par value stock for 6 shares of new class B common stock, sometimes hereinafter referred to as class B, so that there were issued to the stockholders 4,000 shares of class A and 24,000 shares of class B. Thereupon, the total par and stated value of the corporation's outstanding capital stock was $520,000.

The qualifications and preferences of the respective classes of stock as shown on the stock certificates were as follows:

1. As to Dividends.-The holders of Class "A" Common Stock shall be entitled, in preference to the holders of Class "B" Common Stock, to dividends out of the surplus or net profits as and when declared by the Board of Directors, at the rate of $6.00 per share per annum, payable at such time as the Board of Directors may determine; such dividends shall be cumulative so that if for any dividend period, dividends at the rate of $6.00 per annum shall not have been paid upon such Class "A" Common Stock, the deficiency shall be fully paid, but without interest, before any dividend shall be paid upon, or set apart for the Class "B" Common Stock.

After the cumulative dividends on the Class "A" Common Stock for all previous years and the current fiscal year shall have been declared and shall have become payable, and a sum sufficient for the payment thereof shall have been set aside from the surplus or net profits, the Board of Directors may then declare dividends on the Class "B" Common Stock. Whenever such dividends for the current year on the Class "B" Common Stock shall total $2.00 per share, any further dividends that might be declared by the Board of Directors during the same year shall be paid equally to both classes of stock, i. e., each share of Class "B" Common Stock receiving the same amount as each share of Class "A" Common Stock.

2. As to Voting Rights.-The holders of the Class "B" Common Stock shall have no voting power whatsoever; nor shall they be entitled to notice of any meeting of shareholders of the Corporation; the voting power being vested exclusively in the holders of the Class "A" Common Stock.

3. As to Liquidation-In the event of any liquidation, dissolution, or windingup of the Corporation, whether voluntary or involuntary, the holders of Class "A" Common Stock issued and outstanding shall be entitled to be paid $100.00 per share, together with an amount equal to all dividends thereon accrued or in arrears, whether or not earned or declared, before any amount shall be paid to the holders of Class "B" Common Stock. The holders of Class "B" Common Stock issued and outstanding shall then be entitled to be paid $5.00 per share. However, should there be more than sufficient assets to pay all of the Class "A" Common Stockholders and all of the Class "B" Common Stockholders as outlined above, then each class of stock shall share in the surplus remaining in that proportion which the total of its stated capital compares with the total stated capital of both classes of stock outstanding at that time.

At a special meeting in April, 1940, the corporation's board of directors approved and recommended to the stockholders a proposal that the unissued class A shares be issued pro rata, as a stock dividend, to the holders of the outstanding shares of that class and that there be a like issuance of the class B shares to the holders of the outstanding shares of that class of stock. Subsequently, the pro

posal was approved by the stockholders at a special meeting. All if the holders of the class B shares consented in writing. Thereafter, on June 19, 1940, the board of directors adopted the following

resolution:

RESOLVED that the Directors hereby authorize and direct the issuance of de remaining 12,000 shares of Class B stock, and 2,000 shares of Class A stock pro rata among the stockholders of record as of June 19, 1940, in acrance with the basis heretofore proposed, authorized, and approved by the Bard of Directors on April 24, 1940, and by shareholders on May 8, 1940, amely, that for each share of Class A stock held of record on June 19, 1940, by a stockholder, he is to receive a stock dividend 1⁄2 share of Class A stock, and for each share of Class B stock held of record June 19, 1940 by a stockholder he is to receive as a stock dividend 1⁄2 share of Class B stock, and for each share of Class A stock so issued, there shall be transferred from the company's surplus account to the company's capital account the sum of $100.00 and for each share of Class B so issued, there shall be transferred from the company's surplus account to the company's capital account the sum of $5.00.

Said shares to be issued forthwith and said capital and surplus accounts to be adjusted forthwith and the proper officers are hereby authorized and directed to prepare and issue the required certificates in accordance with the above minutes.

At that time the issued capital stock of the corporation, consisting of 4,000 shares of class A and 24,000 shares of class B, was owned by the petitioners in the following amounts and in the indicated percentages of the total amount of each class of stock:

The shares owned by Cynthia S. Calhoun were transferred to her by Ernest N. Calhoun. The shares owned by the E. L. Wiegand Trusts Nos. 1, 2, 3, and 4, were conveyed to the trusts by gift from Edwin L. Wiegand, whose children are the beneficiaries of the trusts. On June 20, 1940, pursuant to the resolution of the preceding day, the distributions of stock were made as follows, increasing the total tstanding stock of the corporation and the amount owned by each petitioner to the amounts indicated below.

par value stock for 6 shares of new class B common stock, sometimes hereinafter referred to as class B, so that there were issued to the stockholders 4,000 shares of class A and 24,000 shares of class B. Thereupon, the total par and stated value of the corporation's outstanding capital stock was $520,000.

The qualifications and preferences of the respective classes of stock as shown on the stock certificates were as follows:

1. As to Dividends.-The holders of Class "A" Common Stock shall be entitled, in preference to the holders of Class "B" Common Stock, to dividends out of the surplus or net profits as and when declared by the Board of Directors, at the rate of $6.00 per share per annum, payable at such time as the Board of Directors may determine; such dividends shall be cumulative so that if for any dividend period, dividends at the rate of $6.00 per annum shall not have been paid upon such Class "A" Common Stock, the deficiency shall be fully paid, but without interest, before any dividend shall be paid upon, or set apart for the Class "B" Common Stock.

