[' ', ' ', ' ', '“RESOLVED:', 'That', 'the', 'stockholders', 'of', 'American', 'Brands,', 'Inc.,', 'assembled', 'in', 'annual', 'meeting', 'in', 'person', 'and', 'by', 'proxy,', 'hereby', 'request', 'that', 'the', 'Board', 'of', 'Directors', 'take', 'the', 'steps', 'necessary', 'to', 'restore', 'limited', 'pre-emptive', 'rights', 'to', 'the', 'shareholders.”', 'The', 'proposers', 'of', 'the', 'resolution', 'have', 'furnished', 'the', 'following', 'statement', 'setting', 'forth', 'the', 'reasons', 'advanced', 'by', 'them', 'in', 'support', 'of', 'their', 'proposal:', '“In', '1981', '10,320', 'owners', 'of', '1,691,113', 'shares', 'voted', 'in', 'favor', 'of', 'our', 'similar', 'resolution:', '“Charles', 'J.', 'Elia,', 'a', 'well', 'known', 'Wall', 'Street', 'writer', 'publicly', 'stated', '“The', 'hassle', 'over', 'pre-emptive', 'rights', 'is', 'becoming', 'increasingly', 'evident', 'The', 'whole', 'idea', 'of', 'pre-emptive', 'rights', 'is', 'to', 'give', 'people', 'the', 'chance', 'to', 'maintain', 'a', 'proportionate', 'ownership', 'in', 'their', 'companies...', '.', 'Stockholder', 'prerogatives', 'are', 'few', 'enough,', 'it', 'seems', 'to', 'me,', 'without', 'taking', 'away', 'this', 'one”', '“An', 'argument', 'against', 'the', 'pre-emptive', 'rights', 'has', 'been', 'market', 'fluctuations.', 'The', 'new', 'ruling', 'by', 'the', 'Securities', 'and', 'Exchange', 'Commission', 'allowing', '‘shelf', 'registration’,', 'in', 'our', 'opinion,', 'takes', 'care', 'of', 'this', 'problem.', '“The', 'growing', 'interest', 'of', 'employee', 'shareholders', 'on', 'the', 'subject', 'of', 'pre-emptive', 'rights', 'was', 'shown', 'last', 'year', 'at', 'the', 'Pan', 'American', 'meeting', 'where', 'approximately', '38%', 'of', 'the', 'vote', 'cast', 'was', 'in', 'favor', 'of', 'this', 'similar', 'resolution.', '“TE', 'you', 'agree,', 'please', 'mark', 'your', 'proxy', 'for', 'this', 'resulution:', 'otherwise', 'it', 'is', 'awlomatically', 'cast', 'against', 'it,', 'unless', 'you', 'have', 'marked', 'to', 'abstain.”', 'Board', 'of', 'Directors', 'Statement', 'on', 'Proposal', 'The', 'principle', 'of', 'preemptive', 'rights', 'originated', 'to', 'permit', 'a', 'stockholder', 'to', 'maintain', 'his', 'proportionate', 'interest', 'in', '@', 'corporation', 'and', 'to', 'protect', 'his', 'voting', 'rights', 'from', 'dilution', 'through', 'disproportionate', 'sales', 'of', 'additional', 'shares', 'to', 'other', 'more', 'favored', 'stockholders.', 'While', 'the', 'principle', 'still', 'has', 'significance', 'in', 'the', 'ease', 'of', 'corporations', 'having', 'either', 'a', 'relatively', 'small', 'number', 'of', 'stockholders', 'or', 'a', 'controlling', 'stockholder', 'or', 'group', 'of', 'stockholders', 'who', 'wish', 'to', 'maintain', 'their', 'relative', 'interests', 'and', 'voting', 'rights,', 'it', 'has', 'little', 'significance', 'in', 'the', 'case', 'of', 'corporations', 'having', 'a', 'broad', 'base', 'of', 'corporate', 'ownership', 'and', 'with', 'additional', 'shares', 'readily', 'available', 'in', 'the', 'market', 'for', 'purchase.', 'As', 'of', 'March', '24,', '1986,', 'there', 'were', 'approsimately', '92,111', 'holders', 'of', 'record', 'of', 'the', "Company's", 'Common', 'Stock,', 'which', 'is', 'actively', 