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William H. Ogsbury Vincent Riggio (b) (g) lames F, StrickIand {1) C2) Name of individual Cai~aokles in which or identify o~ glroup rel:atmerafion was r e~ived Hiram R. Hamner Director of Re~earch, The AmerlnanTvbaoeo Com- p'any Edm~nd A. Harvey (e) Treast~er and Vice-Pr~i- dent, The American To- bacco Company HarryL. iIilpard(b)(f) Assistant Treasmer and Treasurer, Tbe Amer- icaa Tobacco Company A. LeRoyJanson Audltor~ 'I3~e American Tobacco Company JamesE. Lipscomb, Jr. President, Amerieml Sup- pliers, Inc?rporatedla) As~islant Chlef of Manu- facture, The Aluerlcan Tobacco Company President and Chairman of theBoard, The Amer- ican Tobacco Company Vice.Presldent, American Suppliers, Incorporated Directors and Of~cers Director~ and O~eers as as a group a group (4) (3) Participation Salaries in profitz 834,666.70 50,000 $78,336 47,333.35 40,000 120,000 50~000 68,666.69 30,005.19 50,000 67.73 %2,000.08 709,386.93 1,219.14 (B) Est[maled (5) manual Applicable (6) (7) retirement per tioli of ~xee~s D~cre~e henefi~ gr~p over undor at normal i~snI~nee pI~V]OU~ ~re&~o~ r~tii~t plemlnm year y~r dat~ $67.73 $13,100 67.73 $78,336 17,000 67.73 7,333.33 12,323 67.73 6,000 16,62~ 67.73 25,000 67.73 17,000 67.73 $312,075.84 23,000 15,337 593,293.24 (a) Af~llstcd company engaged in purchase and handling of leaf tnhaecu. (b) Also o~o~r o£ a~liated company or companies. (e) Elected a Vice president Apri~ 7, 1950. The amount reported in Column (6) is aecotmted for by partlcipati~n a~ a Vi~Presldent undo< Article XII for over 8 months of 1950, a~ against no participation in 1949. (f) Elected T~e~urer April 7,1950. (g} Elected Chairman of Board of Director~ April 7, 1950; retired January~16.195I. The araomat reported in Column 17) is accounted for by participation as president under ArficIe XII lot over 3 months of 1950 as against participation for the entire year 19~,9. The amounts stated in Column (4) above were accrued as incentive compensation (based on amount of Company profits), ul~der A~ticle XII of the By-La~s, after giving effect to tim voluntary reduction in the incentive compensation for 1950 of the President, Paul M. Hahn, and the five Vice-Presidents, Richard J. Boylan, James R. Coon, John A. Crowe, Preston L. Fowler and Edmund A. Harvey, described on page 4 of this proxy statement. The effect of such reduction was to reduce the remuneration df these respective o~cers by the following amounts which would otherwise have beert payable to them: Paul M. Hahn, $143,925.50; Richard J. Boyinn, James R. Coon, Jobn A. Crowe and Preston L. Fowler, $74,621.96 each, and Edmund A. Harvey, $54,995.43; a total reduction of $497,408.77. No fees or commissions were paid tu or fur the benefit of any of the individuals listed above. There were no pension, retirement or similar payments to or for the benefit of directors and ofiqeers of the Company during its last fisoa~ year. The Retirement plan for employees adopted by vote of the sthckholders at the 1949 Annual Meeting covers approximately 18,600 regular full-tlme employees of the Company and its subsldiaries. The Company has maintained since October L 1946 a group llfe insurance plan whicb covers all regu- lar full-time employees ofi the Company and of its consolidated American snbsidiaries and certain employees of other subsidiaries: the maximum amount ef insurance theretmder for any employee being limited to 10

