3 - Form of Secretary's Record of Stockholders present at Meeting. - Order of Business for distribution to Stockholders at Special Meeting. Mr. Mallgraf will see that all of the above are delivered to Seeretaryls Department. The regular meeting of the Board of Directors on December I, 1953, should be held open by adjournment to December 3. Furnish Inspectors With ilst showing names and addresses of Stockholders who have signified their intention of attending Special Meeting; also names of Official Party.
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- i0 - Deliver original copy of each Certlf~cate of the Inspectors of the Vote and 20 copies of each Ballot to Inspectors. Mr. Henlon will attend to foregoing. Ascertain from Inspectors of the Vote number of shares ~ep~esented by proxies received prior to speci~l Meeting, and insert in synopsis. Mr. Hen!on will attend to above. Hold Special Meeting of StockholdeTs. Execute on originals of Agreement of Merger, certificate as to Stockholdersz vote. Mr. Manlon will execute. AdJod~ned regular meeting of Board of Directors at ll:O0 o~clock a.m, Discuss preparation of and filing of Form 8-K with Mr. C. F, Hetsko. Mr. Hanlon will discuss. File any supplemental information with NEW York Stock Exch~ng~ and make any necessary changes in Ltsting Application and Form 8-A. ~essrs. Parke, Hughes and Metsko w£11K~tend to above. P~eparation of deeds~ t~ade m~rk assignments, etc., to be executed by A~erican Cigarette ~d Cigar Company, leases to be assu~ed~ where r~- quired, by The Amerioan Tobacco Company and possible de~Ivery in escrow. Counsel and Trade Mark Counsel Will attend to ~bove. PFepar~tion of documents to be flied in various states as result of merger. Mr. Hughes will attend to above.
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~¢ember 8 Nr. Wilkinson ~. Friou Mr. Parke Nr. Hughes Mr. Hetsko D~cember 15 and 31 - ll - File with Stats Tax Commission of New Jersey tax request required to obtain Tax Commission.s certificate in connection with merger. Messrs. Wilkinson and Friou will attend to above. Obtain from New Jersey Tax Commission necessary certificates for both The Am~rlc~n Tobacco Com- pany and American Cigarette and Cigar Company required by Secretary of State as condition of his filing Agreement of Merger. Messrs. Wilkinson and Friou will attend to above. Board of Directors Meeting - Ii:00 o'clock a.m. I [ Approve Scrip Certificates. 2 - Appoint Guaranty Trust Company of New York, Agent, to make physical exchange of American Cigarette and Cigar Company Pre- ferred and Common Stock to be converted by merger, 3 - Authorize arrangements with Guaranty Trust Company of New York for purchase and sale of Fractional Scrip to acco~nodate Ameri- can Cigarette and Cigar Company Preferred Stockholders. Messrs. Parke, Hughes and Hetsko will attend to above. Send notice to Stockholders of favorable votes at Special Meetings of The American Tobacco Com- pany and American Cigarette and Cigar Company, stating that later notice will be sent as to the date for exchange of stock. Make advance arrangements, if possible, with Secretary of State of New Jersey for certifica- tion on December 31 of copies of Agreement of "Merger required for filling in other states, etc., to he delivered by him the moment Agreement of Merger is filed.
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- 12 - ~. Ranlon Rr- Ranlon stryker, Tams and Homer will attend to above. 11:59 o,clock p.m. effective date and time of merger. Agreement of Merger bearing certificates "by Secretaries of The American Tobacco Company and American Cigarette and Cigar Company of two- thirds approval by Stockholders of the two com- panies is to be filed with the Secretary of State of New Jersey; also necessary certificates should be filed in all states where companies are authorized be do business. Mr. Parke will make necessary arrangements. At any time after this date issue stock of The American Tobacco Company in exchange for stock of American Cigarette and Cigar Company. Wire New York Stock Exchange Agreement of Merger effective and mail New York Stock Exchange certl- fled copy. Mall certified copies of Agreement of Merger and other material to various state authorities. Mr. Hughes will attend to above. Mail certified copy of Agreement of Merger to Guaranty Trust Company of New York, Transfer Agent, and City Bank Farmers Trust Company, Eegistrar. Mr. Hanlon will attend to above. Mall certified copies of Agreement of Merger to Guaranty Trust Company of New york, as Trustee under the four Indentures, together With opinion of Counsel. Mr. Jansen will attend to above. Send notices to Stockholders that merger has become effective ~nd also giving necessary in- formation to American Cigarette and Cigar Company Stockholders with r~g~rd to exchange of stock. Mr. Hanlon will make arrangements with Guaranty Trust Company of New York. File For~ 8-M with Securlh~es and Exchange Com- mission and New York Stock Exchange reporting action taken at Stockholders Meetings of The American Tobacco Company and American Cigarette and Cigar Company.
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~essrs. above. - 13 - Parke, HUghes and~Hetsko will attend 3O to
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31 AERICAN CIGARETTE AND CIGAR COMPANY SPECIAL ~-~TI~G OF STOCKHOLDERS DECN~ER 4, 195~
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Aug~sb 21 September 9 Morning of September 17 ~. Her~n Mr. Herman Morning of September 18 Mr. Ganshow Mr. Eyre Mr. Case September 23 Mr. Herman October 2 Mr. Ganshow 0etcher 6 Mr. Hahn October 7 Mr. Bolivar - 1 - WPitten request for ruling filed with Commissioner of ~nternal Revenue re tax aspect of mer~er. Lette~ f~om CQmr~issioner o~ ~Jnternal Revenue ruling on tHx ~apect of me~ger. Write Guaranty Trust Company of New York to furnish information as to ~h~res of ~bock of bobh ~lasse~ of American Clgarette ~nd Cigar Company registered in ~he ~ame~ of Ofy~eers and Directors of Th~ American Tob~ooo Company and American 0igare~e and Cigar Companyj as of bhe close of business Septembep 15, 1953, Mm. Herman will attend be the above ~nd peport to the Audlfor ~f The America1 Tobacco Company. Delive~ to Mr. Mallgraf of Purchasir~ Department, ~approved proof of window envelope. Deliver to Mr. Sehley of SotK Printin~ Co~ ~p- p~oved proof of retu~n envelopes w~houb ~amps affixed. Purchase suffiolent postage to be affixed to return envelope~. M~. Herman will approve proofs and deliver to Mess~. M~llgrKf and Sc~ley and purohase stamps. Conference ~b S~curlties a~d Exch~e CO~ISS~O~ in WashinKbon, D. C., re: financial Information to be included in Proxy Ht6te~nt of The AmerIoan Tobaooo Co~pa~y~ Messrs. GanShow, Eyre ~nd Case will ~ttend con- fe~e~e. Furnish M~. Hughes with a lis~ of States where American Cigarette and Cigar Company is qualified to do buslne~s. Mr. Herman ~ill furnish this list. Send 9-30-53 proof~ of proxy material of The American Tob~cc~ Company to the Directors of American Cigarette and Cig~ Company. Mr. Ganshow will attend ~o above. Call of Special Meeting of ~he Board of Director~ of American Cigarette and Cigar Company be be held October 16, ~t ~:30 o'clock ~.M~ Mr. H~hn will ~ttend to th~ above. Send out Notice of ~peci~l Meetin~ o~ the Board of Directors to be held on October 16. Mr. Bolivar will ~ttend to the above~
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October 7 Mr, Her~Jin Mr. Ganshow October 15 ~, J~nson October 16 ~. Samson Mr. He~ma~ ~3 - 2 - Deliver to Mr. Anderson copies of'existing con- tracts and R llst of Trade Marks registered in the name of American Cigarette and Cigar Company. Mr. He~inan Will attend to above. Deliver to Directors of American CigRretbe and Cigar Company preliminary copy of Notice of Meeting of Stockholders of American Cigarette and Cigar Company to be held on December 4, 1953, and p~eli~nary form of proxy for said meeting, Mr. 2anshow Will attend to Kbove. Deliver to Mr. Bollv~r sufficient espies of 10-14-53 Proof Of Nobloe of SpecdKl Meeting and Proxy Statement Of The ~merlos/% Tobacco Comps/%y for use at Special Meeting of Directors of Cobs- ben 16, 1953. Mr. Janson will ~ttend to above, Delive~ to F~. Bolivar sufPl~ient copies of iO-15-5~ Proof of Agreement of Merger fo~ use at Special Meeting of Directors of October 163 1953. M~. Janson will attend to above. Deliver to Sorg Printing Company final proof of the following: 1. Noblce of Meeting of Stockholders dated 10~26-53 2. Form of Proxy 3. Letter of President dated 10-26-53 4. Letters and Post Cards to Brokers Mr. Herman will deliver above material, Hand to each Director at Directors1 Meeting one of the following: l. Form of Notice of Meeting of Stockholders 2~ Form of Proxy 3. Form of President's Letter 4. Form of Notice of Special Meeting and Proxy Statement of T~e American Tobacco Company proof of ~0-14-53 5. Agreement of Merger, proof of 10~15-53 Mr. Hern~n will attend to above, __n
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9 F Mr, ~NKn Z~, Her~n 0c ~ober 19 -B- Mold Special Meeting of Board of Directors at 2:30 o.clock P.M. to: 1 - Amend Z~ctlon 3 and 7 of Artlcl~ I of the Hy-Laws authorizing the Direators to fix a ~ecord date for all stockholdersr meetings 2 - Fix conversion rates for merger 5 - Approve Agreement of Merger - Call Special Meetin~ of Stockholders for December 4 at principal office at i17 Main S~reet, Flemlngton, New Jersey, fix Octo- ber ~8 as the record date an~ appoint 1:30 P.M. in the afternoon as the hour therefor 5 - Appoint Inspectors of the Vote for Special Meeti~ of StockholderB 6 - Designate paul M. Hahn, charles G~nshow arid JQhn G. Lang as the persons to be named as proxies for Stockholders in form of proxy to be distributed by Company for use at ~peoial Meeting of Stockholders 7 - Apprbve form of proxy, Notice of Special Meeting aud President's Letter and authorize the Officers to cause same to be l~ailed to- ~ether with the P~oxy ~batement cf Tb~ ~erlcan Tobacco Company 8 - Adopt order of business for Special Meet- ing of dtockholders 9 - Adopt Blue Sky Resolutions i0 - Authorize exeoutlon of documents and papers in oonnecblon with Merger Write Letter to ~u~ty Trust Comgany requesti~ Lists of Stockholders as of reeord~ Oetohe~ 16~ 1953~ and October 28} 1955, and arrange to obtain daily transfer sheets d~ted from October 17, 1953, to October 28, 1953, inclusive f~om Mr. Schou. M~. Merlmzn Will %trend to above. Deliver to M~. Me~na~ the followin~; 1 - No%Ice of ~peelal Mseting 2 - Form of Proxy 3 - Presldent~s Lette~ - Eeturn envelopes 5 - Window env~lopes
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Sorg Printing Co. F. Whitln~ Inc, Mr. Herman October 20 Mr. Herman Mr. Hanton G~r 5nty Trust com_2~AE~ Mr. He rm&n Mr. Her;~n Mr. Herman 55 Sorg Printing Co. will attend to above for iter~ l, 2~ 3 and ~ and F. Whiting Inc. will attend to item 5 &bore. Affix 3~ stamps bo return envelopes. M~,. Herman will ~ttend to above. Send certified resolutions 0£ A~endment of By- Law~ z~: fixing of r~co~d date to duayanty Tr~st Company, Tl~ansfer Agent and National City Bankj Registrar. ~h'. Herman wlll attend to above. Deliver to Mr. Herman Proxy Statements of The American Tobacco Company. Mr. H~nlon will deliver the above. Deliver to Mr, Herman Llst~ of Stockholders &s of October 16, 1953~ S~ranty Trust Company will attend to above. Deliver to Haskin~ & Sells Lists of Stockhold- ers as of Octobep 16, 1953. ~. Herman will attend to above. Arrange to have typed on proxy name and address of each stockholder in space p~ovided on proxy. MP. Her~mn will attend to above. Enclose in wlndo~ envelope the followln~: 1 - Proxy with name and address showing throuHh ~i~do~ 2 - Notice of MestlnH of Sto0kholde~s 5 - President's Lettep - Proxy Statement of The A~erican Toba0co Compar~~ 5 ~ Return envelope wlth 3¢ stsmp a~flxed Mr. Herman will ~ttend to above. From daily transfer sheets remove envelopes of stockholders who have sold out all she?as of stock and prep&re envelopes for ~ew stockhold- M~. Herman will attend to above.
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O~tober 23 H£~kln8 & Sell~ M~. Herman H~B~tns & Sells October 2~ ~I~ Herman H~sklr~ @ Sells October 26 )h~. Bolivar October 28 00tober 29 Mr. Herman h~sklns & Sells Mr. Herman Mr. Herman Haskins & Sells Nove~er 2 Mr. Herman envelope, Hasklns & Sells will attend to above, Arranse to have postage affixed to each envelope end seal each ent,elope~ Mr. Herman and Hasklns & Sells will 5ttend to above. Mall ~o George K. Large one set of materi~l mailed to stockholders with a ~ette~ advising of the meeting ~nd record date. M~, He~ Will ~t~I~d to above. ~2ake e~velo e~ to Oe~erel Post Offic~ 3~nd Street and ~th place Manhattan, and Aven~ej same in matlB. Mm. Herren and Has,ins & Sells will attend to above. D~li~e~ ~ ~et of m~e~i~l ~o each Di~e~or. Mr. Bolivar will ~btend to ~hove~ Record d~be for StockholdersI Specl~l Meetlng. M~il ~roxy ~oli¢itatlon materi~l to new sto~- holders becon~ng of record subsequent to Octo- be~ 2~ and includln~ October 28. Mr. Herman and Haskins & Sells will attend to ~bov~ Execute Affidavit of M~lllng. Mr. ~ern~n Will execute the above. Deliver to EaBkinB & Sell~ lists of Preferred ~nd Bo,~non Stookholde~s ~nd co~mence tabulations of pr0xis~ ~eeelv~d. Mr. Herman will deliver the lists and Hasklns & Sells will supervise ths tabulation. Prep~e subBtitutlon of proxy for P~ul M. Hahn~ Cha~le~ Gan~bow and John G. Lsng, M~. H~rm~n will prepare and submit to Leg&l Department.
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November 19 ~, Herman - November ~4 -6- Prepare the following: i - Oath of Inspectors of the Vote - Certificate of Inspectors of the Vote on Agreement of Merger 3 - Certificate of Inspectors of the Vote on other Resolutions which may be intro- duced at Special Meeting and voted on by stock vote 4 - Ballot (Agreement of Merger) 5 - Ballot for other Resolutions which mey be in 6 - Form of Secretary's Record of Stockholders at Special Meeting ? - Orde~ of Business for distribution to Stockholders at Special Meeting Mr. Herman will prepare above ~nd submit to Legal Dep~tmenb for approval. Pile duplloate set of Certified lists of Co~on and Preferred Stockholders in Home Office, Mr. Herman will attend to above. Deliver to Fh-. Harry Bowden for pPintlng ap- proved p~oofs of: 1 - Ballot (Agreement of Merger) 2 - Ballot for other resolutions Whi0h may be introduced at Special Meeting on whlch a stock vote Will be called 3 - For'm of Secretary's Record of Stockholders present at Meeting - 0nder of business for distribution to stock- holders at Special Meeting Mr. Herman will submit p~oofs of all of the foregoing to Mr. Hetsko for approval and deliver to Mr. Harry Bowden. 0brain from Mr. Harry gowden the followi~: 1 - B~llo~ (Agreement of Merger) 2 - Ballot for other Resolutions which may be introduesd at Special Meeti~ on which a stock vote is called 3 - ~o~m of Sec~etaryls Hecord of Stockholders present at meeblng 4 - Order of Business fo~ dist~ibutlon to Stockholders at Speelal Meeting
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3~ -7- Mr. ~arry Bowden Morning of December 4 Mr. Herr~an Afternoon of Decel]ibe ~ Mr. Bolivar December 7-31 Counsel and Trade Mark Counsel Mr. HuKhes December 7 Mr. Lang Mr. Frieu December 8 F~'. Lang Decen~er lO December 15 "and 31 Stryker, T3]~ and Homer Mr. Harry Bowden will see that all of the above are delivered to Secretaryfs Department. Ascert~in,fr0m Inspectors of the Vote number of Bhare8 represented by p~oxles ~eceived prior to Sp~clal Meeting and insert in synopsis. Mr. Merman will attend to above~ Hold Special ~etlng of Stockholders. Execute an o~iginal~ of A~reemenb of Merge~ certificate a~ to Stockholderst vote. Mr. Boliva~ will execute. Preparatlon of deeds~ trade mark assignments et~. be be executed by American Cigarette and Cigar Company and deliver same in escrow. Counsel ,a~d Trade Mark CoUnsel will attend to above. Preparation of doot~aents to be filed in various state~ as result of Merger, Mr. Hughes will attend to above. File ~ith State Tax Commisslon of New Jersey tax request required to obtain Tax Co~missionrs certificate in connection with Merger. Messrs. Lang and Friou will attend to above. Obtain from Mew Jersey TsX Son~uisslon necessary certlfioate for American Cigarette and Cl~ar Company required by Secreta~'y of Shate as condi- tion of his filing Agreement of Merger. Messrs. Lang and Frleu will attend to above. Send notice to Stockholder8 of favorable vot~s at Speelal Meetings of The Anlerioa~ Tobacco Company and American Cigarette and Cigar Company stating tha~ later notice will be sent as to the date for exchange of sto~k. Make ~dv~nce arrangements3 if possible~ with Secretary of State of New Jersey for Certifica- tlon on December 31 of oodles of Agreement of Merger required for filing in other states ~tc. to be delivered by ~im the moment Agreement of Merger is filed. $tryker, q~s and Homer will a~tend to above.
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December 16 December 31 Mr. Parke January 1 - 5 ~9 Board of Directors Meeting - 10:30 A.M. 11:59 o'clock P.M. effective date and time of Merger. Agreement of Merger bearing certificates by Secretaries of The American Tobacco Company and Am~rlcan Cigarette and Cigar Company o£ two- thirds approval by stockholders of the two Com- panies is to be filed wlth the Secretary Of State of New Jersey; also necessary certificates should he filed in all states where Companies are au- thorized to do business. Mr. Parke will make necess~/,y arrangements. At any time after this date issue stock of The American Tobacco Company in excha~lge for sto0k of American Cigarette and Cigar Company. M~il eertlfled oodles of A~reement of Me~ger and other material to various state authorities. Mr. Hughes will attend to above. Nail certified copies of Agreement of Merger to Guaranty Trust Company of New York, Transfer Agent and National City Bank of New York, Registrar. Mm. Bollvar will attend to above.
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4O THE KMI~ICAN TOBACCO COMPANY Incorporated lll Fifth Avenue New York 3, New York August 21, 1953 Cormuissioner of Internal Revenue Washington 25, D. C. De~ Sir: your rulings, on the questions set forth bedew, are ~espe0tf~lly requested with reggrd to the proposed m~rge~ of ~he 2~r*~lean Tobacco Company ~nd Amerlc~n Cigarette & Cigar Compauy. The Ameridan Tob~ccQ Company (h~reln~fter c&lled ~'Amerioan Tobmcco") is a corpo~atlon orgaulzcd ~nd existing under the laws of the State of New Jersey since October 19, 1904 ~nd m~nt~ins its prlncip~l executive office at ill Fifth A~en~e, New Yo~k 3, Ne~ Yo~k, American Cigsret~e & Cigar Company (herein£fter 0alled "Clg~rette Company") I~ a corpo~atlon orgenlzed and existing under the laws of the ~tate of New Jersey since danu~yy 12, 1901 and maintains its p~i~10ipal executive office at iii Fifth Avenue, New York 3, New York. American Tobacco has outstandin two classes of capital stock, namely, 626,997 shares of ~ cumulative pre- ferred stock having $1O0 par value pe~ share and 6,~54,330 sh~es of ~ommou stock h~vlug $25 ~ value ~er Nha~e. The stoc~ of American Tobacco is listed on th~ New Yo~k Stock Exchange. AS of February 10, 1953 there were 8,157 holders of the p~ferred stock and 7~,75~ hol~ers of the common stock. Cigarette Company has outstanding two classes of capital stock~ n~mely, ~989 shares of 6% cumulative preferred stocN l~vlng $i00 par v~lue pe~ share and 195,500 shares of common stock having $70 p~r v~lue pe~ sha~e~ 3,230 sh~rea of such preferred stock and 188,225 s~res of such co~on stocN are owned by American Tobacco. The balance of the ou~- standiug sba~es of ~tcck of Cig~,~tte Ccmgany Iz in the hands of the public. The stock of cigarette Company is not listed on any stock exchange. American TobaCco is engaged in the business of manufacturing ~nd selling cigarettes, cigars and smoking and chewing tobaccos, American Tobacco m~nuf~etu~es and sells (among other brands) LUCKY STRIKE ~nd HERBERT TAREYTON. Amerlc~n Tobacco also owns the PALL MALL brand, In 1936 American Tobacco le~sed that brand to Cigarette Company ~o~ a te~m to empire ~idni~ht Dec~he~ BI, gO~q. From November 1936 through the year 1948 Cigarette Company m~nuf~ctured PALL M~LL Clg~rettes from p~oeessed, cut tobacco .r
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August 21, 1953 D. Our customers must deal wiLh the two companies, dl- rectlng an order fgr BALL MALL CigaP~ttes to Cigarette Company and anothe~ one for LUCKY STRIKE Cigarettes to Americ~ Tobacco. B~ch d~y 8o~e customer orders for PALL ~LL Cigarettes a~e ~eceived by Amerlc~n Tobacco on the same orde~ forms as LUCK~/ STRIKE Cigarettes, necesslt&tlng t~ansc~dblng ~nd transmitting the orde~ for PALL MALL to the Cigarette Company. The me~ger ~ould ellmin~te complications no~ existing for hoflh the customers and the t~o companies and ~t the same time would save expense. g. Almo~t evemy d~y Some combined ~emlttanees cove~ing both LUCKY STg/EE and PALL ~LL Cigarettes are received by America~ Tobaooo~ zecessit~ting the tr&nsfer of funds to the Cigarette Company. Likewise remittances covering both LUCKY STRIKE and PALL MALL a~e received by Cigarette Company necessitating the transfe~ of funds to American Tobacco. F. Because of the n~ture of the two comp~nles two separ- ate ~ccounts ~eceIv~ble a~e maintained ~dth respect to the same custome~ ~ two separate O~edlt Depe~tments a~e allowing c~edlt with the obvious effect that g~eate~ l~tltude on credit ~esults than ~ould be the ease if the custome~Is credit w~s co~tro!l@d by o~e co~pa~. G. Separate tax repoPting is required in many localities in respect to ~a~ehouse inventories and to various states for i~come and f~anchlse tax purposes, all of which could be h~ndled on one ~etu~n if the companles were memged. E. The~e is conslde~ble duplication of effo~t through the maintenance of separate Accounting, TaxI Pay Roll, File, O~der, ~reho~se, gtatlstlc~l, Credit ~nd ~%ii dep£rtmenhs ~s ~ell 5s in the central Stenograph, Traffic a~d Stationery departments. Financial state- ments are separately assembled and published and each comps~yls accounts are ~udlted by a separate fir~ of ce~tdfded public accountants. A1 these m abboTs will be greatly facilitated and economies affected by a me~ger of the t~o companies. I. U~e~ the present arrangement there is duplication of f~ictlo~s in both the T~eas~rerls Department and the C~edlt Department, such as ~ecording ~nd depositing ~emittances from customers~ ~ritlng and signing checks; banking aP~angements i~icludlng opening accounts~ recon- ciling balances and supervising use a~ act£vity of accounts; stock transfers and dividend disbursing; preparation and distribution of the Annual Repo~t. A merger ~ould eliminate these duplicate functions, g. Ther~ a~e frequent occasions ~hen the Cigarette Con~any b~s excess funds beyond ~hat it owes to AmePican Tobacco. This excess ~%y be ~s high ~s $7,000,000 but the ful~s ape not availabl.e to Ameri0an Tobacco for the reason that NO~ Jersey l~ does not permit loans to a parent corpoPatlon ~om its Subsldiar~. If the companies were
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Co~isslo~er ~f l~te1,~sl Revenue August 21~ 1953 -6- ~e ~re ~D-closi~-g h~ewith powe~ of ~ttorr~ey ~uthorIzi~g cert~ m~mb~ ~nd associates of th~ ~irm of Chadbourne, P&rkej Whlteslde, ~olff & B~oDhy ~o r~present both companies i~ ~oDnectlon ~Ith o~r ~equest ~or rulings. St&tement ~el~tlv~ to ~e~s ex~cut~ b~ this firm is ~I~o 6t is, chad, Respectfully submitted, THE AMERICAN TOBACCO COM~A~ ~5 J. R. Coon J. R. Coo~j Vice P~esldent for The Amerlo~u Tobacco Comp~my A~C~ICAN CIGARETTE ~ CIC~R COMPANY C. Gaushow C. Ga~show, Vice p~eside~t for An~ricaa Cigarette & Cigar Compau~ J,
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~6 p0-~7~R OF ATTORNEY KNOW ALL P~R BY T~SB PREgEN~B, that the undersigned, TREAMERICAN TOBACCO COMPANY, a corporation o~ganlz~d and exist- ing under the la~s of the State of Pe~7 Jersey, having its p~in- elpal place of business at l~l Fifth Avenue, No~ York 3, New York, does hereby ~ke, c~nstltute and appoint ~IDLIAM M. PARKE and GEOR~E W. T~{ITESIDEj ~embers of, and DONALD J. MARRAR ~nd ROBERT E. F~IOU~ associates of the fi~m of CP~dbourne, Parke, 1~iteslde, Wolff & Brophy, 25 Broadway, Ne~ York 4, New Yo~k, its true and l~iful ~tto~e~s~i~-fact, fo~ it and lu its nm~e, ~l~ee ~ug ~tead~ toil lake, prosecute, oomplete~ co~promi~e~ abandon and otherwise deal with a~y matters ~lating to a request for ruling as to the tax effect of a proposed merger of The American Tobacco Co~pany and America~ Cigarette & Cigar Co~panF, and in connechion there- ~ith to p~epare, execute and file such p~otests~ petitions, ap- peals, statements, claims oe othe~ docu~ents and to ~epresent it at &~y conferences or beatings before a~y bureau, u~it o~ other department o~ subdivision of~ Or before any representative of the Treas"~y Be~rtment, ~iving ~nd granting unto the said attorneys, full po~er and a~bhorlty to do and pemform every~ct and thing ~hatsoev~ requisite and necessary to be done in and about the premises as fully to all intents ~nd purposes %s it mIF~t or could do if 9e~so~lly present, with full power Of substitution and pevocation~ hereby matlfying all that the said attorneys, or thei~ substitute or substitutes s~all lawfully cause to be done by virtue he~eof~ IN ~ITNE$8 WH~EEOF~ th~ undersigned has c~used this inst~,ament t~ be executed by its duly authorized offlcers~ ui~der its corporate seal, this 2$th day of August 1953. THE AMF~ICAN TOBACCO COMPANY By J. R. Coon Vice President Attest: John ~. Hanlon (g~D)
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47 STATE OF NEW YOEK ) : 8s, I COUNTY OF NEW Y0PK ) On this 2~th day of AugUSt 1953, befol"e me per- sonally came J, R. Cook and J. Win. }lenlon, to me kno~n~ ~ho, being by me duly swo~n, did depose aE:d SaN that the~ are respectively Vice President and Seo~'etary of THE ~ME~I- CAE TOBACCO ~OM~ANY, the Oo~poT~tlo: deBo~ibed in and ~hloh executed the foregoing instmument~ th&t they know the se~l of said eoz~pora~ion; that the se~l affixed to sa~d instr'd~ ment is ~uch temperate ~al; that it "~ ~o ~fflxed by o~de~ of the Board of Directors of sald eorpo~tlon and that they signed t.hei~ names themeto by llke ordain. Joseph ?, Smith Notary Public Joseph F. Smith Notary Fublic, State of Ne~ York No. ~i-3733400 Qualified in ~ueens County Ce#tificates filed ~ith Ne~ Yo#k County Clerk and Office of Register in Queens and New Yo~k Counties. CoL~nlssion expires March 30, 1955 <SmL)
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48 POWER 0F ATTORNEY KNOW ALL MEN BY TER3E PRES~TS~ that the undersigned, AMERICA~ CIGARF~TE & CIGAR COF~ANY~ a corporation organlzed and existing ul,der the laws of the State of New Je~sey~ havlng its principal place of business at III Fifth Avenue, New York 3, New York, doe~ hereby make, constitute ~nd appoin~ WILLIAM M. PARER and GBORG~ W. WHITE31DE, members of, and DONALD J. ~R~AN and ROBERT E. RRIOU~ associates of the fi~m of Chadbourne, PadRe, Whiteside, Wolff ~ Brophy, 25 Broadway~ New York h, New York, its true and la~ful attorneys-in-fact, fo~ it and i~ its name, Place and stead~ to make~ prosecute, complete, compromJme, abandon azd otherwise deal with amy matters relating to a re- quest for ruling as to the tax effect of a proposed merger of The American Tobacco Company and Ame~icam Cigarette & Cigar Company, and in connection the~e~i~h~ to p~epare, execute and file ~uch D~Otests, petltlons, appeals, statements, claims or other document~ and to represent it at any conferences or hear- in~s before any bureau, unlt o~ othe~ department or subdivision of, O~ before ~ny rep~esentatlve of the T~e~sury Dep~tme~t, giving and g~a~tl~g unto the said attorneys, ful] powe~ and authority to do a~ perform every act and thing whatsoever req- uisite al~d ~eoessary to be done in and about the premises as fu~lR to all ~ntents and purposes as it might o~ could do if per~onaliy p~eaent, ~th full powe~ of substitution ~nd revoea tlon, hereby ratifying all that the said attorneys, o~ their substitute o~ ~ubs~itute~ shall lawfully cause to be done by virtue h~eof, IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed by its dl~ly au~horIze~ offlcers, under its cs~porate ~eal, this 24th day of August 1953. ATTEZT: G~e E. Bol~a~ Secretary AIWERICAN CIGARETTE & CIGAR COMPANY By C. Gansho~ Vice P~esident (SmL]
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49 S~TE OF NE~J~DRK ) COUNTY OF NEW YORK ) On this 2~th d~y of AUgUS~ 1953, before me per~ ~onally came C. GAmBhow and George E. Bolivar to me known, who, being by me duly swo~n, did depose a~d ~y ~h~t they are respectively Vice P~e~Iden$ and Secretary of AMF~YgA~ CIGARETTE & CIGAR COMPANY~ the eo~poratlon described in ~nd which executed the forsgolng instrument; Shat they know the seal of ~id co~poratlon; that the seal afflxed to s~Id ia~ ~trumeut is such corporate seal; that it was so ~fflxed by o~e~ of the Bo~6 of Dl~ecto~ of ~id cor~oratlon ~nd that ~hey ~i~ned thel~ ~e~ thereto by llke order. Reuben Hemmau NoSy Public Not~y publlo, State of Ne~ York Qualified in B~o~ County No. 03-1770350 Certificates filed in Ne~ York County Clerk's Office ~d B~onx CO. and New York 0o. Reglstemls Office Commission expires M~rch 30, 1955 (g~L)
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~O U. 8. TRF~.BURY DEPARTMENT Washln~t on 25 Offlee of Commissioner of Internal Revenue Address ReDly to Commlssione~ of Internal ~eve~ue ~nd ~efer to T:S:R EG September 9, 1953 Mr. Donald J. M~rran c/o Ch~dbo~ne~ P&~ke, Whiteside, ~olff & Brophy 25 B~ oadw~y New Yo~k ~ Ne~i Yo~k A letter dated AuguBt 21, 1953 from The American Tobacco rullng &s to the effect for Federal income tax purposes of a proposed st~tutor~ me~ge~ of the t~o companies. Acco~dlng to the Inform~tlon Submlt~ed The Amerlc~n TO- b~oo O~mp~y (herelnafbe~ o~lled ~'Ame~ican TObaCco") w~s o~gan- Azed under the l~ws of the State of ~ew Jerse~ on 0~toher 19~ 1904. It b~s outst~ndlng 526,997 sh~es of 6 per cent c~mul~- tl~e p~eferr~d stock h~vi~g a par value of $i00 pe~ sl~re and 6,~5~,i10 ~h~re~ of commo~ stock havin~ ~ ~r v~lue of $~5 pe~ sh~e. Both Classes o~ stock ~e listed on the ~e~ Yo~k ~tock ExpUnge. AS of February 10, 195~ there were ~,157 holders of preferred ~tock and 7~,75~ holde~ of ~o~mon ~took. A~e~ic~n Cigarette & Cig~ Company (hereinafter c~lled "Cigarette Comp~n~I~) w~s o~g&nized J~nuar~ 12~ 1901 ~nde~ the l~s of the ~t~t~ of New Jersey. It has outstanding 3,989 sha~es of 6 ~r cent cumulative ~efe~ed stoc~ h~vlng ~ ~ v&lue of $i00 ?~r sh~re ~nd 195,500 shares of common stock havlng ~ p~ value of ~?0 pe~ sh~e, Ame~io~n Tobacco owns 3~230 sh~res o~ 80.~ per cent of this p~efe~ed stock ~nd 188,~5 sha~e~ o~ 96.~ ~ cent of the co~on stock. The stock of the Cigarette Company i~ not listed on any stock exchange. ime~io~ Tobaoco ~ufaetu~es ~d ~ells 01~arettes, cigars ~nd Smoking ~Dd chewing tob~ccos~ among othe~ b~nds, L~cky Strike ar~ He~be~t T~eyton. It also owns the Pall M~II b~a~d. ~n 193~ Cigarette Company le~ed ~ubst~ntially ~ll of It~ ~e~l &nd ~er~o~al property, pl~ts~ cig&~ b~nds, trademarks, business ~nd good,ill to Ameri0~n Tobacco fo~ ~ p~riod of 99 ye~ ~t ~n ~nnu~l ~e~tal of $I~800,000 ~l~s certain expenses. In 1936American Tobacco leased the Pall M~II brand to Ci a~et~e Comu~ny for ~ ~e~iod of 9~ years. F~om 1936 through 19~8 Cigarette Company manufactured Pall M~ll Cigaret~e~ from p~oc~ssed out tobacco S~pDlled tO it by Ame~ioan Tobacco. ~luce 19~ Amerlc~n Tobacco has manufactured all Pall Mall Cigarettes but ~ii of this b~and h~s been sold by Cigarette Com- pany. ~ince 19~6 Cigarette Company has been ~he agent in the
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52 2 - Mr. Donald J. ~r~an United States and its possessions for the sale of ell cle~rE~va~ olg~rsm~nufaetured by or fo~ American Tobacco, which bPands ~re lessed Prom Cigarette Company. The maintezance of these comp~nles ~s separate entities h~s become So ~densome and oomplle~ted that it is no~ desired to merge the two companies, with American Tobacco as the con- tinning company. ND~erOUS benefits whleh will ~esult fro~ the merge~ ~re listed in the ~equest for ~ ruling. It is prn~o~ed that the assets ~nd liabilities of Cigarette dol~D~ny s~l! be transferred to American Tobacco in a statutory merge~ under the laws of the ~tate of Ne~ Jersey, An inter- company account payable by Cigarette Company to American To- bacco will be cancelled. At Decembe~ 31, 195g this account ~nounted to @2,1~ji19,79~ This is an open account arising in the ~egul&r Course of business betvee~ the two 0ompanles~ It is contemplated that the stock of Cigarette Cow.any presently owned by Ame~ioa~ Tobacco, will be cancelled. The minority ~tockholde~ of Cigarette Company will receive stock of American Tobacco in exchange for their stock in Cigarette Company. The b~sis of the exchange h~s not yet been determined. The stock of American Tobacco now outstandln~ will be unaffected by the merger, Under New Jersey law, dissenting stockholders of' either co~por~tion a~e entitled to ~eeeive the m~ket v~lue of their Sh&~es in cash out of the funds of the co~por~tlon resulting from the me~ge~, Based solely upon the facts as stated above, it is held ~s follows: (i) The merger of Cigarette Company i~ito American To- bacco under the la~s of the State of New Jersey will Constitute a reorganization within the meaning of seotlon llg(g)(1)(A) of the Internal Revenue Code. NO g~In sr loss ~lll be ~ecognlzed to eithe~ co~po~atio~ ~s the result of the merger, iucludlng the cancellation of the intereomp&ny ~ecount pay- able by Cigarette Company to American Tobacco. (e) The b~sis Of the assets received by the transferee ~ill be the S~me ~s the "oasis of the assets in the hands of the tPansfero~ in accordance ~ith the D~o- visions of section l13(a)(?) of the Code. (3) The earned SuPplus o~ Cigarette Company will become earned surplus of American Tobacco under the provi- sions of section 29.115-I1 of R~gulatlons Ill, ~v~ilable for distribution as taxable dividends by ~ll~e~le~n Tobacco. (4) Pursuant to section i12(b)(3) of the Code neither g~ln nor loss will be recognized to the stock- holders of Cigarette Company upon the exchange of thei~ stock for stock in ~d~e~ican Tobacco. (5) The basis of the sh~r~s Of American Tobacco re- ceived by the stockholders of Cigarette Comp~ny~ will be the same as the basis of the stock ex- changed therefor in ~ccord~nee wlth the provisions of sect!on I13(~)(6) of the Code~
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53 CF~DBOURNE, PARKEj WHITE3IDE, WOLWF & BROPHY 05 Broadway, New York 4, N, Y. 0PINIOg LETTER December 24, 1953 The American Tobacco Company ill Fifth Avenue New York 3, New York G~utleme~ This will confirm our prevlous oral opinion to yo~. We a~e familiar ~Ith the p~ovi~io~s o£ the proposed ~e~ent oT Mer~ between The Am~o~ Tob~cao Comp~ny ~nd the ~irecto~s thereof a~d Ame~i~a~ ~ga~ette and Ciga~ Company a~d the Direetor~ thereof, dated October 16~ 1953J an~ the proc~edlngs of thei~ ~p~e~Iva ~i~eto~ an~ ~f their ~espe~~ tlve ~tockholde~s (~ubsequently ~aken) Am co~mectlon ~ith the ~utho~izatlo~ ~ndado~tion of said Agre~m~mt of Merger. We ~e ~l~o familia~ with the Drovision~ of a ~uling of the Conn~isslone~ of Interngl Revenue, dated Septe~be~ 9, 1953, with r~p~0t to the tax~f~e~ ~t~r~ of s~Id ~rge~j which wa~ ~quested on behalf of the ~bove m~utloned C0nstltue~t Com~anles. Base~ ~po~ ~u~ ex~mlr~io~ of sgl~ Agreement of ~r~er~ ~i~ rullng of the Co~i~io~r of I~ter~al ~eve~ue ~ ~n iu~ d~pend~nt study of ~he applicable p~ovi~ions oT the U~ited ~ta~es I~t~rnal g~v~nue Code, it is ou~ o~lhion that upon the filing of a~ ap~op~i~telF ~xeeut~d oount~pa~t of ~ald Agreement of Me~ger ~d certai~ ce~tlfi0ates ~e~i~ed to a~compa~y ~o~ filim~ i~ the Office of the ~c~et~y of State of New J~ey, s~id merger will be eff~ct~d ~ that the ~erge~ th~by eff~ted, i~ ac- cordance with the provisions of sald Agreement of Me~ge~ will ~o~stlt~te a tax-f~ee ~eo~g~nization ~ng that ~eAt~r gain :o~ 10~ for F~de~al i~om~ tax purposes ~lll be ~e~llzed by r~0m of the mer~e~ by elthe~ of ~he Con~tlt~e~t Companies ~bove ~tio~ed~ except ±~ th~ 0a~e of ~to~kholde~s who ~F ~±ssent a~d be paid the market valu~ of thei~ ~tock i~ appropriate a~raisal p~oceedings. Very t~uly ~ours~ Cha~bou~ne, P~rk~, Whiteslde~ Wolff ~ Brophy
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STRYKEI~ TAMS & HOR~IER NA~IONAL NEWARK BUIlDInG) 74~ BEOAD ~EET~ NENA~K 2, N. J. September 4, 1953 ~llllam M. Parke, Esq. Chadboumne~ Fa2~e, ~hi%eslde, ~olflf & Brophy ~5 Broadway New York ~, N. Y. Re: The American Tobacco Company - Possible Me~ge~ ~TH 3585 D~ar Mr. Pa~ke: Yo~ have a~ked me to ~dvise ~ou whethe~ in ~y opinion the o~ne~s of ~he p~efe~ed stock o~ American Ciga- rette ~ Ci~a~ Company have the power to vote on the ~uestion ~f ~he adoption ~r r~jection of ~n agreement p~ov~ng fo~ the me~,ge~ of that Company Into another companF. Th~ Ce~tlf1~te of Incorporation of the cor~o~a- ~!onj as amended i~ 19~, p~ovldes fo~ ~efe~ed stock ~nd common stock. The Fourth A~ticle thereof p~ovides as follo~8: "..,~.The P~efe~red ~took shall not co~fer ~m the holders the ri~h~ ~o a%te~d Or vote, either in ©e~son o~ b~ p~ox~ at electlon~ of di~eeto~s~ o~ ~t a~y~eefl~ng~ of stockholders, except m~eti~s co~ vened fo~ inc~e~sln~ o~ dec?e~sing the capital othe~ ~tte~a ~ith ~espect to which th~ statute express~ g~ves the po~er to Preferred Stockholders to vote.~ R.~ 14:1~-3 ?rovldes that notice of the m~ting of ~totkho~d~r~ fo~ the ~o~e of ado~tin~ o~ rejecting a me~ger a~eement ~h~ll be mal~ed to e~h stookho!d~r. The ~cond p~aglpa~h of said section p~ovldes as follo~: I~If the vot~ of %h~ holde~ of t~o-third~ of all the a~p~tal sto~k of each of th~ me~ing or ~on~olidating ~o~po~tio~ ~ll be in favor of the adoption of the ag~eement~ %~t fact shall be ce~tlfied upon such agreement bY the secreta~ of each of the ~p~ative corporations, under th~ ~eels thereof, ar~ the ag~eeme~t~ so adopted ~r~ certified, shall be filed in the office of the secret~y of st~te~ ~h~e~on it shall he dee~ed to be the ~g~eeme~t ~nd act of merger or consoli- datio~ Of s~ch ~o~9or~tions, and the several co~- pora%io~s shall be o~e co~o~ation, by the r~e provided la the a~ree~ent. In my opinio~ this section clea~ly provides that a m~rge~ a~ee~ent in o~der to b~co~e effecti~e m~st receive the vote i~ f~vo~ of th~ a~opt~on thereof by th~ ho2~e~s of two- thirds of all the capita~ stock of each of the mergin~ col'Tora- tio~s~
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~5 Willi~n M. Parke, ~sa. -2- Beptembe~ ~, 1953 Wherevem the Corpop~tioa Act provides for the sub- mission of ~ question to stockholder~ ~nd restrlct~ the po~er to vote on ~uoh question to ~t~ckholders having v~tlng ~ower, the Act cl~ly so provlde~. R.3. 11!:3-5 which pro~ides fo~ the ~le or exchange p~0vides that the p~oposed s&le shall be ~itho~ized by the affirmative vote of t~o-thirds in interest of the holders of ea0h ~lass oe stoc~ havln~ voting powers. R.S. 1~:~-6 ~hich provides fo~ the leasing of its properby and f~anehlses to ~ny othe~ co~po~tlon requites the assent of ~wo-thirds in interest of its stockholders. ~,~ l~ll-2 ~equi~e~ the vote of t~o--thi~,d~ of e~ch cla~ of stockholders h~g voting po~er~ for the adoption of ~ ~endmen~ de~l~ed ~dvls~bl~ by the Boa~d Of Di~eeto~ ~.g. 14:!3-1 ~equi~es the vote of t~o~thlrds i~ in- ~e~st o~ ~ll the ~tockholde~s whether with o~ ~ithout voting po~ers ~ vltl~ut ~egard to cl~ss ~hen the q~est~on of ~ p~o- posed diss~!utlon is ~ubmitted ~o stockholders. While th~ l~n~u~ge of R~. l~:lg-3 dlffe~s P~om the 15nguage of R.g. 14:13-i~ it is my op~nlon tha~ it clearly requires a vote in favor of the adoption o~ rejection of a meyger agreement by the holders of t~o-thJmds of ~ii the capl- ~al stock ~hlch Incl~ades in ~y opinion o~ners of g class of ca?Itai BrOCk '~hleh under it~ cha~te~ h~ no ~otln~po~e~. £ think that the vote on a mer~er agreement by the preferred ~tockholders is not inconsistent vith the c~rter provision ~bove quoted. The statutory requirement that ~he holders of all of ~he stc~k shall be entitled to vote on the adoption o~ rejection of ~ merger agreement is~ i~ my opinion, equivalent to a statutory provision ~hlch expressly gives the voting power on su0h question to ~he preferred stockholders. ~f the Legisl~tu~e had intended that the power to vote on the adoption or rejection of a merger ~gre~ment should be restricZed to stockholders having eha~er voting P~e~, I believe theft the statute would?~ve so p~,evided. Very truly yours, Josiah gtryker J8~JC
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(Llndabury, Depue & Faulka) NATIONAL ~ARK BUILDING 744 B~oad Street, Newark 2, N. J. 56 SeDtember ~, !953 J Wi~la~ ~. Par~e~ Esq. Chadbourne, P~rke, Whiteslde, Wolff & Brophy 25 Broadway N~w ~ork 4, N. Y. Com~a~ ~ Po~slble M~rge~ ~e: The American Tobacco BTH 35~ D~ar Mr. Parke~ You h~ve a~ked m~ to ~ive you ~y o~lulom o~ the i~ vot~ug o~ the ~est~on o~ ~doptlom or ~ej~t~ou of ~to~kholder~. 2~ ~der the ~mh ch~t~r of The Ame~ic&~ Tobacco Co~Dany t~ holde~ of ~e~red ~tock are euti~led to four vote~ for e~ch sh~re ~d the ho~d~ of th~ oon~o~ ~toc~ 8~e entitle~ to oz~ Vot~ for eaoh sh~e. In vot~m~ ~on ~ m~rg~r ~g~eement ~i~i the ~o~ of ~e ~fe~ed ~o~k h~e fou~ vote~ for e~ ~h~e O~ ~lll t~ey h&ve but o~e vote ~o~ e&c~ Co~ in votlu on a ~e~ ~eemeut vote ~ ~ cl~s_ s? holders ~' t~o~thi~da of all th~ c~pital stock of e~h of the merging ai~d ~o~olidatim~ corpoz~tions shall b~ im f~vor of the adoD~1on of the ~g~@~emt, that f&~ s~all be ~rtlfie~ ~apou ~c~ agreement b~ ~h~ ~ret~y of e~ch o~ the ~e~p~ctlve co~or~t~o~i~ u~d~ ~e ~a!~ thereof &ud the deemed to be the ~c~ of ~e~r or co~soli~tlo~ of ~c~ It is ~y o~£nlon th&t this ~t~tuto~y ~rovi~i~ ~o~ ~lot require o~ pe~mi~ ~ ol~s vote b~ ~tookholders of ~ifferent ~]~s~ on th~ qu~t~o~ of &do~t~om o~ rejectlo~ I h~ve b~u ab~ to ~lud no d~i@io~ ~rl this ~t~t~ !~ which ~hi~ ~u~tlon ~$ definitely d~.ded.
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57 William M. Parks, Esq. -~- September 4, 195~ The opinion of the Cour$ of Chancery in The Unlted States Leather Com~, 73 N.J.Eq.72. at7, at l~age 75, contalnst~-f-o~sentence whlsh, h~vever, bad no influence upon the decision of the case: ..... Including the Central Leather Company, the holders of about nlnety-eight per sent of the common stock also approve, and the agreement is to be con- slde~ed and acted on at the stockholders~ meeting of the United States company by the entire body of stockholders of this company, the preferred and common stockholders voting under the act (section 105), as one entire body and not ms separate classes of stockholders." The 2eference to section 105 is a reference to the section bearing that number in the Corporation Ast of 1896, the language of which is substantially identical, so far as this question is concerned, with R.S. 14:12-3. Our Corporation Act clearly provides for a class vote vhere such a vote is required, Where provision is made for a vote of all the stockholders without specifying the class vote I think it is clear that a class vote is not intended. R.S. ]4:3-5 with respect to the sale or exchange of all or substantially all of the property and assets ~equi~es anthorlzatlon of t~o-thlrds in interest of each class of stock having voting powers and in addition requires that notice of the meeting of stockholders or of the written consent of tile stockholders having power to vote on the m~tter sh~ll be given to all stockholders whether or not they are entitled to vote. R.S. 14:3-6 which pe~mlts the leasing of the p~operty and franchises of corporations with the consent of twe-thlrds ill interest of its stockholders ~pparently does not require a class vote. R.S. 14:11-2 requires a class vote of the stockholders having voting power ~ith respect to the amendment of the Cer- tlficate of Incorporation. R,S. 14:13-1 requires the vote of two-thlrds in in- terest of all the stockholders whethe~ with or without voting po~e~s and ~ithout regard to class where the questlon presented is the dlsso!~tlon of a co~po~ation~ While the language of R.S. l#:19-3 is not SS definite as the language of R.S. 14:13-i, it seems to me to clearly p~o- vide for the vote of two-thirds of the owners of all the capital stock and does not ~utho~ize a class vote. 2. A~e the holders of the preferred stock of The American Tobacco Company en- titled to four votes for each share when voting upon theapp~ov&l o~ dis- abbrOVal of a merge~? R.S. i~:12-3 provides in part as follows: ".....At each of such stockholdersl meetings a vote of the stockholders shall be taken by ballot, cast in person or by p~oxy, fo~ the adoption o~ rejection @
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L !i~'- !L Willi~ M. Pm~ke~ Esq~ -3- of ~uch agreement, each share Of stock ¢n- titling the holder to one vote/' rfhe ~erlc&n Tobacco gompany when organizsd in 1904 by the A~eement of Merg~ and Con~olldatlon p~ovld~d fo~ p~e~ f~ed s~ock h~ving ~ p~ v~lue of $1d0 pe~ sha~e and co,on stock have a pa~ value ~£ $100 per sh~re. The holders of the preferred stoc~ and of the common stock were entitled to one vot~ pe~ ~hare. Subsequently e~ch ~h~e Of Co~/~o~ 6Pock ~ split into Pour snares, each t~ving a par value of $25 per stare. When this was done the holders of the preferred stock were given f~ur votes for each share in orde~ to preserve their relative voting power. Paragraph 9 of ArtleSs II of the By-Laws of the Corporation provides thpP: ~At all annual and s~ecial meetings of the stockholders the holders of the Preferred gboog ~}~II be entitled to fou~ votes for e~ch sha~e of the par value of $10d held by them, and the ho!de~s of the Oommon Stock shall be entitled to one vote for each share of the p~r v~lue of $25 held by them/' It i~ obvlou~ that if in voting on a merge? the h~Ide~s of the p~eferred stock are enZitled to but one vot~ for each share~ their voting power when voting upon a merger has been dll±uted by the split of each stare of ce~mon stock which orlgln~ll~bad a pa~ value of S10G a share Into fou~ sta~'e~ of co~on stock having ~ pa~ v~lue of $25 pe~ ~hare. Notwlbhstandi~g this~ it is my opinion that the l~nguage of R.S. i#:12-3 which very definitely provides that in voting f~ the a~option o~ ~eJectlen of ~ merger agreement each sl~e of stock is entitled to one vote Is controlling. In my opinion the f~ct that the charter p~ovides that the owners of the preferred stock shall be entitled to fou~ votes for each sha~e and that the By-Laws provide tha~ at all annual and special meetings of the stockholders ~he holders of the orefe~red stock shall be entitled to fou~ votes for each ~ha~e of the p~ value of $i00 held by th~ does not ~fect the voting rights of the holders of the pmeferred stock when voting with respect to the adoption of a merge~ agreement. The c0rporatmon is without power to adopt eithe~ a chapter p~ov~sion o~ a by-law which i~ inccnsist~t Nith a ~?ovi~ion of ~e do~- potation Act. See Costello vs# Thomas Cusack Com~ (E. & A., 1923) 9~ N.J.Eq. ~2~ a~ ~page 42~, in vhlct~he Co~t held that a New Jersey corporation l~s no powe~ to inse~t in its certifi- cate of incorpo~atlon a p~ovislon containing qualifications of dlrecto~s as the Corporation Act prescribes the only qualifl- c~tion for such oCficers. In Venner CO~ vs. United States Steel Cor~., (Cir. said wl~h ~efere~ee to a reduction of the ~peferred stock of the Steel Corporation by the purchase of g substantial amount thereof fb~ ~eti~ement "Certainly permanency in the relative ~TopoPtlo~m of the different sec-u~Ities was no part of the con~ t~et." While this statement yeferyed to the aggregate voting
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~9 William M. Par~e, Esq. -4- Septembe2 g, 1953 power of the o~e~s of &ll the ~efe~ed stock, it m~y have some &pplioatlon to the question under eo~sider~tlon, While I h~ve not beeu able to find th&t the preoise q~est~o~ h&~ e~e~ been co~Bide~ed by o~ Courts, it is defin- itely my opinion that e~oh sh~e of 9~efe~red stook ia entitled to but one vote ~hen voting upon the ~doption o~ ~ejeotion of a ~eT~r a~eement, Very truly you~sl Josiah 8tryke~ JS:JC
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STEYEER, TAMS ~ MORNER (hlndabury, Depue ~ Paulke) NATIONAL NEWARK BUILDING 74~ Broad Street, Newark S, N. J o gO September ii, 1953 Wllllam M. Pamke, Esq. Chadbourne~ Parka, ~iteside, Wolff & Brophy 25 Broadway Nov York 4, New York Re~ Company STH 35~ Amerlsan Tobacco Com ny - Amerloan Cigarette & Cigam Dear Mr. Parka: We have your lette~ of September S, 1953 and its enclosures. You ask our comments with respect to the d~fts of the proposed merger agreement, notice of speelal meeting of stockholders, proxy statement and time sehnd~le enclosed with your letter, you also request our views with respect to the possible amendment of the charter of The Amerlean Tobacco Company relating to the nUmber of directors. We vlll state our views with respect to the ~mendment queBtlon flrst. Just what amendments %o the chartem of a surviving co~por~tion in a merger may be Included in the merger &gree- msnt is not settled in our l~. R.S. 14112-2 clearly con- templates that ee~taln changes in the charter of the survlvlns corporation may be made in the merger agreement. These changes include a change of name and a change in the n~mber mnd kind of capital stock. The statute also provldee that the &gree- ment m~y contain the number, names and addresses of the flrst directors and officers and such other provlslone and details as the dlrectors shall deem~to perfect the me~ger or coneolld&tlon. Our courts have held definitely that an ~mendment changing the purposes for which one of the merging ¢orpor&- tlons is organlzedj 8o as to meet the requirement of similar- ity of puPpose In the statutory pmovisions governing me,garB, cannot be made in the me~ger agreement. In Ool~ate v. Ublted States Leather Co. (E. & A. 1908) 75 N.J. Eq. ~S9, the oou~t 8aid at p~ge 239: I.* * *0~ Oe~e~al Corporation ~et a~tho~izes change in the n~ture of the business of the com- pany by the vote of two-thlrds in interest of the stockholders. * * * But action on the p~t of the corporation to change the nature of Its business Is to be exercised, if at all, by diPeet pro~eed- ings taken pursuant to the statute authorizing it. The acts authorizing ooneolld~tdon neither permit nor contemplate theta change of the objects of incorporation is to be accomplished by means of a consolidation agreement." We believe the 8efep course to follow is to Include in the merge~ agreements only those changes in the charter of the su~vivlng corporation as are authorized by the me~ge~ statute. Such changes include those exp~essly a~thorized in
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September ii, 1953 R.~, I%;12-Q and tho@e implledly authorized bythe language IIp~ovlslons and deta11s" whloh the directors "deem necessary to ~erfee~ the me~ge~"o I~ the instant case, the 190~ Agreement Of Consoll datlon o~ Merger unde~ whloh The American Tob~coo ComDany was or~nlzed p~evldes "~he Board of Directors of said merge~ co~o~atio~ shall be twe~ty~elght in n~ber~. ~owever, the By~La~s of the Company have for many years provlded that th~ number of directors ~hall be seventee~ and that is the Dr~- se~t numbeP of directors om ~he Bo~rd~ A~ ~e have heretofore ~tated, we believe that, in vle~ Of the provisions Of R.~. l~:3-1f which p~evides that ~ve~y corporation may adopt by- la~,~ flxi~g ~Dd ~ite~ing the ~umber of directors, ~he b~-la~ provi~io~ ~ith respect to th~ nu/~be~ of directors would con~ tro~ ove~ th~ oha~te~ p~evislon~ although ~e canuot s~y that the m~tter is entirely settled. We believe that R.~. i~:12~2c would be construed to autho~iz~ a chang~ in a charte~ p~ovision ~Ith ~es~eet to the number of di~eoto~s. This sub~eetion exDressl~ p~o- vld~s that ~he me~ge~ agreement shall prescribe the n-d~be~, names and~ost office ~ddresses of the first dlrecto~s. A m~e~ f~eq~ently involves a~ i~¢~e~s~ in the n~unbe~ o~ Board to include ~ep~esentat~v~s from boards of all the mer- ging corpo~atlons, ~b would see~ that as a p~ctic~l m~tte~ the power to 0hange the nUmbe~ of directors ~ould in r~ny ca~es be a ~ece~sa~y inciden~ to the perfection of the me~e~, it is ha~dl~ conceivable that the Legisl~ture con~ templated that the n~mbe~ of the first directo~s ~hould be different f~om the nUmbe~ specifled in a cha~ter p~ovislon 0the~wlse cont~olli~ F~rthe~mo~e, the s~bs~ctlon p~ovlde~ tb~t the first dlrecto~s shall hold offioe until thei~ suc- cessors ~re ~ho~e~ o~ ~ppoin~ed elthe~ "~ccor~i~ to i~ o~ the by~la~s of the eo~po~ation'~. No ~entlon is ma~e cf a ¢ha~ter provision. ~e believe the Legislature comtemplated that the ~Umbe~ of directors to be elected afte~ the first di~oto~ ~I~ he ~ove~ned by b~-l~s ~do~te~ ~ursu~nt to the p~ovi~ions of R.~. l~:3-1f. ~ a~e of ~he o~in~on therefore that p~ovlslons ca~ be incorporated in the m~er ~gree~ent ~mendin~ the cha~te~ of ~he Tobacco Company so as to eliminate the ~es- ~nt provisio~ specif~In~ the nLunber of directors to be on the bo~d. Although thi~ is ou~ vie~ ~e h~v~ no case direct- ly on the point ~nd the~efo~ we c~nnot say that the matter i~ ~ttled beyond any question of douht~ ~e~e~ A~eement The Me~e~ A~reeme~t has bee~ carefully d~afted and the onl~ suggestion we h~v~ is of a mino~ n~t~re, On page 8 and 9 of the agreement, it is p~ovided that afte~ the effective date of the Merge~ A~reement, ~e~- tiflcates of sto~k of the Cigarette ComD~ny not exchanged f~r the ne~ sh~res o~ ~tock of the Tobacco Co~ny as ~ro- vlded th~ei~ ~shal! be deemed for all corporate purposes, othe~ than the payment of dividends o~ othe~ distrlbuti~ns to ~vidence the o~ne~ship of sha~es" of sto~k Of the Tobacco ComPany. We wonder if in th%s case it might not be well to p~o~Ide that the holders of s~ch unexc~nged ~ertifi¢~tes ~ll not be entitled to vote. Where the exchange of ~teck
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William M. Pa~ke, Esq. 3. September II, 1953 in a merger is on a share for share basis, p~ovlsloos giving the holders Of unsu~ende~ed ce~tlPic~tes the right to vote probably would i~volv8 no p~rblc~l~r problem. Where, however, the exchaD~e m~y i~volve fr~ctio~al ~h~esj p~ovisio~s ~er~It- tins ~ch sb&reholders to vote ~Ight unnecess&rily ¢ompl!e~te elections. Furthermore, the withholding of the right ~o vote would be anothe~ inducement for the holder to ~ke the exchange, There, of COU2S@~ ~ill be an~e~ed to the ~e~ge~ ~sree~ent co~porate acknowledgments and the certificate of the secret~rg of each of the corporations mentloneS in E.g, If the exchange involves Practical 8haresp we believe it would be well to include provision for the issu&nce of scrip to ~ep~esent f~action~l interests ~nd to eefe~ to s~oh scrip i~ appropriate place~. P~Statement The p~r~g~ph I~ the proxy state~en~ beginning on p~ge 3 might be understood more readily by ~he ~verage stock- holde~ if it indicated that the chafes specified as being out~tanding include the sh~es exchanged fc~ Cigarette sh~es. This ~ould be acoo~iplished hy changlmg ~he first llne of the R~r~g~ph so that it wiAl read ~8 follows: "U~on the issuance of the additional shGres in exchange for Cigarette s~res at the time the me~ger becomes effective the Surviving" etc. On page 14 of the Pro~ Statement, we ~uggest tb~t the language beginning in the ninth line of the first p~r~- graph on said p~ge be changed to read as follows: "* * *dissenting stockholder by ~ction in the Superior Court m~y apply for the ap~olntment of three disinterested appraisers to ~ppraise the full ~,rket ~lue of his ~toek without regard to any depreci&tlon o~ ~ppreci~tlon thereof in consequence of the merger:~. Prio? to the 1953 session of cue Legisl~t~-e, R.S. 14:12-7 continued to refer to the filing of a petitio~ to the Circuit Cou~t, By Ch~p~er !4 of the L~ws of 1953, E.g. 14:12-7 was ~mended. We enclose a Copy of zhe Section as amended. The change we hive suggested in the language of the p~oxy statement is to conf~ the language to the section ~s le the ch~ter of The American Tobacco Company is to be amended to eliminate the provision specifying the ~u~- bet of directors on its board, we believe the~e should be included in the proxy statement an explanation substantially as follows: "The ce~tlflcate of incorporation ~nnexed to the merger agreement as Exhibit i is identical with the Agreement d~ted September 9, 1904 pur- suant to which two o~her eomp~nles ~e~e ~erged o~ consolidated into Amerlcan~ ~s such Agreement has heretofore hee~ amended~ except with respect to F
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William M. Parke, Esq. 4. September ii, 1953 the ppovlsio~ rel~ting to the number of directors ~Lnd officers ~nd the n~es and &ddresses of the first dlrectors and offlce~s. The New Jersey Revised Statutes p~ovlde ~l~t ~he me~ger ~g~ee~enZ sh~ll ~escrlbe ~he n~/nber~ n~mes ~nd post offlce ~dd~es~es of the f~st dlrecto~s ~nd offi~e~ of th~ survlvln~ corporatlon ~nd that they shall hold office until thei~ suc~essor~ a~e chosen o~ ~ppointed either ~ccordlng to la~ o~ the by~l~s of the co~po~tion. These statutes also ~rovide that every co~po~tio~ sh~ll h~ve powe~ to ~opt by~!aws flx£~ ~nd a~erlng the nUmbe~ of its directors. ~he Agreement of S~pt~mbe~ 9, 1904 p~ovlde~ that the ~t~ab~r of d±recto~s should b~ t~nt~-eight ~nd set forth the na~es ~nd resi- dences of ~he first of s~ch t~enty-ei~ht directors ~nd the offlce~s. For mzny ye&~s the by-l&ws of the Company have f~xed ~he n~m~e~ of ~ecto~s ~t seventeen. Article Ill of Exhibit I set~ forth th~names of the f~st dlrecto~ ~nd offloe~ of Ame~lcan in acoo~da~ce ~ith the p~esent by-laws of Ame~ic~z.~I T~me ~hedule We h&ve no tom/hen, s with ~es~ect to the ti~e schedul~ exceDt that you might i~clude the~elu ~ remlnde~ that certificates showing the p~yment of Ne~ Jersey co~- po~t~ f~nchlse ~axes m~st be obtalne~ ~nd annexed to the ~o~rs ve~ t~uly~ • ~WT :SAK Enolo~u~e (;3
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STRYKEH, TAMS & HORN~ (Lindabury, Depue & Faulks) h~ti~nal he~k Building 74~ Broal Street, Newark S, N. J. G4 September 23, 1953 William M. Parks, Esq. Chadbourne, Parks, Whlteside, Wolff & Brophy 25 Broadway ]~ev Yo~k 4, ~e~ ~ork Rel American Tobacco Company - American Cigarette & Cigar Company STH 3583 Dear M~. Parks: You have re~uestel our advice with respect to the following: (I) Whether there would be any advantage insofar ~s New Jersey franchise taxes are Concerned if the merge~ agreement in the above matte~ was Tiled Just before m~dnlght on December 31, 1953 as against filing it early on JanUary 2, 1954; (2) Whether the directors of The American Tobacco Company who hold stock of the American Pigar@tte & Cigar Comha~y should vote in a directorrs meeting on the ~sti6~ of me~ger or sign the msrger agreement; and (3) The fopm of the proposed amendments of the cha~- ter of The American Tobacco 0ompany. l. NeF Jersey.~'r~nchlse tax. Section 2 of the New Jersey Corporate Fr~nohise T~X law, adopted in 19~5, providss that eve~ domestic eorho~atlon not therein exempted shall pay an annual franchise t~x for th~ year 1946 and each year thereafter for the privilege of havln~ or exercising Its corporate franchise in this state or for the privilege of doing business employing or owning capit~l or property or maintaining an o~fdce in thi~ state R.S, 54:10A-~). In Section 15 of the Act, ~s amended, it is provided that the tax imposed by the act shall be due and p~y~ble with ~espect to the calendar year 1946 and each yea~ ~he~eafter, measured by the taxpayer's net worth a~ of the close of the calendar year or oZ its fiscal year next p~eoe~ingthe privilege year, except that in the egse of e taxpayer whos~ fiscal year ends not later than June ~0 in the prllilege year such measure shall be as of the close Df such fisc~i Te~. (h,g. 5~:iO&-15). Th~ t~m "p~d~ileg~ yea~" is defined to mean the calendar year in and for which a tax is payable unde~ the act. (R.S. 54.10A-~). If the merger agreement were to be filed o~ December 31, 1953, the New Jersey fr~nchlse t~x pzyable in 195~ ~nier the act would be measured by the net worth Of
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~r William M. Parke, Egg. 2. September 23, 1953 The American Tobacco Company ~fte~ giving effect to the me,gem. If the merge~ a~re~ment is filer On January 2, 1951L, we are of the opinion that the taxes payable for 195~ ~o~id be (I) ~ tax ~easu~ed by the net ~orth of The American Tob~¢co C~pany as of the end of the ~ear 1953, and (2) a t~ measured by the net ~rth Of the A~erlcan Cigarette & dlger Pompaa~ as of the same date. As en&cted in 1945, the law Was Clear that the tax ~crued ~s of Jsnuary 1 of the Tear in which it was p~yable. The act then provlded thzt the tax llen ~cc~aed ms of January 1 of th~ p~Ivil~ge yea~ snd expressly required corpo~tlons dissolving or llquldatlng to Day the taxes for the p~Ivilege ysa? in which ~ certificate of di~sol~tlon ~as f~led. B~ a!l aaengment enacted in 19h5, the date upon ~hich the tax bG- oozes a llen ~as changed to Janus~y 1 succeeding the p~lwilege year and the Tequi~ement for the p~yment o£ taxes upon dis- sol~tion W~s changed to the pa}n~e~t of "all t~xe$~ fees, penalties ~d Interest ~osed ~pon the corporationu in ~o~nce with the provisions of the ~ct ~PL 19~7 Oh, 5~ Pg~ 178, R,g. 54|10A-12). ~here is no provision in the law fed apportioning the t~es fo~ a p~Ivilege ye&r of a corporation which is in existence on ~nd ~£tem Decembe~ 31 p~ecedlng a p~ivilege y~£r but is not in existence fo~ the full twelve months of th~ p~ivilege ye~?, In Section l~ of the ~ct, it is expressly p~o~ided that ~ co~por~tion o~gandzed on o~ afte~ Januar~ 1 in any y~a~ ~hall not be ~e~ud~e~ to pay any tax for the p~ivilegeye~r in ~hioh it is so O~g~nlzed. The Dep~rtment of T~xatio~ and the Secretary of 8tate,s Office t&ke the vte~ that the tax under the act ~ccrues ~s of January I of each year and, ~s above mentioned, we ~e of the opinion that such constmuetion ~o~id be s~stalned. We, of COurse, do not have the detailed information f~om vhlch ~e could make an estimate as to ~hether the tax p~y6ble fo~ 1954 iT the me~ge~g~eement were filed on DesemheT 3~, 1953 ~ould be mote o~ less than the t~xes p~y- ~ble if filed on J~nu~y 2~ 1954~ It WOUld seem p~obable that the two tmxes which would be p~y~ble in the event the ~g~eement were to be filed on January 2, 1954 would aggregate m~re th~ the one t~x ~hl~h would he Incurred if the agree- ment ~e~e filed December 31, 1953, If the agmeement were to b~ filed on J~nt~y 2, 1954, in computing the net worth of the Tobacco Company a portion of the value of its shares in the Cigarette Company ~ould have to be included (R.S. 5~:IOA-9) a~3 in eomputlng the net ~orth of the Clg~ette Company an~ i~debtedness owing to the Tobacco CCmp~ny ~ould have to be excluded (~.g. 5~:10A-4(d)). Where the Agreement is filed on December 31, 1953 there ~ould he one tax on the consolidated aet ~o~th ~nd the Indebt~da~ss~ if any, o~Ing to the Tobacco C0~oany ~o~ld be elimiDat~d. Furthermore, if the merger Increased the net womth of the Tobacco Con~pn~y upon ~hich the ~ax is measured, such Increase might be t~xable at a leaser ~te th~n it ~ould be against the Cig&rette Company, d~e 5~:IOA-5. ~e believe that the accountants of the two 0o~panies could make a falrlT ~cs~te estlm~te ~s to th~ taxes involved in each ~ite~n~ti~e. The proposal fo~ fili~ the mergem ~g~eement On January g, 19~4 presentm anothe~ problem, R.5. 51~:lOA-12 p~0vides that no corporation o~ga~ized under any I~ of this St~tem~y merge o~ oonsolld~te unde~ any l~ of this gt&tc
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u~til "all taxes~ fees, pe~altlcs a~d interest ~.~posed upon sald 00rpor&tio~" in ~ccord&nce with the p~ovlsio~s of the act shall have b~e~ ITully paid}I. This seotlon also provides Ztat no 'Ioertifioate of me,gem" sh~ll be filed ~ith the ~. Secretary of State until theme shsll have been filed ~;ith hlma certificate of the Director of the Divisiom of Taxa- tlon evidencing the p~ymen% of all such tames~ ~ees~ penalties ~nd iiiterest. There is no provlslo~ing an ~xeeption ~ere the A~reem~nt is fil~d before the tax h~s been detem- mlncd. It p~>ob&hly would be difficult to determine on oP be fore January 2, 195% the t~x payable under the act by the t~io corpo~atlons. Under ~.~, 5~:iOA-~O the t&x Co~issione~ has power to :,elease propemty fmom the llen of the t~x upon terms that secur~ pavement. This probabl~ would to section be construed authorize the Commissioner to issue a tax 61ea~nce ¢ertlfi- i ~ate in th~ case of a merger effected before the ~ax ~as doter~ined~here satisfactory arrangements weber us,de to se- i cure payment whe~ the tax ~as determined. The !~nguage of ~he section refers to the ~elease of % tax llen and wo~id not necessarily apply to the issuance of a gax clea~noe certlfl- ¢&te upon the strength of security given for the p&~Tn~nt Of taxes not then determined. We believe that unless the~e should be ~ very g~e~t advantage in filing the ~e~ge~ ~gree- ~ent O~ JanUary ~, the q~estlo~ should be avoid Q~. 2, Whethe~ the dl~ectors of American Tobacco Company ~ho ~ stock of Amerlcen Cigarette ~ Cigar Co~p~n~ should vote in a di~ecto~rs m@etin~ o~ the q,uestio~ of the ~cr Sign the mer~. i R.S. I~:12-2, p~eso~ibing the p~oced~e for a merger p~ovides "The directors of the seve~a~ corporations p~osing to me~e shall e~her into ~ joint agreement u~d~r the corHo~ate seals of the respective col~por~tio~s fo~ the ~e~ger or co,sell- ,orlon" prescribing the Several items refe~c~ to i~ said see- %ion~ However, %he merger o&n not become effective u~tll after it is 8oproved by the ~equlslte t~¢o-hhlrds vote of nil stook- h0ld~s. Although we believe the section ~ould be construed ~ ~ot ~e~uirlng the sign&t~re of every direc~o~ we have no case on the point and cone~quently we advi~e that, ~heneve~ p0ssible, all the di~ecto~ should vote for and ~ign the agree- There is no provision in ou~ statutes p~oviding tha~ a director of merging eorpoPations ls disqUalified fr~ voting for or signing a me~ger agreement by peasen of the fact = that he i~ interested in the merger because he holds stock in ~o OP more of such me.slug eo~porations. It i~ our opinion that the principle ~estrictin~ the power of a director in aetlng on a corporate transaction in which he P~ a personal interest h~s no application to a matte~ which is to be submitted to a vote of the stockholders, except that th~ interest of the director in the transaction mu~t be adequately disclosed to the stookholder~ so that it can be taken into account by them in determining how they should ~ote. G6 Wllliam M. Pepke, Egg. September 23, 1953 A Y L L L
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William M. Parke, Esg. $. September 23, 1953 In Stewart v. Lehigh Valley Railroad CO. (E.eA. 1875) 38 N.J.L. 505, It ~as argued that a contract mad'e-by a corpora- tion in which one of its directors had an Interest was ipso facto void~ The co~rt held it was not void but merely voidable at the option of the aorporation and not by plaintiff. In dis- cussing the rule the oou~t said at page 523: "Nor is it proper for one of a board of directors to support his oontraet with hiB company~ upon the cround that he abstained from participating as director in the negotiations for and fin~l adoption of the bargain by his co-director~, the very words in whlah he asse~ts his right d~clare his wron~; he ought to have participated, and in the interest of the ~tookholders, ***" In United State~ Steel Corporation v~ HQd~e (E. & A. 1902) 64 N.J,--E4T. 07~, ~hT~ourt reversed a declslon below re- stralning the corporatlon from 18suln~ bonds in exohang~ for pl, ef~rred stock pu~s~nt to a plan whioh had been ~pprov~d by the directors and by stockholders. Amon~ other ~hlngB, it ~s argued that th~ plan was void because 15 or more of the 2~ members of the Boar~ of D~roctors were interested in ~ ~yndl- ~ate ~hich was fo~med to ~ssist in o~rryi~ out an aS~eeme~t with J. P. Morgan & Company whereby it w~s a~ed that $I00,000~000 face v~lue of n~w bon~s would be t~ken a~d paid for by at least $80,000,000 of preferred ~tock and $20,000~000 in cash~ The agreement also p~ovided that the ~yndloate woul~ receive a commission of ~% on the $i00,000,000 and on any ad- ditional amount that might be taken at pa~ by the ~too~holders or the hunkers. In a letter accompanyin~ the notice of the stockholdersr meeting, the Qontr~et with J. P. Morgan & Company and the ~ate of commission was referred to and it w~s 8tared that some of the directors were included in the syndioate. In sustaining the transaot~o~, our Court of Errors ~nd A~p~als said in pa~t: "The ~u~e that dlreotors cannot lawf~lly ente~ ~nto a oontr~ct, in th~ benefit of which even One of thei~ number particlpates ~ithout the ~nowledge and consent of th~ ~toc~hol~ers, is so firmly e~- t~enched in our jurisprudence that it I~ n~t open to debate. * * * (Citing cas~) * * * "The rule is imb~dde~ in ou~ juri~p~udenoej and it cannot be too strongly stated or too ri~orousI¥ applled. But in the eases ~ited the oontract was m~de by the trustee wl~ho~it the knowledge or oontent of the cestui ~ue trust and without ~ub~equent ~ati- ficatlon or adoption by which the vice in it could be ouPod. 'IThe object of the rule is to prevent di~eoto~s from secretly using their flduoiary position for their own emolument, ~nd not to impair the right of stockhol~ers to enter into any lawful enga~e~ ~e~t with a full disclosure of the f~ots.'I In Col~ate v. United 5rates L~athe~ Co. (Ch. 1907) 73 N.J. Eq. 72 it ~as argued, among other--t'~--6~{7, that th~ consolidatlo~ a~reement was voidable ~t the in~t~noe of ~ny
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Willlsml M. Parka, Esq° 5. C8 September 23, 1953 stockholder because it Was m~de by 0o~p~nies h~vin~ common dlrecto~s. On this point, Vice Ch~ncellor Emery s~id at page~ 86 and 87, ~mThe principle allo~ing stockholders of a oom~ny OT companies to avoid, ok these g~ou~ds, agreements m~de by common directors of companies, reaches to • and is intended to control thc~ contracts of com- panies with each other in ~hlch the action of the common directors effects or concludes the contract and finally binds the compsny and ~ll its stock- holders. The avoidance of the agreement is an enforcement of the right of the company as a co~- potato body, which right of the company is asserted and prosecuted in its behalf by the individual stockholders in an action to which the company is a party, and in which the decree goes in favor of the company. The principle does not touch or apply to the control of the indivld~al stockholders, voting or acting as such, in ~ef~cnce to their indlvidual interests. ~IContracts made on behalf of companies by eomlilon direetors~ or m~e by directors ~ith one of their body, may be ratified by the corporate action of the enti~e body of stockholders, and where as in the merger acts, th~ final contract, if ~de, is the contract of the corporate body consisting of an entire body of stockholders actln~ as individuals, approving the agreement entered into by Lhe directors, the principle does not ~pply. The whol~ proceeding for consolldation is statutory, and llke proceedings fo~ dissolution and so~e othe~ prooe~li~gs~ is di- rected flnally to the co~porate aetlon by the en- ti~e body Of stockholders, acti~ in thei~ Indlvld- ual ~i~ht8 ~d Indlv~l ~nte~ests, and in the ab- sence of ~ny statutory disqualification of the di- rectors to act by re,son of eoz~mon di~ectorshlp in the ~erglng companies, no~e should he created by an appeal to ~ prlnciple of equity, ~hdch Was Intro- duced to ~each eases of an entirely different char- ~ctem. The only practical effect of applying the p~inelple to these cases, would he to compel the i~troduc~io~, as pa~t of the ~aohi~e~y of consoli- dation, of the mo~e objectionable f~ture of Id~ilmy~ directors in piece of directors actuall~ rep~esentlng stockholders~ i~te~ests a~d entitled to the control o~ weight Which p~operly belongs to m~jo~fty in- terests,~' The consollda~ion in this case ~as held invalid by the Court of gPmoms and Appeals on ~he g~ound that the two oo~porations ~e ~ot o~nized to e~y o~ business Of the same Or si~[iL~ purposes (Z5 N.J. Eq. ~gg). The Cou~t expressed ~o opinion with respect to the effect of common dlrecte~s. In Ellasbe~ v° Standard Oil Company (guper. Ct. 1952) ~3 N.J. Gupep. ~31 ~ff~d on opinion belo~i 12 N.J. ~67~ e restricted stock option plan approved by stockholders ~as sustained although it appeamed tbat all Of the directors ~ho formulated 5nd approved the pla~ were eligible as be~eflciar- ies thereunder.