After the cumulative dividends on the Class "A" Common Stock for all previous years and the current fiscal year shall have been declared and shall have become payable, and a sum sufficient for the payment thereof shall have been set aside from the surplus or net profits, the Board of Directors may then declare dividends on the Class "B" Common Stock. Whenever such dividends for the current year on the Class "B" Common Stock shall total $2.00 per share, any further dividends that might be declared by the Board of Directors during the same year shall be paid equally to both classes of stock, i. e., each share of Class "B" Common Stock receiving the same amount as each share of Class "A” Common Stock.

2. As to Voting Rights.-The holders of the Class "B" Common Stock shall have no voting power whatsoever; nor shall they be entitled to notice of any meeting of shareholders of the Corporation; the voting power being vested exclusively in the holders of the Class "A" Common Stock.

3. As to Liquidation-In the event of any liquidation, dissolution, or windingup of the Corporation, whether voluntary or involuntary, the holders of Class "A" Common Stock issued and outstanding shall be entitled to be paid $100.00 per share, together with an amount equal to all dividends thereon accrued or in arrears, whether or not earned or declared, before any amount shall be paid to the holders of Class "B" Common Stock. The holders of Class "B" Common Stock issued and outstanding shall then be entitled to be paid $5.00 per share. However, should there be more than sufficient assets to pay all of the Class "A" Common Stockholders and all of the Class "B" Common Stockholders as outlined above, then each class of stock shall share in the surplus remaining in that proportion which the total of its stated capital compares with the total stated capital of both classes of stock outstanding at that time.

At a special meeting in April, 1940, the corporation's board of directors approved and recommended to the stockholders a proposal that the unissued class A shares be issued pro rata, as a stock dividend, to the holders of the outstanding shares of that class and that there be a like issuance of the class B shares to the holders of the outstanding shares of that class of stock. Subsequently, the pro

posal was approved by the stockholders at a special meeting. All of the holders of the class B shares consented in writing. Thereafter, on June 19, 1940, the board of directors adopted the following resolution:

RESOLVED that the Directors hereby authorize and direct the issuance of the remaining 12,000 shares of Class B stock, and 2,000 shares of Class A stock pro rata among the stockholders of record as of June 19, 1940, in accordance with the basis heretofore proposed, authorized, and approved by the Board of Directors on April 24, 1940, and by shareholders on May 8, 1940, namely, that for each share of Class A stock held of record on June 19, 1940, by a stockholder, he is to receive a stock dividend 1⁄2 share of Class A stock, and for each share of Class B stock held of record June 19, 1940 by a stockholder he is to receive as a stock dividend 1⁄2 share of Class B stock, and for each share of Class A stock so issued, there shall be transferred from the company's surplus account to the company's capital account the sum of $100.00 and for each share of Class B so issued, there shall be transferred from the company's surplus account to the company's capital account the sum of $5.00.

Said shares to be issued forthwith and said capital and surplus accounts to be adjusted forthwith and the proper officers are hereby authorized and directed to prepare and issue the required certificates in accordance with the above minutes.

At that time the issued capital stock of the corporation, consisting of 4,000 shares of class A and 24,000 shares of class B, was owned by the petitioners in the following amounts and in the indicated percentages of the total amount of each class of stock:

The shares owned by Cynthia S. Calhoun were transferred to her by Ernest N. Calhoun. The shares owned by the E. L. Wiegand Trusts Nos. 1, 2, 3, and 4, were conveyed to the trusts by gift from Edwin L. Wiegand, whose children are the beneficiaries of the trusts. On June 20, 1940, pursuant to the resolution of the preceding day, the distributions of stock were made as follows, increasing the total outstanding stock of the corporation and the amount owned by each petitioner to the amounts indicated below.

The shares of capital stock so distributed to the petitioners as a stock dividend were of the identical class and character as the shares of capital stock in respect of which the distribution was made.

The net assets of the corporation, as reflected by its books immediately prior to the above distributions, amounted to $1,168,514.36. The capital stock and surplus accounts showed class A stock outstanding of a par value of $400,000, class B stock outstanding of a stated value of $120,000 and a surplus of $648,514.36, or a total of $1,168,514.36. To reflect the stock distributions, there was transferred from the corporation's surplus account to the capital stock account $260,000 representing $100 per share for the class A stock and $5 per share for the class B stock issued as dividends. Immediately after the distributions the capital stock and surplus accounts showed class A stock outstanding of a par value of $600,000, class B stock outstanding of a stated value of $180,000, and surplus of $388,514.36, or a total of $1,168,514.36.

No stockholder had a right to an election or an option to receive cash or other property in lieu of his proportion of additional shares of capital stock distributed pursuant to the resolution of the board of directors, nor did the distribution of the stock involve the transfer or distribution of any cash or other assets of the corporation to petitioners. None of the additional shares received by the petitioners as stock dividends were canceled or retired by the corporation during 1940.