$10,000. The amount of group life insurance provided for earl, employee is determined by his basle annual pay. Each of the officers and directors was insured for $10,000 under such policy. The cDst of the insurance is payable ratably by the Company and such subsidiaries. The total number of employees insured under rite plan on January 1, 1951 was approximately 18,500. The aggregate armmnt of remuneration for the fiscal year 1950, received from the Company and fits subsidiaries, dlrectly or h~directly, on an accrual basis, by all the directors and officers of the Company as a group, was approximately nineteen onethundredfl~s of 1% of the Company's ¢onsohda ed ne sales. MISCELLANEOUS Any stoc~older making written request therefor to the Secretary of the Company will he furnished a summary of the Annual Meeting that will be prnpared after *he meeting has been held, Messrs. Lybrand, Ross Bros. & Montgomery have for many years been the independent auditors for the Company, and are appointed by resolution of the Buard of Directors. ~ aeeoedance with the Company's customary practice, a member of the firm of auditors w~ll atteud the Atmnal Meeting and respond to que~ions which may be asked¸ by stockholders. Comments or sttggestions by stockholders with regard to the audit are welcomed, as they are with regard to all other matters affecting th8 Company's th~rests. Flemington, N. J., is reached by the Lehigh Valley Railroad. This year arrangemems have also been made for return bus transportation to New York promptly after ~ meeting for stoekho]dexs who not~y the Secretary in writing prior to March 31, 195~. of their desire to return by bus rather than by train. The present train schedule, which is ~u~ect to change and should he confirmS, is as follows: Leave Pennsylvania Station (33rd S~et and Seventh A'1enu~ New York, N. Y.) 10:55 A. M. Arrive Flemington Junction 12:03 P~ M. Leave F~emington J'unption 5:¸16 p. M. Arrive Pennsylvania Station 6:35 P. M. The Company will p~c~uT-e transportation from _New York to Flemlngton by railr~d and retarn by rail- road or, ~ expressly re,tested ~ ~e s~ckholder's notice, re~r~ by b~ at Company expense for any stockholder of record desirous of attending the meetin~ on his notifying the Secretary in wrltln~ prior to March 31, 1951, that he wishes such ~ransportati~n obtained, f~ yea do not plan to attend~ you are urgently requested to execute the enclosed proxy and umil it ~o th~ C~mpany promptly. Expense of Solicitation. The expense of the solicitation of proxies for this meeting, including the cost e f mailing, will be borne by the Company. ~ addition to mailing eopi~ of rids materiaI to stockholders, the Compa~ will request persons who hold ~toch in their name or custody or in the name of nomlrtees for others, to forward copies of such material to those persons for whom they hold stock of the Company and to request avlhority [or the execution of the proxies. The Company may r¢inthur~e such persons for their out-of-pocket e~penses and clerical ~arges in connection l~lerewith, which expenses are estlmated to he about $1,800~ To the extent necessary in order to assure sufficient representation at the meeting, officers and ~ome regular employees of the Company and approximately 6 employees of Pbilip G. Cameron Com- pany wlil request the return of proxies by telephone, te]~ram or in person, at art estimated cost of about $14,000. The amount of the expense to bc bor~c by the Company will depend upon the volume of shares rcpr~ented by the proxies received promptly in response to the No~iee of" M~eting. ~ proxies are not received promptly, it may be necessary for th~ Company to send telegraphi~ solieltatlon to those stockholders wh~l have not responded. The expense o f such telegraphic solicitation would he abo~ $2,500. As the affirmative vote of two-th~rds of the outstanding Preferred Stock, as well as the affirmative vote of two-thirds of the outstanding Common Stock, is required in order to authorizc the proposed amend- ment of the Agreement and ~kct of Merger and Consolidation (Proposal B), tile Stockholders are urged to send in thelr proxies without delay, appreciated. Prompt response is helpful, and your cooperation will be February 7, 1951.