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G~ ~illiam M, Psrke, Esq. 6. September 23~ 1953
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William M. Parke, Esq. 7. September 23, 1953 We believe the essential changes in the Cempany,a charter c~n be made ¥1thout cre~ting a~ un~sua~ sltu~tion by inclndAng in the Me~ger Agreement the following: k i. To include in APtlcle II of the Merger Agree- ment in addition to the number, names and post office ad- dresses of the flrBt directors ~nd offlcePs the following sentence: '~he n~mber of the f~st dlre~tops of ~he Surviving Company shall be s~venteen ~ thereafter the number of the Beard ~f Di- rectors shall be the ~umber ~ixed f~om tlmQ t~ t1~e in the by-la~s of the Supvi~A~g CompanF." 2. Include in the Merge~ Agreement the follovlng: "The T~ansfer Agent a~d ~he ~eglstrar of the stock and obligations of the ~u~vlving Company shall be the person~ oP cop~oPatio~s designRted as such from time to tim~ by pesolutlon of the Bo~d of Directors." 3. Include in the Merger Agreement the fo~lo~ingl '~The Agreement datsd September 9, 190~, pursuant to which the Supvivlng Com~ny w&s created, ~s s~ch A~eeme~t has bessie- fore b~en ~me~ded, sh~ll be deemed to be a~n~ed furthe~ by this Agreement i~sofap as s~ch Agreement ef September 9, 190~ as heretofore amended is inconsistent with any provindon of this Agreement." The procedure suggested &here, it seems to us, would ~ccompllsh the de~i~ed ends and ~ould ~vold cr~&ti~g an instrument, the term~ of which Would ~ppea~ to be incon- slste~t o~ a "ce~tlflcate of ihco~op~t~on~ o~ ~n ~&l klnd fop which we have Re precedent. If the foregoing ~uggestion is ~dopted, the pro- vlsions of the p~oxy statement with resp~ot to the ~h~nge~ in t~e charter of The AmerAcan Tobacco Com~n~ effe~ by ~he p~oposed merger ~greement ~ould have to be broadened ~om~wh~t. We su~gesb ~ statement ~ubst~ntlall¥ ~s follo~s: "Th~ only ch~ges ~hlch the p~opo~c~ m~ agreement would effect in the Consolldatio~ A~rcement of 190~ as heretofore Rmend~d a~ ~ith P~spect to the nu~he~ of the Bo~d of DiPeoto~s~ th~ registered office of ~he 8u~- vlving Compan~ in New Jersey and the Transfer Agent ~nd Reglst~a~ of stock ~nd oblig~tlo~s of the Supvlving Company. Thc New ~e~sey statutes require that the merger a~reement set forth the nUmber of the flrsh directors of the surviving company. These statutes Rlso ppovlde that ~very corporation shall h~ve powe~ to ~do~t by-l~ws fixing and ~lter~ng the Rt~mbo~ of directors. The Agreement of September 9, 1904 pPovlded that th~ number of dipector~
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WilllamN, PaPke, Esq. 8. Septembe~ 23, 1953 should be t~ent}~-elgh~. Fo~ many years the by-laws of the Conlpany ~,ave fixed the number of directors st seventc~n. The p~oDosed Me~ge~ Agreement provides that the n~mb~r of the first dlre~tors shall be seventeen and thereafter such mUmbe~ ~s shall be fixed f~om time to time in the b~-!~ws of the Company. The 1904 Agreement of Consolld~tlon also n~med the Transfer Agent and Registrar of th~ comp~ny'~ ~tock and obliga~- tions. The t~nsfer ~gent thus n~med is no longer in existence. The p~oposed ~erge~ provides that such T~an~£~ Agent and ~egistra~ sh~ll be the p~son or ~o~po~tio~ deslgn~ted as such from ti~e to ti~e b~ resolution of the Bosrd of Directors of ~he ~crvlv~ng Company. The proposed Me~c~ ~ee~ent ~ec~tes the correct p~Inclp&! and regis- tered office of tho Surviving Co~po~tlon ~nd the Agent in cha~ge thereof ~hich differ~ from the office and ~ent ~eferred to in the 190~ Consolida- tion Agreement. The 1901r Consolidation A~reement ~lso provided that ~eferrod ~toek provided fo~ in the A~ee~ent could be issued onl~ fo~ the re~ dcmptlon and ~e~i~e~ent ~t par of d~bts that b~ the cou~olidatiou became debts of the Survl~dn~ Cor~o~tlon or at ~ for e~sh ~o be used for ~ueh red~mptlon. The proposed ~e~e~ A~re~m~nt p~o- vldes for the Issuance of such P~efe~ed ~toc~ in exeh~ge for P~efe~ed Stock of Cigarette.~I ~e ~oul~l be pleased to discuss ~n~ of the foregoi~ ~tt~s with yo~ if ~ou so desi~e~ F~:~A~ ~t~yke~, T~ms & Horne~ TO BE DELIVERE0
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STH~EEE, TAMS & HOHNSR 744 B~o~d Street Newark 2, N. J. October 21, 1953 Wiliiam M. Psrke, Esq. Chedbourne, ParFm, Whlteslds, Wolff & Brophy 25 Broadway New York 4, New York ~ American Tobacco Company ~ American Cigsmette ~nd Cig~ Company ~TH 3583 De~r M~ Parke : We wish to ac~owledge receipt of your let- t~ of October 19, 1953 enclosing ~opy of mlnutes of s~ci~l m~et~ng Of tb~ Board of Directors of Am~rlca~ Cig~rett~ & Cigar 0~pany and your letter o£ Ootober 20 enclosing photost~tlc aopy of executed merse~ asr~- ment. I h~v~ r~ad ths draft of minutes of the shecial meeting and examlned the photostatic copy of ~he ~greem~nt of ths msr~r b~twe~n the American To- bacco camp~zy ~nd ~hs American ~Igarette & ~isa~ Com- Pany~ In my opinion, the minutes of the dlr~to~s' ~etln~ am~ adequate fo~ the pu~po~ intended and the ~gr~ment of merSe~ ~ppe~ to hers been properly executed on behalf of the two corpor~tlonB and thei~ dlr~to~s i~ a~oordan~e with the ~e~i~nsnts of ou~ S~tut~s. Yours wry t~uly~ FWT:SAK F~ncls W. Th~n~s
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73 [- Proposed Mer~er of TK~ AMF/~ICAN TOBACCO COMPAi~-f A~q) "-I AI~P~ICAN CIGARETTE AND CIGAR COMPANY L_ -J
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P~3pos~ ~r~ of ~ AF~IC~ TOBACCO C~A/rf ~ne Amerinau Tobacco Ccmpaay (a New Jersey corpoz~tion) is considering merger with its sub~idlmvy, American Cigarette ~nd 01~r Company (a New Jersey eor~or~tlcn). Amerteau ~%ba~co now own~ 188~925 (96.28%) of the. 195~500 out- standing common sh~res a~. 3,230 (80.97~) of the 3,989 outstanding 6% preferred sh~res of Am~rlcan Cigarette. There are presently outstmr~ng with the public 7,275 c~n sh~res and 759 preferred sheres. ~ICAN 01GA~ETIE AND CIGAR CC~ANY Am~rica~ Cigarette was incorporated in Near Jersey in 1901 @s American Cigar Co. Its present title was adopted August lls 1936. The prSnciiml business of American Cigarette is the m~rketing of PALL MALL Fa~o~s Cigarettes (King-size). The PALL MALL brand together with the business • nd goodwill ~erein ~s l~ed by Amerlcan Cigarette fr~z American Tobacco in November 1936 ToT a period to expire with the ye~ 2030 Lt an ~Luuual rental of $52,000. The PALL MALL b~ is m~nuf~ctured by A~ericmu Tobacco under an agree~ meat terminable by either p~rty on one yea~r'~ notice. I~ addition to cost ~f the ~ant~actu~d product and expenees incurred in the stoz~ge and shipment of PALL MALL Famous Cigarettes~ American Tobacco receives ecapensatlo~ for ~Tying Of leaf tob~cco~ ~nf~cturing~ storing mn~ shipping. The .PALL MAIL hra~d w~s dis- tributed originally bM A~erlc~n Tobacco prior to November 1936 ms a Turkish bleud vhi~ traditionally char~ct4rlzed this clg~rette. In November 1936 Amerlean Cigarette began hh~ dlstribut~6n of ~ new type o~ PALL MALL ~mous Cigar~ttea hac~n as Modera Blend to re+~il ~t popular prices. This cigarette was of the standard size, 70~s~ in length, ~nd of ~ blend of tobacco know as the
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75 2. I~ )-939 there ~{as i~%'r~uee~ eP~ 81z~sti%uted for pALL ~IL ~Iodern ~1~a - ~w ,aa 1o~ pALL MALL Famous Clgarntte, 8~ ram. In lem~h (~-size), ~ a tlend de~Igne~ better to suit the t~s~e of the American 17ublic. Sales Of pAIL MALL ~av~ in~zeas~ d~dng the ~st seve~ ~ears st rates far ~ove the in- ~mtz7 ~wr~ge, uuit ~ale. in 1952 ~elag almost 5 times ~ult sales for 19~6. pALL MAIL is by a wide ms~in the largest-~ellln~ kl~-slze cigarette la ~he ~$ed 8~ates a~ zanked in 1952 in fourth 91ace smo~g all cigarette ~-s~Is, pTiCT to 1932, ~me~lean CiR~metta (then American Cigar CO.) was e~ged in %he =anuf~ure an~ ~le of ~i~a=s under n~a~ of CEA~/ELLOR~ C~LDB~ AW20~IO T CLEOPA~RA~ ~L ROI TAN, ani ~. In 1932 c~rtain ~ ~ ~somal ~yBrty~ ~l~n~s, cig~z bran4s, %~ade-=arks, hus~ne~s am~ ~o~rill thereof~ owue~ by Amer- ican OIg~retth ~e lea~ tD American ~eo ~;~n~ fu~ s ~ ex~In~ w1~h the ye~ 2030 at an ~nnu~l rental of $1,800,000 ~lus texee assessed ~on the leased property, i~s%~snce snd other charge~ aonstltutin~ a~i%io~al z~ntal. Undel- an agreement with American Toheoco entere~ into in 1936 an~ eon- ti~In~ ~rCm y~ ~o y~r ~ub~ect to ~rmi~atlo~ o~ ~0 d~s' n~ioe~ ~riea~ Cig~rett~ IS th~ ~Eclusi~ agent in th~ U. B. ~ all it~ ~osse~i~ f~r the sale of all clear ~avan~ eigazs manuf~oture~ ~y o~ fo~ Americ~ Tobacco. C~- ml~slons e~rne~ umber this agre~ a~oun~ to $~T,O00 in 1952. L~ASES At the time of the 1952 le~se ~f ~er~In pm~p8r~ies and ei~ar brands ~y American Oi~r to American Tobaccox t~e Cigar company sold to Americ~ Tobacco c~r%~In u~ it~ ~oFerties exelu~sd fr~ the le~a~ i~lu~Ir~K~ smo~ othsr thin~s~ its leaf tob~ceo~ manufactured sto~k aud su~lleB, certain acoounts reeei~bl~ real estate io~&te~ in Connecticut an~ Mis8ou~i~ certain shares of the C~on Stce~ o~ the American Cigar and its investment in porto Eiean Leaf Totac~o CO~y~ (but ex~ludi~ other se~urltles and ~erinln other ~ssets)~ in oon~Ider~tion of
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'26 7D,~O0 shares of Cow,non Stock and 129,500 shares of Cox~on Stock B of the American Tobacco ~nd the asst~ption or cancellation of debts and liabilities of ~erieaa Cigar S.mountlng to $13jO2~726~ with ~ cash adjustment of $ii,672. (Fast of the above-mentioned ZOO,SO0 shares of American Tobacco Co. Common and CO~mon B Stock was distributed by Amaricau Ci~rette Co. to its stockholders in the years 1935 to 1940, inclusive either as ~vide~d~ or iu recapltalization and the balance ~s sold to American Tobacco in 1916. Thus American Cigarette no longer o~ns any of these shares). Prior to 1949, American cigarette mant~faetured PALL MALL Famous Cigarettes (which brand it leased from American ToBacco in 1936) in a p~ent at Durham, North Carolina, leased from Amerlc~n Tobacco, under a lease terminable by either l~rty on 90 days' notice. Tobacco and other materials needed for the ~antue~cture of the ci~rettes ~ere obtained from ~Jnerican Tobacco~ togehher with other f~cillties and services including supervision of manufacture. In ~@~tio~ to re,hal for le~sed factory s~ce and m~ehlnery, ~eri~an Ci~rette ~as obli~ted to ~y eosh of tobacco, materlal~ ~n~ services plus a s1~ e~am/ to 2~ of the cost of making the ~lend. By amendment in 1946 it was agreed that the charge for interest on leaf w~s to be calculated ~h 5.3% of the cost of leaf used i~ the blended tobacco delivered and also that the profit to American TO- h~cco wo~ul~ be l~ per po~ud of blemded tobacco (instead of 2~ of the cost of the blend), Beginning with JaUUar~ l~ 1949, s n~ ~greement was entered into, superseding t/ze previous agreements~ which provided for the m~uuf~cture of PALL M~LL ci~rettes By American Tobacco for American Ci~rette. ~ALL MALL is n~ be- ing manufactured at three different American Tobacco plants. The interest zharge for leaf used was set at 5~ per annum (in addition to rental for leased faczory space and machinery) ar_d the profit to American Tobacco remalne~ at l~ per pound of tobacco~ By amendmenh in December 1949~ retroactiv~ to January l~ 1~49~ it w~s agreed that the profit to American TObaccD would be 6~ per thousand 3,
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~ ~o ci~ttes and that interest on the cost of leaf tobacco would be the ~average interest rate" on the long and short term debt of American Tobacco relate~ to the average inventories of leaf tobacco. SUB SIDTAEIES American Ci~rette o~s a controlling interest in Cuhsn Tobacco Compar~Y, Inc., a holding company incorporated An Delaware in 1924, as successor ~uder ~ I~ of reorgm~iz~tlo~ be ~n~ Tobacco CO. orgao~zed in l~OH. Cuban Tohaeco has various subsidiaries which owm real estate and farm l~nds in Cub~ amd are engaged i~ the tobacco business, including the buying~ supervising the ~ewing by sharecropp~rsj wmrehouslng~ processing and stemming of tobaccos, and the ~nfacture of clga~s An Trenton, Ne~ Jersey~ and of cigars •nd ci~rethes in Hmvana, Cuba. The brand~ of cigg~rs manufactured include IA CORONA, HOCK Y NA~ H~Y CLAY~ CABANAS sad VILLAE Y VILLAR. Holdings of Cuban Tobacco CO. securities by American Ci~rette are shown hereafter. CAPITALIZATION American Cigarette aad Cigar Com~an[ Long Term Debt Prefer~'ed Stock, 6% cumul~tive~ $100 par authorized and outstanding 3,989 shs. Co~Imon Stock, Par value $70 per ~h~re, authorized 500,000 shares, issued 2CO,O00 sl~resI outstanding 1953500 shares Ret&ined earnings December 51~ June 50~ ±952 1953 None ~one $ 398,900 $ 398,900 13,685,000 13~685,000 13,724,026 ~6 573 062 The 6~ e~n~ative preferred stock of American Cigarette is non-callable9 e~titLed to $1CO and accrued dlviden~s An liquidation; and has ~o voting rights,
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*Reduced to $2,780,000 at JUne 30, 1953. (i) 9,334 shsres (84.9%) owned by American Cigarette zt September 15~ 1953. (2) 131~i13 share~ (77.1%) owned by American Cigarette and 7,643 sh~res (4~2%) by American Tobacda ~t September 15, 1953. (3) Divlde~d ~rre~r~ on the ~referred Stock ~t Juue 30~ 1953 ~ere American Cigarette ~lso holds stocks of certain subsidiaries Of Cuban Tobacco Co. The $3~707~000 3% Collateral Note d~ae 1961, th~ ~h~res of Preferred Stock and Co~on Stock of Cuban Tobacco he~d by American Cigarette ~ere carried cn the books of the latter at June 30, 1953 at an ~ggreg~te ~lue of $3,604,676. The-market value of Amerlc~n Cigarette's holding of Cuban Tobacco Preferred ~nd Cc~on Stock was ~proxlm~tely $~805,000 on September 3, 1955.
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• ~ic~n Ci~ette ~ad Ci~z C~sh AcCounts receivable~ customers l~v~ntor ie s Total c~rent asoets~ incl~di~g other AcCOunts ~ay~ble= treble Ac er ue~ t~xes p~yable to affil~te Tot~l current liabilities, including oth~r Net current .Assets Iu~s~nent i~ Cuban Tobacco Stocks of subsidiaries of Cuban ~ob~co Assets leased to American Tobacco Pl~nt and m~ehlnery~ net of smortlzation ~onds, t~ade-mar~ and goodwill Other Azsets TOtal Net Assets Capital StOe~ Retained Earnings Total December 31, 6,558 14,560 $ 26~011 446 13, ~47 9,701 9,874 17447 6,658 Z48 $ ~7,808 z4~Ca~ $ 27,808 June 30, $ ~,oo6 16,638 $ 37,178 588 13,486 /2,36~ 9~890 1,539 6,599 $ 30~65T 30~6~7 6.
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Net Sales (~clu41~ Federal ]t~ois e ~%xe ~I 1937 $ 2,081 193~ 1,830 1939 4,874 19~0 11,953 19hl 12,359 1942 15.~6~ I 19~3 16,617 19~ 18,741 1945 20,773 19k6 27,337 1947 35,558 19~8 ~6,9g+ 19~9 61,650 195o 85,3o8 1951 122,398 1952 163,325 June 1953 93,096 (2) Income before Net ~edersl Ope ratin~ Xease and State Profit Income Income T~es IneQ~e ~xeG $ ?5 9B 102 683 ?B% 2,138 1,810 1,236 700 1,181 2,159 2,700 5,572 I0,558 13,144 10,475 (813) m.8oo $1, 4 (795) 1,800 1,426 (900) 1,800 1,264 427 1,800 2,680 436 1,800 2,753 1,590 1,800 3,899 1,432 1,800 3,824 853 1,8oo 3,~o9 137 1,8oo 2,658 (91) 1,8oo 2,1o8 1,15o 1,8oo 3.1~7 3,3#5 1,8oo 5,366 4,784 1,800 6,913 8,7~I 1,800 10,871 13,552 1,80o 15,598 16,636 1,800 18,760 13,826 900 14,888 Net income flguree are adj~ted to reflect application of income aud excess profits tax adjustments to years affected (,ee ]~.hihi~ V). No e~sh divi~end8 pal~ on common mtock. Divi~e~s were paid in stock of Amerl~an Tobacco, as followsl 1937 - i/I0 sh.; 1938 - I/I0 sh.| 1959 - i/~0 sh,~ 1940 - i/IO sh. Net Income I~ $ 1,409 1,328 1,162 1,997 1,972 1,712 1,686 1,599 1,422 1,4o6 1,956 3,207 4,213 5,299 5,616 4,413 Oaeh Dlvldendm Paid $ 24(2) 24(2) 24(2) 24(2) 1,606 1,197 1,197 1,001 1,001 1,00! 1,001 I, 392 1,979 2,761 3,152 3,543 1,576 $1,385 1,3o4 1,138 1,973 489 598 955 1,815 8,254 ~,5~8 1,888 2,073 2,837 O~ CD
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~7 ~E~ICAN C~A~ETTE ~D C~AR ~erned per Share 1937 $ 6.93 193@ 6.5S zg~ ~.~ 194o 9.87 19~1 9.96 8 63 t9~3 8.50 19~ 8~06 19~5 7.15 19~6 7,07 $947 9,88 z9~ 16.~8 i9~9 21.43 195o 26.98 1951 25 .66 1952 28.6o 1953 22, ~i 6 Mos, Dividends Paid Price R~r~e(1) per Sh&re Preferred ¢o~£0n Co.on High Io._~w ~ t.oK $ - (2) zoz Bla 140 Bi& (2) d17 1/2 97 130 li5 (2) 120 ii0 135 ii0 - (2) i20 114 185 120 8.00 125 ii7 170 120 6.00 120 llO 130 iOO 6.00 121 ii0 ii0 iO5 5°0o 125 120 123 liO 5.00 13o 12~ 132 ll~ 5,0o 153 125 145 I~0 5.oo 135 13o 135 125 7,oo 130 120 132 iio i0.00 127 123 130 ii0 14.0o 130 120 160 129 i6.o0 135 125 215 130 18.oo 130 125 225 210 8.00(3) 130 125 265 230 (i) Bid ~rlces for yema~, (2) No cesh dtvide~dspaid on c~on stoak. Dividends were ;sii in ~tock of American Tobacco, as follo~s: 19S7 - 1/10 sh.; 1938 - i/i0 sh.; 1939 - i/~0 sh.; lgho - i/i0 sh, (~) Deelsred quarterly dividend of $6.00 a share payable Sep- tember i~ 1953- The above quotations for c~on stock of Amerlcsn Cigarette ~nd Cigsr ~re mere!~ zoml~l quotations and do ~ot represent p~iee8 at which ~ansa~tlons h~ve ~a~en pl&ee. At ~resent there is e nomlmal bid of $e65 ~er sha~e with no stock c_-~2~red.
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CUB~R TOHACCO COMPANY; INC, (CON~0LIDATED) ~ecelvable, customers TobaCco and Other Inventory Total Current lasers, including other A=~tun t s payable ~',~.inces from Affiliate for Leaf Tobscco ~or Future Delivery to Affiliate Total Current Liabilities, ~ncluding other Xet Current Assets ~sal ~s~aDe, Ma~hine=y and Fixtures {net) In Cuba InU. S, A. Other Assets Total Net Current, 9ixed and Other Assets" DO~4 Term Debt Held by American Cigarette F/norlty Interests in Stocks of Subsidiaries Qther Liabilltle8 Total Tangible' Net Assets Brands~ T~ade-Marks and Goodwill Total Net Assets ( ooo) * 3z2 1,515 1&,673 585 905 6~816 7,857 1,590 2,099 326 8,107 1,936 lO,O6~ 216 3,f56 Capital Stock 1,270 ~etal~ed Earnings: Capltalized by stock dividendof a subsldla~y 337 Retained Earnlng~ Cuban Tobacco 153 Retained Earnings of subsidiaries Total Capital Stock and Retained Earnings $ 3~756 9- 18,284 4#6 938 8,576 9,708 1,696 648 2,3~2 456 12,506 10,059 1,972 12,031 475 3,968 i~270 337 I06 $ 3,968
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~ear Inco~ for lnl~re~t Net Operating an~ Ineom~ ~l~ S Inco~ T~es t937 ~,A. $ ~1 $ 6o5 1938 N.A. 397 411 1939 N.A. 372 365 1940 N.A. e41 ~36 1941 N,A. 349 390 1942 N.A. 380 354 19~3 ~,A. ?75 ?74 1941~ N.A. 1,477 i,t~48 1945 N~. I~207 !,~oo 1~46 N.A. 918 1~163 1947 $~I,~39 981 88o 1948 11,631 i~041 i~013 !949 11,080 829 829 1950 ii, ~67 910 ~53 1951 13~080 950 948 195~ 13,570 1,137 1,136 19~3 (to Sept.lo) Notes: (1) (2) (5) (4) Interest Charges Earned ~d per Price Range Minority Tmcome Net Share Preferred(Z2 ) Common Interest 'l~xes Income common High Low High Low 393 75 (57) (.66) 4o 29 5 3/4 a 318 377 69 (81) (.80) 35 24 4 i}2 2 1/2 351 iol (gx6) (L59) 27 io 2 3/~ x 366 141 (ll7) (l.01) 15 I0 2 1/4 1 357 i89 (192) (L45) I0 4 e I i/8 38g ~3 99 .~6 ~ 9 3 i/~ ~ 3/4 416 577 4~5 2,35 88 6o 19 7/8 3 1/4 416 405 379 1,91 105 75 47 ~/~ 12 433 391 339(4) 1.67 160 65 38 3/4 13 i/2 411 395 74 .ll 7~ 6o 17 7 i/~ 43o 8'~ ~05 ,~8 6o 50 ~ i/8 5 i/4 437 n89 i03 .~8 59 52 15 3/8 5 3/~ ~e %~ 177 .7~ 65 58 13 9 356 464 128 .~3 9~ 7o 22 i/~ 9 5/8 379 625 13~ .45 96 9o ZOl/~ i~ i/2 18 ~ 5/8 No dividends l~id on ecm~non stock since 1930. Preferred dividends in arrears $45 a sh~re ~t June 30, 1953. B~dprices for yesr. 1937 - 1950 inclusive are not eom~rable wibh later periods due to c~ i~ reportln~o~rat~Eprofit oi' subsidiaries. Includes $38%521 profit on s~e of real estate by foreign subsidiary. O
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iI, Ci~rette~ 95.01~ Cigars 3,45 Tobaccos i.~7 Miscellaneo~ .07 The Rrlnclpal product of American Tobacco ±~ LUCKY STRIKE Cigarettem, ~al~ ~f~h±ch c~nstltute the major ~ortlo~o~ consoli~ted sa±cs. ~he secon~ principal~roduct is PALL~I~LL Cigarettes mauufactured by Amerlcan Tobacco for its subsldiary~ American Cigarett~ & Cigar CO. H~T TARETr0~ Cigarettes are th~ Ccmpar~'s thir& principal product and the s~cond largest-selllng king-size cigarette in Am~rlca. These p~inclpal productB o~ American Tobacco and i~s sub- • i~la~yj Amerlcan ~igarette~ ra~ked secon~ ~our%h and seventh ~lace ~on~ ~ll ~ig~rette bran~° A &ow~1~rd ~ren~ in the s~le~ of L~CKY ~I~IKE ~ratt~ ~hi~h b~gan in ~949 ha~ continued ~o ~ate. Sales of PALL MALL and H~B~ TA~E3FfO~ Cigarettes have in, reused ~ri~g the ~t se~ years at ~'~es f~r ~b~ve th~ ~ndustry ~ver~,geo ~ICAN TOBACCO COMPANY ~e ~e~Icau Tobacco ~ i~co~o~t~d ~m ~a,# J~T~ey lu le~° Amerlc~u Tobacco and It~ subsidiaries are ~gaged in th~ b~sin~ss af m~lufact~llng ~n~ s~lli~g clgsre~es~ clga~s~ and s~okJJag an~ ch~w±ng tobaccos. The net s~es (including Federal revenu~ ~tamps) of Amerins~ Tobacco and it~ consolidated subsidiaries (including American Cigarette) in 1~52 ~re msde up as follow~:
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CiFXTALIZATION December 311 i952 Long-ter~ d~bt s~d minority interest (1) prefe~ed Stockj 6% cure., $100 par authorized 540,106 shares, outstanding 526~997 ah~re~. 52,699,700 Common Stock, $95 par~ authorized io~0003000 ~hares, out~taudlug 6,~5~,110 161~352,750 Exce~s of net proceeds f~om sale of stock over p~r 43~294,441 Retained e 8a~nlngs Total capital and surglus ~7 0~ Total capitalization $632,704,564 $255,630,609 (i) Includes slmklng fuad requirements due wlthi~ one year. 85 dune 30, 1953 $247~h95~C~00 52,699~ 700 161~35~ 75G ll8 595 999 $6e3 ,h37~ 890 Tae 6% ct~uls~ive preferred stock ofAmerlcauTobacco is nou-cadlable9 ~ntltled to $100 and accrued dividends in llquldation~ and is entitled ta four votes per s[~e (except f~t it is entitled to onl~ one vote 9~r sh~e u~a question of merger).
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C~ah $ 26,410 AccOunts ~elvable, ousters 44j510 ~f tobacco~ manufactured stock3 etc, Notss payable to banks $ 92,000 Accr~d t~eB ~8,O32 Debentures to be re~e~d through Bi~i~ fund To±al current llabiiities~Includlng o~her $1~i~00 Net C~rent AssetB $551~254 ~n~s~ents in ~d ~nces to ~onsoli~t~ Other assets ~ $6~1,755 long-term debt $2k3 ,ffTo Minority inter~t in American Ci~ette i ill Total Ne~ AssetB . $377,074 Preferred S~k $ 5e,700 C~on Brock 161~353 Capi~l SU~IUs 4~e~ ~etalned Earnings $377,07~ = 37,990 ~8~564 $i02,000 41,610 ___bAU_ $159,709 ~547~932 $ 19,459 ~5,159 $619,565 9e,700 161,353 43~29~ $375~943
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Net Sales (Excluding Federal year Exci~ T~xesl 1937 $126,29& 1938 131,103 1939 139,129 i~4o 1~,639 1941 176,572 1942 213, ~26 1~3 e5o,395 1944 266,111 1945 275~286 1946 354,575 1947 403,755 l~t8 ~o,599 1949 ~48~248 1950 464~230 1951 r@7,488 195e 9~5,173 6 ~OS, 1953 274~461 ~[zc o~ne Av~ilaDle for Interest Net Applicable Con~on Operating and Income Interest Provision for Net to C~m~on Dividends Profit ~xe~ ~ C~rges Income ~u~es Inc___~ Stock (i) P~i~ Balance $29,893 $32,@I0 $ 876 $ ~,567 ~6,197 $~3,035 $2~,934 $ i01 29,724 32,443 1,037 5,969 £5,436 ~,£74 22,840 (566) 33,386 31~,045 1,189 6,$59 ~6,368 ~,~O6 2~,413 793 39,781 39,835 l~hO7 10,759 £7,668 24,506 22,404 £,i02 ~7,133 ~G4~? 1,3~3 z~,753 ~,~o ~o,118 £o,169 I~) 5%939 58,1~0 3,435 32,346 ~,340 19,178 14,566 4, 58,787 59,513 3,617 33,361 22, 53~ 19,37£ 14,566 4,806 45,069 45,'~8 4~146 ~1~740 19~ 502 16, ~0 14,566 2,174 4£,963 44,070 6~86Z i%510 19,697 16~ 535 14~566 1,969 54,764 55,~09 6~812 18~410 29~887 26,T25 14,567 1£,158 6£~255 6~940 %356 £1,739 33~845 30,683 1%704 1£, 979 79,340 79,~40 - 8~716 26,61£ 43,91~ 4%750 ~0,169 20,581 83,275 83,337 9,010 28,65£ 45,675 4£, 513 2-I, 514 ~0,999 86,617 85, 5~1 8~797 34,99e 41,733 38~571 21,514 1%057 89,153 89~395 8~984 47,301 33~i10 29,~8 ~l, 514 8~434 87,717 88,£51 %899 I~,283 34,069 3%907 23,934 6,973 50,183 h9~928 5,566 ~7,777 16,585 15,004 16,135 (i~131) NO~: (i) After ~ividend requirements on the preferre~ Stock of $3,1~I~98£ in each year,
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Net ~le~ I~d~ral 1937 ~.25,811 1938 13o, 598 1939 116;528 1940 1423579 1941 164,037 1942 198,362 19 3 3,394 1944 246~750 1945 ~53,~23 lgh6 326,632 19~7 368,096 1948 393;597 1949 386, 51~ 1950 378,775 1951 " 384~ 953 1952 381;917 6 IQOS, 1953 181,149 (i) ][~come Available for Interest Net Applicable Common Operating ~I Inco~ Interest provisloa for Ne% to Con~non Dividends I~'ofit %~xes .~_i~_ss Inc~ Taxes I~nome Stock (1) Paid $27,750 $3s,019 $ 877 $ 4,938 $26,2o3 $%,o41 27,i~ 31~394 1,037 5,199 25~157 21,995 28, TWe 32,9b~3 1,1@~ 5,642 e6,196 23,034 35,510 39,127 1,350 9,500 ~8, ~77 21,115 42~491 45,159 1,363 19,858 23~938 29,T(6 51,365 54,236 3,381 ~8,484 22,371 19,209 52,039 55,768 3,578 ~9,458 ~,733 19,171 38,486 4~,019 4,Z13 18,0~8 19,877 16,7~5 36,997 41,~06 6,636 14,381 19~989 16,8~7 48~750 52,450 6,783 16,283 29,384 ~6,222 54,687 59,178 7,3~ 19,~L6 3~636 ~9,474 6%410 7e,697 8,698 28,513 I~,486 37,3e4 71~19~ 76,oee 8,999 24,909 42,115 38,913 69~086 76,096 8,790 30,~14 37,091 33,9e9 64,714 74,143 8,~0 35,1~6 30,017 ~6,855 58,370 69~ 905 9,858 29,1@9 3%918 27;756 29/{~ 35,495 5,5~ 16,449 13~484 ll,903 $22,934 92,840 22,752 22,712 20,879 14,718 14,738 14,718 14,718 14,718 17,704 e0,169 ~1,514 21,514 23,934 16,135 After dlvide~[ requirements on the Prefe~u~d Stock of $3,161,9~2 in each year. B82181%~ ~ $ ~07 (@+5) ~82 2,403 397 4,491 h,853 1,99{ 2,109 ii,504 i1,770 17,155 17,439 12,415 5,341 3,8~ (4,23~) 0o
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(i) Regular ~uarterly dlvi~end of $0.75 a share psi& March and Olune i ~nd an extre dividend of $1.00 a share p~id March 2.
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c~
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00MPARISON OF AMERICAN TCSAGO0 COMPANY AND ~I AMERIC~ CIGARETTE AND OYGAR COM~ANY From the time of dlscontircaance of World War II price control on J%~ue 3O, 19~6 to July 28, 1950, m~nufactumerz prices of LUOEY STRI~E, pALL ~LL and KER~EHT ~K~YTOW (per thousand cigarettes) were a~ follows: Price efter Net Price New 10% Trade and 2% ~xcludlr4 FedBr~l ~Ist Price Sa~h Discounts E~cise Tax April 25. 1946 $7.096 $6.26 $2,76 Oc%~oer 7, 1946 7.38 6.51 3.01 July 29, 1948 7.78 6,86 3.36 Since July 28, 1950, PALL MALl and HERBERT TA/~YTON have sold at the manufacturers level at a ~llght premi~ 8~ove st~nds,r~-slze ~igarette~ ~s follow~: July 28, 1950 LUCKY STHIE~ KING-SIZeS November I, 1951 LUCKY $TRIHE KING-SIZES Pebrua~ ~6~ 1953 LUCEY STRIKE KING-SIZNS $8.0o ~7.o6 $3.56 8.05 7.1o 3.6o 8,566 ?,56 3.56 8.616 7.60 3.60 9.00 7.94 3.9~ 9.1o 8.o3 4.03 Premi~m priced klng-size b~m~s (s~oh as 0hesterfiel~, 01~ Gold ~ndPhillp Ecrrls) competitive with PALL ~ILL and HERBERT TAF~YTO~ h~ve been priced as follows: J~e 19, 1952 $9.10 ~,03 $4*03 February 26, 1953 9.35 8.25 4.~
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2o ~AIL MALL and ~T T~E are sol~ at ~l~ro~te]~v the sa~ re~il I~rice ~s IJJCKY ~I/~ a~d other poyAtlar-gize~ brea~s~ wher~s ~ pzemium of ~u~ c~nt per ~ack~ gene~lly pre~lls ~ kin~=slze cigarettes of certain co~etitorso ~owever~ msny r~t~il o~tlets sell single p~cks of PALL MAL~ &ud ~T TARE~TO~ a~ a one cent pr~mlus over LUCKY ~. AS i~dic~ted abOVe~ ma~-~c~urers' ~rlce of PALL MALL ~ ~ERBERT T~YTON is 2~ per thousau~ b~low that of ~e~zi~griced k~-slze cigarettes. FRO~C~ON AND SALF~ Nude: Unit figare~ i~ tbls see%ion a~e from Ea~ry M. Wo~r~m, in ~lutars' Ink Na~zlneo ~he growth in s~les of PALL MALL cigarettes is oae of %h~ most ~c~acular ~e/io~Its i~ the history ~f the ~i~v~hte i~luStrM. ~ro~ less tm~n O~B bi21fo~ ~igaz~b~e~ i~ 193~)~ I)rc~o~ioa.~f PALL ~ ~icr~a~ %~ ~5 b~li~ a{~t@es in 154~1~ ~t the st~rb of World War ~I. ~N~is a~ou~tcd to ~bo~b ~'bf~ t'~ i~ustry t~bsl~ a rat~ w~ich was not exceeded by ~uy m~bs'~5~ ~ou~'t ~ %~e war bee&use Of ~O~CCO shebang, ~r~ze th~ W~r, h~e~er~ strlk~g" g~ow~h has been aehieve~ ~ith 9To~et~oa i~ ].95~ Of ~6 ~ll/i~a ei~mette~ whleh regresm~%~ over 10% of the i~ustr~ total sm~ s~ lue~e~se ove~ the ~ro~,~tlo~ ~ ~t ~ar ~ Of over ~0%. ~ ~U~ ~roa~tion in ~ ~ccount~ for 60~ of teb~l #roluction of king,size ciE~rcttes~ IA~I ~_TK~ the major br~u~ of Amerlca~ TOb~Cco~ enJoy~ a stea~ increase ~u productio~ from lg~l to th~ !9~6 ~emk was i(~%. ~ales uf L,~" ~Z~ D~ve ~i~e de~i~e~, the decline 2rc~ 19~8 through 19~ a~o~,i~ %0 s/most ~o ' Although the rate of ~ecliD~ ~ec~ase< in 195e~ w~ are im~o~e~ that it h~s ~i~ ~s~c~ ~ l~er 9~'ogortlo~ In 19~S- ~UCKY ~IEE ran~ first a~DDg a3_] oig~rette br~as from I~i to 19~8, but sin~e 2948 has rs2Lke~ SeCO~I to Reyno~s Ebb~cco:s ~.
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~l~s of HERR~T T~REYTON~ Americ~Tob~cco's kiDg-size cigarette have ~n~ a success comparable to pALL MALL~ although ou a sm~ller scale. productlon of TAREYTONS rose from 2.8 billion in 1946 to 12.8 billion in 1952, an increase of about 350%. Balms of American Tobacco Cc~a~v ou a consolidated basis h~ve i~- creased iu each of the past 15 years. American Tobacco (Consolidated) assumed leadership as the largest U. S. producer of cigarettes in 1940 and has main- tained tbat position in each y~ar since. Due to the success of PALL MALLS a~d H~BERT TAF~NS~ American Tobacco has been the dominant factor in the king-size field since 1940. As recently as 1948, its total king-slze productlon of 18.5 billion relmesent~d 92% (70% PALL ~ aod 22% HER~T TABEYTON) of total kin~-size production. In 1952 its total production of about 59 billion king-slme cigarettes still represented 77% of total king-size production (60% PALL MKLL ~nd 17% HERBert Total industry ki~-si~e production h~s enjoyed a r~Id growth during the past five years as eompsred with the relatively static domestic d~n~ for r@~la~'-size cigsrette~. In 19~ total ki~-size ~roduetion ac- =o~nted for 20 billion units (18 i/2 billlon of which were represented by ~erie~ Tobacco (Consolidated))Or about ~ of tof~l Ir~dustry production. Thi~ grew to 76 billion in 1952 (~9 billion for American Tobacco) or ~bc~dt 17% of total cigarette production. ~ing-size production is said to be ru/l~ing currently ~t about ~% of the tot~l i~du~try. It is cow,mealy pro- dieted that by 1960 production of klng-size ~nd filter-tip cigarettes will together account for 50% of total cigarette production. The recent rate of grOWth of king-sizes s,aggests that thi2 proportion of total sales might Possibly be realized before 1960. The success ~ttaized in the promotion of PALL MA~L ~n~ ~D~ TA~EYTON h~s prompted other msJor companies to introduce king-sizm brands 3~ (J3
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i slier Worl~ W~r If. ~wsmples sre CA~ (P. J. pey~old~), ~ (Pc Lorillsr@.), FITIMA (ligg~bt & ~2ers) ~d ~NKILL (Phili~ Morris). Nevertheless, prior to 19~e, A~eric~u Ci@~tte ~ ~ri~ Tobseeo h~ ~lo o~tltlo~ Of ~ ~or slgaiflesnee la the ki~g-slze flel~. In J~Le, 195e Li~tt & Myers i~troluced ~Ing-size &~/~P~IELD, the first ki~-slze eo~terpa~ of ~ m~or regu/ar brs~d, production ~ t~lls cigarette in six months ~as 8.~ 51111c~ w~e to~al C~itp%~t Of C~/~I~J~D~ ~ose oDly e,~ billion, s~ggesti~ t~t the sD~ces~ of t~ kiog~slze of this br~ ~ largely ~t the ~xpense of the regular brs/~. To~ getter -~Ith FATI~A~3 Liggett & Mye~.s ~ccouut~d for about 13 hillio~ of the 76 billlou kIDg-slze elgsrett~s produced in 1952. I~ 19~ both Philip )~rrls ~ ~. ioriller~ (OLD ~OL~) h~e intro~ dueed king-size cigarettes carrying the ~s Of exlsti~g reg~/~m-size brs/~ls. Also in 1953, R. J. Eeynolds has begun the ~etiv~ pro~otlo~ of It~ klag~size C~VALTEB~ by selllng ti~s Of lOO's for 7~ (~ew York City) i~ effect ~bsorhing the Federal excise tax of ~ per 1OO air,reties. ~Is Incre~slng oo~9et!~ioa i~ klng-size cigarettes students that /~e d~cl~ i~ %~e ~l~tive ~osltlon of American Cigarette sr~ Am~rles~ Tobacco in the klng-slze field m~y Continue further ~/xl tha~ the r~be of ~,owth in sales of ~ALL ~ ~ ~ ~N may be slowe~. The exger~enee of Liggett & Myers with its klng-slze 0}~IELD suggests that a substanti~-I portion of the decl~e in sales of LUCKT ~IKE slate i~8 may have represented ~ shift to PALL MALL ~ ~ERT T~ZTON. ThUS~ ~le totsl p22oduetion of the two k~mag-sizes Incre~s~ b~ abo~t ~0 bill~oa ,/~Its s~c~ 19h8, LUOKY ~TRIE~ produc~io~ fell about ~O bkllion. Whil~ we u~derstar~i that Americs~ Tohs~co h~s no present intention of introducing a klng-size LUCKY ~I~ a oc~ti~led decline in the sale of LUCKY ~/~Lv~, in which A~erle~ To- bacco has ~ hesvy i~v~s%/~n~ in selling end a~v~rtlsln~ e~endlture~ aD~ the
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5~ incresslng co~e%i%io~ from o%62~ klng-size brands, mi~% eveatually comgel it ~o ~ke Simil~r action to that already taken by the msnufac%urers ef C~ST~/IELD3 9~LI~ M~IS ~d OLD GOLD, ~uch ~ ~evelopment might have a marke~ effect on sales o~ PALL MALL an~ K~B~T TABEYTO~. Th~ tabnla%iODe ~llowlng ~reBe~t cez%~in ~Ig~mes on whlch some of ~he foregoing observations are b~se~o More deta~d s~ments o~ unit p~o. ~uctlC~ and sal~ are sh~w~ in Exhlb~s I a~l II.
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D6 6. CIGARETTE P~0DUCTIQN BY BEAND.~ [b111iQns Of e£E&re~£es) 193$ LUCKY ~TRIKE_ ~K~B~T TAEEYTON 1941 1946 ~94T i1948 1949 i1950 1951 1952 Cre~Be 9~6~2 PALL MALL Annu~l "" Annual Increase 0.7 4.5 9.5 25.o% il.5 21.1% 28.6 14.0 21.7 22.2 / 17.0 ~.21.4 27.3 24.0 41.2 42.8 34.1 42.1 28.0 46.0 34.9 -- ~nnual ~_qo~ant Increase Amount 36.3 0.9 49.5 2.5 1o3.0 2.8 Ioi.0 (1.9)% 3.5 i09.5 1.5 ~.5 91.~" (io.8) 5.5 90.5 (i.0) 7.b 85.5 (5.5) lo.o 82.2 (3.8) 12.8 32.7 66.1 10.3 412.0 ' 41o5> 922.2 (20.8) (20~2) I0.0 357.1 36.5 38412 ) indicates decrease * 8ouree~ Earry M. Woo~Iben, in Prlnte~s~ TOTAL INDUSTRY Annual Amoun____~t Ino~ease 168.5 214.4 351.8 370.0 5.2% 388.8 5,1 388.3 (o.1) 396,5 2.l 418.8 5.6 ~40.4 5. i 226.0 105.4 88.6 25.2 Ink Magazine.
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~I@~ T~CCO of Annual y~ --Am°unt Indust~ --Increase 1946 ZZ7o8 33.5% ~o.~ i548 i~6.o ~.4 4.6 1949 ]19,4 30.7 (5,2) 195o ]21.5 30.6 1.8 1951 129,6 30.9 6.7 i95~ i41.o 32.0 8.8 CIG~ ~O~ON BY C~ANY* (hilll~s of elgmrettes) AM~ICA~ TOBACCO 01 Annuat Amount Industry Increase io8.3 30,8% 19°o~ zo9.o ~9.5 0.6 ll~.O 28.8 ~.8 102.4 ~6.4 (8.6) 97.5 ~.6 (4.8) 95.5 ~e.8 (2.i) 9~.o m_.6 (0.5) AMERICAN CICMBE~fE AND CIGAR of Ann~l Amouut Industr~ Increase 9.5 2.~ 35.7~ ii.5 3.i 91.1 1k,o 3.6 21.7 i7.o 4.4 21.k B4.0 6.1 41.2 3~.I 8.1 42.1 46.o lO.4 34.9 Year 1948 z~9 195o 1951 i95~ ~ION (~ KI~SIZE CIGAP~* l (biLllan~ of Ci~pa~etteS)- A~IGAN TOBACOO 34.1 ~6.0 I~BI~T T~Rm~/TON Totml King- Ann~l PALL M~LL of King- Annual Amount Sizm Increase 1~.o 69. 7~ al.'U~ 4.5 ~2.~% 28.6% 17.0 65.6 21.4 5.5 ~-.2 ~.2 e4.0 68.~ 41.2 7.0 19.9 ~7.3 68.8 42.1 i0.0 ~O.2 ~2.9 6o~3 34.9 i~.8 16.8 ~.o (Consolld~ted) TOTAL IN~JS~Y ~ 0f l ~ ~ Total TOtal King- Annual Cigarette Ann,s/ Amom~t Size Inex~e Amou~t P~xl. Increase 18.5 ~.o~ ~.3~ ~o.~ 5.~ z~.5 86.9 21.6 25.9 6.7 28.9% 31.0 88.3 37.8 35.z 8,9 35,5 ~4.1 88.9 42.3 49.6 11.8 ~1.3 58.8 77.i 33.3 76.3 17.3 53.8 ,~ * Sotu, ee: Hsmry M. Wootten~ in printers' Ink Ma~zlne
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Ass~Ing annu~l 1953 sales will be double those for the first six months. g~les of certain other cigarette com~nles in 1952 sn~ thei~ index of szles (1945 • i00) were as ~ollows: .9S 8.
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The follOWing tabulatiou sets forth a ec~r~rison of certain exgense s~ !~c0~e r~tlos ~%hvi~g the ~ y~s ~r~! 6 mo~ths ended Ju~e 50~ i~53 of American Ci~rette~ American Tobacco Company an~ American Tobacco (Consoll- dated) • A mo~e det~ile~ eom~Ison is shown in E~hiblt Ill.
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AMENICAN CIGAEE~PE AND CIEA~ ~ERICAN ~OBACC0 C0, AMerICAN 'iOPACC0 (CONSOL~D) Adv.j Adv.3 Ad~i, ~ost Sell., Cost Sell., Cost Sell. s of Ge~. • Oper. Net of Gen. 0per. Net of San. 0per. Bet Ye__~ Sale_~s & Adm. Profit Inc___~ Dale~s & Adm. Profit Imcome Sales & A~, Profit !nc___~ 1948 88;9% 5.2% 7.1% 6.8% 76.~ 5.5~ 17,6% xo. ~,~ 76,9% 5.1% 18.o~ lo.o~ 1949 67.0 6,1 7,8 6,8 74.7 6.9 18.4 10.9 75,0 6.4 18.6 10,2 1950 85.6 4.8 i0.~ 6,2 74.2 7.5 18,2 9.8 74.6 6.7 18.7 9.0 1951 85.3 4.1 ll,l 4.1 ~-9 8.3 16,8 7.8 75.4 7.0 17.6 6.5 1952 @6~i ~.i lO.e 3.4 ,76.2 8.6 15.3 8.1 77,0 6,9 16.1 6.2 6 Mos. 1953 8-1.6 5-9 14.9 4.7 73.7 9.9 16.4 7.~ 74.1 7,6 18.3 6.0 Co~-rable flgo~,es f~r certain other cigarette co,hies fo~ the yes2- 19~2 were as follows: Cost Of Adv., Sell~ng, Operating Net Co~ma~ Sales Gen. & Admln. EX~. Profit Incam~ lO. amer le~n Tobacco 76.2 ,~ [~, 15,3 8.t American Toba~ co(Consoli~ate~) 77.0 6.9 16.1 6,~ . 16.7 7.0 65~0 19.0 16.o 7.2 Philip Morris P. nor illard 66.2 ~.I 11.7 5.0 o ©
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101 31. American Cigarette has consistently h~d cost of sales ratlo~ substan- tially higher tl~n those of any of the foregoing co~ies. I~ ~ivertlsing, selling3 general and ad~lnfstratl~e expense ratios, on the other ~ have been much loWer than those of its ~arent ~u& m~Jor coa~etitors. ODerating profit ratios ~ ne~ i~eome ratios have ~isc bee2 consistently lower hy a -~de a~ount. Net income ratios have been ~rtieularly aiTeated &uriag the ~ast B 1/2 years by hea~y excess profits t~x payments° The high cost of sales ratios ~ay be e~l~lned by several factors, About 17~ more teb~cao is re~uired to roll out 85 millimeter king-size cigar- ettes as cempsmed with +~he r~gular 70 millimeter sizej a~l klng-size is othe~ise a more e~ausive ci~rette to manufaature. Another factor is the inclusion in co~t of sales of the ~yme~t~ to American Tobacco ~oher the agreement ~her~y American Tobacco manufaet~re~ PALL MALL for Am~ric~u Cigarette. These payments in l~ aggre~te~ $7~767~506 an~ included ~5,033,4~6 for i~terest on the carry- ing of leaf tobacco and ~2~7~ representin~ pI~aflt of 6~ ~r 1000 cigarettes. el~minatio~ of s~ch payments /~ costs ~o~ have reduced the ratio of cost of ~zles from 86.1~ to 81.4~. If th~ ~xtr~ cost of tobacco and other ext~ expenses i~cl&ent to ~roductlon of PALL MALLS were &educted, it woul~ reduce the cost of sales ratio to a basis eompa~abl~ tc that of American Tobacco. SeliL~ a~vertlalng, general an& e2~mlnlstratlve ~xge~se~ of American Clgzrette ha~ hee~ very low in re~_atlon to sales as compared with compatible expenditures of It~ major eempetltor~. During the 9ast ~ years ~ueh ratios of Am~rlen Cigarette have been a.bou~ oue-hal~ of the ratios for Am~zicam Tobacco~ ~hlch in turn eo~2ar~s favorably in this re~i~ct ~ith its major e~etitors, The r~latively low ra~lo of American Clg~rette an~ %be increasing competitive- ~B ia the klng-size field ~uggests that increased selling an& advertisin~
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12, a~e~dltures ou the ~srt o~ Americsn ~i~rette will be requlre~ in order to ~intain a growth in s~les. In ~@albit IV are shown various capitallzation, asset ~ earnings figures for American Cigarette ~ American Tobacco and certain oth~r cigmrette co~panies, together with ratios of market prices of the commo~ Btcek of each co~ally to ~s~io~B e~z~gs 82~ asset factors. A ccmr2arlson of the pre-tax Income and net income of American Tobacco (Consolidated) an~ Ameriea~ Cigarette is ~s foll~ws:
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F 103 13 Pre-Tax Income Net Income for C~U 2~3o R~tio Am,Tobacco Am.Tobacco American Amer ica~ To Amer le~n American TO y e~,.,.,~ Tohec c__~O ~ ~ Tobacco C~aret~ 1943 $ 55,896 $ 3,447 16.2 $ 19,372 $ i~662 ii.7 1944 41,642 2,865 14.5 16,740 1,575 10.6 1945 37,208 2,238 16.6 16~53~ 1,398 11.8 1946 48,297 2,107 22.9 26,725 1,382 19.3 • .i943-47 $ 47,725 $ 2,765 17.3 $ 223011 $ 1,590 13.8 1948 70,524 5~392 13.1 40~750 3,~8~ 12.8 1949 74~3~T 6,856 i0.8 423513 4,2@@ iO.i 1950 76~724 i0~846 7.1 38,571 5,275 7.3 1951 8Oj411 19~590 5.~ 29J9~ 5,016 6.0 1952 ~ ~ 4.~2 ._~ ~ ._~ te.19[,6-52 $ 76,068 $ii,486 6.___~6 $ 36,538 $ 4,651 7-9 MoB.J~e 1953 $ 44,362 814,900 3.0 $ 14,214 $ 4,LOI 3.e NB%. 1953 833,156 $ 36~746 $ 9,832 / 3.7 A similar com~s~ison of per share e~ni~gs a~il~ble for commo~ s~ocks and d~Vi~en~ ~s sho~ below: Ea~ne~ ~er Bh~Q Common Divi~en~B ~er 8h~re Co,on Ra~£o ~atlo Am. ~igare%te Am°0igarette Amer i~ A~er ic~ To American American ~o Year Tobacco__ Ci~aret~ Am.__Tobacco -..-----.--T°bacc° Cigar ette Am. ~9G9~ $4.3~ $ a.5o 2.o 83.25 $ 6.oo 1.8 3.74 8.06 2.2 3.25 %oo - 1.5 1945 3.69 7.15 1.9 3.25 5.0o 1.5 1946 5.96 7.o7 i.2 3.25 5.00 1.5 19~7 ~ 9,88 ~ 3,50 ~ : 1.4 ~.1943 -47 84.68 $ 8.13 1.7 $3.3___O0 $~.20 1.6 1948 7.98 16.a8 2.1 3.7~ 7.00 1.9 1949 7.90 21.43 2,7 4.00 I0,00 2,5 1950 7,17 26.98 3,8 4,00 14.00 3.5 1951 5.57 25.66 4.6 4.00 16.00 4.0 19~r~ ~ 28.6o 6,0 4.00 zs.oo ~'1948-52 _$6.60 $~3.79 3.6 $3.95 $13.00 3.3 Y~a,June .... 1953 $e.3~ 822.51 9.7 $2.50 $ 8.00 3.2 z,t. 1953 $5.70 450.40 8.8 $4.0o $30.o0 7.9
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IO4 We k~ve been ~rovided with ~sti~tes of 1953 resists of o~ratlonn of Azerle~u Tobacco a~ ~eriean~ Cigarette on v~lou~ b~ses~ ~ follo~= A. Estlm~ted net Incc~ - ~53 B- Esti~ted 1953 net incc~e if cigarette ~r~ce incre~se(ef- feetlve F~br~a~ E6~ 1953) h~4 been in effect for f~ll yea~ C. Estlm~ted 1953 ~t° Inco~ if cigaret+~ p~ice increase had been in effect for the ~[i AmerlcanTObacco Amerlcen Cigarette Amount Per 8barge ~Am°unt Per Share Comnen $39,9~,7~ ~ $9,856,000 ~7~7~ MI~9~I~O00 6.00 i0,888,000 55~7 Fear 1953 and t/~re h~d been no e~ss ~rofits tax 50,M59,000 7,35 17,38~,000 B8,79 E~rni~g~ of American Cigsa, ette in the f~%~e ma~ ~ff~t~ b~ va~io~ f~ctors which are d~ussed below, These f~e~o~s will h~ve ~ eor~s~ ~on~i~ ~ffect on results of operatio~ of American Tobacc~ although t~ ~. le~se~ exte~t~ d~e to the ]~rger ~cope of the business of;m~rlc~T~eoo. The ~or f~ctoz nfl~ectIDg e~'nln~s Of ~ri~n Cigsrett~ ~S been ~le heavy ~xee~s p~ofits taxes ~ul'ing the 3 yeses and 6 m~n~hs en~ June 30~1953. , ~e effect of excess profits tax p~y~ents o~ the e~rnID~s of ~eriean OiEr~ette and ~rie~n% To'bathe d~ID~ Zhis period is shoWn below: Amerlcen ebte ~ ~i a~ Pre-t~x Net Income mZe~s Net Ineo~ Excess ~rofits Year ~e~e for ~ou ~ro~Its T~x ~er ~her~ ~sx ~e? Sha~e 1950 $i0~846 $ 5~275 Se,~90645 $~6.98 $ 4.55 1951 15,59° 5,O16 25.66 13.53 195E 18,746 5,592 3,~5 28.60 16.80 6 Mo~, 1953 14,9OO k,~01 2,619 ~2.51 13.hO (Est.) i953 33,156 9,832 5,8~7 50.40 ~9.80 Amerlc~n Tobacco c~p~ny {Consolidate~) 1950 76,724 38,571 2,703 7.17 0.50 1951 8o,~11 ~9,9~8 5;050 5-57 o.9~ 195~ 78~35~ 30~907 ~.E8~ ~.79 0~51 6 Moa. 1953 h4,362 14,Ei4 ~ '7:] 2.32 0-54 (Est.) 1953 36~747 8,390 5.70 1.30 Excess profits taxes ~er sh~%re pai~byAmericmn Tobaeeo~ ~eri~ Cigarette ~nd certain other ~igarette companies during 1952 and the slzmonths
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i~ "e~peoso, S ° DI%q~ENDS ~eriea~ Tobacco Co~mn Stock st ~ price of 74 3/8 (September iO, 3953) w~ selling to yield 504~ on its Imile~te~ ~unua/ dividend ~%e 0f $4°[<) ~er ~[~are~ ~J~ric~n Ci~ret%~e ~bi~h p~d. $[8.00 ~ 19~ (Inel~n~ $~.C~ extra) ~s Lp~id. $8°e0 Ls ~ae first six months of 1953 ~d ~S declared a qu~rterl~ dividend ~f $6.O_~ ~r ~hare ps~Table S~pt~mber S, 1953. We s,re info~ned that a t0t~l of ~30 per s~a~e ~a~- b~- ~ai< ~LD~ 1953. ~e quce~tlon for the c~on Stock of hmer~cs~n 0igare*~e is p~]y norn~_,~l ~%~ h~ ~o m~nin~ for p~n~oses of cc~r~/k~ ~rk~t/e~lln~s ratios Or <%i~ri~,~d ~ie3gls. ~e t~l~tion follo~in~ ~ts forth ~he ~2et prices o~ September iO; ~5~ a~,. the ~m~Icated ~zd~al ~ivi~eD~ r~te ~nd yle/~s on certain clgaret~
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o~pany co~on stocks. 16 Indicated Msrket Amnual Price Divi4end Yield Amer ica~ cigarette $3O.O0 American Tobacco 71~ 3/8 ~.O0 5.4~ R. J. Reynolds 45 3~ 2,00 4.4 Liggett & Myers 77 3/8 5.00 6.5 Philip Morris 51 9.00 5-9 p. Loril]a~d Z8 3/8 1.50 5.3 C~/ITALTZATION AND BOOK VALES At June 30, 1953, American Cigarette and American Tobacco had c&pitsliz~ticns ~s foll~#s: iO6 Ba~k loans, funded debt Preferrnd Stock Common Stock and retained earnings Total Book Value per share Amerle~n American Tobacco ~tt~ (Consolidated) $50,657 i00.0~ $720,3h8 i00.0~ Sales of American Cigarette and American Tobacco (Consolidated) d~r- ~g the first slx months of 1953 ~er~ $93,O96tO00 and $274~61~000, respectlwly. ~us ~ale~ of the f~me~ were ~roximately 1/3 of consolidated sales. Ca~ital- izatlon of American Cigarette a~ June 3G~ i~53~ on the othsr~hand~ ~ only about 1/~ of consolidated capitalization. It i~ appsa~nt from ~ comparison of these ratios that the business o~ ~meric~n C~garette is being conducted to a l~rge extent on f~ds ~ro~ided ~ the parent c~uy~ It is true that Amer- ican Cigarette compensates the parent for the¸¸ use cf its c~ital by means of ~ym~ut~ unde~ the m~n~f~cturing agreement ~hich for 1952 included $5,O33~26 ~or Interest and $2,723~e77 ~epresenting profit on ~ervizes rendered under the agr~meut. Nevertheless the charge to American Cigarette i~ ~robably less than it~ co~t of c~it~l wonted b~ if it had ~o provide its own capit~l on ~he same ba~Is a~ its parent. Th~ extent of the extr~ cost m~y be illustr~ed in
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Amer. C Igar~tte Proportion of Less: Additional Consolidated Amer. Cigarette Capital C~italizztion Ca?Italization $1L6,4k4 $ $116,44& 17,876 399 17,477 $e~3,963 $~0,657 $213,306 The hook cost sT the extra capital to Amel'ican Tobacco ~as as follows (annual¸ ba~Is at rates b~aed on results for first slx months of 1953): Bank loans and long-term debt (3.E5%) $ 3,784 Preferred Stock (6~) I;O49 Common Stock ~ud retained earnings (~.3%) 7~383 Total $12,216 The amount shown above compares Vith payments under the manufacturing ~ment d~Ing the first ~if of 1953 of $4,613,630 of which $3,o79,387 repre-
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American Cigarette American Tobacco R. J. Reynolds Liggett ~ My~ philip Morris 18 sented interest payments and ~ij534,2~3 profit. The difference (on an eanual h~Si~) of almost SB~OOOjO0O may be said to ~oxlm~te the extra cost to American cigarette if it bad to provide its own capit~l on ~he same basis There ~e set forth belOW the book values of the c~ stocks of American Tobacco, American Cigarette and certain other oigaret%~ ~mpamles and a c~mparison of such book values with market values ~t Septembe~ lO~ 1953. Msmket VslOe as Market Value Book Valu_~e .... 9f B~ok ¥alu~ $15~.77 74 3/8 50.o8 ~ 45 3/4 ~.94 18} 77 3/8 57.59 J-34 5t 38.99 h3a p. Lorillard 28 3/8 23.17 le2 Benson ~ HedgeB 40 i/8 14.97 2~ In gener~l~ it may be s&id that the book values of common stocks of most Ir~ustrial companies have f~r less influence on the m~rket ~rlces for ~uch shares tb~n ~o earnings. Considerations of book v~lue m~y~ howe~er~ provide ~ limiting factor in csrt~in e~ses where the mamket valuation b~sed on earnings results in a ratio of ~rket to book va&um tb~t is t~u~u~oriahle ~n the light of the r~tios ~llc~ble to com/~m~bl~ ~i~ companies in the sam@ industry. MA~ VALES AND ~_~ ~CE -EA~INGS RATIOS Valuations Of co.men stock~ safe b~ed ~,o a l~rg~ ~xteBt on relative factors ~ i.e. in comparison with the common stocks of comparably situated cc~P~niee~ ~s wel~ as with other eo~n stock~ since a~y eo~mo~ stock mA~t a~m_~ete in the market for investors' funds with other avmll~ble c~o~ stocks. I~ an ~ndu~try sUCh as the toDacco industry ~here there exi~he a relative uniformity of ~roducts~ markets ~nd business probl~ms~ it is probably sa/ffielent to make the comparison with comparable companies wlthlh the i~lu~try - i,e~ those VhOs~ ~ ~ ...... ~^~ ~ ~e r~pr_~¢~d by cigarette s~les ~n making
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110 ~eric~ Clgare t ~e A~ericsn Tobacco R. ,7. Reynolds ilg~ei,%, & M~ers Mar?~z, Price Tiz~,s E~rainss ~er Shsre ~O. ~r~t Avsr~ge Price ~2 E~t. 1953 $&3,79 $28.6o $50. a© 7& 3/8 6.6~, L±.3 4.79 i[5.5 5.7o 13.o 45 3/4 3.31 13.~ ~.~O 15 $ 3.65 1°-.5 TT 3/8 g.68 li.~ 5.11 15.i 6,10 ~2.T 51 5,70 ~-9 h.13 52.3 5.75 8.9 p. Loril]~rd ~ 3/8 2.28 ]2.~ 2.01 14°I ~.ID 13-5 ~enson & Hedges 40 1/8 1.68 23.~ 2.O~ 19.7 2.60 i4.3 ~ere is re~e~ted below a slm~r2 c:~i~o~. 0~- ~er sh~re e&rnir~s av~l~hZa for c~m~o~ stock and ~ivi~end~ pe~ share of c~o~ stock of Amerlca~ Cig&rette 8~ Ameries~ ~ibs,cco: ~e~ ~are C~o~ Dlvi6ends pet ~a~re Common A~. Cigarette A~o Ci~grette ~rlcscs A~eriea~l I%3 ~merie~l A~e fi~q ~o Perle& ~ Tobacco Am. Tobacco Ci_~re+,te ~i%~,acco Am. Tobacco 1948 $16,~ $7.58 ~.i $ 7.o0 $3-75 1.9 1949 °~i.~3 7.90 2,7 lo.co 4.00 2.5 ~50 ~. 98 7,17 3 • 8 ~g. ~ ~. t~o 3 - 5 q ~-5~ 25.66 9.57 ~.6 ]6.oo ~.oo ~.o 1952 28o6~ ~.79 6.0 :8.00 4.0o 4.5 Avers, ge ['7n~ei~zte8 ) ~.22 @, : °i~ ko£ $I 5.8.~ $~.96 4.0 (~eig~,~d) $3a.50 $5.62 6.9 $22.96 3.99 5.8 • Weighte& a~ followsl Average 1948-1951 - i 1952 - 2~ ~ti~ted 1953 - 3. ~is welghting~ a~ Indlca%ed~ ~ives ~ bea~/ ~<~s~s to tie ~o~e ~ece~t e~rnlugs of 19~2 and 1953. ~'o~ho~t thls co.arisen of American Cigar-erie ~u& American Tobacco we ~ve ref~i~ fro~ ~hOwin~ ~ivliie~ book v~l~e ~i~ p~lee-e~r~in~ rel@.tio~- ~h~ i'o~ the ~c~z~olh BT, o~k of A/~e~io821 Cigarett~ BiD~ ~O ~.ifIcKL ~Eket ~o- ~atlen is ~vailable. The~'e ~ set forth below cc~£ar~tllre ratlos and equivalents rea~l~l~ f±~ the exchange OT an ~ssumed nk&qbe~ of shares of ~e~ican ~oh~cco common stock for eaeb share of American Cigarette c¢~mlcu stock.
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A~-ri~ 2~mri~ ~b~. ~.7~ $ 6.60 l~ 28.6o 4.79 ~r~° i9~ 50.ho 5.7n 11-.3 111
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112
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Our olrlnlon of f~ir val~e of ~r~can Ci~ette ccsDon sto~ ex~ssed i~ ~hiS re~t iS limited to ~tlon of the ainorlty Itc~k ~st in %~ solely for the l~USe of ace~lish£~ a ~6er of American Tobacco and American C$6~met~. The Preferred St~eks of ~meric~n Olgare~e an~ Ame'rlean Tobecco hsve ~ s~ dividend r~te~ 6% per anm~, amd the same par value, $:00 ~ ~re. Both com~i~ h~ ~ io~ a~ tuliz~err~t~ hlstc~If of ~e~ ~i~i~e~s ~on thei~ preferre~ etocka. ~erlc~n Tobacco ~ae l~id the full ~lyidendm 0n its preferreA .t~ck c~i~ously since the Cc~pa~ be~n busln~ss in January 1905 a~ ~can Cigarette h~8 p~i~ the full dlvi~ends o~ it8 prsferr~d s%ook con- t£n~u~ly (except f~r ~ p~t of 1931~ the resultln~ arre~s h~Ti~ ~een up in 1932)~Ince dividends first heceme p~yable on January i; 1906. ~ei%her %h8 preferre~ sto~k o~ Am~ric~n Tobacco nor ~h~% of American O~a~e%te is subject to call oD re~lon. In case of llq~idatlon c~ ~i~solu* tlon, ~h~ ~iders of the ~rei~red stock of ~ c~0e~ s~e enticed to the ~ar aE~u~t cf %h~ir preferre~ 8h~Ees sn~ a~ acc~ulate~ ~nd un~ald ~Ivi~n~. ~ thereon ~fore an~ ~un~ ~an he p~i~ to the holfer~ of ~he co~m~on ~tock. A~eric~ TOhsc~ preferred stock ha8 four vote~ l~r sh~Te ~% eD1 ~orporate meetings ~r~ e lectlons while ~erlcan Ci~tt~ preferr~& s%uck h~ no v~tim~ rights except at meeti~E~ coavened for i~c~eaei~ Or d~re~sir~ c~it~l 8~OCk~ ~is~olvi~ %h~ ~OT~ti~n ~r ~8~ upon oth~ ~tt~8 ~i~h r~% to ~hlch the New J~zsey s~tute exl~res~l~ gives votin~ ~ow~r ~o pre- Ssrre~ s ~o~kholde~s ~
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Analysis of Preferred Stock American Tobacco Company and A~eriean Cl~ttm an Cigar Coml~u~ American ~cbacco Cc~Pa~7 6/3o/53 Balance Sheet Date Book Capitalization (000): Funded Debt & MinOrity Interest $253~622 39,3% preferred frock 52*700 8*5 Co~on Stock and SurpluS ~ Total Book Ca~italizstion $619,565 i00.0~ ~ket Ca~italizati~n (ooo)~ Fanded Debt and Minority Interest SB53362B 31.4~ Preferred Stock 5R~700 6.5 Total Market Ce~/tmlizmt~Om $77~j~4~ iC0.0% Interest Requirements $ ii,132(a) Preferred Dividends Total Requirements $ i~1294 Times Aot~l Interest an~ Preferre@ Dividqnds Earned: 19~8 ~,h 1959 $-5 1950 5 .S 1951 3-5 195 Aver a~e ~.0 Est im~tea 1953 5.6 Dtviden~ Rate 6~ B~er of Sh~es 526s997 ~k~% Price Sept. iO3 1953 136 1/B ~et Value of Preferred Stock ~-~er Deduetin~ Be~ior Seet~ities: Net Current Assets ~er Share ~zeferred $~7 Net Assets at Book Value per ~nare Preferred 713 Net Asset~ at M~rk~t V~lUe ~er Share Pf&. l~Oll (a) Six month~ 1953 on an a~uual basis. 114 American cigarette and C~I~1 C~ 1.3 $30,657 $ 6,~83 3-i 3,1 2.8 B.l S.7 B.6 3,989 130 $3,099 7,685 13,o88
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25. The interest requlr~ents of American Ci~rette shownl above represent is-crest pa~ment~ to Aaerlean Tobacco under the agreement for the manufacture of pALL MALL. Of t~e 3,9~9 s~1~s of American Ci~rette preferred stock present2~ ou~stan~Lug~ ou/~T ?59 are held by the public. <n vie~ of the small amo~mt of American Cigarette preferred stock outsta~udlng and the fact that ~rlcau Ci~rette h~s no f~de~ debt r_or ba~k !O~US~ its preferred g~ock ~ould alYgear to be ~eh stronger from the stan@2olnt of assetG and earnings coverage thaa the preferre~ stock of Ameri~mu Tobacco. E<,~=ver~ if con~ider~tlon is given to bhe Bub~t~ntlal inter- est paymenbs by ~rlc~ Cigarette to American Tobacco under the m~nnf~eturir~ agreement arid also to the capitalization factors heretofore discussedp the p~ferred stock of American Ci~rette'~ould not compare so favorably with the preferred stock of American To0acco. In our opinion, a share-for-share exchange of American Tobacco pre- ferred stock for American Cigarette preferred would be a fair basis of ex- change. However, in view of the small amouut of American Cigarette pre- ferred stock outstanding ~ith the publlc~ we ~ recc~mmsnd aa egcchar~ of 1.l Shares of American Tobacco preferred stock for each sl~re of American Cigarette. F:~ferredo Such an exchange would result in an e~i-a~lent market price for Amerlean Ciga~ette preferred of about ~150.4~ a sbaz~ or a 4.00% yield basis. ~t WOuld reql~Ire f~.e isst~nce of 83~.9 shares of America~ Tobacco prefer~'e~~ or ~.9 shares more than would be required ~or a share-for-share exchange. ~ne ~arket Value of the additional shares of preferred stock that ~ould be Issued~ ~% the CUrrent Earket price for American Tob&ceo p~eferred~ wotlid be about I15
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&q OARETTE pR0~TIO~ 0~ CERTAIN TOBACCO OOMPAIT~ES (Som~-e: I~=~*ry L W~ottan, in ?z4n~ers' y._~k ~aga~lue) LBUKT 5TILT~ ~KBER~ TARETTO~ pALT, ](AL~ CA]~I, OpESTEPJ~CE~ ;TI(%I ~Y ~]~ i) Total Acnual To~l An~.=l Tof~d Annual T~tal ~v~l To~al 1939 38,3 71.6 5.5 0.9 0.5 o,o 1.7 1,0 lh~.9 h2,7 24.0 (2°9) 93.0 18,6 19hO h2.0 2~.k 9.7 1.8 1.0 i00.0 h.o 2~I 135.9 &h.5 23.8 4.2 93.5 I?.9 19hl h9.5 23.1 17.9 2.5 1.2 38.9 h.5 2.1 12.5 ~8.5 22.6 9.0 37.5 17.~ l~h2 59.5 25,5 ~O.2 2.8 i.I 12.O 5.5 2.2 22.2 5~.5 ~1.5 I~.4 ho.5 16,O z~ 68,0 23.0 lb.3 3.0 1.0 7.I 6.5 ~.2 19.~ 57.~ I~.5 5.5 5o,0 ~6,9 19hh 63,5 19.7 (6.6) 3.~ 1.0 6.7 7.~ 2,2 lo.~ ~9.0 15.2 (lh,8~ 48.o Ih.9 l~ 71.o ~1.3 ~/.S 0.6 0.~ (B1o3) %0 ~.i (~.8) S6.5 i%o z5.9 55.5 16,? z.~ z~).o ~.~ ~6.z ~.s o.s ~.7 9.5 ~.7 35.7 B9.5 ~5.~, fz~s~ ~.o z.o.~ 19h7 I~i.0 27.3 (1.9} 3.5 0.~ ~.o 11.5 9,1 ~l.Z l~.o E?.O 71.5 19,3 ~hS io2.5 ~6.k 1.5 h.5 1.~ 28.6 lh.o ~.6 ~.7 9s.o ~5.~ (~.o) 69.5 1%9 19~ 91,~ £3.5 (1o.8) 5.5 l,h 2s.9 I%0 h.~ 21.4 98.0 ~5.~ 0.0 6?.~ 17,E z~50 90.5 2~.8 (I.0) 7.o 1.8 ~7.~ ~h.o 6,1 bI.2 ZC~.9 26.5 %0 71.~ 18.0 i~ 8~,~ 18.7 (9,9) I~o8 2°9 ~.o h6.o lO.h 3~.~ i13,5 ~5.8 ~.1 65.8 ~.9 AI~ K~ TOBACCO (CONSOLIDATED) A~aAN TOBACC~ A~PJOA~ ~IC~ ~ 0~SAE ~. J, ~T~OI~S • LI~K~Tr & ~ ~OM~r~ i) Total A~nual Total Annual T~t=l Annual To~al A~n~l To~al 19~ ~7.8 ~5.5 16.9 h3,8 13.4 zl.? tuo ~.1 I~5.3 W~.5 2~.~ @.$ 3~.5 ~7.9 I~E) 8~i E9.8 21.9 81,6 27.6 ~2,Z 6.5 ~.~ 18,2 6~.5 ~.~ 17,1 ~6.~ 19.1 z~ 95.0 29,5 7.8 87.8 ~q,3 7.6 7.~ ~.~ io.8 68.3 ~A.2 (0.3) 69.5 21.6 19~,5 9B.o ~.5 3.2 91,0 27.4 3,6 7.o 2.1 (2.S) 72.0 21,6 5.~ 60.5 20.6 z~&5 117.8 ~3.5 ~o.2 1o8.3 3o.8 19.o 9.5 ~.7 35.7 92.5 26.3 28.~ 72.0 ~0.5 ~h7 i~o.5 32,6 2.5 109,0 29.5 0.6 Ii,5 3.1 ZI.I 105.7 ~8.6 ~.5 79.~ ~1.5 I~ I~6.o 32,~ h.6 112.o ~8.8 2.8 zh.o 3.6 ~t.7 io6,o E7.3 0.5 8~.h ZI.~ 19h9 ]lg,h 30.7 (5.2) 10~h ~6.h (8.6) 17.0 ~.~ ~l.h I0~.3 ~6.9 (i.~) " 78.0 ~o.I ~ I;9.6 30*9 6.? ?~.5 22,8 (Z.I) 3~,i 8.1 ~2o1 ~2.0 ~6.~ d.o 75.0 17.~ 19~ lhl.O 32.0 8.~ 95,0 ~I,6 (0.5) 46.0 lo.h 3h.9 ~15.5 26.2 3.1 ?8.7 17.9 (i) Figures ah~ only 4~e~%ie I~Oduc%ien Frior ~ 19h2 f~r Co~ules ~d prier t* 1950 fo~ te~uds; indt~ totals In~l~de %ax~fr~e e~ (2) Timbres ar~ axclus£~ of pall ~ 0i~%%e prc4u~icn, as ~wa a~ve.
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a ¢ ~T E ~~ !~I~ ....... ~ ....... i;~i~ H .... P..PP ...... I.e~ .............. a g~ ......... ~ ..... ~1i [ 1 J I io F~
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~ember ~3~ ~95~ 60.3 ~,9 L9.8 16,8 ~,0 ~.8 ~7,1 ~.~ 76.~ &~3.4 &7.3
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~ ~ ~ ~1~o~ ........ ~ ~ ~ ~ ~ ~l$~k~~ ~ ~ ~ ~ ~
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.... ~ ~l! ...................... ~, ~~s~®~
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o fi ° " ' -- "%"-I" i : ii'1 (~st, ' .4 :t~41 ~: 'l=q ,1~1 1
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~,~ ~ "~ ~
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.~,~ ~-i~iI ~'~r~
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(I) ~ p~ ~ ~ ~% ~4~ ~ i~
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Z5O'68~ ~ _ .
