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Minutes of a meeting of the Board of Directors of Philip Morris & Co. Ltd., Incorporated held at the offices of the Company, 100 Park Avenue, New York City, New York on April 28, 1954 at nine-thirty o'clock in the forenoon pursuant to due notice mailed to all directors. Present the following directors: Messrs. A. E. Lyon 0. L. C. P. McComas G. Hanson T. Ames, Jr. J. F. Cullman, Jr. J. F. Cullman 3rd b t K. H. W. H. E. B. Rockey Riddell Ryan, Jr. sen - G. P. W. H. 0. H. Brauburger Hatcher Chalkle y Mr. Paul D. Smith, a member of the firm of Conboy, Hewitt, Boardman, general counsel, was also present at the meeting. 0' Brien The meeting was called to order by Mr. A. E. Lyon, Chairman of the Board, and the Secretary recorded. On motion duly made and seconded, the following resolution was un- animously adopted: RESOLVED, That the minutes of the meeting of this Board held on March 17, 1954, copies of which were furnished to members of the Board, be and the same hereby are adopted as and for the minutes of the said meeting. & Thereupon Mr. L. G. Hanson presented the financial statements for the fiscal year ended March 31, 1954 as certified to by Messrs. Lybrand, Ross Bros. & Montgomery, together with their report on the computation of the amount of provision under the Additional Compensation Fund Plan. After examination of

and discussion relative to these documents, on motion duly made and seconded, the iollowing resolutions were unanimously adopted: RESOLVED, That there be and hereby are accepted and filed the financial statements of Philip Morris & Co. Ltd., Incorporated and its subsidiary, Benson and Hedges consolidated at March 31, 1954, as certified to by Messrs. Lybrand, Ross Bros., & Montgomery, certified public accountants, and their report upon the computation of the amount of provision under the Additional Compensation Fund Plan. BE IT FURTHER RESOLVED, That the provision for the Additional Compensation Fund in the sum of $528,?04.00 as determined by the said certified public accountants and made on the books of the Company, be and the same hereby is accepted. It was the consensus of the Board that the functions of the directors pursuant to paragraph !t of the Additional Compensation Fund Plan should be per- formed by a committee consisting of Messrs. 0. P. McComas, L. G. Hanson, K. H. Rockey, H. E. Riddell, W. B. Ryan, Jr., and they were so appointed. Mr. 0. P. McComas then suggested that the directors authorize the Executive Committee to act on certain matters in the absence of a full Board. After discussion, and upon motion duly made and seconded, the following resolu- tions were unanimously adopted: ~ RESOLVED, That the Executive Committee be and it hereby is authorized to reconmend policies to this Board and to exercise the powers of this Board in the management of the business and affairs of the Company with respect to matters which, in the opinion of all the members of the Committee present at its meeting, should be attended to prior to the next meeting aof this Board but are not of sufficient importance to warrant the calling of a special meting of this Board; and further RESOLVED, That copies of minutes of meetings of the ~ Executive Committee be furnished to all members of this ~ ~ Bo ard. .a aQ Mr. L. G. Hanson reminded the directors of the Sinking Fund require- ments of the Cumulative Preferred Stock lt.% Series and 3.90% Series for the

fiscal year commencing April 1, 1953, such requirements being the retirement of 1,999 shares of the 4% Series and 1,307 shares of the 3.90% Series. Mr. L. G. Hanson further inforrred the directors that the Company had purchased other than through the Sinking Fund at prices not exceeding the redemption prices of the respective Series on the respective dates of purchase sufficient shares to satisfy the Sinking Fund redemption requiremants. Thereupon, upon motion duly made and seconded, the following resolutions were unanimously adopted: RESOLVED, That pursuant to the Certificate of Incorporation, as amended, and to the Certificate Setting Forth the Designation, Descriptions and Terms of the Cumulative Pre- ferred Stock, 4% Series, this Company credit against the Sinking Fund requirement for the fiscal ye ar commencing April 1, 1953, 1,999 shares of the Cumulative Preferred Stock, 4% Series which shares were purchased other than through the Sinking Fund at prices not exceeding the re- demption price thereof on the respective dates of purchase. BE IT FURTHER RESOLVED, That pursuant to the Certificate of Incorpor ation, as amended, and to the Certificate Setting Forth the Designation, Descriptions and Terms of the Cumula- tive Preferred Stock, 3.90% Series, this Company credit against the Sinking Fund requirement for the fiscal year commencing April 1, 1953, 1,307 shares of Cumulative Pre- ferred Stock, 3.90% Series, which shares were purchased other than through the Sinking Fund at prices not exceeding the redemption pri ce thereof on the respective dates of purchase. BE IT FURTHER RESOLVED, That the President or any Vice President or the Secretary of this Company be and they hereby are authorized, empowered and directed to deliver to Guaranty Trust Company of New York, Certificates for 1,999 shares of Cumulative Preferred Stock, !t% Series, and Certificates for 1,307 shares of Cumulative Preferred Stock, 3.90% Series, and Guaranty Trust Company of New York, as Transfer Agent, and The Bankers Trust Company, as Registrar, be and they hereby are authorized, empowered and directed to retire the afore- mentioned shares from their respective records and not reissue any certificates for said shares. Mr. 0. P. AicComas reviewed briefly the progress which had been made in forming the Australian subsidiary. He stated that, in working out the details,

it was necessary to deviate from the original plan. In illustration, he pointed out that it had been found desirable to increase the authorized capitalization to approximately $6,750,000, of which it was expec ted that approximately $4,000,000 would be presently issued. NMr. McComas also pointed out that since regulations of the Australian stock exchanges prohibit the issuance of voting shares to the American Company and non-voting shares to the Australian sub- scribers, and the American ComparW s Indenture restricts the issuance of pre- ferred stock, it was thought advisable that the stock issued by the Australian subsidiary be of a single class with equal voting rights. The American Company would subscribe for and maintain ownership of more than 50% of the stock out- standing. It was the consensus of the meeting that the management should con- tinue with the formation of the subsidiary, making such changes in the original plan as are desirable. Mr. 0. P. McComas told the directors that 18 Molins making machines, with attachments, and 5 packers were all either delivered or would shortly be delivered, reminding the directors that these machines were authorized for the making and packing of 80 mm. recessed filter cigarettes; further that the product turned out by said mac hines is unsatisfactory. Mr. McComas then out- lined the following alternatives: That the Company proceed with the production of flush-tip filter cigarettes, 80 mm. in length to be packed in a cardboard box; That the Company use present machines to produce 85 mn- flush-tip filter cigarettes to be packed in a cup package; That the Company cancel the purchase of the Molins making machines, with attachments, and order assembly machines to produce recessed filter cigarettes and/or flush-tip filter cigarettes, the former to be available for distribution early iii 1955. tr.

There followed considerable discussion relative to all aspects of filter cigarette production and sales. Upon motion duly made and seconded, the following resolution was unanimously adopted: RESOLVED, That the proper officers of this Company be and they hereby are authorized to cancel the purchase of the 17 Molins making machines, with attachments, retaining one machine with attachments for experimental purposes, and to purchase eleven assembly machines at a cost of approximately $180,000. There followed a discussion of the budget for the current year and the outlook for sales, both as to the industry and for the Company. There being no further business before the meeting, the same adjourned. ~ , Secretary