EXHIBIT A R~L~E~. ~at the Board ef Direeto~ ~f Ti~ Am~ean Tobae~ Com~ny he~y de'ares ~ ~ be ~d~ahl~ that thv authorized Common S~ock of the Company be increased from the present~ authorized Six Million (6.000.000) shares of Common Stock of ~e par value of $25 ea~ to Ten Million (10,000.000) shares of Common Stock o~ the par v~ of $25 each. and¸ that to effect the foregoing change. Article IV vf the Agreement and Act of Merger and Col~solidatlon. as heretofore ameMed, be amended to read ~s £ollows: ~ti~e IV. The capital stock of the said merged corporation is $g04~10.600. Five Hundred Forty Thousand One Hundred and Six ($40,106) shares shall he Preferred Stock of the par value of ~100 e~ch. Ten Millh~n (10,000,01)0) shares shall he Common Stock of the par value of $2~ each. The rights of the holders of tile said Preferred Stock and Common Stock, respectively, shall be as follows: The holders of file Preferred Stock sh?ll be entitled to fofir votes for each share of tJ~e par value of $100 h~ltl by them, and the holders of the Common Stock shall he entitled to nee vote for each share of Lhe par value of $25 held by them. The holders of l]te Preferred Stock shall be entitled to receive out of the surplus or out of the net profits, a~d the merged Corporation shall he hound to pay thereon as and when declared by the Board of Directors, a dividend at the rate of, hut never exceeding, six per eentum per annum, eamu/ative from and after the frost ~.y n f October. 1904, payabl~ yearly, half yearly~ o~ q~terly, before any dividend shall be set apart or paid on the Common Stock; provided, however, that when all aeeruetl dividends on the Preferred Stock have been paid, the Directors shall, if in their iudg~e~t the surplu~ or the net profits, after deducSug the amount of dk~ide~ds tr~ aee~e on the Preferred Stock dpring the current year, shall be suffmient for such purpose, have power in their dlsexetion to declare and pay a dividend, or dividends, on the Common Stock. In case o~ l~qltldafion, or dissolution, or dlslrih~,tlon of assels of the said merged eorporatlon, the holders of Preferred Stock shah he paid the par ampm~t of their Preferred shar~s and the amollnt of dividends accumulated and unpaid before any amount shall he payable or paid to the holders of the Common Stock; the tedanee of the assets of said merged corporation shall be divided ratably among~he holders of the Common Stock, share and share alike. Ftr~Tr~gg R~SOLVgD, that the furegoing matters, including such proposed amendment to said Agree- ment and Act of Merger and Consolidation, shah be submitted for action thereon by the Preferred and Common Stockholders of the Company at the next annual meeting the~reof to he held on Wednesday, April 4, 1951, at one-thlrty o'clock in the afternoon, or at any adjour,ment thereof, at~d that notice of the time, piano and purposes of such meeting, including the taking of action upon the foregoing matters, ~hall he given irt accordance with the 9rovisiotas of th~ By-Laws of the Company. Fu~a'ra~a R~,SOLVga, that, in the event that two-thirds in interest of each class of stocktutlders having ~oting power shall vote in favor of such change and amendment at said afi~mal meeting or at any adiourn- raent thereof, the proper officers of the Company he and they hereby are authorized and empowered to make, execute mad aekno~dedge or prove a certificate of such change and amendment and to file th~ same in the ofiqee of the Secretary af State of the State of N~w Jersey, and Ia take oil ether steps deemed necessary or advisable to effect sack ckange and ,ameedment. 12 Nil

• NOTICE OF MF~TING F]em~ton, N. J., March 1, 195~ NOTICZ ~s II~gBY Olv~,~ ~|~,tt the Annual Me~ng o~ the Preferred and C~rca~on Stockholders of T~E A~aERrCAN TOBACCO COMPANY wili b~ held at No, 43 Park Avenue, Fl~ralngton, Ne~ J~r~ey, at ot~-th[rty o'~I~ck ~t the ~ftert~o~ (Eastern St~ad~r~[ ¸Time) on Wednesday, April 4, 1951, for the following p,lrposes: (1) to elect Dir~tors; (2) to consider and vote u~on a proposal (designated Proposal A and ~ forth in the fo]]owln~ proxy statement) to anqcnd the By-Laws by repealing Artlcl~ XII as now i*l ~ff~ct and su/~stlt~ting therefor a new Artlcl~ XII, which proposal b.as been recommended by th~ Board of D~re~tors; (3) to consider an~ vote ~pon a proposal (designated Proposal B and ~t fi,rth in the {o]lowii~g proxy statem~ot) Io amend the Agreement and Act of M~r~er and ConsoIidatlon ~mder which the Company was org~nlzec/, a~ h~retofore am~ndecl, which has heel1 dechred advisal~]e hy th~ Board of Directors; (4) to conslder a~*d vote upott a proposal (designated Proposal C and s~t fn~th ~n the fol/owing proxy star,anent) mad~ by three s~ock/~olders; (5) to consider and vote upon ~ proposal (deslgnat~d Pro- posal D an~ set forth in ~he following proxy statement) mac/v ?~y ~ ~toekholder; and (6) to transact ~t,ch other business as may properly come ]~fore the meeting, The Pre£errcd and¸ Corara~n Stock transfer hooks wl]I not be closed but ho]der~ of Pr~£errcd Stock and Contmon Stock to h~ ~ntit]ed to vot~ must be holders of re~ord at the close of busln~ss o~* March 5, 19SL Jo~ W. HAN~Or~, Secretary SPECIAL NOTICE Holder~ of what w~ formerly Comm~l Stock B who still hok] t~.eir Common Stock B ¢ertific~t~ ar~ rerni~ed that, by ~mendv~ent of ~hv Charter of lh~ Company on April 8, Stock, ~ith th~ votln~ r~ts of Co~m*on S~ck, nam~: One votv per sb~re.