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~o ~ ~-~ ~ ~ °° ~',~ ~ ' ~,db~"~,~ I~1 ? i!ii~
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IH~-~
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~n~str~ gx~s l ~i¢~ Ci~t~ ~ 0~ Co. i~#97 ~it ~ ~mf~ ~i~i~le~ ~ Y~ 0~g~e ~ C|~ CO, ~0 TEE AM~RIC&~ T0~AC00 ~ter@vt ~ Re~t~ Chffizgee 17 ~77 1,037 1,3~ -~ ~ ~ ~-~ ~.~ ~o~ ~ o,~o~ ~ - . 37~ I~) Ia~lu~s ~tc~ fo¢ ~b~e ~ l~s ~ ~n% i~ ~a~let~ hnon~m~ de~ p~%~rie~ ~e ~udu~t ~ss es~at~d re~te~ fed~l ~n
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THE A~IC~ TOBACCO CONP~ Ill l
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{3) I~cl~U'~ pro,i~1~ for l~.i~l~ ~ i~ ~ i,~ ~ ~c~e, m~oara: ~ ~t~ ~e K~.d~ i~
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II II ~'qb EXAI~T 2/ J*162 ~.~ 3.1~ ~,16~ 5.~£~ 3~162 3,16~ 3~16Z J~162 J,162 3,~6~ 3,16~ 3.]62 ~.~6 3,162 ~,~81 £~66) ~ 793 $ ~.i0~ $ (~i) ~ 4.6~ $ ~&06 $ ~,~74 $ 1,969 $ ~,1%8 ~ &2,979 $ 20,58~ $ ~0,999 $ t?,057 $ B,~3~ $ 6*gZJ $ [i,131) ~9~&~9 5~ .~ 59.339 ~9.379 63.~l~ ~ 7J .511 ?J.099 5~,258 99.78~ ~20~333 141~J62 158,419 11Z,754 1~9,727 - l,lg9 Z43 1~9 ~,~80 -,., 5~,°99 - ~_n~ L~.L~ ~ ~ ~ ~
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THE AMERICAN TOBACCO COMFANY Incorporated iii Fifth Avenue, New York 3, N. Y. Office of the President October 6, 1953 Mr. John W. Manlon, Secretary The American Tobacco Company IIi Fifth Avenue New York 3, New York Dear Mr. Hanlon: I hereby call a Special Meeting of the Board of Directors of The American Tobacco Company to be held at the office of the Company at Ill Fifth Avenue, New York 3, New York, on Friday, October 16, 1953, at ii:00 o'clock A.M., for the purposes set forth in the attached form of Notice of Special Meeting. Will you kindly deliver or mall to each Director of the Company notice of this Special Meeting in the attached form. The call of this Special Meeting io made pursuant to the provisions of Section i of Article llI of the By-Laws of the Company. Sincerely, Paul M. Hahn Paul M. Hahn President
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Notice of Speclal Meeting of Directors New York~ N. Y. October 7, 1953 A Special Meeting, pursuant tq call of the President, of the Board of Directors of The American Tobacco Co, any will be held on Friday, the 16th day of October, 1953~ at ll:O0 o'clock A.M. (Eastern Standard Time), at ill Fifth Avenue, New York 3, New York, for the follo~ing purposes: (i) To consider and take actiGn wlth respect to the approval and execution of a proposed Agreement of Merger between th~ Company and its directors and Amerloan Ciga- rette ~nd Cigar Company and its directors, (2) To consider ~/Id take action with ~espect to the calling of a Special Meeting of the Preferred and Cow,non Stockholders of the Company to vote upon the adoption or re~ectlon of such AEreement of Merger. (3) To fix a re¢ord date for the deterhninatlon of the holders of Preferred and Common Stock of the Co.any en- titled to notice of and to vote at said Special Meeting o£ Stockholders. (4) To 0onslder and take action with respect to the appointment of Inspectors of the Vote, the appointment of
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- 2 - October 7, 1953 a Proxy Committee, and the determination of the Order of Buslne~, for said Special Meeting of Stockholders. (5) To consider and take action with respect to th~ approval of the form of Notice of Meeting, Proxy State- gent, Proxy and President's Letter and other ~aterlal to be mailed to the stockholders in connection with sald Special Meeting of Stc0kholders of the Company and the filing of copies thereof with the Securities and Exchange Commission. (6) To authorize the listing on the New York Stock Exohaoge and the regl~tration under th~ Securities Ex- change Act ot 1934, as amended, of the additional shares of Preferred ~nd Com/~on Stock of the Company Issuable unde~ said Agreement o~ Merge~, (Z) To authorize the execution and delivery to the Transfer Agent ~nd Reglst~ar of the Preferred and Common Stocks of the Company of such documents a~d parers ~s may be r~qulred Or appropriate in eo~nectlon wlth said ~erger and the issuance a~d registration of the additional shares of stock to be issued thereunder. (8) TO authorize the execution and delivery to the Trustees under the several Indentures of the Company of s~oh documents and papers as may be required o~ app~o- Drlate in connection with said merger. (9) To authoplze ~crlp Certlfioates in respect of fra~tlonal shares of P~,efe~red and/or Corm~on Stock of tha Company as may become iss~able in connection with
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- 3 - October 7, 1953 such merger and such other documents and papers as may be involved in connection therewith. (lO) To authorize the filing of such aRplications and other material and such other acts and payments as may be required in connection wlth such merger under the BAue Sky and Securities laws, corporation laws, tax laws and other applicable laws of the several states, (ii) To authorize the execution and filing of such statements, oertiflcates and such other documents and papers and the pa~nent of such fees and expenses as may be requlre~d preliminary to, in connection with, or inci- dent to the consummation of such merger, (12) To transact such other business as may be sup- plemental or incidental to the foregoing or as may prop- erly come before ~e meeting. ~ A the meeting. JOHN W, HANLON
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1~0 MINUTES OF A STECiAL MEETING OF THE BOARD OF DIRECTOES OF TBE A~¢RNRIOAN TO~ACC0 COMPANY HELD OCTOBER 16, .19~~. A Speclal Meeting of,the Board of Directors of The American Tobacco ComDany WaS held on Fride, y the 16th ds, y of October, 1953, 8.t ll:gO 0.clock A.M. (Eastern Standard Time , at Ill Fifth Avenue, New York 3, Nsw Yomk. The following Directors ~ere present: Mess~s. P~ul M. Hahn Orpheus D. Baxalys Alfred F~ Bowden Ribband J. Boylan Dougl~ ~. Br~she~~ Thoma~ R. Conners Je/~es R. Coon John A. CreMe John 8. Dowd F2eston L. Fo%-ler Hi,am R. Fanmer Edmun~ A. Har~ey Harry L. Hily~ John N. Hutchlngs. Jr~ A, Leggy J~n~on Mill/am R~ Ogsbu~y Jemes P. St~iokland 0onstituting all of the Directors and a quo~u~ fo~ hhe meeti~ig. M~. Tsul M. HaNn~ T~side~t of the Oo~pany~ ~cted ~s Cb~i~n of the Meeting, ~r~d Mr. John ~. Han!o~, ~ec~et~y of t~e Co~panT~ ~ted ~ gec~et~ of the Meeting ~nd ~ecorded the minutes the~eoC. The~e ~e~e ~lso p~.es~t at th~ m~tlng by invlt~tlo~ tNe following: William M. Pgrke of Chs, gbo~Pne, ParNe, ~qiteslde~ Wolff & ~rophE Cyril F Hetsko - Counsel fo~ the ~oNpany ga~y N. C~se ) of Lyb~and, Ross B~o~. & Montgomery Accountants fo~ the Company I~illlam Eyre ) of ~as~Ins & Sell~ Cigarette ~nd Cigar cor~pany The Nec~eta~V stated that ~he meeting had be~n c~lled by the P~esident pumsuant to A~ticle III of the By-L~w~ and p~e- sented the written c~ll fo~ the meeting d~ed October ~, 1953, ~Igr~ed by the P~e~ideut, He else presented g oopy of ~he notice ~f tb~ meeting ~hlzh he ~e~t~g had been delivered o~ mailed to egch Director of ~sls Company on 0ctobe~ 7, 1953. Me sub- mitted proof by gffidavit of s~ch delivery or mailing, and on motion duly made, ~eco~ed ~d un~n~ous]y adopted, the call of th~s meeting, notice of meeting and ~ffidavlt of r~ailing were &~OVed ~nd o~de~ed to De filed wltN the ~eco~ds of this meeting. Fixing of Conversion E~tes, A~p~cval of P~oposed Agreement of Me~gep of American Cig~rette ~nd Ciga~ Cemp~nylnto The Ameri- can Tobacco Company, C~llir~ of Spatial Meet- ing of P~efe~d ~nd C~mon gtockholde~s, ~d Fixing of ~eeord D~te fo~ Prefe~ed ~nd Common ~tockholde~s Entitled to Notice o~ and to Vote at g~id Meeting * --~ The Cb~Irm~n stated th~t the principal pu~oae of this ~peei~l meeting of the Bo~rd, gs sta~ed in the notice of this *Ne~dlngd supplied fo~ convenlent refe~enc~
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181 meeting, ~as to consider and act upon a proposed merger of Ame~i- can Cigarette and Ci~ar Company (hereinafter sometimes called L~Cigaret~e") into this Company, whe~eb7 this Company would be the co~po~tlon surviving such mergem (this Company as such su~- vlvlng corporation being hereln~fter so~etlmes called the "gup- vlvi~ Company"). He she, ted that the merger of Cigarette into this Company as the Surviving Company ~as believed advantageous for and in the best Interests of both co~porations and their re- spective stockholdersj that certain reasons iz~icatillg the de- ~ir~billty of such me~ger ~ere set forth in the proposed P~oxy Statement and draft of Preslde~tI8 Letter to Stockholders of this Company. He stated that on October i, 1953, the1~e was de- livered o~, mailed to each Director of this Company a copy of the 9-30-53 proof of the Proxy Statement, including the notice of meeting and Exhibits~ Exhibit I being ~ dr~ft of the proposed Agreement of Me~ger, no conve~slon ~ates being thereill specified with respect to the publicly helg dom~on a~d Preferred Stocks of Amerlc~n Cigamette and Cigar Company. The Chalr~an stated that it ~ould be necessary to call a special meeting of stockholders of this Company to vote on the adoption or rejection of the pz,oposed Agreement of Me~ger - if such agreement is ente~.ed into by the Directors of this Company and by the Directo~.s of C!ga~ette - and that it ~ould also be neeessaTy to ~'ix ~ Teco~d date fo~ the dete~mlnation of stock- holders of this Compan~ entitled to notice of ~nd to vote at such special meeting of stockholders. ~Ke explained that counsel fo~, this folnpany l~sd sdvised that applicable Ne~ Jersey la~ me- qui~,ad that the Agx, eement of M~rger be adopted by the vote of the holders of at least two-thirds of the outstanding capital stock of this go~pany, i~ e., P~efe~ed a~]d Common, entitled to vote, and also by the vote of the holders of ~t least t~o~thi~ds of the outsta~dlng caplt~l stock of Cdgamette, i.e., Preferred and Common, entitled to vote. Theme ~e~e then presented to each of the Directors at this meeting p~ooPs of 10-I~-55 of the Proxy Statement, ino~ud- lug the Notice of Special Meeting of ~tockholde~s &D~ Exhibits, Exhibit i being a draft of the p~oposed Agreement of Merger %'ithout conve~slon l, ates specified therein with respect to the publicly held Common a~ Prefer'red Stocks of American Cig~mette and Cigar CermpanF, and freside~tls Letter to Stockholders. He called attention he the fact that the oonve~slon rates and ¢e~- taln info~natlon depei~ent thereo~l ~em~ined to be inse~ted in such material in accordance ~!th action to be tdken at this Directors~ meeting. The c~nges from the e&mlie~ p~oofs which had bean submitted to the Did,eaters were explained ~nd each of the Directors examined such new proofs presellted at this meet- ing sr.d cons!de~ed hhe same. The Chai~m~n stated that he desired to call specifi- cally to the attention of the Di?ecte~s the provisions of Arti- cle VI of the d~sft of proposed Agreement of Me~ge~ attached as Exhibit 1 to the ne~ proof of P~oxy Statement presented to this ~eetin~, such Amtlcle Yl presc~Iblng the ~nne~ Of converting the capital stock of. the Constltuer~t 0o~pa~ies, i.e., American Cigarette and Cigar Company and The American Tobacco Company, Ir~to sha~s of cap~tal stock of The ~erlcan Tobacco Colony as the g~vlving Com~5 and also the provisions of the Privy 8~te~ent u~de~ the c~ption ;~c~pltallzatio~ of Constltue~t Com- panies and Basis of Conversion or± Me~ge~". He stated that the Directors will h~ve noted that under the p~oposed Agreement o9 Me~ger the 188,g25 shames of Cor~on Stock of Cigarette o%,ned by this Company (out of a total of 195,500 sh~es of Common Stock
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-3- of Cigarette issued and outstanding) and the ~jS0O skates of Common Stock of Cigarette held in its treasury would nat be converted into Co~aon Stock of the Comps~y but ,#ould ce~e to exist and that, consequently, only 7,275 shares of the issu~,d and outstaudlng Common Stock of Cig~ette ~ould be converted into Common Stock of this Company. He stated that the Directors %'ill ~Iso l~ve noted t~t ~unde~ the p~oposed Agreeme!th of Me~ge~, the 3,230 shares of Preferred Stock Of Cigarette owned by this Company (out of ~ total of 3,989 sh~res of Preferred Stock of Cigarette issued and outstanding) ~Tould not be converted Ii-~to P~efeD~ed Stock of this Company but would cease to exist and tl~t, COllseque;itly, o~l~ 759 sha1~es of the issued ~nd o~tstand~ lug Frcfe~q~ed Stock of Cigarette ~ould be ao~ve~ed into Pre- fer,red Stock of ~his Company. The Chairman ~tated that it w~ now in orde~ fo~ the D~rector~ to eonslde~, and determlne the ~ates of conve~sion of the st~res of Common ~-d Prefe_~c~ Stock of ~crican Cig~etze and Ciga~ Company to be converted into sha~es of Common and P~e- fen, e~ Stock of this ComDany, so that such rates could be appro pri~tely inse~ted in the drafts of the Agreement of Merge~,, ~roxy Statement and ?resident ~s Letter. A full discussion on the part of the Directors then took pl~ce du~ing which the Directors discussed v~ious factors relating to both corpora- tions bearing iu bhelr ~udg~nent u~on the p~oper ~ates of con- Aftel~ thi~ dlsoussioi~j on motion Sul~~ n~de ~[~ seeor~- ed, the following ~esolution ~as unanimously adopted: RE~OLVED~ that the foll~ing ~tes of conve~slon are he?eby adopted and shall be inserted in the proposed A~ree- ment of Merger prcsentc~ to this meeting, to %'!.t (8.) ~ach sha~,e of Common Stock of American Ciga ~ette and Cigar Company to be converted s~ll be conve~tnd into eight (8 shares of Common Stock of The American Tobacco Company. (b) Each sha~e of Preferred Stock of American Cigarette and Ciga~ Company, to be con- ve~ted~ sh~,ll be converted into one and one-tenth (l~i/lO) shares of ?~efe~l'ed Stock of g~he American Tob,%oco Con~ny. TheTe ~e~e then Inse~t~d in the gecTetsryls ¢opio~ of the Agreement of Me~ge~, Proxy Statement and P~esldent Is Lette~~, the eonve~slon ~tes ~s ~doptt~5 bY th~ fo~.egoing mesolutlon of The Chalr, m~n hhen stated that it ~as in o~ez~ to con- Bide~ add t~,ke ~ctlon upon the Agreement of Men,get (with the ~tes of conversion Inse~ted pursuant be the resolution jusb zd0ptsd); the c&lliDg of a special stockholdel~s~ meeting, etc~ After dlscussloIl, on motion duly made and second~d, %he follOWing z,esolutions were u~nimously adopted: W}~EEAS, this Com~&ny is the holde.~ of ~ rd~Jorlty Of the outstanding shames of oapltal stock of Amemio~n Ciga- rette and Cig&~ Co~pa~I, ~, 1~e~ Jersey co~po~&tio~, ai~d both oo~poratlons are orgal~ized fo~. the purpose of sa~rylng on business of' the s~me o~~ 5 s~ila~ natalie, ~nd in 6rde~ to
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P F T [ ellmln~t~ ~ny dupli~tlens i~ opcratlou~ of the two c0rpor~tlons as separate corpor~tlons and to m~ke possible other economies in o~e~tlons, as ~ell as for the gener~l welfare of this Company and American Cigarette and Cig~ Comae, up ~nd the welfare of their r~spective st~ckholgers~ the Boa~d of Directors of this Company concludes th~t~ nnde~ present circumstances and conditions, it would be advantageous for both co~- potations that American Cigarette and Cigar Company be merged into this C~pany in s~co~dance with, in the manne~ ~nd on the te~ms p~ovldeg in the for~ of the proposed A~eement of Me~ger submlttcd to this meeting, a copy of '~hlch, marked for identification, is directed to be filed with the records of this meetln~ : NOM~ THEREFOB~ be it RESOLVED, thmt the Board of Directors of this Company do~s hereby ~pprove the p~oposed Agreement of ~e~ger in the fo~ submitted to this meeting, p~ovidi~g for the me~ge~ of A~erlc~n Cigarette and Cigar Company, a New Jersey eor©o~ation, into this Ccm~ny pursuant t~ the laws of the State of Be~ Jersey~ and p~escrlbiag the te~ms ~nd conditions of the merge~ a~d the method of ce~ying it into effect~ the ~%ame of the gu~vlving Company, the number, ~mes ~nd post o~Tice addresses of the first Directors and offloe~s o~ the g~rvIv~g Co~p~y, the number and p~r v~lue of the sh~es of caplt~l stock of the Surviving Com~ pany~ and the m~nner of conve~tlug the shares of c&pital stock of Am~pic~n Cigarette ~nd Ciga~ Co~pany i~to shares of caplt~l stock of the g'~vlving Company; ~ed fu~the~ RK$OL~ that the Directors of this Company be end they hereby a~e ~uthorized to en~e~ into said p~oposed A~1.eement of Merger ul~e~ the co~po~ate *e~l of this C~pany ~ith the Directoms of American Cigarette ~nd Ciga~ Comg~ny, and that the ~esident o~ any Vice P~esldent ~nd the Sec~et~y or ~ny A~slst- ant Secretary of this Company be ~nd they are hereby ~utho~ized a~i directed to execute s~id Agreement of Meyger on beh~,lf of this Company u~iSe~ the co~po~ate se~ of this Company, all ~s p~ovideg b~ ~ad i~ a0oo~dsnce ~i~ the appllcable la~s of the State of Ne~ Jersey; and fuTthe~ REBOL%~2~, that ~fte~ s~id p~oposed Ag/'e~ment of Merge~~ has been jointly entered into by the Di- rectors of this Company and the Directors of Ameri- can Cig&rctte ~p~ Cigar Company ~ndem the respective co~porate seals of the t~o co~o~atlons a~ dul~ ~ecuted b~ the p~ope~ offdce~s of both corpo~atlons then said p~oposed A~reement of Me~g~ shall be sub- mitted for action thereon by the ~toc~olde~s, Pre- f~ed and Common, of this Company at a Special Meeting of pmefe~red and Common Stockholders of this Company~ ~hlch is hereby callsd fo~ the purpose of considering the ~doptlon or ~e3e~tion thereof; s~id meeting to be hhld ~t ~o. 3~ Oou~t Street Flemlngton NeW Jersey, ~t 1:30 o~edock in the ~fte~uoon E~ste~n gt~nd~d T~e) on Wednesday, Decembe~ ~, 1953. and that the elo~e of busino~ on ~c~n~sday, Octobe~ ~8~
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-5- 1953, shall be and hereby is fixed as the d~te for the dete~mln~tlon of the stockholders of reco~ of this Company entitled to notice of and to vote at such meeting; a~ further RF~0L~ED, t~qt in the event that the holders of two~thi~fls of the outstanding c&pit~l stock of this CoW,party entitled to vote sh~ll vote in favor of the ~doptlon of such Agreement of ~erger at such Speclal Meeting of Stoc~uolders, Or ~t any adjourn- ment or ~,djourrmlents thereof~ the Secretary of this Company b~ ~d he hereby is a~tho~iz~fl ~l~d di~ect~ to ~ke ~nd C~eeut~ hz~d~ the ool~o~te se~l Of this Company ~ certlflcate upon such Agreement of the fact of such adoption of the Agreement of Merger by the stockholder8 of this Company; ~nd further RESOL~, that in the event that the holders of two-thi~s of the outstanding capital stock of Ameri~ can Cigarette &rid Cigar Company cntltled to vote shall ~Iso vote in f~vo~ of the adoption of such Agreement of Merger at a Special Meeting of Stock- holders o~ American C~sarctte and Clg~r Company held for such purpose, ~nd if the S~cretsry of hmerloan Cigarette and Cigar C~npany shall ~Iso ~akc ~nd execute under the corporate se~l of that co~por~tlon a certificate upon such Agreement of the fact of such adoption of the Agreement of Me~ger by the stockholders of American Cigarette ~nd Cigar Co~pany~ then the Secretary or ~y Asslstant Seore- t~ry of this Company be ~z~ he hereby is ~uthorized and directed to file Ss,ld Agreement of Merger, so adopted and ce~tlfied, In the Office of the geome- terF of State of Mc~ Jersey, ~t ~ueh time ~s may be determined by SUbSequent ~otlon of this Board. ~polntment of Inspectors of the Vote * The Chai~m~m ~t~ted that the next business to come be- fore the meeting ~s to appoint, pursuant to Article II of the By-Laws of this Company, Inspectors of th~ Vote to act at the Special Meeting of Stockholders of this Company, and at ~nF adjournment or s,djo~ruments thereof, After dIBcusslcn, on motion drily made and ~econded, ~he following resolutlon was u~nhaously~dopted: RESOLVED, that, pursuant to Article II of the BF-Laws of this Company, Joseph A. 01eske and William W. Sagsdale, Jr.~ be and hhey hereby ~re appointed Inspectors of the Vote~ to ser~e ai~ ~ct ~t said 5peci~l Meeting of Stockholders to be hold December 2~ 1953, and at ~ny adjoumnm~nt or ~djournments thereof. Appointment of Proxy Committee * The Chal~,man stated that the next business to come the meeting was to appoint a Committee for the sollcl- ~tl0n and collection of proxies ~nd to ~ct ~s proxies for ~f the Company at the Special Meeting of Stock- lled for convenient reference
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-7- in connection with said Special Meeting, ~nd the proper officers of this Company ~re hereby ~utho~- ized and dlrec~ed to c~use to be ll~.lled to each Preferred and Common StocNholder of the Co~p~ny entitled to notice of such Special Meeting a Notice of ~uch Speci~l Meeting of Stockholders, Yr.oxy, Proxy Statement, retu~ envelope and PresldentI~ Lette~, ~ith a copy of the A~reeme~t of Merge~ ~nd all other Exhibits ~ttached to said Proxy Statement. all in final form. Autho~,Izatlon of Li~tiug on New ¥o~.'k Stock Exchange and ~egistratlon ~mder Securities Exchange Act of 193~ of Additlo~l Shares of Preferred and Co.on Stock * The Cl~irnlan stated the.t, in connection with the merg- er~ it would be necessary to authorize the llstln~ on the New York Stock Exchange ~nd the registration on Fo~m S-A with the Securities ai~d Exchange Con~nission ur±der the Securities Exchange Act of 193~, as amended, of the ~ddltional shares of Preferred Stock and the additional shares of Sc~muon Stock of this Sompany $O be issued to the minority stockholders of Anlerlc~n Cigarette and Clga~ 0ompany urger the uonve~slon terms of the Agreement of Merger, After discussion and on motion duly i~de and seconded, the following resolutions were ur~nlmously adopted: RESOLVe, that the pz'ope~ offi0ers of this Company be and they are hereby a~thorized and empowered on be- half of this Company to e~ecute add Tile ~ith the New Y(mk Stock F~ehange ~ Listing A~pllsatlon for such additional shares of Px~efepred Stock end such additional sha~es Of Co.on Stock Of this Company~ Upon Official notice of Issuance, ~S racy be Isstu~ble to holders of Preferred and Common Stock of' An%erisan C~garette and Cig~ Co~pally upo~ such merge~ becoming effective, ~ad i~ eomleetion the~e~ith to file such d~ta, and on be- half of this Company to enteP into such aNreements ~ith the New Yo~k Stock Exchange ~s m~y be necessary o~ deemed by them advisable; ~ fu~,t~ey RNSOL~IED~ that the 2rope~ officers oP tbls Colzp~y be end they ~re hel~eby ~uth0rIzed and empowered on be- t,%If of this Compsny to execute and £11e ~n ApNllcatlou fo~ Registration of s~ch ~dgitlonal sh~es of Preferred ~r~d dorm~on Stock of this Company on FO~ 8-A unde~ the Secu~itles ~change Act of 193~ with the Securities and Exchs, nge Commission ~nd the New York Stock Exchange end in ~onneotion tJ~ere~it~h No file such othe~ documents ~nd papers ~ith the Seo~mdties and Exch~9~nge Co~Ission and the NeM ]fork Stock Exct~nge as m~y be ~eqtti~ed in connection with the reglst~&tion of s~id e~Idltlon~l shares of Preferred Stock ~nd szid additlor~l sh~es of Common Stock of this Company; and further NESOLV~D~ that the pmoper offleers of this Company he ~nd they are hereby authorlzed ~nd empowered on be- half of this Company to execute and file amendments to said Listing Application and said Application for Negls- *Me~dlng suppl~ed fo~ convenient meference
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237 -8- tratlon on Poem 8~A embodying such chatlges the~ein or additions thereto as they may deem necessary or advisable; and f~ther RESOLVED, that e~ch of the following ~erson~, r~mely~ Paul M. Fehn, President of the Company; J. R. Coon~ Vice President of the Company; A. LeRoy Jansen, Auditor of the Com~ny; John M. F~nlon, gecreta~y of the Company; a~d ~ss~s. William M. P~?ke~ C~il F. Hetsko and Clair B. ~ghes, of counsel, be and each of them is hereby designated and authorized by this Company to appea~ on its behalf before the New York Stock Exchange o~ any appropriate co~Itgee or de- partment themeof with authomlty to n~ke such ehange~ in any Listing Appllc~zion o~ any agreement relating thereto as he3 in his dlsc~etlon, ~y deem necessary to ~onfo~m with the requirements for listing arid to t~ke such othe~ steps ~s~y be necessary to effeot sald listing. Authorization of Proxy for gpeci~l Meetlng of Stockholders of American Cigarette arid Cigar Comp~n~ * The ChaJrman stated that the Board of Directors should consider ~h&t p~ovision should be ~ade to authorize o~ direct the officers of ~he Company~ o~ the p~ox!es Po~ sh~es ~f stock of Cigarette owned by the Company, to vote the sh~res of stock of Cigarette o~ned by this Company with respect to the p~oposed merger at the Special Meeting of Stockholders of cigarette ex- pecte~ to be held on December ~, 1953, ~md c~lled atbentlon to the fact that the Prox~ Statement fo~ the Special Meeting of Stockholders of this Company, unde~ the c~ptdon "Vohe Required to CaP~y 0~t the Me~gerl~ ~ontai~ed ~ ~ese~v~tlo~ o~ the par% of this Company as the owner of sb~es of Com~on and Preferred Stock of Cigarette to ~efraln f~om voti~ such s~es in favor of the adoption of the Agreemenfi of Merger or to vote such shares against the adoption of the Ag~ee~nent of Merge~ at the Special Meeting of Stockholders of Cigarette, if, in the opinion of the Board of Directors of this Cempany~ the merger, ~t the time of sue~ ~pecial Meetlng of Stockholders of Cigarette~ is Impractlcable o~ insdv!sable under then exlsti~g clrcu~sta~ces K~dconditions~ Afte~ discussion, o~ motion duly i~sde a~l seeo[~ed, the follo~ing resolutions were unanimously adopted; PESOL%~, that Faug M. hahn, James R. Coon and Richa~ J. Boyl~n~ Or a m~Jority of them (of if only o~e~ the~ that one), be a~d ~re hereby desigr~ed as proxies for ~hi~ Company to vote at ~ Special Meeting (incl~ing all adjoupD~ents) of the Preformed ~nd Co,on ~toekholders Of American Ci~R~ette ~n~ Ciga~ Company expected to be held on ~ecember ~, 1953, upon the adoption oP ~e~ection of the Agreement of Merge~ bet~eenA/~erlcan Clga~ette and Ciga~ Company and its d lrecto~s and this Company and its d irectors~ and upon such othe~ matters as I~y properly come be- fo~e said Special Stockholders~ MeetinZ of Amerlc~n Cigarette and Cigam Company in ~espect of ~iI sha~e8 of P?efe~red and Common 5took of A~erlc~n Clgar~tte *geadlng supplied for convenient~
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138 -9- and Cigar Company owned by this Company~ and further RFSOLVED~ that the ofgdcers of ~bi~ C~pany be ~d ~tx~e hereby ~uthorlze~ to execute ~nd deliver a Proxy fo~ said Spec1~l Meeting of Stockholders of Al~erica~ ciga- rette sDd Cigar Company; ~d fun'thor RESOL%~ED, that the execution and delivery of said Pl, oxy fo~ ssid Speci~l Meeting of Stockholders of Amex, f- c~n Cigarette and CIBar Company is s~bject to the ex- p~,e~s condition that, if, in the opi~io~ of the Bear~ of Di-~ecto~ of this Co~p.%~y, evidenced by s ~esolution adopted by the Board of Directors of this ComRan~ prlo~ to the vote being t~keu fo~ the adoptio~ o~ re~ecblon of s~,id Agreement of Me,gap ~t such Special M~etlng of Stockholders of American Cigarette ~d Clg~ Company or an~ ~dJournme~t o~ ~gjournments the~eof~ such me~ger Is~ at the time of such Speelal M~eting of Stockholders of Amerlc.~n Cigarette ~Dd Cigar' 0om~ny, Imp~actlc~b~e o~ inadvisable UDder ihen existing clrcumst~noes end con- ditions, then the proxies fo~ thi~ Company shall elthe~ ~ef~in from ~otlng such shares of A~er~cmn Cigarett~ and Clga-~ Oom~ny, owne~ by thi~ Comp~n~, o~ shall vote su~ sb~es ~g~Inst the ~doption of the Agreement of ~e~er at such Speclal Meeting of Stockholder~ of Amerl- ~n Clgare~e and Cigar Company Or any ~djou~ent oi" adjournments thereof. Adoption of 0rde~ Of Business fo~ Special St ockholdmrs! Meeting The Chai~.n stated that, unde~ the ~ovistons of i Section 8 of Article II of the By-Ls~s of the Company the Di- rectors ~ould ~dopt ~h order of b~Islne~s fo~ the p~oposed Spe- cial Meeting of Gtockholde~s of this C~mpany and thst th~a ~ractlce b~d been followed - as the Dil~ecto~s kno~ -iIi con- = ~ctidn with the ~n'a~l meetings of stockholde~,s of this Company. After discussion by the Directors ~f a ~oposed orde~ of business, the following resolution ~as unanimously adopted: RESOLVED, that the order of business for the Special S~ochholders~ Meeting of this ~ny called to be held on December, ~, 1953, sh~ll be ~ follows: (i)C~lllng ~eetlng to o~der ~nd p~elimin~ry fot, m~lit ~es. t (~) Determination of quorum, (~) Req,<est that stockholders p~esent, who vlsh to ~ct i~ persol~, give thei~ name~ to the Secretary of the Co=~ny and that Derson~ p~esent who hold p~oxles f~o~ stockholders turn them over to the Inspeoto~s of the ~ote, (4) S~e~ing in Of the Inspectors of the Vote. (5} Consideration of ~ctlon with respect to adoption o~' ~ejactio~ O9 Agreement of ~e~ge~, Dist~Ibutlon of B~llots and colleetlon by Inspectors of the Vote, '~ading ~upplied f'6~~ference
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- i0 - (6) Report of the Inspectors of the Vote. (7) Aanounccment by C~irma~ as to result of vote o~ Agreement of Merger • (8) Trar~saction of such other business as may prop~ erly come b~fo~e the meeting. (9) Ad J ou~rnaent. guhjec'5, hoveve~, to s~ch changes the~eln as the ~residlng officer at ss, id meeting o~ an~ agjou~mment or adjournments thereof n~y determine to be ~dvls~ble. Authorization to Transfer Agent ~,nd Reglst~ar fo~, P~efer~ed ~,nd Common Stock of the Company * The Chairman stated that in connection ~ith the merger, it would be necessary to increase the authority of the Transfer and the Registrar Pot ~he P.refe~red Stock of the Company and the authority of the Transfer Agent and Eegistrar for the Common Stock of the Company to cove~" the additional shares of ~ef~z,red ~ud Commo-ii Stock, respectively, Of the Company, dssu- able u~on the me~ge~ becoming effective. Aftel, discussion, on motion duly ~de and seconded, the following resolutions were unanimously adopted: HZ~OLVEDj tf~t the authority heretofore granted to Cm~auty T~ust Company of Ne~ ~fork, T~nsfe~ Agent, for t~le transfer o~ ce~tlficates of sha~es of Prefe~ed Stock, 6% Cumulatlve~ pa~ v~lue S10g per share, of this Company~ be and it is hereby ~xtended to include 834 &dditlo~al ~l~res of such ~efe~red Stock of this Co~l~ny; and further RESOLVED~ that s~id T~ansfe~ Agel~t is hereby autho~- iz¢~and directed to countersign as Transfe~ Agent and re- cond, in its transfer record, and deliver to City Bank Farmers T~ust Company, Registrar, for ~egistratlon, an~[ whe~ cou~tersigned by said Registrar, to delive~ certlfi- c~tas for 834 ~dditional shares of' such Preferred Stock in s~ch r~mes ~nd fo~- such number of slates as the Presi~ dent o~ s, Vice Tresident of" this Company may in writing direct, duly ~ttested by the ~ee~et~ry o~, ~ Asslstgnt Secretary unde~ the seal of this Company; ~rzl furthr, r, RESOLVED, that the authority heretofore g~anted to City Bank Fa~ers Trust Company, Regist~,~, for the P~e- feared Stock of this Comp~ny~ be and it is hereby extended to iucl'~de 834 additional sb~ees of such Trefe~ed Stock of this Company~ and further RESOLVED, that the authority he~etofo~e g~anted to gua~ailty Trust Company of New ~°ork, Tr~nst'e~ Agent, fo~ the t~ansf~z, of certiflc~tes of shg~es of Com~lon Stock, par value $25 per share, of this Company~ be and it is hereby extended to include 58,200 additio~l shares of such Common Stock of thls Company; and fu~the~ RESOLVED, tibet said T~ausf'el" Agent is hereby autho~.- ized and directed to countersign as Transfer Agent and re- ~Seadlng supplied for convenient ~efe~enoe
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140 - il - co~d i~ its ~z~n~f~ recoz~, &~ deliver to City Ba~k Farmers Trust dom~an¥, ~eg~st~a~I for ~egi~- tration~ ~nd ~hen counte~signed by ~i~ He~istrar, to deliver ~e~tiflcates for 58,~00 ~dditior~! sh~e~ ~ber of ~l~es ~s ~he P~eside~t or ~ V~ce P~esi- deist of flht~ ~ompany~ay in writing dI~ect, duly at~est~ by ~he Secret~ry o~ ~n Assistant Secretary under the se~l of this Companyj and further HESOL\~, that the authority he~etafore granted to City Bank Fa~e~s Trust Company, Regtst~aP fo~ the Oo~on S~ock of this Company~ be &rid i~ is he~e- by extended ~o include ~,gO0 ~dlblonal aha~es of such Common 3tock of this Company.¸ Authorization with Respect to ~lue Sk¥~aws * ~i . The Cha, iz~an 8based that it might become necessar,y to qualify or Pegls~er the addltiola~l shares of Co~mon and Pre- ~ferred Brock of the assu~ble i~ connection wK~b the Company. ~ge~. unde~ the Bl~e Sky l~s or Securities Laws of various ~; States; that it would be desirable that a general authorization ~ glve~ to the offloe~s of the ComportF to do ~hafl might become accessory in thia respect~ though Specific re~olut~on~ ~ight be r~qulred in conme0tion with particular States as the result of ~the~ i~ve~tlgatic~, II After dlgcus~ion~ o~ motlo~ duly made and seconded. ~ithe following Pe~olutlons were unanlmously~opted: ~EBOLV~D. that the p~o~er officers of thi~ C0mpany be and they a~e hereby authorized, in the n~me and on behalf of ~hi~ Company~ to take any and all action which they ~y deem necessary and advisabl~ to q~aiify or reg- /~te~ the addltlomal aha~e~ of B~eflerved gnd common Stock Of thiP So~y, issuGble pursugnt to the terms of said Agreement ~fi Me~ge~ h~t~eu th~ Co~9~uy ~u~ American Cigarette a~d Cigar Co,pang. unde~ the Blue ~ky L~ws or Securities Laws of auy of the States of the United States and/or to qualify and register the Scrip Sertifleates Is- ~uable or to be issued for such Prefevved o~ Cordon Stock to holders of the P~eferz.ed ar~ Common Stock of American Cige~e~tc and Oig~ Company, ~e~pectively, and in eoa~ec- t~0~ therewith to execute, acknowledge, verify, dellve~. fl~e and publish all such applications~ reports, Issuer,~ ~0Ve~t~. ~So~tio~ ~d o~he~ p~e~s G~d doeil~ents as ~%y be i, equired under such l~s. ~nd to take a~y and ViSible i~ o~de~ to m~i~t~i~ ~u~h Pegi~tl'~iotl SoT as long as they~ dee~ to be in %he best Znte~ests of this Col~p~uy; and fu~the~ RESOLVED, ~at the prope~ offlce~s of this COmpany be ~n~ the~ hereby ~re authorized and e~powered o~ be- tels of this Oom!~any to make ~oh pendents of fees and expense~ and do such other acts and things as may be deemed b7 them necessary and advisabl~ in ccunectlon g~th ~he ~i~g out of any of the Natt~P~ Op ~pO~eS set forth i~ the foregoi~G ~esoL~tiona. ~Eeading supplied So? convenient ~efe~ence
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EXCERPDERP~ FROM MIRUTES OF MEETING OF BOARD GF D~TORS 0F THE AMERICAN TOBACCO COMPANY / HELD DECEMBER i~ I~ / Re~lutic~s Gr~ntlng Power of Substitution of~eembe~ 4, 195~ American Cigarette and P oxie~ fo~The Am~i~Toba~co C~pan~ ~t Ci~a~ Compan~ Stockholder~ Meetin6* The Chairman referred to the resolutions adopted at the meeting of the Board held October 16~ 1953~ desi~- n~tin~ P~l ~. ~hn Jamas R, Coon ~%d ~i~hard J. Boylan to act as proxies for this Company ~t a Special Meeting inelud- leg all adjournments) of t~e Preferred and Common Stock- holder~ of American Cigarette ~ud C±~ Compsr~y to be held on December 4, 1953. He stated that such resolutions had nob ~ranted the power of substltutio~ and suggested the desira- bility of @r~ntln~ ~u~h pewez to th~ ~oxies. After conside~ation and on motion duly made and seconded~ it was unanimously HESOLV~D that Paul M, Hahn, James R. Coon and Rieh&rd J. Boylan, heretofore designated by resolutions adopted at the m~etdn~ of this Board held 00tobe~ i~, 1953 to a~t a~ proxi~ for this Company at a Speei~l Me~blD~ (including all adjournments of American Ciga- rette ~nd 01g~ Com~n~ to b~ h~iS December 4, I~5~, h~ and each of them is hereby ~ranted full powe~ of sub- stlt~ion, a~d that the proxy authorized to be exe- cuted a~ddelive~ed b~ tbe offi~ra ~f this Company shall so provide; and f~rther BESOLVED that, ~S modified by the fere~oinK reso- lution, the l~solutlo~s adopted ~t the meetfr~of the Board held October 16, 1955~ referred to above~ shall continue in full force and effect. *HeadII~a~pplded for ecnvenlenb ref6renee
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' EXCERPT FRSM MINUTES 0F~ETING 0F BOARD OF DIRECTORS OF THE A~RICAN TOBACCO COMPANY HELD DECEMBER 15, 1953 Resolution Authorizing Filing of Agreement of Mer~er with Secretary of State of New Jersey* The Chairman stated that in the resolutions adopted by the Board of Directors of this Company on October 16, 1953~ ~pproving the proposed Agreement of Merger. d~ted October i~ 2953, between this Company and American Cigarette and Cigar Company, and their respective Directors. it was provided that In the event said Agreement of Merger be adopted by the stock- holders of this Company and also by the stockholders of Ameri- can Cigarette and Clga~ Company and certain appropriate ~ertlficates as to ~uch stockholdersr action be annexed tl~re- ~o, the Secretary or any Assistant Seoret~ry of thi~ Company be authorized and directed to file said Agreement of Merger. ~o adopted and certified, in the offlse of the Secretary of $t~ta of New Jersey, at such time as may be determined by ~bsequent action of this Board. and that similar appropriate and corollary provisions appear in the resolutions adopted by the Board of Directors of AmerleanOlgarette and Cigar ~mpany on October 16, 1953. He stated that, in view of the ~d0ptlon of said Agreement of Merger by the stockholders of ~his d~mpany and of American Cigarette and Olga~ Company. respec~ively~ and the execution on the Agreement of Merger 0f certificates of the secretaries of said two companies, re- spectively, as to su.oh stockholders: adoption, it was now ~pr~pria~e that the Board of Directors of this Company adopt a resolution with respect to the filing of said Agreement of Me~ge~ in the office of the Secretary of State of New Je~.seyl ~on which filin~ the Agreement of Merger would become effec- tive. After discussion, on ir~tion duly m~de and secondedj t~e following resolution was unamlmously adopted: RESOLVED, that the Secretar~ or any Assistant Secre- tary of this Company be and i~ hereby authorized and directed to file or cause to be filed in the office of the Secretary of State of New Jersey a properly signed and executed original of the Agreemen~ of Me~ger, dated October iS, 1953, between this Company and American Cigarette and'Cigar Company~ and their respective Di- rectors, with such certificates annexed thereto as may be required by the provisions of the laws of New Jersey; such filing to be made on such date ~s the P~esldent or any Vice President of this Company n~y in his discre- tion deter~ine. Resolutions Appolntlns guaranty T~ust Company of N~W York Agent to Make Exeha~4~es mqd Deliveries of Certificates fo~ Preferred and Common Stock of The Amerlcan Tobacso Company to Holders of Preferred and Common Stock of American Citarette and Cigar Company* The Chairman stated that it was necessary to appoint agent for this Co~p~ny to make exchanges ~nd deliveries of for Preferred and SOFt.on Stock of this Company fo~ Preferred and COlnmon ~tock, respectively, of American 143 convenient reference
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- 2 - Cigarette and Cigar Company, pursuant to the prov~sions of th~ ~ree~nt cf MergEr between this Company and American Ciga- rette and C~gar Company, and their respective Directors, dated October 16, 1953, and that it was deecl~d d~sirable that Guar- anty Trust Company of New York be appointed such agent. After discussion and on motion duly made and seconded, the following resolutions were adopted: RESOLVED, that Guaranty Trust Company of New York, 140 Broadway, New York City, be and hereby Is appointed Agent of this Company to make exchanges and deliveries of certificates for shares of Preferred Stock (par value $100 each) and Common Stock (par value $25 each), re- spectively of this Company to holders of shares of Preferred Stock (par value $io0 each) and Coupon Stock (par value $70 each), respectively, of American Ciga- rette and Cigar Company at the rates of conversion set forth in para&raph (~) of Article VI of the Agreement of Merger between thi~ Company and American Cigarette and Cigar Company, and their respective Directors, dated October 16, 1953% and ft~ther RESOLVED, that said Agent on behalf of this Company be and is hereby authorize@ to requisition from Guaranty Trust Company of New Yor~ Transfer Agent for the Pre- ferred Stock of thi~ Company and f~cm Guaranty Trast Com- pany of New York~ Transfer Agent fDr the Common Stock of this Comp~ny~ such number of s~are~ of preferred and Conm~on Stock, respectively~ as may be necessary to make such exchange and delivery for P~eferred and Cerumen Stock of American Cigarette and Cigar Company and also such number of shares of Preferred Stock of this Company as may be necessary to be issued in exchange for Scrip Certificates representing fractional interests in pre- ferred Stock of this Company provided to he issued under said Agreement of Merger; ~nd further RESOLVED, that said g~ent on behalf of this Company be and heresy is authorized to sell or cause to be sold such number of shares 0£ said Preferred Stock of this Company, in accordance with the provisions of said Scrip Certificates and the provisions of paragraph (e) of Article VI of Bald Agreement of Merger, as may be nec- essary or appropriate to carry out the terms and provi- sions of said Scrip Certificates and the provisions of said paragraph (e); and further RESOL%~D~ that in connection ~ith the foregoing matters, Guaranty Grust Company of New York may act upon, and shall be fully protected in acting upon, the instruc- tion~ of the President, a Vic~ President, or the Treas- umer or Auditor of this Company; and further RESOLVED, that any of the foregoing officers off this Company be and they hereby are authorized on behalf of this Company to make such arrangements with Guaranty Tr~st Company of New York, ~s said Agent~ as he m~,y deem n~cessary or advisable to enabl~ holders of So~Ip Cer- tificates to accumulate additional Scrip Certificates necessary to make exe~nge for full shares of Preferred S~cck of bhls Company by provtding for the purchase ~Id/or sale of Scri~ Certificates by holders thereof; and further
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- 3 - 145 B~SOL~D, that ~ny of the fo~efoi~ o£flce~ be ~nd they he~'eby are authorized to c~use ~o be prepared and delivered to Gt~rsnty Trust Company of ~ew York~ Corpo- rate Trust Department~ ~he necessary quan~i~le~ o5 ~±d Scrlp Certlfieate8 ~und also to cause to be Drep~ed and dsllvered ~o Guaranty Trust Company of New York~sueh l~$~e~s of tr~smltt~l, doo~m~n~s, papers and o he~ • l~ter~ture a~ may be necessKr~ o~ dee~d by him e~Irable ~o carry o~t the ter~s and provlsions of the fo~ g~golng resolutlon~, and to ~ake wlbh said Agent suoh d~oslts and to sign and deXiver to Gu~rant~ Trust Compa~ of New X~k ~nd t~ ~he ~i~t?~r f~ th~ ~hsr~ of Pr~e ~d Stock and 0~o~ 8rock of this Company~ and to ~ other oertifi~ates &nd other doeuale~ts &Dd p~per~ ~s ~uch officer ~ deem necessary or advisable to effeot the - ~n~ ~nd prov±~ions of the foregoing re~o~u~ions and the intent th~reof~ Resolution Approving Text of $crlp Certlfi~ate ~epr~sentlng F~actlo~al Int~r~ts for Fr~f~rred 8rock Of The A~ican Tobacco Comp~n~* The C~a~rm~n pre~ented ~o ~he me~Iz~ a f~oposed text of a Scrip Certlflca~e (proof of 12-7-53) representing ~he ~ra~tlonal Interest (to be expressed In one or mo~e tenths) in a ~h~re ef Preferred ~took of the Company or the p~oceeds of sale ~he~eof. He s~ated that s~ch Se~ip Ge~tiflc~tes he- came ne0essary only wlth respect to Pr~fe~ed ~tock of th£s Company, but not wlth respect ~o Con~on Stock, under ~he pro- vi~lons of the Agreemen~ of Merger De~ween this Company and Am~rlc~n Cigarette and Ciga~ ComD&ny, and ~h~i~ respe0~Ive ~i~e~tor~, d~t~d Oct~b~ 16j 195~ an~ that ~u~h ~c~i~ C~tlfi~ 0a~e~ were ~o be issued in lieu of f~ao~iona~ shapes ~f Fre~ f~rred Stock pursuant to the provisions of p~ragraph (e) of Article VI of sa~d Agreement of Me~er~ wi~h W~ICh t~ di~e~to~s • wer~ f~millar. He ~i~o stated that certain specified expiration • dates referred to in the form of Serlp Certlficate which are dependent upon the date of the aotu~l filing in the Offlee of the Secretary of State of New Jersey of the A~reemenb of M~rge~ da~ed October 16, 1955, m~fht be resulted to be ~pp~oprlat~l Y changed in accordance with the pPovlslonB of s~id par~graoh ~e) of Article VI of said Agreement of Merfer. After discussion and on ~otlon duly made and se~onded~ i~ W~ unani~ousl~ F~OLVED, tha~ the text of the 8c~iR Certificate Iproof of i~-7-53) ~e~re~entioK a fractional Inte~st ~xpressed in tenths of a sha~e) in Preferred S~ock o£ thi~ Cempa~y presented to th~s meeting be and ±~ is hereby dir~o~ed to be filed with the r~cords of ~he S~re~ary and that ~he same be and it hereby is approved ~th suoh ~hanges ~he~ein ~s the P~esident~ an~ Vlce Preslde~t, the ~e~e~ o~ the A~dltor of this Co~p~y m~y d~m nece~saPy o~ ~dvls~b~ej ineludlng, wlthout l£mitation, suoh chanfe8 in the explration date~ speci- fied in ~h~ proof of ~ch Ser~p Certificate suhmlt~ed ~Headi~supplled for eonvenlent r~fer~no~
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14G . ta this meeting, as such Officer may deem necessary or advisable to conform to the provisions of paragr&ph (e) of Article VI of the Agreemeot of Me~ger between thl~ Company and American Clgarette and Cigar Company, and their respective Directors, dated October 16, 1953~ and any changes in the proof of said Scrip Certificate de- pendent upon the date of the filing of said Agreement of Merger in the Office of the Secretary of State of New Jersey; such changes and alterations in the form of said Scrip Certlfloatc, approved by any said officer, to be conclusive evidence of the approval of this Company of such Scrip Certificate,
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EXCERPTS FROM MINUTES OF" ME~TING OF BOARD 0N DIRECTORS OF T~ AMERICAN TOBACCO COMPANY ~LD DECEMBER 2~ 19~~ Resolution Authorlzlug ~calification of the Com~in Florida* The Chairman ~eported that as an incident to the merger of this Company and American Cigapette aug Cigar Com- pany it will be n~cessary for this Company to qualify to do business in the Ctate of Rlo~id~ 0~ motiD~ d~lym~de ~nd seconded, it ~as ~nanl- mously RESOLVED, that this Company be qualifled in the State of Florida and that The Corporation Company, a co~po~ation d~ly o~ganized and ~xlsting unde~ the la~s of the 3taPe of Florida, Room 508~ Consolldeted Building~ East B~y Street, City of Naeksonville 2, CountT of Du~l~ State of Flo~i~a~ be and it is hereby designated as the t~ue and l&~ful attorney of this Company lu ~nd for the State of Flo~id~ on ~hom all ~rocess ~f la~ ~g~Inst this Company may be s~ved in any action or p~oceeding a~alnst the said Company in the grate of Florida; and FDRTHER RESOLVED, that the prope~ officers of this CompanT be and the~ hereby are authorized and directed to do such act~ and things and to execute and acknowledge ~ and ~li such documents ~s they in their discretio~ ma~ con~ider neeess~rT o~ desirable or convenient ~d p~oper to give effect to the purpose and intent of th~ fo~egolng ~esol~tio~. Resolution Authorizing Assumption of any Unpaid Taxes of American Cigarette and Ciga~ Company in Indiana* The Chairman also repo~ted that in connection ~ith the merger, it will be necessary to withdraw American Ciga- rette and CIga~ Company from the States in which it is quali~ fled, including the State of I~diana. I{e maid that he had been informed that S~ction 95 of the Indiana Laws of 1933, Chapter 50, as amended~ requires the Secretary of State to withhoh the issuance of a certificate of withdrawa! of any foreign cerporatlon until he has reeelved a clearance from the Gross Income T~X Division; that in the case of a me~ge~ it is the practice to accept a certificate bY the successor corporation to the effect that it assumes the tax liabilities Df the meTged corporation; and that the administrative form used for this certificate refers~ amongst other thiugs~ to a specific resolution by the Board of Directors of the ~ueces~or c~rperati~n under which such liabilities have been assumed. THEREUPON, on motion duly made and seconded, it was ~nanim~asly RESOLVED, that this Compar~y undertake and a~ume ~d~nES supplied for convenient reference
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148 liability to the D~pa~.tment of State Revenue for the ~t~t~ of Indian~ for payment of ~ny unpaid ta~ of Amerlcan Cigarette And Cig~ 0omp~ny which have accrued ~r will ~cr~ ~der th~ G~S~ I~o~ Ta~. A~t o~ l~ o~ the St~8 of Indla~aj prior to the m~ger of said Ame~io~n Cigarette and Cigar Company with this Company. Minutes Relatln~ to Letter dated December l~ ~53 written ~o Amerlc~n b~ Saul ~ubin an~~ ~. Towlse dem~dID~ t~t Am~i~a~ b~in~ for Waste ~le~e~ly committed in Coon~ctlon with Me~ger* T~ A~slst~nt 8~cret~R ~t the r~quest of the Chai~m~n ~d to th~ meeting ~ l~tte~ d~ted D~c~mbe~ ~4, 1~5~ wrltt~n t~ the ~ompany by ~aul ~ubln, ~ep~e~entlng the will of P~lli~ Tu~be~g. dece~sedj aud Frank H. Towsley. representing Lloyd La~ and Bt~nfo~d L. He~m~u~ demand- ing th~ the Company b~ing an ~ct~on ~g~Inst th~ offlcer~ and directors of the, Comp~uy fe~ waste ~llegedly oom~itted in connection ~Ith the merger between thi~ Company ~nd American Cigarette ~d Ci~a~ Company. There we~ ~iso ~e~n~ed to ~he m~etlng the ~ile~ ~o~tal~l~ all the co~es~o~de~c~ ~elatlng to the m~R~ ~i~h ~ul ~bi~ ~nd his cllent~, J~anett~ T. Rubln and Emanuel L. T~b~rRj and ~Ith Lla~d Landau. At th~ request Qf the Chelr~n~ the Assistant Re~eta~y ~l~o ~e~d to the ~etlng the le~te~ of Dec~mbe~ ~ 1953, written by the Chei~n to S~ul Rubln. The Chairman ~tahad that he w~ informed th~ ther~ had been no me~ge~ correspondence by the Com- pany ~Ith Btanford L. He~m~nu, n~med i~ the l~tter of De~embe~ l~ ~ ode of the st~c~hold~ ~ep~se~t~d ~. Tow~l~. Tha A~i~t~nt Rec~t~ repo~ted that a~ of the ~lo~ Of bu~i~3 On Octo~e~ ~8. 19~ the ~co~d d~t~ for ~h~ determln~tlon of stockholders entitled to vot~ at the ~p~ci~l ~eetlng of ~tookh~ld~r~ of the CO~.- pany held on D~ce~ber R~ 1~5~ JeAnette T. Rubln ~nd Emanuel L. T~rb~rg~ Trust~s ~nde~ the ~lll of Philip T~b~rg~ d~c~ed, ~ the holder~ of ~e~rd of i~0 ~her~ of 0o~on Bto~k of the ~omp~ny, Lloyd Landau wa~ the holde~ of re~ord of 14~ shares of Co~mon dtoek of the ~ompa~y ~ ~t~ford L. ~e~ ~ th~ hol~r o~ ~eoord of 50 share~ of CO~O~ ~tock of the Campar~V. Afte~ con~dde~tion o~ the lette~ read to the meeting ~nd the f~le~ of co~po~de~ce Dr~s~nted ~o It~ the di~to~ ~n~ni~o~y confi~d &ll ~tlo~ heretofore taken i~ ~lyi~g to ~o~e~po~d~e fr~n ~ul Rubln~ h~ cl~t~ ~d Lloyd ~nd~ i~ ~orm~ctlo~ ~dth the m~ ~nd unanlmou~ly d~cided that i~ thei~ o~Inlon~ tha claim ~et fo~th in the lett~ of D~ember l~, 1~53 abov~ ~e- ferred to ~ whoil~ without fou~d~tlo~, t~ ~o W~o~- ~ul~ neg~ent or w~tef~l ~t~ h~d b~ ~o~Itted by tha ~ff1~r~ ~nd d±rect~rs A~ claimed and that the br~nglng of an ~ction ~ demanded by ~ald hette~ ~ould b~ entirely without ~ustifio~tion. Thay fu~the~ ~nanlmou~ly decided *HeAding supplied for convenient ~eferenc~
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149 that no such action ~h~ald be brought by the Company and that no obj~c~ would be served by further correspondence with the writ~s of the ~aid l~tt~r and that therefore no repl~ should he ~de to ~ald let~e~ ~f December 14, 1953, written jointly by Saul Rubln and ~ank H. Towsley, which had been presented to the meeting. Resolution desl *atln@ A. Gordon Findla and Divisions* The CF~IDman then r~oo~mended that considera- tion be given to appropriate titles for Messrs. A. Gordon Findlay and Charles Ganshow when the x~rger b~two~n this Company and A~,erlcan Cigarette and Cigar Company becomes effectlve, at which time both Will become inembers of the Board of this Company. He call~d attention to the fact t~t ~or many years aacb has been and ha~ had a sZandlng in th~ trade ~s a Vice President of American Cigarette and Cigar Company and suggested that without making thom office~s of the Co;a~r~¥, each b~ glve~ tb~ tit]~ "vice P~sident of ACC Division. T~EEUPON~ ca iilotlen duly Ir~de and seconded, it was unan~uou~ly RESOLVED, that, efflectlv~ with the m~rg~ be- tween this Company ~nd Amerlc~ CIga~tte and CIga~ Company, A. Gordon ~ndlay and Charles Ganshow shall ~eoh ~ve th~ tltl~ "Vi0e Preslden~ of ACC Division" subJec~ to furthe~ ~c~ion of this Board.
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150 EXCERPT FROM MINUTES OF MEETING OF BOARD OF DIRECTORS OF TEE AMERICAN TOBACCO COMPANY HELD DECEMBER 2~ I~ Eesolutlon Amending Section 1 of A~ticle I of the By-La~s to provide for 17 Directors* The Chairman stated that the A~eement of Me~se~ between this Company and American CIsa~ette and Cigar Co~pa~y, and thei~ ~espeotlve Di~e~to~, da~e~ October 16, 1953, ~ro- rides in Article II thereof that the number of the flr~t Directors of the Su~v£vius Company, i.e.~ The Amerlca~ Tobacco Company, shall be nineteenj and that thereafter the n~mbe~ of Di~e~to~s shall be th~ nu~e~ fixed from tlme to time in the By-laws of the Survlvlns Compsny. He called attention to the fa~t t~t the present By~La~s of this Company~ iu Sectiou l Of ~tlele I~ provid~ fo~ seve~tee~ D~recto~s to b~ ~nu~lly ele~ted~ and tha~ Section 2 of the seme A~tlcle p~ovide~ tha~ the number of Directors may be altered by amendment of the By-~ adopted ~t any ~egula~ o~ special m~tlng of the Board of Directors of this Company at ~hlch not less than t~o~thlrds of sll the Directors then in office a~e present. H~ stated that~ although in the opinion of counsel the ~gree- m~t of Me~ger~ o~ b~cgmins effective, by filing An th~ office of the Sec~et~ of State of ~ew Jersey, ~ould supersedo the By-L~ p~ovislon a~d Increase the ~e~ent Board of Directors of this Compauy to ulneteen, it ~ould seem appropriate to amend the p~ovislon~ of Section 1 of ~rticle I of the By-La~s to ~ov~de fo~ ~i~etee~ D~e~tors~ such am~i~t to be effective ~on the effective date of the Me~e~. Ke also stated that he ~as advised by the Secretary that there ~d teen d~l~ m~lled O~ dellve~ed ta ~ll Directors ~ no~iee that there ~ould be submitted to this meeting a proposed amend~lent of ~eotlon 1 of ~ti~le I of the B~La~s of this Company Dro- vidi~s~ upon the ~ffect~ve date Of the me~er~ for an ~nerea~ in the number of ~ts Dl~e~to~s from seventeen to nineteen. O~ motlo~ d~ly ~nde ~d seco~d~d, s~id ~t~c~ ~as approved and o~de~ed filed ~ith the minutes of thi~ me.tins. After discussion, o~ motion duly med~ and seconded~ the follo~ing ~esolutlon ~as unanimously adopted: RESOLVED~ that u~on the filing in the Office of the ~ec~et~ of ~t&te of Ee~ Je~se~ of the ~eement of Me~ge~ b~t~n this Company and American Cig~rette ~n~ Cisa~ Co~pa~, a~d thei~ ~es~ectlve Directors, dated 0ctobe~ 16, 1953~ Sectlon 1 of A~ticle I of th~ By-ia~s o~ this Oo~p~y~ ~h1~h ~ow r~ads as follows: I~ec~!o~ 11 The ~umbe~ of dlrecto~s of this Co~gan~ is fixed at Seve~teen~ ~ho shall be anu~ally elected and shall h01d off±~o until ~he next following annual m~eting of stock- ho~de~s, Or u~til their s~oeesso~ a~e d~y elected and quallf!ed.~ be and the sam~ is hereb~ amended to read as follo~s: tSeotlon i. The r~mber of di~ecto~ of this Company is fixed ~t ~i~etee~, ~ho shall i Headlngsu~plled Tom oonwenlent ~ofe~enco
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- 2 - he annually elected and shall hold office until the next follo~Tiu~ anu~al meeting of stock- holders, or until thei~ ~uccessors are duly elected and quallfied°i Th~ Chai~mau stated that said mmendment of the By-Lays, effective only when and if the ~bove-mentioned ~e~- ~eut of Me~ger ~ecomes effective, had been duly adopted by the ur~ni~ou~ vote of the Directors present ~t the meetln~.
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152 EXCERPT FROM MINUTES OF MEETING OF BOARD OF DIRIC~ORS DF T~ A~dERICAN TOBACC~ COMPANy HELD JANUARY 12~ 1954 Resolutions Ratifying the Conve~ion of $2,823,000 of 3% Notos of Cuban Tobacco Company Inc. to 0pe~ Book AccOunt I~debted- mess, Ratifying $145~000 Laau to Cuban Tobacco Company Inc. and Authorizing Ad- vances up to $4~000~000 to that C o~ The T~easurer called attention to a me~olutlon Which had been adopted by the Board of Directors cf Ame~Ica~ Ciga- re~t~ ~n~ Ciga~ Comp3ny on ~eb~ary 2C~ 19~, ~nd ~hi~ had ~itho~Ized the office~s of that company to make loans from time to ti~e to Cuban Tobacco Company Inc. not to exceed $~000~000 at any one time outsta~dlng and to be ~epr~entod by demand notes bea~ing interest at the rate of 3% pc~ ann~m. He reported that at the close of business on December 31~ 1953, American Cigarette ~nd Ci~ Company held such demand notes old,ban Tobacco Company Inc. i~ the aggregate p~InciDa! amount of $2,823,000 for advauce~mad~ by American Cigarette and Cigar Compa~T pursuant to said re~olutlon~ and that a~ a rezul~ of the m~rger with g~er!can Clga~et~ and Clga~ Co~9~n~ such notes had been delivered to the Company. He further ro- p0rted that Cuban Tobacco Company Inc. had paid the l~tercst on these notes ~rough December 31~ !953, ~nd t~t a~ of D~ccmber 31, 1953~ as had been agreed upon in discussions between the offlo~rs of Cuban Tobacco Co~pany Inc. and the officers of this Company, $2~823,000 principal amount of the imdebtedne~s re,resented by the motes had been converted into open book account indebtedness of Cuban Tobacco Company Inc. to this Company with interest at the rate of 4% per annum Pay- able quarterly On the last business d~y of ~qrth~ J~o~ Geptem- be~ and DeEember, and that ~uch notes had been nmrked "Can~nd!nd and ~onve~ted into open book account Indebtedness" and returned ~o Cuban Tobacco Company ~c, He ~d~thcr reported that on January 8, 1954, at the ~equest of ~na offlce~s of Cuban Tobacco Company Inc., a~d after consultation between himself and other officers of t~e Company, a loan had teen made on behalf of the Company to Cuban Tobacco Company Inc. in the amount of $145~000 on op~u book a~count Indebtedness of Qlhan Toba0oo Company Inc. to this Company, likewise ~ith interest at the rate of 4% per annum, payable quarterly on the last b~sl~ess day of March, June, September and December. He r~0o~mended that the Board ratify the convorsion of the $2,8a3,000 of indebtedness ~ep~esente~ by such note~ of Cuban Toba0co Cc~ip~ny Inc, i~to open book account indebtednoss, add bhe making of the loan of $1~5,C00, and that the Board also grant authority to ~he officers ~f the Company to ma~o loans to C~ban Tobacco Com~Rny X~c, on open book account indebtedness of C~ban Tobacco Company l~c, to this Company ~i~n intercst at ~he ~abe of 4% per annum, ~ayabl~ ~arte~ly, the aggregate amount of @uch loans at any one time outstanding not to exceed $~00O,00C includinE the $~823,000 of co.vetted indebtedness a~d the loan of ~145,000. He stated that it had been the practice of the Company in the past to make advances to Cuban Tobaooo Co~pany Inc. in ¢onneotlon with the acquisition of H~va~& tobacco for the Company and thmt such advances hereto~ fore or hereafte~ mad~ would not be affected by the proposed $~,O00,0dO loan limitation. THEREUFON, O~l motion d~ly made and seconded, it * HeadluE supplied fo~ convenient reference
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Resolutlot%s Determining Fair V~lue of 58.000 Shares of common Stock and 834 Shares of Preferred Stock to be Recorded on the Rooks of the Company and the A~o~nbs Per Share to be Credited to "tk~i~B~ed com- n~n stockH, ~r~issued preferred stock~I 8/%d 1~Exoess of net proceeds from capital stocks issued over par value"; Providlng that Assets off American Cigarette and Cigar Company be Recorded on Company's Rooks at the Same Values at which Carried on Books of American Cigarette and Cigar Company and Providing for Capitalization as "Brarlds~ trade-marks, patents, good-will, etc." of Excess of Fair Value of Minority Interest in A~erican Cigarette and Cigar Company over Portion of Net Worth of American Cigarette and Cltar Cor1~any Represented b~ Mdnorlb~ Inherest* Mr. g. L. Jansen, Auditor, reported that, to coh~ form with generally accepted pr~nclples of aeeo~ntlng, it is necessary to establish the fair value of the 58,g00 shares of Common Stock and B34 ~hare~ of Preferred Stock of hhi~ Company into which 7~275 shares of Common Stock and 759 ~hares of Preferred Stock of American Cigarette and Cigar Company (representing the minority Interest in ~hat co~any) Were converted in aooo~dsnoe with the te~B of the Agreement of Merger entered into on October 16, 1953J between The ~me~Ican Tobacco gompany and it~ ~Arecto~ ~nR Amerlc~ Cigarette and Cigar Company and its directors, approved by the ~tockhelders of each company on Deeembe~ 2, 1953, and December ~ 1953, respectively, and filed with the Secretary of State of New Jersey at the close of business on Decem- ber 31, 1953. Mr. Jans0n further reported that Morgan Stanley & C0., which bad been requested to submit an opinion as to the valuablon of such blocks ~f Common Stock and Preferred Stock of this Company~ had given their opinion tha~ the fair value, bases on the market at December 31, 1953, would be $57.50 per share for the Common Stock or $3,346,500 for the 58,200 share~ thereof, and $125 per share for the Preferred Stock or $10~250 for the 8~ shares thereof, a total of $3,~50,750. then presented to the meeting a copy of the opinion letter of Morgan Stanley e Co, dated January 5, 1954. Mr~ Jansen recommended to the board that the 58,200 ~hares of Co..men Stock Of this Company resultlr~ f~om the conversion of American Cigarette and Cigar Company Common Stock be recorded on the books of the Company at a value of $57.50 per share~ $25 pe~' share to be credited to "unissued common stock" and$32.50 per share to be credited to "Excess of net proceeds from caplt~l stocks issued over par value", ~nd that the 834 ~hares of Preferred Stock of this Col%Party ~esultlng from the conversion of American Cigarett~ and Cigar Sompafly F referred St~k be recorded on the books of the Com- paDy at a value of $125 per share, $1OO per share to be credited to ~'unlssued prefie~red stock~ and $25 per share to be credited to "Excess of net proceeds from capital stocks Issued over par" value," He further reco;~lended that the assets of Amerloan Cig~ett~ and Ciga~ Company be ~ecorded *Heading supplied for oonvenient reference
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EXCERPT FROM MINUTE~ OF MEETING 0F BOARD oV DIRECTORS OF T~ AMERICKN TOBACCO COMPANY HELD FEBRUARy 16~ l q~4 Besolution with Respect to Write- off of Intangibles Acquired f~om Americ~n Cigarette and Cigar Company on the gorger* Mr. d, E, Coon ~eferred to the item of l~rands, trade-~arks# patents, good willj etc.", in the s/hoist of $2~198~146 15, representing the excess of the fair value, as determined by this Board at its meeting held January 26, 195~, of the 58,200 ~hares of Common Stock and 8BI~ shares of Pre- ferred Stock of this Company resulting f~om the conversion of the shares of Preferred and Co,on Stock of American Cigarette and Cigar Company which had represented the minority interest in American cigarette and Cigam Company ove~ the portion of ~he net worth of American Cigarette and Cigar Company which had been represented by the outstanding minority interest at the time of the ~erger. M~. Coon recommended that the Company continue to carry intangibles on it~ books at a nominal valu~ of $i and that action be taken to write off the intangible assets resulting from the merger of American Cigarette and cigar Company into The American Tobacco Company at December 31, 1953~ by monthly charges to income during 19511. Mr. Coon called to the attention of the Board that in the New York Stock ExoD~nge listing application covering the additional shares resulting f~o~ the merger with American Cigarette and Cigar ComPany it had been indicated that such I~Brands, t~ade-marks, ~atents, good will, etc." would be treated in accordance with generally accepted accounting principles. The charge to la- come~ he salt would be in accordance ~ith such practices, TKEREUPON~ on motion duly m~de an(l seconded~ it was uF~nim~sly RESOLVED: That, as recommended by Mr. J. R. Coon, the brands and other intangibles comprising the l~em of ~Brands, trade-n~mks, patents, good will~ etc.~', in the amount of $2~198~1~6.15~ representing the excess of the fair value, as determined by this Board at its meeting held January 26, 1954, of the 58~200 shares of Co--on Stock and 834 shares of Preferred Stock of this Company resulting from the conversion of the ~hares of Prefe~ed and Common Stock of American Cigarette and Cigar Company~ ~ioh had rep~,esenSed the minority interest in American Cigarette and Cigar Company over the portion of the net worth of American Cigarette and Cigar Company vhlch had been represented by the out~tandlng minority interest at the time of the merger b~ written off by monthly charges to income duping the year 195~ whereupon intangibles shall continue to be carried on the Company,s books at a nominal value of Sh * Heading supplied for convenient reference
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EXCERPT FROM MINUTES OF fETING OF BOARD OF DIRECTORS OF CUBAN TOBACCO COMPANY INC. ~LD JANUARY 20~ i~54 Besolutlons Ratifying the Conversion of 62,825,000 of 3% Notes of Cuban Tobacco Company Inc. to Open Book Account Indebtedness, Hatifying ~I~5j000 lo~n from The American Tobacco Comporty and Authorizing Borrowings up bo $4,000,000 from The American Tobacco company* The Chairman called attention to a resol~blan which had been adopted by the Boa2d of Directors of this Company on Februauy 20, 1952, and which had authorized the officers of this Company to borrow money on behalf of this Company from time to time f~om American Cigarette and Cigar Company, not to exceed $4±OOO,O00, at any o~e time outstai~llng and to he represented by demand notes bear~%g interest at the rate of 3% per annum. He eeported tD~b at the close of business on December 31, 1953, American Cigarette and Cigar Company held ~uch demand notes Of this Comp~n~ in the &~reg~te principal amount of $2,823,OOO. for advances made by Ayz~ioan Cigarette and Cigar CompanN pursuant to said resolution, and that as a res,lt of the I~rger of American Cigarette and Cigar Company into The American Tobacco Company such notes had been de- livered to The American Tobacco Company. He ftU, bher reported that this Company had paid the interest on these notes through December 31, 1953~ and that as of December 31, 1953, as had been agreed upon in discussions between the officers of this Company and the officers of T~ American Tobacco Company, $2~823,000. principal amount of the indebtedness represented by the notes had been converted into open book account in- debtedness of this Company to The American Tobacco Company with interest at the mate of 4% per aran:~ payable quarterly 0~ the last business daN of Marchj June, September and Decem- ber~ and that such notes had been marked "Cancelled and con- verted into open boo~ account indebtedness" and returned to this Company. He further reported that on January 8, 195g; at the request of the office~s of this Company and after con~ult~tlon between them ~nd the ~ffleers of The Ameri~a~l Tobacco Company this Compan~ had borrowed from The Am~riaan Tobacco Company the a~nount off $I~5,000, on open book account indebtedness of this Company bo The American Tobacco Company, llkewise with interest at the rate of 4% per annum payable quarterly on the l~st business day of March, June~ September and December. He recommended that the Board ratify the con- version of the 62,823,000. of ir~ebtedness represented by such notes of this Compan~v into open book account indebtedness, and the borrowing of the$145,000., and that the Board also grant authority to the officers of this Company to borrow money on behalf of this Company from Th~ American Tobacco Company on open book account Indebgedness of this Company to The American Tobacco Company with interest at the rate of ~% pe~ ar~i~m, payable quarte~gy, the aggregate amount of such borrowings at any one time outstanding not to exceed $4,000,O00, l~cludlng the $2,893~000. of converted Indebtedness and the loan of ~i~5,000. Ke stated that it bad been the practice of The A~rican Tobacco Company in the past to make advance~ to this Company in connection with the acquisition of Havana tobacco for The American Tobacco Company, ~nd that such advanses heretofore or hereafter would not be affected by the proposed $~,000~000. loan limitation. *Heading supplied for convenient reference
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- 2 - THEEEUPON, on motion duly made and seconded, it was unanimously RESOLVED that the ac~1on~ of ~he officers of this Company in oonne~tion with the eonversion to open book aeoount indebtedness of thls 0ompany to The American Tobacco Company of $2,823,000. principal amount ef In- debtedneas which had been ~present~d by demand notes of this Company ~Iven for borrowln~s of this Company from ~Jmerlcan Cigarette and Ciga~ Company pursuant bo ~he ~esolutlon of ~he Board of Directors of this Oompany adoDted February 20, 1952 ~hlch had authorlzed ~uch borrowlr~s not to exceed ~,000~O00. ~t any o~e ti~ o~tstandlng, and in bo~owlng from The AmerloRn Tob~coo Company on January 8, 195~ the amount of $i~5,000. on open book ~oun~ ~ndebtedne~ of this Company ~o Th~ .4m~rlcan ~obac~o Company~ all such open book acoou~ ~Ddebtedness being due on de~dand be&rlug interest at the rate of ~% per annum, pa~able quarterly on the last business da~ of ~ch, June, September and Decem- ber, be and ~hey hereby are In all ~espec~s fully ~&tlfled, &pDra~ed and gonfi~med~ ~nd furthe~ RESOLED that the officer~ of this Company be and they h@reby are ~utho~Ized to borrow money on behalf of this Company f~om time to time from The American ~obaoco Company on open book a~count indebtedness of tills Company to The ~merican Tobacco Company~ to be dtte on demand ~nd to bea~ Interest at the ~a~e of 4% per annum p~y~ble qus~te~ly on the last bus~%ess day'of Maroh~ June, September and December, provided that the aggregate amoun~ of such borrowings outstanding at any one time~ including the $2,823,000. of converted Ind~bted~ hess and the borrowing of $11~5,O00~ ratified by the fore- galng resolution, ~hall no~ exceed $4~000,000; further provided that requests for ~dv~ces sh~ll be submitted in writing signed by two offioe~s of thi~ Company and ~b~ll be &ddressed to the Treasurer of The Americgn Tobacco Company~ and further provided th&b at the time of any bcrrowir~ of money au~horlzed b~reby ~hls Company sh~ll furnish evidence sati~faotory to the offioers of The ~r~¢an ~bacco Comgany ~hat t~Is Company ~as not borrowed any money o~ incurred an~ bank or other ~ndebted- ~ess subBeque~$ $o Janua. y- l, 195~, othe~ than loans ~de to this Company by The American Tobacco Company and cur- rent indebtedness incurred ~n the ordlna~y cou~se of huslness. 158
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AMERICAN CIGARETTE AND CIGAR COMPANY Incorporated One Eleven Fifth Avenue, New ¥o~k 3, N.Y. October 6, 1953 Mr. George E. Bolivar, Secretary American Cigarette ~nd Cigar Company ill Fifth Avenue New York 3, Nev York Deaf Mr, Bolivar: i hereby call a Special Meeting of the Board of Directors 05' American Cigarette and Cigar Company to be held at the office of the Company at iIi Fifth Avenue, New York 3, New York, on Friday, October 16, 1953, at 2:30 olclock P.M., for the purposes set forth in the attached form of Notice of Special Meeting. Will you kindly deliver or mall to each Dire6tor of the Company notice of this Spe- cial Meeting in the attached form. The call of this Speoisl Meeting is made pursuant to the provisions of Section 7 of Article II of the By-L~ws of the Company. Sincerely, Paul M. Hahn PaUl M, Hahn President
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AP¢tERICAN CIGAFdETTE AND CIGAR COfAPANY ON~ ELE'V~N FI~-T~ AV~NIJ~,NK~ yORK ~b~y SAL~S AO~T Notice of Special Meeting of Directors @ New York, N. Y. October 7, 1953 A Special Meeting, pursuant to call of the Pres- ident, of the Board of Directors of American Cigarette and Cigar Company will be held on the 16th day of October, 1953, at 2:50 o'clock P.M. (Eastern Standard Time) at ill Fifth Avenue, New York 3, New York, for the following purposes: (i) To consider and take action upon a proposal to amend the By-Laws of the Company: (a) By striking out the last sentence of Sec- tion 3 of Article I thereof, which reads as follows: "No share or shares of stock which shall have been transferred on the books of the Company within twenty days next preceding any stockholders' meeting shall be voted on at such meeting." and substituting in place thereof the following:' '~The Board of Directors shall have power to close the stock transfer books for a period not exceeding fifty days, preceding the date of any meeting of the stockholders or at other times and for other purposes; or in lleu Of closing the transfer books, the Board of Directors may fix in advance a date, not exceeding fifty days preceding the date of any meeting of stock- holders, or the date for the payment of any dividend,
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1G1 -2 - October 7, 1953 or the date for the allotment of rights, or the date when azy change or conversion or exchange of capital stock shall go into effect, as a record date for the deter~inatlon of the stockholders entitled to notice of and to vote at any such m~eting, or entitled to receive payment of any such dividend or any such allotment of rights, or to exercise the rights in respect to any such change, conversion or exchange of capital stock; and in such case stockholders of record on the date so fixed shall be exclusively entitled to such notice of and vote at such meeting or at any adjournment thereof, or to receive payment of such dividend, or allotment of rights, or exercise such rights, as the case may be, and notwithstanding any transfer of any stock on the books of this Com- pany after any such record date fixed as aforesaid." (b) By striking out the last sentence of Sec- tion 7 of Article I thereof, which reads as follows: "At such meetings of the stockholders at which the Preferred stockholders may vote, each stockholder shall be entitled to cast one vote for each share of Preferred stock to which he is entitled as recorded on the books of the corporation as held by him for at least twenty days before the meeting." ~ud substituti1%g in place thereof the following: "At such meetings of the stockholders at which the Preferred stockholders may vote, each Preferred stockholder shall be entitled to cast one vote for each chafe of Preferred Stock held by him.~ (~) TO consider and take action with respect to the ~pproval and execution of a proposed Agreement of Merger h-~ween The American Tobacco Company and its directors and this Company and its directors. (3) To consider and take action with respect to the Calling of a Special Meeting of the Preferred and Common
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-3 - October 7, 1953 $~mckholders of the Company to vote upon the adoption or ~ection of such Agreement of Merger. (4) To fix a record date for the determination of the holders of the preferred and Common Stock of the Com- pany entitled to notice of and to vote at said Special ~etlng of Stockholders. (5) To consider and take action wlth respect to the ~pointment of Inspectors of the Vote, the appointment of a proxy Committee, and the determination Of the Order of ~slness for said Speolal Meeting of Stockholders, (6) To consider Knd take action with respect to the approval of the form of Proxy, Notloe of Special Meeting of Stockholders a[%d proposed P~esident~s Letter to stock- holders of the Company and any other paper or .material to be sent to stockholders with the notice of the meeting. (7) To authorize the filing of such applications and other material and such other acts and pa~ents as may be requiredin connectlon with said merger under the Blue Sky and Secu~itles laws, corporation laws, tax le~s and other applleabl~ laws of the several states. (8) To authorize the execution and filing of such state~ents~ i~strume~ts, certificates and such other docu- ments and papers and the payment of such fees and expenses a3 may be required preliminary to, in connection with, or Incident to the consummation of such merger.
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-4- 163 October 7, 1953 (9) To transact ~uch other business as may be Bupple- mental or incidental to the foregoing or as may properly come before the meeting. GEORGE g. BOLIVAR Secretary.
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hiN~'TEH OF A SPECIAL MEETING OF THE BOARD OF DIEECT0hS 0F A~RICAN CIGARETTE AN~D CTGA0 COMPANY HELD OCTOBER 16. 1953. 164 A $peclal Meeting of the Board of Directors of AMERICAN CIGARETTE AND OIGAR COMP.~YW~S held on Friday, the 16th d&y of 0etohe~, 1953, at ~:30 ololo~k P.M, (H~,stern Standard Time), at Iii Fifth Avenue, N~, York 3, N. Y. The following Direotors were present: hess~s. Paul h. hahn, President Alfred F, Bowden John A. Crone A. Go2~on Findlay Preston L. Fo~lem Ch~les Gansho~ Alan C. Gar~att AlbertGold Edmund ~. E~rvey F~7 h. ~ilys,~d John G. L~ng ~Idney Schou Constltutln~ all of the Directors and a quo~im for the ineetlng. There were al~o present M~. ~ill~ h. P~ke ~nd M?~ cyril F. Hetsko of Ch~dbou~ne~ P~r~e, ~Iteside. ~olff 8nd h~ophy, ~nd M~, William E~e of haskins &rid Sells. h~, Paul M. ~hn, President of the CompHny, acted as Ohalm~n of the Meeting, ~nd ~ G~orge E. Bolivar, Seo~et~ry of the CoI~pany acted as Sec~eta~y of the Meeting ~d ~eoorded the minutes thereof. The Beeret~ry stated that the meeting bed been salled by the P~esldent pursuant to Section ? of Article If of the By- Lays and presented the w~itt~n call fo~ the meeting d~ted October 6~ 1953, signed by the President. He also p~esented a copy of the notice of this meeting ~hIch Me ~eported h~d been delivered o~ mailed to each ~irsote~ of thi~ Company on 0etc- her 7~ ~53, He s%Ibmitted ~oof by &ffidavit of such dellve~y o~ ~ilizg, &nd on motion d~ly m&de, seconded a~d unanimously adopted~ the call of this meetlng, notice of meeting a~d affi- davit of m~illng were approved and ordeped to be filed ~ith the ~eco~d~ of this meetinz. Amendment of B?--Lews of the Companx The Chairm~n stated that the first ~sin~ss to c~e before the meeting ~s the consideration of g pPopos~l to ~mend the By-Laws of this Company, as ~et forth in p~ehr~ph (I) of the notice of this me~ting. He stated that the puppose of the proposed amendment was to peEnlt the ~oaPd of Directors to fix a record date in adv~oe for a stockholders~ me,finE and fo~ othe~ purposes, ~nd to make another change in the By- Laws consistent therewith. He further stated thmt unde~ the provisions of A~tiele XIII of the By-La~s of this Compan~ the hoard of Directors, by a ~ajorlty vote of all the Directors, had the ~ower to amend the By-Laws of the CompHny. * Beading supplied fo~ conven~
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iCY~ After discussion, on motion duly m~de ai~d Seconded, the following resolutlon ~s unanimously adopted: R~S~LVED that the BT-la~ of this Oompany be and they a~ he~hy amen~ad: (a) By st~Ikln~ out the last sentence of Section 3 of Article I thereof, which ~eads as follo~s: "No share o~ shares of sto~k whi0h shall have beef transfer~ed on the books of the Company within twenty days next preceding any stockholders, meeting ~hall be voted at such meeting." and Substituting i~ place thereof the following: ~The Board of Dl~ectors shall have po~e~ to close the stock b~ansfe~ bOOks fo~ a period not exceedl~g fifty d~y~, preoedln~ the date of R~ meetlng of the stockholders or at othe~ tlm~s a~d for othe~ purposes~ or in lieu of oloslug the transfer books, the Board of Directors may fix i~ advance a d~te, not exceedl~g fifty Say~ pre0edlng the date of any me~t~g of ~toeWholder~, or the d~te ~m~ tb~ ~a~$nt of any dividend, or the date fo~ the allotment of righbs~ o~ the date ~h~n ~y ~h~ge Or co~ve~sion o~ exoha~e of csplt~l shock shall gO into effect, es e ~ecord date fo~ the det~ml~atlon of the stock- holders e~tltled to ~tiee of ~[id to ~ote at ~ny s~ch meeting, o~ e~tltled to receive pa~ent of i~y Such dividend OD ~ny such allotment Of ~Ighfis, OD to exe~clse the ~Ights in respect to any such change, co~ve~slon 0~ exchange of capital stock; and in such c~e @to~khold~rs ~f ~co~d on t~ d~Se ~o ~Ixe6 shall be exclusively entitled to ~ch notie~ of add vote ~t such me@ting o~ ~t a~y adjournment thereof, o~ to ~¢celve pa~ent of Blloh dividend, o~ allotm~nt o~ ~ights, o~ exe~clse such rights, as the ease may be, ~nd not~ithstK~ddng &n~ t~fe~ of ~ny ~tock on %he books of thi~ Company after any such record date fixed ~s ~fo~es~id." (b) By st~iMlng out the last sentence of Section of ~ticle k thereof, ~hieh ~ead~ a~ follo~s: '~t SUCh meetings of the stockholders at %~hlch the Preferred stockholders ~y vote~ e~ch stockholde~ shall he eutitl~d to cast one vote fo~ each share of ~efe~me~ stock So ~lhi~h he is entitled ~ ~e- co~ded On the books of the corpo~atlen as held b~ him for at least twenty days before the meeting. and subs%itutlr~g in ;lace theDeof the following: "At such meetings of the stockholders at ~hlch the Prefe~Ded stockholders ~&y vote~ e&ch Pref~pped stockholde~ shall be entitled to cast cn~ vote for each sh~rs @f ~eferred Stoc~ held b7 him." The Chai~a~ ststed that the above-mentioned ~mend- mends to the By-L~ws Of this Company h~d been duly ~dopted by the vote of more ~han a majority of all the Dl~eotors of the Company and weme now In effect. - 2 -
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IgG Fixing of Conversion Rates, Approval Of Proposed Agreement of Merger of American Cigarette and Ciga~ Company into The American Tobacco Company, Calling of Special Meetin~ of Preferred and C~mo~ ~tockholders, ~nd Fixing Of Record Dat~ for Preferred ~nd Comtnon Stockholders Entitled to Notice of and to Vote ~t said Meetin~ * The Ch~irm~n stated that Zhe next bl~slness to come before thi~ special meeting Of the BO~d, ~s stated In the notice Of this meeting. ~as to co,sider and act upon ~ proposed me~ger of this Compsny into The American Tobacco Cmmpany, whereby The American Tobacco Company would be the co~poretion surviving such merger (The ~erlc~ Tobacco Compan~ ~s such survlvi~g co~9oration being he~ei~Pter sometimes c~lled the "Su~vivdn~ Company"). Ke stated that the mer~er of this Company into The Amerlean Tobacco Company as the Surviving Company ~ be- lieved advantageous fo~ ~nd in the best interests of both cor~ potations and their respective stockholders; that certain ~e~sons IL~dlcating the desirability of such merger were set forth in the p~oposed Froxy Statement of The American Tobacco Comapny and the proposed letter of the President of this Com- pany to its stockholders. He stated that on October 2, 1953~ there was delive?ed o~ mailed to each Director of this Company copy of the 9-50-53 proof of t~e P~oxy Statement of the Amer- ican Tobacco Company, including a draft of the p~oDosed Agree- ment of Merger as Exhibit 1 thereto, no conversion rates being specified in such exhibit with ~espeet to the publicly held do~on ~nd PrefecTed Stock of this Company. The ~%airm~n stated that it would be necesssry to call a special meeting of stockholders of this Company to vote on the adoption or rejection of the p~oposed Agreement of M~rger - if such Agreement is entered into by the Directors of thl~ Company and by the Directors of The Amerlc~n Tobacco Onmoany - ~d that it wo~ld ~iso be necessary to fix ~ record date for the dete~mlc~ien of stockholders of this Company entitled to notice of ~nd to vote ~t such special meeting of stockholder~, He stated that the Agreement of Merger I~ been approved by the Board of Directors o5' The American Tobacco Company at its meeting held earlier this day. He explained that counsel for this Company had advised that applicable New Jersey law re- Sulted that the Agreement of Me~ger be adopted by the vote of the holders of at least two-thi~ds of the outstanding capital StOCk of this Company, i.e., Preferred and C~mon, entitled to vote, ~nd also by the vote of the holders of ~t least t~o-thlrds of the outstanding caplt&l stock of The American Tobacco Com- pany, i~e,, P~efe~red and Co~aon, entitled to vote. The~e ~ere then p~esented to e~ch of the Dl~ectors ~t this meeting p~oof~ of 10-14-53 of the Proxy Statement of" The American Tobacco Company ~i~ exhibits, Exhibit i being a 0opy of the proposed Agreement of Merge~ ~itheut specification of the conversion ~ates with respect to the publicly h~id Com- mon and Preferred Stocks of this Company, a copy of the p~oof of 10-15-53 of the proposed Agreement o~ Merger as approved by the Bo~rd of Dlreeto~s of The American Tobacco Company at its meeting held earlier this day with such conversion r~tes #llle~l in in inE as approved by the Board of Directors of The American Tobacco Company at such meeting, togethe~ with Notice of ~ pmopoee~ Special Meeting of Stockholders of this Company ~nd proof of lO-15-53of p~oposed Yreeddent's Letter of this * Heading supplied for 6onvenlent ~efe~en~
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If~8 (b) Each share of Preferred ~toek of American Cig&re%te and Cigar Corap~ny, to be sonY@tied, Shall be ~on~e~ted into one and one-tenth <I i/IO) ~hare~ of Preferred Stoc~ of The A~erloan Tobacco Company. The Ch~irma~ then st&ted that it ~ss now in order to Oonsidem a~d t~ke ~stlon upon the A~ree~ent of Merger (in ol~ing the mates of conversion adopted an@ approved by the reaoluti0n J~st adopted); the calling of a Speodal g£o~k- holdersI Meetlns. ere. After disousslo~, o~ motion duly made and se0onded~ t~e following resol~tlons were unanimously adopted~ W}IRR~Ag, Th~ Amerlczn Tobacco Compa~, a New Jersey Oo~por~tlon, is the holde~ of a ~jorlty Of the o~tst~nd- inZ shames of oapital stook Of this Company, ~ N~ Jersey corporatlon~ end both 9o~oratlons ar~ o~ganlzed for the purpose of car~yin~ o~ busi~[ess of the sa~e o~ ~ slmila~ ~t~re~ and in orde~ be ellmlnete many duplications in ope~atlons of ~h~ t~o Co~poI~tlons ~s sep~r~t~ co~po~a- tiers ~d to m~ke possible other economies i~ ope~atlons, a~ ~ell as for the general ~elfa2e of this Co.pony and The Ame~i0a~ Tobacco C~npeuy ~d the welfare Of their res~eotlve stGakholde~s, the Bo~d of Pi~eetoms of this Company eo~¢l~des that, ~nde~ present cIpctmlst&nc~s and co~dltiO~s, it would be advantageous for Both corpor~- $10~s t~t thls Co~p~n~ b~ msrg&~ into ~he Amorloan Tobacco Company in aoco~dance with, in the n~ner ~nd on the te~ms p~ovldc~ i~ the fopm of th~ pro?0se~ AgPeeme~it of Me~g~r submitted to this me~tlns~ ~ copy of ~hleh. marked for Id~utlfi~tlon is diracted to he filed ~ith the 2eoords of this meeting: NOW, T}~REFORE, be it R~0LVED, that the Boa~ o~ Di~ec~s of thi~ Co~- pan~ do~s h~eby approve the proposed A~ement of ~erger I~ th~ form ~uhmltted to thi~ me~ting~ p~ovldln~ ~or the me~ger of this Company i~to The American Tobacco Compaay p~SDa~t to bhe l~s of the Stat~ Of ~ew ~ersey, ~nd p~e- scr±b~n~ the ter~s ~nd ~n~itlons of the me~g~r ~nd the method of ~smryiug it into effect, the name of the ~u~- riving Co~p&ny~ the ~&~he~ ~ames ~nd po~t-ofYIce &d- dr~s~ of the first Pi~esto~s and oPfi~s of th~ ~- vlvi~ ~o~pa~j the ~%l~b~r aI~ ~ v~l~e of the sh~res of capital steak of the $ur~i~in~ Company, and th~ man~ of converti~ the sh~res of oapi~l stock of this Com~nany into shares of c~pital stock of th~ ~u~vlvlug Co~pany~ and fu~the~ REVOLTS, that ~he Dire~tor~ of this Oompany be aed they hereby ~re authorized to eat0~ into said proposed Agreement o~ Me~e~ ~r~de~ bh~ ao~porate se~l Of this Co~- p~ ~Ith the Directors of ~e A~eriea~ Tob~0o Com~y, ~nd that the President o~ anF Vice P~sld~t End the Secretary o~ any Asslsts~ to,reVery of this ~o~P~ny be and the~ hereby ~re ~uth0?ized a~d directed to execute s~Id A~reemeat of M~e~ on b~h~lf of thi~ Company under the corporate ~I o~ this Comp~, ~ll ~s ~ovid~d by and in acco~daaoe wi~h the applicable la~ of the State -5- - .L
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lg9 of New Jerssy; ~nd further ~BOLZTED, that after said p~opo~d Agreement of Merger ha~ been jointly entered into by the Directors of thl~ Oom~y and the ~ir~ctor~ of The A~erle~n To~ bated Company u~der the respective corporate aeals of the t~o ao~po~atlon~ ~nd duly executed by the p~ope~ officars of both corpor~tlons, then said p~oposed A~rce- ment of Merger shall be ~uhmltted for action thereon by the s~ockholderB, Preferred ~nd Oo~Imon, of this Co~p~y at a ~p~clal Meeting of Frefer~ed and Common gtockholder~ of this Company ~hloh is hereby o~lled for the purvo~e of c0nslderlng the adoption or rejection thereof; said meettmg to be held ~t ~o. i17 ~In Street, ~lemlngtom, New J~rsey, at 1:30 otclock in the afternoon (E~tern Star~l~l~d Time) on F~id~y, December ~, 1953, and that the close of business on Mednesd&y, October ~8~ 1953, shall be ~nd hereby is fixed as the d~te fo~ the deter- mlnation of the stockholders of ~ecord of this Company entitled to notice of ~nd to vote ~t such meeting; ~n4 further EESOL%ZED~ th&t in the event that the holders of two- thl~@~ of the outstanding ceplt~l stock of this Corny eutltled to vote s1~zll vote in f~vo~ of the adoption o~ such Agreement of Mcrgc~ ~t su0h gpeoi~l Moetlng of Stock- holders, o~ ~t ~uy~djournment or adjou~me~t~ the~eof~ the 8~cret~ry of this Company be ~nd he hereby is authorized and directed to ~ake and execute ~nder the corporate ~e~l of this Company a certificate upon such AE4~,eement of the fact of such adoption of the Agreement of Merger by the stockholders of this Company; ~nd further REBOLVED~ that in the event that the holders of two- thirds of the outstanding capit~l stock of The American Tobacco Coat, any entitled to ~ote ~h~ll ~i~o vot~ in fa~o~ of the adoption of such Agr~em~ent of Merger a~ ~ Special ~eeting of Stockholders of The American Tobacco Company held for auoh p~pose, a~d if the Secretary of The American Tobacco Company shall also m~ke ~nd exe0uto under the corporate seal of that corporation a certificate upon such Agreement of the f~ct of such adoption of the Agree- merit of Merger by the ~tockholde~s of The American Tobacco Company, then the gecret~ry o~ ~ny Assistant Secretary of this Company be and he hereby is sutho~Ized ~n~ directed to file s~Id Agreement of Merger, so adopted and certified, in th~ dffic~ OT th~ g~c~t~y of gt~te ~f M~ I~T~ey, ~t such $1me ~s m~y be de~ermined by subsequoat ~ctlon of this Boa~d. A p2ointment of In~>ectors of the Vote * The Chaim~an stated that the next Saslness to come befor~ the meeting w~s to appoint Inspectors of the Vote to ~t 8t the Special M~etlng of gtockholde~ o~ this Company, and at any a~Jou~r~nt or adjournn~ents thereof. the fello~Ing resolution was unan~mou@lyedopted: RESOLVED, that William Eyre ~nd Edward M. M. Monek bo and they hereby ~re ~ppolntod Inspectors of t~c Vote, Eeading supplied for convenient reference
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170 %o serve &rid act ~t s~id Special Meeting of Stoekholder~ and at any ~djournment or adjou~nm~nt~ thereof. Apoointment of Proxy Committee * The Chairman stated that the next business to come before the meeting was to app0int a Committee for the solicita- tion ~ collection of p~oxies and to act ~ proxies for stock- holders of the Company at the Speclal Me~tlng of Stockholdcrs on Dccem/De~ 4~ 1953, and at any and all adjournments thereof. After dlao~ssio~, o~ motlo~ duly~%~de ~lld seconded, the following ~esolutlon was unanimously adopted: EESOL~ that MessrB. Paul M. Mahn Ch~rl~s G~sho~ and John G. ~ng or ~ m~jority of them (o~ if only one, then t]~t one ~ith full power of substitution, be ~nd they hereby are 8ppointed ~ committee for the solicita- tion and oolle~tion of proxies for the ~pecial Meeting of Stockholders of the Company to be held on December ~, 1953~ ar~ to act ~s proxies for stockholders at s~id meeting. Approval of Notice of Special M~eting of 8tockholders~ e%e~ * The Chairman stated that the next business to come before the meeting w~s to oonside~ and a~p~ove the Notlce of 3peclal Meeting of Stockholders, fo~ of P~oxy and P~e~ident,s ~tte~ to $tockholde~s of this Company. After discussion, o~ motlo~ d~ly ~de ~nd seooy~ded, the follo~Ing res~lutlon ~s unanlmou~!y adopted: RE~OLV~D~ that the Notloe of Meotlng, giving the tlme~ place and purpose of the Special Meeting of Stock- holders to he held December 4, 1953~ including the pro- posal to tak~ action upon the Agreement of Merger, the fo~ Of ~oxy, and P~esldo~tls Letter to gtockhold~s of this Co~pa~y~ all as s~bmltted to this meeting, be a~d the sam~ are hereby ~pp~oved, subject to such ¢]~nges as may be de~med neoQssapy or desirable by the ~pp~op~late officers &~d 0ou~sel of the dowdily~ for ~se in conDectlon with s~id ~pecial Meeting, ~nd the proper offloem~ of this Company ~e hereby ~uthorized and di~cted to c~use be he mailed to each P~ofemmed and Common Stockholdem of the Com~&n~ entitled to notice of such Special Meetln~, a Nobloe of such Special Meeting of Stockholders, Tmoxy 8nd ~resident's Letter, together ~ith ~ copy of the Proxy ~t~tement of The American Tobacco Company to It~ o~n stock- holders includlzg a copy of the Agreement of Merge? be- tween this Company and The American Tobacco Company ~ and ~uch other p~pers in such fo~m as the prope~ officers of this Co~pany m~y approve. Adoption of O~de~ of Business fop ~peci~l g~gokholde~1 M~etlq~ * The Chairman stated that the Directors might deem it desl~able to Kdopt an omde~ of business for the proposed Speelal Meetin~ of 5tockholders of this Compsny Afte~ d~scusalon by the Diroctors of a proposed order * Headings s~pplied for oon~enlent reference - 7 -
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171 Of business, the following resolution was u~animohsly adoptcd: ~ESOL~, that the order ef b~slness f~ ~e ~peci~l StockholdersI Meeting of this Company ~lled to be held on December 4, 1953, ~h~ll be as follow~: Calling meeting to orde~ and preliminary form~%Idties. Deter~i~atlon of quorum. (3) Request that stockholders p~*sent, ~ho wi~h to act i~ pe~so~ give thei~ na~es to th~ Secretary of th~ ComPany and that persons p~esent Mho hold proxies f~o~ stockholders turn the~ ov~r to the Sc0~et~ry. (4) S~earlng in of Inspectors of the Vote. (5) Consideration of a0ti~n with ~espect to sdoptlon ¢~ rejectio~ of Agreement of Me~ge~, distrlgu- tion of Ballots and collection by Inspectors of the Vote. (6) R~port of the gecretary aud Inspectors of the Vote. (7) Announcement by Cbalrman as to result of vote on A~e~mcn% of Me~er. (8) T2ansactlon of such othe~ business as m~y properly come Before the meeting. 19) Adjournment, Subject, however, to such cP~nges therein ~s the ppesiding officer at said meeting o~ any 6d$ourn~ent o~ adjo~r~ents themeof may detemmine to be advisable, Authori~atlon ~Ith ReSpect to Blue Sk~ The Chairman stated that it might become necessary to gu~llfy o~ ~egdsteT the 8~dihio[~l ahar~s of Oonu~on and P~e- ferred Stock of The American Tohacco Company IssU~ble in connec- tion with the ~e~ge~ uDde~ the glum Sky Laws or Securities Laws Of various Statcs~ ~nd that it would be desirable t~t a gener~l authorization be given to the offlceys of th~ Company to do ~b~t ~ight becom~ necessary in this respect on be~,if of this Company, though specific m~solutions mi~t he required in con- nection ~Ith partlcul~r States ~s the reBult Of f~the~ investl- gatlon. After dlsc~sslon, on motlo~ duly m~de &~d seconded, the following ~esolutions were unanimously ~dopteg: RESOL~, that the proper offloe~ of this Company Be and they a~e hePeby 5uthorlzed, in the n~e a~4 on be- I~19 of this Company, to take any and all action ~hIch they ~ey deem necessary and advlssble to qu~llfy or tog- later the additional shares of Ppefe~r~d and Common Stock of The American Tobacco Company, issu~ble pul, suant to the tcr~s Of sald Agreement of Me~gep between thls C~mpany * He~dfng suppl~eg for conv~~
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1'7,~ ~r~the Amerloan Tobacco Company, urger the Blue Sky L~wst~~ o~ ~e0urltles La~ Of ~uy of the State8 of the UnitEd star \ and/or to qualify and register the Scrip Certificates issuable or to be issued for such preferred and Common Stock to holders of th~ Preferred and Co~uon Stock of thisil Company, and in bonncction therewith to execute, acknowl- edge, verlfy~ delive~ file and publish all such applica- tions~ reports, issuer's covenants, resolutions, and other papers and documents as may be required under such labia, and to take any and all further action which they may dee necessary or advisable in order to maintain such reglstra- rico for as long as they may deem to be in the best in- terests of this Company; and further RESOLVED~ that the proper officers of this Company be and they hereby are authorizc~ and empowered on behalf of this Compauy to make such payments of fees and expenses and to do such other acts and thlngs as may be doomed by them necessary and advisable in connection with the carry- lug out of. any of the matters or purposes set forth in the foregoing resolutions. Authorization of Ex~cutlon of Other Docu- ments and Pap22s in Connection with MergerI * The Chalrman stated that in coancctlon with the merger -- although a complete check had not yet been made--it might be- come necessary for this Company to execute a~ dollvor v~rious dsc~nts and pspcrs with respect to the t~ansfe~ to Th~ American Tobacco Company of !e~ses on the re~ectlv~ propertlea of this Company acquired on the merger, or in connection with brands, trades,ks, etc. Afte~ discussion, on motion duly made and secoaded~ the following resolution ~S u~ani~ously adopted: RESOLVF~ that the officers of this Company be and they hereby are authorized to execute s~oh inst~tu~ents and docu- ments and to do such other acts and things ~s may bc n~ces- s~y or desirable to evldenc~ the vesting in the Surviving Company, as effectually as they were vested in the several and respective Co~sbltuent Cor~p~nies~ of all the rlghb~, privileges, powers and fr~nchlses of each of the C~nstltu- e~h Corllpanies, both of ~ public and p~ivate nature, all re~l and personal p~operty, all debts due on any account, all othe~ things in action o~ belonging to each of the Constltu- snt Companies, and all and every other interest, and as may be necessary or desirable to evidence t~e preservation un- impaired of all rights of creditors ned all lions upon the p~operty of the Constituent Corapanies and the attechment to the guPvlving Company of all debts, liabilities, re- strictions and duties of the Constituent Companies, to the same extent as if they had been incurred or contracted by the Surviving Company. NO ~arther business being befor~ the Board, on motion duly made and seconded and unanimously ca~Icd, the meeting was adjo~rned. George E. Boliva? --gec~et~y * Heading supplied for convenient reference
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K ~'Aq EXCERPT FROM MINUTES O~ M~ETItG OR BOARD OF DIRECTORS OF A~RIOAN CIGA]RETTE ~ND CIGAR COMPANY ~LD DECEMBER l~t 19~~ Re~olutlon Authorizing Filln~ Of Atree~ent of Ner~er wlt5 Secret~r~ of S~te Of Mew Jersey* The ~hairm~ stated that in th~ resolutions adopted by ~he Board of Directo~ of Shi~ CompanY on October 16, ig~, app~ovln~ the p~o~osed A~reement Of Merger~ dated October 16, 1953, between The American Tobacco Company and th~s Company ~d thelr resDectlve Directors, it was p~ovlded that in the event said At~eement of Me~ger b~ adopted b~ th~ stockholde~ cf Th~ Ame~leanTobaoco Company ~nd also by She stookholder~ of th~s Company a~d certain ~ppropri~t~ ~ertifi~ate~ as ~o s~c~ ~$o¢~hold~r~ a¢~io~ ~e annexed thereto, the Sec~e~ar~ o~ ~ny tssi~tant ~ecret~y of thls Company be ~uthorlzed and ~e~ted ~c f~le s~i~ Ag~eemen~ Of Merte~ so adopted and c~rtlfled, in the office of the ~ecretar¥ of State of ~ew Jersey~ K~ ~ch time ~ ~y be d~te~i~ed bN s~seq~n~ &c~on of thi~ B~rd~ and thab ~imll~ ~pproprlate and corollary prov~ione ~ppear in the re~clutlonSadoDted b~ the~oa~d of D~rector~ of The American Tobacco Compan~ ou October i~, 195~ stated ~tat, in view of the adoption of said Agreemen~ of ~r~er ~y the stockholders of The American ToDe~co Company a~d of ~hls Comp~n~, respectively, ~d the execution on the A~re~e~ of Merger o~ ~r~1~Ica~e8 Of ~e ~ere~a~le~ Of s~Id two ~ompa~le~ r~Bp~otlvely, as tQ Bush stockholders1 adcptlon~ it ~a~ now appropriate that the Board of Dire~tor~ of this ComPany ~dopt ~ ~esolution With ~espect to the ~lllng o~ ~a2d A~eemen~ of Merger in the offlc~ of th~ Secretary of State of Me~ Jersey; ~pon which ~ili~ the Agreement of Me~er ~uld become ~ffectlve. He stated that he was ~dvised ~hat at a meeting of b~e Board of ~Ire~to~s of The Anglican Toba~c~ Company held on December 15, 195~, ~ re~olutton had been adop$~d autho~izlng the ~e~re~ar~ or ~n~ AB~t~nt ~e~tsry o~ The American Tobacco 0ompany to file or caus~ to he ~iled a proDe~l~ sitned and executed o~Ig~Dal of s~i~ Agreement o~ M~rge~ in the office of th~ Secretary of State of New J~r~e~ o~ ~u~h d~te ~s She President or any Vice Pre~iden~ of ~he A~e&~ ~obaeco Co~p~y m~ i~ his ~isc~etlo~ d~e~mlne~ a~d that it w~s appropriate that such filln~ b~ delagated tQ The ~er~ean Thbacco Company~ Afte~ dlscussi~n~ on motlo~ du~y m~de and secondeOj the followlng re~olution w~ una~ImOUSl~ adopte~: RESOLVED~ that the Secretary or any Assistant Secre- tary of The American Tobacco Compan~ he and is hereby au~orlzed and dlre~ted~ on behalf ~f thi~ Co~pany~ $o ~ile or cause to be Filed in the office of the Secretary cf Stat~ of ~ew Jersey a p~operly slgn~d ~nd executed Original of the Agreement o~ Merger~ dated October 16j 1955~ between The American Tobacco ComFany and thi~ Company azd bhelr ~spectlve Di~e~tor~, w~th s~ch ~er~Ifl- ~te~ annexed ~here~o as ma~ be ~q~i~ed by th~ provl- s~ons of th~ la~s of Ne~ J~sey~ such fili~ ~o ~e mad~ on s~ch date ~s the President or any Vice F~e~i~ent of T~e American ~obaono C~mpanymay in his d~acret~on determine. ~' Headln~ suDplie~ for convenient reference
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PRESS RELEASE October 16, 1953 174 ~oI ~. Ha~LU, Pr~sldent of The American Tobacco Company and of American Cigaretbe and Cigar Company, announced this after- ~oon ~h~t the Boards of Directors of the two Companies today entered into an agreemant (subject to approval of stockholders) to merge Amerioan Cigarette and Cigar Company into The American Tobacco Company. Speci&! Stockholders Meetings of American Tobacco a~d American Cigarette to vote on the merger will be held on December 2, 1953 an& December ~, 1953, resp~ctlvely. American Tobacco now o~s about 96% of the Common and 81% of the Preferred Stock of American Cigarette; there being 7275 shares of Co~cn Stock and V59 shares ofPreferred Stock of American Cigarette in the hands of the public. The a~mu~l reports to stockholders of American Tobacco have been for a number of years on a consolidated basis, including A~eric~u Cigarette and certain other subsidiaries. The Merger Agreement provldes that each share of Common Stock of American Cigarette held by the public will be converted into eight (8) shares of Common Stock of American Tobacco, and each share of Preferred Stock of ~erican Cigarette held by the public will be converted into one 9.rid one-tenth (1 1/10) shar~s of ~referred Stock of ~merican Tobacco.
