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(ITEM 2)
DESCRIPTION OF THE PROPOSED AMENDMENT AND VOTE REQUIRED
On December 20, 1995, the Board of Directors unanimously adopted resolutions approving a proposal to amend Article FOURTH of the Company's Certificate of Incorporation in order to (i) increase the number of shares of Common Stock which the Company is authorized to issue from 2,800,000,000, par value $.25 per share, to 5,600,000,000, par value $.25 per share, and (ii) split the Common Stock of the Company by changing each issued share of Common Stock into two shares of Common Stock, par value $.25 per share. The Board of Directors determined that such amendment is advisable and directed that the proposed amendment be considered at the Annual Meeting of Share Owners to be held April 17, 1996. The affirmative vote of the holders of a majority of the outstanding shares of Common Stock of the Company is required to approve the proposed amendment.
The full text of the proposed amendment to the Certificate of Incorporation is set forth in Appendix A to this Proxy Statement. The amendment will not affect the number of shares of Preferred Stock authorized, which is 100,000,000 shares of Preferred Stock, par value $1.00 per share.
PURPOSES AND EFFECTS OF INCREASING THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The proposed amendment would increase the number of shares of Common Stock which the Company is authorized to issue from 2,800,000,000 to 5,600,000,000. The additional 2,800,000,000 shares would be a part of the existing class of Common Stock and, if and when issued, would have the same rights and privileges as the shares of Common Stock presently issued and outstanding. The holders of Common Stock of the Company are not entitled to preemptive rights or cumulative voting.
The Board of Directors believes it desirable to preserve the relative proportion of issued to unissued shares. If the proposed amendment is adopted, there would be approximately 2,009,000,000 authorized shares that are not outstanding, reserved for issuance or held in the treasury of the Company. The present proportion of authorized and unissued shares to issued shares would be unchanged by the proposed stock split. The Company, as of February 19, 1996, had 1,712,453,955 shares of Common Stock issued, of which 459,978,395 were held in the treasury of the Company. Of the additional shares provided for by the proposed amendment, as of February 19, 1996, approximately 791,000,000 shares would be required to be reserved for issuance under the Company's stock compensation plans and prior acquisitions and to effect the stock split.
PURPOSES AND EFFECTS OF PROPOSED TWO-FOR-ONE STOCK SPLIT
The Board of Directors anticipates that the increase in the number of outstanding shares of Common Stock of the Company resulting from a two-for-one stock split will place the market price of the Common Stock in a range more attractive to investors, particularly individuals, and may result in a broader market for the shares. The Company will apply for listing on The New York Stock Exchange, on which exchange shares of the Company's Common Stock are listed for trading, of the additional shares of Common Stock to be issued.
If the proposed amendment is adopted, each share owner of record at the close of business on May 1, 1996, would be the record owner of, and entitled to receive a certificate or certificates representing one additional share of Common Stock for each share of Common Stock then owned of record by such share owner. Consequently, certificates representing shares of Common Stock should be retained by each share owner and should not be returned to the Company or to its transfer agent, as it will not be necessary to submit outstanding certificates for exchange.
The Company has been advised by tax counsel that the proposed stock split would result in no gain or loss or realization of taxable income to owners of Common Stock under existing United States Federal income tax laws. The cost basis for tax purposes of each new share and each retained share of Common Stock would be equal to one-half of the cost basis for tax purposes of the corresponding share immediately preceding the stock split. In addition, the holding period for the additional shares issued pursuant to the stock split would be deemed to be the same as the holding period for the original share of Common Stock. The laws of jurisdictions other than the United States may impose income taxes on the issuance of the additional shares and share owners are urged to consult their tax advisors.
If the share owners dispose of their shares subsequent to the stock split, they may pay higher brokerage commissions on the same relative interest in the Company because that interest is represented by a greater number of shares. Share owners may wish to consult their respective brokers to ascertain the brokerage commission that would be charged for disposing of the greater number of shares.
In accordance with the various stock option plans and the restricted stock award plans of the Company, it will be necessary to make appropriate adjustments in the number of shares and price of Common Stock reserved for issuance pursuant to such plans. From the effective date of the proposed amendment regarding the stock split, shares reserved for issuance pursuant to exercise of options or awards granted under such plans will be doubled and the exercise price per share, where applicable, divided by two. In addition, pursuant to the Company's Performance Unit Agreement, the number of Performance Units will be doubled and the base price will be divided by two. Pursuant to the Company's Incentive Unit Agreement, the number of Incentive Units will be doubled. Appropriate adjustments will be made under the Company's Supplemental Benefit Plan.
If the proposed amendment is adopted, the value of the Company's common stock account will be increased to reflect the additional shares issued at par value $.25 per share and the value of the capital surplus account will be reduced a like amount with no overall effect on share-owners' equity. The number of shares issued and outstanding, reserved for issuance and held in the treasury would double.
EFFECTIVE DATE OF PROPOSED AMENDMENT AND ISSUANCE OF SHARES FOR STOCK SPLIT
If the proposed amendment to Article FOURTH of the Certificate of Incorporation of the Company is adopted by the required vote of share owners, such amendment will become effective on May 1, 1996, which will become the record date for the determination of the owners of Common Stock entitled to a certificate or certificates representing the additional shares.
Please do not destroy or send your present stock certificates to the Company. If the proposed amendment is adopted, those certificates will remain valid for the number of shares shown thereon, and should be carefully preserved by you. You will be mailed certificates only for the additional shares to which you are entitled. It is planned that certificates for additional shares will be mailed on May 10, 1996.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND ARTICLE FOURTH OF THE COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED COMMON STOCK OF THE COMPANY TO 5,600,000,000 SHARES, PAR VALUE $.25 PER SHARE, AND TO ADOPT A TWO-FOR-ONE STOCK SPLIT. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR THE PROPOSED AMENDMENT UNLESS SHARE OWNERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
SUSAN E. SHAW
Secretary
Atlanta, Georgia
March 1, 1996
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