•% PROXY STATEMENT The enclosed proxy is sollelted by and on behalf of the Management mad is revocable in writing. Proxies in the form enclosed, properly executed by stockholders and duly returned to the Management and not revoked, will be voted and, if a ehoiee be specified with respect to matters to be acted upon, will be voted in accordance with such specifications. The outstanding number of each class of voting securities of the Company is: Preferred 526,997 shares; Connnon 5,378,425 shares. Tile Preferred Stock is'entitled to four votes per share. The Common Stock is entitled to one vote per share. ELECTION OF DIRECTORS The Board of Directors consists of seventeen members who are elected to hold office until the next Annual Meeting or tmtil their successors are duly elected and qualified. It is the intention of the Proxy Committee to vote at this Annual Meeting for the nominees named below. These nominees, with the exception of Alfred F. Bowden, constitute Lhe present Board and have sen,ed as direetors of the Company for the periods commencing with the date~ set after their respective names. The Company is informed that these nominees were direcdy or indirectly the beneficial owners of outstanding securities of the Company at die dose of business on February 7, 1951, as set forth after their respective names. Ytar First Name Ptinoipal O¢~lpatlon ~eeted Director Orpheus D. Baxalys Viee.Presideah The America Toba*,zo 1940 Alfred F. Bowden Richard f. Boylan Dougle~ W. Brashear Thomas P. Conners James R. Coon John A. Crowe John S. Dow~ Prestml h Fowler PauI M. Hahn Hiram R. Hamacr Edmund A. Harvey Harry L. Hilyard A. hnRoy Jans~ • James E. Lipscomb, Jr. William H. Og~ury James F. S~ickland Con~aon p~ef~rred 884 62 - Company of the Orient, Inc. Asslst ant to the President, The American 105 Tobacco Company Vie~-President~ The American Tobacco 1929 1,720 200 Company " Virx:-Presldent, American Suppliers, 1948 100 Ineo~orated Dire.etor of Traffic, 3~ae Amerlc~n 1946 • 146 Tahac~e Company Vice President. The American Tobaceo 1936 652 80 Company Vim-President, The Araericau Tobacco 1931 500 105 Company ~ce-Presldent. American Suppliers, 1946 800 Incorporated Vice-President, The American Tobacco 1941 6tl0 100 Company President, The American Tobacco 1931 2,086 Company Director of ]~eareh. Th~ American 1938 120 Tobacco Company Vice-President, The American Tobacco 1932 500 40 Company Treasurer, "f~e Americas Tobaccn 194'i, 120 Company Auditor, The Amerle.~n Tobacco 1948 26.5 Company President, American Suppliers, Inner- 1918 1,800 100 porated As.~istant Chief of Manufacture, The 1930 12{) 50 American Taha~o Company Viee-Prezideab American Suppliers, 1946 ~20 Incorporated

Mr. Bowden has held the office of Assistant tv the President for the past I2 years, acting in that cngacity for three successive Presidents of the Company, Me~rs. Hill~ Riggin and Haht~. His employ- ment in the Compaffy covers a peHed of 30 years. In addition to his e~ceeutive duties, he has responsibility for the Company's public relations and supervision of the Company's British su/~sidiary, J. Wix & Sons~ Ltth Klthough the Management does not contemplate the possibility, in the event any nominee is not a candidate o~ is unable to serve as a director at tile Lime of the ele~ion, it is intended that the proxies will be voted for any nominee who shall he designated by the present Board of I)ireetors to fill such v~eaney: Information regarding the remuneration of directexs is hereinafter se~ forth under the caption ~ ~Ptemlllt el'atlen". Proposal A PIlOPOSED AbllgNDMENT OF ARTICLE XII OF TIIE BY-LAWS The Management recommends to the stockheblers an amendment o/ ¢lrticle Xll of the By-La~ws reducing substantlally the amount o/ compensation payable ~nder cttrrsmt rates of earrt~ngs. The proposed amendme*tt is set forth as Proposal A on pages 5 and 6 of this proxy .statement. The reduetinn proposed has a~eady been dffeeted soluntarily with reageet te the 1950 compensation of the President and the rice Vine-Presidents now in ofl~ce by action of the Board of Directors described on page &. Artiele X~I of the By-Laws of the Company was adopted by the stockholders on March I3, 1912, by a vote of 621,047 shares of stosh in its favor to 35 shores opposed. On the reeommendaffen of the Management, it was a~nended at the I949 Annual Meeting of stoeltholders, the effect of the amend- ment being ~ Substantial¸ reduction in the rates of incentive compensation