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I 25 8h~res of Common and Preferred Stock of American Tobacco will continue as at present without change. In other words each present share of Common Stock and ~ach present share of Preferred Stock of American Tobacco will respectively contlnu~ to b~ one ~hmre of Common stock and one share of Preferred stock of t~t Company. The presently authorized cgpital stock of American Tobacco is 10,0O0,OOO shares of Co.men Stock of which 8,454,110 shares are issued and outstanding, and 840,106 s?~res of ~r~ferred sto~k of which 586,997 ~hare~ ark issued and outstanding. When the pro- posed merger becomes effective A~erican TobY.coo will have issued and outsta~qdlng 8,51~,310 shar~s of Co.on Stock (representing an addition of 58,800 shares) and 527,831 shares of Preferred Stock (representing an addition of 834 shares). The propos~'d merger ~ill ~liminate A~erican Cigarett~ as,a corporate entity and its outstanding shares will cease to exist. ~r. Ea~u state~ that the m~inten~nce of the two Compa~qies as Beparat~ entitie~ has for som~ time seemed to be a needless ccmplicatlen and that it is belleve~ that the merger will be advantageous to both Co~panies and their stockholders. American Cigarette stockholders will have as stoekholder~ of American Tobacco a direct Interest in the assets ~ncludlng plants and leaf inventories and in the bus~nese of American Tobacco, ~hiGh has a much larger capital and has for almost fifty years consistenfily a~JoYed a favorable ~arnings and dividend record ~s one of the leading corporations in the tobacco industry~ The shar~s of
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17'6 The merger will also make posslbls th~ elimination of many duplications now resulting from the oDerations of the two Companies ~s separate entities.
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QDBSTIONRAIR~ ?OR OFFICBRS A~D DIRECTORS OF THE AMERICAN TOBACCO COMPANY AND AMERICAN CIGARETTE AND CIGAR COMPANY IN CONNECTION WITH PROPOSED MERGER September 18~ 1933 ~a~ Sir: If It is deolded to proceed with the me~ger of Amerlsan Company into The American T~b~cc~ Com- pany, i~ wlll be necessaPy to hold a special mee~ing of the ~to~kholders of each company. Kindly supply the infor[~a- ~n ~equested below for use in connection with the proxy 8011citing material for these special meetings. A~te~ fillin~ in the n~cessary information, please sign and ~omptly ~et~Dn the additional enclosed copy of~Zhls ques- tlonnai~ Ver~ truly yours, ~estlon i {a) Do you or does any associate of yours have any substan- tlal interest~ direct or Indireot~ i~ the proposed mer~er other than as an officer, director or stookholde~ in The American Tobacco dompan~ or American cigaDette and Cigar Company, or both? (The term "associate" as used in the rules of the SeouTi- ties and Exchange Commission means (I) any corporation or or~antz~tlon (othe~ tha~ ~he Issue~ or a majority Owned s~bsIdlary Of the issueD} of which such person is an offi- cer or part~er or is~ directly Or indirectly, the be~e- f~clal owne~ of 10% Or mo~e of Shy class Of equity 8ecuri~ tles~ {2) any trust o~ othe~ estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a similar fiduciary capaci~ t~, and (3) sn~ ~el~tlve or spouse of such person; or any relative of such spo~se~ who has the same hcme as s~ch per- son or who is a director or offloe~ of the Company or any of its subsi~Is~les.) Answer:
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(b) If your answer to (a) is in the affi~matlve, please give full details~ Answer: Question 2 (a) Did you own beneficially, whether directly or indirectly, any of the securities of The American Tobacco Company listed below as of September 15, 19537 Scrip and convertible divldeud certificates Twenty Year 3% Debentures due 196g Twenty Year 3% Debentures due 1968 Twenty-five Year 3% Debentures due 1969 ©~enty-five Year 3-I/4% Debentures due 1977 (The te~m '~benefdci~lly" as used in this question and in succeeding questions means ~ny interest in the security in question which entitled you to any of the rights or benefits of ownership even though you are not the registered owner.) ~nswe~: (b) If the answer to (a) is in the affirmative, please state th9 ~l~s ~d a~o~t of s~h Be~ritle~ ~o o~ned by you and glve f~ll d~alls concerning your ownership. Answer: - 2 -
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The American Tobacco Company ~m~rican clg~rett~ ~nd Clga~ Company ~51estlon ~ 1~ (a) Acao~di~ to bhe records of Guaranty Trust Company of New Yor~, T~an~fer Agent ~c~ ~ot~ The Ame~ican T~bao~o Company and A~rican Cigarette a~d Clgar c~any, you were the holde~ of reoord at the olose of business September 15~ 1953, of the followlng s~e8 of stock of ~ach company: preferred Sh~. Shs. ~hs. Shs. Please ~ta~e whether the foregoing statement of your record holdings is correct and i~ it is ~oc, please In- dloate what oo~eotlons s~culd ba ~de. A~swe~: (b) As of September 15, 1953, did you own beneficially, whether directly or Indi~ect~, all of the shares of ~to~k of The American Tobaoco Company and American C~ga- rette and 01~r Company indicated above as held of ~ecord If not~ please indicate how ma~y shares o~ each c~ass of eaoh company held of ~eeo~d by ~QU were also bene~iolall~ owned by you directly o~ Indlrectly as of S~ptember i~, 1953. Answer: (o) As of Septembe~ 15~ 1953~ did you o%n% be~eflclal$~, whether Tobacco Company o~ American Cigarette a~Id 0i~ar Oompany not registered i~ your n~m~ but register~d in the names of others O~ in bea~er form and h~Id for you henefio~ally? If so, please state the 0lass and amouRS of such stock a~d glv~ full detai~s concernlng ~uch ow~rshlp.
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180 ~uestlon 4 (a) Did any associate of Fours as the term '~assoclate" is defined in Question l(a) above) own benefloially any securities of The American Tobacco Company or American Cigarette and Cigar CompanF a~ of September 15~ 19537 A~BW~r~ (b) If Four answer to (a) is in the affirmative, please give the n~e Of eaoh Bu~h ~B~oclate, the ~J~o~ ~ng cl~ Of such sec~rltles owned by him and full d~tails concerning his ownershlp. A~wer: Question 5 (a) Are you a party to ~ny contrac~ with The Am~rlcan ~obacco Company or Amerloan Cigarette and Cigar Company? Answer: (b) If your answe~ to (a) is In the affirmative, please give Pull details. The foregoing information is correct to the best of my knowledge~ infol~latlon and belief. If there ar~ any changes in the security ho~ginss of myself and mF associates between'September 15, 1953 and the close of business September dO~ 1953, I wi~l promptly ~ive ~'ull detalis ±u writing to M~. g, ~. Coon, Vlc~ P re'si~ent, The A~erlcan Tobacco Com~ary, iiI Fifth Avenue, New york 3, New York. Dated: September , 1953 {Signature) -Q-
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LIBEAND, ROSS BROS. & MONTGOMERY Certified Publlo Accountants 90 B~oad 3treet NOW York 4 September 23, 1953 1~1 Mr, Andrew B~rr~ Assistant Chief Accountant, Securities and ~cll~nge Commission, 423 2rid Streetj N. W., W~shington 25, h. C. Dear Mr. Barr: On depte~be~ 18, 1953 Messrs. Charles Ganshow, Vice President of American Cigarette and Cigar Company, gillls~l Eyre of Hasklns & dells and HaPry Case of Lybrand, Ross B~os. & Montgomery discussed with you certain financi~l statements to be included in a Proxy Statement being prepared fo~ submission to stockholders of OUr client, The American TobaccO Company~ in conjunction with s conter!iplated statutory merger of that company and American Cigarette ~ Cigar Company. The American Tobacco Company will he the SurviviuS Company, if the me~er Is e~ns~ateg. Americsn Cigarette and Cigar Company (hereinafter ~ferred to as Cigarette) ~s 19~,SOC sher~s of issued ned outstanding common stock and ~,9~9 shares of i~ued ~nd out- standing preferr~] stock. The American Tobacco Company (here- inafter referred to as American) owns 188,225 shares and 3,230 shares, respeetlvely, of the outstanding common and preferred stocks of Cigarette. Uade~ the proposed plan of merger the out~tandlns common ahd preferred stocks of Cigarette w~ll be con~erted into co~on and preferred s~ccks of the SurvivinS C~ipany (the hssis of conYersicn has ~et to be determined) except that co~on a~d preferred stocks of Cigarette owned by ~merican will not he converted. The conm~on ~nd preferred ~tocks of American outstanding on the effective date of the merger will continue as outstanding shares of the Surviving Company. It is planned to i~clude financial st~te~ent2 as ~equlred by Regulation X-14 for American and its consolidated subsidiaries (including Cigarette) and for Cigarette, separately, in Americanls Proxy Statement. Cuban Tobacco Company Inc., is a significant subsld- i~ry of Clg~ette, ~s that terra is defined in Regulation S-X, but is not a slgnifica~t subsidiary of American and its con- solldeted subsidiaries. At December ~i, 195S~ Cigarette owned igi,485 shares of common stock of Cuban o~t of a total of 170,000 such shares outstandlnd and 9,334 shares of p~e- farted stock out of a total of ll,OOO such sh~es outetanding. Cigemette also had direct ownership of sbares of ~e~tain con- solid&ted subsldla~les of C~ban~ At that date~ the i~vest- ment and advances of Cigarette to Cuban Tobacco Company and its consolidated subsidiaries aggregated approximately $11,5oo,000 out of Cigarette,s total assets of ~44~o00,OO0.
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182
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1/-3.3 SECURITIES A~ EXCHANGE COMMISSION Washington 25, D. C, September 25, 1953 M~. Harry N. Case Lyb~and, Ross Bros. & Montgomery 90 B~oad Street New York 4, New York Re: The American Tobacco Company File No. ii-56h Oe&r MY. Case; This in in reply to you~ letter dated Z~ptcmber 23, 1953~ relating CO ~ conference on September 18 in respect of proposed proxy statement filit~$ in conjunction ~ith a con- temnlated statutory merge~ of American Cigarette ~d Cigar Company into The American Tobacco Company. AS was ~gre~d ~t that comferenee~ no objection ~III be raised to the omission from such proxy statement of flaanclal statements of (I) The American Tobacco Company on an uucon- solld~ted basis, Or (2) Cuban Tobacco C~npany ~nd its consol- idated subsidiaries since your letter izdicates that adequate info~tion wl!l be fu~ulshed in re~pect of Cigarette,s equity in net assets, earnings and dividends of Cuban and subsidiaries. It is our understanding from the conference that the p~oxy statement wlll clea~ly disclose the ~ta~u~ of intercom- ~auy sales, purchases, leases and profits of the several com- panies and will state the considerations used in arriving ~t the basi~ of A~ric~n Tobacco stock to be issued for minority holdings of Cigarette's common and prefezTed stocks. In accordance with your letter, ~ copy of this r%~ly is bei~g mailed to M~, J, ~. Coon. Very truly yo~s, Aod~ew Dart Cklef Account&mr Division of Cc~pc~tion Finance cc: M~. d, R, Coon, Vice P~eside~t The American Tobacco Company iii Fifth Avenue Re~ York 3, New York
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~HE AM~!CAY ~O~CCO COMPANY Incorpora%ed iIi Fifth Avenue ~ Ne~ York 3, ~ow Yo~k Oetohe~ a, 1955 Securities and F~xchange Commission Division of Co~poratlon Yln~nce Washington 25, D. C. Des.r Siva: I~ connection ~th a Syeolal M~eti~g of S~ockholde~ of The Ame~ic~n Tobacco Comp~nywhich it is intended will be held Decemhe~ ~, ~953, to 0o~ide~ ~ p~oyos~! to ~e~g~ ~meric~n Cigarette and Cigar Company into The American Tobacco Co~yany, we file herewlth in com~llance with R~le X~I4A-6 three prellmlnary coples 0f e~ch of the following: (a) Fo~m of proxy te be solicited by the ~nagement (b) P~e~ident~ ~etter to ~tockhol~e~s (c) Notice of Meeting ~ud P~oxy ~ate~e~t, including exhibdt~ to be furnished stock/folders by th~ m~ement (d) Fo~m of letter to Mr. Philip G. Cameron outlln~g In~t~uctlon~ to be observe~ ~y Phlliy ~. Csme~o~ Company in soliciting proxle~ (e) Fe~m of iden~iflc~tlon lette~ to b~ fur- nished ~mployees of Philip G. 0~me~on Company ~ho ~ollclt y~i~ ~o~ th~ ~%- ing to v~lous b~nks requesting thei~ cooper- ~tlon in forwarding p~oxy materi~l to ~to~kholde~ It is iutend~ ~t the m~te~i~l referred to in (~), (~) holders on Oetobe~ ~6~ ~nd that the m~te~lal refer~d ~o in (d), (e) and (f) will be released on October 2~, Th~ meet~ng~ of the Boe~d~ of Directors of" both Companle~ to conslde~ the merger are scheduled for Octobe~ 16. %Fc ~o~ld very ~uch ap~ec~%te ~eeelvi~g yo~ comments on the material filed herewith as much In ~dvance of 0ctobe~ 16 as ~osslble. ~e~y t~aly yours, J, ~. Coon J. E, Coon Enclosures Vice Ppesident
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-] [- _J The undezsl~ned hereby aDpoinM PAUL M. HAHN, JAMES R. COON ~nd RICH~tifD J. IfOYLAN proxies, with ~ower of subs~ifutien, ~o ~ote at the Special ~[eetMg (includWlg all ~cljournmen~s) o~ S~oc~lolder~ Of The American Toba~o Covnpany, to be hem December 2, 1953, for the adoption or rej~ion of the ]~igrger A£v:eement which pro~de~ for ~be merger ~f Amerlcml Cig~ret~ and Cigar C~mp~y into Th~ American Tobacco Company, a c~py o~ which is Exhibit 1 to ~be Pro~" SLMemenL and on any other be~fness *hat may come before the meetlng, ac6ordlng" ~o the nmnber of vote~ that the ~nder~igned would be entitled to c~ and with a/l powe~ ~he underai~ned wouk~ p~sses~ if l~r~on~l]y preselit. ]F A CHOICE IS NOT SPE~!IFIED B~LOW, THIS PROXY IS TO BE VOTED FOE TEE ADOFTION OF T}~ MEI%GEIf AGREEMIfNT. Managemer~t recov~mencls a vo~e FOB: [~o~ Adoption ef A ma~orify (or, if only one, then tha~ one) Of the proxies or 1heir subetltute~ acting at ~be m~tin~ may exareise all the POwers }mr eigf el)nferre~L Date@: ................................ 195~. ~ Comply will fdl i~ nu~beI, of ~ar~ [ ........................ Share$ P~'efc~red .................... S~ Common ............................................................................... [L. S.] ( 8~kholde~ ~h~td ~i~n~ he~) When si~lng as at[orney, exeeul~r, adm~iaigator, trus%ee er guardian, please give your fail title as such.
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PRELIM|NARY COPY O~ober 26, 1953
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a c0?y o~ toe l~{e~ger Agreement and ~ ~ateme~t of the p~ocedu~e to be {~i1~wed by ~i~e~ng ~o~helde~ of ehh~ company. Also set forth i~ the Proxy Svaz~er~ are the rea~a~ ~ich Ied the D/~e¢cors ro e~ter i~t'o the ~'~/~ge~ Agoee~ent ~ to ~.thmk ~ ~ the ~oc~holders o~ the w-o ¢oraper~es/w adopcbn. In the exent ~h~t t~e ~e~ger A~e~maut ~u~-o~ ~ect~ • ¢o~aver~d m~o ~hares of Comcao~a S~ock o~ your C4~mp~a~y ~s the St~viv~g Compen~ except that sheres of Common Stock of American C~gare~_ ~n~ C~r C~mpa~y held in (~) E~ck s[~xe o{ the p~e~arcad S~ck ~ Ax~er~c~ Ciga~et0a ~nd Cigar Coml~y v~R be co~vert~ ia~ s~ of i~rei%rred Stock of the S~viviag Comply, ex¢~pt th,~t th~res o~ P~e~er~ ~ock o~ Am~rlcaa G~g~ette ~nd Cigar Company ow~ed by you~ Company wi~ cea~ to exls~. ]]~¢k she~e o~ Common St~ck ~cl each sha~e of P~e~er~ S~ock ~ you~ Comically w~ ~p~d~ly ~ot~cme r;~ be o~e shoe o~ Commoa Stock ~d o~e shere ~ Preferred Stock of your Com~ ~s the Stax{vi~ Compe~y. • ~t ~ the op~n~ o/¢oaose~ /or the two compaaies that, meder the Iuter~l R¢~e~e Ccd~ now i~ e~ec~, the me~gar will ¢o~stltute ~ t~x~ee reo~ganlzat~oa ~nd that neither ~ nor Ions ~eder~l I~coa~e T~ ~ut~ses vA~ be ~[ized by ~e~m o£ the me~ger by ei~her corapa~, or ~y the h~ide~s of C~m~a o~ PivEer~ Stock of eid~e~ comi~any, except ~ the case o~ stock- ho~de~s who may di~ent an£ be paid ~ ma~ke~ ~lue of d~eb s~k i~ ~peopriam ~pp~o~sal ~ceedi~g~. Al~o eaclosed hare~c{t~t i~ a fo~n ~f ~r~ ~o~ the. ~se o[ ~0~ckho~e~s who m~y t~t b~ ~ble m ~0e~ ~he Special ~eedn~ of Stockholders. I hope you wL~ attend this ~ec]al Meed~ of Stockhol~r~ but i~ d~is i~ i~uposzlhle please fil~ i~ an~ return your signed ~°~oxy as soon as poss~ole i~ orcl~r that a quotama m~y ~ as~a~e~ ~t the mem~g. F~[uee to ~ a quoo,tu~ on rAe c~0e ~et ~voul~ ~ecess{ta~e ~ adio~rm*t~e~ ~'hich world invo~v* the Compsny ta considerable ~nd nee~ess expense. I°~UL ~'VL ~H~ President
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PRELIMINAIiy COPIES ~'OTIC~ OF MEETING F:emington, N. J., 0ctobcr 26, ]953 NOTICE Is a~K srv-~N I}iat a Sf~ial M~th~g of the Preferred and Common Stockholders oF nANE .&M~:mCA-'~ Tot~Acc~ CoI~PA~ will he held at No. 34 Court Stxeet, Flemlngton, New Jezsey, at erie-thirty o'clock in the after- noon (Eastern Standard Time) on Wednesday, December 2, 1953, for the follow- ing I~urposes: (1) to vote for lhe adaptlcn or rejection of a Merger Agreement entered into on and dated October 16, 1953 Between the Company and its dlrectt, rs and Amerlcan Cigarette and Cigar Company, a e6rpo~ation of the State of New Jersey, and its dlre~t~*rs, merg[e,g said Amerlcan Cigarette and Cigar Company rote the Compat~v and prescribing the ~e~ans and conditlons of ~ald me~er and the mode of carryihg the same into effeeh a copy of ,ahich Merger Agreemeat is atXached as E:dfibit, I to the following Proxy Stalemem; (2) to transact sttch other business as may properly come before dxe meeting. ,it The Preferred and Common Stock transfer books will net he dosed, hut holders of Preferred Stoci~and Colnl~en Stock to be entitled to wae mu*t be ho:ders of ~e~:ord at the close of business on October 28, ] 953. JOliN W. HAzcLO~, Secretary I Proofof9-30-53
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PI|OXY gTATEMI~,NT SOLICITATION OIl PIIIOXIES AND OUTSTANI)ING VOTING StIAI|ES Thlg ~lalenlenl is furnished in ctlnlleCtlon wil]l the sg]icitatiou [ly the n/anageluellt of The Aml Tobacco Cotnpany (hereinafter sometimes called American) of proxies 1o he used at the Speeial Meetl of StcJckko]clcrs t~ kc held oil ])ceemhcr~ 2, ] 953, and at ~my ~cljuI~r~LITI~ILt dxercof. OJl]~¸ stockholder8~ recf~l~l as of the close of business ~m Oclobcr 2,g, 1953 will bc entitled Io i~otlce of and to vote at such meet 'J•he j/lanagcn)enl knows of no ]IILSilleSS wkich will lie presellled Io die meeting ot~lc]¸ than "~ot~ng oil adoptioll or ii~jcclion of the proposed Aglcctncul of Merger, hereinafter descrlhcd. If any olhcr mat ~lrc inesenled properly 1o d~e nlecllng for ~cllon~ it is intended that die persons named ill lhe proxies , vote t]lelcon ae¢ol'ding to their best judgment. Any peJsoll giving a pr,axy nlay revoke it h¥ notice iu writing given to the Sccrclary of Ainerl ~t any time prior to the excrcisc ~hercof, but if not so lcvoked the proxy will I~e voted and, if a choice specified with rcspccl to Ihe merger proposal, will be voted ill accordance with such specification. choice is specified Ihe proxy authorizes a vole in fa~'or of the adoption of s~l merger proposal aud w voled accordlng]y. Attcndallce at die i~leeli~lg does not serve to revoke the proxy. 'J'hc oulstanding lunn]lcr of each class of voting sccuritic~ of American is: Preferred 526,997 sha~ Con~lnOn 6,45'1,1 l0 sha~s. In votit~g on the adoplion or rejection of the proposed Agreeinent of Mel each shar~ of ]~rcfcrrcd Stock and each share of Conunon Stock entitles the ]lo]der thercof to one (Section ] 4:12-3 ~f the l/cviscd Slatutcs of the Stale of New Jersey provides Ihat in voling on the ad~ or rejeclion of a propo~;cd Agln2er~lcnl of Merger each s]~arc of cagila] stock ellt~des th~ ha]dor la ant vo PROPOSI~D MERGER 'Fke ptupose of die Spcelal Meclhlg is to consider at~d take action on an ~grcemcnt of Merger (hc~ aftcJ cal]cd the Merger gglcemenl) ~hleh provides for die lllelgcr of American Cigarette and Cigar C pany, a New Jelscy corpolallon (.hereinafter sometimes called Cigareltg), into American as the corpora' su~vivh~g die me;ger, Ciga~etle aud Amerlca~t a~ herehlafter eo]lectlw]y referred to as the Constltl Companic.< Amc~ ~cau~ as such surv~h~g c~rp~ra~ion~ is he~ e~naf~er s~m~tin~s ~f~rr~d t~ a~ d~ ~urviv~ Company, A copy of the Me~ge~ Agreonlel~t is attached hereto as ExlAhit l, to whleh refereltcc is here lllade for a (.on3plolt3 slatCll/0111 of t]1¢2 ltrovl$iOll$ thereof. 'lhc Mclgct Agleenlent provhles Ihat the Surviving Company shall have an authorized capital sl . consisllug of ] 0,000,000 sh~lcs of Common Stock, par value $25 pe~ share, aud 540,106 shales of P ferrcd Stock, par value $100 pe~ share. This is the same as the present aulhorizcd capital stock of A mcrle~ 'Phe Sul vivlug Company will retain the presold llanlc of Atnel'iOall~ to wit: The American Tobacco Con~pal T c only cl~augcs which t}le Mc~g~ Agleemenl would effect in the Agreement aud Act of Merger Ctm~olidali~m, dalctl Scplcnl]~Cl 9~ 1904, as horetofoie ameuded, constituting the cc~liftcatc of incmpo~at[ of glucticau, are wilk ~cspcct to tile numller of Di~cctols of the Smviviug Company, the roglstercd of thc Surviviitg Compauy ill New Jersey an¢l the Trausfer Agent and llegistrar of stock of tile Stub'iv Con/llany. The New Jersey Rcviscd Statutt~s p~ovlde that the mergc~ agrce~ient shall prescrlbc the nulll~0 names and posl cfilec a&hessez t~f the filst dircctols and oft~ce~s of the surviving eo~poratidn and that tl shall hold ofllcc ~mli] their successors ~rc chosen or appoi~led e]lhc~ according to law or the hy.laws he corpotalltm. T]lcse statutes also provide Ihal every colpor~ltion shall have power, to adogl by'] fixing ~uld all(ling the Iltllll[ICl of lls dhectms. The Merger Agreement gives the iltuld)t/, names an¢l 2
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190 ~ee addresses of the llz~t directors aad olfic~x~ of the Su~iving Corporatim, in vompllan¢~ with these ~tut ely~ roqu~relnel~t$. "fI~e Agreement of 1904 p~,ov~ded that the mlmber of directors should be t~¢cnty-efght. For many )~ars fie g* .i~ws of A tre~ieart have fixed the nllmbee of dlrectors at sc~'enteen. The ?¢[erger Agreement provides ~t the i~rst directors immedi~tely, upon the taking effect of the Merger Agreement sha]/he lgncteetl in l~be~ al~d thereafter ~ueh tmmber a~ shall be fixed :~rom time ~o time m the By-Laws ot the Survi~ng Com- ~11}. as prowded by the New Jersey statutes. The 1904 Agr¢ement aloe t~awe~{ the Trmlsfer Agent and ~e~;~trar of Amerie~l~'s stock at that time The trausfer ~gent thus named s no lo gern existence. Th~ ~ierg~Y Agreemeat p~ovld~ ~l~t the Transfer ,%gent at~d Reglstrar ~f th~ ~t~ck of the Su~vlvlng Company, all be die persons or corporations deslgnaled as such from time to time hy resolution ot file Board of rect~rs of the Surviving Company. The Merger Agreement recites ~]~o correct prineipa] and ~egis~ro~ ~ee of the Sarvivlng Corporation and the Ageat h~ clmrge thereof which differs ~rom the office and agent red W in the 1904, Agreement. The lgO4 Agreeme~ct also pnwlded that Preferred Stock prcwlded for bercht could be issued only for the redemption and retirement at par of deins that by the 1904 consolidation ecame debts of Amer{ea~ or at par fo~ cash to be u.~ed in suck redemption. The Me~'ger Agreemetr~ pro- !s for the issuance of suck Preferred Stock in exchange for Preferred Stock of Cigarette. The Merger ~greement also provides that the By-b~ws of American as they shall exist on the effective date of the merger -Mi[ be the By-Law~ of the S~-~vi,.th~g Cam~m~;y until ahered, amended o~ repealed as therein provldeth Upon tlae mer ge~- becomil~g effective the Studying Compo~y will have sh~es of Common ~oek o~ the par valne o~ $25 per share issued and outstanding and shares o~ authorized ,ut mfissued Corn m,m Stock d the par value of $25 per share and shares of Preferred Stock 0l the par value of $1 O0 per share issued a~d o~tstandh:g and shares of authozlzed hut ~misstted Preferred Stock o~ the par ~,alue el ~I(~0 per share. There are no present plans ~or the Jssz~ttnee o~ any ~ath authorized but unlssued shares. VOTE REQUIRI~D TO CARRY OLIT THE MER(;ER If the Mergex Agreement is adopted at this Special Meeting by the vetes of the holders of at least two- dgrd~ of ~II the eapltaI stock, i.e., Common and Pre~erred~ of Amer~eml entitled to vote at s~tel~ meet~g, ~n~ at ~ Speeial NZeeff~g of stockholders of Cigarette bereiaafler ~c2erred to, by the~ votes o~ the holders ~f at [east two-thirds of all the capital stock, i.e., Common and Preferred, of Cigarette e~fided to vote ,~eh n~eetlng, the merger will become effective upon the filing o~ the Merge~" Agreement ia the nm~mer ~ro~decl 5y the laws of New Jersey. ~q~en the I~erger Agreement becomes effective the s~parate exlstem~ '~t Ggare~e ",~iil cease eacept inst~ag as the same shall ~ontinu~ hy ~tatute ~r may be requ%~e ~ ~ar~yin~ ~t the purposes of the Merger Agree~nent and Americaa as th~ St~rv~ing Company will s~ceeed ~ all th~ "ights and property and he s~tbjeet to all of the dcbt~, restrictions, liabilities and duties ~ Cigarette. a ap~cla~ r:~e~elr~g o~ ~ockholders oi Cigarette ,aill he hel~ f~r the purpose o~ considering and taking ~tion on the Merger Agreement ~n De~'emher 4, I953. Ameriea~ is the 6w~er and holBer of 188,225 4are~ o£ the Common St~'k par vat~e $70 per share of Cigarette ot~t of 195,500 shares (e~xeluslve of .500 shares held in the Treasury of Cigarette) of s~tch Commort Stock o~tsta~di~g o~ approximately 96% ~i ~ outstanding Common Stock of C~garette; American is the o~¢ner attd beIder o~ 3~230 shares ed the ! ~eferred Stock, par value $100 per share, o~ C~garette out of 3,989 ~ares of sttch Preferred Stock out- , ~thng or approximately 81% of the ou~stanthng Preferred Stack of Cigarette. Araer~can as owner and • ~der o~ ~u~th share~ o~ Common and Pre{erred Stock o£ Cigarette, reserves the right either to refraltt :eqra ~etlng such shares irt ~avor of the adoption of ~e Merger Agreement or to ~'ote ~ueh shares agaths~ g
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the ~doption of Ihc MeJ~cz Agtcement at such spt~ci~d mctqing of slockholders of Cigarette, if, itt' opinion of the IIoard ~)f ])irecloJs of Ainctican, the mt rgcr~ :~t the tinln of such special meeling of .sl holdcls ~bf Ci,~ulelte, is imlu'acllc~dde or itmdvlsaldc under then existing clrcttmstanccs and condilioxls, ]f ~lltl rdlen thc mclgcr shall h~','e Ilecolnt" eft'c< tive, .~ll]erlcan inten(ls to mail In its stockhold notice Io such effect within len (lays t'ollowiug the effective date of the lllcrgcr. CAIqTALIZATION O1" CONSTITUENT COMI'ANIES AND };AS)S OF CONVERSION ON MERGER As of Scl~ cmhcr 30, ]9a3 (a) American had all attlho~ized capital stoch consistiug of 10,000,000 shares of Corn SttH'k, pllr wtlue $25 per shale, of v, hich 6,454,1 0 s a es we "e ~ssucd and outstanding and 540 (V sl]a~t~ of 6,,~ Cm~ulla we l'JderJed Stock, pa~ ",,alut $]00 per shale, of which 526,997 shares, issued and ottlstanding; and (h) Ciga]ettc had an authoJized capital stock consisting of 500,000 shares of Conmlon SI pal vahtc $70 pcl shtuc, ¢~f which 103,500 shares were issued and outstandhlg (exclusive of d sha~es held in Ihe Treasuly o/ Cigalettel of which 188,225 s es were owned b'¢ American 3,989 shares o/6~)~ Cuinula0vc h'e,~cH'ed Stock, ilar value $100 pet" shale, of which 3,989 sh wele issnl:d and Oulshuulltlg of whleh 3,230 shares were owned by American. l'hc Merger Agreemcn plo;,Jdes ha when hc merger becomes effec ire: (a) each share of Conlmon Slock, par value $70 pc) shale, of Cigarette outstalldlng on cflccllvc datc of tile merger, will be converted into sha~es of Comnlon Stock, par v $25 pu" share, of the Surviving Comt,at~y, cxecyt lhat the 4,500 shares of said Common Stool Cigarette held in its 'I'leasttly and the 1~8,225 shales of said Comnlon Stock of Clgare c owl hy Anlclican will not he converted il~o Common Stock of the Surviving Company but will eeasd exisl, aud cach share oI 6% CumuIative l'refcrrcd Stock, par value $100 per share, of Cigari otllsland~ng on the cffectlvc date ol the n/elgel~ will hc converted into shares of t Cumulalive Preferred Stock, l~ar vahe $]00 per share, of t!le Surviving Company, except that 3,230 shares of said Preferred Stock of Cigarette owned by American will not be converted into Cumtdalive Prel'erled Stock of the Surviving Company bt~l will cease to exist; (h) each share of Conm/on Stock, par value $25 pe~ share, of Ame]ican, outsla~lding on cffe<tlve dale of the merger will contlmle to he one share of Coin/lion Stock, pa~ value $2.3 pe~ sha~ of Ihe Surviving Company, and each shale of 6~ Cul~]tdatlve Preferred Stock, par value $100 ] sha~c, o~ American, outstanding on the effective date of the merger will continue to be one share 6~C n fla ivc 1'referred Stock, par value $100 l~er share, of the Surviving Company. SCRIP CEItTIFICATI,:S 1~'O1{ I,'RACTIONA1, SIIARES In all cases whelc Shares of l'refe~tod Stock or Shares of Common Stock of the Smvlvlng Comp to he .~c*i~cd i,'," a hold¢, of ]Sefclrcd o] Conlnlon Stock of Cigalltle shall consist of a ~raction o] sha~e, a Scrip Ccrlificate will he issued to represcm such fraclional itltelest. Such Scrip Ce~tifica~ will, whcl~ combined with similar Sc~ip Certificates aggregallng one or n "c fu sha~es, he excha geahlt 1ol a llt~io/! nf Iwo ycals froth the effective date ¢~f the ille~gcr fol full shares of Preferred S c, ck 0~ Commn~ Slot:k, as the case may he, of the Stnviv;ng C~m~pany. ]lolders of Scrip Certificates will hs~ no voting lights or righls to divldcnds or other dist~ihutions. Refere~ce is made to A~tlcle Vl(c) of tlC Met'1~er A glce/nel/I (Exhildt l ) fo~ st f ullc~ desc~il)tion of the te]ms and p~ovisions of such Scrip Cer tificat¢~, 4
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DESCRIPTION OF COM~ION AND PREFERRED STOCK OF AMERICAN AEdde IV of ff~e Agreeme~ and Act of Merger and Consolidation, dated September 9, 1904. as :~e~e~ofore amez~ded, is as i~[iows: ~'AI1TICLE IV. The capitsi 5tuck ef the sai4 merged corpt~ratlon ~3 $301fd10,600. Five Ilundrecl Forty I'ho~,sa.d One Hundred and Six /SgO, iOg) shares shag be Preferred Stock of the pac value ot $100 each. Tc~ Million (i0,000,000) ~heres sl~l| he Common S~ock o1" the par value of $25 each. The rlght~ of holders ~I the ~dd Preferred S~ock and Common Stozk, r~pectluely, sha/l be a~ follows: The h~lders of the preferred Sumk shall be entitled to four votes ~or each share of the par value ed $i00 held by them, and ths holders ~1 the Common Stock shalI be entitled to one vote for cash share of th~ par value of $25 held h~ them. T~e h~lders o1 the Prefeire,1 St~ek shaK he endtied to r~eeive out of the surplus ur out of the net profits, and the werged corporation shall be bound to pay thereon as a~d when daalared by the B~aed of Directors, a dividend at the rate of, but never exceeding, ~ix per eealtum per mmum, ¢umulatlve /ram and altgr the hrs~ day of October. I904, payable yeaviy~ half yearly, or qua~ethy, befure any dividend shall he set aparl or paid on the Common Stuck; provided, however, that when all accrued divldead~ on the Preferred 5lc*k i'mve been paid, tlm DLreet,~rs shaI], if iz their judgment the surpths or th~ ne~ profits, a~te~ deducting the ameual o~ di¢ide~ds to a~rue ~n the Preferred S~ock during the euzrent y~r~ shall he suble.loa~t for snch purpose, have pe~'er in their dlsc~e~icn to declare and pay a dividend, t)r dividends, on the C.xmaon $wek. [n case of ]iquldatlo~, or dissolution, cr gistributon of aszels of the said merged ¢orpora~ion~ the h~lder~ of Preferred Stock shall be psld the par amount o1 their Preferred thares and the amount of dividends a~e~ufaled and u~uaid before any amount shall he payable or paid to the holdex~ of the Common Stock; the balance ¢f tim assets o1 said merged corporation shall be divided ratably among the holder~ of the CemlnOn S~o¢~, share and ~r~ alike." The Agreement of i904, as heretofore amended~ coulains no provisions regarding pre-emptive or ubscriptkm rlghts. Ira the opinion of Counsei ~'or American the holders of Common Stock have prc- empgve rights and the h~lders of Preferred Stock do not have pr¢-emptlve rights wi~l~ resv~ct to the authorized and unissued shares of Common Stock. Reference is also made to the caption "Restrletions ,~a Dividends of American" below. RANGE OF SECURITY- PKICES The high and low sales p~iees of the Qgmmon and Preferred Su,ek of American on the New York Stock Exchauge for each of the eight consecutive qua~'terly periods, the last of which ended on September 30, 1953, compiled h'om The C~mmercial & Financial Chron[c~% and the hi@ and low bid prices of llm Common and Preferred S~oek of Ciga~eae i~ the over-th~cotm~or marke~ for each o~ ~he same periods ~s compiled from The National Daily Quotation Service, Eas~er~ Stock Division, pz~lished by The National Quotation Bureau, Inc., were as ~oBows: h~/er~ua~ Cigarett~ New York Sleek Exchange Sal~ PMees narterly Ended 5~¢eather 31, 1951 ...... ~[areh 31, 1952 ....... June 30, 1952 .............. ~eptem~er BL~ 19~2.:.. 0~cemhcr gl~ 1</52 ...... Over -t he.Co u nt e~ Bid PZlees Common Stoe~ ~?re{~rre~l Stock Coamm ~r ~toek ~r~e~re~ Stock H~gh L~w iff~k Le~ ~qigh Low.w iligh Low 65~g 5%4. 13g~4 228~ ~15 2"05 -- -- 66 57 138~/~ 129X/z 229 210 125 125+* 5g~/~ 5 ¢,a/~ 138~/~ 132~ 215 215 ig5 135~ 58 55½ 136z/~ ,131 215 215 132 128~ 567/a 55~/~ ] 397/s 132 220 220 130 130 ~,~a~cg 31, 1953 ......... 74:)~ 65 138}~ 133 250 250 -- -- ;~ne 30 1953 ............. 74 68.}g 136~/~ 130~ 2(~* 250 130 125 "~ptera cr g0, 1953 ~-Durla~g the quarter ended J~mc ~3, t95g, there wa~ one offerlug quotatiort @ 399. ~' lJurh~g th~ quarter ended £~¢lu~ch 3l, ~952~ g~re was one offeviug quotation @ l~kS~ durhig the quarter e~ded ~[une 30, 1952~ there wa~ one offering quotation ~ f30 mid dazing the quarter ended September 30, 1952~ there was ~ne offe~Sng qu~tatlon @ 130. ]~ne above bids for the Commo~ and P~eferred Stocks of Cigarette are merely nomlnai quotations and L not ~ccessarily ~epresent prices at which transactions }~ave taken place. The offeriu~s of Cigarette 5
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Common and Ptefencd Stock listed in the n~tcs to the above lablc ~etc tile only offerings which ap in the rccolds dining the eight quarlcrs listed. As illdic~lle~l, no I~ids nppcarcd in the record for I l'~cfcrted Stock during Ihc lasl qualtcr uf ]951 ot¸ Ihc fost qu~lLcr of ]953. BUSINESS AND I'ROI'ERTY OF AMERICAN CIGARETTE AND CIGAR COMPANY Cigalctlo, which was incol'porated in New JeJ~cy in 1901, sells I~ALI~ MAIJJ ]~at]~ot~s Ci~are The PAl,l, IM~LL I~lasld togcLhcl¸ w~th the l~tlsitlcss and good will Iherein was leased by Cigaleue fr~ |l Atncllcan in 1936 lor a pcrlod to cxil[lc with ~]lc year 2030 at all allnual rental of $52,000. ']'Jlc }~AI II MAI~I~ l~rall~l ~s l~la~IIfaCtl~t~cd IJ~~ AR~leI~iCa~l at tl~ee faclol~s locatc~ a~ ])~a~ N~ C~ l~o~l~v~l~e~ 1{ and I~e~l~l~ld~ ¥a~ and sold to C~garc~e ~ndc~~ a~ ag~cc~ t~i~al~|e l~y circler p~r~y o~ one yea ~ ~l~o ~l~l of II~ c~ls~ o~ ma~u~fac~ur¢ (~ch ~n~lud~ t~ ~osl ~f ~11~ ~lanufactured ]p~od~ct and e×pt~l~ ~eur~cd ~n ~hc s~oragc and ~n~e~l~ o~~ d~l~very there~ calculated ~n accordal~¢~ with gcl~c~ally a¢cepl ~r~c~ples of aeco~nt~ng fo~lo~'cd ~y ~n~cr~ca~)~ p|~s ~n~e~e~ o~ the cost of leaf to~aceo used ~n n~a~lfacl~lrc of such c~garcttcs (ca|cu~alcd by n~ul~ip|yi~g Amcr~ca~s l~'~ragc ~le~es~ ex~c~sc by avcr~l~e lc~lf dur~ll~on fo~ ~e ~reeed~tl~ ye~lrt phl~ ~ ~c~ aln~l~l~ ~e~ t~ol~s~tnd ~gat~ot~ r~j/~r~n~i gross p~'oF, I ~o A~er~ca~ T~ l~r~c l~a~d ~d~~ t~ co~c~ l~y Ciga~e~e Io ~n~er~ca~ for P~L ~A C~garel~c~ n~fac~lr~d for and sold t~ Ci~rc~e I~y A~c~ica~ d~r~g ~c year 1952 was sg09~4g9fl of w~ch $30~702,3~ ~prcsc~¢i~ ~l~c co~t of the n~al~fac~reg p~od~¢~ and e×pense~ ~c~ed ~n s~or~e a~d sh~l~c~ II~erc~f~ $5~0gg~42~ rc~ese~ed ~l~res~ c~g~ ~ ~l~c ~l~aeco leaf carded ~vc~lo~y for ~ co~'acl and $2~723~277 ~prcsen~d g~oss pr~fi~ to ~l~e~can~ ~n ]932 ecr~ain r~al ~nd ~r~ona~ propcr~y~ plants~ ¢~r Ill~allgs~ ~ade~nlarks~ b~l~ a~g good w~ll ~here~f~ owned by C~,~rel~c wel~o loa~d ~o A~l~el~c~n for ~ ~erl~ exp~g w~l~ tI~c yt~a~• 20 al a~ a~al rc~tal ot" $~800~000 pills t~xcs assc~cd upon ~l~c |eased prope~y~ ~s~rance and or} charg~ con~lu~l~g addi~i~al ~:~al~ u~g~r al~ agrce~cl~ ~i~l~ ~n~er~ca~ ~t~r~d ~lto i~ 1936 ~ ~c U~cd St~s ~1" A~c~ca ~d all ~ts posse~s~o~s ~or the ~a~c ~ al| clear ]~ava~a ciga~ n~fac~a~ lly or for ~n~r~an~ ]~ynl~nls l~y Anlcr~¢~i~ ~lntYr [h~ a~e~l~ent ~nlo~l~d lo ~69~58~ :for ~lc ] 952. Cigalcuc does noL o~*'n ally planl~ (except cigar plants leased to Atncricau ultdcJ the lease rcferl to a},ovc) or Iol,acco leaf stocks. C]ga,ctlc owns all invenlory of PAL1, MAI,L Cigarcucs whicll arc slm p~incipally in public wale}/ottscs. Cigarctle has investments in secuHties (notes and stocks) of Cut" Tobacco Company Inc. and stocks of subsidiaries of C~ba~ Tobacco Company Inc. Cuban Tobal Company hie. has various subsidlallc~ whlch own real estate and t'al.i lands i,I Cuba and are ¢nga~ in the tobacco.business, inchlding the buying, supervising the g~owing by sharecroppers, warehousi, processing and stemming of tobaccos, alld the tnanuf'aclurc of cigars and cigarcLtcs in Havana, Cuba, subsidiary of Cuban Tobacco Company Inc. also owns a matml'actmlng plant in Trenton. New Jersey, wh, cigars arc lllailu~actuFod. BUSINESS AND I~ROPIr.RTY O]" TIlE AMERICAN TOBACCO COMPANY I American was incorporatc~l ill New Jcrscy by the Agrce~llcllt alld Act of Merger and Conso]idago~, dated Scptem]~cr 9, 1904, rel'encd to a]mvc umlcr lhe caption "]~roposcd Merger". ArnerJcan and it~ subsidiark~s arc engaged in the I~tisi~lcss of" l~lat~tifaetLl~i]~g and soiling ciga~clles, cigars and smoking al~ 6
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L 1<34 ~thtg cobaeco~. The llet sales of Amerisan and such of ils sulJsldlaries as are inclltded in its consolidated - ~el~l slatemeuts ~tere~ith were ~L06~,7~3~3~454 in 19o2 (Jnc~tlding Eeder~l revenue s~l~!ms ~i" ~'~0 4"10,025 a~xed to tt~e predue~a), medc up o~ 9.~.01% ~arett~s. 3~% Cigar, ~ed 1.~% Tol~aecos ~t ~liseel~neous. T~ pril~clp~l pro~luet of A~erican is LUCKY STRIKE C~ga~et~es. '1~ s~co~c] l~ri~eipal prodtzc~ is ?~I~ ~IALL Cigarettes ra~nu~ctured by Am~rlean for C~ga~e~e us~der alTange~e~ts de~cril~ uuder i !o~~Iw~r~ ~reI~cl th ~e s~le o~ LUCKY ~II~ C~g~re~t~s .sl~ie}l ~eg~ax ir~ 19~I,9 has ¢o~nued to date. ~le~ o~ pALL ~LL aed HERBERT TAI~EYTON Cig~r~les l~v~ ~lc~e~ed dur~ the past sevc~ years ! !~e~e c~.~sumpti~n ~d are ~ois~ raa~nly through ~oI~bers aed to s~>~xe e~:teil~ d~r~ct ~o ehai~ ~tor~s ! ~ll oth~r large ret~iI outlets. T~ }~ra~d~ o~ clg~trs n~rtufaet~u'e¢l l~y Ar~e~ieal~ ~'ere lem~ed to it ut~der ~ ]our-term lea~e with i ~i~tl~ eu~erecl into ~l~ 1932, re~erred to ~bove u~der file preced~n~ cala~ion. The prinelpal braix¢t~ n6w 15eing re~u~e~lred ~r~ EL RDI-T&N ma~ ~cil~ei~ally ~om d~mestic tobaccos, tm~l ~kl~J~OIqIO 3~ ~I£0?&TIL~-, ~ade e~irely fram H~van~ tobaccos. &merieal~ also m~u~a~ures ~ALF & t:L&LF ~n~ BULL DUP, HAM $~loki~ig T~baecos ~ud ~l imml~er ~f otl~r ~raoking, 13~ug, ~wist, cigarette and Ax~eriean S~i*pl~er~, Ineoc~orated, ~t wholly-o~etl ~u~sidi~ry, purchases "clome~ti~ le~ tobacco ~u~piyi~ ~o An~erisa~ tile m~or portion of ~s t~I~acco re~tu~rem~n~s. To~eeos ~o~ the ~a~n~a~ture o.~ d~r~es, s~rioki~ and ehewlng I~baeeos ale purelaasecl ma~ on auc~iou markets tiitd ~l~n cl~alers ~ov~l~"ae~ ~ge~e~e~; ~g~r ~o~ttoeo is pccrell~sed t~ree~ ~om ~ro~ers ~tnd ~om de~ers. This ~ul~ ~idlary also red~ies~ s~ores aud stems tobacco, maintains ~wreh~u~es ~or handllng aiid s~or~g ~ ~o~ :0baeeo ~ slra~eglc points ~s r~latec~ to fl~ ma~li~aetur~ng pl~s ~n~t grovc~ng ~reas, ~d ~t~rua~|iy has Ii~c~ a ~e~y ~ll~la~li~l inventory o~ lea~ tobacco. Colcle/1 Be~ Man~a~tori~g Company, ~t 9¢.07% owlaed ~tchsld~ry, m~ntifacture~ cotto~ l~ags, pti~[p~l~ used ~o~ the l~ack~gln~ of tobacco, and supplies A~le~iean's re~remciiIs o~ ba~ for it~ brand I~LL DUF.FL~I; ~anu.f~ctures to~cco sha~e cloth used ~o co~,e~ ~e fielt]s on whled~ Conr~ctisut ~alI~" !~h o~ Tr~e H~th~'ay-Ste~e Corp~r~llon; a~d ~so ~:~nu~e~res labels ~or ~b~'~s¢~ 0a~cl e~gsr~l~ ~ckages. Tl~e Flathew~-S~e~n~ Corl~o~on, ~ ~hol~y-o~ed stfil~d~ry, gr~s, ~or±% p~cks ~cad cure~ !~m~i~ eig~ Ie~" ~l~aeco~ alm~ ~1 of ~vl~e~x is ~1c~ ~o A~er~em~. T~ae A~ericau Tobacco o~orap~y o~ the ~/rie~t~ I,~e., a v,~otl~o~'~lcll subs~c~y, buys, sorls a~d p~cks tobacco i~ the ~ear ~ast known ~s T'~trkish ~',~ ~ sh~me~ to Ame~ieau~ ~. ~iz & Solas, Litui~d~ ~ ~vholl~o~d ErtgI~sI~ smb~idlary, ma~lu~ !act~s and sells elgare~es u~der th~ hra~ds I(~SITAS ~a~d BtF¢ ONE. The properties of Araer~ca~ an~ its ~l~sidia~ies utilized i~ the h~ntl~i~lg and ~a~lu~acture of tobacco, ~e Lt/a~u~aclure (iucl~dlng pre~13r~eatlo~l) o£ ti~e tobacco pr~due~ ~or ~ ~al'ke~ ~ e~ie~ ~ter~ ~ ~,~i~ the ~na~u~olu~i~ ¢~pe~tlc~l~ a~ eo~du~ecl ~3z Ai~lo~-ie.~t ~-e th~ ~o~.lr ~t wh~ ~L nl~m~ct~l~ces i~reltes ~vhieh irteh~de ~eilltles ~or condifionin~ and s~eraming ~ob~eeo. T~ese a~e ila or ~ear ]:l~ehmon~, ~ir~il~ia, Dur~/ar~ ~nd B.eicls~e~ l~o~th C~rol~n~ ai~d Louisville, Kelxtucky. T~e p(auts fil R~eIlraond, Virginia, ~nclude a e~g~rette £ae~ory ~nd a smoklttg ~o~acco ~etory, x~dry- ~1~ set~l~fi~ga1~dresea~ehf~c~I~ties~nd~Lorages for to]~aecoa~ldsupp]ies Theplants~tDurlmm North -~ ~1~ i~ducle cigarette a~l~ stroking ~obacco ~ae~or es, ~ec~ryi~g aud s~er~m ng fae lli~es aud storages 7
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,s*3 i < ' h,/>~, a,nd s.pplies. A[ XCei<l~vilh,, Nmah Ca,o/h,a,,tl'~"~ a,e ~, dga,,~lk factory,• ,edt'yl, g~ f,. sleminmg fa~diEil,:~ and stoiagc~ ]'or Iobacco ai/d .Upld]Cs, ]he ],]allls al ] ou]svl]Ie, Ketltuck), i]j~!~7~ I~,~llI]l~ ~lllI] cheldr,gl loh:u:~ ]'~itqOl'ies ~ind l~li~i][[i~:~ fol l(:dl~ing HIHi ~I{!Illllli[i~t Illl{] S[o]'~IgI!s ~o1 (iIi~ ~UId ~qJp]lJJl!S. ~i 'lhe l,Jlncipal cifal planls ,-,[ Allitl~elltl lllC ]ocalcd ill (]ha]'lcslon, Soulh Caro]itm, ],oui~ K~rt[tmk), Ashley, )']dladelphia, SOl-anion ~md Wilkes IlalJt~. P~nnsvl~mia. Most ol the (igal 2~la~TM m:uhi,ml) is ]casc~l rio n lhe inimllfa/:lutcr. "]'be i,]ants ~lt C]lalleshm~ ]amlsvillc and ]'hi]adelplli~,y,[lll ]eased fZtml (:igatcll~+ l'he p]~,nts at Ashley, Sctanlon aud Wilkes llano lit( ]etlSO~l flOl]l ollmis. CI (; AIII~II' I'I,; I'III(:I~S ~, .q hlCC J~nu;,t y I , 19"111, I}le ]i~[ ]uie~ 1o cu slOlile) s of Ihc ]u ]nciDd ]l]a nd~; of clg:llUlles sold bv Aurar~,i~ ~ltl(] ('.iI al(~tl¢ ]laye ]l(!(!l] ~IS f(lllolls: • ] [ i [,ri~es i~I 31m~JSal~d (.ig,~reltes , i;;(il]i ~M~,I I irla , C [: 7--~ ]UCK~ S'I'RaKII II]311:FR'] TAREY'I~ 30 July 29, 19~/~ ...... " ........... 87.3B 87.38 l,~. ']o Ju]y ~8, ]930 .................... : 3.78 7.78 ToN, e,l,,t ], ]951 .................... g.00 8.05 > ] eli~tla~) 2f~, 1933 to dale ...................... 9,00 9110 "ii; Autlm~ize(l by the Ofllce o] Iq]ce Slabilizai]on to cmea in~cast, il, ]cdczal cxcis( tax from $3.59 ],el ll~ousa]/d (if;at l, lt. ol 7~' i,e] t~aekag¢ to ~].(19 ]~lf thotl~,atll] ol 8~" per package, • ) • , ),]AIININ(;S (I]e (:IGA]II,;I'TJ,: ANI AMI RI(,AN ~:, 3']m f~dlml'hl~ II~Ia, fm the )'(als ]9d8 Io ]9~2, ]nchlq~e, ha~e ]men ilrcpared l~lolll liila]lci~ll s~lt, • r * III(:IIIS ~l]ll]l ]laVl~ ]lo~n eX~Tllllll!(] ]]) ]ll~](~ )Olld(]l/{ ¢('l[I]led Illl~]lO acco/mttutls, lh¢ data for the ),cal.~ 1~ to ]9~;L'~, inclusive, ]elating l*l (:iga~ctlc, ]m~e bectt ](:vlc~ed 1~3' ]lasklns & Sd]s and, ]c]ating k /~me]'ican, by ];yBrand, ]~oss Ihos. & lMonlgomc~y; *lie ol,i~dons of said fires appear in ]':xhlbits 5 andi2, le ]leel ] vcl y. 1: CI(;AIIT;I"I J: (qlde~] Jul,~ 30,1953 1952 1931 ]950 19t9 191.8 operalions $]&L631,076 g 313,3~13,493 $236,363319B $163,190,619 $]~093,738 $ 97,209,~ t~IL1 op~'rallolis, rellla] uTlde) 1111]OlIIUII (if J~t~e I]alel] ~'laI*}t al, ]93~, ai~i&,,,~ls, illicit i am1 ~. ~tb~ r !!!!3,!,!c Jm,~4 1 ..i3~ ,3I:'~ 2,9] ~,89/1 2,73~.~3~ 2,71/6,7el ~ 2,720,1155 ~,711,1gl ]n[orne ]~e[<*l( feclora] lille] ol]le~ lax~s on incolnc ]el.9]/1296 18,','~15,969 13fi73,~f37 11},8~16,009 6,B56,02] 5,39],~ Nel j)le~mm .... el,gJ~10,~/16 5,6111,939 5~1)32,11); 5,~74,0091]) d,155,820 3,232e~!5 ]'~11 t rIi11~$ lilt {:($)~i i;I o]i sha~{ (]95,51111 shales ouIsl/,r,d in~, ) ...... 22.(,312) 2[1.6312 ) ~3.6212l 26.R5123 21,1d (23 ]6.41 (~) ])i~i~lcnds paid nil ~lnlI too*, ~tock Iff~ slla~t~ 800 18/I]) 16.09 14,00 ]0.O0 700 "]1 ) E(:c al~, net c],,dit o1 :jie~ial items am~mnlin~ W, 8772.71/5 i~tdu(Ird in ~la[tlllCllT of ]noolnl! for 1950 in I;xhiMt $ ]21 Arty, deduclicm elf divillel~d~, tm I'lefell(d #qo(k of $31,91/i hI Ihe six IIImdhs cndcd JImc 30, 1953, and tf S23,931 in cad~ tff lhe y(,als ]9JII ll*iough 1952.
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"" 196 e~t~ci 5d ~al~ ........................ $524,780,491 [~¢os~ 1~fors federal a~l or}mr taxes on inc(~me 41,432,824 Set if~m~ .................. 17,(}75,117 ~mi~lgs pet c~;~o22 ~hB~:e ........................... l)i~ide~ pald on e~m- mon stock pet share .... Cornglon ~ aat~t~m]. i~g at end o£ perled .... A~bIE~ICAN (CONSOLIDATED) $[~065,738,~4 $942~552,03'& $371,621,130 $85B~996,089 ~873,~,917 78,351,963 80,4¸10,505 ?6,724,339 74,327,118 ~,523,925 ~C~,9~3 B3,1~,6~ 41,%2,716 45,675,154 ~912,~04 2,4011} 4.7911) 5.571t) 7.1711) %9011) 7.5811) 2.50(2) 4.00 4.00 4.00 4.00 3.75 6,454,I10 6,454~110 5,378,425 5,378,425 5,378,425 5,378,425 ,D A~ter dsd~<fion ~1 divi&nds na Pre{er~d Slock 0~ $3,161,982 L~ eaeh of the years ID48 through I952 and of ~i,530,991 ~ ~hn six monl}m ~ I~n~ 39, 195g 12~ Twe xegt4a~ ~l~art~'rly db~i~end~ o~ $.75 per shaz~ a~d an extra divider~ o~ $3.00 per share paid iVla,'ch 2, 1983. DIRECTORS A~ND OFFICERS OF SIfR%~Y]zNG COMPA~N~ LvPON CONSU~d~LgTIO~ OF TH]~ MER~ER The Mezger Agreemen~ provides that the Smwiving Company shall have 19 Direcfors and mimes the ~[I~wln~ indi~duals as its first Directors: Orpheus D. Baxa[ys A~{red F. Bowdea Richard 1. Boyish Doughs W. Brashsar Thomas 2. Conners Janae~ R. Coon John A. C~owe John S. Dowd A. Gt~rdon Fh,dla~ Proton h Fowler Cha~-les Ganshnw Paul ~vl. Hal.m H{za~n R. Hanmar Edmm~d A. Harvey tIarry L I-lilya~d John R. Hutchings, ~r. A. I~R~y ~anst~ Wi~am H. Og~bury ~ames F. S~'ickland The Dircctors named above, with t~e exception o:~ A. Gordon Fimllay and Charles Ga~show, con- stitute the p~csent }~oard of Directors of American. A. Gordon Fimtlay has se~ed American a~d its ~b~idia~ies for ~ period o~ 21 years. He has h¢¢~ a Vice Pr~alden~ and ~rec~or o~ Cigarette ~nce 1939. D~rlng the p~st 5 yeaz% and {t~r many year's prior thereto, he has bees in charge o~ sale~ a=~I advex6~ng nf c~ar~ for Cigarette and its subsidiaries. Chn~Ies Ganshow has se~'¢d ~Annec/can a~d its a~ab~idlar~es ~r a p~'iod o~ ~ years. He has been a Vice President of CigareUs si!lc~ 1950 and a Director since 1935, ~ing ~rved a~ $3adit~r ~ro~n 1936 to i9,50. Dur/ag the past 5 year% and ~oc many yea~ pc/or th~-re~o, ~e ~as supervised the administration of all depa~mems ~f Cigare~ta and it~ sabsldia~ies. Bo~ Mr. Fh~]Iay and ~r. Ganshow have be~n office~ and directors ~[ subsidiaries of Cigarette. ~r many yeazs.
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The Merger Agreement also desiguates the fi3Uowing iedlviduals as the first Officers of the SItrvi Cotnpany: Pant M, H~hu, Presido~t R]dtard J, Rsyl.~n, Vice President James R. Coon, Vic~ Prcslde~l and Comptroller John A. Crmve, Vice Preddeut Presto~ L. Fowler, Vise Pees~donl Edmand A~ Har~%, Vice PreAd~at Harry L. Hilyard, Treasurer A. LeRoy JaElsmb Audih~r AlFred F. Dr>wden, A~islalA to file Presidenk John W, Haalon, Secretary Ji W~hy Dale, Assistant Auditor Edward D. Flahert~ Assistant Audilor Prude~ivk W. Ken~y, Assis~sx~ S~¢~ta~- Joseph R. Waterhousm, Asslsta~ Trcasurer ! LNTEREST OF DIRECTOI~ AND OFFICERS OF CONSTITUENT COMPALN, ES American has been advised ~ha~ uo Director or Officer of American or of Cigarelh. and no assoei~ of ally such person has any sttbsh~lda~ mtcrcst, d~rect or ;n¢tlrect~ in the proposed merger other tha~t an oi~eer, dircctor or stockholder in one or ]Joth of" the Constituent Companies. The amolmt of Cmnm0tL Stock and Preferred S~ock of American and Cigalette owned beneficial directly or i~directIy, as of Septemhar 30, ]953 by the Officers and Directors of each as furnished them is as follows: iN-ame Orpheus D. Baxalys George F~ Bolivar Alfred P. Bowden Richard J. Boylan Douglas W. Rrashea~ Thomas P. Conner5 James R. Coon John A. Crowe Jolm F. D~le~ Joh~ S. Dowd A. Gordon Pindlay Preston L. Fowler CMrhs Gasshow ALan C. Garrat~ AIber l Gold Paal M. H&m John W. flan~on Hiram R. Hanmer Edmund A. Itar¢~- l-larry L. Hiiya~d Je~hn R. Hutchings, Jr. A. LeRoy Jans~aa J&ax G. L~ng WilBara H. Ogshury Sidney Schou Jaraes F. Striekland O~ce Common Profited Director el American 1,061 62 g~relary e~ C.igatette Director and Assistant to the President of 150 Ameridan and Director of Cigarette Director and Vice President of American2,250 Director of LLmerlcan 220 D~reetor el Amerlcatt . 174 Director, Vice P*e~ident and CoraptrolIer of 788 American Director and Vice President of Ameriea~ and 720 Director of Cigarette Auditor of Cigarette 36 Director of American g0~ Director and Vice P~esident of Cigarette Director and Vice Pre~idmxt of Americatt and 720 Direeaor of Cigare~ Director and Vice President of Cigarette DDer-tor of C~garet~e 1 Director and Vice President of Cigarette 523 Director and president o~ American and 2,504 Direc¢or and Pre~sident of Cigarelte Secretary o~ American 32 Director ot American 14/I, Director a~d Vice President of American aad gO0 Director o~ Cigarette Director a~d Treasurer of Amerlcas~ and 350 Director <,~ Cigarette Director o~ Anaericaa 200 Director mad Auditor of American 318 Director of CigareLge 5 Director of American 150 Director and Treasuler of Cigaxet~e 2 Director of Amedcan 620 Stock of Cigar Stork of American He~d ~e~et~ Held Be~Ie~ciaI[y Common Pr efer~ 10 450 20 g0 5 i log 250 100 I01 40 28 5g 313
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,198 3n~erican is also informed d,at associales of the following individ,lals o~vned benegeially, as of Septem- ber 30, 1953, securities of American and Cigarette as indicated: James R. "Goon, 83 shares of Cigarstie ~e~ed St~; P~eston L+ Fo~der, 120 sh,qres of American Common Stock; Paul M. IIabn, 85 shares d Cigarette Common Stock; Hiram R. Hanmer, 39 sRares of American Common Stock; and A. LeRoy Jaitson, Z4 shares o~ American CommotL SLoek and 10 ~hares of Cigarette Common Stock. BECOMMENDAT[O1NS OF THE BOARDS Or DIRECTORS ~e Boards of Direclors of Ameriea~ and Cigaretl~ afler care~uI co~slderafio~, ~ncluded at xespee- fi~e meetlr~s held on 0~tohe~ 16, 1953, th~ the taerger wouJd be advantageo~ to the respective (3onsti~ue~ Companies a~d their stoekbelders> 0~ the twelve mcmbors of die Board of Directors of Cigarct~e, six arc ~1.-~ me~be~s of the Board o~ Directors of American. Cigarette stoeldlolders will have as stock~olde~ o{ the Su~si~ing Company a direct iaterest in the asseL% ino~dir~ leaf invcatodes a~d ~an~, and i~ the busiuess of American Mdch has a much larger capital and ilas for aboost ~Iy years consi~tel~lp e~joyed a favorable ea~nin~ and dividend re~ord as one of the, leading corporations in the tob~cc~ industry. A~so ~he sh:_,res of Americas which are lisled on the New York Stock ~xc.hangc and are actively dealt in enjoy a m~teh broader market dxaa de, the shares of Cigarette M~iek are not iists~l on any exebatlge. The Pre- ferred Stock of Ame~ic~ax as the Surviving Compat~y wilI Rave four votes per share whereas with respect to mo~t corporate matters the Preferred Stock of Cigarette has no vodng rights. American stockholders will share in the full bonefits of Cigarette's operatiot~s. The merger will also make possible d~e ellmir~atio~ of many duplications in the operations o~ the ~o companies as separate enddes, At present pALL ~LL Cfgarettes and LUCKY STRIKE C'igaz, et~es, although man~fae~u~ed in tore same plants and stored in the same warehouses, must be ghipped to customers under separate bills ~f iadiug, notwith~tandlng such ~hlprae~ts are to the ~ame customers. Separate ~ecords must be maintained and eac~ eornpai~ y hilled separately for warehouse and shipping expellees, ft is not possible to take advantage of c~rtaln mlnimum carrier ~ates becal~e of these separate shlpme~. Customers must either suffer the 5~coaveMence of dealing with two compsnies when ordering PALL ;IALL and LUCK'Z STRIKE Cigarettes, or, if as daily happens, they combine orders for both cigarettes in one order, the company receMng the order must tran~ribe and transmit a porti,m thereof to the other ~:empany. Similar dlf~cully arises when, as happens practically daily, customers comhine remittances for PALL MALL and LUCXY STRIKE Cigareu~s in ace check. Because at present k is necessarf to maintain separate accounts receivable and separate credit departments with respect to the some eu~omers~ greafer lot tude unavoidably results than would be the case if dxe customers' credit was controlled by ot~e company. There is also considerable duplieatioa in raMn/alning warehouse in~enlo~ies, taw payroll, mall aud other departments and in recording a~d deposlllng remittances from customers, writisg and signing checks, I~anIdng arrangements, stock transfers and dlvldend disbursing. I~ost, if not all, of these duplications w~uil[ he elimilmted by d~e merge3". In fixing the bases of couve~'slon in the Merger Ag."eement as~ hel~inafm*'e set fozth under lhe caption "Capitalization of Consti~uenl Companies and Basis of Conversion on Merger". eonsidm'at~on "~as given, ~itR respect to both companies, primarily to past and present earnings ar, d future prospects. In addition, Consideration was also give~ to market values of shares so far as am:e~tainable, book yahoo, dlvlde~ds, capilal funds, developments in the cigarette industry and other factors deemed relevant, including those raentioned herelnabove under tl'ds caption, iX Ill~ ~" r 1 --~ Hill II
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( I:i I{/9 TAX-FREE NATUP~E OF TIlE MERGER It is die opinion of ~:ounsel for the Cons~itnent Companies thai, under the Internal Revomm C~h, nl in effect, the merger will constitute a tax-free reorganization and that nckher gah~ nor 10as for Fedm h~eomeTax purposes will be realized by reason of the merger by either *if the Cmhstitue~t Companib.~ or the holders of Common Stock or Preferred Stock of either of the Constituent Cornpat~ie~, except in the case i stac, kkaiders who may dissent and he paid the market value o[ ti~elr stock i1~ appropriate apprah proeecdibgs. 1~1GHTS OF ~DISSENTLNG STOCK~IOLDERS ~r stockholder of American wlshibg to take advantage of the appraisal statute c~f Ne~ Jerse~ Any (Sectib~a I4:I2~5 and 14:12-7 of the Re*dsed Statmc~ of the State ~£ New Jersey) mast (a) gi~~ written ~mtlce to Aea~eriezn of his dissent at any time prior to the veto on the merger at the Spee'~k Meeting of Stoekholdexs of Ame,rlean referred to herein, and (b) either not vote on the merger or vo | agaibst Lhe merger a~ such Special Meeting. Section 14:12-7 of the Revised Statutes of the State of New Jersey provides, in connection withb~ of cm:porafiDns, ~at any stocldmlder not voting in favor of the Afirecmmat of Merger may disse~ me*'ger £':om such Agreemeait at aW" time prior to the" vote on such merger h3" giving the COrlmration in wMch is a stockholder written notice of dissent; at any time wlthib thh~y days after the adoption and of the Agreement of Merger such dissenting stool&older by action in the Superior Cmtrt may apply for I uppohltment of three disinterested appraisers to appraise the full market value of his to any depreciation or appreciation Ihereof in consequence of the merger. Said Seetian 14:12-7 and Section 14:12-6 further provlde that the award of tim appraisers, or majorffy of them, whea~ e~nth'med by the Court, shall he final aM conclusive on all parties. If is not paid by the corporation to the dlssendng stockholder within thirty days from the filing thereof a contlrmation by such Court the amotmt of the award shall be a judgment against such may be collected as other judgraents in such Court are by law collectible. On receivin such stockholder must transfer his stock to tim surviving corporation to be disposed of by the direeto . thereof or to be retained for the benefit of the renaaib ng s odtho ders TIe Cour may direct the dissenfi stockholder to ~uhmlt hls cerfifi* ate tri stock to tim Cleck of the Com-t for notatmn thereon of the pende of tlre apprMsaI proceedings and if die stockholder fails to coragly with such direction the Court ma~ dismiss the proceedings. Any minority stecklmldm" el" Cigarette wishing to take advantage of ~lae appralsal statute of No~ Jersey. which is hereinbefore deser~ed, must (a) give written noth:e to Cigarette of his dissent at al~ time prior to the vote on tile margo.r at the Special Meeting of stoekholtiers of Cigarette to be held f0~ the ptzrpose of voting tl~ereon and (k) either not vote"~ on the merger or vote agaib.t~ the merger at su~egt SpeeiaI ?vIeeting of stockhoMers of Cigarette. 1 P~STRICTION$ ON DIVIDENDS OF A~ZEILICAN In the indenture dated JanuaW 1, 1948, re[atibg to American's Twenty Year 3~o Dehent~lres d~ Jatmary 1,1968, American has covenanted that it will m~t deegare any dividend~ (other khan stock di~ idendS)[ on any class of is stack or n~.ke aay paymen ca aeeotmt of the purchase, redemption, or other retiremen~ of any ei~ares of such stock, or make any distribution in respect thereof, if the effect of such payments or cask distributions will be to exceed lhe sum of $15,000,000 plus (or minus in the case of a de~ci0 thd ? I
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~tJU ¢oasol[dated net income of American and its consolidated stthsldlari~a subsequent to January 1~ 1948~ ~e~L Lo the r~It of American to declare or pay dlvide~ds on i~s preferred stock aL any time outsh?~thnIG ~t all such dividends on its preferred s~ck after December 31, 1947, shall be in¢inded i~ all subseque~ c~D~tations under such dlvidend re~trlctlon, aed s~t also to h~ ~ of American to re6re sha~ of ~!y clas~ of stock by exchange [or or cut of the proceeds of the snbs~n6al~y ~nc~rrent sale ~ othc~ cl~s~es ,~f s~ock. For th~ purpose o[ *~ch r~Lidsfian, d~vlde~d~ ~ property ~ America~ ~hall he imduded at the ~0k value of ~ch property. At J~a~ 30, 1953, approx~late~y $88,400,000 of retained earnln~ wa~ free this res~icLi~. FINANCIAL STATEMENTS There are annexed hereto, as E~fiblt 2: conzolidated financial statemeats of American and it~ sad~ Ad~ar~es; and as ~xhthlt 3: filaa~clak statements of Cigarette, F~rther fi~anria~ statements of American ~d o; American aed its co~olidated subsidiaries, i~cledi~g Ci~are~te~ are o~ aqle Ln ~he office of the Securities and Exchange Commission at Washington, D. C. ~md at the circe of the Ne~ York Stock Exchange. EFFECTS OF MERGER ON C~P/TAL AND SUIUPLUS OF $URWI~rLNG CO?KPA~NY If t~ p~opo~e~ m~rger had hee~ effected as of Jm~c 30, 1953, then, o~ ~ch Ja~ th~ ou~ed~g capital stock of Amerlca~, as th~ Surv~vi~g Company. would consist of s~es of ~Pref~-zed ~toek having an aggregate par value of $ and s~ares of Common Stock. }~a~g a~ aggreg~l~e pa~ value of $ . The palthin surplus would amouat to $ ; ~ increase o~ $ o~" the amount show~ hy the co~L~ol~dated ~alaiioc .~.~e~t of &raerlcan E~ibi~ 2 represents the excess of present appmxlmate market values of shares of Amcrlean received by ~kh~ders ~ C~garet~ ~>~er the t>a~ ~a]ue there~ Consolidate] ~e~i~ed enmi~g~ ~ A~rlean ~nd i~s ~bsldla~ics, a~ sh.~ in Exhibit 2, would not 5e changeth The excess of the market value, on the effective date of the Merger, of shares of AmerJem~ reechoed i~y ~L0ckholders of Cigarette over the mi~rky interest of rush sto~h~lders, a~ show~ by the ha|sate sh~e~ of Cigarette at Dec~aather 3i, 1953, will be added to the i~tanglhle asset accou~ of the Surviving Compaay. 5ud~ e~cess¸ based on market ~a}ues al~d minority ~terest zt June g0, }953, am~tmted ~o $ TR-4~NSPORTATION TO FLEMINGTON Flemingtorb hi. J., is reached by the Lehigh Valley Railroad. The present train schedulo, which is ~ubject to change azd should be confirmed, is as follows: Leave Petmsy~vm~ia Station ($3rd Street and ~e~et~th&vetme, NewYork, N.Y.) 10:55A.M_ Ar~P~-eFlemlngt~nJ*anc~ionl2:03P.M. Le-exeFlemil*gton /ur/ctio~ 5:22 P.M. Arrive Palmsylvmfia Statio~ 6:40 P.M. Artaerican will procure transporZa~ion :~rom \~w Yzrk to Flemingten hy railroad and return by railroad 9r, if expressty requested, retur~ by bt~, at o '(~n~pany expense for any sLschhold~ of record desirous of attendi~g the meethng, on his tto6fying the "ccrctary h~ writing prior to Novemher 27, 1953, that he wishes such t~att~portatiact obtaiaed, If you do .y ~equested to execute the eaclosed proxy and mall it to the Company ~ro~ptly. 13
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EXPENSES OF SOLICITATION Tbe e~pcn~ez ai pr epanl~g, a~emblmg, pnrtt mg and malhng th~ ~ol'ai o:[ proxy, noLee of meeting a~ i proxy statement wilt he paid by American. ~i In addition to t e soIc ation of proxies, American will request persons who hold stock in their na~- or custody or in the name of nominees £or others, to forward copies o£ such material to those persons ~ whom they hold stock o~_American and to request auth~ ' y for fle execution o£ the proxies.. American. m~- reimburse such persons ~or their out-of-pocket expeuses and cler cal charges n eounectma therewzth, whi~ expenses are estimated to be about 84,000. To the exte~t neeessalT in order to assul~ sufllcle~t rep~ sentatlon at the meeting, ol~eers and some regular employees of American and approximately six employe~ o£ Philip G. Canmron Company ~eill request the return1 of proxies by telepha~e, telegram o r bl person, at estimated cost of about $14,000. The amount of the expense to be borne by American will depen~ the volume of shares reprcscnted by the proxies received promptly in response to the Notice upon Meeting. If proxies are not re, solved prornpt|y~ ~Z may be necessary for A~uerlean to selid telegraphk solicitation to those stockholders who have not responded. The expense of such telegraphic sollchati~ would be aho~tt $2,500. StoeMmlders who do not intend to be present at the Mcctlng are urged to send irt theh" Proxies wi~o~ delay. Prompt response is helpful, a~d your cooperati~u w~lI be appreciated.~ q 14 t 4
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EXHIBIT I AGREEMENT OF MERGER between THE AMERICAN TOBACCO COMPANY (a New Jersey corporation) and the Directors thereof and AMERICAN CIGARETTE AND CIGAR COW'PAiNT (a New Jersey e~rporatien) and the Directors thereof For the merger of American Cigm~te zmd Cigar Comimny L~to The American Tol~cco Company~ ptt~s~ant to C~iapter 12 ol Title 14 of the Revised StRtutes of the State of New Jersey, ,202
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?