'traded', 'on', 'the', 'New', 'York', 'Stock', 'Exchange', 'and', 'is', 'also', 'traded', 'on', 'European', 'slock', 'exchanges', 'in', 'London,', 'Brussels,', 'Antwerp,', 'Frankfurt,', 'Dusseldorf,', 'Paris,', 'Amsterdam,', 'Basle,', 'Geneva', 'and', 'Zurich.', 'Holders', 'of', 'Comnion', 'Stock', 'desiring', 'to', 'maintain', 'or', 'increase', 'Uheir', 'holdings', 'can', 'da', 'so', 'through', 'open', 'market', 'purchases', '(usually', 'with', 'the', 'payment', 'of', 'brokerage', 'commissions).', 'Thus,', 'holders', 'of', 'Corimon', 'Stock', 'need', 'not', 'rely', 'on', 'preemptive', 'rights', 'to', 'protect', 'their', 'proportionate', 'interests', 'aud', 'voting', 'rights.', 'It', 'should', 'also', 'be', 'noted', 'that', 'the', 'absence', 'of', 'preemptive', 'righls', 'does', 'not', 'preclude', 'the', 'Company', 'from', 'making', 'rights', 'offerings', 'to', 'holders', 'of', 'Common', 'Stack', 'to', 'purchase', 'additional', 'shares', 'of', 'Common', 'Stack.', 'Preemptive', 'rights', 'may', 'operate', 'to', 'the', 'disadvantage', 'of', 'the', "Company's", 'stockholders', 'by', 'limiting', 'the', 'Cormpany’s', 'flexibility', 'in', 'future', 'financings', 'involving', 'public', 'offerings', 'of', 'Common', 'Stock', 'of', 'the', 'Company', 'should', 'opportunities', 'considered', 'favorable', 'by', 'the', "Company's", 'Board', 'of', 'Directors', 'arise.', '1', 'he', 'necessity', 'of', 'first', 'submitting', 'such', 'an', 'cffering', 'to', 'the', 'holders', 'of', 'Common', 'Stock,', 'on', 'a', 'pro', 'rata', 'basis,', 'could', 'require', 'a', 'longer', 'time', 'schedule', 'than', 'a', 'direct', 'offering', 'te', 'the', 'public', 'generally,', 'and', 'this', 'additional', 'time', 'factor', 'could', 'reduce', 'the', 'ability', 'of', 'the', 'Company', 'to', 'take', 'advantage', 'of', 'favorable', 'market', 'conditions', 'during', 'a', 'limited', 'period', 'of', 'time.', 'However,', 'no', 'offering', 'of', 'Common', 'Stock', 'of', 'the', 'Company', 'to', 'the', 'public', 'generally', 'is', 'presently', 'contemplated', 'by', 'the', 'Company.', ' ', 'Accordingly,', 'the', 'resolution', 'should', 'be', 'rejected', 'as', 'not', 'in', 'the', 'best', 'interests', 'of', 'the', 'Company', 'and', 'its', 'stockholders.', 'Identical', 'resolutions', 'were', 'overwhelmingly', 'rejected', 'by', 'the', 'stockholders', 'of', 'Old', 'American', 'at', 'the', '1980', 'and', '1851', 'Annual', 'Meetings', 'when', 'more', 'than', '94.9%', 'and', '94.6%,', 'respectively,', 'of', 'the', 'votes', 'were', 'cast', 'against', 'them.', 'The', 'stockholders', 'of', 'Old', 'American,', 'at', 'a', 'Special', 'Meeting', 'held', 'on', 'February', '14,', '1979,', 'voted', 'overwhelmingly', '(by', '94.5%', 'of', 'the', 'votes', 'cast)', 'in', 'favor', 'of', 'a', 'proposal', 'to', 'eliminate', 'preemptive', 'tights,', ' ', 'The', 'affirmative', 'vole', 'of', 'a', 'majority', 'of', 'the', 'combined', 'votes', 'cast', 'by', 'the', 'holders', 'of', 'Common', 'Stock,', '$2.75', 'Preferred', 'Stock', 'and', '$2.67', 'Convertible', 'Preferred', 'Stock', 'voting', 'thereon', 'is', 'necessary', 'for', 'the', 'adoption', 'of', 'Proposal', '5.', 'The', 'Board', 'of', 'Directors', 'recommends', 'that', 'you', 'vote', 'AGAINST', 'Propasal', '5.', '2', ' ']