payable under the By-Law. Artiele XII~ as now in effect, was adopted by the stockholders on April 6, 1949, hy 6,174,489 votes in its favor to I10,290 votez opposed. It provlties as follows: Seetlen 1. As soon as practicable after the end of th~ year 1949 and of each year of the Company's aper~tlons therea£te~ the Treasurer of the Company shall ascertain the net prellts~ ashereinafter defined, earned by the Company &racing such year, and ff such net profits exceed the ~tml of $15,500~000 the Treasurer shail pay an amuunt equal in the aggregate to five per eel. of such excess to the President and five Vlee-Presidenis o£ the Company in the following prapur- tions; to wit: One~ourfit thereof, or 1~ per cent. of such amount, to the PrBsldent~ aue-iifth of the remainder thereof, or ~ per cent. of ~uch amount, to each of the fi~e Vise-Presldents as salary for the year, in additinn to the fixed sldary of each of said o~eers. Section 2. If any sush office be vacant for a time amounting in the aggregate to one month in any year, so much of th? amount provided by this resolution to he paid to the incumbent of such o~lee as is proportionate to rite time of such vacancy thail be returned into the general grgfit a~6ount of the Company. If there shall be a change during the year in ibe incumbent of any office, the amount hereinbefore provided t~ be pap~ shall be divided among the different Inenmbenls of such elfiee fit the groportlon of their respective periods of ineumhency dnHng file year, subject to the ahove provision in relation to vacaneles. Seetlo~t 3. For the purpose of this By-Law the net profits earned by the Company in any • year shall conslzt of the net earnings made by the Company in its business as a manufacturer and ~eller of tobacco and its predueis after deducting all expenses and losses, and such provisions as sl~all be determined by tbe Board of Diseetors of the Company for depreeiatfon and/or all out- standing trade obIigailon~ to which profits shall b~ added~ or from edllch profits shall he deducted, as the e~se may be, the Compang's proportion (based on its ~toch holdings) of the net profltz or losses for the year of its subsidiary companies engaged in th~ m~nufacture ( dise~tl~ or through the ik

Company or any other ath~atvd eorngany) and sale of smoking tobacco, chewing tobacco, olgar- ettes, or little cigars. Section 4. The declaration of the Treasurer as to the amoumt of net profits for the year and the sum d~ anyone hereunder shall be binding and conclusive oil all parties~ and no one daimlng hereunder shall have a right to question the said declaration, or to any examination of the books or accounts of the Company, and notlCmg herein eontaltted shM[ give any incumbent of any office any right to claim to continue therein, or any other right except as herein specifically expressed. Shetinn 5. This By-Law may he modi fled or repealed only by the action of the stockholders of the Company and not by the directors. The Board of Directors at its organization meeting on April 7, 1950, after the last Aroma1 Meeting of stockholders, initiated a study of the operation of .~Lrtlele XII of the By-La~s in relatin~ ~o current conditions to detormlne whether further revision or modification thereof should be revommended. At the same meeting the Board of Directors adopted resolntthns under which the President and the five Viee- Presidents no~s in office, by aeeepdng ~leedon ~o their ~espeeBve offiee~, eon~emed that any px~pe~e6 revision or modification of Article XII which would receive the favorable vole of a majority of the Board of Directors might by resolution of the Board of Directors be made app!izable to their respective x~uneratlon fo~ the yea~ 1950. There are two major changes under the recommended proposal: (1) the net profits upon which eompensatlon is hosed are defined as the net income reported by the independent publie aecoul~tants who have audited the Company's books as fairly reflectlng the eonsolldated results of the operatinn~ for such year of the Company and the subsidiaries included in the consolidated finanelal stateqnems furnished to stockholders; and (2) tbo amount of incentive compensation payable under current rates of earnings is reduced substantially. In addition, the dL~trihudon of the eom/mnsation between the President and the Vice-Presidents is readjusted to meet the Presifinm's reeommendafion that his percentage be reduced from 25% to 20% and that of each o£ the five