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2 % !I -4 ARTICLE I The American Tobacco Compauy~ {am ,~*hich C{garette {s hereby merged, as aforesaid, shat be the c~rpot'&t{ot% cotlt~tillbtg" af£cf the merger and the ii~ine o~ th~ corporat{on Shall be and remain the ~m~. (Said corporation sba[l beleil1~ter somcthncs be re errer[ ~o as he Surv ~Ing Company"). ARTICLE II Tbe number o[ tbe l~rst Directors of the Surviving Company ~b~fl be nit,ellen (19) an~ thereafter the number o~ Directors shall be the number fixed from time zu time i~ ~he l~y L~Iv~ af the Surv[vittg" Company, The names and post-ol~cc addresse~ of the flr~t Dkector~ o~ the Surviving Company who shall hold office until their successors are chosen or appointed accordblg to the 13y-L~ws of the Surv~ving Company are as folIo~%'s: Orpheus D. Baxalys iii Fifth Avenue blew York 3, New York Alfred F. Bowden Richard J. goylan Doug'las W. Brashear Thomas P: C~nnor~ James i~ Coon John A. Czowe John S. Dowd A. Gordon Findlay preston L. ieowler C~ar le~ Gansbow Paul M. Hahn Hiram R. Id~nmer Edmund A2 Piarvey Harry L. H[lyard John tL Hutch{rigs, Jr. A. LeRoy Janson W~lllam H, Ogsbt~ry James F. Sir~ckIand Ill Fifth Avenue New York 3, New York lll Fifth Avemte Ne~ ~ork ~ New Y~rk P. O. Box 6-P Richmond 16, Yirg~da 111 Fi~th Avenue N~v Y~rk 3, New york lll Fifth Avcntt~ New York 3, New York 111 Fifth Avenue Ne~ York 3, New york P. O. Box 808 Louisville 1, Kentucky Ili F{~th Avenue New York 3, N~w ~ork 111 Fifth Avenue Nov. york 3, N~w York ill Fffth ~vel/ue New Y~rk 3, New York lli Fi~th Avenue New York 3, New York P. O. Box 4178 R{chmond 24, Virgln~a ill F{fth Awnue New Y~±rk 3, New York Ill F{~th Avcn~e New York 3, New York Pettigre~ & ~3l~¢kwell Streets Du~t~am, North CarMi~a lll F4frk Avenue New York 3~ New Yurk Pcttigrew & Blackwell Streets Durham, North Carol{ha Pettigrew ~z /~l~ckwell S~reets Durham, North Caralh~
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2O5 The ~rst ot~¢ers of ~he Survlv~ng Company shall he foucteen (14) in number and shaif be a pcesident, five (5) Vice Presid~nt~, one of whom shall a/~o h~ the Comptroller, a Secretary, a Treasurer: art Auditor, two ~&.s~ist~r~t Auditor~, an Assistant S~.cretagy~ art A~si~'cant Treasttrer ~nd an AssiMant to ~he 2Jre~ident, and til¢ir l~.a+me~ and post-offic~ addresses are as follows: O~ez~ l~I~e~ pc~t~ee AddtesseB presid~a~ Paul M. ~-~ahn ill F~frh Aven~e Rkhara J. Boyla+~ ]¸ames R. Coon yoh~ A. Cro~c Preston L~ Fowler Edmund A. Harvey HarDr L. I-lilyard A. LeRoy Janson Alfred 1~. Bowden John W. HanIoa J. Wesley Dale Edward D. F[aherty Frederick W. Kenny Joseph R+ Waterho~se V{ce ~resident Vice President and ComptroIler Vice ~Pre~idea~ Vice ~r ealdent Vice President rrea~la~-ey Assistant ~o the President Secretary A~alsta~ Audft~r Assistant At~ditor Assistant Secretary ~& 8sistan}. Tr ~aslal'er New York 3. New Yock 111 Fifrh Avenue New York 3, New York 111 Fifth Avenue New York 3, New York 111 ~ifth Average New York 3, New York lll F~fth Avenue New York 3~ New York 111 Fifth Aven~e New.York 3, New York lll Fifth Aven~e New York 3, New York lli Fifth Avenue New York 3, New York 111 Fifth Avea~e New York 3, ~qew york 111 Fifth Avenue New York 3, New York 111 F~fth Avea~e New York 3, ~rew York 111 ~fth ,lvermc New York 3, New York 111 t~i~h Avenue New York 3, Ne~ ¥ock Iii Fi~th &venue New York 3. New York ARTICLE III The ~otaI authorized Capital Stock o~ the Su~vlv~g C~mpauy is and sk~I~ be ten million (10,000,000) ~harea ef Common S~ock of ~he t~ar va~ue of $25 per share a~d We hundred forty thousand one hundred six (540,t06) ~h~res of Preferred Stock of the par value of $100 per share. Tha Tra,l~fer Agent a~d the Registrar ~ tl~e stock ~ the Survivir~g Company shall be the pe~sotts or cot?orations deslgttated as such from time to time by re~oIutlon of the Board of Directors. ARTICLE IV The Agreement and Ae~ of Merger aad Con~lida~o~ ~ Amerlca~t, dated Septemh~ 9, i904, pursuant to which American was created, as st~ch Agreement of September 9, 1904 has hereto[ore been a~ended. ~h~[[, upon the da~e ~n which ~he megger become~ elective trader file l~ws of the St~t~ ~ New ~er~ey, he deemed to he amended further by thi~ Agreement inso~r as such Agree- mcnl of September 9, 1904 a~ heretofore amended i~ ~consistent with any provls~on o~ ~kls :~greement. ARTICLE V The By-Laws ot the 5~rvlving Company shall be the ~y-Laws o~ American as ~ho~e shalI exist ~n the effective d~te o[ the merger mltil altered, amended or repe~ied as ~herein provided. 3
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ARTICLE VI J The manner oi con~erthlg tile CapitM Stock ed the Constituent Companies int~J tile Capltaf~ Stock of the Surviving Colnpa~y shall be as foliow~: (a) Each share of Common Stock, par valu~ $70 p~r share, uf Cigalette which shall be issued and .t~t~U~dix~g <m the effective <Late ¢A the merger (extruding arty ahare~ the~ i held in the Treasury oF Cigarette and excluding any shares then owned by American, ! which shares shM1 ccase to exist and Ihe ~er[ihcales representhlg such skares shaI] be canceled) shall be converted into ~har~s of Common Stock~ par value $25 ! per share, o2 the Surviving Company and each share of Preferred Stock, par ~aIue Sft~) per share, of Cigarette which shall be issued and outstanding on the effective date of the : merger (excluding any shares then held hi the Treasur~ of Cigarette and excluding any . shares tken o~ned by American, whlch shares shall cease to e.,ds~ and the eertlfiCate8 representing such sh~res sh~]l be e~,eeled) ~halt ~e ~onvert~ {ntc~ ~hares of Preferred Stock, par value $1fiO per slmre, of the Surviving Cumpany; and (b) Each share of Common Stock o~ Ameri¢~, par vak~e $25 per sh~re, i~sued and outstandlng on the effective date of the merger shall continue to he one share of Common Stock, par value $25 per share, of the Surviving Company and each share of Preferred Stock of Amerlcan, par value Sf00 per share, issued and outstaadlng on the effective date of the merger shall continue to be one ~hare of Preferred Stock, par value $100 per share, of ~'he Surviving Companyi and (c) After the effectfve date of the merger each holder of an outstanding certificate or certificates representing share8 of Common Stock, par value $7{) per shm'e, el Cigarette shall surrender the same to the Surviving Company and suck holder shall be entitled upon such surrender to reeeke in exchange therefor a certificate or certificates representing shares of Common Stock. par value $25 per shar~, of the Sr~rv~"ing Company for each share of Commot'~ Stock o{ Cigarette ao surrendered. Until ao surrendered, each outstanding certih~te which, prior to the effective date of ffm merger represetlted shares of Common Stock, par vahle $70 per share, of Cigarette, shall be deemed for all corporate ,~ purposes, other tha~ votlng and the payment of dividends or other distributions, to e~:idenee the ownershlp of the shares of Co .... Stock, par value ~25 per sh ..... f the Surviving ~ Cnmpm~y into which stick sho,rgs haw beet~ ~o coaverted. L'uless and untll any suc outstanding certificates shall be so surrendered, the holders thereof shag have no voting rights ~n respect thereof and no dividend or other distribution gavable to the holders of~: recmrd of Common Stock of the Surviving Company as Of art~ date suhsequer, t to the effeetlve date of the merger shall be paid to the holdel~ of such o~¢seaaxdi~g certificates, but a~ upon such surrender of any such outstanding eertigeate or eert{fieates there shall he paid to ~- ~he record holder o~ the certificate or eertificate~ for Common Stock of the Survlvi~g Company fssued in exehanga therefor the amount of dividends or other distributions which filereto~0re became payable with respect to the number o~ sbares of Common Stock of ffm Survfving Company represented by tim certificate or certificates ~o issued in exchange. (d) After the effective date of the merger each holder of an outstanding certificate or 7_ certificates representing shares of Preferred Stock, par value $I00 per share, of Cigarette L shaIl surrender the same to the Surviving Company and suck holder shaIl be entitled upon such surrender to receive in exchange therefor a eertifleal'e or certificates represe~zting shares of Preferrml Stock, par value }iC~& per share, of the S~rviving Company for each skate of Preferred Stock of Cigarette so surrendered• U~t~l so surrendered, each outstanding cerdfxeate which, prior to the effective date of the merger represented shares of Preferred Stock, par value $100 per share, of Cigarette, shall be deemed for aII corporate purposes, ether than voting and tke payment o~ dividends or other d!stribations, to evidence ~ke ownezsMp of the ~hares of Preferred Stock, par value $100 per share, o~ the Surviving Co~pal~y into which such shares hawe be~n so c;~n'eer~ed, phfle.aa llld u~l[ff ~lly ggteh otltstanding certificates shall he so surrendered, the holders thereof shall have no voting 4
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207 r{ghts in respect thereof and no dividend or other di~trlhution payable to the holders of record of Preferred Stock of gle Surviving Company as of any date stlhsequent to the effective date of the merger shall be paid to the holders of such outstanding certificates, hut utm'n such smrender of aIly such outstanding eert{gcate or cer~}~c~'LLes ~hel-e shall be paid to t~ e record holder o he cer ~fieate or eertificate~ for PreEerred Stock of the Surviving Company issuect ill exchange therefor tile atllO~I~.~ Ot dividends or other distr~hLt~ioli~ wf.deh theretofore became I~yab}e with respect to the number of shares of Preferred Stock of the Stlr~d~'iflg Colllpany represellted by the eerfificate or certificates so issued ~n exchange. (e) N~ fractional shares o~ stock ~ha}I be issued by the Surv{ving Company, but each homer of shares of Common Stock of Cigarette entitled hereunder to receive a fraetiot~ of shine of Common Stock ~f the Surviving Company and each holder of shares ol Preferred Swck (>f Cigarette entitled heieunder to receive a fraction of a share of Preferred Stock of tl:e S~rviving Company, shalI receive for each such fracfiaa of a share a non-votlng, non dividend and rmn distribution paying Scrip cert~ate of tim Surviving Company for the fraction of a Mmre of Common or Preferred Stock, as the cane may he~ to which he is eneffled. ~ach Scrip Certificate wilI entitle the holder (inclttding the Surviving Company f t sha [ have acqllired the s;ulle) of ~eh Sct'ip Certi~eate to receive, on s~rrender thereof within two years after the date on which tile merger become_s effeefi~-e, together with other Scrip Certificates of llke ten.r, representing in fl~e aggregate rights in respect of one ear more ~ull ~barcs of Cornraon Stock or one or m~re full ~hare~ of Preferred St~ck of the Surviving Company, as the ¢a~e may be, certificates for ~hares of Common ~tock or Preferred Stock of the Surviving Com- pany equal to the number of iulI shares of Common Stock or Preferred Stock in respect of which such Scrip CertlKcates were is*~ed and the amounf of dividends and o,her di~tributlons ~heretofore.dec[ared in respect of such fuli shares and ~mw Scrip Cerfificate~ of a like tenor for the remaining fraction of a share, if any. All such Scrip Certlfiteates which are not surrendered wRLin the tlme af~resald ~haI/ be void and of no effect ,whatsoever on and after i a date which shall be t~vo years after t le date on which the merger is effecfive (hereinafter referred ~o as ~he "expiration date") except that the holders thereof shMI be entitled to receive within two years and te~ months after tlle expkafion d~te their pro ~ta porf~o~ of the proceeds re~ulfiag from the sale of the full ~haxe~ of Common S~oek or Preferred Stock represented by the unsurre~dered Scrip Certificates, together with their pro rata ~hare of dividends mid other distrlbutlons ~heretcfore declared i;~ respect af such full slmre~; such sale shall be made within one hundred eighty days after the expiration date (publicly or privately at then currently prevailing market ]~rieea) by the S~rvivlng Company or the transfer agent of the shares with respect to which such Scrip Certffieafes were i~sued,.as the agen~ for attd on behalf of the holders of ~uch Scrip Cerfificates~ o~at the election of the Surviving Campat~y~ may he made to the Surviving Company at a price equal to the average closing price of the ~tock on the New York Stock Exchange for the twenty full business days immediately following the expiration date. Any proceeds resulting from such ~ale not claimed wifhin such two year and fen month period shall be paid by the tra~sfer agent to the Surviving Company and be held by the Surviving Company as part of it~ general Iunds free and clear of any cIMm of those previously e~itled thereto. The shares of stock of the Sur~.ivi~g Company represented by Scrip Certi~ca~es ~hall be issued upon the merger becoming effective and shall be held and disposed of by the Surviving Company or, at its option, by an agent desigmtted by it, as herein provided. ARTICLE VII Except insofar as in this Agreement otherwise specifically set forth, or a~ provided by stat~tte, the corporate wame, purp~aea, pa~ver ~, ~hjeet~, franehise~, en ti~y, ~dstence, rights a~d orgm~izaH~n 0f Amerlca~ shM[ reitmln intact ~nd he ve.~ted in the Surviv{ng Company, and the corporate franchise, e*~t{ty, existence and rigi~t~ of Cigarette ~hall be continued i~ and merged i~to the Sur~iving C'umpany~ and the Surviving" Cm~pany shall be fuSy vested tf~ere~Kh, and upon the fi!ing in the Office of the Secretary of State of New Jersey of this Agreement, when adopted by fi !,
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-{! i!• | Z08 ! ARTICLE VIII Upon the eiTecfive date OF tim merger herein provhled for, all and singular the rights~ privileges, polver~ and fran~tdses of e~ch of the Co~stituenL Companies, boil1 ed ~ p~lhlia altd private natur% and all property, rea!, pe~son~l a~d mixed, and all debts due on whatever accounts, as well i~ stock aubseripdons as all other things in action, belonging to each oz said Constituent Companies shall be vested in the Surviving Company wltho~t further ac~ or deed as effe¢~lzlIy ~s they were ve~ted ~n ~he C~as~i~nen~ Companies; aud all and e~ely other internal o~ the Constituent Corn. panies M:all hereafter be as effectually the property o~ lhe Surviving (-:ompat:y as they were of £be ~on~fituen~ Companb~% and lt~ fide to any and all real estate, wh~ther by riced or otherwise, ~ested in e~ther oi said Constituent Companies shall not revert or be in an), way impaired by reason of the said merger; and all r~ghts of creditors and ag liens upon th~ property of the Co~stltuent Compaaies shall be preserved unimpaired; and the Con~tituer~t Cmupanies, partlea hereto~ may be deemed ~a continue i~ exi~eace in order to preser~'e tlze sa~e; and all debt% llaMIhie~, restrictions and duti¢~ ~f th~ Constituent Companles shah forthwith attach to the Su~vi~ing Company and may be enforced against it to the same extent a~ if said debts, liabilities, restrlctioas and d~tles had been incurred or contracted by it, it belag expressly provided thab the raerger of the C~nsthttent Compatlies shall no~ in aay manner impair the rights of any creditor or credi[o~s of either of tl~e Constlknen[ Companies. l~ at shy time the Sttrvlvlng ~ompany shall deem or be advised lhat auy further assignments, assurm~ces in the law, or things a~ necessary or desirable to vest in th~ Surviving Company the tilIe to any proper~y of the Constltuen Companies, the Ccmstitue~ Companies and tbei~ proper of~cers ~ad dlreaturs shall and wil| e~'ecute all proper assignmeng~ and ~ssuraaaes i~ the law, an<[ do ~ll filings ~tecessary or proper to vest title to such property in the SurvPcfng company and otherwis~ to carry oaf the purposes of tMs Agreement. it is expressly declared and Amerk'au hereby covenants that tim Surviving Company shatl be sub]eel to the remedies and liah~/ifiiaa in ~ucb cas~ prescribed {n the said Chapter 12 of Title 14 of the Eevlsed $tatntes of New Jex~ey and the several supplements t~ oced amendments thereof, and sh~I1 be entitled to all cf the rights, po~ers, ptivileges and immunities accorded to a corpo- ration organized under said. Act, and the several supplements 1:o and anlendinent$ thereof, whether now Of hereai~ex eD.~ted. ARTICLE IX The Surviving Company shall pay all expenses of thb merger. ARTICL~ X The Surviving Company reserves the r~ght to amend, alter, change or repeal any provfsioa contained m the Agreenien~ ~d Act o~ Merger and Consolidation, dated September P, 19~,~: pursuant to wMeh American was ~reated, am such Agreement o1 September 9, 1904 has heretofore ~{ been amended and as amended by this Agreement, or eo~ltained in this Agreement ~n the manner~. now or hereafter prescribed by s~atute, and all rights conferred upon ~t~ekh.olders of the Surv~}ng Cow-pal~y ~re granied dt~bj~at to this reservation. ARTICLE Xl ,~ Tl~b Agreement shall be submitted ~) the swckholders of each of lhe Con.~ituent Companie~ as provided by law and shall take effect and be deemed and tv~ken to be the agreement :~d act of merger of tile Constituent Companie~ upon the adoptioa tPiereaf by the votes o{ the holde~ o~ two-thied~ ot at[ the capital stock of each of t}{e Constituent Compa~ie~ and upon the doi~g' oi such other act~ at~d things as shall he required by Chapter Ig of Title 14 of the Revised Stat~te~ ~ New lersey and the several supplements thereto arid acts amendat0ry fhercog 6 fill
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I}l WITNEiS WI:[ERI~OF, said Constituent Companies, parties to this Agreement, have cause4 their respece~ve corporate ~eals ~ be hereunto ~xed and these pr~s¢~ to be signed by theit resp~ive Presidents or one of their resp¢ctlve Vice Presidents and attested by their respective Se~g~aries or A~sistant Seeretar[e.s, all thereunto du~ anthorlzed, and the Directdrs of each of _~id Corporations have hereunto set their hands and seals a~ ~ tile day a~d year fir~ above mentioned. TH~ A~aER~C&N TOBACCO CO~PA~CY ATTEST ! president ~oHt~ "vV, HANLO~ S~cr~ry TH~ ~MI~RICA:~ TORACC~ CQ~pAI~I~ C0~pOgAT~ SEP*~ $igaaturea ot D{rect~ra 6f Tim Amerkau To[:acco Compare: .................................................. (L. S.) ....................................................... (L. S.) ............................................ (L.~) (Alfred F. Bowden) ..................................................... (Ls.) (Hiram R. Hanmer) ............................................................. (L, S,y (Richard J. Bro'laz) ......................................................... (L. S.) (~4m~nd A* H~,ey) ............................................................. (L.~) .......................................................... (L. S,) (H~xry h llft~ ax4) ..................................................... (u s.) (ThomasP. C~aaors~ ....................................................... (L s.) (John l~, ~-~ut ghlag~, Jr,} ............................................................ (L, s.) (Jame~ R. Ceo~) ..................................................... (L&) (John A. Cr~w~ ........................................................... fL s.) (7ohn S. Dowd) ......... ; .................. ~ ....................... (L.S.) ......................................................... (L. so (J'amea F. Serlcldand) ...................................................... (L. S.) (preseoa L. Fowler) 7 I T~ I I II .....
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• 2J-O % { ATTZST : GF.X~RGE F. BOLrVA~ Secretary A~ERICA~ C~GA~KTTE AND C£C~&K COMPANy By ................................................ CHARL~ GANSHOW Vice President A~JEIIICAlg C~GAEEI"TE A~NI) CIGAI~ COMI"ANy OORPORATE ~L S]gnatul'es o~ ]3~recLozs of American C~garet~e and Cigar Cmnpany: ................... ' .................................... (m s.) (Alfred 1#. Bowdea) .................................................. (L S.) (Alber~ Goad) ................................................ (L.S.) {Jal:~ A. Crowe) ........ : .............................. (u.s.) (Paul ~{. Hahn) ................................ . ................. (L. S.) (A. Gordon Find/ay) ................................................... (L.S} (Edmund A. Har~ey) ......................................................... (L. s.) ( Brest*ala h leowler) ......... : ............................... (LS3 {Harry L. HiIyard) .................................................. {L.S.) (Charles Ga~ah~w) .......................................... (L. S.) (John G, Lang] ......................................................... (L. S.) (AI~n C. Garret l) ................... i ................. (L.S.) {Sid=eF Schou)
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211 STATS OF ~%V YORK t BE xr ~E~E.~[BE~ED time 0~ this 16th day of Octo5¢~, i~l the year Oiie Thousand Nine Hundred altd Fifty-three. before me, the subscriber, a Notary Public of the State of New Ymk, County of New York, authorized to take ackno~Iedgments and proofs fn said County and State, personally tq)pe,%red fohn I.V. lIanlon, known to me to he the Secretary of The American Tobacco Company, one of the compa~fies named in tlie within Agreement. who being by nm daly sworn ott tds oath said and made proof to my sgtisfactlon that he is such Secretary, that he "~eil knows the common seal of said Company, that the seal amxed to the wfthirt Agreelr[erll is such common scaI and wzs thereto affixed by Paul *%L t~ahn, the Preslden~ of said Company, as~d ~hat s,~id Agreeme~ w~s by s~dd President slg~ed and delivered as ~nd f~r the vol~ata±y act and deed of sald CompaIly in the presence oF said deponent who thereupon subscribed his name thereto as attesting witness, and that tile wltbln Agreement was signed by the said Dhectors of sak[ CompaTl~. Sx~ora ~<, ~xd suhscribed before me, a Notr~ry Publlc in and for tlm County of New York izx the State of New York, in sa~d County and State, tki~ 16tk nay ~ October, 1953. Jo~ V¢. ~A~LON Noi~'y public ia and ~,r th~ Comniy of N~W York in the ~*icte of NeW York (SEAL) Date of Expiration of Commiss{on , 19 . STA~£ OF N~w ~o~ )ss. ~s IT ~S~I~ that on this i6th day of Octoher~ {n the ye&r One Tho~s&ttd l~fne Hundred ann F{ft~hre~, before me, tI~ auhacr~ber, a Notary Pt~h[ie of the S~ata ~ N~w York, County of New York, autborized to taJ~ acknowledgments ~d proofs in sa~d Connty and Scare, personally appeared George E. Bolivar, known to me to be the Secretary of American Cigarette and Cigar Company, oue of the companies named in the withiu Agreement, who heing by me dttly sworn, on his oath said and made proof to my satis{actlon that he {s such Secretary, that he weI[ know~ the common'seal of said Company, that the seal affixed to the within Agreement is such ~omrnon sea} ann was thereto affixed by Charles Gate,how, & Vice PTesident of said Company, and that said Agreement was by said Vice t~reside~ s~gned and delivered as and {or the vohmtary act and deed o£ said Company in the presence o{ ~a{d deponent, who thereupon subscribed his name thereto as attesting wlmes.% ann tha~ the within Agreement was signed by all the I)~ed, o~s of said Company. P~b!ic in and for ~h~ Co~n~ ~ New Y~rk in ~he Sta~ of ~v ~ro~k~ ~ s~d County ~nd State, th~$ 16t~ day o~ Oct~h~ f953~ (SEAL) Date of Expiratibn o~ Commission . 19
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CERTIFICATE 1, Jolt ~i \\/, ll~,~ll~tq, Secre~r~,, o( 'I'h~ Al~/eri~all Tobacco Collli~ly, i~ corporati~ c~rg~ll~z~ a~ld t'xisliing t~L~dc~ ~t~d b~ ~irtlie of tbl~ laws of the Stifle of Nelv Jersey, oz~e of the Con~tltue~ C(llIIll~tIlle~ d(~l'libl'd ill tile foI(!goilIg *"\gfcl~tllelll Of l\ler~ur, do hl'r~!l)y certify bl *~t.cordallcc wit ']'irk' ]-I lli ~11¢! NLlv I~ rst!~' ](c~ i~c~ll ~tatclt¢,s a~ lilllended aiId ii~tllictd~lil) J,b ~ 14 ;12 3 thereof thai h "iht foreg'oillg Agreenll!~/t of h.lcrger of said corporatioii iltld Anleric~ui Ci~aretie r~, (igar Coinpttlly w~ls e~iered lille by the Directors of sald "1"he AIl~er~can ']'obac¢o Coll~l~aIly, tlutle llle coIl~orate ~eal of said coIporat~oll, pllr~uallt lo resohl~iOll~ ildOl)~ed by tfic }lo~rd of ]}irectors ~l s,~id "ghe Arele~icali Tc~baeeo Ct~rl/p~ll~y l~l ~ duly cl~rlv¢~lled I~ieeling tX~el~of held oll Ocloher 16, 1953 at ~vll~cfi libel'fling a Sl~ecial Meethl~ of the I~referred al~d C~llllll/oi~ stc)ckholdets e)f s~.i. cclil~olati*~l x~,;i~ callerl, i11 accold;lllce with Ll)~ ]~y-Laxls, o be held oil the 21 d~)" of l)ecel bet 1953 for lhe, ptlrl~ose of eoll~iclerlzig *illc sailic, 2, ~id Agre<~ll~ellt ~a~. ~/~dy ~lbl~/it~¢({ ~.o t[/~ I're[errcd ~<l~d CoI~/l~oli ~tc~kholders o~ sal, 'lfie Am('lictt~l Tobacco ColllL)aily at a specild Illeetblg thereof called as aforesaid and drily held at 34 Collil Street iil the Iloiotiglt of Flenlingl~lll, ili the C~ilty of khlnterdoi~, New Jersey, of wlii~h ll~e~til]~4 twcnl2+ days' ilo~iee of lt1¢ time, place and object ttlereof was i~lailed to tlae lasl krt~vl~ 1~o~ o~]]ce address el e~eh ot ~ald stockholders. 3, ..q~lid Agreenleill was eollsidt~red by lhe Preferred alld Coilll~loil stockholders a~ said nleeliilg aiid a vole of .~ald stoekholdeis was drily taken by b~Ilot for the adop~.ioii o; rejec~ioll of sa}d Agreemelll, e~eh shale ~f stock entitling the holder lllereof Io one vote~ and tile ballots el the sto~khcddee~ were ~/~ly ¢~sc by tlte stockIl~lhlcr s ht lscr so~t ~r by p~ony ~t~4 ~tockholder~ owl~ fi~g /nore Ihall Ilvc~-Ildi-ds iJ[ all the caldtal stock o[ s~dd Tile Aillerlcaii "]'obac¢o Colnp~ny voted favor of ~l/(~ ~ldOl)tioll oI said Agreelliei/t. 4, The l~l~elhl~ ~d th~ l~ft<vred a~d Ci~ll~m~ stoc'kll~ldeis c~f Th~ Alnerieal'~ Tobacco Conlpany and Cle said w~te by ballt~t Ilpoll tile ado[~tloI1 of said Agreelllellt were lleld and taken separately hOl:l the I~leetllig of the stockholders alid v(}te of said American Cigarette and Cigar Compally, 5: "]'he prllJeipal office ~f ~'he Atl~rleat~ Tobacco Cotupatty fi~ tke State o# New jersey is 117 Maltl SIteet ill tile ]Joiollgh of Jrlemlngloi~, ill the Collnly of ~tutlterdon, New Jersey, and Jlidge George Kil¢lwles Large is the Ageilt therein, itl charge thereof, a/ld ullon wholn process agalllst said eoipoiatiotl itlay b~ served withili sa~d State, ]1~" WI'I'NI¢SS W}IIgRI~OI~I ] ~lilVe llereuilto stalled lily i~tllle as Secretary ~lld al~iX¢(I ~]le Se~[ of said "1lie Al~leib an T~lbaeco Coitll);illy lhls 2d day of Deeerl~ber, 1953. (CO ](I?0 I~.ATI,: SI,'.A l, ................... v .......................................... Seerett, ry
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21a CERTIFICATE ~ ~EOR~ ~ ~OL~VA~. Secre~ty of A~ri~ C{gar~t~e aad Cigar Company, a eorporaeion org-aalzed and existing under and by virtue of d,e l~ws of the Stat~ of New Jersey, one of the Cot~stitl!ent Companies described ia the foregoing Agreement of ~ferger, do hereby certify in accordatlee with Title i4 of the New Jersey Revised Statutes as amended and particularly R. S, 14d2-3 thereof that: L The foregoing Agreement of Merger o~ said eorporat{on end The Am#riean Tobacco Compmly was entered into By the Directors of said American Cig-aoz£~e and Cigxr Corrlpa~I}% under ~be corp~ate ~eai ~f sMd ~rporagon~ pursuant m resolutions adopted by the Board of Dkecter~ ai sx{d American Cigarette and Cigar Company at a duly convened meeting thereof held on October 16, 1953 at which raeet[ng a SpecL~f Meeting of the Preferred and Common stockholders ot sa{d corporation was called th accordance wi~h ~he By-Laws, ~o he held on ~he 4th day ~g December, 1953 for the purpose of considering the same. 2. Said Agreement w~s duly sabmitted to the Preferred and Common stockholders of said ~Amer{can Cigarette and Cigar Company at a special meeting thereof caiied as aforesaid and duly held at the office o~ file corporation at I17 Main Street {n the Borough of FiemiugtotL in the County of H~nterdo~, New Jersey, cd ~vh~eh meeting twenty days' nonce of the time~ pI~e ~nd object thereof was mailed to the last known pos~-of~ce address of each of said stockholders. & Said Agreement wa~ conslde~ed by ehe Preferred and Common stochhoMers at said meeting" - a~id a vote o{ said stoohheIders w~s duly %ake~ by ballot for the adoption or rejection b{ ~d Agreemenf~ ~eh sh~re of ~ock ~ndtiiag the holder fimreof to one vote, and the Ballots o[ the stockholders were duly cast by the stockholders ~n person or by proxy and stockholders owning more than two-thlrds of all ~he capkai stock of said Amer~eaa Cigareete and Cigur Company vo~ed in f~vor O[ the adopt[~tl o{ said A~Eenl~ut. 4. The meeting of %he Preferred and Common stockholders of American Cigarette and Cigar Company and the said vote by. ballot upon the adoption of said Agreement were hem and taken separet~ly from the meet{ng of the stockholders and vote o~ said The American Tobacco Compm~y. 5. "[he principal offtce of Amerieau Cigarette and Cigar Company i~ the State of New Jersey is at 117 Main Street in the Borough of Ffemington~ in the County of tlunterdon, New ~eraey, and Judge George Knowles Large is the Agent therein, in charge thereof, and upon whom process against said corporation may he served within said State. fig ~VITI~-ES~ ~EEREOF~ [ have hereunto signed my name as Secretary and ai~x~d ~he seal of said American Ci~'are~te and C{gar Conlpany ~his 4th day of December, 19~3. GZORa~ E, Bohw~a Secret~ry ( CORPOB_ATE SEAL)
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• :e~4 F~X1MB1T 2 THE AMERICAN TOBACCO CO~[PAN~" AND ITS i CONSOLIDATED SUBSIDLARIES FINANCIAL STATEMENTS
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/. J Opinion ol Independent Certified Public Accoun[anls TIlE ]~OARI) OF DJRI~CTORS A~D STOt?KIIOLDF.R$ OF TIIE AMf:RICAN "YoIIACCO COMPANy We l~t'~e exanril~ed fl~e finaucLat statements of The Anteriean "l'ohacco Comp~rty atxd its cm~sal{, subsEd{arles, set forth in Exhibit 2, as o1 I)r:cember 31, 1952, and for tile years 1952, 1951 and 195 The fillan¢ial stateint!nts of American (igalette and Cigar Company, a ccmsolidated aubskga:y, werl examhled by )Iasklns & ~%elIs, whose ophdon appears iu l,xhlbit 3, Our enaminafiml was nlade i~ accordance with generally accepted auditing standards, and accordingly hlcluded such tests of th~ accounting records of the companies (except American Cigarette alld Cigar Company) and such othq anditillg procedures os we consldered ilee£~sary i[i 1he clrcutnstances. We examitmd or tested acc.unfing records and other data supporthlg the prices at which c{gareth nlamffacttlred for American Cigarelte and Cigar Conlpany ~ere billed to that subsidiary during tl~ yea~s 1952, 1951, 1950 and 1949, and have reported to/lasklns & Sells that, in our opinion, such prk~ were fairly deterndned in aeeordatte¢ wlth the provisions of the agreemettt, effective Janttary [ 1949 l~etween "die COlllpald~S. We pte~ously mad~ yearly ~xa~nati~ns s{in~lar in s~l~ t~ Idlat it~ea~cd iI~ the pr~eedit~g paT; graphs of the financial statements of The American Tobacco Company and for the yeats 1948 arid 1949, "We have reviewed the data appear{ng under tile e~ Cigarelte and Amerlean" relating to "i'he Anlerlcatl Tobacco Comfxany and for tim 3egrs 1948 to 1952, inchlsive. ]n our o,qin]on, based ~lpon our exanfinatlotLs and the report of ]]asklns & Sells, tile financial statements {Exhibit 2) present fairly the consolidated financial position of The Tobacco Company and the subsidiaries included therein at l)eeember 31, 1932, and the results o] thtir operations for the years 1952, 1951 and 1950 and the data relating to The American Tobacc( Company and its COllSglidated subsldlarles, appearinG under the caption "F.arnings of Cigarelte American", pre~ fe, irly ~k¢ ~t [fl¢~31~ arid ¢~tl~er itlforr~at~+3n s~K~w~ therein {~r fl~e y~ars 194g to 1952, inclusive, in conformity with generally accepted ~accounthlg principles ai)pHed on a ¢onsistellt l)asis, ' L','l~a~t), Ross BROS, & }~IO~TGOMI{RY, Nm~ York, FehruarZ 2, 1953.
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216 THE AMERICAN TO~SACCO COMPANY AND ITS CONSOLIDATED SURSIDIAR[E~ (NOTE i) CONSOLIDATED STATEMENTS OF INCO~TE FOr the S[X Months ~hlded June 30~ 1953- Not F~aralned by Independent Certified Publlc A~ounta~ts Fo~ the Years 1952. 1951 antl 195~ ExamLued by Independent Ce~ti~ed Public A~ceuntants Six i~]ont~ End~l J~v 30~ 19~ Net sale~ ...................................................... $524~780fl91 Cost o~ sales (Note 2) .................................................... 453~60fl93 GL'oss pV¢ flt ....................................................... ~'1,020,298 ~ ~/i~ng, o~ver t] sing, general alid adlnln~str a£1ve exp~nses 20,717,045 50,303,2~ Add: ~r]e~ (Note I0) ................................................................ 181~297 Other ~¢¢cm¢ ............................................... IZO~O~O Oedt~: hlterest on debentures ................................................ ~,849,494 Rede~ip6on pr~mlum 4~o~unt in 1953) and amor- tiz~loa o~ ~scot~t on dcbentur¢~ .......................... 20,t,89' Other interest ~d discotmt ............................... 1,7~2,91~1 prov{3~on {<~r re-~rv~ a~st ~n~estg/enls ~n sezt~i tlea (so tk~d ~ direct write dax~vs o~ iav~tweu~ acoot~t ~ .............................................................. -- 1~5~ 195~ ~95~ SLO65,Y38,454 $94K552,0~4 ~871fi21,130 ~40,321,656 8,1;,973~556 *,4* 753,93~,691 125,416,798 124,57~47g 117,683,4~9 37,700,056 35,425~916 31,066,7Z5 87,71~42 ~9,1S2,~62 86,616,714 1158,071 487,467 686~19 3L~958 372,657 7~5,299 89,188,771 90,012,686 87,658,5,32 7,372,300 6~73.97l 6,963,552 181.603 Iq2~02 28~,~2 2,145,36~ 2,21~,476 I~54G694 PortS~ .... ol aek h~o~me o[ A:acrk:au •C'~:arat~e~ ~md Cigar Company agpllcahIe to mmorl~y interest.._... 167,061 212,127 191,656 23fl~.54 Other ¢x~cn~ arc} }o~es .................................. 422,782 T~,41~ 426,276 422,987 Ta~3 d~u~.~ .......................................................... 6,18L758 [0Z~6~08 9.~8~ • 10,934,198 i~¢ome ............................................................. 44,4322~24 7&/51,96~ ~,410,~05 76,724~9 F~er~/i*~¢nmc taxes ....: ....................................................... 2Z,165,000 39,335fl0~ 40,038,~00 31,759,000 Federal excess lofits faxes (less carry-b~¢k credi~ oi fhe 0 tke~ mc.~nle ~xes. .................................................... ~9~00LI 2~,000 2~693,~ 2,982~000 2~,I J3,OOO 44,288fl00 47TSff~O00 37,454,000 77~,Z93 43y,I6~ 2~462,377 .A-et ~no)me . . $ 17,075,I17 S 34~f}58,963 $ 33,I09,669 $ 4~,732,716 The ac~mp~l~[ng no~es are an ~ntegral part (]i the ~9/1~[ st0xetl%ents. (See 9age for additional informat{on rel~v(" to ~he dls~v~;)t~tion of certain exp~n!es• 0d.ld ~[ ~.L~tO~ltl~ 3 ~T
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;d'l V Till,: AMI,;I¢ICAN TOBACCO COMPANY AND ITS CONSOIXDATED SUBSIDIARIES (Note I) CONSOLIDA'IED )IALANCE &IIF.~]'S June 30, 1953- -Not ~xamlned by Independent Ci:rtil~ed Public Accountants 1)ecet~1)er 31, 1952- -)~xamhled by Independent Certified Public Accountants ASSET.q _ June 30,¸1953 _ Dctnand deposits in I,ai1ks and c,~sh on hand ........ $ 37,903,501 Acc~,unls Iccc]vable, cl1~t~m~ers .......................... $ 49,459,035 I .css, ]'i¢>vi~ion for cash di~counls alk~wable .... 893,661 ~,]iseellaileOllS ~cc¢lunts Teeeivallle .......... ]nvenlories (No(e 2) : ] .ca[ tobacco ................ 535,370,473 ]Hamlfac~ircd stock .................................... 59,259,583 SUpl>lic~ ............................................ 16,712,779 l~e~cnue sta I, ...................... 4,48.%422 615,g28,256 (:a~h c~n deposh wlth s]tlk{ng fund Iru~tees fol ic- Ee up ion o1 dehenh~res ........................................... 3,001,616 l¢cceivabks from s~lhsi~liaries, i ............ 8-I,979 "Yol~l current assets .................... 706,342,672 hlve~t111ellls in stclllil[¢~ o1 sll]~sidiaries, at an]otlnts 1~ot iu excess o[ cost (No~e 3) : Wholb' owned Ilr;tish sul,s;dialy ..................... 5,400,000 OlheI~, less le~crves of $96jt'~.'~ and $100,079, lespcct[vely .............................. ]1,279,118 16,679,118 Advance~ to gubskllary ............. 2,780,000 Insmancc d~j~s[Is aT1~] miscellaneous h~vcsttucnls ..... 2,248,322 ],'e&l cslatc, lllachiner),, fixlurcs~ etc~ al Cost (N~[e 4): ]~cal cs ate a~ d [ t 11tl t gs .................................... ~,lacl]hlety ~nd cqtlil)iilcnt • • • Othel ........................................................ ] tss, Allowmlce fc~T dcpleciafion (Nolc 4) ]~l~'pald ex]JcTis~s fi//d dell~rrl.d chalg~s: Discount on notes and debenlurcs (Note 5) .... Otllet .......................... llranll~, tLade.nlal ]is, p~t ¢tlt s, good will, etc. (NoR 6) December 31,1952 $ 26,409,'~ $ 45,312,838 !;: 48,565,374 803,335 44,509,50~ 958,9d6 78~,1.~ 576,826,637 i): d 1,110,928 17,830,127 ~ 4,985,427 640,753,1!! 192,916 712,653,9~ 5,400,000 11,100,133 16,5~30,13.1 2,846,000 2,375,5~ 'lhe ~lc¢Olll]l ttt~][Ig IIO~ arc all integral part of the fl[/~llC[[lJ ~lgllel~lOll[~ 4 2,135,682 2,253,975 2,916,679 5,032,36J 2,0.15,444 4,299,419 1 I $778,257,269 $783,154,~ 39,581,858 38,889,~60 31,092~319 33,278,901 5,728,180 5,168,099 79,402,357 7.7,336,06D 34,247,562 45,154,795 32,856,525 44,.179,55~
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THE A~dERICAN TOBACCO COMPANY AND ITS CONSOLIDATED SUBSIDIARIES (Note D CONSOLIDATED BALANCE SHEETS June 30, 195~---Not Examin~l by llldependent Certi~ed Public Accounta/It~ Degemb~r 31, 1952--Examlned by Independen% E~tified Pilbli~ Accountants LIABILITIES >~etes gagahle ~o kam[c~ .............. ~ .............................. .%co~tmt payable, trade ............................................. ~vide.~d3 ~n pre~er red a~_ock ................................. i~crue~ {uterest ........................................................... Accrued ~xes ............................................... Advert[~iuK an/[ of[mr ancrued expeDaes ...................... .%raount due to Of~cel'$ ................................................. Debentnres ~ ha redeemed through s{~k{r~ {und operations (Note 7) .................................................. Payables to subsidiaries ........................................... Total current llabilides ......., ........ /gehentur~ (Note 7) ...................................................... 1[ nor~ty giterest kl American Cigarette and Cigar Corapang ; Capital stock ............................................................ $ ~et~k~d ea~nit~g~ ................................. ~tm~ ~I), 195~ D~e~bez 3t, 1952 $102,030,000 $ 92,000,003 5,712~33 5,210,888 790,496 79O,496 1,499,782 1,561,583 39,995,574 48,032,415 3,585,908 1,990,026 272,(181 587,690 3,873,000 10,950,000 472,996 ~ 276,687 lS8202,270 161,399,785 24Z,405,000 243,570,000 400,607,270 404,969,785 585,150 $ 585,150 632,043 1,217,t93 525,459 1,110,609 CAPITAL CapitaI stock: Pr~erred, s~x per cellt ¢llr~lS~l]¥e~gar ~ahte $100 Fer share, authorized 540"106 ~hares, i~ued and ouasranding 526,997 shares ............ $ 52,699,700 Commml, par value $25 per share, authorized 10,000,000 shares, issaed and outstanding ~,454,110 ska~.a ..................................... ~ ...........161,352#50 E,~ces~ o~ net procee~ from sale o~ common stock _ ~er par value ........................................................... 43,29d,44I 257,346,891 8e~iL~ed eazni~gs, as annexed (N~e~ 8 a~d 9)..].. 1 I9,085,915 $ 52,6992OO 161,352,750 43,294,&II 257,346,891 37~,432,8OO 1t8729"064 $778,257,269 $783,154,349
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,i • 1,~80,991 &161,982 3,161,982 3,151,98~ 16,1351275 23,933,991 21,513,700 21,513,700 ] J
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J. 22O TIIE AMERICAN TOBACCO COMPANY AND ITS CONSOLIDATED SUBSIDIAEIES NQt~s Ae~ampany~ng ~inanelal Statemenls 1. The knzneial statements of American Cig~arette dud Cigar Company (96.28% of the cotntuon capital stock of win/oh is owned b1' the Compatxg) and those of ati whogy ovmed d~nestic s~bsid~ar~es o~t/~e Companyj except The Amerlean Tobacco Company o~ the Orient, Inc., whlch ~s not rdgmifie~ant, ~re inch!dad ~n the con~elid~ted ~nanclaI statements. g. fnvexi~r~es used in the co~npu~7 af cast ~ safe~ are priced at cosL~ which resuB ~rem t~e a~rag~t~g inottLh[y Of ra-ansRctiDns refected in th~ i~ventory accollL%L5 ~xcepl that r~ve~ltte &tamp invetltorics are priced at actual costs. The an~oun~ of inventories ~t the beginnhlg and end o[ the periods were as /0gows : Beglnnh~g ~,~d petgod PCC~Dd judge 30, 1953 .............................................$640,753,119 $615,828,256 952 .....................................................~ 5~,54d,a~i .6iO, ZS3,119 1951 ...................................................................... ~ag,szo,gga 594,543,851 1950 ................................................................... 53I,$87~8~ 532,679,223 It is a generaBy recognized trade practice to cla.~sSfy the tota~ amo~lt 05 leaf tok~cco inventory as a current a~set although par~ o~ such inventory~ due to duration ol aging proce~e.~ ocdinaxilp wo~Id not be reallzed within one year. It is not practleable to estimate that i~rtion of the leaf inve~ttary amouat~ at june 30, 1953 and December al, 1982. which might remain fn the inventories at June 30, 1954 a=d December 31, 1983, respectively. d. Based upon financial statements of tile subsfd~arie% the equky in net ussets o~ the~e subsidiaHez ve'a~{ as foliowa : Joax~ ~0, toss Decemlaer aL 1982 V¢hogy ow=ed British (translated ~nto U.S. dollars a~ appropriate rates of exchange) ................................. $ 9,714,I28 $ 8,976,22I Others (includes intanglhle asset~ of $2,835,925 a~ J~me 30, 19&3 and ~%2,766, 594 at December dl, 1952) 15,687,892 15,4li9,250 4. The policy of the Company a~d its consolidated subsidiaries with respect to depreciation of all m~sets ~ubjec~ to depr aeration and obsolescence is to set aside in a reterve a~count such amour as is estimated willequaltheec~tofthes~ropergvbythem~doyitsuse~uISf~. Theprovisionthusmadeisacctwat6ated on the straight-Ime method. Rates of deprecmtmn are yarned depending upon location, use and type o~ eqmpm~n. The ra es u~ed o compute he annual am~unta [or the major items are as io ows : 13uBdlngs: Concrete ............................................................................ 2~ Brick and stone ...................... : ...............................................55¢~ GalvanLzed iron ............................................................... 5g~. h~aehinery dud equipment .......................................................... 5% Off'c~ ~uruitur~ and equipment ................................................... 5~ toga % Passenger automobge~ ............................................................. 24% Truck} .................................................. : ........................................... 12% and 24~ It is the policy of th~ Company and its eonsol~datdd subaldiar~es to gd ust the re*arras ~r depr eclatleat for tixe ac¢~m:ulat ed anaounts of deprecladoff applicable to each {tern ¢d properW plant and equiptmeat re6red or otherwise dgspused of. Profits or losses r~ulti~g from such dispositions are included in the statement of inoanm. ~laintenatlce and repair e~pendilttl-eS are charged to cost or expense. Bettern~e~ts and renewals which improve and extend the life of taxis thug p~ op~r ty, plant and equipment are ~pitalized. 71 is the practice o[ Puneiican Cigarette and Cigar Company ve~th regard Co assets leased to The American Tobacco Company to amortize it~ ihvestments in ~uch a~set~ over the term of the lease (99 years). ~nder such policy amortization of $42,928 was detiueted in the six months ended ~une 30, -7
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" • y~'* • J~n~ 30,195¢ Twenty year 3~, due April 15, i962 $ 508,000 $ 62,080,000 Twenty ye~r "3~, d~e J~uuaD" 1, 1968 ..... ........................... 3,000,000 60,000,000 Twenty fi~e year 3%~ due October 15, 1969 ............................................ 355,000 71,736,f/OO Twenty-~ve yea~ 3~/%, due Fehn~- ary 1~ 1977 ....................................... 48;599,000 ,3,sv ,ooo a42, os,o Z * Estimated principal amomais to be redeemed through s~nklnt.~ fund operations at prices as provided by the inden~ares, le~s at ~ne 30, 1953, $3.029,000 o~ Twenty Y~r 3$o Debeat~res, du~ April ~5, 1962, and $2,932,000 o~ Twenty-Sve Ye~, 3% D~bent~re~, due Oet~he: I~, i969, acq~fir~d ~or • retirement on July I5, I953, through slnkinK ~und ol~erat~o~s. The e~dm~xted~gg~eg~e ame~mt o~ payme~s to the sinki~g fund~ {~r the ye~r~ 1953 ~o 19~7 inch~ive, a~e ~s ~ollows: 1953, ~11,972,280; 19~4, $12,231.185; 19~6, $12,505,224; 1956, $12,TgT,44g; ~9~7, ~¢13,078,055. A reconciIat[on o~ retained earnings o~ the Company, separateIy, and consoIidaixd retained e~rnirvds foilow : Jttrte 3o~ December ~1, I953 195z m Retab~cd e~rnb~gs o~ the Company. separately ................ $100.I99.581 $103.949.124 Ex~e~ ~ eqnity of the C~ml~ny. in net assets of con aol~da~ed aub~idlak~e~, a~ ~bown by their hala~¢~ sheets~ over bc~k mnount of the Cempany's investments i~ st~cb h~bsidiarie~ ($15,177,4~5 a~d $I2,419,840 ~f such P~'cee~.% re~pect{vely, ar{ge~ fram c~n~lidation o~ American Cigarett~ a~d Cigar Cqmpany) ........... 25.020,255 21.568.875 125,219,8,46 125,517,999
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! Notes Accompanying Pinaneful Statementa -- (ContLuued) j'u~e 30, December 31~ fntercompaany profits in inventories, {ncIudhlg $395,59.5 and $113,008, r~peetlvely, ir~ American C garette and Cigar Company's invent~ri~ ~ . 711,258 386,770 glda.fitutfun of depre¢iafioll for amoedzat{on pro- vg]ed h) lessor (American Cigarette and Cigar Compae~y) with respect t~ certafu a~et~ covered bg an intercompany lease wltt~/he Company ...... 5,422,873 5,404,165 Cc,nsoIidated retai/Ied eart6ugs .............. $119,0fi5,915 6,133,931 5,79~),935 $119,72Y,~64 9. ~A~idar the provisions o~ gie fude~ture relating to the Twenty Ye~xr 3% Dehenthres, due j~mrary I, 1968, cash dividends declared an comnlott ~t~¢k~ and. p~.2n~ea~ts mar2~ i~ purefiasfug ~hares o~ any ciass o~ the C~ipany's stock, ~ubsequent t~ December .31, 1947, may n~ exceed the aggregate o~ $ o 000,~300 az~d consolidated ~et inoome earned subsequent to Decmnber 31, 1947, less divlde~l~ -- paid o~ preferred s~ock. AI~pmximarely $88,400,000 aad $89,000,000 of reta{ned- e~arnings was Iree ~f th s restr el ~ at )'une 30, 95 a d 3ecember 31, 1952, re~ec~keely. 1~). The equity of the Compaay a~d its consolidated st~hs~diaries in earnings o[ mlcon~oEdated sub- I ~d~ar~e~ (fueludfog the wh~lIy owned British s~bsidiary) animated t(> $1,026,71fi for the six months : e~ded June 30, i953 anti $i,753,689, $1,831,879 and ~1,~34,193, respectively, for the years 1952, 1951 and 1950. The e~rnings oi the whogy owned 13ritisi~ subs{diary translated a~ approprLate rate~ ~" exchange ~ere $737,906 for fue ~ix months ended Ju~e 30, 1953 at~d ~i 089 774 $1.20~,679 mad $773,457, respectively, for the years 1952, 1951 mid 1950. • 11. A n~¢on~r~hutory Retlremer~ PIa~ t~rovldlng unfunded (pa~zs ~-go) I~enef~tu ~r empl~yee~ became effective as o~ j'a~uary 1, 1949. S~b~ect fo cond{tlons contained in the Plan, ret~remeat benefits (normally commencing at age 65) and d~saNlity benefits ~re ~vailabie a~er 12 years of continuous ~ervke. The normal retirement beaef~s and di~abitity benefits ~re based ~pon ra~cs varykng betwe~ i ~; and 2y~ (a~ of a~mual compensation on the effertJve da~e g~r eaefi applicable year of pas~ ~ervice and (b " o[ aut~ua[ earnfugs f~r each appI~cable year o~ future service, ~ub ect ~o a deductfur~ eg~3 ~.o one-hell of the primary social security beneft~. The n~aximum a~me~l benefit i~ 50% ~ the first $10,000 o~ the er~pleyce'~ a~rage ear~aga dur{ag hia Ia~t five years o~ e~ployme~t, pl~ 30% of ~ny e~ce~, a~rl shall rot exceed $25,(kc)0. ~fh~ Plan als~ p~'ides .~e~-era~ce hellefit~ ~oz empfu~ees a~ ]east 50 yeac~ o~ age whh 20 ye~rs o~ s~rv~ce. Under the Plan the Company has the r{ght to amend, modify or terminate the }~lan ~ ~vAaol~ or in p~rt at any thn~ or ~rom time 1o th~e. The ~cregofog ~s a brief descriptfo~ of the essential pmvls{ons of tile Plan rand is ao~ ittlended to be complete. I Pa~ueats made ~nder file ]?1an m~d charged ~o consolidated i,~eome were $1fi2,~3 ~n¸ the ~ix months eadefi ~une 30, i953 and $288,968, $224,089 mad $I36,943, re~pec ~vey, n the years 1952, 19~1 ~nd 1950. It was estimated by iladepe~derlt actuarie~ at the i~¢ept[~tt o~ the l~Ian (~n the he~s o~ the w~ge and salary scal~ and ether ~acts and cend{fions thee ~xis~fug or a~'~mcd) that annual pa~n~en~s would increase to an u~t{raate rate Mter I979 ~f $2,431,450 ~r the (~mpany and its e~n~l~dated ~ubaigiarie~ arid o~ $1,941,I50 for the Ccanpany aI~ne. • S~lch a~nua[ payme~ts inch~de estimated ,~2~l~[trlts [J~).~bl~ whether lne~st*r~d by po~s~ or ~ltllr¢ s~rvice~. Thcr~ is no ~olzllh[tlnenl to fund~ file ~zy~r~¢1lt~ under k}l~ l~]ai1 ~nlJ no e~{~1~ o~ the 1)~s~ ~ervice co~ ha~ bee~t ll/ade atlc[ lo rrlal~e slteh an ~folRt~ wollid reguite ~tlt.e~sonable effur£ .-lng e~pe~tnsc. 9
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Sb~ mc~¢ha e~ded Jtme 39, 1953 250/i08.6~2(1) 234,469 Y~r 1952 ....................................... 5~0,565,g87( I ) 419,079 435,186,239 1 .355,937 "feax 1950 ................................ Oe~rz (5[o%¢ 2) : Six mo~ths ¢r<kA ~ 3~ t~53 1,804,512 515,329 year 1952 ...................................... 3,6~ 5,692 ~B~,Z~ Ycar 1951 ........................................ 3,512,117 974,045 year ~9~ ............................ 3~2fl51 ~6,113 ~anag~¢n% and ~el'~e~ coti~ra¢:~ ~ae$~ Iqca~. R~ a~d reyzlt~es: SLX m~uth~ ~ded J~e 39~ 1953 143,567 154,15l y~r 195~ ......................... 3¢7,775 324,276 Yrar 1951 ............................... ~21~198 310 3t5 Year 1950 ................................. 293,678 29~,641 So~ltle~ : SLx II~llhs ~ded ~une 3~, ~953 252,82~ Year 1952 ....................................... 543,303 Ycav 1951 .............................. 552 036 Year 1950 ....................... 522,72 (i) Exceeds ~he at~o~n~ {scIiided ;~ sqles by F~K~5, ~45,2~, ~d22,328 and. ~9~,766, respectively, ]for • cnded Jut~e 30, 1953 ~nd f~r tb~ years 1952, 195i ~ 19~0. The major ort~on o~ ~uch exe¢~ repres~al~s ~h¢ cost ! revenue gt~mp~ ~t .~e~ed to rnanufacl~r ¢~ ~t¢ck d~str lbtzr.c~ ~ factocy emp~ye~ va~t2aout char g¢. (2) C~4~r~se~ : fldx ~ ~,~¢h~ ~'~le~ imae 30,1953 I952 19~1 1950 ~qtate taxe~ not ba~cd on income .............................. $ 348 794 ~ 740,41i $ 725,696 $ ~,~75 zJnemplo)~n~t ~nsuranee a:ld ui4-ag¢ beaneries taxes 763fl ~ L620,M7 },7~36,203 1,477,630 l~eal ce, tzte z.nd ~ber ~axe¢ ........................ 1~07,i29 2~42,942 2,034,263 2,137,660 Totals ................................................... $Z,319,8~i .54,603,96~ ~4,4~6,I6Z ~,248,174 (3 The refits shown comprise stlbsta~)t~aIly aIi of the rent qf tl~e C~mpz~}r ~ it~ eo~oEidxte~ subsld~arles. ~,~t cxp~,ad~t/~'¢~% ~c~l ~b~at~t~ ~l th~ ;zggrcg~ W~ ~Fc~d and ¢'d~rth'~te~t ~hro~h v~r~c~ coK~ a~a~u~t~. The ~at~ of %h~e 1~" cx1>erldil~res ~s no~ obt~ln~bI¢ ~tho~t ~rea~'.ab~ el~or~ clad expeAx~.
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EXHIBIT 3 AMERIC..~N CIGARETTE A~ND CIGAR COMPANY FINANCIAL STATE_MEh'r S
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225 Opinion of Independent Certified Pub|ie Aeeouutalats TO T/'IE ~O~D OF ~IRECT~RS, 2~51EBIC&N C~?~E.TT~ ANI) CI~" ~OMLpANy~ We have ex~'~a{ned the financial sta~eal~e~t~ of Ataer{ean Cigarette and Cfgar Company, se~ forth in Exhibit 3, as o~ December 5i, 1952, and for the yearz 19.52, 1951 m~d 1950. The cigarettes sold by the Comgany were m0zaof~ctured for i~ hy an affiliate, The American Tobacco Company~ under an agree- ment effective ~a~uaW 1, 1949. Our exanthzation of the prices paid for the rigaIeLte~ so ma~ofactured for the Company was limitexl ~ an inspecff~n of the re/aterf in.aloes but Ly~rand, Ross Uros. & Mo.b gomory have re.fred to us that in their opinion, based tlpan a teat exaed.nafion, the prices at which the mmaM~ctured cigarettes were bilIed to tim Company were fairly determined i~ accordance ~dqth the terms of the said agreement. We b~ve also exmni~.exf the fmat~eial s~ten~ents of Cub~ Tobacco Company Inc. and of its sabsMfaries (rim prezen~ed herewith) a~ of December 3I. I952. and for tbe years 1952, IPSl azd 1959. O~ar examination wns made b. accordance '~ith gat~erally ae~'zpted audhh~g standards, and aeeorthttgly iaeludati such ~ests of the accoutering records and such other auditing prceedure~ a3 we consMered n~e~e~saty ~, the circumstances. We prevgms/y made yearl2¢- examinatlons similar in scope to that indicated fi~ the preceding para- graph of the t~naI~cial statements of the Company for the years 1949 and 1948 except that in the year 1948 the cigarettes said were manu[actured by fl~e Compa~y mad in respect of that year cur exzmth~ation was extended to the manufacturing aceount~. We have reviewed the data N~e~ing ~ndar lhe ~pt~an "~rn~ngs of Cigarette and. Ameriean" reIafing to American Cigarette and C~gar Company for the years 1948 to 1952, inclusive. In our ophda% based upon our examh~aticns a~d the above mentioned reports a{ Lybrand. Ross F~ros. & hfordgeme~, f~he~1952, 19~I, 1950 and 1949, the a~companyh~g gnancial ~tatements (Exhibil 3 ) present fairly t~£~hioxl of American Cigarette and Cigar Company at De~ember ~1. 1952 e~d the t'esul~ of its operatim~s for the years 1952. 1951 ~d 1950 and the d~ renting to American Cigarette i and Cigar Company, appearing uadar the e.apt[on Eartdngs of Cigarette and Atnerica/l , pre~ent [aMy the net income and otl.er information ~hown therein for the years 1948 m 1952. inclusive, in ¢on%rmiV with ganeraliy accepted accounting pr~ncliqes r~pplied ox~ a Consistent L'aMs. IIASKINS & SELLS New ~o~, Febroary 2. 1953. f
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AMERICAN CIGARETTE AND CIGAR COMPANY ~ATEMENTB OP INCO~,IE For ~e ~x Months Ruled ~Luxe g0, 1953- Not F~amincd by Independent Certified Public Accountant~ For the Years 1952, 1951 and 1950-- Exar~ned by Independent Certified Public Acc~un~xts 81x ~onths ~nded June 30~ 1953 19~ 1951 Net o~r~thug p~t ~ c~g~retta a~d e~r ~ucnt: Net sales (Note 4) ........................................... $184,631,076 $3J3,343,491 ~36,~8,408 Cost ~ *ale~ (N~e~ I *~d 4) ........................... 167,469,9~ 310#94D84, 21~37S,257 m $I67,I9D,619 I $4,94~5(l A~: ~I'0~ ~n~l~ss~og~ ~'~r~ed ~d~ ~. cigar ~.I~ ~g~ncy ~g~ee~nt ~t~ T~ Am~ri~a~ TO~ Compaay .......................................................... ~ct: Sc~% ~dverti~n~ general ~nd ~t~m[n[str&c~ve expe~ses (i~ote ~) ............................................... Rental uuder indenture of lease with The Amer[cau Tobacco Com~aw dated March 31, 1~32 .................................... ~{v~Od~ ~IC[ ~t~r~ Ot~ hlveMramlts in securities of sllb- siuSar ies : Dividends (Note 2) : C~ban Tobacco Coatpa~v [n~ ...................................... Subsidiaries of Cuban Tobacco Company Inc ............. Interes~ : C~km.~ Tobacco Ccrapar~y hr~ ............................... ,~__ Inlcr~st on advents to ~uhsldlaries .................................. O~her .................................................................................. i7,/61,117 22,649,407 17,988,151 12,244,969 31~,I82 696,$88 ~35,204 589,288 17,476,299 23,a45,99~-~--" 18,623,355 ~2~7 900,0(fd I,N/O,ON} 1,809001) i,~9,6IJ~ 14,744,872 18,436,334 15,352,370 10,541,1~2 28,333 93,2~7 4¢,672 28,615 49,48~ 59,358 13,925 g0,214 198,482 180,704 -- 142,102 ~8~4,';~ 1~1~97 333~49 200,d99 307,279 40.46~ 84,412 111,482 80,17~ 4~ 4,~41 tO 172 l~,033 40,9(~8 8~9~3 I21~54 9~,175 14,967,~77 18,~58~636 15,674,723 ~' L3edu¢l : Amortlzation--leased properties (Note 6) .................... i ..... 42,928 8~,8.~6 t 8S,K~6 8J,886 Oehcr ex--pe~lscs and lo$~es ....................................................S,~ 26911 II,~SG ~ . 48,871 1I~J,667 97,516 92,547 h~me before federal a~d ~her t~x~ on in=ome 14,918,20~ I8,74~.9~9 15.877.2t~ 10eS46.0a~ Ded~e~: Federal iaeamle taxes ............ ~ .......................... 7,576,000 9,505,000 7,765,757 4,290,000 Federal ex=e~ profit~ taxe~ ........................................ 2,62[,000 8.~5,000 2.636,343 89~.000 O~her inceme taxe~ .................................................. 281,~ 394,~0 143.0e~ 392J2~ 10,478,000 13,I44,0~11 10,54SJ00" ~ 572,00fl Ne~ i~zcc~ae ................... : .................... 4,44~,2e6 5~5~1.9~9 &0~,107 5.274,~9 ~p~aI items : Cancellatlon and gdjusgulellt o~ provisions ~or prior s~ate taxes, including interest, Iess related expenses .... -- -- -- 2,931,726 Les~: Redt~etlen in carryiag value of ~warlties of a s~bsldlary (Ct~b¢~ T<J:acco.C.omp~y In~,) r~riI~g of cost) at D~cember 14 1926 ................ ~ -- 2 1,259,02i -- -- ~ 772,705 Net i~a~ a~l ~pe6al item~ .................................. $ 4,440,206 $ 5,~31,96g ~ ~,032307 $ 6,04~y14 * Felleral m-sd ofl~ef t~-xe~ o~ ~me ~fe r~h~e~I b), ~i~ ~epresell~ing ~le~ ove~-t~ro'fqslon8 ill 1~0. The ~c~mp~lv~ng l~o~s ar~ all intea!l a[ part o{ %[1¢ ~nSllcla[ ~tateme~ts. 3
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dd7 AMERICAN (:IGAI{I~']"]'],~ AND CIGAI~ COMPANY |I A I.A NCF, $I I F~ETS June 30, 1953- Not lCxamhled by Inclcpendent Certified Public Accountants l)ecembcr 31, 1952- l~xamhzed by Jndependent Certified Puhllc Accountants June 3C', 1953 I)~n~and dcl,osits in ba~ks aIId cash on hand .................... $ 5,1)06,161 Acc~,ur,ts ~¢cclvablc, c~Ist,:,n~cls ............................................ $16,677,737 L~s~, 1'1(,vision for e~Lsh discounts ~llowable 307,003 16,370,734 Miscellancous accounts reedvablc .......................... 273,386 1)ecember 31,1952 $ 6,5S21516 $14,827,91g ! 26g,441 14,559,~0 122,~ 111~ ~'tlt olie8 : }I'itllshed goods (Note l) ................................... 15,436,963 4,562,127 S//~ ~lie~ " .............. 1,285 15,438,248 1,124 4,563,251 II ..................................... Recd~al~lcs flora subsldia~ies ........................ ! ................ 89,155 208,ga~ ']'otA cmlent assets ........ 37,177,6g'i 26,011,1~ lnv(sinlenls in securiUes of sul~sldiazics, at alixotlllts t)ot in excess c~f co~t (Note 2) : Collate,al notes and stocks of Cuhan "lt~lmc~c~ Corn i I,any ]no ..... ~ ............................................ 2,110,357 2,027,602 Stocks o1 sulJskl;aries of (uhan "]'obaceo Conllmny lne .................................................. 1,539,321 g,649,67g 1,d46,504 8,474,1~ Ad~al,ces t(~ n e,ubsklitiy ....................................... 2,780,000 2,g16,000 Olhei investmcnta, al cogt .......................................... 12,030 12,~0 ]~t;ll (MAR,, fiKtt/it~,, itC~ a[ cos{ ................................ !08,gg5 104,955 less, Alkmance fo* delnecia6on ..... ~1g,719 60,116 46,3&q 58,~ I '~epaid l xp(nsls ..... ~ .................. .......... 212,122 77,79~ ,~*sst.ts l(as(d io "1'}/¢ AII)ClleSli Tobacco COIIl[l~T}y for ~ term Of 99 ),(sis tilt(let lncJcntule Of lease dated l~.~alc]l 31, 15132 (Nolo 6) Real esl~tll', lll{tdliliCl~ Slid ~xltlzcs, al COSt, as of ])e{eulbe* 31, 1931, less allowance {or deprecialion ~ccumula*(d as of II~at dale ................... g,~99,776 8/199,776 ]lzands, ltade-nmlks and good will ................ 1 1 g,~99,777 g,d99,727 I cs, AI/o~ancc fo] amoitization ....... 1,90~,570 1,86],642 6,595,207 6,639J35 $55,4 g(,,g57 ~ i4,117,72g "lhc a¢¢ Otllpall~,illg Ito[( $ are an il/~¢gl a[ p;trt ol the hltanclal s( tlOiRnts. 4
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AMERICAN CIOAI~ETTE AND CIOAR COMPANY lR A~LAN(~ E $1-1I~ETS June 30, 1953--Not Examined by'Independent ~ertified Public Aceauntants December 31, 1952--]gxam~ne~] by Ind.~pend~t Ca~ti~ed Publie Aceountant~ LIABILITIES .t(e~tmts payable, ~rade : D~e to a~l~ ............................................................... $1f~644,308 Cther ....................................................................... 58g,063 ~ed taxe~ ............................................................ h~ver01~i~g and ~ler accr~ ~vfm~ses ........................... Total curreat liabili@s ............................ Ju~e 30,195~ D ecmm2aet 31, i952 CAPITAL Capita[ stock: Preferred, six per ¢ex~t cumulative, par v~ue $£~}J per share, authorized, issued and outs~aadL~g $,98-q share~ .................................................................... 398,900 Common, par va/ue 870 per share, ~uthorlze4 500,000 ahares, issued 200,000 sl~res, iududing 4,500 shares in Treasury ............................................................. 14,000,000 Retained earnings, as annexed (Note 3) ........................... t6,985,030 al,.~sa~ao Less Treasury ~oek, a,~. c~st (Note 3) : 4,500 shar~ af common stock ......................... 711,765 $ 2,12#,:[20 $11,232,37t 44&815 $ 2,S69,935 13,488) 80 13,446,884 93,541 292,985 2¢,8t4,692 16,309,802 39g.900 14,000,000 Z4,3~8,~ 14,120,791 ~-8,H9,691 711,765 30,672,163 2z~.9~5 $55,486,857 5 ~7d4,117,728 L
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AMERICAN CIGARETTE AND CIGAR COMPANY ~TATEMENTS OF RETAINED EARNINGS For the Six Months Ended June 30; 1953- Not Examined by Indepcnden~ Certified Public A¢countant~ For the Years lg32, i951 and 1950-- Examined by Independent Certified Public Account~n~ SL~ Months Ended Jr~e 39, i~3 19S2 Ig5~ Net ~nco~e (i~¢I~dlng in 19~ ~72,705 ~peci~ it~m.~) /or p~r(od.. 4,440,206 5~i,959 5.032.107 Total ................ ~. ................ : ...................................... i~fl97 17~63.T2S 5.213,~ Cash ~ivlde~;z : Preferred stock, $3 per ~h~re in six months ended Juae 30~ " I953 and $6 ~er ~!-~r ¢ iu 1952, I951 ~6 1950 ..................... 11,9fi7 2.".934 23,934 1953, $18 per sh~ze in 1~/~2. $16. ~e~ sbar* ~n 195i m~d $14 per share in 1950 ............................. • .............. i,~64,0~0 g,SIq,~0q 3,17B,00~ 1~575,957 3,~2,934 3,151~934 B~tmlce ~t cad o~ period (Not~ 3) ..................................................... $16,985,~33 ~;14,120,791 $12.0~L7~6 6,046,714 .i ,@ 7 Tile ao~rcff~any[ag lmte~ are an ~Ilte~lal part oi file financial st ~t emenL% 6
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230 AMERICAN CIGARETT3~ AND CIGAR COMPANY Notes Accompanying Financial ~tatements 1. In coimecdon wld-~ the manufacture o{ cigarettes for the Cc~npany, The Americaax Tobaemo Company charged dm Com[~any wkh (~) i~terczt on ~ost~Lleal~ (b) an amOUnt in exce~s o~ the cost ~f manu[act~re o1 c~garette~ and (c) bra~d re~trd~gregatlng" ~,639,63t in the six months ended June 30, 1953, $7,808,703 in I952, $6,2,02,067 if{ 1951 and $4.366.675 bI t950. It is estimated that inter-companyprofits~.amomlting to approximately ,~96,0~0 and $113,000 were inck~ded in flIe ~lues of the Coml~a~y'a inventories of finished goods at June 30, 1983 and De~ember 31, 1952, ~speedvely. [nv'~r/t~ ies u~ed m the colllpn~l~ion of C{gSl ot 5ai~ are prl~ed at average Cost except ~at revenue s~anlp [ncfudex[ ~berein are prlced at aetna| cost. The amounts of inve~turie~ at ibe beginning and en of dm periods were as fellows: June 30, 1953 ................................................... $4.563.251 $15.4.t8,248 i952 ........................................................................ 4,467,d69 4.563.25I 198i .......................................................................... 1,757,468 4,467,469 1950 .......................................................................... 2.340,230 1.757.468 2. ~la~ed upon .Snanclal statetnen~ of the rmcm~olidated sub~idlarles (Cuba_~ Tobacco C~npany Inc. and i~ subsidiaries) : Tt~e equity ~ the Company. applicable to its investlnen~s in secur~tles of ~uhsldi~ries, in the- net assets ~f d~e subsid~aries ~t June go, 1953 was $12,327,855, represented by t~gible ~sset~! ~n~untlng to $9,600.323 and intangible assets amounting to $2,728,532, The comparable ~gures al December 31 1952 were 81218.3.965, $9,524,058 and$2,659,907, re~poetiveIy. The equity ot the Company in net profit and lo~s o1 these subsldlari~s was a~ follows: A~Hcakle to A lic~bl~ to ~re[erred sad Co=l~On se~'a~ae~ ¢~ ~bs~- Stocks o~ Cuban Tobacco ~r~f~ of CmS~.,~ Toha~ Cgmpa~y :1~¢. o~ • C ~ze4~miv I~. ~t an c~lldat ed b~s~ h,~xi~ b~ Comrrmn Si-¢ mor~t~s ~ded June 30, 19S3 ........ $23,535 $31,860 ioss* ~s5.452 Y~r 1952 ......................................... affh,617 54,76~ 111350** Year 1951 .............................................44.672 51,815 23267 Year 1950 .......................................... 38,615 88.114 25,398 • Deterr'~ined aider prov~sio9 for dividend ca preferred sb~ck. • * The Company% investment in aeanritles ~1 subsidiaries of C~ax~ Tobacco Company Inc. was ~ubsmuti~lb' increased during 1952 and was further ~creased duri~g the sLx months ended yune g0. 1953. h~ eurnputing the equities in net assets and profit and loss of die tmconsoHdated subsldlarles referred ~o above, no co~gulzanee is ~lkett c~f a~ly i~eorne or other l'ax~ d~at may heaome payahIe on deelaza- tion ~f dh,ldend's b~ domestic or" fo~elgtz subsidiaries o1 Cuban Tobacco Company I~e. The amounts ~¢k taxes wdl ~e depoadent on future dividend pol{eles o1 the eo~rpanles and on t~x laws and rotes applicable in the yeaza in which any dividends may be declared. 3. Of the retained earnings at [m~e a0, 1953 and December 3L 1952. $711.765 {s represented by Treasury stock, lgad such Treasury stock been retired b statutory proceedings and ealgtal reduced ace~rd%gly~ capital wquld thgrehy have bee~ reduce~ By .3315,000 and retained earnings by ~396,7~5 at each ~f these d~tes. 4. Sales and cost of sales include revenue stoups as ~oltows: Ce~t (af Sale~ Six months ended June 30, 1953 ............................ .~ 91.534,159 $ 91.534,079 Year 1952 ............................................................. , .!~Q.017,615- . 170,017,583 Year 1951 .................................................................. 113,965,475 YI3,975,422 Year 1950 .............................................................. 81,882,537 81,882,537
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~lotes Ac~ompany~n~ Finar~al Statement~--(Con~n1~ed) !
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AMERICAi~ Ch~AE~E AND CIGAH COMPANY SUPPLEMENTAI~Y PROFIT ~_lqD L~SS INFORMATION F0r the ~ix Monks Ended J~ne 3(~, ~953-- Not Examined by Independeat C~rtified Pu~ic ~ccountant~ ~or ~e Years 1952, ig5I aud 1950-- Examlned bF Independent Certified PubEc Account8 --PrQfit and Lo~s To co~, or Ch~ to O~er Opera~g ~ Ac~0tln~ llzkl~e::~e a,~ re~eJts : Sk ir~t~ e~de~. Jua~ 30, 19~3 ........... $ $ L~A9 y~zr 19~2 .......................... -- 2~017 y~r i951 ....................................... -- 1,676 year 19~3 ........................... ~ ......... -- 1,$23 ~r ~c~z~ ~d ~rr~r ~Az~ Lk~n c~ ~xed a~et~ : S~ m~hs euded .~u~e ~0, 1953 ............ -- 47,~74 year 19~2 ................................. -- 93,~4 Vear 1951 ..................................... -- ~,~59 year 1959 ........................... -- 92,~07 S~- mo~t~ e~z~e~ June ~0, i~5~ .......... ll,4Y~ year ~52 ........................................ 23~9~ Year 1951 ....................................... 468,90{I year 1950 ............................................... 7,942 Six mo~fil~ ended ]~ 30, 19~3 ....... ~0 IL037 ~zr 19~1 ................................... 5~,000 20~7~ Year 1950 ................................................. 5~,000 i9,673 Royalties: ~: The ~c*~a~s colnpr~se: F~deral t~m on flo~r stock~ as of Novenlber 1, 1951 $ -- Utlemployllle~l ~n~r~u~ a~d ol~-~e beae~(s ~axe~ ~,4~4 }~e~l es~te and olher ~ax~ .......................................... 2~,~ Totals ......................................................... $70~258 ~A78 The A~er~.~ Tob~c~e Cc~p~y 9~fi59 The A~n~erican Toh~cc~ C~ya~ 79,492 The Ame~cm~ Tob~ Compel) ~8,I5I The AmeHe~ Tobacco Comt~ny -- 2,0I~ 74,073 -- 72,0~3 9 -- 47,074 -- 9J,98¢ ! 203 , t 20,0~2 202 ~,594 176 ~,2~P ~,21~ 32,234 24,325 $120,~2 ,~4~,594 ~,269
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S~CI~N T~ AM~ICAN TOBAOC0 COMpANy Incorporated Ill ~i~th Avenue Ne~ Yo~k 3~ N. Y. October 25, 1953 Mr. Philip G. Cameron Philip G, Came~o~ Cbmpan¥ ~0 Cedar Street New York 6. New York Dear ~. C&~eron: This Will canfirm our previou~ arrangement8 to the effect that £hillp G. Cameron Cow,any WiZZ sol~ci~ p~oxles for a ~peci&l meeting of the ~$o~kholder8 of The A~rlcan To- bacoo Company to be held on or any adjournments thereo£. ~ou a~e authorized to request ~tockholders to execute ~rox~es i~ the fo~m sen~ cu~ w±t~ ~a no~i~e of ~he meet- ing. You &re n~t authorized to m&ke any 8t&~e~n~ not ~ontalned in the notice of the meet~r~, the proxy and the proxy 8~abemen~, oop~e~ of all of which have been ma~e~ to the stookholders and filed w~th the Securities & EX- ehang~ Co~s~is~i~n. Yo~ ~e not ~uthorlze~ to maybe a~y ~rom~se~ o~ offe~ ~n~ i~e~n~s fo~ ~he ex~ou~ion of She Droxles soliolted. Z~ t~event an~ shoo,holder ~ho~e pro~y ~8 sollci~e~ doe8 not h&ve a~ail&ble the proxy 8~%~ accompanying ~te- ~ial Nhi~h ~as U~lled to him, ~o~ ~h&ll f~rnlsb copies of all of ~e ma~erla~ ~r±glna~y ~ent to the stockholder, ~hen ~o~ m&ke your request fo~ exeout±on of the proxy. Ve~J truly yo~s~ H. L. Hilyard
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S~CIHEN THE AHERICAN TOBACCO COMPANY Incorporated lll Fifth Avenue New York 3J R. Y. October 26, 1953 To our Stockholders: This note will be Dresen~ed to you by Philip G. Cameron Company~ ~hlch is sollcitln~ proxies for a special meetin~ of the stoo~olders of this Company ~alled fo~ and ~ny adJou~rmqents thereof~ is authorized to reques~ s~ock~ holde~ to execute p~oxi~s in the fo~m ~ent o~t with the notice of the meeting. He is not authorized to make any statement not co~tained ±~ the notice Of the meeting, the p~oxy and the proxy Btatement, oopies of all of which have b~n m~iled to ~to~kholders 8~n(l filed ~i~h the 8eou~itle~ & Exohan~e Commission, or to make any promises o~ offer ~y induc~ment~ for the executlo~ of the proxies sollolted. A s~eci~n of Mr. ~i~nature ~ppear~ on the line below: Specimen Signature The ~erican Tobacco Company H~ L. Hilyard, Treasurer
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SME01MEN TME AMERICAN TOBACCO COMPANY Incorporated ill Fifth Avenue New York 3, N~ Y~ October 26, 1953 Gentlemen: We ~re today mailir~ to yo~ proxy materlal for a speclal meetln~ oP stockholders of this Company to be held on This material is addressed ~o stock- holder~ whose addreBs on o~ records is in care of your b~ o~ to your bank ~s ~ fld~clary. M~y we respeotfully request tha~ where you do nob have bhe authority to exe~ cuta a proxy, thi~ ~ateria~ be forwarded promptly to the Interested stock~older BO tha~ he may exeroi~e bls priv- il~ge Qf voting ~t the ann~al m~e~Ing. In this oonnecblo~j we are enclosing ~ sheet which you can mall bo us fo~ anp additional ma~erd~l you may need. Cpon re~elpt of ~ ~equest f~o~ ~ou~ we will fo~a~d K~ m~ny complete setB o~ m~teri~l &s you ~equd~e and also relmbbb~se you PO~ any out-of-poc~eb expense~ you may incur in reforw~ddDg this ~te~d~l, Your cooperation in see~r~ that thi~ proxy material is forwarded promptly will be greatly appreciated. Very truly yo~s, Enclosure H.L. Hilyard 5?reas~er
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236 Dat~ The American Tobacco Company iii Fifth Avenue New York 3, New York Attention of Mr, H, L. Hilyard, ~reasurer GenZler~n: In conneotlon with the special meeting of stockholders to be held on we shall need the following: Sets of proxy material with mailing envelope Cash for out-of-pocket and clerical expenses ~ Plea~e f~rward material to - Very truly yours,
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2~7 ZECURIT!EZ AND EXCHANGE CO~41ZSION W~hlngtc~ 25, D. C. Division of Corporation Fin&~oe OCtcbe~ 8, 1953 Mr. J. R. Coon, Vice President American Tobacco Company lll Fifth Avenue N~W York 5, ~e~ York R~ Nile No, ii-56~¸ D~ar Sir: This will ~ckno~ledge the receipt on October 2, ]953 of you~ lette~ of th~ same ~ate with which wer~ enclosed three ~oples of D~llminary ~rcxy sollcltlng m~te~ial for the special meeting of ~tockholders of your ccmp~n~ scheduled to b~ held on De~ember 2, 1953. On the b~si~ of Inf~m~tio~ ~t pre~eut av~ilahle~ thi~ Divi~io~ h~ no ~e~t with ~e~pect to the m~t~rial ~ub- ~tt~ ~cept to point o~t that ~t l~ast o~e copy of the de- finitive ~oxy m&te~i~l f~led ~ith th~ Commission ~hculd con- t~in ~u~lly ~n~ ~co~&~t~I c~rt~fic~t~s, Very truly you~, E~nest W. Eams~ec~ A~si~t~t Dir~cto~ D£vlslo~ o~ Oo~po~atlo~ Finance
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CRADBOURNE, PAYd~E, "WHITE$1DE, WOLFF & BROP}Pl 25 D~oagway, New York 4, N.Y, Octobe~ 16, 1953 Mr. Frgl~k %q. Moude!l Se0urlties and Exchange Cormmisslon Division of Corporation Finance W&shlngton 25, D. C, Eel Deer M~q MolT~iell: The American Tobacco Company File No. iI-~6~ The Directors of The American Tobacco Company and A~e~ioan Cigarette an~ Ci~r Co~F~ny tod~y e~tered i~to the Agreement of Mergor (snbject to approval of stockholders) to merge American Cigarette ~nd Clg~r Co~pany into The A~erloan Tobacco Company. The Agmeement of Merge~ pmovddes that each share of Co~1ou stock of Amerlcan CiEarette and Ciga~ Company held by the public ~ill be converted into ei@ht (8) shares of Common stock of The A~erlc~ ~ob~c~o Company and each sha~e of Preferred stock of American Cigarette and Cigar C0mpamy held by the public ~lll be converted into one ~nd one-tenth ~!-i/!O) sha~es of T~efar~ed st~ok of ~he A~z.±ea~ Tcbecc~ This inform~tlon is supplied in accordance wlt~ yoa~ suggestion th~, when dete~ml~ed, the Co~malssion be advised of the conversion r~tes. It is expected that the definitive proxy ~,aterial ~ill be fil~d with the Co~mis~ion next week. Very truly yours± Cyril F. Hetsko
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239 October ~O, 1953
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24O TO OUR CldENTS: RE: THE AMERICAN TOBACCO COMPANY Spe¢{,~( Mee÷ing of S'}o,:khoEler~ December 2, 19~3 We will appreclaEe your iastmct]o~ as to vo~ing the stuck of Th~ ~metica~ Tob~o C~mp~ay hela by us ~or your ae~x~a~ at the Special ~!eedng of S~ockholders of tha~ Compaay co he hH~I Decemhe~ 2, 1953. ~ado~efi ~s proxy ~Midd~lt ma~ezial rel,ating ~o the meeting ~hich h~ bee~ ~um~shof to u~ by the man~gemea~ Fo~ y~t ~o~veaie~c~ t~ ~,~v/t~ us yoar voting in~t~t/Jan~ ~ al~o e~Ie.~ a po~t e~n{ addressed m o~selv~s. Kindly indleat~ ye¢~ vatlng tnstrucfio~ on the e~d~e~] ~um post ~ard ~tl ~gn ~1 m~l it ~mpfly, ~c~ ~n4~c the cule~ of ~bx N~w Y~rk ~mck Exchma~e ~,e ca~ aot gi~e yatat p~oxy ~o~ the meeting ~f ta~cfiom ~m n~ ~ecelv~d by ns.
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THE AMERICAN TOBACCO COMPANY SPECIAL MEETING OF ~OUK~IOLDEI~.B December 2, 1953 [ acknowledge receipt of proxy soHchhlg rnatcrlal furnlshed by the management rel,~tlng to the ~9¢clal ~eetlng of Slockho]ders o[ The American T~haec~ Comp~w~y t~ be held December 2, 1953. As m ~ny stock of said Coinpany held by you [c~r my account, yoa are ~nstrllitcd to vc~te. Adoption of the Agreement of Merger referred to in the Proxy Statement It i~ underslood that ff no Bileelficat~m ~ mlde above, you will vole ray JI~ h~ favor of ~doptlon o1" Ih~ Agreement of Me~ger* (Signature) pLEASE RETURN THIS CARD PROMPTLy k
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THE AME~IOAN TOBACCO CO~ANY Incorporated Ill Fifth Avenue, New York 3, N. Y. 245 Office of the 3ecretary October 233 1953 Division of Corporation Finance 3eouritles and Exchange C~lisslon W~shlngton 25, D. C. The American Tobacco Company File No, i1-~64 Dea~ Si~s: Me enclose herewith three sets of our definitive proxy m~terLal consisting of the following: 1 - Proxy 2 -President,s Letter to the Preferred and Common Stockholders 3 - Stamped self-addressed return envelope # - ~otlc~ of 3peci~l Meeting of" Stockholders and Pr¢~y Statement This is the defi~itlve material which will be mailed ~t to our Pr~fe~ed ~nd Co.on ~cc~aolde~s. V~ry t~uly yours, John W. Kanlon ME John W. Hanlcn Enclosures Secretary
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i ! I~I~0RTANT NOTICF~Thi~ proxy 1$ for~ard~ on bei~t][ o~ the M~a ernest, who request if you will n~t be I present at the meeting, that you fill out, ~gn, fald snd return th~ proxy m t~e eneJesed stamped addre~d euvelope.I F Tile underalgned hereby appaln~a pALr[J ~. HAHN, JAM~S 1L COON and RICHAtLD J. :BOYLAN pro~es, with power o~ sub~tit~tlo~ to vote at the Special Meeting (including all adjou~m~ents) of Stockhal~ers of The Amerlcan Tobacco Comply, to be bald December 2, 1958, fer th~ adoption or rejectlon of ~he Agreement o~ ~erger which provides for the mer~er of AmeYicarl Cigarette and Cigar Company i~to The American Tobacco Com]~mW, a COlby of which i~ Exhib~ 1 to the P~x~r Sta~ffleh~, v~cI On a~y o~her hu~e~J that ~ay comae be~of~ ~ho meeting', accor~n~" to ~ nur~ber o:f vot~ ~ha~ the undersigned ~ould be entitled to ~ast and with all :~ower~ the u~deralg~ed would p~es~ i~ ~ersonally presen?~ IF A C~0tCE ]~ NOT S]~ECIFIED B:~LOW, THSS PROXY IS TO BE VOTED FO~ ~ ADOPT~0N OF ~?4E AGREE. ~IE~ OF ~IEICGER, ~ui~geyn en~ r vc~ ~merld~ ~ voto ~O~ ~ Ad~ti~ o~ ~dopt~o~l of ~.he A~e~l~ellt of ~erg~r, ~ 1~ ~geeement ~f Mevg~ A majority (or, f~ only one. then tim~ one) of the p~a~es or their subst~ta~es acting at the mee~L~t~ may exe~v~se all the p~wera hel'eby conferre~. D~ted: ............................... ]953, Comp~n~ ~vII] fill in ~tm~r of ~l~x~ ................... Shares Preferred ..... Shares Ccm~non .............................................................. [L. s3 When signing as a~'mrney, executor, ~dminls~L'ator, t~stee or guardian, please give your ~ulI title as such. h~ 5~
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"~ A~M[~ICA~ '~'o~t~O CO~pA~~ O~ober 26, ~953
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;e ,5 a copy ok the Merger Ag,~eel~ent r~r~6 a ztate~'~ent of lh¢ p~ooedv.re to be fe, llowecl by d~thag x~ocha'Io/der~; of ~ ooirlp~tl~r, A2~3 ~e~- ~3t~/~ ~ct d~ Ptx2xy Srare'rr~el~ a~ the ~eason~¢ wh~c~l led ~e DJrec0ars to eater into the ~fe~ger Agreeraen~ and to submi~ it to the smckho~ of the two c~nlpatl~es fo~ ~do]?6t~r~. I~ ~e event th~ the Me~ger Ag~eeme~ becomes effecxi~e~ (~) E,~d~ ~re of Commo~ Stock o7 Amefma~ Cigarette a~d Cigar Compazy wilI be con~etted into elghz ( 8 ) sharea of Common Stock of your Coi~p~ny as th~ Su~iving Corapa~y, except that ~c~ of C*~mmoa stock of AmeMcan Cigarette aad C~g~r Cornpa~ heId in its treas~tr~ or owaa¢c~ by your Company v¢~I1 oe~e to e.~:is~; (b) Each ~are of the Preferred Stock of Americoa~ Cig~ret0e and Cigar Company will be con~er ted into one an~ one-te~h (l 1/10) sha~e~ of Y'*~St r r ed Sto~ of your Company ~s the Sn:v~mg Com~y, eccept that ~la~re~ ~f p~eieroe8 $~k of ~knmtlc~ Cig~ette and C~g~r Company owaed by ~ Com~ny will cease to exit. Each share of Common Stock and each thate of Preferre¢l Stock of your Company will t especzlvely co~thaue to be one share of Common Stock ~nd one share of P~efettecl Stock o*¢ your Company ~ the Survlvhag Com~ny. It is file opinion of c.ovsrsel for d~e two com/oanie~ that, ~lnde~ the ~nternaJ Revenue Code nn~ in effe¢~ the me~ge~ wil~ oanstit~te ~ tax-feee reorganization a~d tha~ t2ei~et gain ~ot loss fo~ Federal la~co~e Tax purlx~e~ will be realized by re~so~ ot the lz~.~ge~ by either cx~mpany 0~ by the holders of Common o~ Preferred S~ock of either company, except in the ca~e of stock- ho/deex ~vb.o m~Y dlsse~ att~ be paid the market value o~ their stock ha ~ppr~pr~zte approval ploceedings. Also enclosed bercwith is ~ ~tm of proxy fo~ the ~e of stockholdera ~'ho may no~ be abst ~o ~tre~d the Special ~eerlag of stoekholder~. I hope yo~ ~ill attend thi~ Specinl Meedn~g of stochlmlders but i~ thls is im2~assible please fill in ~n~ r~mrn y~x¢ ~g~ed Prox2* ~ ~¢mn as p~hle ~ otde~ ~bet ~ quoram may be assercct tha l~ec~t~g. ~a/Illre to ~eoaxe a q tzolr~n olt tile ¢~ate ~et wolgl~ ~1eoessita0a ~1 a~io~r~imet/t ~,hlch would jn~oli'e ~e Corat~any i~t co~slderable m~ nee~e.~ expeme. P~uz zxS. t2;M~N Fredtdeo*
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......... .................................................... -~n,j .....| .................................. L~ ......... J _ I il II THE AMERICAN TOBACCO COMPANY 111 FIFTH AVENUE SECRETARY NEW YORK 3, N. Y.
