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Minutes of a meeting of the Board of Directors of Philip Morris dc Co. ;,td., Incorporated held at the offices of the Compaiy, 100 Park Avenue, New York City, New York on AI~y 26, 1954 at ten o'clock in the forenoon pursuant to due notice mailed to all directors. Present the following directors: Messrs. A. E. Lyon 0. P. McComas L. G. Hanson J. F. Cullman, Jr. J. F. CuZ].rnan 3rd C. T. Ames, Jr. K. H. Rockey H. E. Riddell W. H. Hatcher W. B. Ryan, Jr. Absent - G. P. Brauburger 0. H. Chalkley Mr. P aul D. Smith, a member of the firm of C onboy, Hewitt, 0tBrien & Boardman, general counsel, was also present at the meeting. 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 u- nanimously adopted: RESOLVED, That the minutes of the meeting of this Board held on April 28, •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. A. E. Lyon stated that a number of matters connected with the next Annual Meeting of Stockholders must be determined at this time. Upon motion duly made and seconded, the following resolutions were unanimously adopted:

RESOLVM- , That paragraphs 2 and 3 of the Additional Compensation Fund plan adopted by this Board May 25, 1951 and approved by the stockholders at the annua3l meeting held July 10, 1951 be amended to read as fol2ows: 2. With respect to each accounting period of the Company, there shall be set aside by it, after the end thereof, a sum equal to 2% of the con- solidated earnings of the Company and Benson and Hedges before deduction of the sum so to be set aside and before deduction of Federal income and excess profits taxes and other Federal taxes measured by income. ItConsolidated earnings of the Company and Benson and Hedges" means the earnings, on a con- solidated basis, of the Company and (to the extent of the Company*s interest therein) of Benson and Hedges and its subsidiary companies. Each sum so set aside shall thereupon become part of the Fund. If, however, after deduction from said consolidated earnings of the su~n so to be set aside, the remainder of said consolidated earnings shall not equal $25,000,000 (or in the event that any accounting period of the Company shall be more or less than 12 months, an amount which bears the same relationship to $25,000,000 as the number of months in said accounting period bears to 12), no sum shall be set aside with respect to such accounting period. 3. The aforesaid consolidated earnings and the sum to be set aside with respect to any accounting period shall be determined by the Company's independent certified public accountants in accordance with generally accepted accounting principles and practices as reflected in the con- solidated statement of e arnings for said period certified by said accountants and submitted to the stockholders, even though such statement reflects, or fails to reflect, any revenues, income, gains, costs, expenses, losses, pro- visions for reserves, and restorations of reserves, and regardless of the source or cause thereof and of whether or not the same are extraordinary or non-recurring or might be attributable to operations of other years. The determination of said accountants shall be final, binding and conclusive upon the Company and all other persons who may at any time have any interest therein. And further RESOLVID, That the s aid amendments shall be effective with respect to the accounting period of this Company which began April 1, 1954; and further RESOLVED, That the foregoing resolutions shall be of no force and effect unless a majority of the shares of the Common Stock, $5 par value, represented at the annual meeting of stockholders to be held on July 13, 1954, or at an adjourn- ment thereof, shall be voted in favor thereof. Upon motion duly made and seconded, the following resolutions were unanimously adopted;

RESOLVII), That subject to the approval of a majority of the shares of the Common Stock, $5 par value, represented at the Annual Meeting of Stockholders to be held on July 13, 1954, or at an adjournment thereof, Messrs. Lybrand, Ross Bros. & Montgomery be a.•~d they hereby are selected to audit the accounts of the Company for the fiscall period beginning April 1, 1954, and further RESOLVID, That this Board of Directors, pursuant to Article I, Section 3 of the By-Laws of the Company, designates the Jefferson Hotel located at the corner of Jefferson and Franklin Streets, Richmond, Virginia, as the place at which the Annual Meeting of Stockholders scheduled for July 13, 1954 is to be held, and further RESOLVED, That June 14, 1954 be and the same hereby is fixed as the record date for the determination of holders of Common Stock, par value $5 per share, who shall be entitled to vote at the Annual ,Meeting of Stockholders of this Company to be held on July 13, 1954 at 12 otclock Noon, Eastern Standard Time, and only holders of Common Stock, $5 par value per share, of record at the close of business on that date shall be entitled to vote at the said meeting, and further RESE3LVED, That Messrs. 0. P. McComa.s, L. G. Hanson, P. D. Smith and W. W. Crump be and they hereby are designated by this Board as Proxies under the Management Proxy, and further RESOLVED, That the Notice of Annual Meeting of Stockholders, the Proxy Statement and the Management Proxy as presented to this meeting be and the same hereby are approved subject to such addi- tions, amendments and modifications as counsel for the Company may deem necessary or desirable, and further RESQLVED, That the Secretary of the Company be and he hereby is directed to mail or cause to be mailed at least ten days before the said Annual Meeting, First Class Postage prepaid, a copy of the Notice of Annual Meeting of Stockholders and Proxy Statement to all record holders of Cumulati've Preferred Stock, the Common Stock, $5 par value per share, and the Common Stock, $10 par value per share, at the close of business on June ltt, 1954 and that there also be en- closed in the envelopes addressed to the holders of Common Stock, $5 par value per share, a copy of the Management Proxy and a postage prepaid return envelope. Mr. L. G. Hanson then presented the Report of Messrs. Lybrand, Ross Bros. & Montgomery, independent certified public accountants, upon their Examination of Inventories as of March 31, 1954. Upon motio n duly made and seconded, the / 4i

following resolution was unanimously adopted: RESOLVED, That there be and hereby are accepted and filed the report of Lybrand, Ross Bros. & Montgomery, certified public accountants, upon their Examination of Inventories as of March 31, 1954. Mr. L. G. Hanson stated that approval for certain appropriations were in order, whereupon Mr. C. T. Ames, Jr. proposed the installation at the Companyts 19th Street and 20th Street plants in Richmond, Virginia of cooling towers to permit the reuse of city water, explaining that water bills were mounting. After discussion of the practical and financial considerations involving a co:npany saving of approximately $12,000 annually, upon motion duly made and seconded, following resolution was unanimously adopted: RESOLVED, That the proper officers of this Company be and they hereby are authorized to proceed with the construction and installation of two large cooling towers (one for tobacco conditioning and the other for main air conditioning at the.19th Street and 20th Street plants of the Company) and one small cooling tower, at a total cost of approximately $? 5, 000. Mr. 0. P. McComas then presented an amendment to the B y-Laws of the Company, and upon motion duly made and seconded the following resolution was unanimously adopted: RESOLVID, That effective upon the expiration of the term of office of the present Boardd of Directors, Section 2 of Article II of the By-Laws be amended to read as follows: "Number.-The number of directors shall be ten.t' There followed a discussion of the general business of the Company. There being no further busiress to come before the meeting, the same adjourned. the Secretary of the Meeting