Vice-Presidents he increased from 15% to 16%. In the opinion of Management, the amendment constituting Proposal A is designed to provide amounts of payments that should meet the approval of the most conservative and yet preserye the psincipl~ of incendw compensation that ha~ been traditional iu the Company, Ae.coxdlngty, a resolutinxt was adopted by the Board of DireCtors on July 25, 1950 recommending to the stockholders that at the Annual Meeting the By-Laws be amended by repealing Article XII ~f the By-Laws as now in effect and skhstltudng therefor die new Article XII hcreinhclow set f~rth, aI[ effeed~e a~ of January l, 1951. The Board of Direetdrs also adopted a resolution making the proposed revision of Article Xll applicable to the re*pecdve xemunerafion for the year 1950 of each officer entitled to com~oensation under Article XII of the By-L~'ag elected to ~uch oitlce dozing that year. The persons who partinipate in Article XlI remuneration are, as staled above, the President and the Vice-Presldents. The Article XII remuneration for the fiscal year 1930 of Paul M. Hahn who has served as President slnee April 7, 1950, as reduced pursuant to the resolutions of the Board ot Direetors hereinbefore referred to, was $125~876.34. [f such red~etion had not been made, his Article XlI remuneration for 1950 would have been $269,801.84. The Article XI1 remuneration for the fiscal year 1950 of ¥1neent Riggth who had served as Presldept to April 7, 1950, was not affected. The Artiele XII remtmeratlon for the fiscal year 1950 of Rthhard J. Boylan, James R. Cram, John A. Crowe and Preston L. Fowler, the four Vice-Presldents who were in ofliee for the entire year, as reduced pursuant to the resclutio~ls of the Board of Directors hereinbefore referred to, was 8106,292.35 each. If such reductlotl had not been made the Ardele XII remuneration of each of suab four Vice-Presidents for 1950 would have been $1g0,914.31. The Article XII remuneration for the fiscal year 1950 of Edmmtd A. Harvey who was elected a Vine-President on April 7, 1950, as reduced pursuant to the reso]utions of the Board of Directors

hereinbefore referred to, was $78,336.00. If such reduction had not been made, his Article XII remunera- tion for 1950 would have been $133,331.43. TEare was no hontts or profit-sharing plan, other than Artio!e XII, in effect during the year 1950. The Company had in effect for about ten years prior to January 1, 1949 an informal, voluntary, non- contributory plan to provide for employees who had become tmfit for active duties, under which plan payments are still being made. The Cmnpany now has in effect the formal, non-contributory Retirement Plan for employees, adopted by vote of the stoekholders at the 1949 Annual Meeting. The amounts paid or set aside for the benefit of (a) employees (or former emplnyees) and (b) offeers and directors (or former officers and dil~eetars) of file Company and its consolidated subsidiaries during the year 1950 under any bonus, profit-shazing, pension or retirement plan were as follo,*s: (a) Employees (other than directors or officers) : Payments to former employees of approximately $354,000 under the old informal plan referred to above and approxhnately $137,000 under the Retirement Plan adopted in 1949. (h) Directors and otficers: A. Payments to three former officers or directors (one of whom was formerly an officer and director of the Company, and the other two, officers or directors of a ~ubsidlary) of an aggrega!e of $14,000 under the old informal plan referred to above. B. The amounts of incentive compensation acet,zed during 1950 to the President and Vice-Presldents are stated on pages 9 and 10 of this proxy statement. Such incentive compensation was accrued under Article XII of the By-Laws, as reduced 0i the case of the present President and Vice-Presidents by:the voluntary reduction in incentive compensation described on pages 4 and 10 of this proxy statement. The resolufion authorizing such amendment will require for its adoption a majority of the votes east thereon by Preferred and Common stockholders. The proposed resolution constituting Proposal A is as follows: RgSOLWD, as recommended by resoitttion of the Board of Directors of '131e American ToEaeco Company, teat the By-La,~s of the Company be and they hereby are amended by the repeal of Article XII of the By-Laws as now in effect and the substittttlon therefor of the foIlowi,g new Article XII, all effective as of