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247 NOTICE OF SPECLkL MEETING Flem~mgtou, N. L, 0~ober 26, 1953 NOTZCE ZS ~R~Br ~ that a Spe~al Meeting of the Preferred and Cu~m~ou Stockholders of T~E A~E~CA~ TosAcco ComPAny will be held at ~No. 34 Court Street, Flemlngto~, New Jersey, at one-thirty o'clock in the afternoon (Eastern Standard Time) on Wedne,~day~ December 2, ]9.53, ~foJ" the followir~ purposes: (1) to v6te for ~he adoptko~ or rejection o~ an Agreement o{ Merger eat~red ~nto on aud da~d October 16, 19~3 l~tween th~ Company and 3to d rez~ors aild .american Cigarette and Cigar Company, a corporafi~ of the SteErS,~ of New Jersey, and its d~ectors~ merging said Ametlean Cigarette attd C~.gax Company into the Company arid prCscr thing the term~ al~d condltksas o£ sald rc~erger arid the rno~e o~ carrying the same into effect~ a copy o~ w~fich Agreemet~t o~ Merger is altaoksd as ExbJJblt 1 to the £~llowlng l~roxy ~tatement; (2} to h'm~act such oth~r bassinets as may proper~y come be[ore lh~ meeting. ~le I?re£exred and Common Stock ~a~fer books ~ nc~ be doced, .b~t ilolders of Preferred Stock and Common Stock to be entitled to vote must he holders of record ~t the dose of h~incss on October 28,1953. go~ W, H~Los, Secretary It
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)q~OX't' STATI(MENT SOI,ICITA'IION OF Iq{OXIES AND oIr'ISTANIHNG VO'IING S)IAI{ES J }11~. ~.l~lcnlcJlt is t'/iNttshcd Jtl coxlnccllc~n wilh Lh(~ sldJcitalJotl by the lllan~igclllcl/t of The ~,r~tj Tob~L~:o ComI~/ny (l~clcil~afLcr s¢~/ ~1 es ,ca ed /~./eJic~Ln) of proxlc~ to ]~c used ~1 the Spcclal ]~l~'l~l of SIo~:kholdcrs h~ be held oil l~cccndlcr 2, ]953, and at ally ~ldjourn:z~l Ihc~c~f. Only stockho]Elcr~ i ~ ~1 d a.q of tile clause of htJ~,llJ(:~,; on Oclol~cr 28, ] 9~ w~ll }to c.lltlcd lo n~licc of ~l~d Io v~,tc at ~L~h t~lccll ] Jl(~ llhlll~t'ttll!ltl ~11~¢$ O j" 110 ]~ll~lllt~S~ W!II~]I ~lI] I~l! ltlt!s~llll~d II~ II/(~ IIICellll~ ol]lf'r t]l,qll x/o[il/~, t3ii a~l~ll[~ll ol¸ l(:jcclioH of Ihc l>tOt~o~;~l] A~r~/!lnctlt of ~Jcl'gct~ }ll!ll:it/~lfLcT¸ d~scri])cd, l[ ally ol]l~l¸ lllalt~ ~lle ]ll(:~(!lll~,d i)lO]~C:l]) Io l~lo ITI('(:[~II~, l'(~l¸ ~/t~lioll~ J[ J~ Jtll(:?lded [}h3t II1[~ II('I~OIL$ ilan3~d ill [h~ ]lto:(i(?~; vol(! IlJl~ll~?L ~e('Ol(~in~ to lhc~l¸ b(!~t jltdgl/icld. Ally l~crsotl glvillg a lnltxy inky lcvol.¢ it l~y llol~cc ill wlJthl~ ~,i~'ell Io t]Jc Sc~:l~l~ll¸, of fill!c~ll, al ~ny liiEl/~ l~lJol¸ Io t}t~: (~xclcJ~c ~]lclco~ l~tll if not so 1 ~.'o]~¢d lh~ ~/J~y ~,trjll l~e ~,rolcc] arid, if a C]1Oi~0 ~ccified w~th Jcspcel Io Ihe I~lc~ct¸ i~ot~o~.~d, will lie vole(] ~n accordance wi~h such si~ecifieal~on. If choice is sl,ccifi~ll Ihc p~oxy autholi:'cs a vole in faro1 of tho adoplion of suth mcJgcr proposal and will voted accordingly. Altcndancc al the }netting does Iiol sc]x'c to Je~,~]~c~ lirc p~oxy. The oulst~tndi~g ~und>er of eac]~ c]~tss of voting s¢cHitics ~f ±'x.~e~icnn is: ]'~cfcr~cd 526.997 shar Cortlltlon 6/15'1.1 ]0 sha~cs. In 'voting on lhc adoption o~ lcj~ction of Ihe pt¢~p~)scd Agtecmctlt of McrI e,~ch sltdle of ] ~cfcH~d Stock n.d ~,~:h sha~c of Co~mon Sl~ck el3tH]cs Ihe }lt3]t]~ i Ihetc~ff Io ~1¢: v( 9, (Se(hon ]~1.1 -.3 of Ih(~ ]t(w)scd Slatl~lCs of I}le Stale of ~cw Je)scy )~t(,v~clcs Ihat ~1 ;'o[~lig oil I}lc: a¢]~ph (~] J¢:jcclil~]i of a ]~1 o])osed .~gt eet]lcl]l of ]~¢lge~ each shale of ca])]ta] ~tocl,( ¢lll]l]('s the ]lo]del to one voh
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VOTE REQI.~RED TO CARRY OUT THE MEP~GER ~f th~ Mer~er Agre~m~m is ac~op~¢~ at ~ $~cclal Meet~ by the wtcs ~ ~he h~lder~ ~ at l~a~ ~vo- ~rds ~ ~11 the capital s~e~ i.~. ~mmou an~ Pre~errexl, of Ameri~aa entitled to w~t~ a~ such me_~ing, ~M ~ th~ S[,~cla~ ~e~ti~ of s~I~otders ~£ Cigare~e h~teina~r re~errecl ~, hy the votes o~ the holders such meet~r~ the merger will ~ecome e~tive upo~ the filing o~ the Mer~r A~rceme~t in the manlmr ~ded hy th~ law~ ~ New Jersey. When the M~rger Agrcement 5ecomes e~ect.iv~ ~m ~eparate cxlste~e ~ C~ar~ ~i~[ c~a~ exce~ ~t~sofar as the sam~ sha~I co~finu~ ~ statu~e or may be ~equ~s~t~ ~or carryln~ ~ the Imposes o~ the Merger Agreeme~ a~d Am~vir~an as the Surviving Company ~1~ ~ucc~d to a~ the d~kts and propcrty and be ~ub~ect to ali of the debts, restrictions, llabi~ti~s and duties ~ Ciga~e~ A ~e~s~ m~ of sl~c~h~l~r~ of ~ar~ wiY~ be ~[¢I ~or th~ p~rpose o~ ~ons~de~ng anti taking a~on ~r~ the Merger Agreement ~n Deceva~er ~. ~95~. ~aerlcan is the ~.r~er and h~d~r of 188,225 ~ar~s ~f tha Coramo~ Sto~, par value $70 per chafe, of Cigaret~ ou~ of 195,500 shares (e:~clusiw of ~500 shar~s held ia the Treasury o~ Cigarette) ~ sara C~mmou Sto~ ~uts~anth~ or ~pproximate~y 96% ~ ~ ~t~an~h~ Common S~e~ of C~ga~e~e; American ~ the ~w~er an¢~ h~Mer ~ 3..230 simre~ of thc ~re~ercecl Stock, par vaI~ $10{) per share, of Ci~et~e ~u~ of 3.989 sb~r~s of sue~ Pr~err~d Stock ~ut- ~ld~ ~f suck share~ of C~mmo~ aad Preferred St~ck of Cigarette, ~el~e~ the right either to r~frain r~m young ~uch shares in ~ave~ ~f ~ ~¢~pti~n ~ th~ ~rge.r A~reement or to vote suc~ shar~s a~ins~ 3
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' ' 250 the adoption of the Merger Agreement at such special meeting of sLockholdera o£ Cigarette, i[~ in op~nlo~ cf tlL~ Board of Direeto~ o£ Amcrfem~, the merger, a~ ti~e time of such special meeting of st¢ holdcr~ of Cigarette, is impracticable or inadvisable ~.~ ter then existing ~rcumammes and eoedi~ions. II a~d ~when ~e me~er shall have become effective., American in~cnds to mail to notice to such e~ec~ wlLhin ten days ~llowi~g tho effective date of the merger. C~d>IT-bXIZA'I'ION O1? CONSTITUEN~P COMPANIES AND BASIS OF CON~nlgRSION ON I~IEllG]Ell As ~ Sept~mhrr 30, 1953 (a) Amerfe~u~ had an authorized capital stock e~nslsting of 10,1300,000 chafes Stock, par vMae $25 per ~bare, of which 6,454,110 shares were i~ shares ef 6% C~mmlative Preferred Stock, par value $100 per shox-e, of whlch 526,997 shares issued and outataadmg; and. (h) Cigarette had an amhori~ed capital stock co~sistlng c,~ 500,090 shares o:~ Corarnon ', par value $70 per share, of whfeh ]95,500 shares were issued and outstanding (excl~sl,ze of shares held in the Trea~ury'of Cigarette), of wbfeh 18g~92.5 shares were ovmed h) 3,989 share~ of 6~ Ctu~ulative Preferred Stock, par raise $100 per share, of wifich were issued and outstanding of which 3,230 shares were ow~ed by Amel"iean. The _~erger Agreoanent preMdes that whe.n the merger h, eeomes effective: (a) each share of Common S[ock~ par value $70 pea" share, 05 Cigare~e oms~andlng on effecti,~e date of tke m~ger, will be converted iI~to eight (8) shares of Commou Stock, par vaI~ 825 per share, 0£ the SmMving Company, except that Ihe 4,500 share~ of said Commoa Stock t C~gq~retle held in its Treasury and the 188,225 shares o~ said Commozt Stock o~ Cigarette o~ By Amerfean will not be converted into Commort Stock of the Surviving Company but will cease 1 e~is~, and each share of 6% Cmnulatlve Preferred Stock, par value $100 per share, of Cigare~ outstanding on the effective date o~ the merger, will be converted intll one and one-tomb (1-I/11~ shores of 6% Cumulative Preferred Stock, par value $100 per share, of the Sm'vi~dng Compar~y, e~cei that the 3,230 chare~ of said Preder~etl Stock of Cigarette owned by _4~,uer fean ~1 no~ be converted ir, l 6% Cmn~Lative Preferred Stood: o~ the Suzvlvlng Company hut ~ill cease to exist; (h) each share cd Common Stock, par value $25 per share of American, outstanding on th~ i effective date of the merger ~vill eontir±ue to he one share of Common Stock, par vahe 825 ~er share? I o£ ~fie Sundving Company, attd each shaxe of 6% CumuIative Preferred Stock, par value~$100 ~ i share, o~ Asaefiea~, ou~standir~g an tl~e effective da~c o~ the merger will continue to be o~e share of. 6% Curaulative Preferred Stock, par value $700 per share, of the Surviving Company. ~ ! SCRIP CERTIFICATES FOR FRACTIONAL SHARES '~ In a~l eases ,ahere Shares of Preferred Stock of the Surehdng Compatfy to he received by a ltolder~ [ of Preferred Stock of Cigarette ~all c~nsiet of a fraction of a share, a Scrip Certificate will be issued to represent such fx-aefional intecest. Such Scrip Certificates will, ~hen combined with similar Se~:ip' Cer~ficates aggregating one or more fall ~hares, be exehangeaMe ~or a period of two years from the effective data'of the merger for full sha~s of Pro{erred Stc~< o£ the Surviving Cr~mpany. Holders ofI i Scrip Certificates will have no voting righN oy eights to dividends or other distrlbutions. Reference is made to Article ~rI(e) of the ~ferger Agreement (Exhlhit l) for a fuffer de~criptlon of the terms a~d provisions of such Scrip Certificates.
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251: DESCRIPTION OF CO~ON AND PREFERRED STOCK~ OF AgIEI@C.~aN %rtlc~ IV of the Agreement and ~ct of l}ierger and Consolidation, dated September 9, 1904, aa be~el~f~re amended, ~s as follows: "ARTICLE IV. The capital st~ek el the ~nid merged corporation is $304,010,600. Five Hundred Forty Tho,mand One Hundred and Six (540,106) shares shall be Preferred Stock of rite ~ar value o~ $100 each. Ten i~Idlinn (iO,O00,00g) &ares shag be Common Stock o~ the p~r value o~ ~25 e~cb. ]]m xigbt~ o~ the holders o[ [h~ ~aid P*eferred Stock and Common Stock, respecd~aiy, shall be as failings: 'Die holders oi t~ prelerred St¢.ck shall he e~dtled to fmlr wte* ~or eacI1 slmre o{ the par value of $103 het£ l~y them, sn~ tbe h~lders ~ th~ Cerumen Stock sb~ll hc en~fled t~ o~e ~'o~e for e~cJ~ sh~re of the par value ¢~ $2,5 held h) them. The boldex~ o~ the Preferred Stock ~_hal[ be entitled ta receive out of the snrphls or ou~ o~ file ne~ pie@s, mid tim ~r~e~ e~orpearat{ort shall be b~uad to pay thereon as and when declared hy the Bo~rd el Dixe~t~r~ a dividend at the ra~e ~f, J~ut ~evcx ex~eedll@, rdx pe~ ~e~ura /~r a~ttt~m, ~um~da~l~ee [rein atut offer ~ze fi~st day of OctoBer, 190~ yayabie yearly, half yearly, or ¢~aazteHy, before any dlv~dend ~ha~l Be se~ apart or paid on the Common Stock; provided, however, tha~ when all accraed dividends on the Preferred S~k ha~e been laai~ the Directors shall, ff in thc~r ]ttdgment die sa~lcm or the a~t pro~, after deducting th~ ain~ml o~ dividends to accrue o~ the Preferred S~:k during the curre~t yeag~ shall be .~lllfiaie~t for sush p~lrfmse, have power in their diseretinn to declare and pay a dividend, or dlvldend~ on the C¢,D:n~r~ St~ck. in case of l~q~idafion or dL~intio~, or di~lrlhmi,~n ~,f a~s of ~he ~eid merge8 corporatlov, the holders of Prefe~rell S~r~k *hall he pald tt~ par ~raom~t ~ their Prete.rred shar~ asd th~ emao~nt of dNdde~ds ac, sumulated and unpaid belgie a~ty amount ~hal] he payable or paid ~o the holdexs of the Comraon SL~w"~i the balance o~ th~ assets o~ said merged eurporafion shall Be dd~ded ratably among the holders of the Common Stock, share a~d share alike." ;f~e Agrecme~ o$ 190~, as heretofore amended, cmxtaLxs ~o peo~ions ~eg~rdshg pre~emptive ~r s~bscr~p~ion rights. In the opinion of Com~sei for Americ~u ~t'.e hMders of Common Stock have pre- elaptive ~ights and the hoIde~ of Preferred Stock do l',ot have pre-emptlve rights with respect to the ~ltksrlzed ~nd uniswaed slmres of Common Stock. Reference is also made to the caption "Restrictions on Dividend~ of American" below. RANGE OF SECUK1TY PBICES The high and low sales prices of the Co,tureen and Pre{erred Necks o$ American on the New York Stock Exchange fo~ each of tbo eight consecutive qaaxterly periods, the last o~ which ended on September 30, t953~ compiled from The Commercial & Finanthal Chronicle, and the high mtd low hld prices of the " Commoa and Preferred Stocks of Cigarett~ in the over-the-ootmter market for each o{ the same periods as compiled from The National Dail~ Quotation Service. Ea@eni Stock Division, published by The Nali~m] Quointion Burea~A Inc. were as $oI1o~: rl~terly Q~ea~e8~ Ended Deeenthcr 31, 1951 ...... 3Iareh gl, 1952 ....... ~une 30, 1952 ......... -Septetaber 30, 1952 .... December S], 1952 ...... March 31, 1953.. ]~ae 30, 1953 ............ ~eptember 30, 1953 .... C~9,~ett¢ N~w Yerk Sleek E~ha~ge Sabs Pzi~s Owr-t h e- C~unv'r Bid. pHee~ Commoa greek l~e~Ted Stock C~mm~ 5leek preferred S~e~k High 12ow Hish I.,~¢ High Low /~ish Low 6s~,i 59½ 13~{ d~ ms 2o5 -- 66 57 13g½ 129½ 220 210 I2~ 125~ 587~ 5¢~ 13g~/~ 1323/~ 215 215 I35 135~ 58 55½ 136~ i31 216 215 132 128~" 66~ 555/~ 1397/~ 132 220 g2g 130 130 74s/~ 65 138J/~ 133 250 250 • -- 74 68~,-~ I86}~ 13g~/~ 265* 250 130 125 779~ 709~ i~½ IZ2~,~ 275 265 127 127 Dttring the quarter end-,A dtmt; 30, i953, there was oze offerh~g qu~tatinn @ 3130. *~ During the quarter ended March 81, 1952, there was one offering quotation @ 1,15, during the quarte~ ended lune 30,1952, there was one offcaing quotation @ 130 and during the quarter eroded September 30, 1952, there was one offering quotation @ 130, The above b{ds for the Common and Preferred Stocks of Cigarette are merely nominal qaotagor~ and do not necessarily ~epreseat prices at which transactions have taken place. Tile offerings of Cigarette 5
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~SId . ,, / Common and Preferred Stocks listed in the notes to the above table were tim tufty offerings which appear~ in the records durlng the eight quarrels listed. As indicated, no bids appeared in the record lc.r t~ Preferred Stec~ during the last quarter of 1951 or file 6rst quarter ~f 1953. ! BUSINESS AND PROPERTY OF AMERICAN CIGARETTE AND CIGAR COMP,LNW Cioarette, w}fich was incorporated ha New Jersey in ]901, sells PALL MALL Famous Cigare The PALL 3L4LL brand together with the buslne~s aad2~80sod will therein was leased by oCi~-amtte American m 1936 iora period ~o exptre ruth the year at art annual rental of 8D2,000_ The PALL MAI,L hrand is manufactured by Ames ca~l at h -ee factories located at Durham, N C, Loedsv e, K ~ a*'Id Rzchmond, Va. and soId to Cigarette under an agreement tmminable by either party on one ye~ notice, This agreement provides that the price for, the PALL MALL Cigarettes manufactured theremzd is the sum of the cost of mantffaeture (which includes tl~ cost o~ the manufactured product and expemc* incurred ir~ the storage and s~inpmem or delivery thereof calctdaled in aeeordaac~ with generally principles of aesomafing followed b~ American), plus interest oat the cost of leaf tobacco used manufacture of such cigarettes (ealeulated by multiplying A ' " ' mcrmaas average ~ltere~t expense by ] ave~agm leaf duration ~or the preceding year} plus a fixed atttou~t per thousand gross profit to American. The price paid under the agreement by Cigarette to .~nezioa~ ~or PALL C ga~'ettes manufactured for and sold to Cigarette by AmericaR during the year 1952 wm of which $301,702,388 represea~ted the cost.of the manafai~tured product and expenses incurred ] sterage and shipmeut or delivery thereof~ $5,033,426 represented interest charge for the tobacco b carried in 5tventory for the'contract ant{ $2,723,277 represented grass protit to American. In 1932 certain real and persorsal property, plmtts, cigar brmlds, trade-mark~% business and 1 good wilX tirol-eel, owned by Cigarette were leaned to American for a term expiring wiI}~ the year 203~ at an annual rental of $1,800,000 plu~ texas ssses~'~.~l upon t}lc leased property, instance and o~h~ cberges eob~tituting addltinnaI rental. Under an agreement with AXmeriean entered into in i936 aa~[ continuing from year to year snbjeet to termination an 30 days' notice, Cigarette is the exclusive a m the Umted States of America and all its possessions for the sale of all clear Havar~ dgar~ manufae~ • by or far American. Payments by American under this ~greemeltt amounted to $696,588 for the ye~ 1952, g Cigarette does not tuna any plants (except cigar plants leased to American under the lease reSsr~ to above) or tobacco leaf sleeks. Cigarette own~ an inve~toI~ of PALL MAT L C ~are es which are stored pr nc pally n pubte wa el cures. C~gare e has ~ves~et~ts m recruit es (notes and stocks of C~b~ Tobacco Company Inc. aod stocks of subsidiaries ~f Cuban Tobacco Company lnc. C~an Tubacc~ Company Inc. bar val'inns subsidiaries which owa~ reaI estata~ and farm lauds in Cuba and are engage~ in the tobacco b~.ino:,c~, including the buying, s~apervlsing the grm'¢ing by sharecroppers, warehousm& processing and stemming of tobaccos, and the yaanmSact~re of e bars and cigarettes in Havana, Cuba. ~ subsidiary of Cuban Tobacco Compm~y No. al!~b owns a manufacturing plant in Trenton, New Jersey, wbe~ olgars are ma~mfaetured, I BUSINESS AND PROPERTY Ol? TffE ~CAN TOBACCO COMPANY American was incorporated in New Jersey by the Agreement and Act of Merger and ConsolldatioS, dated September 9, 1904, refer~ed to above under the caption "thoposed Merger". American and its subsidiaries axe eDgaged in the buglne~ of manuinetufisg mid selling cigarettes, elgars and smoking ast[ 6
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cbmvil~g tobaccos. The net sales of Amerlca*t m~d such of its subsidiaries as aro incktded ia its con$olld~ted fiaatlcla[ stalements herewilh were $1,06g,738,454 in 1952 (including FederaI reveat~e stdmpa of 8520,420,025 affixed to the prodttcts), made up of 95.01% Cigarettes, 3.45% Cigars, and 1,54% Tohaocas and MisoeBaneous. The principal product of American is LUCK~g STRIKE Cigarettes. 'r~e second prlncipai product is FI.LL MALL Cigarettes manufactm'eA by American for Cigarette under arrangements described under tile preceding caption. HERBERT TAREYT'ON Cigaretles are 7hnerieau's third prlnoipal pacdaet. A do~mward ~,'e~d i~i the sale of LUGKY STRIKE Cigarettes which be.g~an in 1949 has conthmed ~o dele. 5ales of PALL MALL end HERBERT TAREYTON Cigarettes bare increa~xl &-'ring the past seven years at _~'a~ es fn~ above flue ~ndustry a'~e:t age. Combined ~a~es of LUCKY STRIKE, PALL MALL and HERBEItT TAI1EYTON Cigarettes place American in the position of America's leading manufacturer of ~de@.rcttes. The cigarettes manufactured by American ax-e principally for domestic consumption and are sold m~bdy ~raugh jobbers and to some extent direct to ehairl stores and ofl~er large remii outlets. The brands of cigars ma*mfaetured by American were leased m ik trader a long-terra lea~¢ ~ Cigaretle entered into in 1932, redo/trod ~ above under the preceding caption. The principal brands now being manllfsctured are ]EL ROI-TAN made principally ~rom domestic tobaccos, and ANTONIO y CLEOPATIt~k, made enfi~'ely from Havana tobaccos. Amerlean also m~n~ffae~ures HALF & IqALF ~nti BULL DURHAM Smoking Tobaccos aud a number e~ ~ther ~moking, plug., ~wist, eigaretm and cigar brands. American Suppliers, Incorporated, a wheBpowned smbsidiary, purchases domestic leaf tobacco sappIylng to ~auerlean the major portion of i~s tobacco requ~remel~s. Tobaeoeo~ ~or the manufacture of cigarettes, smokir~g and ebe~i~.g tobaccos are purr~ased mainly on auction markets real from de, lets artd gtrvermnent ag~eles; cigar tobacco ;s purchased direct item growers and from dealers, Tiffs ~ab- ~khary also rerfries, s~eres and ~etns tobacco, maintains ware.hou~ for handling a~d storing o~ leaf tobacco at strategic poki~ as relaters to Ihc man~tf~ctm'ing plants and growing areas, end normally has ~n hand a very substantial inventory of leaf t~baceo. Golden Belt Ma~tufactuFmg Company, a 94.07~0 ow~ed stthsldiary, mazufactures cotton bags, principally ~med for tt~o packaging of tobacco, and s~pplies American's rcqulrements of bags ~or its brand hULL DUFddAM; manufaet-m~es tobacco shade cloth used to cover the tlelde ~n which Connecticut Valley s}~le-gro~,~x cigar ~apper tobacco is grown; supplies a s~thstantlal p~zfion of the requirements for such cloth ef The Hatb~a~ay-St~ar0e Co~poralion; and also mamKaet~res labels for tobacco and cigarette packages. The I-lathew~y-Steane Corporation, a wholly-ova~ed subsidiary, grows, sorts, packs and cures clomestie cigar leaf tohaeco, almos~ all of which is sold to American. The American Tohaee~ Company of fl~e 0rienl, Inc., a whorfy-o~*medi subsidiary, buys, sorts aud packs tobacco in tlxe Near East known as Tm:kish types for thlpment to American. J, Wix & Sons, Limited, a who~ipowned Engllsb subsidlary, manu- ~aeatres slid serfs cigarettes under the braMs KENSITAS and BAit ONE. The properties of American and its subsidiaries ulillzed in the handling and manufacture of tobacco, get,orally speaking, are employed in either the buying, redrylag, storlag or stemming of leaf tobacco, nr ia the maz~u[acture (ineludhtg prefabrication) cd the tobacco products for the market. The fib;el eel~ters a which the manudscmr'mg operations are conducted by American are tha four at which it manufactures cigarettes ~'bleb include facilities for conditioning and stemming ~,hacco. Tl~ese are ki oJ: nea~ l~ehmond, 'rgima, Dmham and lteidsviBe, North Carolina and I,oui~ille~ Kentucky. The plants in Pdelmmnd, Virglaia. include a cigarette factoz~ and a smoki~g ~obacco factory, red~y- ing, stemming and research [aclhfiea aad slo'~r~ges do~ tobacco trod ~uppkles. The p~a~ at I)u~h~ra, Nori~ Catalina, knelude cigarette and smoking tobacco factories, redrylng and stemming facilities anal sto~ages 7
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2';1 : Sot tol~a~eo m~d s~ll~l~l~es. At ]~eids~ilh~, Nc*rl~ (:a~olina, lhere a~e ~ dga~f,lle l'~t'loly, ~eJ/y~t~g sll~imLi~li11~ f~eililies ~nd slol~gcs for tol~acc~ avid stEpplics. '/lie plal~lS ~t l.o.~svillc, K~l~ltl,:l~y, ine]l c~galeUe ~/ll~] Ihewiitg Io],ae¢o l~aetolles all(] fael]itles J'ol¸ rc~]lyhtg anti ~tl!nulthlg ~tld slol~l~es fm¸ to]/a and supp]ics. The i~illc:il~ cigar' p]anls of Anmric~n arc ]ocated at (:~l~llcstol~, Soulh Carolina, ],ol~isvi Kcntucky, Addcy, l'hiladclphia, So, anion and Wi]kcs-Ilarte. Pcn~sy]vauia. MosL of Ihc cigar mak nmchlncry is Icn~ed flora Ihc nmm~faclurer. Thc p]anls at Ch~Jr]eston, ]~ouisvilrc and ]'hiladclphia lcased from Cigaleltc. Thc l~]anls at Ash]cy, Sclanlon and Wilke~ ]lalrc ~tlo ]eascd fJom others. I,;AI{NIN(;S OF CIGARETTIr: AND AMEItICAN 'i The ~'o]lowi~ig dala, for lhc yca~s }gd~I io ]952, inchls~vc, ],avc ]men p~cpalcd J'lom fina~Jcla] s[alC- 111cl~ts which have l~ccn ex~v~li~icd ],y itlde],cndcnt certificl] ]~l~lic accotmlal~is. The data for the years ]94~ to 1952, inc]us]vc, ic]athJg Io Cig,~cuc, have l~ccn revlcwcd by llasklns & Sc]l~ and, ~clatillg to American, ]~y ],y]nand, Ross ]hos. & ~,~ol~tgomcry; lhc opinion~ of said llrms appear in ],:xhlbils 3 and ~ i e~pecl~v~]y. CI(:AI~I,:~'fE ~l,ded o],c~alions ............ $]I/1,63~,D70 $ 333,3,13,d9] $230,003/108 $167,190,61t) $122,097,73g $ 97,208,389 G~o$~ COll/llllS~iolts J~ODI c]tr'ar (~p~ali0ns, rental UU~el ~n(]enttlI ( Of ]ea¢,¢ tlatclI 5Jar~h 33, 1932, diG~Tc~ls, illlell'Sl and ot},c~ ].como 3/]37,307 2,91&g90 2,757,557 2,78{~7e~ 2 2,~20,055 2,7] ],lg4 h~come l,cforc fe¢lcval a~3 othe~ la~cs on income 1"d,910,206 18,7~13,969 ]5,577,207 ]0,gl~,0(19 6,856.021 5,391,805 NCL income ....... 4,'110,~06 5,601,959 5,032,107 5,27~1,009(]) ~1,~55,020 3,232,515 ]l:arll]tl~$ ]t£q ~ 01111tl£1 n shave (195,500 sha~cs outslandin~ ) 22.6fi(2) 28.53(2} 2562(2) 25.8.~ (2) 21.3~1 (2) ]TAI (2) Divi&~lldS pai¢l on e~m- In~,n stock l,e~ dHrc 8,0/I 1800 16.00 ]d.O0 ]0.00 7.00 "(1 ) Scc also, ~cI ttcdil of special ilcms an/ounlinp to $772,705 inchlde3 in Statcmc.t of ]ncofite for ~950 in ]:xhiMt 3. (2) AItcr deduction of d~vide.ds on Preferred Stock of $]1,967 in the six n,o~th cnded June 30, 1953, a.d ~! $23,934 h~ (tglt h of Iho )cals 19~1/ through ]952. $
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AMERICA~ (CONSOLIDATED) Six~fo.th~ ended lu.e 30, ~3 ~9~2 I~31 1~ ~9~ L~ Set s~les ..................... $.-',24,780,491 $1,0~5,730,454 $94~,552~034 $871,621.130 ~858~996,089 $573¢46(h917 /~eon~e before fede~r a[ ami ~lher tax¢~ on mcorrm ¢4,432,024 78,351,963 30,410,505 76,726,339 74,327~I19 70,523,925 S~ inoozne ..................... 17,075,117 34,068,963 :~3,109,669 41,732,716 45,67~,154 43,912,204 EarIing~ per coramou ~har~ ......................... 2.40/'~) 4.79~1) 5.57(~) 7.17(1) 7.~(I) 7.38(1) N~qder~6s pa}d on com- ra0n stock per share .... 2.50[2) 4.00 4100 4.00 4.00 3.75 O~mmtm sh~re~ ¢ut~zxd- L,g at end of period .... 6,454,110 6,454,110 5,373,425 5,378,425 5,378,420 5,378,425 d) A{ter dedttetlon of dividends on Preferred Stock of $3,I61,982 in each of the years 1948 t~ough 1952 and of 51,U50,991 in the a~x raon~h~ ende~ June 00~ 2953. ~2) Tso regalar qvartezly dh4dertds of $.75 per ~hare and ar~ extra dividend of $1.00 p~r ~h~r¢ pald March 2, 1933. DIRECTORS AND OFFICERS OF SU'li%q~31~G COMp_gNY L~'ON CONSU~I~VfATION OF T]tE MERGER The i~[erger Agreeraent provlde~ that the Sm'vlving Company shall have 19 Directors and names the fd[owlng h~dlvlduMs as its Srst Directors: Orphe.~ D. Baxalya AIfre8 F. Bowmen R~z~ard J. ~ylan Dougla~ W. Brashear Jame~ R. Coon John A. Crowe John S. Do~ A. Gordon F~nd/ay p¢¢s~ou L F~wlcr Char~es Ganshow Pa~d M. H~hn Hiram i~. Hanmer E~u~d A~ llazvey Harry L Hilyartt J~h~ R. Hut~'hJngs, Jr. ch L~Roy Ja~sou William H. Ogsb~ry Jame~ F. SLrleklo~tt The Directors nm~;ed above, with the exception of A. Gordon Fiudlay and ChalJes Ganshoyq con- "~it~e the pl'esen~ Boar~ of D-~ecto~s of ~erlc~n. A. Gc~r,~ Fi~d]ay has s~rved American ~nd its ,l&~idiarles for a period of 21 ycar~. Ue has heoa a Vice P~esident and Director of Cigarette ~ince 1939. ] ~r~ng the past 5 years, and for many years prior thereto, he has been th charge of sales and adverSsing ~[ clgar~ for Cigarette and ks stthsJ~iarles. Charles Ganshow has setvecI American and its aubsidlarle~ ~r a period of 42 years. He has been a Vice Pre~ider~t of C{gar~te sthee I950 and a Director since 1936, ~avlng served as Auditoz" ~:om 1936 to 1950. During the past $ years, anti ~or many years prior thereto, b~ ~a " s suloervJsed the admi~is~r~tlo~ of ali tiepartme~ats of Cigaratte and its stth~tiiaries Both Mr Fmdlay ~Jd Mr. Gans~ow have Seen of Ecers and d[r¢cttrrs of subsld~ar~e~ of Cigarette ~or rna~y years. 9
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"' 2,b(; J ] c ]~ e A e : als, d{sq,,,na es hc foil(re, rag m&vJd.a ~ as Iho fi]st ()[li0o]s of the ~mvj {':Olll[)afly: Paul M. ]lahn, Ptc~idcnl ]{ichmd J. Boylm~, Viec hcsldc.I Jm,,,,s R. C~on, V{ee hes~de.t and Comphollc~ Joh), A. (:ro~c, Vice l'Jcsldc.t Preston 1, ],'(,will, glcc ]~evlde~t l,Mmu.d A, ]lalvey~ Vice Prc~dcnt IlatJy l,. ]lil)atrl, "l'tcasurvr A. ],e](oy Janso]t, Audilor Allied I'. ]lowd<n. Asslslanl t{~ the ]'rcsldenl ]olm W. ]lai,lon) Scctelmy J. Wc~lcy I)ale, Assistanl Auditor Edward ]). ],laherty, Assls~ant A,ad{Ior ]')cderi(~. W, Kc)my, Ass~la),l Sccrclary Joseph II. Watcihonsc, Assisla),l Trcasu)cr ~r IN'I'I';RI,;ST O1,' I)II{I,:CTOI{S AND OI,'I,'ICI:I[S OF CONSTI'I'L~I,~N1' COI~IPANII,:S "~ A)ne]ica)l has ]men advised lhal ]1o di)¢elo)¸ m¸ ¢)Mcel of Atuer~t~a)l or (d" Cigarette anti Iio a~soci~ of ally sl]e]l l)0rs0)r ]1as Imy St)l)s[at)tia] 5)ltelesl) direct o]¸ i]l~ilc(:l) ill lh# plo]msec] )ne)ger ol]mr l])all ~t an ofllccr, dircclor ol slocl;holder in one tb)' bolh of I}]c Conslitucnt Companies. ']'hc attlomlt of (:ot)lt)ll)ll Slook and })t~fl~tJ(~tl Slock of AmelJean arid Ciga]cl[e owned ])¢t)eficla: directly m i.dilcc0y, as of Scplcml,cl 30, 1953 I,y Ilic dhcclf.s and of/;ce~s of each a~ :furllidlcd them ~s as follows: Ol)icc Director o1" Anl('r]cun S(~:'rclary oJ" Cigarctlc I)i)eetm¸ a)Lel A~ista,,l Io Ihc Pr(sldcnl or ]50 50 Atlml]can ~l)d ])ireClor of C{ga)ctle ])ireclo~ a)ld Vice ]'Jc.qdt:nl of Atneriean 2)~50 450 20 ])ircclol¸ of American 220 ])ileel~l o( American ]74 Di)eclo), ¥ico Prc~qdc]~t and (:ol)~l,lrollc) o~" 793 50 Ai]lel ~l fill Dircclor and Vice P~csident of American a.d 720 105 ])Jleclol of Cit~arcllc ~&udito] of (:iga~cltc 36 ])hcctot of An,elijah .100 }Jhech~t mid glcc ]']e~ident of C~gatetlc 250 ]}hcctor a~d Viol P~t~idcnt of Am~harl aud 720 1(10 ])hccto~ of Citmcttc l)ilcctm and Vi~c hcsidenl o[ Cigatctle 10} ])ircctt,1 of {iga~etl(: ] ])h~cl(,r a,~d Vice ]+rcsidcnl o~ Ciga~otc 523 l)Jleelol a,,d I'tcsldent of America. and 2,50'1 285 Ili~,ctm arid ]'~c~sldenl of Cigazcttc Scclelaly of Anlciican 32 ])irecl(,~ of An,cdean ]¢H ])J}ecl(,r and Vice Ple~denl o{ ~lnelicalt and 800 40 28 ]}illclol o/ C~garctle Ili~cctm and 'Jlcasmc] of Arrlcrica. mid 350 I)i~eclu] of (:iga~ctlc ])ite(Iol of ~mclican 200 Ili~cclo] and /tmlilor of America. 318 ]lilec[oI of (:iga~eltc 5 , ])]~tl:lOl of ZtnlelJcall 150 50 Dilc¢lor and Twasulcr of C~ga]elh! 2 ])ilcc[ol of Amclican 420 Stc,c~ of American Stool o[ Cigarel . llef(lI{erlcfic~all~ ]le]<ll~etLcfi~:~/ Couu:ton ]'tel~rl~(I Con,mon }~fcr[; 1,061 62 ~: 5 Otl,hcus I). Bnxalys Gco]ge E. ]lollva; Alflcd 1,'. llow&u, ]Hchard J. Boylan Douglas W. Bra4~ear 'Jlioiti,'l$ }) COil[tOl~, Jmues ]L Coon Joh. A. C~owc Joh,, 1". })illon John S. ])owd A, (;ordou ]"~),dlay ]hesl<m L. ],'owlet (:ha) k:s Gatlshow Alal, C. Cattalt AIbvrl Gold Paul M. ]lah. John W. Ila.bn Ili)~,r,t ]L Ham.e) l:8mm,d k. ]lah'cy Ilmty ],. Ililyatd Jolm ]L ]lulchi.gs, J1, A. l,eltoy Ja,,~an John G. ].em~ Wi]]iam }1, Og*buly Sidney Schou Ju]nc~ 1". Slrlcklmd 10
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J Atr,esics~t is also informed that sssociates o~ the fallowing individual~ o,~,led 5eneficially~ as ~f Septers~ get 30, 1953, secudtles of Amerinaa and Cigarette as indicated: Xamcs R. Coon. 8"3 shares of C~garette~ Freferred Stock; Preston L. Powler, 120 shares ~f Amel'icaxl C~mmtm St,~k; Pa~l ~I. Hahn, 85 shares of Cigs~*Ite C+~mmon S[+~cI~; Hit m, n R. ttarirner, 39 shares of Arner~call Commot~ Stock; artd A. Le.RoF JansQn, 21 sinLres of Araerlemt Common Stock m~d 10 shares of Cigarette C~rnrnon Stock. RECOM~IENDAT/ONS OF THE BOARDS OF DIRECTORS The Boards of Directors J Amerlcan a~d Cigarette, after carc~l consideration, concluded at respe~ ti~e meetings hdd on October 16, 1~ ~at lke merit w~d i~e adva t~ge~ to the r ~pe~t~ve Cotl~t~ ~eut Companies ~nd their stoc~aoIder~. Of the twelve members of the ]~oa~ of D~ectors o~ Ci~ret~ ak are ~Iso members of the Board of Diree~rs of Americon. Cigarcne stockholders MH have as stoekh~ders of _ ~e Su~ving ~mpany a direct i~erest ~ the a~se~, iaclv~ng ~ev~ hlw~mrJes a~ plants, a~d in the b,siness o~ American ~dch has a much larger capit~ and has for almost fifty years eon~f~te~y e~joyed a favorable earnings and d~der~d record as ~ne ~f ~e leading corpora~ons in the tobacco i~ust~y. Also the shores of American which zre listed on tlle New York St~ck Exchai~ge a~ld axe aetlvely des.It i~t enjoy a mush broader market than do the shares o~ Cigarelte which are not listed on any exchange. The Pre- ferred Stock of Araeriean *s tits SmM~iag C~mpany ~,in have fo~w votes per share whereas with reswx't to most eorpsra~ matters the Preferred St~ok of Cigarette has no voting rights. American stoc~iolders will sitars in the hdl benefits of Cigarette's operations. The r~rger M]I also make posskble the ellmlnatlen of man)" duplieatinr~ in the operatin~s ol the two companies as separate entities. At present PALL MALL Cigarettes and LUCKY STRIXE Cigarettes, although manufactured in the santo plants and sto+ed in the same waretmttses, must be shipped to customers under separate bills of lading, n~twitbstanding such shlpmeats are t~ the same evstomers. Separate records most he ~sM-atalned and eacb company billed separately for warehouse and shipping expenses. It is not possible to take advantage of c~rtain minimum candor ra+es beeau~ ~f these separate shipments. Cttstomers must eithe~ suffer the incc, nvenience of dealing ~¢ikh two companies when orde~dng PALL 5fALL and I,UCKW STRIKI~ Cigarettes, or, if as dally happens, they combine orders fox" hath cigarettes ~, one order, the company receiving the order must transcribe and transmit a portion thereof to the other company. Similar dlf~cuhy arises ,+.hen, as happens pracficalIy daily, customers combine remittances for PALL ~LL and LUCKY STRIKE Cigarettes in one check. Because at present h is ~ecessary to maintain +'parat~ accounts resolvable and separate credit deparl~+'ents with respect to the same e~stome~s, g:ealer ~ti~ude unavoidably ro~t~lts tha~ weald be the ease if the customers" credit was controlled by one oampany. lhere is also considerable th~plinatlen in m~nt~i~ing warehouse inventories, ta~, payroll, mslI and other departments m~d in re~erding and dapositing rr~mltta~s from ess+omers, writing and sig+ds,g eh~ks, /~ar~Mng arrangements, stock transfers and dividend disbursing. Most, if not all of these duplinatlotls x+~uXd be eliminated by the merger. In fixing the bases of eom+ersion in the ~Ierger A~greeme~t as hereinabave set forth udder the eaptinl~ "Capitali~tinn of Con~lltuent Companies and Basis of Convcrsinn on hfergeF', consideration was glwn, • ~th respect to both companies, prlraarlIy to past and present ea:~ings and future prospects. In addition, conslderstisn was aIso given to market values of shares so far as ascertainable, book values, dividends, '~apital funds, developments in the elgarette ind~tstry and e~ber factors deemed relevant, including those r~enfioned keeeinabeve under this caption. It
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"JAX.I,'IIEI; NATUI{F, OF Till,; MEI{GL'R It i~ I}Jc ¢>llilli~ll o{ c~>un~el for Ihc Consl]lucnl C¢m]}~enlc~, I}laL, ilndcr Lln~ ]riletna] }(cvcnuc C~dc ~n c~'~'l, the inelgcl¸ w~l] con~titntc a tax-flcc tcol~ani~'at~orL anll that nciLhCl¸ ~lln nor los~g ]l~Cl/tne Tax ]~tlrl)oscs wl]] lJc rca]~xcli }ly reason of []le mcl~cz¸ ]Jy c~lFJcl" of the ConsL]LucnL C~tt~ stockh~](lcrs wllo ~n~y dis~cnl and lJe paid ~hc tnal~L vaTuc c1~ Ihclr sto¢:k in ~q~l~roprlatc ~n ol~ec~ngs. Rt,:SIRtC'IIONS ON DIVII)I,;NI)$ OF AMEltlCAN January ], ] 9(>~. A~r~c~l~l ]la~ c~,~'ct~a]~tcd Ih~t ~t wjl] not dcc]~,c a~y dividends (~thcl t]~,,i ~loek dividendS) on ally class of il~ ~l/~(~ el¸ nla~e ally imylnt'n't on accourlt oi" I|i~ ipul(~m~e, ic(]~nlttl~on, ~r ~l~i']¸ ]clilc~'nt or any ~]lalc~ n~ such st~ek, oJ¸ z]la.~c ~ny []~sLl~l~LJl]on ]n ]c~]~C¢l thereof, ~f the ell'eeL of such l)~yn/cnLs o~ cash d~lt~/~l~llo~ls wi}] he Io exceed the ~un~ ~f ~]5,000,000 p].~ (¢~r ~,fim,~ h, Ihc case c>~ a doge|l) ~ ~2
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.5.9 s{d~dated net income of American and its consolidated subsidiaries subsequent to January !. 1(~ ~8, ~ubjcct to ~he rigI~t ~f American to declare or pay dividends on its preferred stock al any time oues:am!thg, but all such dividends on its preferred stock after December 31, 1947, shall he included is1 all sn~.~-q,ient ~amputatiot, s mlde~ such dividend restriction, and subject also to the ,'tgbt of American t~ retire .~2~tn.~ of arty c'tass of s~ock by exchange for or out of the proceeds of the substantially concurrent sale of oth~e elates of sty&. For she purpose of such restriction, dlvideads i~ prngerty of American s]'iall be inchlde~-~'at tile book value of such property. At June 80, 1953, approximateIy $88,400,000 of relalned earnings "~as f~ee of lhis restrlct~om FE~A.NCIAL STATEMENTS There are aimexed hexetn, as Exhibit 2: ~ncial statamen~ of American and its consollda.~-d .-'lzh- sldiarles; and as Exhibit 3: finanelal statement~ of Cigarette. Further tkiandal statemeitts of ¸American and of American and its consolidated snbsidlarie~, indudlng Cigarette, are o~'1 file in the office of the Securities and Exchange Commission at Washingtort, D. C. and at the office of the New York Stock Exehang< F EFFECTS O gFERGEB ON CAPITAL AND SURPLUS OF SUR~T~NG COMPANY If the proposed merger had heea effected as of Jtme 30, 1953, then, on such date, the outsimldlm~ c~pital steck of American, a~ the Sum, i~Jng Company, ~ould consist of 527,831 shares of Preferred Stock having an aggreg~e per voluo of $52,788,100 and 6,512,310 shares of Common S~ek having an aggregate per value of $162~807~750. The pal&in suxplus would amount to $46~173,346; the inc~.~,ase of¸ $2,878,905 over the amonnt shown by the eoi~solida~ed balance sheet of Aracrlean ia Exhibit 2 repn~sents • Ige exce~s of chert ngprnxlmat~ market values of shares of American to be reealYed by stechtmldel-~ of _ ffigarette o~'er the par withe thereoL Retained earnings of American and its consolidated subsidiaries, as shown irt Exhibit 2, would not be changed, The excees of the roar!oct value, on the effective date of the l~erger, of shares of .~*merioan received hy slockholders of Cigarette o~'ea" the mL~ority interest of such stockholders, based upo~ she balance slicer of Ciga~l~ at D~:'enther 31, 1953, ~1 be added to the intangible asset aecom~t of the Sta~,ivlng Company. S~tch excess hosed on market vall~ ansl ramority interest at June 30, 1953, ametmted to $3,200,112. TB-&NSPORTATION TO FLEgILNGTON Flemingtan, N. J., is ~eached by- the ~iIigh Valley Railroad. The present train schedule, which is subject to change and shouid be confirmed, is as follows: Leave Pennsylvania Station (33rd Street and SeventhAvenue, NewY~zk, N.y.) 10:55A.5I. krdveFlemh~gt<mJanetlonl2:03p>M~ LeaveFIemibglor~ hmetion 5:25 P.M. Arrive Pennsylvania Station 6:40 P.M. American will procm'e tfansportatim~ from ~ew York to Flemlngton by railroad and return by rallroad or, it expressly requested, return by bu.s, ae Company expense for ~my siockholdez of record desirous of attendb~g the meethig, on his notifying the Secretory in writing prior to November 27, 1953, that he wishes gush tzansportatlon obtained. I£ you do ; :~ot plaa to attea~d, yea are urgently requested to execrate the enclo~zd proxy and mall it to the COmpany proraptly. I3
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,2(;0 1 EXPENSES OF $OL~CITATION The ~xpense~ of prcparlng~ a~embling, prlz~ivg aud mailing sbe form of proxy, notice of meeting proxy statement will he paid by American~ t I~ addi~ioa w the solicltmlon of pr o'xie~, ~'~rlcan ~i~ request p~l~m~s ~l~o lzold sto~k i~ ~wir ~zm_~ • or custody or i~ the name o~ nominees for otIters, to ~orward copies o~ sneh material to tbese per~or~ ~ wkomtheyhoMstocko~Amezieanandtorequesta~mrlty~ortheexeeufi~noftbeproxle~. Ameriean m~ reimburse such perso~s for their ~mt-oLImeke~ expense~ and clerical charges in eotm~tion the~wlt~l, whi~ expenses a~e estimated to be about $4,000. To the extent nec, sssa~T in order to assure s~l~eient rep~ sent ation at the meaning, offmers and some r eg~alar employees o~ Amerlcau and approximately six empIoyee~ o{ Philip G. Cameron Company will request the returs_ o~ proxies ]~y telephone, telegram or in person, at 4tg a~imated cost ~f about ~14,000. The amouat of the ~xpec~s~ to 1~e h~rne by American will de~n~ upon the volume of aliases ~epresented by file proxies received promptly in response to the Notlee~_ Meeting. If 1-~oxle.~ are not received F~mptly, it m~y be necessary for ?maenean ~o send telegra~ so]ieS.~don to those stoc~l~olde~s who have rmt zesp~ded. Tbe a~ ~ • pe ~ oJ s~ch telegraphic solieitafio~ woulA be about $2,500, & Stockholders who do ~at h~tenrt to be present at the )decting a~e urge~l to send in their Proxies witho~ delay. Prompl response is belp ful, and your cooperation will he appreclated. -g October 16, 3953 i
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AGREEMENT OF MERGER Yoetwevn THE AMERICAN TOBACCO COMP-gN~~ (a New Jersey corporation) an¢l the Directors thereo~ nnd AMERICAN CIGARETTE AIN-D CIGAR COMPA~NT (a ~ew Jorsey ¢~r~oralir~) a~{l lhe Direetor~ thcreo£ For the mergPr o£ Americ~ Cigax~{te amt Cigar Com~v~y [no T~e American Tobacco ComFany~ pursuant to Cha~cr 12 o~ Title 14 of the Re~sed Statutes of ~he State of New Jersey.
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&GREE~ENT OF MERGER AGREEMENT made aIId ealered into th{s 16th day of October, I953, by and between T~ti~ A~ER~C~.N TOnAC~O CO~Y, ~ ~orp~£~tl o~ ffle ~t&te of ~e%v ~etsey (bere{naf£~r some- times calle.d "_A.~rican")~ ~nd tlze Directors th~r¢of~ parties o~ the drst part, and A~E~¢A~ C~Q~I~rT~ AIqD C~GAg COMPANY, a corporation o~ the State o~ 7~e~v ~er~ey (herelna~ter a~metimc~ eaIled "C~ret~e')~ a~d t~e DirecLors thareo~, parties o~ the ~ec~nd part, said t~vo corporations b~ing here~na~tu~ c~ll~tiv~iy ~l]ed fl~ "Co~il~e~t C~ml~anieg'; W~AS, the principal and reglster¢~ of~c~ of Am~{~an in the State of N~w Jersey is at N~. 117 Mai~ S~eet, in ~h~ 25oro~gh of Flemi~t~, i~ the Couuty o~ Hun~:erdon, New Je~aey. and George Kno~vIe~ Large is ~he Agent Lhereb~ ~t ch~r~c thereof, and ~poii whom process against s~id corporation may bc scrved within said State; a~d W~R~AS, ~he primcipa| and r~gistered of~ce of Cigarette in the Stat~ ~f N'~w 3er~t'y ~ at No. 117 ~b~ Street. i~ the Boro~gh o~ Flemh~g~, ~n the C~unty of i~lan~erdon. New 3ersey, and Geo~g~ Iinowl~s L~rge is ~he ~ge~ there~n, in charge th~reo~, and upon whom process against sai~ corpo:aticn m~y be s~rvcd wlth{n said State; and W~, the a~thorized Cap~t~l "Stock o~ America~ ctms~st~ ~ 10,009~000 ~a~e~ a~ Common- L Stock. par ~alue $2~ per share~ o~ ~hich 6~454~110 sb~re~ ~ issued ~nd ~ztstandlug and 540,I06 sha~e.~ o~ P~a[arr~t[ S~ock, p~r val~ $100 per abate, o~ which 526,997 sh~re~ are issued and ~utstanding; and W~ER~S, the ~uthorlzed Capital Stock af Cigarette ¢onslst$ of 500~000 shares o~ Common Stock, pa~ wa~a~ $70 ~e~ ~ba~e, o£ which ~O,~ shares are ~.~ed aad oatstaadlng, ~l~d~wg "~,500 shares he~d ~n ~s Trea~t~D, an~ ~1~o inciudlng 1882~.~ shar~s owned by American and 3~989 shares ~f Pre~rr~d Stock. p~r vaIue $100 per shar% of which 3~989 share~ are issued and ~ts~audin~, ~cludi~g~ 3~ ~ ~c~ r e.~ o~ed by Ar~r~csn ; a~d W~s, th~ above-raent]on~d corporations ~e org~nkz~d for th~ purpos~ of c~t~yin~ on bll~lIleSS Of t~ sa.rrle OF O~ & S~trI~l" ~a~ttre~ ~l~d ~¢V~ss~s, the Boards o~ Directors o{ ~id ¢orpc~attona deem it to lh~ behest and advantage ~ ~5e Constltaen~ Coml~ar~ies ~utt their sto~kho!~ers u:xder p~e~eutly e:dsfin~ circumstances to e~er ia~o th~s /kg~'ecment o~ i~ezg~r under ~l~d p~rsuant t~ th~ prov~ions of Chapter 12 of Title 14 o~ the l~cvised Statutes ~i ifcw Jersey aud Ac~s supplementary thereto or amendgtory Now, T~ll~ ir~ c0nsiders.t{ol% 0~ ~hc premises a~l¢I rnll~'xl~l a~rcelncn~s, l~rOvisior~, ~ove~ na~ts and grauts herein cont.{ned, it is hereby a~teed by and be~areet~ the par~iea hereto, and ~n ac~ordane~ with s~id ~ets of the Legislature o~ ~he State o~ ~ew jersey, tha~ ~ald Cigarette abel| be a~l th~ same hereby ~s mea'~ed into said American, and said ~.merIean doe~ hereby merge i~to itseI~ said C~ga~e~te. .4.ad the par~ie~ herelo by theae preterits agree to ~a</3~reaarlbe ~he terms aud ¢ondiBoos of said nu~Ze~ a~d the mode ~ c~r~yln~ fl~e ~ame into ~ffect, ~hi~h ~erms and cond[tions a~d mode of carryi~K the santo {nto effect the said parfie~ hereto do mut~aIIy and ~evexally eovcnan~ to observe, keep and perform, that i~ to ~ay: ] I i
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263 .' ARTICLE I Tile ,American Tobacco Company, iatQ wh{ch C{gar~tte ~s hereby merged, as aforesaid, sh~ be the corporation ¢ontimdng aher the mergel and the name oi the corpozatiort sha~ he and remain the same. (5~fd corporation shall her~l~a.lter scamethxle.~ he referred to as the ~'~lar~,iw~ Company"). I ARTICLE II The number of the first Directors o£ the Surviving Company shall be lthmteen (19) aad thereafter the number of Directors shaIl b~ the number fixed from tZme to time iu the I3,y Law~l of ~be Sarvfvfng Compauy. The aames ~ud pos~-offce ~ddresse.~ o[ the first ])irec~ors oi di~ $u~vl;~ing Compan3~who shall bold o~ce untiI their su¢¢e~so:s are chosen er appointed accc>rding to the ~y-La~w q~ the Surviving Comi~any are as ~ot~o~vs: ~¢~ post-~ace Addresses O~pheus D. BawaIys 111 Filth Avenue Alired F. Bowden Richard J, Boylan Douglas. ~V. Braahc~r Thoma~ P. Connors ]a,~e~ R. Co~n John A, Crowe Joha S, Dowd A. C-%,rdon Findlay Preston L, Fowler Ch~rles Gasshow Pa~l M~ Hahn Hi,am R H~nt~er ~dmund A. [~a~vay Harry L, ~TiIy~rd John I~. Huv:kiug$, 7~. A_ LeRoy Ignson "%~i}}iaza H. Og'sbury ~amea F. Strlckland Nmv York 3, New ~£rork lll Fi{th Avem*e New York 3, New York 111 Fifth A~enue New york & New York P• O. Born 6-P Richmoud I6, Vftg{nla llf Fifth Avenue ~qe~n Yozk 5, New Y~rk 11i F/~th Ave~e New y~rk 3, New York ili Fi~th Avenue New York 3, New York P. O. Box 808 LoulsviIle 2, Eenfucky Ill F{dth Ave~e New Yo~k 3, New York fll Fifth Avenae New York S, N~v York IIi l~fth Aven~e New York 3, New ~ork /11 Fifth Avenue New york 3, New York P. O. Box 4178 R~bm~z~l 24, Virginia lll F~fth Avenae Ncw york 3, New York 111 Fifth Aven~e New Yo~k 3~ New York Pe~:figrew & ~lackwelI 5treek~ D~trkam, North Carolina 1~1 FKth Avenue New Y~rk 3, New York ]?etfigr~w & Blachwefl Streets Durham, North Ca~fina Petfigr~w & Blackwe~l Streets Durham, North Carolina
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pl~s~dent Vice President ~¢e President and Comp~ro}[er ~ice P:esident ~ce P:~s:den~ Vicc President Treasurer Audit Assistant ~ the Prcsldent Secret~ry Assistant Auditor Assistant Audltor Asslstaat Secretary_ Ass{stant Treasurer 264 The ~rst officers of the Surviving Company shall be fourteen (14) {a m~mhe~- and shall be a president, tlve (5) Vice Presldemts~ one of whom shalI also be the Comptroller, a Secretary~ a TreasureL an A~ditor. ~wa Asaiat~t Auditors, an x~slstan~ Secretary, an Assistant Treasurer a[yd all ~S~i$~Ilt k~ the Fr~sidm~t, and their names and post-office addresses are as follows : O~cer~ N~ :POBt:O~ Addresses Pa~l M. Hahn ill Fi~th Ave~lue New York 3, New York Richard J. l~oylan 11l FKth Avenue New York d, New York ]am.~ R, Co~n ill FKth Avenue N-~w York 3, New York ]ohm A. Crowe Ill Fifth Avenue New York 3, New Yark Rrestoa L, Fowler lI1 Fifth Avenue New York 3, New York EdIaund A. Harvey 11[ Fiftk Avenue New York 3, New-Fork t-larry L. Hilyard 111 Fifth Avenue New York 3, ~ew York A, LeRoy ~aa~on Ill Fifth Avenue New- York 3, New York Alfred H Bowden ill Fifth Avenue New York 3, New York John kV. I~anlon Ill Fifth Avenue New York 3, New York J. ~7v-esley Dale 11I Fifth Avenue New York 3, New "fo~l¢ Edward D. Ii'laherty 111 Fifth Avenue New York 3, New Yorl¢ Frederick Vf. ~eany 11i FiDh Avenue New York 3, New York ~osepk R. Waterhouse ill Fifth Avenue New York 3, New York ARTICL~ III The ~o~al ~u~horlze~ C~pkal S~ock of the Surv~i~ Company is and shall be ten million (10,Lg0,~OO) share~ of Common Stock of the par valae of $25 per share and five hundred for~y thouaand o~e hundred six (540,106) shares of Preferred Stock of the par value of $I00 per share. The Transfer Agent and the Regiatrar o~ ~hc stock of the Surv:vh:g Caml~ny shal~ be the persons or corporations deslgnated ~s such from time to time by resolution of the Board of D{re~tozs. ARTICLE IV The Ag~eeme~ and Act of ~erg~r and Co~salida~i~a o~ Amerlc~m. dated September 9, 1904. pura~a~t to which An:erica~ was crea~d, as s~ch A~-eement of September 9, 19134 has heretofore been amended, shall, upo~ the date of: wklch the n:er~er becom~a e~eat~e urtd~r the l~w~ of the Sta~e of New Jersey, be deemed to be amcnded further by this Agreemettt fosofer a~ such Agree- merit of September 9, 1904~ a~ heretofore amended, is inconsistent with any prov:~ion o~ this Agreement. ARTICLE V The By-Laws o{ the Suryiving Company shalI he the By-Laws of Ameriean as those M:aII exist on the effective date of the merger untll altered, amended or repeMed as thereln provided. 3
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G.5 ARTICLE VI The manner of coI1ver~f~g tlr¢ Capg~l Stock of tim Co~s~tue~t CorapaMes ~mto the Capl~{ Stock of the Survivlag Company shah fie as fuIIows: (a) ]~aeil share of Co~imo~ Stock, par vaIt/e $70 per share, of Cigare~e wfiich shall be issued and outstanding on the- effective date of ~he merger (e~cludtng any shares the~ held i~ the Trea~u~'y of Cigarette and excludlng any shares then owned hy Amer{can~ which sfiares shall cease to e.~lst and the certificates representing stIch share~ sh~II he caracoled) shall be converted into eigkz (~) shares o~ Common S~ck. par vMue $25 per share, of th~ Shrvlvkxg Company a~d each share of Preferred Stack, par value 9109 per sfiare, of CJ'garette which ~haH be issued and o~t~tandi~g" on ~fie effective da~e d the merger (~xcluding ~ny shaxes thett he!d in the q'reasi~ry, ol Cigarette and exeIudlng any shares ~hen owned by American, which shares shag cease to exis~ and the eertidcates repre~en~iag such shares shall be eaneelQd) shall be converted ~nto one and o~e tenth (1-1/10) sha~es of preferred Stock, par val~e 9100 per s~are, of the Surviving" Compa~y; and (b) l~ach shar~ of Common Stock of American, par value 925 per share, ismted and out~tandlng o~ the effective date of the merger ~bM1 conthme to be one sk~'e of Common Stock, par ~-aI~e 9~5 per silare, of the Survlvl~g C~mpany and each share of ]?referred Stock o~ Amer~ca~ par valne 9100 pe~ share, issued and ~ut~a~dhtg on the effective date of the merger shall continue to be one ~kare of Preferred Stock, par value $100 per share~ 0~ the Sttfviving Companyi ahd (c) After the effective date o{ %he merger each liolder of ar~ ouL~ta~ding eertlficate or certificate8 represet~h~g share* o~ Common S/dck, par value $7Q per sitar% o~ Cigarette shall smrender the S~me to the Sur~'i~i~ Company and sack holder shall he et~titled upon sllch s!Irret~der to ~-eceive hi ~accka.llge lheretof ~ certificate or ~'e~t~dcate8 repPesentillg eight (~) shares o~ Common Stogk~ par ~ah~e ~,d" per share, of ~he Sl;rv[ving Company for eacfi ~fiare of Corr.mon St~ck ~i C{gare~le a~ aurrendered. Until sa sur~e~tdered, each outsta~db~g certificate which, prior to the effe~tive date o~ the merger, represented shares of Commo~ Stock, par value SgO per ~hare, o~ Cigarette, shah be deemed lot all corporate purposes~ other than ~'otlng and the payment of dividends or other distributions, to evidence the ownership of the shares of Common Stock, par ~alue ~$ per shar~, of the S~rvivi~K Company into wh~efi ~mch shares hav~ been s~ cotawerted. Unless alld ~ntll any s~ch outstarldh~g certificates shall he so st~rrendere~, the 01olders thereof shelf h~ve no voting rights in re~pect thereof and no dividend or other distributlon payzbl~ to the holders o~ record o{ Common Stock oI the Surviving Company as of any date subsequent to tile effective date of the merger shall be paid to the holders of suck outstanding cert!f~e~tes, bu~ apotl such surrender of amy such ot~tst~nding certificate or cert~cate~ there ahall b~ paid to the record fiolder o~ the certificate or eerti~ea~es for Common Stock ol the $~rviving Company ltsued ia exchange therefor th~ mnount of divlde~ds or ether distrlb.fi~s which thereto~ore became pawable wilh respect to the number of shares of Courtroom Stoef: of the SurvlviIlg Coi~lpany represested hy the certlfie~to or eer~fic~tea ~o issued in exckangc. (d) After the effective date of the merger each holder of an outstanding c~rti~cate or certificates representing shares of Prefer'red Stock, par value 910g per share, cd Cigarette shall st[frontier the ~ame to [fie Surviving Companl' and such holder shall fie erltitled upo~ ~ueh surrender to receive in exchange there{or (subject to the provis~mm of sukdiv~sion (e) hereof wfih respect t~ flactldnaI sbares) a certif~eate or eerti,q¢'ates representing one ~nd one- tenth (1-1/10) shares of Preferred Stock, par value $I00 per share, of the Surv[v{flg Compa~ ~ J for eaefi share of Preferred Stock of Cigarette so surrendere& U~til so surrendered~ each o~- ~-~ Mandb~g aertificate which, prior to the eP'~ctlve date ~ tke merger, represented shares o~ P~e- ~I. tarred Stock, par valne 9100 per sfiare, of Cigarette, shMl be deemed ~or ag corporate purposes, other than voting ~nd the payment of di~ddends or otfier distr{butions, to evidence tile ~'~ ownership of the shares of Preferred Stock, par value $[(X1 per shar~, of the gurvivh]g C~mpany ir~to which such shares have been so converted, IJaless and until any such 4
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| ,2 0 outstanding certificates shall be so sttrrendered, th~ holders tl~ereo~ shalI have r~o vo6ng rights i~ ~e~pect ther¢o~ a~d no divid~ld or other dlstriSt~t~on payable ~ the holder~ o~ ~cord o~ Pre{erred $t~ck ~ the Survlving ~mp~uy a~ o~ ~uy dat~ s~bseq~e~t to the ~ve date o~ the m~g'er sh~lI be p~d to the holders of ~uch outs~andi~ ccct~fic~tes, b~ upou such suiTendet" o~ ~ny s~ch ot~9~rldin~ ce~'~i~c~e or C~r~{~cate~ ~iex-e sh~II be pa~d to the r~cord holdc~ o~ ~te ee~ti~cate or certi~ca~es foz Pre~errc~ ~t~ek a~ the Sarvi~in~ Comt)a~y is~led ~n exch~tge therefor ~he amount o~ divid~uds or o~ diatfib~tions whic2~ ~hereto~ore becanl~ payable wkh respect ~o the ~umbez of a~r~ ~ Preferred S~ock o~ the ~i~inK ~mpa~y ~pz~e~tted ~ the ce~ti~c~t~ or ce~ti/ic&t~ ~o ~a~d ~ e~c/~e. (e) No fr~etlo~al .~har~s of stock ~hall be i~ued by the ~urvlv~ng Comply ia r~p~¢~ stock ~f Cigarette, 5u~ e~ch holder of shar~s o~ Preferred Stock of Cigare~t~ entitled h~reunder ~o receive a ~r~cfio~ of ~ shar~ o~ Pre~e~d Stoe3¢ ~ the Survlv{ng Company ~halt ~ece~v~ for each s~ch ~ction o~ a sh~r~ a ~n-vo~K, ~o~d~v~den4 a~l~ no~di~r~b~tL~ paying Scrip Ccrti~ca~e of the Survlv{ag Company for thc fr~ct~ af a ~Iva~v~ o~ T~f~rred St~ek ~ which he i~ ent{fled. E~ch Scrip C~rtificate w~ll ~nfifl~ the hold~r (iucl~ding the ~t~g C~n~pany ~ i~ ~h~l h~vc ~cqu~ved th~ same) of such Scrip Certificate to receive, on surrender' fl~reof with{n t~ yea~ ~(ter tke d~e on which the m~rgec 5~comes ei~ectlve, ~o~ether wlth other Scrip Certi~ca~ o~ l~ke tenor, repres~nt~K in ~h~ ~ggre~te riyht~ in ~e~pect af one ~ more ~ull sha~z o~ ~r¢~er~4 ~tock o{ th~ Su~v~n~ Compasy, cerfi~c~tes ~or shar~ o~ Preferred ~¢k o~ the Su~v~hlg Company equal to the number of full shares ~ Preferred Stock ~n re~pec~ of which s~h Se~{p Certi~cates were issued ~d th~ amount 0/ 4~d~n~ ~nd other dlstrlbufiona th~re~ofore declared i~ respect o~ such {ull shares and ne~" .%v~p Cert~cate~ ~£ a llk~ tenor ~r the rem~ininK tractlon o~ a ~re, ~ ~ny. Pall ~uch Scrlp Certificates which are not surrendered wi~hln ~he time aforesaid sh~l be void¸ aud of no e~ec~ whaiso~ver on ~nd ~t~r a date which ~aII be ~wo years after ~ date on which the merKer is effective (herelnaf~er re~r~ed to a~ th~ "expirafio~x datc") excep~ ~hat the holder~ ~hereof ~h~21 be en~tled ~ rec~ve wi~I~ ~wo years and te~ mo~t~ afCe~ ~he ¢~pir~tlon date ~elr ]~'~ ~ port~o~ of Lt~e proceeds resulting ~rom the ~Ie ~ d~ £u~[ skates o~ preferred ~tack zepresen~ed by th~ the~¢t~o~e u~a~r~e~d~d Sc~p Certitudes, toKe~h~r i x~[th th~ pre r~t~ share of dlvide~d~ aud other distributions ~ere~o~or~ declared in r~pect 0~ such full shares upon surre~Lder of such Scrip Certi~eates; ~uch sale shall b~ made • within o~e hundred e~l~y d~s a~er ~hc ~xplra~i~n d~te (publicly or pr{v~tcly at ~e~ ~ ~randy pl'~aiIin~ r~arket p~[ces) by the S~rv~vln~ Company o~ the tra~s[e~ ag~n£ o Lhe ~res v¢ith ~es~c¢ to wh{eh such Scrip Ce~t{6cates were issued, as the ag~n~ for a~d ¢~ behalf o~ the holder~ ot such $¢r{p Cer~i~e~, or, at the electio~ o~ dl~ ~ur~vi~g [ Company, may be made to the S~An~ Com~an~" a~ ~ price ~qt~ to the a~era~ ~l~-;~g price of ~he s~ck o~ the New York Stock Exchange ~or the twenty ~ulI b~sla~ss days [u~m~dlately ~ollowinK ~he e~xpi~[0n date. Any proceeds resulting ~rom such sale no~ cLaimed ~h~n ~c~ ~w~ year ~d ~ea month period shall be pa~d by the transfer agent ~a the St:rvivlng¸ C~n~p~ny a~cl be h~d by th~ Savvi~s~ C~mpany ~ p.~t o~ {~ g~ue~al £~an~ ~e¢ a~d c~e.~- ~f ~3" claim o~ those p~evlo~sly e~tltle4 thereto. Th~ sIzares o~ stock: of the Surv~ng Company ~epre~entcd by Scrip Certi~e~t~ ~l be issued upotx the mer~er becoming effective and shah b~ he~d and disposed o~ by the Surviving Company o% at its option, hy ~u agent 6~slgnated by it, as herei~ provifie4. AI~TICLE VII ]Zxc~pt i~o~ ~ ~u this Agre~meat ~th~rwise speei6calIy set £orth, or a~ provided by statute, the corporate n~r~e~ purposes, power% objects, franchi.~es, enti~, exlstenc~, ri~s and organization Am~r~ca~ s~a~I r~mahl ~act and b~ ve~t~ ~ fl~ S~r~vi~" Co~npan'~% .~d t~e ~rp~n~t~ ~ta~chis~, en~ity, ~xi~ce and ~k~ o~ Cigare~t~ ~ha~ b~ ¢c,n~{u~d h~ ~nd merged i~to ~he Survlvln~ Compsmy, aud the SUl~V~i~g Company sh~ll be f~lly v~t~d ~h~rewith, and ~l~on th~ Glin~ in the Of~c~ o~ th~ S~cr~tary of Slate of N~w ~[ers~y o~ th{s A&~eenlen~ when adopted by th~ ~to~khold~rs of each Coasdtu~nt Company as her~{n~fter provided, the organization a~d
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¢xis~eno~ o} sa}d C}garette sba}} cease, e-~cept insofar as the sanIe sh~,ll Coll~h~Tle by statute or rlmy be requisite (~ carrying out ~he pttrposes o[ this Agreement. ARTICLE VIK Upon the effec .~ive date of ~he merger herein provided for, all and singular the rights, prlviIegea, powers a~d franchises of each of the Con.°tituent Companies, bo~h of a 9ublie and private nature, and all property, rea[, personal and mixed, and all debts due or1 whatever a~cQm~t% as well for ~ock st~bser pt ons as a o her h ngs act on, be o King to each o{ sald Constltt~emt Companies shall he vested in the Sarvlvit~g C~mpany w{th~llt furthel" act or deed a~ e~eetua]ly as they were ve~ted in the Constituent Compalfie~; and a{l and every other interest ot the Constituent Cora. pan~es shall'hereafter he as effectual y t~e property o l e Survi~lng Corapany as they were of the Constituent Companies; and the fit, le to shy and all real estate, whether by deed or otherwise, %*ested in eid'.er o{ said Consfituen~ Companies shall not revert or be hl any way impaired by reason of tile ~aid merger; and all rights of creditors aud all lieaxs upoa the proper~y of the Constituent Companies sh~}l be preke~4ed tt~imp~i~ed; and the Consti~u~t Compan}e~. par}ies hereto, map be deemed to ~on~inue i/l ex{stetzce in order to pres~v~ the same; ~nd a/l dchts~ liabilities, restrictions and dutles o{ the Constituent Compost,s shall forthwith attach to the Surviving Company and t~Iay be mfforc~d agait~st it to the same extent, as {f sald debts, iiabil~t~es, restriet~ons and duties bad Been incurred or conkracted by it, it being expressly prr~vlded ~hat the merger of the Constituen~ Corapani~s shall not in ~ny mannex impair the right~ ol any creditor or creditors o~ either of the Conslituent Companies. If a.t any tltrte the Sttrvivlng Co ~%p ~.uy shall dem~ or be advlsed that any fuzther assigm~len~s, assuraa~ees in the law~ or things are necessary or desir~bie to vest in the ~urvivlng Company the tide to any property of the Constituent Companies, thc Constituent Companies attd their proper oificexs and directors shall and will execute all proper assignments alld assurances in the law, and do all things uecesss.rp or proper to vest title to such property in the Surviviug Cot@arty and otherwise to carry o~t the purpo.~es of this AgTeemetlt. It is expressly declared arm Amerb-on hereby covenants that the Surviving Company sha!I be sub~ect to the remedle~ and liabilities i.a ~uch case prescribed in the said Chapter 1Z oi Title 14 ox¢ the Revised ~tatntes of New fersey and the several supplemen}s to and amendments thereo{~ and shall be entitied to all of the rights, powers, privileges and ~muuitles accorde<[ to a corpo- ration organized under said Act, and the several ~upplemeu~a to ~nd amendment~ the~f, whether now or hereafter enacted. ARTICLE IX The Szt~viviug Company shall pay ag expenses of thls merger. AIITICL~ X The Survivlng Company reserves the righ~ to amend, alter, change or repeal al~y ploviMon contained h~ the Agreement and Act 9f ~vferger and Consolidation, dated September 9, 1904, pursuant to which An%e.rican was created, as such Agreement o~ September 9, 190# has heretofore been amended and ~s amended by this Agreement, or contained in this Agreement, in tim manner now or hereafter prescribed by statute, and aI] rights conferred upon stockho!d~ of ~he S~rv{v~ng Comp,%oy are gr~nted -~ub~ect to thi~ reservation, =i ARTICLE XI Thl~ Agreement shall he suhmltted to the stoc!~olde~ of ezch of the Constituent Companies as provided by l~w a~d shall take effect and be deemed aad taken to be the agreemen~ a~d ~ i act of merger of the Constituent Companies upon the adoption thereof by the votes of the holders ~ of two-third~ of all file capital stock of each oi the Coasti~ueEtt Companies and upmt the doh~g of ~ i such other acts and things as shall be requlred by Chapter f2 of Title 14 of the Reviaed Stat~es ~ i of New Jersey and the several suppIements thereto and acts amendatorp thereof. ~ I Xi ° |i
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298 [_~ Wrr~g~ss W=~m~p, sa{d Constituent Companies~ parties to this Agreement, have caused ~helr respective corporate sea}~ 4o he hereunto af~xed aad th~se pre~enls to be si~ed by ~elr ~espective Pres:deTlt~ or one of their I'espectlve ~vqce Pres{dcllts ~tlld ~t~ted by the{r r~speet~ve Secre~es or A~iatattt Secretaries, all thereunto duiy aaLhori2ed, and ~he Directors of ~ach of _~a~d Corporatloaa have hereur~o set their hands and s~als as o~ the day a~:d yeaa- first a~ove meut:ond. THE A~lzLz[~L~ TOI~ACCO C~-~pAtC~Z ;qy P~un ~d', ]~AEN (Paul ~, Hahz) Pre*ident COF~T~ SE~L ATTBSr; (Joha: W, ~lank, a) SecreCy Signature~ of Directors of The American Tobacco Company : ORI'~U$ D. BAXAL¥S (L. S.) PAUL M. I-YA~ (L. $.) (Richard J. Boylan) (Edmund A, Harvey) Do:.r~LAS W. BF, ASHEAR (L. S.) ( Do~aglg~ W, 11 ~a~he~r~ (I~rry L. ~ilF~r d) TmO~AS P. Co>I~o~ (L, S,) (Jame~ ~. Coon) L~. L~R~y lan~an) Jozu¢ A~ C~owz * (L.S.) lJoh~ A, Crow~) WILLIA;VI H, OG~BYIRY ( %Rrillia~ I-L O~b~ry) (k 88 ~0KN S. D0wt, (k S) ~*~:xs F. STmC::LAX~ (L. S.) (t~hn S. Dowd) (Jam~s I% S~;kkla~) 7
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" • A~ERICAN CIGARETTE AI'.~ CIGAR COM~'ANY GOp.p OF~.TE S~EAL GzogGE E. BoLrvAR S~etary • A~ERICAi¢ CIGARETTE AND CIGAR CO~,iPA~y Signafure~ of Directors of Americ~tt C/g~rette and C~gar Compaay: (AIfr~d F. Bewden) ALBERT C~3LD fAlber~ Gotd) Jos~ A. Caowx (LS.) (]o~n A. Crowe) PAI~I. M. HAHN C~aul M. E~) ( A. C~rd~ Fiu4hy) F~IUND A, HAEV~¥ (Edmund ~k. Hgrv~) (Harry L. ~t~ard) Jo~ G, LA~ ()'ohn G. L~ng) (Preston L. Fowler ) CHARLES GANSEOW (L. S.) (Charles Ganshov, ) ALAN C. GA~tA~ (L. S.) (AI~ C. G~rra~) ~/DN~y ~CIr~,U (Sidney 5¢hon) (L, $. (L. S.)! (L. S.) (L.S.) (L.S.) (L. S.} 8
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qT~%T~ OF ~W YORK ~ ZT ~mMI{y~ED that on th{s 16fh day of October, hl the ym{r Oi~e Tbousalld N{ne I-lundred ~rtd pilty-three~ before me, tile subsariber, ~ ~NIotary PubI{c of the Stxte o4 New York, Coumty of New "/orb, authorized to take ackn~wiedgr~ents and proofs {n said Cotmty a.rid State, personalty appeared John \V. Hanlon~ kn~I ~o me ~c, be the Secre~y of The An%erican Tebaeco O~mpaay, o~e o4 the eompanies named in the wi~hhI Agreement, who beh~g by me duty swarm ~ra his o~l'b s~.id a.tld made proof ~o lily sal{sfactio:~ that he is such Secretary', that he well knows the corllmon ~eai "~f ~d Con~pany, that the seM af@xecI to the within Agr~.elnent is ~ucb eornmo~ 8e.~i and was ~hereto aFgxed by Paul 5{. Hahn, the President of said Comp~tny, and that sa[d Agreemen~ Was by said Presidemt signed al~d deiivered as and for the voluntary ~ct and deed of said Company in ~b¢ presence of said deponent who theraupo~ aubscrihed hi8 p-am~ ther~ato a.s a_ti.estlng w{tness, and th~ the within Agreement was ~fgned by eli the Dbectors of said Company. Jon~ W. t~xa~o~ S~orn to and subscribed before me, a Notary (Joh~ w. ~an~on Public {n and for the County o£~ew York in the State of New York, in said County and Y,,afe, tkls 16eh day of October, 19~d. ~V[A.~IE S. I~EEICERNAN NO~ pubic in ~'~4 fm¢ ~h~ County of N~ Y~rk in tb~ Stat~ ~:~ N~'~" Y~k (sm~e) Date of Expiration o{ Commission March 30, t955. 5TA~'E OF i~'~W yO~%I{ | B~: ~T emN~g~ tb~t on this i~bth day of October, in the year One Tho-a~a~ld Nine Hm~dred a~d Fiity-three~ be~or¢ me, the subscriber, a Nola~f t~ublic o{ the State of New York, County o4 New York, aath~rized to take acknowledgments ~nd proo~ in said Co~mty and State, p~-sonaHy ~pgeared O~rge E. BoIivar, known tn m~ to be the Sccre/,~ry o4 American Cigarette and Cigar Company, ~ae of the ¢ompamf~ na~ted in tbe within Agreement, who being by me duty swore, on hf~ oath said and made proof to my satisfaction fl~at he is such Seca~etary, t~t he well kaows the common se~l of said Company, that the seaI affuce4 to the ~ithi~ .a*greement is such common sexl and was tbere~o ai~xed by Charles G~ho~I% a Vice President of said Company, a;;d that said Agreement was by said Vice President signed and delivered as and for the voluntary a~ and deed o~ gaid Company i~ the presence of said depoueu% who thereupon subscribed his name thereto as attesting wit~ess, and tb~t the wifld~ Agae~me~t was ~igaed by M1 the DDectors of ~aid Compal~y. GEORGE E. BOLYV'AR Sworn to a~sd subscribed bai~re ~, a Notary (George E. Bolivar) Publle i~ a~l~ for the County of 2¢ew York in the State otNew ~rk~ h'. ~ald County aud State, ~hls 16th d~y o[ October, 1953. ~ob%r~ pablM ia and ~ot t~e C~az~y o£ /~w ~ork [r~ ~e l~ate e,~ N~W yor~ (SEAL) Date of Expiratio~ of C~mmls~ion March 30, 1955. 9 ZTO J
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~27:l_ (John W, t~aIoa) 72 Secretary ( CORPOI~-&TE SEAL)
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L~ CERTIFICATE L C~o~E ]~. BOL~V~ Secretly of Amer can Cigarette and C{ga~ Coragazty~ a corporation or~znised and existing under a~d by vlrtue o~ ~h~ la~s of Lhe State ~ iq~. 3ersey, one o~ the Co~tituen~ Companis~ desex~bed in ~he foregoing Agreement o~ ~[e~ger~ do hereby certify ~ ~cc0rd~nc~ ~th Ti~lo 14 o~ the Ne~" Jersey Revised ~atu~e~ as amended and particularly R. S. 14:12-3 ~her~of ~ha~; L ~Y~ ~or~alng Agree~nen~ o~ ~e~g~r of said c~po~%~on ~nd Th~ A~neric~ Tobacco Company was entered into by the Directors of sa~d American Cigarette and C~x C01np~ny, under th~ corporate seal of ~aid co~poration~ p~r~uaat ~o ~esG~t[o~ ~dopted hy ~he Bozrd ol D~recto~s o~ said Al~e~isan C{ga~e~e and C~gar Company ~t a d~iy con~e~ted n~ee~ing thereof held ou O~Io~er i~ 19~, at ~'h~¢h n~ee~i~ig a Special NIec~ing o£ the Preferred ~l~d Comr~ ~c~olders ~f ~Jd corporation %v~s ¢,n~led ~s accordance ~vith the £gy-L~vs, ~o be held on the 4t}i day of Deccmb~, 19~3 ~or ~he purpose of ~oasld~rlng th~ ~me. % 2. S~id Agreement was duly s~bmi~ed ~o ~he Pr~e~ed ~nd Commo~ stockholders of s~id Avae6can C~g~r~e a~d CiKar Colnp~ny a~ ~ spe~l ~needng ~he~eof callc~l ~ afoce~Jd ~nd duly held a~ d~ of 6ce of the c~rp~r,~lon a~ 117 Ma~n Street in ~he ~3o~ough o~ Fismingto~, in the County of ~nterdon, i~e~v 3e~sey, of wh(~h rneetin~ ~venty d~y~' r~otlce of ~he fJlne~ place and ob~ec~ thereof vca~ maHe~[ to t~¢ ~st kno~vn poat~o6%ce ~ddress of e~ch o~ ~ald ~tockhoidara. ~- Sa~d Agreemen ~ was considered by ~he Pr ~f~rrcd ~d Comrc~o~ ~¢/d~old~s a~ s~d ~neethng and ~ vote ~f s~d s~ocJ~holders ~a~ duly ~a~n by b~lg~ for ~he adoption ~r reject{on o~ said Agre~menL ~ch ~hare of s~oc[< end~|~ug th~ holder ~ereo~ ~o ~ne ~t~, a~d th~ 5allots o~ th~ s~ackbolder~ were duly ~.~ hy ~he s~ockholder~ in perso~ ot by proxy and s~ockholders owalng" raote ~ha~ t~'o-~hirds of all the csp~! stock o~ said American Cigarette and Cigar Company ~,oted i~ ~avor o~ the adopt{on o~ s~id Agreement. 4~ The me~tlng of the Prefe~red a~id Common atockholders o~ Americas C@aret~e and Cigar Company and the said vot~ by ballot upon the at(option of said Agreen~ent ~er~ bald ~nd t~1~en ~epara~ely from the me~dn~ o~ th~ stockholde~-s and vo~e of sa~d The A~nerlcan To~>acco Con~p~rly. i The principal of6ce o~ American C~g~rette a~d C~gar Company ~a ~he State of lq~vv Jersey is ~ 117 .~i,~i~ S~ree~ in the Borough o~ F[emlngton, in the County o~ H~nterd0n, ifew Jersey, and G~r~e ~no~e~ Larg~ ~ the A&'ent ~here~n, in ~harg~ thereof, ~nd upon ~vhom proc~ against ~ai~ corporaIlo~ may be served ~th n ~ald State. I~ ~V~T~ESS ~VI~E~F, I have hereunto s~gned iny name a~ Secretary ~nd affixed ~Ixe seal of .~a~l American Cigarette and C~g~r Company this 4th ~lay of D~ber, 1953~ ( CORPORATII SEAL) (George F-- Bol{var) Seerela~y
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EXHIBIT 2 / THE AMERICAN TOBACCO COMPA1~Y AND ITS CONSOLIDATED SL~BSIDL~A~]ES FINANCIAL STATEMENTS
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Opinion of ~ndepe~u|ent C~rtified ~u~lle Accountants • r T~E A~dCAN TOBACCO C~-p&~y¸ ~Ve ha~e e.~ed the financial ~atement~ of The Amerlca~ Tobacco Company and s conso da~l ~b~i:tiari~, ~t ~r~: L~ Exh~it 2, as o~ ~be: 31, ~952, and for fi~ years 1952, 1¸951 and 1950.I T}le ~a~al ~t~c~ o~ ~er~a Ci~ret~ an~ C{gar Company, a c~soI~dated subsidiary, wereJ ~l~d by H~ki~a & ~el~, who~ ~pi~o~ ~p~ ~n E~l~ibi~ 3. Ou~ ex~i~a~n wa~ made i~~ ~¢or~nce w~th ~ner~F ac~ep~d aad~ng s~dard¢, and ~c¢or~ u~r~ed suc~ t~t~ o: tl~ accounting re~rds o~ tt~e ¢ompaa~e~ (ex~pt Amer~an Cigarette ~d C~a~ ComFany) ~d sucl~ ~e~! au~i~ pzo~c~re~ as we c~d~cQ necessary ~ the circumspect. We e~c~ ~r tested ~cou~t~n~ record~ ~d oiher da~ suppor~i~ fl~c pr~ a~ wl~ich ci~7~t~ m~n~ac~ur~ ~r Amedc~ C~a~te and C~r ~m~ny ~vere ~illc~l to ~t ~bsid~ d~ri~g th~ year~ 1~2, 1951, 1~50 and 1F~49, and have reported to ~:~as~ns & Sells ~hat, in cur opk~n, suc~ pricel ~ve~ [a{rly determined ia accordance wk~ the prov~io~ of tile a~eemen~, ~ecfiw J~uary 1, 1949, between ~he ¢ccapanle~. We pre~{ously macle y~r]y ex~olna~i~ms similar ~z ~pe to that ~ndi~¢d in lbe preceding para ~or tl~e years 19~8 ~d 1949. V¢¢ h~v~ r~v]ew~d ~ da~. ~l~:a~{ug uud~ lhe caption~ "~i~gs Cigarette ~ ~c~n'~ r~t~g to Th~..~¢rican Tobacco ComFit), a~d its ~a~lid~d s~{dlar~e~ f~r ~ae yea~ ]~S to 1932, h~cluslve. ~ our oplmon, ~sed ~o~ our e~m[nat~o~ and t~ ~e~t o( i~n~ & Se]/~, the ~¢com~y~ ~naucia~ smteme~s (F-~ibit 2) pr~en~ f~irly the con~o~d~ted ~n~Aa~ ~sit~o~ o~ ~e Americ~ Tobacco Compa~ ~ ~he subs~d~ar~ i~¢lud~d th~r~L~ ~ ~c~em~r 31~ i952, a~d t~e resa~ o~ their opex-~fion~ ~or t~e y~ I9~2, 19~1 a~d ~950 and the dam rela~ing ~o The .~ne~c~a Tobacco Comfy ~d i~ ~lsolidated ~bsid~ari~, appearing under th~ c~pt~ ~'Ear~z~ of Ci~rette ~d Am~ri~". ~c~c~t f~ly the ne~ itic~me aIld o~er {n~o~na~ion showa t~cln ~or ~e yca~ 1~4~ to l~52, incisive, ½ co~to~ity with gene~y accepted accounting l~r~nc~ple~ appllecl 0~ a co~i~ent has s Ly~RAND, ROSS BROS, ~ ~0~TG0~L~Y. New York, February Z, 1953. !
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THE AMERICAN TOBACCO COMPANY AND ITS CONSOLIDATED SUBSIDIARIE~ (NOTE I) CONSOLIDATED .~T&TE~ENT8 OF [NCOI~ For the Six ~onths Ended June a% Ig&.~- Not Exmnined by Independent Certified Publlc AceQuntan~ Far ~ Yvars 19~2, 1951 m~d 19~-- Examh~ed by In~ependc~t C~'t~fied PubI{a A¢co~tan!s S~x M~s ~nded Iuue 30, I953 Net ~ .............................................................................. ~52~780,491 C~t o~ s~1~ (Note 2) ......................................... :. 453,760,193 Gr~s 1~fit .................................................. 71~20~298 Se~, adve~tls~nm ~eneml sn~ a,/m~'zadva exi~enses .... 2D,717D4a Add: Dividends ~arl hiteres~ t're~m [Ilve~13aent~ iu ~ubsi41- Other ~neon~e ..................... ~ ................................... De4uc/: Re~o~ p;~igm (dls,~,mt it~ lgS3 and ~c- fiza~on o~ d~s~o~ut os ~c~ent~IFe~ .............................. tSeg (~p[ie/ ~s dlre~t w~itt'~ov~s o~: ~s~e~t Port[~tt of net ~ucorne O~ Amer~%~ C[g'arette a~d C~g~r Com~z~y ~ppllczble to rcdr~{~ h~r~ ........ 16Y,051 Other #x~ense~ ~m~ Io~ .................................... 422,782 To~l d~c~uc~ons ....................................... 6,1~l,~r~ ~lwa2r.e be£ore fe4ecal and other ~es c~ i~¢~m~ .................................. ............ 44,g32,R2~ $1,0~,778,4~I $94Z,B~I34 ~71,421,la0 940fi21,656 817,973,556 753,937,691 125,aM)D8 12~,g~g,478 117,683,439 37.7~,054 35,a25,916 3I ~66,728 87.716~74~ 89,I82.N2 8~.616,714 181~97 1,158,071 487,467 ~,519 50,614,882 g9,188,771 90,012,6~5 87,658,532 3,ge&494 7,STLar~ ~,873,9;1 6~&3.i.K2 -- ~ 1~4gI,304 212.127 [9t ,656 2~0,(L54 72.5.418 4~6,276 &22,982 7g,351,963 . FederM inane_ ~a~ .............................................. 23,165,0~ Federal exce~ pro6t j taxes (I~s carry-b~k cr~ ~ ~e Coml~ny in 19~2 ~I $i,220,~Ir~) ............................... 3~339,~ 2~065~88~ 5,~Jl~g ~703,0G5 ZS,l~fl0~ ~4,283,0N1 47,7~8~80 3~,454~0~ 16,29,),#J~ YA,~8,963 32~6~2,595 3"4fi~}.~39 Re~uud ~x~I ~d~t~twant o~ pder ears' federal an4 state tax~, i=¢luding interest, less ~e[~t e d exN*x~e~ ................. 77~fl93 ~7,184 2,442,a77 39,335~ 9,692,1gl 10,934,198 80,4~0,505 76,724,339. 40.068.tWa 31,769,~ Nee ineeme .......................................... $17,975,117 $ ~/16~963, $ 33,159,669 $ 41,732,716 " Denoa~ credit. The ac~ctmpanyi~g v~ r.es are au integral part *3f th~ fimane~tl s~u~t & (~a i~age IO lot add~m%[ itt[~cmat~rm relative to ~he dlst r ~butio.u o~ e.~r tain e.xpev ses ~aad for amot~t of rev~l~ staeapz ~adade4 ~a s~e~.) =;=
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TIII': AMId;RIp'AN "/'O)IACCO COMPANY AND ITS CONSO],]])ATED SUBS]DIARIES (Note 1) ~ONRO],ll)A'I'][CD IIA],ANC],~ StlI~:ICIS june 30, 1953- Not l~xamlned by Independent Certified Public Accmmtams ])ceemher 31, 1952 Examined by Independent Certified Public Aceouniams A S SE'I'S ] une 30, 1953 ]/cmand deposils in batll<~ and eaSll on halLd .... 32,903,501 ~¢COnlltS ~ccclvahle, customers ........................ $ 49,459,035 Less, ]'J/ivi~ic,n t'nl ca~h dlsccmnt~ a]lowal,le .... g93,66] ),]ised[all¢Olls ~n¢¢otlll[s r(c~ivab]e • ................ ]menicbties (Note 2) : 1 oaf Ic~acco .......................... 535,370,473 ~,] 8tltl [Re[ tli ed $[o¢k ................................... Supp]ies ....... ReVCIRle St alalpg ..................... Cash (111 dep{Mt with $itlkillg ~'tllid {Itlstees for re (IflI]]lii{lll of dc[~elltulcs ..................... ]{ecelvables flOnl subsldiari~s 'l(~tal ¢~lrl(qd assets ]ltvestlllents ill 8feUlll~eg o[ sltllsilli;llieS~ ,'/{ all]Otlnls laClt Jn exccsg of COSt (1Yole 3) : Wholly owned Blltlsl~ subsldialy ................ OIhms, hss reservc~ of $96,6(£, and $300,079, leSlmCt[vely A(Ivallces 10 stlhs]dlalj ....................... ]llStlrltll{'{ dt,llOg]ls and iniscellatletbtls {itvt, st*tlelits ..... Real estate, luachhlery~ flxlures, etc., at tom (Note 4): R(~II es~alc mid buildiugs ................ Maehinety and equipment .............. (/thei ............................................ ] ess, AIk,wal~ec foi deplcciati~m (N¢~le d) ]'i(:l~ai~l I×pf.ns(s ~lnd defi!lred cll~tlges: ]}[scouni oJt nolc~ aim dcbeututc~ (Nole 5) . Other .......................................... ] ~1 ~md~, tl adc nlal ks, i~t~,l]l s, g/~od will, etc (Note 6) 59,259,582 16,712,779 4,485/122 5,400,000 11,279,118 30,58] ,858 30,092,319 5,228,1 gO 79,402,357 34,247,562 2,135,632 2,91fU,79 576,g76,637 dl,llO,92g 17,830,127 4,995A27 5,400,0f)0 11,100,133 16,500, q]lc {l(OODllt[tlly]llg II('lc5 ale ill/ illl<gl;~l part Of the flllalqC];l/ S[alelltel/{~I 4 I I, ,I --
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L THE AMERICAN TOBACCO COMPANY AND ITS CONSOLIDATED SUB~IDL~IE$ (No~e i) CONSOLIDATED BALANC~ SHEETS June 30, 1953~Not E~arn~ned by I~td~pendent Certhqed Pubic Accountants Decealbcr 21, 1952~--Elamin~d by Indep~nden~ Cohered I°ub~Jc A~co~n~an~ LIABILITIES N0t~s paTab~ to ~anks ................................................ Account s payable, trade ............................................. D~v~cnds o~ p~erre~ stock ...................................... .&~d interest ......................................................... ~er~d ~axe~ .............................. : ............................... ~¢~is'mg mad ~her aec~ml ~pen~. ................... Amou~ due to of~o~r~ ................................................ 0pe~tio1~s (Note 7) ......................................... Tot~1 current h~iIi~ ............. D~entures (Note 7) ................................................. lKne~ty interest in Am~can Ci~oxett~ at.rl Cigar Company : Capiml stock .......................................................... $ Retalned earnSqgs ... ...................................... . $t02,000,000 $ 92,000,000 5,712~433 5,210.~8 79(),,I96 790,496 1,499,782 1,561,583 39,995,574 48,032,415 3, SgS,gg'g 1,990,026 272,081 587,690 3,873,000 t0~50,000 472,996 -- ; 276,687 1.58,202,z70 161,399,785 242,405,600 243,570,000 4~,b07,270 --~94~969,785 " 585,150 ~ 585,150 632,043 1217,J93 525,459 1,110,609 : CAPITAL Capital s~ock: Pre~e~led~ ~ix par cent camuht~ve~ p~r val~e $100 per share, author zed 540,106 shares, ~m~d ~nd o~stzzdi~g 52,£997 ~{es ........ Ccanmo~ p~ value $25 per ~hare, authorized ~0,~00,000 shar~s, ~ssued ~nd ~ta~dlng 6,4S4,110 share~ ...........................................• .... Ex ~ess o~ ne~ procee(~ ~rom s~e o~ ¢on~non sto~ ~r par valu~ (Note 12) ..................................... ~et~ned earmngs, as annexe4 (Netes 8 and 9) ........ $ ~2,699,7g0 $ 52,699,700 161,352,750 161~52,7S0 43,294,441 43,294,441 257,34K5~I 257,J46,891 119,085,915 376,432,806 119,72L064 3?7,073,955 $778,257,269 $783,154,349 The ~cc~m~ny[ng notes g e as ~rgra~ Far~ oi the f~/M ~L~t~nts 5
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.. THE AMERICAN TOBACCO COMPANY AND ITS CONSOLIDATED SUBSIDIARIES (Note 1) CONSOLIDATED STATEMENTS OP RETAINED EARNINGS For the Six Months Ended June 30, 1953- Not Examined by Independent Certified Public Accountants For the Years 1952, igSl and igsO~ Examined by Independent Certified Public Accountants Six Months Ended June 3~, IM3 Balance at beginning of period ......... $I 19,22F,064 Net income for period ......................... ~ ............................ 17,075,117 TotaI ................................................................ 13~802,181 1952 1951 1950 $I12,754,074 $i04,320,~7 '$14L362,483 34,068,953 33,109,659 41,73Z,716 146,823,017 137,429,756 183,095,199 Deduct: Cash divldetlds: Preferred stock, $3 per share in six months ended June 30, 1953 ands4 per share in 1952, 19~1 and 1950 ................................................................ 1,580,991 3,161,982 3,161,982 3,161,952 Common stOCk, $2.50 per share in six months ended June 30, 1953 and $4 per sllare in 1952, 1951 mad 1950 ...................................................... 16,I35,275 23,933,991 21,51~,700 21,513,700 Write off of brands, trade-marks, patents, good will, etc. iNote 6) ................................................................ 54~099,430 17,716,Z66 27,095,973 24,fiT&682 78,775,112 Balance at end of period (Note9 g and 9) .............. $119,0~5,91~ $119.727,064 $112,754,074 $E4.320,057 The accompanying notes are an integral part of the financial statements.
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d'79 Tl-lli~ AMERICAN TOBACCO COMPANY AND ITS CONSOLIDATED SUBSIDIARIES Notes Accompanying Financial Statemonts l The fm2alcial statements of _~uerican C{gareRe and Cigar Company (95.28/% of the common capital stock of which {s o~ed by the Company) and those o1 all ~helly o~¢d dome~K¢ sztbsidlarlea o~ file Compar~y. except The American To~a¢~ Cemvany of ~e Orient) Inc., which is n~t sig~ddca~t, are included ht tile consolidated l~nanc~a/ stat~nents. 2. ~veator~ used in the ¢~nlputation of c'os~ e[ ~ales are priced a~ costs which result fi am the ~veraging morltldy of transactions rejected in the i~vea~ory accounts exJz~t that re.hue st~n1~ invex~torlea are prioed{oii0wsat: actuM ¢~sts. The ~m~uat~ ~ invm~or~es at the begknniag a~d ~nd ~ the perlod~' were as june 30, i953 ................................................... ~s40753119 $615,828,256 1952 .............................................................. ~99,543,551 640,753,i 19 1951 ............................................................... 532,679,223 594.5¢3.55 I 19d0 ............................................................... ~8L557,~6 5~,t~7~28 it is a geaeraIly recognized trade practice to classify the to~al amom~t o[ ~ tabacc~ Lnve~tory as a c~arrc~ a~sek alflmu~h part (5{ ~uch inv~t~ry, due b'~ d~ati~ o~ aging 9~o¢2~s~ ~rdinarily would not be r~ized within one yea~ It is not prazticable to estimt~te fl~at portion of the leaf inv~atory , aalounts at june 30, 1953 and December 31, 1952, which might remain m the inve.ntorles ~t fu~e 30, 1954 mad Decea~her 3t, 1953. r~sl~Cti~'ely. 3. Ba~ upon ~nancinl ~ta~-ts o~ tile subslt|iarie~, the equ{ly in ~ei assets ol these s~bsid~ari~s w~ as follows: J~r~e 30~ 19~ D~:emhoc al, ~9~ Wholly owtled ~r{tiah (translated ink) ~J.S. dollars ~t approprlate t%b~s a[ exe.l.~ge) ............................... ~ 9.714,128 " $ 8,976,22I Others ~incMd~ intangible assets ~f ~,~dd,gZ5 at june 39, 1955 an~ $2,7d~,594 a~ De.tuber 31, I9S2) I5,687,892 i 5,4~,250 4. The poEcy o~ ~he Compmo-.and Sis oo~oli~ted s~bsldiaries with real:act to depreedatinn of all ~ssets szlbje~:~ to deprec;atlon and obs~e~e.e i~ to ~et a.~÷de h~ a reserve account st~eh ara~ztt a~ is estimated wl}} equal the c~st of the property by the end of its use[ui IKe, The provision thus made is accmntdated on the straight-line mefllod, k~,ates of depredation are varied depending llpon locatinn, use m~el type of eq~lipnl~n~. Ther~tesused~ec~mputelheannllalamoullts:~orthemaiori~erc~areas{ollows: Concrete .......................................................................... 2% Brick and ~t~e ................................................................ . 3~ Galvanized iron .................................................................. . _ 5~ Maehk'~ecy and equipment ...................................................... , =, 5% Office {urnimre and agulpmmt ......................................... ~% to SdN% Passenger a~tomabiles .............................................................. = 24% Tracks ........................................................................................... 12eft and 24% It is the p~licy of the Company and its eon~iidated suhsidL~rles to ad ust the r~smwes for depee~iat~on for tile accumulated ~.mou~s ~f ~pr eainLio~l apppIicable t9 e2~clt ilera o{ proJperty~ p~aI~t a~Id eqttl~e~t retired or o~herwlse disposed eL P~ or.losses resulting from suel~ dlsl~tions are inchided in ~e a~errler~k o~ illcoIx~. ~h~tex~a~ce a~d repair e~penditures are charged to cost or ~¢pee~e. Betterments a~d rencwMs which in,prove and extend the li~e of ex;stit~g property, pla~t anal equilm~e~ t are cupifai/zeg- It i~ the ~melice of Americ~a~ Ciffaret~e and Cigar Ccrmpm~y wi~ red~ard to assein 1eased to The ~erican Tobacco Company to amortize iks investments in such assets over the term of the lea~e (99 years). Unde~ such policy amortization o{ ~212,928 "~s deducted i~ the six rc~nfina ended .[~ae 30, 7
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~otes~ Ac=omp~nying Financ}al Statements -- (Continued) 1953 and ~5,056 in each c~ the years 1952, 195} and }950, For income L~x purposes, however depr eciafioa in the approximate amou~ s of $53,000 ~s cla{m~O ~ fl~e ~x months e~ded ju~e 30, I9&~ and $1 }2,0CC, $127,000 and $147,000, re~speet~vely, in the years 1952, 1951 and 1950, Oa eonso{)dat~on depr ecla ion c~im~-for income tax [yarpo~es is subs hut~d for amortization (See NoTe 8 ). ** 5. Discount is being amortized over the Eves of the related notes and debentures, 6. Prior to 1950, }ntang~ble assets of the Company were re{)ected at fixed amounts as stated ia th~ accomils at December 3i, 19J5. In the opin}on of management, the present value o~ ttte brands | m10 other intang~btes }s eonslderably i~ em:ec-s of tb~e amc~*:nt at wdaieh they hag beer~ e~rri~, thdr total value has 1.~een affected and increased by ~uhst~rAial advertlsmg .~md other e2cper~ditttrea which ha~ been charged to inc~llle ~ronl year to year. Accordingly. in view of tim }913 Yalltafion of such intatagible assets having l{t~Ie reasonable relatlon to preaent ~-Mue an0 having no apparent | hl~b~rie~l sig~i{)~ee, i~ 195{) the Be~rg of Dire¢,~ors ~t~c,r~ed th~ ",vrit~-of~ ~ such assets tD a nom~.a~ ~-alue of $1 hy a ¢h~rgh to retmned ~r rheas, 7. ~)ebentures outstanding comprlsc the ~calowh~g principal amom~ts: ,T~e 30,1953 D ~b~.~ 31,195Z I~:edeemahle l~e~:mble Re~ecroabla Redeemable Widah~ One ' After With~ Otto A/tee Twenty year 3%~ due April 15. 1962 ~ 50g.0S0 $ 62,080JX30 $ 3,456,~53 $ 62,666,000 Twenty year 3~o, due ja~tuary I, 1968 .............................................. 3,000,C~3 g0.0N},0,c~ 3,000.000 60.t~3,000 Twenty-five year 3%, due October 15, 1969 ............. ~ ............................. 365,000. 71,736,7230 3,104,(~0 72,294,90~ Twenty-five year 3N%, due Febru- . acy 1, I977 .............................. .....~ Ag,589,000 1,390,000 4g,61(],(g]0 ,33,873,000 $242,405,CCD $I0,950,0(~ $243,570,000 i E~mated principal ar~cmn t s to be redeemed through sittkiz~g futtd operatior~s at prices as proMde0 by the indentures, l~s at June 30, i950, $3,{)29,000 of Twenty Year 5~ Debentures, due April I5, 1962, aud <.2,932,000 of Tvrenty-{)ve Year, 3~. Debentures, due October t5, }969. acquired for~a~ retlrewamt on July 15, 1953, through sinldng hind opemtlons, The eshmated~te~te amount of payments to the stoking ~unds for the years ~953 to 19a7 incIuslve, are as folImvs: 1053, $ti,972,280; 1954, $I2,23,!,185; 1955, $I2,505.224; 1956, $12,Tg7f149; 1957, $13,ffTg,055. 8. A reconeilatio~ of retained earnings of the Company, separately, and consolldated retahned earnL~gs 3~e 30, De¢~mb~ ~1, ; 1N3 19~t~ ~etalned earMngs oi the Company, separateiy .................. $100,1N,581 $103,N9,1N Exces.~ of eq~fity of t[~ Company, be net assets of e~n selidated subsidiaries, as shown by the}r bNanee sheets, over book amount of the C/omi~ny's investments in such subsidiaries ($15,I77,495 and $I2,419,840 of such e~cess, re.~ tivelv, arises from conso!idat[on of A~neelean ~g~aretteand Cigar ComFany) ..................... 25,020,265 21,568.875 2 I25,219,846 125,517fl99 7~
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Not¢Js Accorapanyh~g Financial Statements -- (Comtlnued) Inn, 30, D~ember M, to~ I.o52 ge~s : Intercem~ny prc~6~s in inventorle& incinding g.~95~d95 ;~ai $]13,008, re~p~tinely~ in American Cigarette and Ciga:" Company s inventoties ............. 711,Zd~q 386,770 Sukstgudon of depreciation for amor~zation pro- vided by lessor (Amesican C~garette and Cigox (~mapaixy) with r~1~ct m corrals a~eL$ cev~xed ky as inteacompany lease ~dlh the Company .......... 5,422,673 , 5,4fd4,165 6.13&93l 8,790,938 Consollda~ed retained earnings ........... $119.085,915 $119,727,084 ~. Under dm provblons of the indenture r~l~ting t~ the Twemy "fear 3% Debenture% due ara~r~, i, 1968, cash dividends declared on eomzrmn stocka~ avd payments made in p~rehasi~g shares of an), class of the Company's stock, subsequent to Deeeraber 31, 1947, amy not e-xceed the aggregate of $!5jK}0,000 and ¢am~lldated net income earned sllbaequent to December 3], 1947, ]e~s dividends paid oa pro[erred stock. Approxlmat~ly $88.400,000 and $89,000,000 ni retained earnings was free el thls r~strlatinn at Jun~ 30, 1953 ~n~l D~embar dl, 195Z, respectively. 10. The equity o£ the Company amd its consolidated subsidlari~ ~ eam~ng~ of ~mc~nsolidated sub- sld{arie~ (intuiting the whe(]y owned British subsidiary) amounted to $1,02~; 715 for the six months ended june 30, 1953 and $1,75d,689, $1,831,879 a~d $I,634,I9a, re~per/lvely, for ~I e years 1952, I951 a~d 1950. Tha earnings of tim wh~Py owned 73rltish ~ub~dJaz7 ~ransiated at a propriate rates of exehen were $737,906 for fl~e six mottths ended June 30, 1953 and $1 089 7~4p $1,205 679 and $72"3 4~7~ zeapectiveb, for tm yea~ 1952, 1951 ~nd 1950, ~I. A llon~ontrlhutoLv t~etlrement I:~I Droaiding unitmdeg~ (pay-a~-you-go) L'ertedts for empIoyee~ became effective as o[ January i, 194b, Subject to conditions contained ha the /~lan, retirement be~efits (normelly ecm~mendng at age 65) i and dlsahillty benefits are av'./Iable alter 12 y~m of eonfinuc~as service. The norlnal retlrem~nt beneJbts and disabi[ity beneA~t~ are based upon rate3 ~arylng between i.~ and 2~7~ (a) of annum coalpensat~on on the effective date hat each applicable year ~i Vast service and b) o~ ann~al ea{~ings for. each appli~mble y~r af {utare service, snb~eet to a dethmt{on equal to oi~e-l.&lf o~ the ' primary soe~ai sex:ttrlty benefit, '~he t~lax~m~m ann~al baneful m 50% o{ the first $10000 0£ the " employee's average earnings during hl~ last l~ve years of employment, pins 30% of soy excess, mxd sb~ll not exceed $25,(D0. The Plan also 9rmddes zeverance Imnelits for empinyees a% I~st 50 gears o~ ~ga wlth 20 years a~ seraioe. Under ttia~ I~Ian the Company ha~ the tigb~ to mnend, modify or terminate the Plan in wh01e or fn pa*~ at any l'ime or from tdne h] t/me, Tb~ f~re~i~tg is a hrie~ description ~ ~he e.~,tisi provislc~z ~f the P]%n ~nd i~ nat in~endmi to be complete. Payments made under be Plan and charged o conso]~dateg income were gld2.42d n tire six m~zths elided fuse 30, 1953, and $g88,96g, $224,099 and $13d,D43, respecfiveI)~, in the years 1952~ 195i and 1950. h wa~ estinxated by independent actuaries a~ the inception of the PIm} (on the ~a~is o~ the wage and s-a]ary seaheq ~tr4 adler f~'ts and ~ondfdmzs then e~:]s~ng or assumed) that am~ual payroents weird i~erea~e to ~ ~ltimate rate after 1979 of ~2,431,450 for the Company m~d its consolidated subaidiaries and of $I,941,15(] for the Company alone. Such annual payments include e~timated amaun~s payabIe whether measured by past or future services. There is no conunhment to fund die payrgertt~ under t~e Yla~ and no esffmate o~ the past ~erw/ee ~st has ~een made and ~ make anch an e~d~te w~,~}d require m~rea~onable e.~ort and ~xpense, ]2~ Is 1932, the ~-xce~ of ~et prod.eta from s~.le of gommor~ ~toele over var value increased $22,71g,ggO asa result of the ~le ol 1,075,685 s~ares of common stock, whJth ineguded 93.713 shares of Treasury stack. There were me other changes in this accom{t durklg the thre~ years ar~d six n~o~tba e,n~ed June 30, 1958.
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4 THE A~gEF.ICAN TOBACCO COMPANY AND ITS CONSOLIDATED SUBSIDIARJ • -SUppLEI,[EB[TARY,PROF[7? AND LOSS INFORI~'AT£ON For the Six ~iolxths Ended June 30, 1953-- Not Erred by I~pendeut Ce~tffed PuBlic Accountants For the Years 1952, 1951 and 5950-- Exam{Deal by Independen~ Certi~ed Public A~ooungants Column A Column B Colum C C OI~ Ch~1 Dir~!r te P~t i | To Co~+~ or Charged ~o Other Opeza~ng ~ Aceount~ ~ I i ~almt~r~ a1~d repalrs : S{x nmnLhs en~"d I~me 50, 19~5 ~ t,903,432 $ 78~67 "~r [952 .................................... 3,388,622 114,297 ymr 195I .................................... ,~A 1,~'390 170,Z~9 year 1950 ........................... 9,869,08/ 85,694 I)el~reCmt ~o~ : SL~ mca~ ended J'm~ ~}, 1953 1,427,351 • 159,5~7 Year 1952 .................... 2~795227 365,290 XZear 1951 .............................. 2,690,668 31J6~15 yea: 1950 ..................... 2,624~46 227.598 T~x~, otheI" than hlcome a~ exo'$s pro~ts taxes : Six m~ths ended J~me ~, Igi~ 250,44~fi82(I) 224,460 3rear 1952 ................................... 528,~Z5~287(I/ 419079 Year 1950 ............................. 407,489,9Z41(i 368,040 Others (Note 2) : S~x momb~ e~d~d Jmm 30, ~95~ ]~3~,512 Year [952 ......................... 3~61-5~69Z yem- 1950 ..................................... 3,2~2,061 l~fmmgement ,~u4 sc'v{ce ¢o~tr~ct fe*~: Re~ts ~I ~oyalt]~: R~uts (Note 3] : S{X meaths ended Itlue ~0, 1953 14~,SffY Year 1952 ............................. ~47,778 Year 1951 ................... ~2t,19~ Y~r 1950 ............................. 2~3~78 Royalties : S{~ m~ntk~ cn&d Iw~ 30, [9~3 252,820 Y~r [952 ..................... 543~303 Y~r 1951 ...................................... 552~036 Year 19.58 ...................................... ~2,721 $ 1,98l,f~ 3,502,911 322%67~ 2,9~4,77~ 3,i0f},51) 2,99%88~ 2,~0],844 250,64&14~ 520,984,&5~ 435,552,17( 407,85;~964 515~ 2.31%741 988208 4 603 9~ 974,~45 4,~3~ 966,113 4,2A8,174 I~,131 297,7V' 324#76 672 O54 310,315 ~8151t 297zfi41 591,$I 543,~33 ! 252~g2~ 522,Z21 ~ (1) ~xeeeds file zmc, ml~ ;~l¢It~ded tn sales by ~e~5, $145,262A ~122,3~ and $98~766, respectively, for I)~ s~x ~oafl~ ~nded June 30 "1953 ate1 {~r foe ears 1952 1951 ~ 1950 The ~ or ~rfioa of such ~cess regresents *he co'~ r¢'ecnu¢ ~mp~ att~le~ t~ ma~u~Y~{~red shY:k distributed t~ ~ac ~or}- ~p~9 ~es vclth~ut ¢11 m'ge_ Irln~ 3#, 19~ 1952 ~51 . 19~ 725,~96 $ 6,~2,8Y5 State taxe~ not based ~n ineon~ ................................ $ 348,794 $ 740,411 $~, Unemployment {nsura~e~ m~d eld-age be~uefit~ taxes 763,918 1,620,547 706~03 P~a~ em~ate av.d ~tber ~s ..... 1,207,129 2~42,94~ 2,054,2~4 2,[37,669 lent expenditures, I~o~ s~bstan~iol ~n the aggregate, we~.e ~neu[red and d~$tr[buted tIlrOt~h %~arlO~ COS~ and ~Xp~ ao~ntmts. The sum ~ these latter e-~:gcnd[tttre~ i~ not obta[nable withotlt tmv~r~nlab~e ~ffor~ and ex1~ns~ ~# i0 i
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• EXHIBIT 3 - AMERICAN CIGARETTE AND CIGAR COMPANY FINA~NCIAL STATE~IENTS , -.." t ,
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2 i gJ
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~85 AMERICAN C~GARETTE AND CIGAR CO~PANY
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AMb:RICAN CIGARI~]TTE ANI~ CIGAR COMPANY BALANCE SHEETS .]un~ 30, 1953 Not F.xamh~ed by Independent Certified Public Accouniants December 31, 1952mExamlned by Independent Certified Public Accountants ASSETS June 30. Ig53 December 31, Ig52 Demand dcpsits in banks and cash c~n hand " $ 5,006,161 .... $ 6.557- Accuunts receivable, eustomcr~ ........................... $16,677,737 $14,827,948 1.css, l'lovlslon for ea~h dlsconnts allowable .......... 387,003 16,370,734 268/141 14,55c. ]~11~cdlaneous ~ccounts reeelvable 273,385 12~ 111v~n10r ieS : Finished g~ods (Note 1) ......................................... 15,436,963 Supplies ................................................ 1,285 15,438,248 - L Reeelvahles from subsidiaries ............................ 89,155 ']'oial clnJent assets ............................... 37,177,684 4,562,127 1,124 Invcstmtnis 111 securities of subskliaries, at amounts not in excess of cost (Note 2) : (ollaleza] notes and stocks of Cuban "J'obacco Corn party ]lie ........................................... 7,I10,357 Stocks o~ subsidiaries o1 Clfl);m "l'~bacco Company ]he .............................................. 1,539,321 Advaneeg to a subs]d{ary ......................... OIhcI Jtlvest111etlIs, ~1 cost ............................................. I~.eal estale, fixtures, etc., at cost ....................... !08,885 I ,ess, Allowance for depieciatlon ........................ 48,719 Prej>akl expenses ......................................... AssetS I~a~t!¢l [0 The Anlerivai1 Tobacco Conlpany for a letnl of 99 years under indcnhtrC of lease dated March 31, 1938 (Note 6): l(cal estate, nlaehinery and fixtures, at cost, as of ])eeemhcr 31, 1931, less allowance for depreciation accumulated as of Ilmt date .............................. 8,499,776 l~rauds, Itade-marks and good will 1 8,499,777 ].ess, Allowance for amorllzath~n ............... 1,904,570 4,563; 8,499,776 1 8,499,777 6,595,207 1,861,642 6,638,1~ 'Phe aeo3nlp~t n3,hlg Ilote$ are an iEllCgl tt] far/ of lhe ~l/a11¢[a[ $la[LliWrtls, 4 7,027,602 8,649,678 1,446,504 8,474, 2,780,000 2,846, 12,000 12, 104,955 60,166 46,388 58 212,122 77~
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! AMERICAN ClGARETTN AND CIGAR COMPANY BALANC~ gI-I~TS June 30, 1953--No~ ~xamkned by Independent Ce~tf~c4 Pub1~a Accountants ~)ecem~c 3t, 1952~--~-Fem}~ by Iadependent Certified ]:~ab.l~c Acconntants ~IABILITIES Ac~:t~ p~ya~e, trade O~er ....................................................................... 3~063 $11,232,371 Ac~ed mx~s ..................................................................... ~3,~,~0 Advertlsing m~d other accrued ~\~e~sea .............................. 93f41 Tats1 ati~rent li~b~ie~ ........................ 24,814~69~ CAPITAL Cap{ ta[ ~rL~ck ~ prefe;red, z~× per cent cctmulatRm, pat ~alue ~i00 ~er share, authorized~ iasued and outstanding 3.989 sharea ......................................................................... 39~>~)0 C~mmon, par vab~e $70 per share, authorized 300,0130 slates, is~texi 200.000 shar~, including 4,5N) sI~.res ~n Treasury ............................................................ 14,000,00~ 14,3,9~900 l{etah~ed ear~ing~, az a~ne_~ed (Note .3) ..................... 16,983,030 31,333,930 Leas T:.~ury stoek, at coat (Note 3) : 4,56"0 shares of common ~tOcN .............................. 7J!,76~ I~ecemblt~3~,lg52 287 $ 2~124,120 443,813 $ 2,569.933 X3,446,K~4 292,933 i6,$09,802 3?3,900 14,398,900 I4,120.79I 28~519,591 30,672,165 711,765 2;7.807,926 5 $44,117,728 • i - i
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AMERICAN CIGAP-~TTE AND CI~-AR COMPANY STAJI'~ENT$ O1e ~TAINND 2~ARNINCx8 F~r the Six ~I~nths ~nded Juae 30, l~5~-- For the Years i952,~ 1951 and i950-- 1g~ami~e~ by Independent Certified ia~l[c Acc~mta~ i. Jm~e~. 19~ 1952 i~ 19~ /%lance a~ ~egi~alag o~ period ................................ £----~ =~4,129,79I $1~,051,755 $1~,181,~8 $ 6,89~,~ Net i~me (~cl~rl~g ~a I~S0 $772,AI5 sped~ ~em~) h~r peHc~.,. 4,qN0,20~ .~,6~I,P6~ 5,0.~2,I07 6,~4~,714 ! Cash d~d~ : ~raterred steck~ $~ pe~ ~a~¢ h~ six m~lths e.~ded 5~.ne 29, lg~8 wad ~ per share in 1952, 195i ~.,~I 1950 .................. 11,957 2-%934 2S,934 23,931 1953~ $18 per share in 1952, ~16 ]~e~ bhare ir~ 1~51 and ~14 per sh~re iz, 195t~ ............................................... 1,5~4,0'~3 3fl19~3 8,[2~ 2,737,b~? Nalarme ~t enrl of i~erM N0~e 3) ....................................................... ~;16985 ~ ~;14,120,791 ~R2,1)51,755 ~il),181,583 The aocompsny~g 1i fl~ are oa~ hxtegral part of the financial ~tatemeuts. 6 1 ! I J
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AMERICAN CICtARETTE AND CIGAR COMPANY Netes A¢¢ompma.yh%g l~'{tLaneial Staten*eRrs 2SD 1. In ¢ozu, ectio~t with the rnanufazmre M elgarettes for the Company, The American Tobace~ Company clu~rged the Company wfih (a) i~terest on cost of i~55, b) an a~mouut itl ex~'~ss of the cost of manufacture of cigarettes and (c) hrasd reubn2, 511 aggregxti~g $4fi39.631 iu the six m~nths carded June 30, 1953. $7,808,703 ia 1952. ~5.302,067 i~ 1951 aad $4.36.6,675 51 I950. It is estimated that iater-e~.mp~uy profits (to The Amer~caa Tobacco Coznpealy) aanom~t~ng to approximately $395,000 a~d $113,000 were included in the values ef the Company% invmltorfes of d~ished goods at ]tme 30, 1953 and December 31. 1952~ resp~.fively, I~ve~tor~es t~sed in ÷dw eaml)utation of cost of sales arc ixt~ced at avenge c~os~; excetX ~bet revemle stamps included therein are priced a~ actnal oust. The avnotmts of inveutolies at the begetting aud end of t~e perfods were as follo~v~: l~g~m~h~g End of of perlad period I*~ne 50, 1953 ................................................... $4.563251 $1S.438,248 1952 ................................................................. 4flhY.4~,9 4,g6.~51 i95i ......................................................................... 1.757,468 . 4,467,469 1950 .2,340,230 1,757,468 2. ~ased u.poa financial statements o~ the ~eo~s~lidated ~ubsid~aries (Cuban Tohar.~ Company Inc. and it~ ~uhs[dlaries) : The equity of tlie Company, applicable to its investw~uztm {n sevur~t~es ot aubaidiar~es, li~ the net ~as~ s o he subsidiaries at June 30, i953 was $12.528855, represe~ted 'ay tat~ib e assets ~anountir~g to ~),600,d25 and inta~gible ~sse~z azmunfi~g ~o $2.T28.532. Tbe ¢ompax~gle figures at December 51, I952 were $12,183,955, ~:9.524.058 axed $2,659,907, re~ectively. The e~luht" of the Company in net profit and Ios.~ of fl~ese subsldhrlez was a~ f¢ltows: AgpIieabl~ to ApI~licab le to l~r e~erred and ~onxmon ~¢curifie~ of s~bs~dl- ~1~ oi Oah~ T ~b~e¢o ~rle~ ,~f Cuba~ Tobacco ¢¢~asolidat ed basi~ i~41vid~al banis Six months ended June :~, 1953 ............. $23.335 $31,560 loss* ~5fl52 Year 1952 ........................................ 46fi17 54,764 t11,150"* Year I95~ ....................................... 44,6?2 SL315 25,267 Year i950 ............................................. 38,615 55.114 25.396 * Det~l~lined aftex proldsi~ for dlvld~d ~n preferred s~or/t. ** The Cxe)~pany's ~nves~uent 51 see~rltles of subsldhedes of Cuban Tobacco ~.mpany Inc. was ~ubs~zntlaliy increased during 1952 ~ud was fu&her increased during the ~x mmtths ended ful~e 30. 1952. It~ computing the eq~ltles i~ net as~s au4 pratt and loss of t[..a uneonsa~lidated suhsidi,a~les referred to above, ~1o CogMza~ree is ~¢ezt of ~}- ineenee c-r otliez taxe~ ~liat n~ay L~ecolne pagable ou ~chra- tien ol divlden~ by drmaesda or foreign subsldlarl~ of Cuban Tobacco Col'npany Inc. The amounts ~ such taxes will be dependent on future dlvldend policies of the companies and ~n tax laws and ra~ appli~zb e [a the years n w eh any d vld~nds may be declare& 3. O~ ~lie retai~1 ea~n%~gs a£Jm~e 30 1953 a~4 December 81, 1952, $711,765 is represented by Tre&sury stock. Had such Treasury stock been redred~1b • star.toO"p~roeee'gd~gs a{~d capita1 red~'ed accordingly, capital would ~bereby ha.;~ been reduced by ~$15,000 and rea~ued e~.rnmgs hy ~96,765at each c~ those dates. 4. Sales and cost of sales include revenue s~amps a~ follows: Sales Co~£ Sales Six mo~ths ende~June 30, i953 .......................... $ 91,534,159 $ 91.534,079 Year 1952 ........................ 170.017.615 i7~,017,585 Year 195I ................................................ £ ........... 2 .]I].~.965.475 11&965,4~ Year 1950 ............................................................... - 8L882,53~ "--gl.882,537
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Notes Accompanying Financial Statements- (Continued) Ill
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A2ffEI%ICAI~ CIGARETTE AND CIOAR CO~{PANY SLrpPLEIV[ENrTAR~" PROFIT AND LO~$ INFOI~IMATION" For the Six Month~ I£nded June 30, 1953- Nor Examined by I~depe~d~n~ Cer~¢d Pub]lie Aecotmtan~ ~or the Yearm 195Z, 1951 an~ 1950-- Examlned by Independent Ce:th~ed i~ah1~ Accouats Colum A Colunm B Charged Dit ~ctkv to ~ P~fft an~ L~'g ~ ~2o C~ts ~r Opiating Item ~xl~enscs O~h~ C~luran C Colmm~ D Charged ~ Other Amount Total • ! year 19S8 ............................................. -- Depr ecA~oa told mmotfhrlt ~on of ~x~d ~e~: Six m.~hs e~e~ I~e ~, I95~ . year 1952 .......................................... -- Year 1951 ............................................. Year ~9E&' .................................... -- Ta:~9, o~cr tt~n ~Ii~o~%~ and excess pr~flt$ ~ar 1952. ................................................ 23,290 Ye-~r lySl .......................... ~8,~0 Y~r i980 ........................................... 7+942 Ren~ an~ roy~I~e~ : R~nt~ : "fear 1952 ............................................. 52,0{N) ~'c~v ~95t ........................ 52,Ot+O Yezr 1950 ................................ +2,000 l~Tm: Thin ~otmls o~upHse: Federal f~x or~ ~oor &~s a~ of No~e~nb~r 1, ~51 State mace n~ h~cd o:~ iua~ma .................................. 2~ea~ e~al~ mad odaer ~xes ...................................... $ 1,249 2,017 1,676 1,523 47,074 93#64 RigS9 ~&50g -- 2,~17 -- 1,576 1,823 -- 4z+?C -- 93,964 92,50'7 ~8~678 96#59 ~8,151 TI~ Amer ~e~n To~eeo C omixxny 70,258 Th¢ Amedean Tuhac¢~ Comp¢*y 2{)3 120,052 Th~ Ar~n Toba~ Com~ny 2L~2 ~,594 T/~ Ametkm~ Tobacco Coralm~y 125 6~,290 20,073 19fi73 -- 37,~37 -- 71,673 Six ~Iontha Ended $ -- $ -- $4sg.~a6 $ -- 31,247 50,215 22~Z~ 2&325 %484 I4,325 ~,190 1%£153 29,527 ~S,5I~ 4g,93a+ 29£9! $z%),258 $120,~52 ~,59{ ~,~9
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SECURITIES A~D ~C~%NGE OOMMI3SION Washington 25, D. C. Divlsi~n of ~o~por&tlon ~in~nce Wovembem $, 1953 Mr. J, R. Coon, Vice Ppesldent I!! Fifth Avenue ~e: File No. iI-56~ ~hls will ~ekno~le~ge the ~eoei~t of ye~ l~t%e~ d~t~d 0ct~b~ 23, 1953 ~ith ~hlch were enclosed three set~ of de- fini~Iv~ p~oxy ~ol~ci~ng ~te~,lal fo~ the ~clal meetlr~ of stackho!der~ of you~ ~ompan~ s~hedul~d ~o be held on Decemb~ 2, !953. A~ i~]icated i~ o~ letter Of October ~ ~t least o~e CO~F of the deflni~Ive 2roxF ~mte~i~l eon~alnlngmanuall~ si~ned ~cco~ntan~s~ ~e~t~fi~te~ should be filed ~Ith ~he Ve~ trul~ yo~s~ E~nest W° Ramspeck E~nest ~. ~ms~ck A~si~ant Dir~o~ Division ~f Col'potation
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29~ THE A~ZCAN ~O~ACCO @O~MPANY Incorporated 12] Pifth A~e~e~ Ne~ Yo~k 3, N. L Office of th~ Secretary November 6, 1993 Division of 0or~oPatlon Finance Becur±t±es a~d Exchange Commission ~a~hington 25, D. C~ The AmerIc&n Tohecco Colony Pile No. ~__ D~r ~irs: Supplementing our letter to you cf October 23 which ~dcomp~nled the three sets of the deflnitlve proxy m~teetal for this Company~ ~peci~l Meetln~ of Stock- holder~ to be held on December 2~ 1953, we n~# enclose one copy of the Proxy Statement in which the opinions of the indepeude~t ce~tlfled public ~cc0uut~nts fc~ A~e~,Ic~ Clg~ett@ ~r~ Cig~• C~n~ny ~nd The ~ae~ic~n Tobacco Company, ~espectlveiF, a~e m~n~ally signed by them. Very t~/y yours, John W. ~lon ME John W. iK~ulen Enclosure Secretary
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In replying please quote E~IERO UNITED STAT~S ~EOURITIEB A}ID F,~XG~L~4P~E COMMI~SION EEGIONAL 0~FICE ~ BROADWAY December g~, i~53 Mr~ P. M, ~hn, Presldent ~azi~an Cig~hte & Cigar Co, 111 - 5th Avenue ~e~ York, N. ~. A~co~dlng to ~ r~t anno~nce~ae~j ~ me~eP ~ praposed bet~en the American ~ob~cc Co. and the American ~±~et~e & C~ga~ Co., whe~eb~ ~a~h share of ~e oo~on ~t~ok o2 American ~ig~e~e ~o~d be ~onve~te~ into ~ share~ o~ American TOb&ceo common, ~nd e~h sbar~ of American Cigarette preferred ~ould be converted into 1,1 share~ Of been ra~fi~d by s~ockhol~ers ~f both ~o~pa~ea. I~ v~w of the ~r~e~e~t~ it wo~ld be Kpp~e- ci~ted if y~u ~ould kindl~ furnish me at ~ou~ ea~lles~ ~on- ~en~e~ce Wit~ ±~f~rm~o~ ~e ~ the date on w~h ~he pro- ~c~l in ~u~stlon w~s fi~s~ ~nd subsequently discussed bet~en the offlcers and dlr~ctor~ ~f bo~h comDan~es~ a~ ~ell a~ the nat~ a~d pe~tln~n~ details o~ ~a~h of the di~cDe~ior~ ~ forward ~ tr&~so~ipt of all p~l~ses and sale~ effeoted in the seeumlti~s of Ameri~a~ ~garette by ~ny ~e~son d~lelng the period O~tobe~ l~ 1953 to date, who ~ ~Ith~ an officer ~? dlr~ctor o~ bo~h companle~ at ~n~ time during th~ p~iod, either fo~ their o~n a~ount or in any account ~n wh~oh they mey have ha~ ~ ~enef~lal interest, Bhowlng p~e~ d~te~ ~d the ~u~ber of shares Involved~ The me~ f~ct tha~ ~his elf ice iB ~ol±~iting In~o~- matlon f~om you in ~hls matter should no~ be ~o~s~d as an expression of o~Inlon by the 0ommls~ion o~ Ira ~unsel that the t~an~ctlonsrefer~ed to ~nvolve ~ny vlol~tlo~s of the l~s ~i~tered by the Commission, or a~ a r~flectlon upo~ ~he Ame~Ica~ Toba~c~ ~o. o~ ~h~ Amerlc~n C~g~re~te & Ciga~ ~., the merits of an ~nvest~ent in their se~u~Itle~ or per- son~ who have effe~t~d t~a~c~io~ ~he~e~n. Francis J. purcell Regional Admlni~t~to~
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January ~, 1954 Me~o~and~ to Mr. Orpheus D. Baxslys Mr. Alfred F. Bowden Mr. Richard J. Boyl~n Mr. Douglas W. Brashear Mr. Thomas P. Connors Mr. James R. Coon Mr. doh~ A. Crowe Mr. John S. DOWd Mr. Preston L. Fowler ~r. Paul M. Hahn Mr. Hiram R, Hanme~ Mr. Edmund A. ~arvey Mr. Harry L. Hilyard Mr. John g. Hutchings, Jr. Mr. A. Legoy J~nson Mr. William H. 0gsbury Mr. James F. Strickland Mr. John W. Hanlon M~. A. Gordon Findlay Mr. Charles Ganshow Mr. Alan C. SarPatt Mm. Albert Cold My. John G. Lang Mr. Sidney Sohou M~. John F. Dillon Mr. OeorRe g. Bolivar Merger of The American Tobacco Company and American Cigarette and Cigar Companl In oon~ectlon ~Ith the mer~er of American Cigarette and Cigar Company and The American Tobacco Company, the Se- curltles and Exchange Commission has requested US to furnish information a~ to transactions in the stock of American Cigarette and Cigar Company by any officer or dlrector of either Company. In connectlon therewith, wlll you p~ease Infor~ ~ Of any pUrChases Or saleB of either Common or Preferred Stosg of Americah Cigarette and Cigar Company by you for your own account or ih any account in which you may have had a beneficial interest, show~n~ prices, dates and n~be~ of shares involvSd, This informatisn should be furnished fo~ the period October i, 1953, to date. If you had no transaotions in any seel1~Ities of American cigarette and Cigar Company, please note the d~plloate copy of this ~emorandum to that effect, sign and Pehurn it to ~8. If yo~ had any su0h tpa~sactions, plea8~ fur- nish complete details as indicated above. ~95
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T~E AM~ICIN TOBACCO C0~PANY Incorporated ~ iii Fifth Avanue, New York 3, N. Y° Office of ths Presld~nt January 20, 1954 Mr, F~a~ois J. purcell R~dion~l Admlnlstrator Securitles and W3chan~e Commission 42 B~oadway New York 4, New York Dear Si~: I am in receipt of your letter of December 23, 1953, ~skln~ fo~ certain ±nfoK~atlon with respect to the merger of American Clgarett¢ and Cigar Company into The American T~becoo Company. As stahed in your letter~ the requisite votes of stockholders For the adoption of such merger ag~ee- men~ beg been given prior to the date of your l~ter, ~t atockhalders1 meetings of the %~o Companies, Since then on De~embar 31, 1955 the merger has be- ~on~ effective. Your first inquiry is as to the date on which the proposal in question was flrst and subsequently discussed between the officers and directors of both Companies, as well a~ the ~u~*s and pe~tlnent de- tails o~ ~ach of the discussions. You also ask For a transcript of all purchases and Bales effeotsg in the sec~rltiea of Ammrlc&n Cidarette during the period 0ctsber l, 19~3 to the date of your letter by any person who is either an officer o~ directo~ of both Companies at any tame during the period, ~ither for their own accotu%t o~ for any account in ~hi~h they~y have had a beneficial interest~ Bhow- in~ the prloe~, d~te~ and the number of ~ha~es involved. ~n ~nswer to you~ fi~st q~estlon Z believe that the fl~st dleeusslon by offi~e~s or di~ector~ of the ~ozp~nies with respeob to a possible ~e~er of
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M~. Francis J. Fureell - ~ - January cO, 195~ A~e~ic~n Cigarette and'Cigar Company with The American TObacco Company took plac~ in Novembe~ 1951. further di~cuBBio~ toak pl~ce in December 1951, Ju~e, July, November ~nd Deoembe~ 1952. The fo~egolng dlscus~ion~ ~e general and tentatlve ±n character, dld not in~ clud~ discussion a~ No whst the ter~ of conversion should be ~nd did not result in anf decision to pro~ teed with the merger. In the ~arly summe~ of 1953 a di~ou~slo~ toek place b~tween some of the offlce~ of the two Co~anles resultlr~ In a dec~slon that steps ~ho~ld be t~ken iook~g tow~ the ~ubmiss~on ~o the Bo~rd~ of Directors of a proposal fo~ a ~9~g~r of the ~wo Comq panle~. In Septembe~ 1953 officers ~nd directors of the t~o Companies dlsc~s~ed ~er~ of o~n~ersion~ ar~ at meetings of the re~pectlve Boards of the two C~mpanles held on October 16, 1953, terms o~ conve~ slon ~ere decided ~pon by the ~a~ds of the tw~ Com~ p~nies and fnserted in a p~©posed melter a~eme~t ~hi~h ~ ~i~o ~p~oved ~t Such m~e~n~8 and exe~ c~ted and r~olutlon8 wer~ a~opted o~lllng ~pecial ~eblngs of the stock~olde~ of the two Co~nies to act on such mer~e~ ag~een~nt. ~n ~espon~e to ~ou~ request for a t~nscrlpt of fur~ chases a~l~ sa~e~ a~ outlir~d ~t the beglnni~ of this lette~ I would say that I have caused inquiries to be made of all o~i~e~s and dlr~ctors of both Oomp~nle~ ~ to ~ny ~u~b~es o~ s~les by them of securlbles of American Cigarette and Cigar Company ~om October i, 1953 through December 23, ~953 and tha answers ~iven a~e to the effect that no offleer o~ di~eoto~ of either Company bought o~ SO~d ~ny securities of Amerl~an Cigarette and Cigar Oompan~ durln~ th~ period O6tober l~ 1955 through ~ecemha~ ~3, 1953 elther fo~ his own a~ount or ~n~ acco~it in ~hich h~ had ~ beneficial Interast. ~ours ve~f t~ly, Paul M. ~hn P~sldent
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T~f~ AMERICAN TOBACCO COMPANY Incorporated iii Fifth Avenue, New York 3, N.~. 2.g8 Office of the 3e~retary October 16~ ~953 MSH Dep&~tment of Stock List New Yo~k Stock Exchange ii ~ll Etreet Gentl~me~: Thi~ i~ to advi~e that s~ a meeting of the ~oard of Directors of The Amerlean Tobacco Company held today a Special Meetlr~ of Stockholders of The Amerioa~ Tobacco Company wa~ called to be held on Desembe~ ~ 195~, for the puarpo~e of t~klng actia~ on the p~opo~ed mep~er o~ American Cigarette ~ cigar Company into The Ame~Ican Tobac~a Company and the ~lo~e of bu~Ine~ October ~8~ 1953 wa~ fixed ~ t~e ~c~d d~t~ ~o~ the ~ete~mln~tlo~ of stockholders of The American Tobacco Company en- titled to notice of and to vote at such Special Me~tlng° As your acknowledgement of the receipt of this letter, please sign and return the duplicate copy al~o enclosed. Vemy truly yours~ Joh~ ~. ~Ion John W. Eanlon ~ecretary RECEIFT A~K~OWLEDGED: ~. R. Satte~fleld
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THE AMF~ICAM TOBACCO COMPA~Y Incorporated i!i Fifth Avenue, New York 3, N.Y. 25)9 Office of the Sec~etePy October 19, 1953 Department of Stock List New York Ztook Exch~nse ii W&II Street New York± Ne~ Yo~k Ge~tlem~n~ S:ipplementlng our letter of October 16, 1953, ~e enclose six copies of the following in connection with thi~ Co~pany~s Special Meeting of Stockholders to be held on December S, 1953: 1 ~ Prox~ 2 - p~eaidentts letter to Stockholders 3 - Notice of Special Meeting ~nd ProxN Statement As you~ &cknowledgment of the ~eceipt of this letter, , ~le~se slgn and ~etur~ the dupllc~te copy also enclosed~ Very truly yours, John ~. Hanlon IDC John W. H~nlon Enclos~,es Secret~ry
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8OO THE AMERICAN TOBACCO COMT~ Incorporated ill Fifth Avenue, New Yo~k 3, N. Y, Office of the 8ec~etaPy 0ctob~ 23, 1953 Ne~ ¥crk 8toek EXchgnge Dep~rtme~t of Stook List ll W~II ~treat ReW YO~ ~e~york D~r S~r~: The Ama~Ica~ Tob~ee~ We enclose h~owlth three Bets of o~ d~rinitive pro~y m~teri~l consisting o~ the following: i ~ Froxy ~ Pr~ide~tts Letter to the P~efe~ed ~nd Commo~ StockholdarB 3 - ~tamped self-addressed retu~ ~nv~lop6 - ~o~iee of SDeci~l M~etlug cf Stockholders ~ud ~oxy St~temeht Thi~ is the de~inXt~e ~ ~hi~ ~I be m~2~ out to o~r ~efe~ed and Gommo~ Stockholders. Very truly you~a~ John W. Hanlon ME John W. Ra~lon .... ~! • %= . - __J-
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GUARANTy TRUST COMPANY OF NEW YORK 140 Broadway Ne~ York 15~ N~Y. October 8, 1953 Mr. John ~anlon, Secretary The American Tobacco Company lll Fifth Avenue Nc~ York 3, ~e~ York Dea~ M~. H~nlo~ In connection ~ith the p~opo~ed mailing to stoc~holdcr~ comtem~late~ on o~ about October 24~ 1953~ thi~ ~lll co~flr~, ou~ conversation ~her~in I ~dvi~ed yo~ that if the m~tori~ ~hi~h you contemplate m~lllng~ i~ ~imilar to bh~ ~at~rlal ±~ slze~ ~tyl~ ~n~ ~%~ge~e~t~ ~ use~ fo~ t~e woul~ re~ui~ ~pp~oxlm~tely fIv~ bu~ines~ d~fs fo~ the e~- of app~o~i~atel~ 81~000 ~leces of m~il. ~e ~ould, of course, the othe~ mate~i~l~ ~e ~e~u~e the ~bove ~e~ of d~ fo~ a ~o~i job properly su~e~vls~, So that ~h~e b~ ~o ~ce~ity fo~ &~y overti~ in ~o~k, howev~ should t~e~e ~e ~y de~y along the line in meeting the ~bove ~chedule~ ~lea~e unde~ stand that ~e ~ill be ~ost happy to cooperate i~ every W~y possible, ~v~ ±~ th~o ma~ be ~ ~el~y of even t~o, t~ee, or possibly fou~ d~f~ i~ mee~in~ b~e above ~he~l~ ~e ~ill ~u~me~t o~ fo~c~ wlth the ~e~ui~ed nUmbe~ of ~eo~le to meeb ~y e~y~ celve p~pt ~dv~ce from you af you~ dellve~T ~c~e~ule ~o that vo may m~ke our plau~ for the n~mber of Te~le ~equired • Yours ~e~y truly, T. V. ~ruokel T. V. Kruckel fVK~hk A~i~t~nt S~cr~t~y
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Office of the ~ecret~my October 16, 1953 Mr. T. V. K~uckel, Assls~ant Seeret~ry Guaranty Trust Company of New York 140 B~o~dwa~ N~W York 15, N.~. Confi~nin~ our telephone conve~s~tlo~ Of tod~, it is ul~le~s~ood t~t @uar&nt~ Trus~ Company of New Yo~k ~!~l handle the e~closlu~ ~nd mailing of proxle~ ~nd other ~ollcitin~ ~ate~i~l to the ?refe~ed and Common Sto~k- holde~ of thls Company in connection ~ith ou~ ~Deci~l ~eetd~ o~ ~toc~holders to be held On Decembe~ 2. T~e e~clos~es to the P~e~e~ed ~d C~m~o~ ~toekholde~ wil~ consist of the f~lle~Ing: 1 - ~oxy ~Ith ~tenciled name of stoo~ol~e~ sho~ing through ~i~do~ of envelope. 2 - P~esldent~s letter. 5 - ~roxy ~eturn ~nvleo~e ~ith fla~ inserted ove~ the P~oxy ~t~temento - Proxy Statement. Enclosed for ~o~ ~l~nce are flv~ s~mp~e ~et~ (i~53 Annul ~e~t~n~ ~te~d~l) o~the complete enclosu~e~. (Note ~nrle~ dn whleb p~ox~ ~et~n envelope fl~p is Inse~ted ov~ ~oxy ~t~te~ent.) Pl~&se be o~reful i~ $ssuln~ inst~uctlo~s to see that it I~ thoroughly understood that the flap of the ~ox~ ret~n envelope is pl~ced ~ound the~P~ox ~t&te- ~. ~e= no olroum~tanc~ ~ the ~oxy~ P~esldeut~s lette? to he imcluded under the fl~p of the ~roxy ~et~/~n envelope. It is essential that ~ll ~tockholders mete±re ~ copy of e~ch of' the above enclosures and that tbe~e be no daplieatlons. C~e should also be t~ken to see that no soiled o~ mutil~ted materi~l is used, In this connection would ~sk that you kindly keep ~ll soiled and mutilated mate~lal and send the ssme to the ~rlter afte~ mailing h~s been completed.
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Mr. T. Y. Kruekel Asslst~r~t See~et~ - 2 - October 16, 1953 3O3 It ~lll be necessary fop you to take into Conside~tlon new a~ closed ~tockholder ~cco~t~ ~p ta the date of ~iling~ ~s ~ell ~s address changes, it is ou~ desire to ~iold ~lllng ~teri~l to stockholders who sell thei~ 3took be- tween gatober i~ and October 28, &nd ~lso to avoid del~y in h~%,i~ the p~oxie~ an~ othe~ m~te~lal ~each stockholder3 who h~ve changed thei~ addre~se~ d~ing ~aid period. Any ~dd~e~s c~nge~ received direct f~om stockholde~ ~t this office will be sent by messen~e~ ta ~ou daily~ TO f&cillt~te the correct- ing of ~dd~es~e~ it is &d¥1s~ble to kee~ the completed en- closures in strict alphabetlcel o~der so tD~t they may be quickly refe~ed to~ In correcting the addTesses it vill be necessary for you to t~pe new proxies, giving them the saz~e nUZlbers, using bl~ck ribbon far Preferred ~nd red fo~ Common Stockholdees. As discussed in cu~ telephone conversation of %oday~ ~e desire yo~ to deposit the properly completed envelopes in the Post Office l~te Sat~day afternoon, October 24. ~e ~l~o de~i~e t~t you h~ndle the enclosing a~ m~i~ing of proxles and ~elsted material to p~eferred ~nd Common gtock- holde~ becoming of record subsequent ~a Octohe~ 13, BO and including 0ctobe~ 28 (the ~ecord date for determining ~tock- holder~ entitled to notice of and to vote at oua~ Special meeting of Stockholders). This mgillng i~ to be ~%Oe no late~ than October 29. The enclosures for thi~ ma~llng will be identical in all ~espects to the October 24 ~ailing, and the same p~ocedure~ ~re to be followed. A~ you were info~me~ in our conver~tion~ it Nill be necessary for you to use ai~ m~il for ~ll outgoing proxy mate~:!el address- ed to stockholders who~e ~ddres~es are outside the contlnent~l limits of the United States. It will ~iso be necessary £0~ you to ~ffix ~i~ m~il postage to the return envelopes which are sent to stockholders in the United States possessions. I~ co%~nection ~ith the m~ilings to be ~de h? yo~ on 0otobe~ 24 and0ctobe~ 29. please let u~ bav~ yo~m~lld~ flguTes fo~ the ~espectlve dKys. glvi~g the b~e~kdo~z ca the Preferred 8nd On,Each Stockholders. 5ho~tl~ ~ftem Octobe~ 28 ~e will prepare and send to you fop exeo~&tlon an affld~vit ~ove~ing the na~es and ~ddresses of stockholders 8nd, in ~ddition, ~n ~ffldavit ¢ove~ing the v~%il- in~ by yOU of the ~roxies, eta, to the P~efe~red and CO~O~ gtoc~olde~s • Ample quantities of the ~espective e~clos~/,~s and e~velopes {wdnd~J ~nd ~tu~n) will be delivered to g0um offlee on o? before 0ctobe~ gO~ ~d we ~de~st~d ~o~ will co~i~e~ce en- closing on tb~t date. As discussed, the i~formatio~ contained in this ~aili~g is of & strictly eol%flde~%ti~l r~ture ~nd should be cons±dared &s such until October 26, the date of release. Pc2 thi~ ~ea~on, ~e ~k that every p~ec~utio~ be t~ke~ in the h~t~dlln~ of this matePi~l. = ......
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M~. T. V. }~okel -3- Oo~ober 16, 1953 I ~ill visit your offlce o~ Ootober 19 and go Over with yo~l in detail the method to be employed in the enclosing an~ m~iling. in ~cco~d~nce ~ith yo~ request this l~tte~ is hende~ to you in duplioate. Very ~uly ~ollps~ John W. Hanlon IDC John W. HanlQn
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THE AMERICAN TOBACCO COMPANY ~nco~9orat nd iIi Fifth Avenue, New York 3, N.Y. Office of the Secretary Ootobe~ 16, 195B Mr. T. V. Kruckel, Asslst~nt Secretary Guaranty Trust Company of New York 140 Broadway New York 15~ New York At ~ meeting of the Board of Direoto~s of this Comp&ny held today, th~ ~ioss o~ business October 28 w~s deslgnated as the record date for dete~mlndng stookholders e~tltled to notice of aed to vote ~t the Speci~l Meeting of Stockholdere of this Company to be held o~ December 2. It is ou~ Inte~tlon to rele~Be proxies for this Meeting to the Preferred and Common Stookholders on SaturdaF aft~noon~ October 2~ and as dls~ussed, we believe it ~ould s~it your ~onvenlen~ to ~ten~il p~oxle~ a~ of the ~l~Be of bu~Ine~ October i~ and recommend that you ~o so. It will be necess- &~Y for you to continue to stencil proxle~ vlth the n~mes ~nd addresses of Preferred and Common Stockholders be0Omln~ of record subsequent ~o Ootober 13 to and Ineludlng t~ close of business Ootober ~8. Proxies fo~ this purpose, numbered in bl&ek ~nd red i~ ~ere delivePed ~o you on Oo~ober l~. Proxies numbered in black ink are to be uaed for the ~tenoil- lin~ of n~me~ ~nd add~e~e~ Of P~ef~nd ~%o~khold~ ~nd those numbered in red for the Common Sto~kholde~, st~n~ll- lln~ on e~eh to be in black ~nd red respectively. It ~s to be distinctly understood that there must be no dup~i- cation of proxies E~ch Frefer~ed proxy should be checked against the combined Co~on llst (~25., $50., and $100. ~r and should a stockholder hold both Frefe~rnd and Co~mon Stock, the Preferred proxy should be eliminated. By ~uch edlmln~tlon he will receive b~t o~e p~oxy,
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Mr. T, V. Kruckel~ Asslst~nt Secretary - 2 - 0etobe~ 16, 1953 Ige ~i12 requi~ f~ you as soon as possible afte~ October 2~, ~od in no event l~te~ th~ ~:00 o'clock P. M. o~ Nov~m~ be~ 6, for the ~urpose of t~bul~tiD~ p~oxie~ received fo~ votiug at ~he meeting, certified llst~, in ~trict alRh~betl- eal orderj e~ch i~ du~llc~teI o~ the ¢ombln~ Co~z~o~ ~tock- holder~ ($~5., @50.~ and $i00. ~r) and the P~efe~red Btook~ holder3, as they appea~ of record at the close of busin~5~ on 0ctobe~ 28. All of %here ll~t~ must be ~. If you have amy question in ~egez~ ~o ~he foregolr~g, please take it up vith me immediately. in accordance ~ith you~ reque~t~ this letter i~ handed to yo~ lu dupllcate. 91ease ~ckno~le~e ~e~etpt of thla lette~, Very t~uly yo~s, John W, Hanlon John W~ Hanlom Zecmet~y ,306
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THE AMERICAN TOBAOCO COMPANY Inoomporated Iii Fifbh Avenue, ~e~ Yo~k 9, N.Y~ 0ffIc~ of th~ Se~re~ry November 12, 1953 Judge George K. L~ge ll~ Main ~t~eet Flemlngton, N. J. My dear Judge: B~ce both the o~t~fle~ li~ts of ~to~kholders of The American ~ ~ompar~ ~nd American Cigarette an~ Cig~ 0ompar~ ~±iI be o~ file in ~lemington, N~ Jersey f~ ~he required ~e~d pr~r te the respe~tlve s~o~kholde~I meetings ~o be held Decembe~ ~ and De~ ~em~e~ 4, ~ should lik~ ~ m~ke ~ert~in that sto~k- ho~e~ of the o~e ~om~n~ ~re not to h~v~ a~oe~ to the !~st of ~h~ othe~ 0om~ In o~he~ ~o~ds~ ste~k- ho~de~s of The American Tobacco C~panymay ha~ ~c~esB onl~ to the llst of stockholders of that C~m~an~ and s~o~khol~e~ o~ American Cigarette and Cig~ Com~an~ m~ h~ve aoc~ss o~ly 5o Ibs li~t of sto~kholde~s~ ~lease acknowledge ~e~elpt of thi~ letter. Ve~ t~uly ~ours~ John~.Ha~lon John W. K~nlo~ Secretary
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Th~ A~ICAN TOBACCO CO~PA~ ~OS iii ~Ifth Avenue N~w york 3, New York November 20, 1953 oc: Mr. William J. Kin~amo~ Vice Presiden~ The Hunte~don County National Bank (Copies to others not listed here)
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3O9 Int~ductory B~NOP~I8 0R THE SPEOIAL MEETING OF 5TOCK~OLDERS OF R A O 0 A L~dies s/id Gentle~n, will ~ou klr~dlp 0om9 %0 opder~ It is no~ 1:30 p.m. AS Soo~ as we have e~tabllsha~ the presence of ~ quor~m~ thi~ will b~ a ~pecl8/ Meet- ing of the preferred and ~o~mo~ stookholde~s of The Ame~ican~qo Company to v~te for th~ adoption Cr rejection of an A~eem~n~ of Me~ ~n~e~d into o~ and d~ted October 16, 1953 between the Company and ±t~ ~ctors and ~me~ic~u ~Ig~ette a~d C~ Company, a tots, me~glng a~I6 Ame~i~s/~ Cigarette and 0~ga~ Company i~to the 0o~ny. In ~or~a~oa ~ith the By-L&~s, ~ F~ident og the Company, I will ~t ~ Chairman. ~. Bsnlon, ~ecratar~ Of the 0~mpany, Wi~l ~ct ~B ~¢- ~eta~q of the M~etin~. There ~e ~Iso pre~nt~ an6 I take pleasure i~ introducing to the ~eeti~ Mr,R~J. ~Ioe P~e~idents~ Mr. Hily~, T~e~surer~ Mr, J~nson, Audlto~; and Mm, Borden AsBimtsnb to the P~esideut; {and n~m~ any othe~ ~ireatoms p~es~nt ) M~. A. Oo~on Ylndlay and Mr. Charles @ansho~ ~h~ are p~asently Vice Preslde~ts ar~ddi~ea~o~s of A~eri~ClKarette sad Clgam Comp~n~ and ~ho, ~ith the members of you~ present Hoard, are namod in the Agza~m~nt of M~ger to ba~oma dlr~cto~s of the Do~p~uy; Mr, ~nnlngs and Mr~ Case of Lyb~and, ROSS B~OS. & MontSomery, our i~dep~nd~nt public a~dltors; and M~. Ey~e of l~sklns & S~ll~, Indepe~d~n~ p~blls auditors fo~A~er~can Clg~tte and Ciga~ Company. ~o~, b~fore p~oceedi~ to b~slness, I ~ish to s~ a few ~ords ~bout the co~d~t ~f t~l~s ~eeti~ ~ve~ stock- holde~ who so desires ~lll ~et ful~ oppo~b[~ity to be hG~Pd. O~e~[~ p~oc~d~e ~eq~i~es~ ho~eve~ ~h~t all questions be addressed to the Ch~Ir, ~/%d I ~ill ~ake eFe~y eff~t ~o see to it ~het, at ~ co~venlen~ time in the meetilk~ all pTope~ ques~lo~s ~te~i&l to the h~sl- nass b~fore this meet/21g ~ill be ~s~e~ed - provided of course that ~e ~Kve the i~orm&tlo~ available hsT~ EO~ the convenience of the s~o~kholders~ copies oF b~e Om- de? of B~slness, ~s adopted by the Bo~d of Direstor~ p~rsu~t to the ~y-L~ws, h~ve bee~ p~i~tedand distrib- uted p~lor to the meetS. If you should b~ s/%~ ohs/Ic~ n~t h~ve a Copy of the Orde~ of ~si~ess, klndly raise you~ h~d ando~e ~lll be fur~ished ~o~.
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The receipt and tabulation cf the proxles for the meet- in~ have been .~nder the control of Mesmrs. Lybrand, Ross Bros, & MontgomelT. I will read from the meport of Messrs. Lybrar~d, Ross Bros, & Montgomery ~avering thei~ t&bulatlon of the ~roxies. (Mm, H~nn reads paragraph giving the tabul&tlon for the adoption ~ for the rejection of the Agreement of Merger referred to in the Yotloe of Meeting dated Ootobe~ 263 1953, a copy of Vhloh Agreement of Me~ger was attached as Exhibit 1 to the Pmoxy Gtate~e~t, and dlscretlo~ar~- pToxles, on the basis of p~oxles received up to the time the report ~ea made.) Mr. ~ulon~ will you please present the l%sfl of stock- holders, the stock hooks a~nd p~oof Of r~tioe to stock- holders. I present a full, true a~d complete list, in alPhabeti- cal order, of all the stockhol~ers entitled to vote on the adoption or rejection of the A~reement of Me~ger dated Ootobe~ 16, ~95~ between the Compa/~y and its di- rectors and American Cigarette and Cigar Company, a corporatlon of the State of New Jersey, and its dlrec- to~s, or on other matters coml~4 before this meeting, as the c~se rm%~ be, ~ith ti~e post offio~ ~ddres8 of each, e/%d the number of shames held b7 e~oh, certified by Guar- s/utyTrust Compa/ly of Ne~ York~ Transfam Agent. The llst of s Zo~oldez~, for the ~e~iod of ten d6ys before this meetir~ et all times during the usual hours of business, has been kept ~t the registered offlo@ of this Compscay in Flemln~on, Row Jersey, open to the ex- amination of any stockholde~ thereat. The stock books, incl~dlng the transfer records, ez~ present, available for examination by all stockholders of this Company dur- ir~ this meeting. I present proof of compliance. ~ith the applicable Ne~ Jersey statute and ~ith the By-La~s as to the madlln~ of notice of this meet~ug, ~ogethe~ ~ith proof of the mailing of related m~te~isl, (P?esents ~ffldavlt of Guaranty Tz~ast Compan~ as to m~lling.) This affidavit is ordered filed with the Secretary~ ~ill you no~, please, file all proxies vith the Secre- tary. Mr. Kenny, will you have your assistants, on - 2
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Mr • Jenr~iD2s behalf of the Secret~ry, kindly make ~ canvass of the stockholders present in person or by proxy and report the result to him. (Mr. Kenny's assistants circulate amor~ meeting, eollectir~ proxies and obtaining names of stock- ho!ders present.) Is th@~e any stockholder present who has not given his na~e to Mr. Ker~ny or one of his assistaht~, or who has not turned over his proxy to the Secretary? If so, will you kindly attend to this before we proceed with the meetin4~. Mr. Jennin~s, ~ill yo~ kindly mead to the meetin~ the certificate of Lybrand~ Ross Bros. & Montgomery as to the proxies given to Mess~s. Paul M, ~ahn, James R. Coon and Richg~i J, Boylan. ~M~r. Jennings now ~ea.ds the certificate of~ Messrs. Lybrand, Ross BrOs. & Montgomery as to the proxies given to Messrs. Kahn, Coon and Boyla~n. ) Mr. Harmon, will you please reportto th& meeting the number of shares of stock outstanding and entitled to vote at this me~tin~, and the number of shares present il/ person o~ by proxy. The number Of sh~res, o~tstandln~ and entitled to vote at this meetLng is: 526~99Z sh~res of Preferred 6,%54,Ii0 shames of Common The number of shares present &t this meetID~ in person or by proxy is not less than sh~res of Preferred shares of Common quorum is present at tbls meeting, Before p~ooeeding with the meeting, any stockholder who desires to examine the proxies is prlvileged to do so. The Board of Directors, in acca~dance ~ith the By-Laws, has appointed Mr. William W, Ragsdale, Jr. and Mr. Jo- seph A. Oleskej both certified public accountants as- sociated with the flrm of Lybrs~nd, Ross Bros. & Montgom~ry~ -3-
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Mr. Hahn 322 to serve as Inspectors of the Vote. Mr. Hanlon, will you please see to it that Messrs. Ragsdale and 01eske are s~ozu% to perform their duties. (Mr. Hanlon obtains the slgnaflur~s of Messrs, Ragsdale and Oleske and has them sworn to the oath before a. hot,my present ~t the meeting, ) Messrs. ~gsd~!e and Sleske ~ve been duly s%,orn. The oath is ordered filed with the Secretamy, The ~rlnclpal business to come before this meeting is to vote fo~ the adoption or the rejection of the Asree- ment of Merger entered into on and dated 0otober It, 1953 between this Company and its directors a~nd Ameri- 0a~n Cigarette 8~d Sigar Comps/ly, a corporation of the State of ~ew Jersey: and its directors, merging s&Id American Cigamette arid Cigar Company into this Comply and presoriblng the terms and conditions of said merger and the mode of carmying the same into effect. A ~opy of the Agreement Of Merger ~as attached a@ Exhibit i to the Proxy Statement dated Sct~ber 16, 1953 and that PrOX)- Statement w&s in turn attache~ to the notice of this meetlr~ dated 0etohem 26, 1953 which was ~eiled to all sbookholdems of record of this Comps2%y togethe~ ~Ith a letter from me to the stockholders. Although you have all resolved a copy of the Agmeement of Merge~ as Exhibit 1 to the Proxy Statement mailed to all the stockholders, I would like to t~ke this Opportunity to refer brlefly to some of the provisions of the Agreement. I ~-ould call your attention to the fact that the Agreement of Merger provides thlt this Comp~J~ shall be the oorpor~tlon oonti~ulng afte~ the merger 8~d t.hat its n~me ~i$1 remaJ/% the same. That Agreement also sets forth the numbe~, names emd post office addresses of the first directors and off items of the sur*~iving corporation who ~ill be the same persons as at present with the exception that there will be added to the present Board of Directors of this ComRany Mr. Charles Gansho-~ and Mr. A, Gordon Find!ay, who ame no~ directors s~nd Vice Presidents of the Amerloan Ciga- Torte ~n~d Cigam Compan~:~ The Ag~eemer~t of MergeP fumthem provldes that the sumvivIP~g oorpomatlon ~ill have a/l au- thorized ospl~al stock oonslstln~ Of 10~SOQ~OSQ shares of Conm~on Stock of the par value of $25 per shore and 5~0,I06 shames of Preferred Stock of the par value of ~10S per share, being the sa~e as the present author- ized capital stock of this Company ~d p~ovl~es for the conversion of each share of the outstandln~ Common Stock pa~ value $70 per share of Araerican Cigarette and Cigar
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| ;li3 Company into eight (8) shares of Con~non Stock o£ the pa~ value of $~5 p~r share cf the stock of this Company except that 4,500 ~hares of Common Stock of American Cigarette and ~Ig~r Company held in its Treasury and 18~,~25 sha~es of 0ommon S~oek o~ ~e~Ican Cigarette owned by thls ~ompany will not be converte~ but ~ill he c~nceled and cease to exist; the Agreement of Merger further provides that each share of the outstanding 6% Cumulative Preferred 5took par value $100 pe~ ~hare of Amerlo~u Cigarette and Cig~ Company will be con- verted into one a/Id one-tenth (l-i/lO) ~hares of 6% Cumulatlve Prefexa, ed Stock par vslue $100 pe~ sha~e o~ this Company e~cept that the 3,230 shares of said Pre- fermed 5took of Amerlaan Cigarette owned by this Com- pany will not be converted but ~lll be cauceled a~d cease to exist. The Ne~ Jersey la~ applicable to this me~ger ~equire~ that the 9~eement of Merger be adopted by the vote of the holders of at lea~t t~o-thlrds of the o~tstandlng capital stock of this Conrpany entitled to vote at this meeting and by the vote of the holders of at least t~o- th%rds of the outstanding capital stock of Amemlcan Cigarette and Oigar Company. FoP the purpose of voting ca the me~ger the New Jersey law provides that each sha~e of stock, whether Common or Preferred, entitles the holder themeof to one vote. I also wish to call your attention to the fact that the Agreement of Mergem will be submitted to the stockhold- ers of Amerloan Cigarette and Cigar Company at a special meeting thereof to be held on Decembe~$, 1953, Yf the Ageeement o~ Mergee is adopted by the holders of the requisite number of sh~res o9 this Company and by the holders of the req~Isite numher of sha~es of American Cigs~ette ~d Ciga~ Company, it Is intended that the A~ree~enb shall be filed ~Ith th~ Se~et~ry of State of New Jersey, at ~hieh time the merger would become e~feotlve. I will no~ ~sk the Asslstant Secmet~ry to ~ead the ~solutlon which ~lll present the msttem of the nle~geP for ~or~slde~atlon s~d ~ote, BE IT RE~0LVED: That the Agreement of Merger entered into on s/%d dated October 16~ 1953 by and between this Company and its directors end American Cigarette and Ciga~ Comp~ny~ ~ eorpo~atio~ of the State of ~ew Jersey, a~d its directors (~ copy of whloh has been mailed to all stockholders attachsd as Exhibit 1 to the Proxy Statement Ill turn at- tached ~o the notice of this meetLr~g) pl~Fidlng fo~
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514 the me~ge~ of American Cigarette and Ciga~ Comply into The Ameri~AqTobaaco Comply as the co~po~ ration surviving such merger pursuant to the laws of the State of Ne%" Jersey and prescribing the terms and condltlo~s of the merger ~qd the mo~e of ca~rylng it int~ effect, the name of the surviving 0o~por~tlon, the ~u~ber~ names ~d post offlce ad- dresses of the first directors and office~s of the su~vivln~ cor~Dr~tlo~, the ~u~e~ ~d par v~u~ of sha~es of o~pltal sto~k Of the su~Ivlng corpo- ~tlon ~qd the ~l~_e~ of converting the sh~res of capital stock of American Cigarette and Cig~ Company into sh~res of capital stock of The A~e~i~an ~ob~coo ~omp~ ~s the s~vivID~ co~- poration~ be and the ~ame Is hereby adopted. In o~de~ that this resolution be brought before the meeting fg~ consideration and action, it is in order that it be moved and seconded. I move that the resolution as read by the Assistant Secretary be adopted~ I ~eoond the motion. L~dles and Gentlemen, you h~ve heard the ~solut~on re~d and the motion made and s~cor~ded that it be adopted, M~. Kenny~ ~lll you ~ud your ~sslstants kindly distribute ballots duri~ the disousslon of the ~e~olutlon~ (M~. Kenny ~d his assistants distribute a ballot to e~ch qualified vote~ at the meetln~) The meeting is now open for dlscusslo~ (Discussio~ follows. In view of the importance Of this resolution~ it would be advisable that it not be cut off unles~ it is unreasonably prot~a~ted~ Tn such event motion may be made as follows.) I move that the discussion be closed a~d that ~ vote be taken on the ~esolutlon before the meetln~. I second the motion. Ladies ~d Gentlemen, you have heard the motion that the discussion be closed and that a vote he taken on the resolution before the meeting. All those in favor will kindly so slg~uifyby m&ising their right hands. All those opposed ~ill do likewise. The motion is o~m~led. It is no%" in o~der to vote on the r~solutlon whleh the Se0~et~ read to the effect that the Agreement of Mer£er of October 16, 195B be ~dopted.