J'anuary 1, 395I: ARTICLE XII Section 1. As soon as practicable after the end of the year 1951 and of each year thereafter, if thg net profits earned by the Company during such year, as hereinafter defined, exceed the sum of $15,500,000, there shall be paid to the persons "~'ho have held the offices of the President and of the five Vice-Presidents during such year an amount equal in the aggre- gate, except as provided in Section 2 hereof, to 5% of the first 86,000,000 of such excess, 4% of rite next $2,700,000 thereof, 3% of the next $2,700,000 thereof, 2% of the next $2,700,000 thereof, and 1% of the balance thereof, of which aggregate amotmt~ except as provided in Section 2 hereof, 20% shalI be paid to the person or persons who held the office of the President and 16% shall be paid to the person or persons who held the o~ee of one of the five Vice-Presidents, as salary for such year in addition to the fixed salary of each of such persons. Section 2. If any such office shall have been vacant at any time durblg the year, the amount provided by Section 1 to be paid to the incumbent or inc,~mhents of s,~sh office for 5

such year shall he reduced proportionately, and the aggregate amount otherwise Fayabie to all such officers for guch year shall be reduced accordingly. If only such office sh~ll have had more than one incumbent during the'year, the amotmt payable in respect of such office shall ha divided among the different ineurahents in the proportion of their respective periods of incumbency during the year. Section 3. Ft~r the p~rp~ ~f thi~ By-Law, tse term "net pio£~ earned by the Com- pany" in aft)" year is definecb to mean the net income stated by the independent public accountants who have audited thv Company's books as fairly reflest!ng the consolidated resells of the operations f0r such year of the Company and its subsidiaries included in the consolidated financial stat~nien/s set forth in the annual report for such year of the Compony the stockholders. their Section 4. At the time of rend~ing report with respect to the financial state- me~t~ of the Compatty and its eou~lidated subsldi~vie~, such public ae~oagtznts shall also furnish to the Treasurer of the Company their writte~ certificate stafi~g the amounts to he paid for stWh year to the President and each Vice-President pursuant to this By-Law, which certi~cate auto the amounts payable to anyone hareunder shall be hindlng and con- duslve on all interested patties, and no one claiming beretmder sha?l have a ~ght to question the samd, o~ to any examination of the hocks or accounts of the Company o~ ~ubsldlavies. Nothing herein contained shall give any incumbent of anF office any right to claim to continue. therein, or any other right except as herein specifically expressed. Section 5. 'I~nis By,Law may he modified or iepoalod only by the action of die stockholders of the Company and not by the directors. ~'he Management recommends that you vote IN FAVOR OF Proposal/2. Proposal B PROPOSED ]NCRKASE IN AUTHORIZED CAPITAL STOCK AND AMENDMENT OF AGREF,31ENT KND ACT OF MERGER AND CONSOLIDATION The Board of Directors of the Company at a meeting held on January 30, 1951, adopted a resolu- tion declaring it to he advisable that the authorized Common Stock of the Company he increased from the presently authorized 6,000,000 shares of Common Stock bf the par value of $25 each to 10,000,000 shares of Common Stock of the par valu¢ of $25 each, and thyt to effect such change Article IV of the Agreement and Act of Merger and Consolidation, as heretofore amended, be amended so that after such amendment the total authorized capital of the Company .will he 8304,010,600, of which 540,106 shares will be Preferred Stock of the par value of $100 each and 10,000,000 shares will be Common Stock of the par value 0£ $25 each. The resolution adopted by the Board of Direetot-s with respect to such amendment to be voted on by the stockholders is set. forth in Exhibit A hereto (see page 12). Such proposed increase in the authorized Common Stock is considered advisable by the Board of Directors in order to make additional shares of Common Stock available for prompt issuance should occasion arise at some future tim0. The Board of D/rectors has no present plans for such issuanae. Shice Proposal B relates only to an increase in the authorized Common Stock of the Company, the Management is of the opinion that financial ~atements would not disclose anything material to the exercise of pr~de~at judgment as to this proposal Financial statements of the Company are nob therefore, inel~ in tJ~t~ proxy ¢tatcxaeat. Ho~gver, the aaixuai report ~f the Corapany malle~ to you with ~is proxy statement sets forth the financial condition of the Company as of December gl, 1950. The Agreement and Act of Merger mad Consolidation, as amended, does not deny or restrict such preemptive rights or other subscription rights as the holders of capital stock may hay0 under the laws

t S of New Jerseyt the Compatly's State of incorporation: hi the opkdon of counsel, the hoIderS of Preferred Stock of the Company have no preemptive rights with respect to shares of its Coimnon Stock. In order to authorize the proposed amendment, the ng~rmatlve vote o/ two-thirds o/the orttstt~ndlng Pre/erred Stock, as well as the aff~rmatlve vote el two-thirds o/the outstanding Common Stock is required. The proposed resolution eonstitutthg Proposal B is as follows: RESOLVED, as declared advisable by resolution of the Board of Directors of The American Tchaeeo Company, flint the attthorized Common Stock of the Company he increased from the presmltly authorized Six MiBion (6,000,000) shares of Common Stock of the par value of $25 each to Ten Million (10~000,000) shares of Common Stock of the par value of $~5 ease, arid that to effect such change, Articie 1V of the Agreen~ent and Act of Merger and Consolidafiort between The American Tobacco Company, Gonsoiidated Tobacco Company and Continental Tobacco Colnpany, as heretofore amended, be anaended to read as follows: Artlcle IV. The eaphal stock of the said merged ¢orporatthn is $304,010,600. Five Hundr~l Forty Thottsand One Hundred and Six (540,106) shares shall be Preferred Stock of the par value of Sh00 each. Ten Million (10,000,000) shares shall he Common Stock of the par value of $25 each. The rights of the holders of tea said Preferred Stock and Common Stock, respectively, ~hall be as foUows: "Pne holders of the Preferred Stock shall he entitled to four votes for each shnt-e of the par value of $100 held by them, and the holders of the Common Stock shall be entitled to One vote for each share of the par value of $25 held by them. The holders of the Preferred Stock shall he entitled to receive out of the surplus or out of the net profits, and the merged corporation shah ha herald to pay thereon as and when declared by the Board of Directors, a dividend at the ra~e of, but n~vor exceeding, six per eentum per annum, cumulative from and after the first day of October, 190~, payable yearly, half yearly, or quarterly, before any dividend shall he set apart or paid on the Common Stock; provided, however, that when all accrued dividends on the Preferred Stock have been paid, the Directors shall, ffi in their judgment th~ ~urpius or she ~aet p~o£~% after deducting the amount of dividends to accrue on the Preferrad Stock during the eurrent year, shah be sufficient for such putpese, hove power in their discretion to declare and pay a dividend, or dlvldeeds, on the Comthon Stock. ha ease of liquidation, or dissolution, or distribution of assets of the said merged, corporation, the holders of Preferred Stock shdR he paid the par amount of their Preferred share.s and the amount of dividends ae~umulatad and unpaid before any amount shall be payable or paid to the holders of the Common Stock; the balance of the assets of said merged corporation shall be divided ratably among the holders of the Common Stock, share and share alike. The Management recommends that you vote IN FAVOR OF Proposal J~. Proposal C The Company is reformed hat Lewis D. Gfiber, whose address m 1165 Park Avenue, ~e~v York 28, Now York, John J. Gilbert, whose address is 1165 Park Avenue. New York 28, New York, and John Campbell Henry, whose address is 65 East 76th S~reet, New York 21, N~v York, stockholders, intend to intraduee at the forthcomthg Annual Meeting the following resolution (designated herein as proposal C) : RESOLVED. T~mt the ~teckbelders hereby request the Board of Dtrec ors to take approprm e s eps to submit to stockholders an amendment to the Certificate o£ Ineorporatlun providing for ¢umtt. latlve voting, that is to say that at all elections of'directors, the stockbeldars shall have the right of eumniatixe voting, welch means each shareholder shall be entitled to as many votes ~s shah equal the number ~f vo~es ~shish he ".~ onld be entitled m cas~ for the election of dizcethr~ with respect to