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315 ~Hetsko Stockholders who have already sent in their proxies or filed them with the Secretar~ need not fill in their ballots unless they wish to do so. The proxies which the management is authorized to vote on this resolution will, ~e~s specific Lu~tructions to the contrary have been reoeived~ he voted In favo~ of the re~olutlon whloh will of course constitute a vote in favor of the ~dop- tion of the Agreement of Merger. Afte~ ma~kiz~ your ballots, will you kindly deliver them to the Inspectors. The Lnspecto~s will please cs~uv&ss and re~de~ a report of the vote on the res~lutlon to adopt the Agreement of Merger in writing to the meetl~4. Mr. Regsdale and M~. Oleske, ~ill you kindly make your repo~t es soon ~s it is ready. (The //Is~eotor8 proceed ~ifih the oanvassir~ of the votes.) I ~ill no~ ask the Inspectors if they are re~dy to st~b- ~t thei~ meport on the resolution to ~doDt the Agree- ment of Me~ge~. (Mr. Ragsdale s~bmits the repo~ of the Inspectors by handing it to the OD~Irman.) (~eads portion of report giving votes for and agal~st the ~esolutlon to adopt the Agreement Of Merge~,) In a~cordance ~ith the mepo~t~ I declare !that the votes of the holders of ~ome tha~n t~o-thlrds of a~l the capital stock of The Amerlean Tobacco Company h~vo been cast i~ f~vo~ of the ~esolution ~ead by the Gecretar~# and the~e- fo~e in favor of the adoption of the Agreement of Me~ger en_d ~h~t said ~esolutlon h~s been Carried, The ~epo?t of the Inspectors is o~de~ed to be filed with the Secretary. There be~n~ no fumther business to come before the meet- ir~, will someone m~ke ~ motion to ~djourn? I movetb~t the meeting adjourn. I second the motion. L~dles end Gentlemen, you have heard the motion. AI~ thoae in f&vo~ ~ill kindly so signify by ~alsi~4~ thei~ right hands. All those opposed will do likewise. The motion has been carried~ I wish to th~nk you all for youm oonsidematlon and coumtesy. The meetig~ is &d- $ou~ned, -7 -
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MINUTES OF SPECIAL MEETIN~ OF S~0CK~0LDDRS OF ~HE A~BICAN TOBACCO COMPANY FLEMINGTON~ N~ JEEdEY~ DECEMBER ~j 19~3 A Special Meeting of the Stockholders of THE AMERECAN TOBACCO COMRANYwaS held this ~ at No. 34 Court S~eet, Fle2aiD~to~ Ve~ Je~e~st l:~ ~Iclo¢~ P.M~ E~st~ ~tanda~d ~Ime~ M~ Paul M. Hahn, F~esldent, ac~ed as Chairman of the meeti~R ~d ~o John ~. Mallow, g~er~t~ ~ted ~s ge~et~y of the meeti~ In opening the meeting the CHalr~n intro- duced the follo~Ing di~ecto~ ~ho ~ere p~ent~ ~ Richard ~. Boyl~n. Vice President M~ Jame~ R° ~oonj Vi~e President ~. JQhn K. C~o~e. ~i~e P~s~dent M~o Ha~Y ~. Kilya~d, T~e~surer M~. A. LeRoy Jan~on, Audlto~ Mr, Alf~ed F. Bo~den~ Assistant to the P~esldent He ~lso introduced Mm~ A~ ~o~do~ Fi~dlay ~nd Mr. CHarles ~an~ho~ who ~e p~se~tl~ Vice ~e~Ident~ ~d directors Of A~e~icen Ci~ett~ ~nd Ciga~ Co~pany, ~nd ~ho ~ith the mem- be~ of the p~esent Board of the Comgany a~e n~med in the Agreement of Me~ge~ to become directors of the Conkoan~ Mes~rSo Alvin R. Jenni~gs and BA~ ~. 0~se of ~he ~irm of ~ccount~nts; ~nd M~. Wiillam R. E~e Of the fi~m Of Hawkins & ~ll~ i~depen~ent a~co~tant~ fo~ ~me~ie~ Ci~ette ~d Ciga~ Comp~n~. The Chairman announced tl~t fo~ the convendence of the stockholders copies of the orde~ of business for the meetln~, as ~doRted by the Bo~ of Di~e~to~ 9u~s~ant to ~he Bv-Law~ had been R~i~ted and dlst~ibuted prior to fire meeting. The Chai~mau then proceeded with th~ m~eting and rear from the statement ~hd~h Lyb~n~, Ros~ Bros. ~ Montgomery h~d ~ep~ed ~ove~ing thei~ tabul~tlon of the proxies, as follo~s: "Ou~ tabulation of th~ p~oxle~ ~ho~ tha~ ~e sha~e~ ~ep~esented by valid proxles fo~ ~nd ~g~In~ ~doptlon of the Agreement of Me~g~r and to be used at the dlsc~etion of the p~o~les with ~espect to m~tte~s not known o~ determined at the time of ~oli~Itatlon ~ ~s follo~s~ Ado~tlo~ of the A~eement of Merger: Po~ Agslnst To be used at the discmetion ~f t~ p~oxles ~ith ~espect to matters not ~own Or determined at the time of sol~itatlon 3hames Represented by ~alld ~oxies Given to Officer 3~,628 -- 34,628 5,~55,006 30 5,~55,036 J
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~)The percentage~ of votes on adoption of the Agree- ment cf Meyge~, reDresente~ by ~alld ~roxles received, ~ere ?8.56 ~nd .50 pe~ cent, for a~d agaln~t, respectively, of tho qut~tandlng capital stoqk and 9~o37 and .63 ~r cent, fo~ and agaln~t, respectively~ of the total vote om the a@~eeme~]t.'~ The gecretary pre~ented ~ full, tr, le and complete list, in alphabetical o~le~, of all stockholders of the Company entitled to vote on the adoption or rejection of the Agree- ment of Me~ger dated 0etcher 16, 1955 between ~he Company ~,d its dlrectorB and Am~rlcan Cig&zette and Ciga~ Company, a ce~poratlen of the State of New Jersey, and its directors, o~ on other m~tters comlhg before the meeting, as the ca~e m~y be, wl~h the post-off lee address of each and the number of sha~es held by each, certified by ~ca~anty Trust Company of }~ew Yorkj Transfer Agent, Me stated t~t said list of stockholders, fo~ the period of i0 days before this masting, at all times d~ing the ~sual hours of business, had been kept at the regi~te~,ed office of this Company in Flemlngton, New Jersey, open to the examination of any stockholder. He furthe~ stated that the stock book~, including the t~ansfer records, were also p~esent, a~ailahle fo~ examination by all stoekholder~ of the oomp~ny, durir~ the meeting, The Secretary presented proof of compllance ~ith the applicable Mew Jersey ~tatute a~]d ~ith the BF-L~ws of the ComDany ~s to the mailing of notice of this meeting, ~ogether with p~oof of the maildnS of ~elated material. The aff!davlt~ of ~aillng ~e~e ordered filed with the ~ecretary. A canvass of the stockholders ~es~nt was had ~nd the Chairman o~ered all pr~les to be filed with the Societally. Mr. Alvin R° Jennln~s, ot Lyb~acd, Ross B~os. & Mont- gomery, rea~ to the meeting the certlfioate of such firm, ~hlch state~ that they had examiaed a~d tousled the proxies given by stockholders of this Company to Paul M, Hahn, Jame~ R. Coon and Rich~d J. Boylan for tkis i~eetlng~ received prior CO the com~enc~mea~ of this meeting, an~ had compared such proxies ~ith oe~tlfied lists of ~tcckholde~s and that, accord- in@ to their count, the~e h~d been given to aald Paul M. Hahn, Ja~:es ~° ~ccn a~ Mieha~d J. Boylan p~oxles Per ~3o~5 sbe~xes of ~ieferred gtoc~ and 5,08~,530 shares of Sol,on Stock of the Company, representing a total of 5.519,025 shares. At ~he reguea~ ~f ~r. ~e~ls D. Gilbert, a atockheddcr, Mn,. Jenni~gs announced that p~oxies to Mm, Gilbm~t covering a total of ap- proximately R200 shares had been t~rned over to Lybrand~ Ross Bros, & Montgomery by M~o Gilbert at the meeting, It was found by the ~ec~eta~y as the meeting p~og~essed tf~t there ~e~e 9resen~ at the meetlng, in parson or by pr~y, the holders of ~0,567 shsr~s of the P~efepre~ Stock and 5,099,419 sHares of the Oom~cn gtock of the Company, out of a total of 596,997 shares of the Y~,ef~rred Stock s~d 6~54~ii0 shares of the Common Stock. After the Chalmmsn declai.ed a quorum to be ~es~nt at the me~tlng he stated that any stockholder who desired to examine the proxie~ ~as privileged to do so. The C~&d~m~ stated that the Board of D~mector~ of the Company, in accordance with ~he By-L~ws~ had ~ppointed Mr. William W~ Ragsdale~ Jr., and Mr. Joseph A. 0locke, both certified public accountants a@soelated with the firm of
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218 L~bT&ud, Ros~ B~oS. & Montgomery, to serve as Inapectors of the Vote, Before p~oce~dlng he requested that the Inspectors take their ~equireg oath, Messrs. R&gsdale a~d 01eske were then s~orn falthfully~ h~cstly &rid i~a~t/ally, a~d acceding t~ ~he beet of ~helr ~hilitles, to perform thei~ dutie~ as I~specto~s. Their o~th was sub~crlbed and ordered filed ~ith th~ ~ec~et~y. The Chairman stated that the principal b~ine~ tc come before the m~etln8 ~a~ to vote fo~ the &doptlon o~ rejection o~ the Ag~ee~eut Qf Merger eutered into and dated gctobe~ 16, 1953, bet~ee~ thi~ Company ~nd its directors &nd American Cigarette and Cigar Company, a corporation of the grate of ~ew Je~sey~ a~d it~ dlrectora merging said American Cigarette e.ud Ci~? Co~pany into this Company and presc~ibin8 the tamms and conditlnus of sai~ merger and the mode st carry- ing the same into effect. Although all stockholders had recel~ed a copy of the Agreement of Me~ger ~s Exhibit 1 to the Proxy Statement mailed to all the stockholders, the C~i~m~u took the opportunity to refer Prlefly to some ef the provisions of the Agreement fo~ the benefit of those &ttend&~ the meetlng~ I~ the coup, so of his discussion the Chairman called &ttentlon to the ~equi~ement o~ the Ne~ Jo~aey law ~ppll- c~ble to the me~ger that the A~reement of Merger be adopted by the vote of the holders of &t l~t two-thlrd~ Of the outsta[~in6 oapltal stock of the Comp&uy entitled to vote at the ~eetlng and by the vote of the holders of at least two-thlTds of the outst&udlng capital stock of American Cigarette and Clga~ Company and that unde~ the New Jersey law. fo~ the F~rpo~e of veti~ on the me~ger, each share of stock whzther Common o? P~efer~ed entitled the holder there- of to one vote. The Asslst&~t Setretar[~ at the pequest of th~ Ohai~ma~ then re~d to the meetln~ the folloNing ~esol~tlon to p~esent the m~tte~ of the me~ge~ for cor~ideratlon and vote: BE IT RESOLED: That the A~eement of Merger entered into on &rid dated oatober 16, 195~ by and betwee~ this Company and its glreetops snd American Ci~rette snd Ci~5~ Com~n?~ & co~o?~tlon of the State of Net. Jersey, and its dl/~ectors ~a ¢op~ Of ~hlch has been mailed to ~11 stockholders attached as Exhibit 1 to the P~oXy Statement in ~1~n at- tented to the notloe of thls meetl~g) ppovldl~g Tom the merger of Amemlo~n Cigarette and Cig~ Company i~to The Ame~iosn Tobacco Company as the eorpor~- tlo~ su~vlving such mex~gemp~a~suant to the l~ws of the State of Ne~ J~rsey and pmescrlblng the te~ms and conditlo~s of the me~ge~ and the mode of carry- ing dt into effect, the name ~f the surviving oor- poratio~ the rf&mbe~, names ~d post office 8~d- dmesse8 of the first directors and offitems of the s~rvivi~g compo~&tion, the n~mber &~d I)~ v~l~e of sh~es Of caDltal sto~k of the surviving corpo~atlon and the menne~ of Oonve~tinE the s~es of oa~itel stock of American Cigarette a~d Cig~m Corny into shares of oa~tal shock of The American Tobacco Com~ p&~y as the 3~/'vivi~g corporatlo~ be and the sa~e is herehy~dopted. -3-
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A~ the discussion co~itin,led iqa', Albe~t ~d~dy, a stock~ holder, luqulred as to the approximate savi~gs ~hich wual~ be b~o~Jght ebo~t by the me~ger of the t~o Co~paales. The dhai~m~n stated hl~ informatlo~ indiaated that the an[~l savings expected to result from the me~ge~ under conditions expected to exist in 195~ were estimated at not les~ than 1-1/~ mlllio~ dollar~. Mr. gaul Bubln~ a p~oxy ~e~ent~ ±~g a t~ust which is o~e of the two dlssenting stockholders, ~tated that he had no oriticlsm~ to ma~e of p~st management cr of its methods of conducting buslnesa~ that he did not have any objection to the me~ger of the two Companies and tha~ in principle the idea of a me~gev seemed to him to be sound3 practical and advantageous. He dld~ hoFeve~ erlticlze the ~ates of conversion and urged the stockholders to ~oin hlmgn voicingthei~ dlss~nt. The 0halrr~an, after answering inquiries by M~. Handy~ stated that there had been a long eb~i~ cf ~a~pc~d~ce ~Ith B~. Rubin ~eg&rding the ~erGer and ~ead to ~he me~ting excerpts f~om ome of the Colap~nyls letters of reply i~ which it had been pointed out that the use cf average e~ningg An fixing the terms of conversion for a Company such as American Cigarette ~nd glgar Company, ~'hich has had a rapid and consistent growth in sales, earning~ an~ dlv±dends~ ~ould give a di~torte~ picture and result in an t~.t American Cigarett~ and Cigar Company is one of the cor- porations which will benefit suh~tantlally f~orn the te~In~.~ tlon of the excess proflt~ tax and that the trifling numbe~ of t~,ansfers of American Cigarette and Cigar Company stock in the over-the-counter market (the~e having been only 255 shares of Common Stock of American Cigarette and Cigar Com- pany ~ud 2 sh~m~s of it~ ?~f~ed greek t~n~ferred of record du~ing the last iS months) could not be said to establish a market in American Cigarette and Cigar C~pany stock so as to give overIthe-counter market quotations an~ sig~iflcance in fixing m~rget value, Two othe~ stockholders~ Messes. LeWis P. Gilbert and gghn F. Astbsry~ also took issue with the c~l~iciams expressed by this proxy. The Chairman in ~espm%se to eu~stions by M~. Milton Berg, ~ stockholder, ~eferyed to the Proxy Statement for information ~e~irdlUg stockholdi~gs of directors of The American Tobacco Company and American Cigarette and Cigar Compan~ and ~tateg that, for the purpose of app~alslng stock of dl~entlng stockholders, I~ determining the fnir v~lue of the stock of the Co~panies involved in the proposed me~ger, the ~ew Jersey law provides that ~y value that the stock shall have as a mesult of the merge~ is to be excluded. ~he otbe~ of the two dlsse~ting stockholders, ~. Llo~d Landau, then spoke in opposition to the me~ger criticizing pamtieula~ly the extra dividend for 1953 declared by American Clg~ette and Clgar Co~Ip~n~. The Ch~Iri~n celled attentloD to the fact th~ it b~d been the polic~ of Ame~lcan Cigarette and Ciga~ Compan~ to decl&~e such an extr~ dividend ~t the end of each year. ~n ~espons~ to an inquiry by Mr. gtenfo~d L. Her~u~, a ~tccgholde~ th~ gh~i~t~ ~t~ted that he did not kno~ whet the cost of an appraisal proceeding ~ld De, but that he could get thls Inform~.tlon, As the d3~eu~sion dre%l to a Close, M~, Philip A~pelba~m~, a stookBolde~I spo~e in favo~ of the merger and the Chairman, in the interests of the Coi~p~ny~ declined to discuss questions by M9. Rubin as to the remedies open to objecting stockholders ~nd informed ~. Gilbert that t}1~ ~mtbe~~ of ~ post-me~tlng ~7 to he sent stockholders o~ request would be gl~e~ co~slder~tloD. 5- .J
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All those p~,esent ~ho desired to do so having expressed their views a~d aon~eabs regarding the ~er~er proposal, the discussion was eloped ~nd th~ ~e~tl~g pPoc~ed~g to vote o~ the r~olution before it. The Ch~Ir~ then ~eq~ested the Inspectors to canvass the vote ~nd rende~ thei~ ~eport of the vote O~ the ~e~ol~tlc~ to adopt the Agreement ~f Me~ger. Afte~ all of the ~to~khold~r~ present or represented by proxy and ent!tled to ~ot~ thereon a~d deslri~g %o go so had voted on the af~re~ald ~esolution bF ba~lot~ the I~spec- to~s collected the ballot~ a~9 p~oce~ded to the exami~etle~ and t~bulablon~ Afte~ the ball~tlng ~n the adoption of the A~reement of Me~ger and ~hile awaiting th~ result of the vote~ the meeting p~oce~d~ tot he discussion of other ma~te~s~ Mm~ ~ilbert co~nme~ided the Chairman fo~ his ~ecent statement on the sub- ject of lung cance~ ~nd e~p~e~sed ~ri~l~m o~ ce~z~In ad~ ve~tlslng by the cigarette indust~y~ The Oh~i~man Commented ~t so~ length o~ this m~%te~ a~d emphasized again his thought that the chief ~ause of the ~tate of mi~d, if such the~e be, of public fear about clga~ette ~moking, which he had referred t~ in hl~ recent publdc statement, i~ loos~ talk an~ he then ~ead to the meeting his statement ~hlch had been ~e- lea~ed to the p~eas on November' 26, pointing ~ut that fo~ every expe~t who blame~ tobacco fo~ the increase in re~pi~a- to~y dlsease~ there are othe~s ~ho speak ~ith at least equal authority who say that there is no evidence to sho~" that tobacco i~ the cause. He al~o ~epo~ted that The American TO~ bacco Company i~ ~o~kl~g at and s~pporti~g ~clen~Ifi~ ~e- search of a fundamental r~tu~e in this field ~ithin it~ o~n laboratory and in InSepend~nt iu~tltutlou~ an~ that it is the policy of the Company~ ~ithln the limit of avoiding duplica- tion of ~esearch, to exten~ ~ooperatlon to projects which the Co~pany belle~e~ ~he researchers ~re approaching and will ap- proach without p~eJudlce a~d ~ith~at preconceived opinlon~ ~n the problem to be In~e~tlgated. The Chai~m~n, in ~eply to a question bF Mr. R. Edwa~ DoWdy, a proxy~ said the Company i~ ~e~y careful about co~ plying vlth gt~te stat~te~ in connection with th~ s~mpllng of college students. Reg~esteg by Mr. gilbert to co~ent on the p~edlction~ as to king si~e and filte~-tlp clgar~tte ~ale~ ~la~e in an a~ticle in Fortune m~gazlne, the Chai~n~n stated t~t the king ~ize market thi~ yea~ is ~q, obably ~5 per cent of the clga~ette market a~d is still g~owing~ that filter~ tip elga~ette~ might emerge thia year with perhaps 3 o~ m~re than ~ per coat of the market ~hlch i~ ~till a ~all factor in the ~etal eeles of the industry; and that ~nethe~ The American Tobacco Company would bring out a filte~-tlp cigarette depends o~ three conditions: gee, the ability to develop a filter-tip that In the Company,s cplulou does an efflc~eut Job of filtratioa; secondly, a filter-tlp that act only doe~ t~at, hub does it ~ithouk ~est~oyin~ o~ impairing the t&ste o~ flavor of th~ tobacco; a~d third, the coavlctlon ~t that time that t~e~e is a l~ge enough public de~d for The A~erlcan Tobacco Company %o venture into a ne~ br~neh cf the buslne~. Replying to a suggestion by Mr. Berg, the Chairman called attention to the f~at that in some ~ecent adve~tlsing the Company is testing co~bined refe~enae to LUCKY S~RYK~, HERBER~ ~g~BYTON and PALL MALL Cigare~e~. ~he chairman, following an Inquiry by~k~ App~Ibaum, -6-
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discussed the sales situation of the Company and the i~dustry. He s~id there h~s been a tendency to exagger~$e the slgn~ flc&n~e of the re~ent small decline in the Ind~st~y~s clg~- ~ette s~les sho~n by Gove~nmen~ figures and that domestlc clga~ette sales of the industry fe~ the first ni~e months this ~e~r ~s ~eflected in Government ~ithdrawal figures are slight- ly ~ore than 1 pe~ cent below the flgares ~o~ th~ ~or~espond- ing period in 19~ ~e sai~ the~e ere a n~mbe~ of f~oto~ that might be pos~ibl~ explanations fo~ the smal~ decline and the~e is ~o~bt ~ t~ ~h~the~ l~st yea~I~ I~¢~ of ne~l~ ~ per cent in dome~tl¢ p~c4~ction ~eally represented a ~ pe~ c~n~ i~ease in the numbe~ of ¢i~ette~ smoked. He ~olnted Gut that ~ec~ent rumor~ l~t ~e~ ~s to ~n Immlne~t end- ing of p~ioe cont~ol~ end ~se of ~ig~ret~ prices resulte~ in exc~sslve ~u~chases hy the ~holesa~e ~nd ~etall t~ade and the introduction last year of a ~e~ king size of one of the major b~ds ~esulted i~ heav~ shipments to fill the dls~ibutlom plp~ l±ne~ and said that he belleveG ~a~ge quautltle~ of ~ig~ettes p~ehased b~ the trade in 1952 ha~ to be sold to the publl¢ in 1953 ~hloh ~ould Indlc~te that th±~ ye~s ~m~i~ decline ~ ~ co?~ectlve ~dju~tment ~f l~st ~Is i~cre~se. ~othe~ facto~ to ~hich the Ch~i~ c~l!~d ~btentlo~ ~s the oo~ider~b~e increase this ~e~ i~ the quantity of king ~ize clge~et~es ~old to the public an~ that ~ithough it i~ in the ~ealm of ~pec~latlen it i~ entirely possthle that a shift P~om ~horte~ to lon~e~ cigarettes m~y mean a ~eo~e~e i~ the n~b~ of ~g~ret~B ~mo~ed. ~[e ~~ Pe~ed to the faot that the United ~t~tes Department of Agrlc~Iture i~ ~ ~le~se dat~ O~tober ~8~ 1953~ po~nt~ ~ut that fo~ the ~ore~eeable ~tu~e a contlnue~ increase in total clga~ette ¢ons~mptlon a~pe~ Indicsted~ He ~epo~ted t~t fo~ th~ nine month~ ending 8eDtember 30~ the Oompan~s do~e~ti~ ~A~ ~le~ ~r~ a~ex~atel~ ~h~ Same ~ t~ey ~re for the same period of 19~2 ~d its export sales, a ~latlvel~ sma~l pa~Z o£ its tot~l vol~l~e'and m~de ~tlcula~ly to United ~t~te~ ~med Fo~ee~ stationed ~hro~d, sho~ a decline due most- ly to reduction i~ purchase8 by the Armed Fe~oes since the Kore~ ~l~is~lee~ that export sal~s a~e expected ~o ~m- ~ove ~ ~ the fou~}~ quarte~ on ~he b&~ ~ ~rd~ no~ on hand~ that i~depende~t s~ve~s indicate that LUCKY ~TRIKE h~s impr~ved its sha~e of the sta~da~d-~ize ~a~ket, although the voluble of the ~nt±~e ~t~nd~d-~ize fleldj in- cluding LUCKY STR~KE. h~s d~¢line~, and that PALL MALL ba~ increased ±~ volume ~nd ~E~BERT TAREYTO~ h~s ~bout he~ its o~n~ The Chairman called attentlon to the fact that the Inspectors ~ere ~e~ to ~b~it thei~ ~epo~t a~ to the vote on ~he ~e~olutlo~ to ~dop~ th~ ~gre~ment of ~erge~. The I~pectors the~ ~e~ented the~ ~eport in ~Itin~j duly slgne~ by them~ ~hlch ~as re~d to the ~eetin~ by the Ch~r- man and o~de~ed filed ~ith the Secretary. 42~,276 share~ cf Prefe~ed ~to~k ~n4 5~067~9~5 sha~es o£ Co~o~ ~tock, ~ggregatlng 5,4911,201 share~ of ~plt~l stock ~n~ being ~o~e th~n twe-thi~ds o~ all the ~plt~l stock~ ~e~e voted i~ Paver of adoption of the Agreement of Me~ger ~nd ~291 ~ha~es of Pr~fe~ed Sto~k ~nd 31,0~i ~ha~es of Co,on Stoek~ aggre- gating 35,3~2 sha~e~ of capital st~o~, were vote~ against ~doptlo~. Acco~dlngl~ the Agreement of ~e~er ~as adopte~ by the vote of the stockhol~e~. Before the ~eetln~ ~djo~rne~, Miss Waite complimented the Ce~ny on the souveui~ p~ckage of LUCK~TR~, HERBERT - 7 -
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T~RE~0N and PALL MALL Cigarettes and the brOch~J~e entitled "~he ~to~y Of LUCKY 3TRI~" ~hlch had been d~st~ibu~ed to ~ho~e attending the meeting. Afte~ a vote o£ th~nks had bee~ ~i~n to the I~specto~s of the Vote and the 0b~i~n h~d expressed h1~ %h~k~ to ~ll th~ stoekholder~ for thei~ ~o~ide~ion ~d c~tes~, ~he mee%in~ ~a~1 on ~t£o~ d~ m~de a~d ~ecol~ded~ adjo~ned~ John W. Hanlon Seeretsmy -8-
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STATE OF NKW YOF~ I s8,~ S COUNTY OF NEW YORK THOMA~ F. KEE~AN, being 8uly s~orn, Gepesem and says: That he i~ of legal a~e ~n~ i~ He~ of the T~nafer ~te~cil ~eotlon of Guaranty ~r~t Company of Ne~ York, 140 B~oadway, New York~ New Yo~, the transfer agent for the P~eferred Stock ~nd Common S~ock of Th~ Ameri~u T~hacco Com- pany, ~ ~e~ Jersey ~o~por~tlon~ Tha~ a~ta~h~d h~e~o m~e~ Exhlblt "A" ~s a copy of the Notice of Sp~clal Me~ting of Sto~kholder~ of The A~ri~an Tobecoo Company, to be hel~ Deaember 2, 1953~ ~Ith pro~y ~atement; that attached hereto ma~ked E~hlblt "B" is co~ of proxy for u~e at said Special Meeti~ o~ Stoekhol~e~s~ ~ha~ ~tt~che~ h~et~ marked Exhlhlt ~C~' ~s a ~o~y of the P~esldent~s lette~ dated October 26, 1955~ to th~ Preferred ~d Cca~non ~tockholde~; that ~ttaehed hereto ma~ed EXhibit "D" Is a copy of fo~a~di~ envelope; ~d that ~ttached hereto m~ked Exhibit "E" is ~ co~ Of ~et~ e~vel~pe~ That he S~pe~vised the ~tenoillln~ on co~i~s of EXhibit '~" of the names au~ addresse~ ~f all hol~er~ of Pre- f~d Sto~ a~d C~on S~O~ of The Ame~Ica~ T~ba~c~ C~pany of ~e~ord ~t th~ close of busines~ on October ~2, 1953~ as they ~pea~ed on the ~tock ho~k~ of that Co~poratlon. and su~vised the ~n~los~re in forw~din~ envelopes of ~II copieB of Exhibit "~" so ste~eille~ (with ~he names end ~dd~esses Of ~h~ ~t~¢~holde~ S~w~g through ~he ~i~s of ~he mespec~Ive f~-~rdi~ ~nvelopes), toKe£her wi~h a cop~ 0~ ~hlblt "A", E~hlbit "C" and Exhlblt IIEI~ in each Insta~ce~ a~d that, for ~nd on behalf of the Secret~ry of The ;~e~i0a~ Tobacco Compa~ d~pouent caused all the abo~ descrlbe~ enve~op~, ~lth en- ~losu~s, ~ be ~eal~d a~d~ ~Ith ~i~st olass postage the~een
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pr~pald in eac~ lustanee, to be mailed Dy the &~poslt thereof in the O~r~h ~t~eet St~t~e~ ~f the Unlte~ ~tates Post Office in the Borough ~f ~tt~ ~Ity of Ne~ ~k, on Oct~be~ 24~ 19~, u~er hi8 d~r~t ~u~vis1¢n, That he supervised the stencilling on copie~ of Exhibit ~B'~ Of th~ name~ ~S add~es~e~ of all stockholdeps becoming holders of re~or~ of elthe~ ~ef~red ~t~c~ or ~o~ Stock of Th~ A~e~ca~ ~obacoo Co~p~y subsequent t~ Cctober ~2~ 195~, to and lucluding Octobs~ 2~, 19~ ~ they a~eared on the ~tock book~ o~ that Co~po~atlon, a~d ~u~vlse~ the en- closure in fo~w~di~ e~velopes Of ~ll 0o~le~ Of Exhibit ~B" so ~t~noill~ (~lhh the names and a~dr~ Of the ~toc~¢hnlde~ sho~i~g through the ~Indow~ ot the ~es~ectlv~ forwarding e~- velopes), t~gethe~ with a copF of ~xhiblt '~"~ ~zhibit '~C" ~nd ~hlbit "E" in each Instance~ a~d bha~, for and on behalf of th~ Secretary of The ~meri~an Tobaoco ComDan~, ~epone~t 0aused all the ~bo~e ~es~r~ed envelopes, with enclosures, t~ b~ sealed ~n~, with first ~la~s postage thereon prepaid in ~ach in~t&nce~ to be mailed by the deposit thereof i~ the Ch~ch ~t~e~t ~tat~o~ of the U~It~d 8tares Po~t Office in the Borough cf Manhattan, City of Ne~ York, on Octobe~ ~9, 195~, under hi~ ~i~ec$ s~e~vi~ion. Thomas F. Kee~n Subscribed and sworn to befor~ me this 18th day off November, 1953, Wm. J Burnham (SEAL) ~m. J. Burnham Notary Public, State of Ne~ York Quallfied in West~heste~ County No. 60-5535900 Cep~Ifieates file~ in Ne~ York County Te~ ~xplres March JO~ 19~ (Attached to the foregoln~ affldavi% were Exhibits "A~, '~, "C", ~D" a~d '~'~ therei~ referred to.)
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For ~ecr e~ry~s record ¢~ ~orkho~ders pt'ese~t in pex'~o~l Or by p:'oxy a~ ~ geclal Me~til~ oE S tockhok}ers of The American Tobacco Colnpany, D~¢elllb~r 2, 19~3. pLEASE pRiNT YOUR NAME ON LINE B~.OW PROXY POR: ......................................................................................... pLI~E FiLL IN BELOW NUMG~ OF SHARES REPRES|NTED pREFERRED: .......................................... ~HARE~ CO'If%ION : ...................... SHARES Please hold this s[;~ until ~Hectec{ by the Secretary, D~ed, F]eming~n, N. ]. Dr~embet 2, J9~3.
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327 SPECIAL MEETING OF STOCKHOLDERS DECEMBF~R 2, 1953
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THE AMERICAN TOBACCO COMPANY DECEMBER 2, 1953 OATH OF INSPECTOR8 32S WILLIAM W. RAGgDALE3 JR. and JOSEPH A. 0LE8KE, appointed by the Board of Directors of The American Tobacco Company at a meeting held October 16, 1953, pursuant to gectlon 7, Artlcle II of the By-Laws, to serve at the Special Meeting of Stockholders of The American Tobacco Company, held at NO, 3~ Cou~t Street~ ~emington, New Jersey, ou Deoembe~ 2, 1953, at one-thirty o'olook in the afternoo~j Ea~ter~ gtand~d Time, ~d at ~ny ~gjou~nm~nt o~ ~djo~ents the~eof~ ~s I~e~to~ ~f the Vote~ bei~ aeve~lly dul~ s~o~ ~pon th~i~ reBpect~v~ o~th~ ~o depos~ ~nd ~ e~ch for himself, that he will faithfull~ hsnestly and impartially ~nd according t~ the be~t of his ~bbllty, perform the duties of I~specto~ of the Vote~ and make a true ~epo~t of the vot~ upon ~ll m~t~e~s p~esenteg ~o the meeting ~nd vo~ed on by w~itten ballot. ~hscmibed and sworn to before1 1953. Joseph A, Oleske Willi~ Ra~sdale~ Jr~ Geo. K, Large Attorney at Law of Neu Jersey
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THE AMERICAN TOBACCO COMPANY SPECIAL MEETING OF STOCKHOLDERS DECEMBER 2, 1953 RESOLUTION TO ADOPT AGREEMENT OF MERGER BALLOT Proxy for. Representing in p~r~n I Rcpresent~n~ by Proxy I- Date~ Flemlngton, N. f,* December ~ 1953. shares Preferred Stock shares Common Stock shares Preferred Stock sbal~B Colr~mon 8toe.k
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330 THE AMERIC/[NTOBACCO CON~A~Y ~PECIAL MEEtiNG OF STOCI~/40~F-~S DECE~ER 2~ 195~ CEBTIFICATE OF INSP~TORS OF THE VOTE 0~ RESOLUTION TO ADOPT AGREEMENT O~ MERGER Wee the undersigned, Insp~ctoPs of the Vote, appoint- ed by the Board of Di~eedo~s of The Ame~i~n Tobacco Oo~pauy at a me~tlng he~d October 16~ 1953, pu~u~t ~o Se~io~ 7, Artlcle II of the By-Laws, ~o Serve at the ~pecial Meeting of Stock- holde~ of The American Tobacco Company held ~t ~o) 30 Oou~t ~t~eet~ Flemi~tonj No. Jersey. On December 2, 19~3~ ~t on~- thirty o~cloek in the afternoon, Eastern ~tanda~d Time~ and ~t any adJou~ument or adjournments thereof, DO REREBX CERTIFY that, afte~ making the ~th~ annexed hereto and raa~ked ~bihit "A", ~e did Co,duct at such ~tockholdersI me~ti~ th~ vote on the ~esolution se~ forth on the form of ballot annexed hereto and ~rked Exhibit "B)~; that ~uch vote ~as taken by ballot of ~tock~ hoider~ present In person o~ by ~roxy &t ~oh ~eetlz~ an~ ~- titled to vote thereon; that, as such InsDectors, ~e decided on the ~aliTdcat~ons o~ t~ voters and 2co&pte~ ~e ballo~s To? and ag~.i~st said ~esoluti~n; that ~he~ all stockholders D~ese~t lu ~rson o~ by p~oxy and entitled to vote and de~i~In~ ~o to do ha~ voted ~hereon, ~0 dul~ ~ec~i~ed ~nd e~nv~s~ed ~ii the votes so ea~t) and hereby ceytlTy that ~30,567 sha~es of Preferred Stock and 5,O98~976 sha~ea of Coa~on Stock aggregating 5,§29~5~ ghares o~ capital stock, were ~cted fo~ and ~gaia~t said ~eaalu~£o~, cf ~hi~h #26~276 shar~ of Preferred Sto~k a~d 5,o67,9~5 shares of Common ~took~ aEg~egating 5~1;9~,20i shares of capital stock and befog {mo~e) ~ than t~o-thi~d~ of all the capital stock~ ~e~e vote~ in favor Of said ~e~olutlon and 0,291 sha~es of Prefer~ Stock and 51,051 sha~s of Cc~on Stock, aggregating 35,3~2 shaz~e~ of capit~l sto~k, were voted against said resolution.
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IN WITNESS WHEREOF, ve ~mve made the foregoing Certificate and have subscribed our names thereto at Flemington, New Jer~y~ this 2~d day of D*cemb~r, 1953. Joseph A. 01eske ~±llism ~ ~a~sdalo Jr. Inspectors o~ the Vot~ (A~tach~d to the fo~e~oing certlf~cate were Exhiblts ~A~ and IIBI' ther~n ~f~rred tot)
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33,'~ CU~ULA~VE SU~IARy OF PROXIES ~E~EI~D TO ~eoe~b~' ~ , Ig~s~ L~CLUSIVE~ FOR SPECJAL MF,~G ~L~ /LELD DF~BER ~ 1953 (INCLUDES BA~LOTS RECEIVED AT T~ MEE~NG) ADOPTION OF AGREEME~T OF ~ERGER AGAI~T SheLve %Of %of %el %of ~mmo~ 6~11o 5,067,925 78.52 99.39 31,051 .48 .61 ~{c,r~a $26#97 g26,~7~ 80.89 99.00 ~,291 .61 l,o0 %1 Mr. Prod ?it. l~hn, Pre~/dent ~,[,'. ]L J. Boylau~ Yiee Prezid~ Mr. ~. IL C~on~ Vice pre~i~i Mr. l- A. Crone, Vle~ ]P~eOAc~t ~lr. 1~+ L. FowJer, %q~ Pl~sid~lt ~r. E, A. Ha~Tey, ~iee Pre~deat k~, A, lr. Bowde~ A~i~it to lh~ President 31r, C~ F. H~l~o~ Law Depurliuent (2) ~o. or" Pr oxici [leeei~d S~}~} Me~lt~g 19S$ 57 *235 A~uu~I }l~et~g 195~ 56,087* Day~ ,dt~t M~II~t Date "3~ Days after Maili~g Date
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333 111 FIFTH AVINUE, NgW YORK 3* N, Y. "~0 THE STOCKHOI,DERS~ PREFERRED AND COT~*MON~ At Ihe Special ~tJng of Stockholders De~ember 2p ]953j more than 799 uf the out~tandlng stock of the Company was repre~nted ~n pe~on or by prox),p ~nd more than 999 of thege sharel were voted to approve the merger of American Ciff~rette and Cigar Company into ~i~]le ~mer]ean Tobacco Compan7, Stockholders m~hing written requ~t wll[ be fumlthcd a sumxn~ry repart of the ~pccial Meeting. American Cigarette and Cigar Compafly stock- hol~hYs aI~ approved the merger December ~, |953, ~l'he ~,~azl~ment thanh~ Itc~hhol~ezs who sent irl prox[e~ or emt their votes in person, and appreciates their constructive ~nter~st, Joas W. FIa~z~, December 21~ 1953 c~eereltlr~,
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335 (oonsis~ing of 31,05I Common and #,291 Prefelred) repr6~nting .51 p~r ~emt of tb/.' Capital ~tock o~tstandh~g aud .64 per cent of the ~ares voted. In the eoume of the ~Iiscussion on the Merger Agreement, on~ ~f the stoc~kholder~ who ,~ho roptesented ~/ numbor of other stoekhokler~ aske~ ~awral q~e~t~ons and l:~ad ~o th~ mee~}~g ve;o terrors vchieh he had red.ivied f~*>m stockhol~er~ erit{elzlng tho rate* of e~nver@~n ~f ~kme~iea~ Cigarette a~d Ci~ar C~n~pany stock into stuck of the C~mpany. l~l reply to the~ qneaio~% tho Chairman stated that, as regards the small numhe.r ~f shares lml,~ by Directors, fl~e ear]ie~ purchase o~ Pl, efer~-exl Stock o~ Araea-i~an Cigarette and Cigar Company held by Directors of The American Tobacco Company ",vas made noarly 20 years ago and th~ latest over 7 3"ear~ ago and the ear'dest pttre/aas¢ of Common Stock of American Cigarette and Cigar Company b~/d 5y them wa~ ~r~d~ betwee~ 12 a~r/13 years ago and the Iate~t between 3 an~ 4 7ears ~g~; tha~ the book ~alue per share ~f Common Sto~k of The Ame~ica~ Tobacco Company as of Jul~ 30, 1953, ~a~ $50.16 and of American Cigarette and Ciga~ Comloany Common Stock ~as $154.85; -that the net asset value per s},a~ of preferred ~ock of Th~ American Tobac~ Company as ~f J~e 30, 1953, was $714.30 and of .4yneriean Cigarette and Cigar Company Preferred St~ek was $7,689.19; that the Board o~ DJreetolS of American Cigarette and Cigar Compauy over a c~de~ahl~ period of years has p~mved wha~ i~ has ¢onsklered a e~exvatiw divlde~d p~ey and that thi~ year~s divldend is in Iin~ with that go]icy; that ~o the best of his kno~,Iedge one reques~ bad been re~e~ved from a stockhold~r a£ the Compa~ly for tho apt'algal of his ~to& i~ the Gompany.and ~no ~equ¢~t from a st~ekholder of _&mcriean Cigarette and Cigar Company for an appraisal of his stock in Amer~ca*t C~6a~ette and Cigar C~mpany; and 0~at ~e had ~o person~/ recollectlon of having ~een any requests to read lo the mee6~g ar~- of th~ lettem rece~v~ from ~t~ekholder~ (A request by a~other stockholder af t/re Company fo~ appraisal of £i~ stock .in the Company was w~eived prior to the meeth~g aad repol~:l ~o the Chairman subseq~zent to t~ meeting, maki~g a ~otaI of two di~se~ts ID' ~t~ekhoht~rs of th~ C~mp~ny.) ; Tho Chairman also reacl from a statement lhat had previously/.~a issued in reply to an inquiry a~d ~ram the Compa~s i~tter of reply ~o on~ of the t~o ~oe -kholders wh~e lctter~ ha~l previously bee~ read ~o ~h~ meeS~g. In thes~ replle~ i~ had been pointed out, amo~tg~ ~ther thing% that the ~rms ~ co~vexslon {8 shares o~[ The American Tob~e.o Com]~any Comma~ ~or I ~lar~ o~ Amex~ean C/garewe anal Cigar Compauy Commo~; 1-1/10 shares o~ The Ame~ean Toba~o Company P~eferred ~or 1 share o~ Arne~iean Cigarette and Cigar Company Preferred) had b~en ar~/ved~ at by the Directors o~ ~}1o two Companies after the most care/ul an~} inter~iv~ ~tudy wi~h th~ sole e~ort to be ~air to t]~e s~o~oldcr~ o~ ]aoth Companies; tha~ in s~ch eo~si~l- eration th~ D~rec~ors ba~ the behest ~ an independent analysLs by the finn o~ Morg~u~ Stanley & Co. o~ ~he fi~mneAal statemel~t% business aad pro~peet~ of both Compa~Aes and o~ consalt~on wlth members o~ that firm; tha~, as sta ed in the ProxD' Statement ~urnisheel to the stockholderS, consi~¢ratlon wa~ gh'e~, with rcspeet to both Companies, primarily to pa~t and 2present earn~ and ~uture prospects and that other factors ~e~c~ also coi~sirlered, but greate~ weight was gtven to the ~:~rront earnings, tho r~sp~6"fivo ~ron~s of ¢~rnlngs o~ the %wo C~mlpanie~ ~d to ~uture p~ospe~s, than to past ~ar~ings, A~ the ~hcuss~on continued a s~ockho]der i~qui~ed as to th~ ~tpproximat~ savings ~dl!& wo~d be brought about hy the merger of the two Companies. The CAlair man ~tated his im~ormatm~ indicated that the annual savings expected to resuh from the merger under condkio~s exlx~ted to exist ia 1954 wcr~ e~imate~l at uot less than 11,/2 million dol!a~. A pr~xy~ represm~t~ng trust which is one o~ rite ~wo dlssenKng stockholders, sta~d that he ~ad no criticisms to make. i~sl management or of its methods of conducting bus~ness and that he did not have a~xv obje~ • ~ ~he me,get of the two Cc¢~panie~ a*kl that in pr~elple tile k]ea of a merger ~eemed to him m he sotu~d, pracdeaI and advantage~ms. He did, ho~'~'er, cr~lo~e the rales of tt urge8 the s~ekh~hlers to join him in ¥oi¢ing their di~sc~t. Tl'le Chairman stated flint there ha been a }~ng eha~ of c~rre~pon~nee with this prow regarding the merger a~d read ~o th~ meeting ~xcerpts from one of the C~mpany's letter~ of reply in wtfieJ~ ~t ~atl been poinlei ~t 2 J~
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3,26" that the use of average earnibgs in fixing +be terms of conversion for a Company such as American Cigarette arid Cig~ CompaNy which has had a rapid and consistent growth in sales, eamln~ and dividends would give a distorted picture and re~u/t ha an tmdervaluatlan of Amerlcaa Cigarette ned Cigar Company s~oek, ibat Am~rlean Cigarette and C~gar Company is one of the corparati~n~ which wlll benefit ~th~tantia/iy from the ~ermhaatlon of the excess profits tax ~ed that the trifling ~xumher of traz~fat~ of American Cigpa~tte aal Cigar Company ~toc.k in the over-the-counter market (there bevlag been only 255 shares of Common Stock of Atuerican Cigarette zJld Cigar Company and 2 ~ares of its Preferred Stock transfen~d of record during the last 12 months) could ~ot be said to esmb)ish a market in American Ci~rette ~t~d Ciga~ Comply ~tc~k ~ ~s to give over-the-counter market fleet a~ioas any si~r~iftcattce itt fixi~g m~.rke~ value. Two other *tockholde*s also took issue with the cri~ielsms expres~d by thla proxy. The Ctmirma~ in response to qaestibns by another stockholder referred to the Proxy State. me~t for information re~.rdlag stuchholdlngs of Directors of 'Pze Amer[ca~ Tobacco Company and Amcrlcan Cigarette and Cigar Company and stated that, for the purpose of appraising s~cck of dls.~'aing stockholders, ha determiM~g the fret value of the stock of the Companies involved in the proposed merger the New Jersey law pro*ides that ~y value that ib~ stock shell have as a result of the me~ger ~a to l~ excluded. The ether of ib~ t~a dissenting stockholders then spoke ha opposition ts the merger er~ficirlng particularly tbe extra dividend for 1953 declared by American C~garette and Cigar Company. The Chairman called att~tha~ to the fact that it had been the policy of" Araexlea~ Cigarette end C~gar C~mpany to declare such an extra di~idea~d at the ¢~ of each y~ar. ~-" After the balloting on th~ adoption of the Agreen~nt of bigger and while awMting the result of the wte, the meeting proceeded ~o the discussion of other matters. One ~f the stpck- holders commended the Cbai~ma~ fo~ h~ ~ecep.t st~tez~nt on th~ subject of lung eaucec and expreszed criticism of certain advertising by the e~garette ~dustry~ The Chairman commented that he did not share in the opinion tl~t ths long term advertising o:~ the cigarette ind~try hat un6ermlned the pukIic's faith in cigarettes. He slated that in his opinion if spree cigarette smokers t~day are wor~ging sheet th~ effect of smoking ~a their haatth, it i~ due px~cipa~y to the fact that scientific L~vestlgatlo~ being made to determine ~ddch, of ~any possible causes may be responsible for apparent increases in respiratory ailment~ are helag presented tu the press as though ibey bad arrived at e~tablfshed co*~cluslons, particnlarly in regard to smoking, ra~d ~is ~ spite ~f repea~e~ wa~n$~ by responsible medibul authorizes lh~4 ma~y possible causes are be5ng investigated and that no definite conclusions have been established. He also stated ibat ff is u~q~estion~bly t~e that the~ ~s some elgaxct~ advergshag going on ~oday which, in his opinlon, is ill-advised and that there are some ~igazette adve~isers wbo he believes are shortsightedly advertising the daL'as of their products b~ a way deslg~ed to capitalize on whet he b~lieves is a c,~r:~nt and ~cmpzrary condition. Ire stated that he feels that such advertis- ing is ttsl characteristic of the i~dustr~ as a whole and that be feels confident that c~nsideratioa and wiser judgment should being about a chm~ga for the heater. ~e emphasized again trls tbenght that the chief cause of the state of mind, if sack there be., of public fear about cigarette smoking, wf~ich he bad tethered to ha his eeoc.at pu~lie Catemem, is lo*~e talk m~d he then zead ~o the meeting his statement which had be¢~ released to the press on November 26, pointing out that for every exper~ who blames tobacco for ibe it~crease La respiratory dlse~se, thexe are others ~be speak with at least equal authority wbo say that there is no eviden~ to she~¢ tha~ tobacco is the cause. After reading the statement, the Chairman also obecrved that at one time or another witti-~ lbe past 350 years praetirally every known disease of the human body has been ase~bed to the use of tcbecco, but that or~ by one these charges have been chandimed for lack of evidence. fie aIso reported that The American Tobacco Company is working at and supporting scibnti~ie re~earch of a ftmdamenta2 nature ha this field withha i~s own laboratory and in ibdepandent institutions and that it is the policy of the Company, within the limit of avoiding duplication of research, to eX~mld cooperation to proieets ~hlch the Compar~y believes the researchers are approachi~g and will approach wlibout prejudice and ~'iibout preconceived oplnibr~s on the " 3
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33'7 problem to be il~vesdgated. He stated that this xepresents an intelligent, obgeetice approach t~ a subject that otber~se is susceptible to more o~ less s~asational exploitation and tha~ the Corn- pany is confident that long-range, impartiaI investigation and other objecfil~e research will confirm the view that laelther tobacco nor its produc~ eontrthute to the inclde~se of laag cancer. The Chairman a2so called to the attentlzn of the meeth*g a release issued on Nove~wJ'er 27 by the Damon Rtmyon Memorial Fund commenting on the e~ntrL~tlo~s by the tohaeco ~dusfaT a~d to a xecent editorial in The New York Times commenting on ~ho health aspects of air p~I~ution ia New" York City, The followlv~g nddRlm~al matters w~ze envered by the Ch~Armaa fil replying to other ques- tions from stockholders: The Company is vexy eax'~fui about e~JmpIythg with State statutes in ~o~-mecdoa with the sam131ing of college students. The king size raarket this yoa~ is probably 25 per cent of the elg~rette market and is still growing. Filter-tlp cigarettes migl~ emerge this year with perhaps 3 or more than 3 per cent of the market which is sti/l a small factor in the total sales o~ the itzdusLcp. W~ber The _&merisa~ Tubaeeo CoL'~pany wo~d brthg o~ g ardter-lip cigarette depet~ds on three eond~ons: on% the ability to develop a/Eter-tip that in the Company's opinion does an efgeient job of filtration; seeo~dly, a filter-tip that ~mt only does thab but does it without d~s~,o ying or impsiein g the taste or flavor of the t~baeeo; and thlrd~ the eon-dcfiot~ at ~hat time thai there is a large enough public demand £or The Amerlean Tobaeeo Company te venmr~ into a new branch of she business. In some recent advertising the Company is testing combined reference to LUCKY STILIKE, ~RBEHT TAREYTO~q and PALL MALL Cigarettes. There has been a ~e~rzd- ency- to exaggerate tl~e significance of the recent small decline in the industry's cigarette sales shown by Government figures. Domestic cigarette sales of the industry for the first n£no months this year as refleele~ in Government ~ith~awal figures are sU~'~tIy more than 1 pew cent below the figures ~or the corr~pondk~g perind in 1952. There are a numhex of ~ae~om that might be possible explanations for the small tieclfim and there is doubt as to whether l~s~ year's increase of near/3. 4 per e~t in domestic production reaUy represented a 4 per cent increase in the rtmuber of eig~re~es smoked. Tberecuxrentrumorslastyearasteanhnmlneatendiagofprieeeon~rolsand rise o~ cigarette prices ~esul~od in excessive purchases by the whole,ale and retail trade and the ir~troduction last year ot a ~ew khlg slze of one o~ the major brsnds resulted in heavy shipments to fill the dJsts-ibu~ion pipe lines. It is believed tha~ larga q~at~titiss of e~rettes pn~chasod by the ~'ade in i982 had to be sold to the public in 1953 which would indicate that this year's small decline is a corrective adjustment of last year's increase. Anotheg £ac¢o~ has been the consider- able increase this ).ear in the qsa~tlty of kir~g siso cigarettes sold to the publie and ahhough this is in the realm o~ apaotiailon it is entireAy posMhle that a shift from shorter to longer cigarettes ms) mean a deexease in the =umber of cigarettes smoked, The United States Department of AgrleuI~are in a release dated October 28, 1953, points out that ~r the ~ore~ecable ~u~are a continued in~q'ease in torsi cigarette eonsumpgon appeaxs indleat~d. Foi' tbe nine months endlng September g0, the Compai~y's domestic utht sales are approximately the same as they" were ~er ~he same period of 1952 and i~s export sales, a relatively ms, all part of its total winme and made pa~tiea~lar!y t.o U~d~d St~xtes Armed Forces ~t~tiened abroad, show a de~line due mostly to reduction in purchases by the Armed Forces since the Korean armJstiee, Export szdes are expected to improve s~,mewbat in tim fourtlt quartet" ou the basis of orders now oa band. Inde- pendent suvceys indicate that LUCKY STK!KE bas improved i~ share of the ~tandsed-slze market, although th~ volume of the e~tise standard-slze field, including LUCKY STRIKE, has declined. PALL MALL has increased i~s volmne and HERBERT TAREYTON has about held its o~'~n. Before the meeth~g adiourned, a st~ckholder complimented the Company on the ~o~veni~ package of LUCKy STRIKE, HERBERT TAILEYTON and PALL MALL Cigarettes and the beochure e~tltied "The Story. od LUCKY STRIKE" which had been distributed to those a~teading the meetlng. After a vote of thamks bed been given to the Inspeete~ of the Vote a~d the Chalm~an bad e~pxes~ed his tha~l~s to all the stocltholders for their e~nsiderathm and courtesy, the rzeet- ing ad}o~aeth
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AMERICAN CIGARETTE AND CIGAR COMPANY In0orporated One Eleven Fifth Avenue, New York 3, H.Y. October 16, 1953 M~. H. ~. W~rnke~, Severed Vice ~meslde~t Guam~nty Tmust Co~peny of New Yopk Stock Transfer Divlsloll 140 Bmoadwgy New York, New Yo~k De~ MI,. Wa~ke~: The Board of Directors of American Cig~rett~ af~d Clgap Company have aoth~rized the c~llID~ of a spe- ¢ial meeting of Common and P~eferred StOO~lOld~s to be held on Decembe~ k, 1953. Kindly ~o~a~d to us t~o cemtlfled copies Of ~ list of Common and P~efe~ed Stockholders of this 0or~pany ks of meco~d 0ctobe~ 16, 1953 mnd three ce~tlfled copies of Conuaon &nd P~eferred Stockholders of this Company as of record Octobe~ 28, 1953. ~e ~ould greatly ~pp~eoi~te ~eceiving these lists at youP very eg~llest convenience so that Ne m~y be in a position to handle the p~ep~tion fo~ m~lllng of the neoess~Dy ~pe~s t9 o~ stockholder, s, ~[Ith kindest p~mson$l r%~s, Very truly youms, George g. Bollva~ George E. Bolivar K0R gecret~y
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RH:KOB
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A~E~CAN ClOAR~TTE AND CIO~S~ COld.ANy ON~ ~VEN FE~II AVON U ~ N E~¢ YOI~K ~N,'~ 340 ~ober 26, 1953
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841 Da may be gh,ea rbe *ame informa6on whkh h being fux~ed to ~¢kh~idets of that company. Yhi~ 1.'foxy' StatemeI~t sets forth in ¢o~iderable detedl va~iou~ faztg rala~ng to the ~ro0osed merger, 10l/~lmg, a;mmg other l}~ings, the texms of ¢onve~s~n ¢~f the sh~rcs of stock of youf Company lain sh~reA' of stock of The An~e r~czn Tobec~o Gomp~tr~y. t~ eEecc c~ die merger ~on the csplt~l ~n~zre o~ *ha: coxapany, fioznciaI statements ~f both companies, a copy o5 rk~e Merger A~e~met~t ~ld z st~rca~t of the procedure to he fo[h~wed by dlssentil3g storkholders of e~the~ comFany. h[~ set inrth in the Proxy Statement ~m thg reasons which led the I~re~vais ~ e~te= into tile ~Ie~get Agreement and to svbmlt it to the sto¢ldloldees of the two comF~nles fo~ adop6on. Ia rile event th~c the Me~ge~ Agleeme~.t hecame~ ~e: (~) ~cb shaxe of Common Sin& of yotx Compzn~, w~I~ be cot~wae~] into e~,ht 58) 4~a~es of Common Stock of TI,e Amedc~m Tohecco ComFany as tbe S~alvlng Compa~, e~cept that shares of yoar O~mFaay hcld in its treasury or owned by The Atnedcan Tobacco Company will cease to c~sq (b) Each ~e of Ftefert'e~ St~ck of yot~t Company wiiI be convette~ into oae ~rut e~e t~nth ([-l/'~0j sl~are~ of Pralc~cred Stock of The American Tobacco ~9ratx~y a~ the Surviving C~mpany. except that shares of Preferred Stock of yovs Company omned by l~he ~nerfoan Tohecco Company w~ cease to exist. E~cb share of Com~en S~k ~4 e~ch share of prefe~ &~ck of ~l~ A~eri~a~ Tobeo~ (x~talany "~'iii respactNely comlnne m be ca~e ~ha~ of Common S.~k ~md one share o~ Pre~em~d StOck of The American Tobacco Company as the St~rvi~fmg Compimy. lr ~s the opbfien ef co~nscq foz fl~ x~vo o3mpa~.ies ~z, under the ~ntc~tl Revenue CoPe n~" in efFecl, the merger wi31 consti~te a r~fi~e t~g~li~t~on and that n~ith~r g~i~ nor 1o~ 5o¢ Ftther~l fncome ~× purpo,~es wlR be re~f~ed by reason of the mecgee by either corapany by ~e boJder~ of Common or Preferred S~ack of either ¢~mpanT~ e rxepa ia the case of stcckhold~ wbe ~y dbeent and be paid the z0atkee value of thcZ~ stuck L~ z~¢o~t~ate ~pprz~szl Paorecdin~. F/eming~on, N. J. is readied by the 9~blgh Valley ikalko~& 'Foe ~reseat t~in sciaedain, w~c~ ~ ~thj~ *o ch~g~ ~d ~]d be ¢c.mfitmed~ ~ ~ ~oifo~: ~e~*~ Pe~lwala Sm6o~ (33rd Str~c.t ~.nd Fevent~ Avenue, New York~ N. Y.) 10:55 A.M. Ardwe F~en~agton Jixnctlon 12193 P.M. Leave ~Ietolngtorl Junction 5:25 P,M. Arrive Pe~nsylw~fia S~¢ion 6:40 l~3~f, yu~c Coszloz ,qy Mll ptocttce transpot ration from New York to Flemthgron by railroad and rem~n by ~iirc~ or.i/ex~resegy ¢¢q~eeted, ¢~¢n b), hu~, a~ Company expanse fo~ ~la~ stockhald~r of record desftous of auendthg the meet/~g, o~ k;s notifying the Secretary in writing pdot to N'ovember ~0~ 19J~, th~t he ~¢Ish~s such tra~sp0r~tion obtai~ Also et~cfose6 be~ewifl~ is z form of Pro~ fo~ the rise o£ stock~older~ who may ~o~ be ~blc m *trend the Spat~f M~etlzg ~f Srockhalde~*. f hope Pau x~ifi att~o8 this Spacied Mee~lg of Stock~ald~ls b~ if this is bn~sthle p[e~e f~l in aod tema~ your st~e8 Pror7 at your e~rly ¢~n~ce. P~d=n~
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,~?,XlSI2ICAN CIGA~ETT~ AND CIGAR COMFAI4y NOTICE OF SPECIgL IMEETING ~sr~ingt~a, N~ ~. O~t ~l~.~ 26, 3953 I'~O~IC~ is IIEl/hB7 C.I"¢EN that ~ Special IVlect~llg of the P~efezl'ed ant{ Coi~t/l~m Stodch, v-lde?,~ o/AM~t{iCA~ C~ ARE'pI'~ ~¢qO CrC;~R ~fFANy v¢~ll }~ lrald at No. 117 Malr~ Stre~h Flemh~Ewn, New Jcr~y. at c¢ac-thlrty o'cI.ck in tho o.ftaraoon (Eastern Stamdard Tiraa) on Friday, Dc~'en'3~er 4, 1953. for the f~llo~. ing ~urpases: (1) to vote for,the adto~t~ozz or re}eat~z? of ~n Agree¢ae~t of ]'~[e rge r entered into on a~td dstmI 0et@cr 16, 1953 };~w~cu ~ Company and it~ tt~t~ctor~ and The Amerleat~ T*ol)ecco Company~ ~ corporatior~ of th~ Stato of Ne~ J~rsey, ~?ld J~ dl z,~'~l'z~ m~Z]~g th~ C~moal~y i~l~o ~'~id ~'~e Amer~e~l ToJ;~eeo Cort2p.~ziy , mid prescribing ti~- ~ern~z a~ ~xxdldo~a c~¢ ~ald mergor and the mode of oarry- ing the ~ame into effeeh a copy of which Agreer~lent ~ff M~rge~ i~ attacbed as Exhlhit l to l~e Pm~7 Sh~t~s~l 9i T~e A~eriean T~i>~o C~mpany for l]~e Special hleet h,~ a[ it~ SMek~alder~ to ]I~ held Dvoemb~ 9~ 1953, a e~gy of witlck Pr~y Ststet~tem~ aeeompan~e~ this nonce; (~) to trans/*et such other buslr~s a~ may prot~xly e~me befor~ the m~ethl~, The Pz'efer~e,d and C~lolx Shock Ixaus£er hooks wl]/ lint he v2osed, bu~ holders of Preferred Stock and Cenm~n Struck k~ h~ cut[deal t~ vote must be hoMe~s cA" reeod at the cIo~e of ~u~n¢~ o~ 0~lob~ g8, 1993. (~.EO~GX ~. ~ OLI~/MI~ Secret*ir~~
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The ulldersign~d hereby gppob]M PAUL ~I. HAHN, G~IAB.LF~S GANSHOW ~d JODN G. ]JA~NG pro:~ies, with power o~ ~b~itutio~, to vote at ~ho Sp~ejal ~eeti~g 0~elw~" all adjourn'nears) o]' Stoekholder~ o£ Ar~lerlcan Cigor~tte al~d Cigar Co~]pany, to be held D~mher 4, 195~, for the ~dop~ioa or rejectio~ o~ the Agreement o~ M~cg~r WhiCh provide~ fo~' the mer~e~" o~ Araerie~.n CIgare~e ~d Cigar Crumply i~to The Am~r~c~ Tobac~ CompaILv, ~ copy og which ~ ~]xhlblt I to ~l~e Ai]aeriean T~bac~ Company Proxy ~ta~emon~ re:~erred to in and enclosed width the ito~iee o~ the me~tin~, and o~ any other business th~ may cc~m be£o~ the meeting, ~¢cord]n~ ~a the n~znber of vo~es tha~ the under~d would bc entitled to ~ast and wi h ~]l powers the ul)deru gned world possess If pe~sona~Iy present. II~ A CHOICE I8 NO'I SP~,CL FLUID BELOW, T/U~ PROXY IS TO BE VOTED FOg THE ADOPTIO~ OF TItE AGREEMENT 011' MEI~GE1L Management ~commend~ a v~e FOR ~] Adopt~o~ ~f e.dop~ion o~ the Ak~reement of l~Ierge~,, ~-~ ~h. A~eem~* ~f M~g~r A m~jority (or, if only o~e, thou th~ one) o~,the proxie~ or their s~b~tilu~s acting ~t the r~eet]~ may ex~reise ~ll th~ l~wev~ hereby c~llf~rred, / ] ........ Sharon Preferred .......................... ~hare~Co~I~o~ ........................ : ......................................... [L, S'] ( Stae~hc~l~ ~houid ~ign ~ot When slgnl~g ~ at~o~ey, executor, ~dm~istrat~r. truste*ox~iardi~n, plcasogive yov2full title.such,
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OXY RETURN AMERICAN CIGARETTE AND CIGAR COMPANY 111 FIFTH AVENUE NEW yORK 3. N. Y. sv.cm~T~Y
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l~V~ umlaa p~solOU0 ~,q~ uo suo~x~s~. B~A ano,~ ~e:gpm ~lpm~t E~61 '~' JaClLUe~OO ~NVdF~O~ ~tV~I~ ONV ~J-I~]~V~I'D NVOI~-3~V
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A~.ICA}I CXGAR~TR ~aND CIGAR COMfANY IncorDorated PROXY (Fo~ S~eci~l ~e~ting of Stockholders cal2~d to be held o~ D~cemb~' ~, 1953) Th~ u~d@rsi~ed hereby appoints fAULM. HA~, JA~S R. COON and RIC~RD J. BOYIAN~ f~oxi6s with power of ~ubstlt~tion, ~o Vote at thB S~eci~l Meeting (including all ~d~cu~nm~tB~ of ~to~k~oTde~a of American Cig~%~ and Ciga~ Company1 to be held Decembe~ ~ 195~, for ~h~ ~doptlon o~ rejection of the Agreemen~ o~ ~e~ger which provides for th~ ~o~r Of ~er~ CI~areht~ &rid Ci~r 0ompa~y i~tc The Ameri~a~ T~b~c~ Co~au¥ (a ~p~ ~f which Ag~e~n~nt of ~erger i~ E~hiblt i to The A~r1~n Tobacco Company F~oxy Statement ~eferr~d to in ~nd ~n01o~ed with the notie~ of s~±~ ~tlng) and o~ ~ny other bu~in~ that vo~ss t~t the ~de~sig~@d ~o~id h~ e~tltl~ ~o ~t a~ ~ith ~ll power~ bhe unds~signed would ~os@e~s if personally A majority (or~ if only one~ th~n that one) of th~ proxle~ o~ their ~ub~titut~ acting ~t the me~ti~g m~y ~r~is~ all the ~ow~s ~e~by ~nfe~ed. Dated: D~sember I, 1953 T~ AMERICAN T0~&CCO COMPANY (CGR20HATE SEAL) Attest: J. Wm. Hanlcn Secret~ry ~e ~ 8~m 188,2253,230 Share~shares commonp~e fe~redl of ~rlo~z Cigarette and Cigar Compan~
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548 AMERICAN CIGARET~E AND CIGAR COMPANY BUBET!TUTION OF PROXY FOE BPECIAL 8TOC~L~OLDERB~ ~ETIRG DECE~BER 4, 1953 KNOW ALL ~i~N BY TEESE PEE~ENTS, ~at ~}~PEAS~ certain h~Ide~s of Preferred 8took and/o~ Common Stoc~ of A~EICAE CIGARETTE AND CIGAR COMP~PY, ~ Ee~ Jersey co~o~atlon~ ha'¢e ~spectlvel~mede &rid exe~te~ or ~y h~re~Zte~ ~&~e &rid execute to P~ul M, Hah~ C~les ~s1~ow ~nd JohTs G. Ls~, o~ ~ one o~ r~o~e of the~ proxles fo~ the ~peolal Mee%ing of the P~ef~r.r.ed and Colm~on Stockholders Of ~m~Icau Cigarette and Cigar Company to be hel~ on F~Iday, Decembe~ ~ 1953, at I:30 o~cZo~k E.m. (~ncludi~g ~ll ad~ou~u- ment~ thereof~ if so ~ovided in 8&i~ p~oxle~), ~Ith full ~o~er of ~ub~tltution and ~evocatlon, the bl~nk ue~est~Icted fo~m of ~id p~oxies b~ing hereto attaohed~ ma~ked Exhibit "A~, and made ~ pa~t hereof. EC~6, T}E~RE~0E~j these ~esents ~itness~ ~hat I, the ~ald P~ul M. H~Jan, one of the p~oxi~s mentlon~ a~ ~eferr~d to in sai~ proxle~ b~ virtue a~d in exe~utlon of the Dower of sub~tit~tlon a~d in execution of the ~.utho~ity in that behalf acclaimed in ~Id ~oxieB f'~o~ the ~fo~esa~d stockho!de~ ~i of ~ll other autho~it~ me hereunto enabllng~ DO H~REB~ CONSTI- TUTE A~D APPOINT C~il F. Hetsk~ a~ my substitute and to b~ one of the p~oxins of all the Frefe~ed and/o~ Common Stoc~- ho!de~ of American Cigarette ~nd Cig~ Com~n~ ~ho have given c~ m~y he~eafte~ give ~e thei~ ~rc~i~ ~ afo~s&id, to ~et and vo~e ~i~h ~espect ~o all the sha~es of Prefe~ed and/or ~omz~on ~tock of American Cigarette and Ciga~ Company with respe~ bo ich~ch I as the Droxy of s~id stockholders Would be e~title~ to act and vote if pe~sonally p~e~ent at ~h~ Special ~eeting of the P~ef~ ~nd Common ~too~olde~s o~ Amerlc~n Oig~ette and Cig~ Com~any called to be held at ll7 M~In 8t~eet~ Ple~ing- t~n New ~e~sey at one-thirty o~olock in the afternoon ~stern Standard Time) ou F~iday~ December 4, 1953 (incl~ding all a~jou~ents thereof), with the same power, force and effec~ ~ if I were ~e~o~a11~¸ ~ese~t an~ votlng~ and as fully a~d effectlveZ~ as I, tee up, de,slEWed, ~i~t~ o~ couZd h~ve ~one if personally p~esent, an~ a~ m~ sai~ substitute might o~ could h~ve doue if he, instead of I, had been ap~olnted the ~ox~ of the said stoo~hold~s, resp~c~Ivel~ i~ a~d b~ th~ I, the ~aid Paul M. H~hn, hereby confirm and agree to confirm whatsoeve~ my ~aid substitute shall Zawfully do o~ c~use ~o be ~one b~ virtue hereof. ~ITRE88~ my hand and ~eal this 2nd day of Novembe~ 1953, Paul M, 1~hn WITNESS: A ne~, LuDatty (Attached as Exhibit A ~s~s a copy of the m~.uagement fol'm of ~oxy sent o~t to ~toekholde~s of Ame~ica~ Cigarette and Cig&~ Company whleh deslgu~ted P~l ~ ~hn~ C~le~ Oanshc~- and John G. Lan~ as ~oxies,)
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AMERICAN CIGARETTE AND CIQAR COMPANY SUBSTITUTION OF PROXY FOR BfECIAL STffEHOL~h~gI ~TING ;~49 E~OW ALL Y~N BY THESE PRESENTS, That H~E~EAS, T}~ AF~RICAN TOBACCO COMPA~/, a Ne~ Jersey corporatlon, ~e~ a~d holde~ Of 18~2R5 sh~res oP Co~on Stock and 3,230 shsme~ of Preferred Stock of A?~RICAN CPGA~ETTE AfD CIOAR COMPANY, & ~e~ Jersey co~po~atlo~, h~s mad~ a~d executed to P~ul H~ H~hnj J~e~ f~ Coon ~nd fich~rd J~ Boyla~ ~ o~oxy for the Sp~clal Meeting Of ~he f~efe~e~ and Con~on ~tookhol6er~ of A~ERICfN CIGARETTE fND CI~R COMPA~Y to be held on Friday, De,ember ~, 1~53, at 1:30 o'clock ~.m. (including all adJourn- me~ts the~eof)~ with ~o~er of ~ub~titution, ~ conformed copy o~ ~ald proxy being hereto attached~ ma~ked Exh~blt ~'A~'~ ~d m~d~ a pa~t hereof, NC~ THEREFORE, the~e presents ~itness, that I, the s~id ~a~l M. H~hn~ one o~ the p~oxle~ ~entioned ~nd ~efe~ed to i~ s~id ~ox~, b~ virtue a~d i~ executfo~ Of th~ ~ower of ~ubstitution and in execution of the authority i~ that behalf contained in said ~ox~ from the ~fores~Id T~ AMERICAN TOBACCO COH~AN~, and of all other authority me hereunto e~abllng, DO P~EBY CONSTITUTE AND APPOINT Cy~il ~. H~tske ~ my ~b~tltute and to he cue of the ~oxles of T~E AMERIC&N TOBACCO COMPANY which has given m~ ±~s p~ox~ as aforesaid, to act ~nd ~ote ~ifh ~e~eot to ~ll the ~es of Preferred ~n~1 Come.on Stock of AMEfICA~ CIGARET~ A~D cIGAR CO~PAfY with respect to ~hi~h I as the ]yroxy of sai~ T~f~ AMEEICAf TOBACCO COMPANY ~ould be entitled to act ~r_d vote if ~e~o~lly ~esent at th~ ~peci~l Meeting of th~ P~,ef~r~d and Common Stockholders of AF~ICA~ CIGARETTE AND CIGAR COMPA~Y c~lled to be held at No; ll? Main Street Fle~in~to~ He~ Je~se~ at o~e-thi~t~ ol~lock In the afternoon Eastern ft~n~d Time on Frld~y~ D~c~mhe~ ~ 1953 (lucludlug all adjou~n~ent~ thereof)s ~±~h the same po~er, force ~d e~fec~ ~s if I were ~e~so~lly ~es~t a~d votinf, ~nd ~ fully ~ud effectlv~ly ~s I, the unde~signed~ might o~ could h~ve done iS p~rso~all~ pz~esent, an~ es ~y ~ald sub~tl- tute might or Could have ~one if he~ i~s~e~d of ~, h~d bee~ appointed the p~ox~ of th~ said THE AMERICA~ TOBACCO COMPANY in ~nd by the afore~ald p~oxy. Ij ~h~ said Paul M. Hahn, hereby confirm and afree to confirm whatsoever my s~id subst£tute ~h~ll l~fully d~ or c~use to be done b~ vlr~ue he~eo~. ~PTNE~S, ~y hand ~d seal this 2nd da~ of December, 1~53. Paul M~ Hahn
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:150 AMERICAN CIGARETTE AND CIGAR COMPANY Inco~,pomat~l F R 0 X Y EXHIBIT "A" (Fo~ SDeclal Meeting of Stockholders called to be held on Deoembel, 4, 1953) The unde~slgned hereby appoints PAUL M. ~KN, JAMES R° COON and RICHARD J. BOYI~N, proxies, with power of ~ubstl- tutlon~ to vote at the gpecial Meeting (including all adjourn- ment~) of Stockholders of American Cigarette and Cigar Company, to be held December 4, 1953, for the adoption o~ rejection of the Agreement of Merger ~hieh provides for the me~ge~ of Ameri- can Cigarette and Cigar Company into The American Tobacco Com- pany (a copy of vhich Agreement of Merger is Exhibit 1 to The American Tobacco Company Proxy Statement referred to in and enclosed ~lth the notice of sai~ meeting) and on any other bu3ine~s that may come before said meetlr~, acccrdi~ to the number of votes that the unSersigned would be entitled to cast and with all powers the uade~slgned ~culd possess if person- ally present. g majority (or, if only oi~, then that one) of the ~9oxles or thelr substitutes acting at the meeting may exercise all th~ powers hereby conferred. Dated: December l~ 1955 (CORPORATE ~EgL) Attest~ g. Wm, Hanlon Sec~eZ~y TBE AMEY~ICAN T0~ACCO COMPA~iY Vice P~esld~nt 188,2~5 Shames Co~m~on ) 5,230 Bhares Preferred) of Am~rlcan Cigarette and Ciga~ Company (Simila~ substltutlo~s of p~oxles wlth respect to stock of American Cig~tt~ and Cigar ComDany o~n~d by The ~e~ican Yob~cco COI~D~y ~e~e given hy Jame~ R. CoQm to Chanties Gaashow and by Richard J. Boylan to John M. Lang.)
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35/ 8YNOFSIS OF T~E SPECIAL MEETING OF CTO~ AMBRICAN CIGARETTE A~D 01GAP COMPANY Introd~to~E Ladies and Gentlemen, ~ill yo~ klndly come to order. It is no~ 1:50 p.m. KS soo~ as ws have established the pre~en~e of ~ quorum, thIB ~ill be a Cpaclal Meetin~ ot the Prefaced aa%d ~o~on stockholders of Amerlcan Ci~ ~ebte and Ciga~ Company to vote fo~ the ad~ptlon o~ re~ Jectlon of an A~reement of Merger entered i~to on and ~at~d D~tobe~ ib~ 1953 be~weon ~h~ Oompany ar~ its dl- ~ecCors ~ The Ameri~a~ ~ob~o~o CO~S/%~, ~ c~0~tion ~f ~le S~ ~f Ee~ Js~ey, and ~t~ d±r~cto~, mergi~ American Cigarette and Cigar Company into that comEany~ ~ accorda~uce ~¢Ith th~ B~-L~ws, i~ the ~bse~ce of M~. F~, the President, ~ Vi~e P~esld~t Of the Company, I ~lll act ~s Chairman. Mr~ Bollv~, CapriCOrN of the Company, ~ill ~t a~ $~o~t~ry of th~ E~et~n~. Th~e ~e al~o pre~ent~ ea~C I t&ke pleasure i~ l~t~odu~In~ to ~he ~ee~Ing~ M~, EEre and M~. Mon~k of E~sk/n~ & Sells~ our independent publi~ ~udlto~. Now, befoi~ pro0eedln8 to busi~ess~ I ~Ish to sa~ 5 few ~or~ about the co/idu~t ~ ~8 me~r~ E~y ato~- holder ~ho so d~si~es ~ill ~et full ~portttw~t~ to be ~rd. Orderly p1~s~edure ~eq~re~, however~ that ~ll questloDs be ~ddressed to the Chair, and I ~lil make ever~ effort to see to it th~t~ at a co~veD~ent time i~ the meetln~j ~II p~op~ q~estlons meteri~l to the b~sl- ~ess befoDe Shis meeti~ ~ill he ~ns~e~ed - provlded oY ~o~se that ~e h~ve the ~nfoz~n~tlon avail~ble here. For the convenience of the stockholde~s~ oople~ of the0~- der of B~sin~s~ have bee~ p~In~ed and distributed p~io~ to the m@et±~, If you ~hould by a~y ohan0e not h~e a ~opE of th~ O~de~ o~ 2~sln~sa, klndl~ ~Ise ~ou~ hand ~%d on~ ~ill be furnished ~u. Mr. Bollvar~ will you pls~se p~es~nt the llst of stock- holder~, the ~tock books ~nd p~oof of ~otloe to sbock- holders. pPes~nt ~ full, t~ue end ~o~le%~ lisa, in ~phabetl- cal orde~ of all the stockholders entitled to vote on the adoption o~ re~ectio~ of the Ag2eement of Me~e~ d~ted ~otobe~ 16, 195~ b~bween th~ Company end lts di- ~ector~uld ~he ~erdta~ Tob~o0o ¢om~, a oo~q~o~at!o~
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Of the Stete of Mew Jemsey. and its directors, or on other matters oomlng before this meeting, as the o~e may be, with the po~t office address of each~ and the numbem of sha~e~ held by each, ce~tlfled by Gua1~ant~ T~ust Compar~y of Me~ York, Transfel~ Agent. ~he list of stockholders, for the period of ter~ d~y~ befoTe thla meetlng, ~t ~ll times du~i~ the usual hours of bu~i- neas~ has been kept at the meglster~ office of this Company in Flemlr~ton, New Jersey, open to the examina- tion of EUly s~ookholder thereat. ~he stock books, In- cluding the t~%sfem ~ecordsj sre present~ availabl~ for exa~Inatlon by all stockholders of this ColnpanM d~r- ing this nleet~n~. I present proof of oomullanoe ~Ith the eppllcable ~e~ Jersey statute and with the By-Laws as to the mailing of notice of this meetlng, together "{Ith pl~oof of the mailing of related material. {P~esents affidavit of M~. ~{elmlan as to mailiDg. ) This 6fflds~vit is ordered filed with the Secretary. ~ill yo~l no~ please~ file all proxies wit]] the Secre- tary. M~. Eerman, on behalf of the Secretary, k~ndly ~k~ e ca~.v~ss of t~e stoo~l~olde~s p~esent i~ pe~so~ o~ by p~oxy ~nd report the ~es~it to him, (Mr. H~man elrculates ~mong m~ebir~, colle~tiD4 proxies and obtaining nsxaes of stockholders present, ) Is the~ any stockholder present who has nob given his name bo M~. He~ or ~ho has not turned ove~ his p~oxy to the Seoretamy? If so, will you kindly attend to this before ~ p~oceed ~Ith t~h9 meeting. M~, Eyre, ~ill you kindly l~ead to the meetlng the ce~- tifi0ate of B~ski~s & ~el!s as to the proxies given to Messrs. Paul M. H~hn, Chaz.les Sansho~ and John G. Lang and to Mess~s. Paul M. ~a]~a, James R. Coon ~md Richard J. Boylan. ~Mm. Byte now reads the certificate of Messrs. Masklns & Sells as to the p~oxles given to Messrs. Hahn~ Ganshow and Lan~ and to Messrs. H~bz~, Coon ~ Boyish. ) M~. Bolivalu "zill you please report to the r~eetlng the number of share~ of stock olltste~di~ ~;~d e~tltled to vote ~t this ~eeti~, ~d th~ nulahe~ of aha?es p~eael~t ir~ person or by proxy. -R-
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353 The number, of Bha~es outstanding and ~ntitled to vote at this meet£ng is: 3,989 ~h~re~ of Preferred The ~mber of ~h&~e~ pre~e~t at th±~ ~eeting In person ~ha~ o~ P~efer~e~ quo~ is ~re~e~ ~t thi~ ~eetlng. Before p~ocee~g ~Ith the meeti~g~ any ~tookhol~e~ ~ho desires th examine the p~oxle~ is p~ivilege~ to do so. ~i~e B~rd of Directors h~ ~polnted Mr. ~ill!am Eyre and M~. ~d~Yd H. B. Mo~ck~ both ce~tlfled p~bli~ ~0- couut~ut~ ~ooi~ted ~ith the ~i~ of }~slclms & ~e~is, to se~v~ ~ ~ecto~ of the Vot~ ~t th~ ~e~tlr~. I thlnk it advi~abl~ that the ~t~ckholders themselve~ ~lec~ In~eo~o~ Of the ~ot~ to ~et at thi~ meet~u~ and I will t~ere~o~e entertain a motion fO~ the elec~ of the Vote ~t thi~ ~eeting. I s~cQr~ the ~tlon. ~l~re the no~u~t±on~ elo~ed. AIX ~hose ~n f~or ~lll kindly ~±gnify by ~ai~Ing thei~ ~igh~ hancls. Al~ tho~e opposed will do like~i~e. Th~ motion i~ 0~rled ~nd " ~e~, E~r~ ay~ ~o~hev~ bee~ ~u~ eleoted ~s In- M~, B~liv~ ~lll you pleas~ see to it that t~e~e gentlemen ~e ~o~u to p~form the~ duties. ~ ~l~d ~ck ~ h~ them ~o~ to the o~th b~fo~e ~ notary ~re~nt at the meeting.) The o~th is .ordered filed with the ~eo~eta~y, -3-
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The principal business to come before this meeting is to vote fe~ the adoptlo~ or the r~ctlon cf the Agree- nlent of ~e~ge~ entc~ed into on and dated October 16 1955 bet~en this Company and its di~ecto~ and The A~eri~a~ Tobacco Comps/ly~ ~ ~o~po~tiQn of ~he dtate o9 ~e~ Je~sey~ ~qd it~ dlreotors, me~glng this Company into The ~e~Icen Tobacco Compan~ ~nd p~e~c~iblng the term~ and conditions of said merger and the mode of carrying the ~ame into effect. A copy ef the Agreement of ~e~der ~g~ ~tt~hed ~s Exhibit ~ to the P~oxy dtate~ent of The Ame~icanTobacco 0ompsnF dated Octobe~ 16~ 1953 and that ~roxy ~tatement ~as en~lased ~Ith the notice of th±~ meeting dated October 26, 1955 ~hich ~a~ mailed to ell ~tockholde~s of record of this 0ompan¥ todethe~ ~ith lette~ from Paul M. Hahn, President of this 0ompan~ and of. The American Tobacco Compan~ d~ted Octobe~ 26, 1953~ to th~ stockholders of this 0ompaay, Alfihough y~ have al% ~ecelv~d a ¢apy of the Agreement of Ma~der aa Exhibit ~ to The Ame~ioan Tobacoo 0ompany P~ox~ Statement mailed to all th~ ~tock~olders, I ~ould llke to take this o~portttnity to ~efe~ b~lefly ~o some o~ the ~rovi~ion~ of the Agreement. I would c~ll ~ou~ ~t~enfii~n to ~he fgct th~ the Agreement o~ ~e~ge~ pr~- vide~ t~t The Ame~i~ Tobao~o Company ~hall be the c~9o~atia~ confii~uing afte~ the me~ge~ and thet its ~me ~lll ~e~aln the same. That ~reem~t al~o sets forth the ~u~ber~ n~mea an~ po~t office address~ ~f the first di~eoto~s and office~s of the Su~vlving ~o~or~tlo~ ~ho ~lll be the ~e ~soru5 as at p~ese~t with the exception ~hat the~e ~il~ be added to th~ p~ese~t Boarder Di~echo~s of The Ame~Ica~ Tobacco Oom- pany M~. Cha~les Gan~ho~ and M~. A. Gordon Findlay~ ~ho ~e ~e~ di~e~to~s ~d vi~e p~eslde~ts of thi~ Com- ~e2~. The Agreement of ~e~ge~ fu~tbe~ p~ides that the ~urvlvlng corPoratlon rill have an ~uthorlz~d capital sfiock consisting of lO~ddO,Ood ~ha~es ~f 0~mmen St~ck of the per value of $25 pe~ share and 540~I06 ~hare~ of P~efer~ed ~tock of the Da~ va~ue of ~I00 pe~ sh~e, be- In~ the same a~ th~ p~esent authorized c~pital ~to~k of The ~rican ~ob~o Compa~y ~azd provldes for th~ ¢on- version o~ e~h share of the o~st~dlng Commol~ dtock par value ~70 ~e~ share of this Company into eight (8) shares of Co~n~on Sto~k of the pa~ valua of ~25 pa~ sha~e of The A~e~icanToba~co Company except that %~500 ~hares of Common Stock of this Comps/%¥ held in its Treasur~ and i~225 ~ha~ea of Common Stook of this Oo~pany ovned by The Ame~Ic~% Tobacco Compan~ ~ill not be co~ve~ted but will be aanceled and ~ease to exist; the A~reement of Merde~ further p~ovides that each ~hare of the outstand- ing 6% CUmulative PreY~rred Stock p~ ~alue ~I00 pe~ ~hare of this Co~any ~±Ii be converted Int~ one and one-tenth (I-I/IO) sha~es of 6% Cumulatlv~ P~eferred
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Stook p~r ~alue $I00 per share of The American Toba¢oo Company except that the 3,250 sha~e~ of ~ald P~ferred Stock of this Company o~d by The American Tobacco Comga~y ~ill not be c~verted but will be o~nceled and ce~s~ to exIBt. The Ne~ Je~se~ law applicable to this mer~er requi~es tb~t bhe Agreement of ~e1'ger be adopted by the vote of the holde?s of at lea~t t~o~tb~rd~ of th~ eutst~ndlr~ capital ~took of this ~ompamy entltl~d to vQte ~t ~Is meeting and b~ the vote of th~ holders of ~t least two- thirds of the ou~s~s~dln~ oa~Ital stock of ~e ~e?i~ Tobacco Company. For the ~gese of voting on ~he me~e~ the New Jersey l~w D~ovldes in effect ~hat e~ch ~h~re of oe~ital sto~k, ~he~he~ Oo~on o~ P~e~er~ed, e~tlt!es the holde~ thereo~ to o~ vote. I also wish to ~II you~ ~b~ention to the faot that the A~eement ef Ne~e~ ~a~ B~bl~Itted to the ~tockhold~ of T