GENERAL CIGAR HOLDINGS INC, S-4, 1997-04-17

GENERAL CIGAR HOLDINGS INC
S-4, 1997-04-17
TOBACCO PRODUCTS

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 17, 1997

REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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GENERAL CIGAR HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

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<S> <C> <C>
DELAWARE 2100 13-3922128
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
Incorporation or Organization) Number)
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EDGAR M. CULLMAN, JR., PRESIDENT
AND CHIEF EXECUTIVE OFFICER
387 PARK AVENUE SOUTH GENERAL CIGAR HOLDINGS, INC.
NEW YORK, NEW YORK 10016-8899 387 PARK AVENUE SOUTH
(212) 448-3800 NEW YORK, NEW YORK 10016-8899
(Address, including Zip Code, and Telephone (212) 448-3800
Number, including Area Code, of Registrant's (Name, Address, including Zip Code, and Telephone
Principal Executive Offices) Number, including Area Code, of Agent for Service)
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COPY TO:
R. RONALD HOPKINSON, ESQUIRE
LATHAM & WATKINS
885 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 906-1200

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective and upon
consummation of the transactions described in the enclosed Proxy
Statement/Prospectus.

CALCULATION OF REGISTRATION FEE

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PROPOSED MAXIMUM PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE MAXIMUM AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED(1) REGISTERED PER UNIT OFFERING PRICE FEE(2)
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Class B Common Stock, $0.01 par 20,248,282
value Shares(3)(4) Not Applicable Not Applicable $128,274
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(1) This Registration Statement relates to securities of the Registrant issuable
to holders of common stock, par value $1.00 per share (the "Culbro Common
Stock"), of Culbro Corporation ("Culbro") in the proposed merger of Culbro
with the Registrant (the "Merger"), with the Registrant as the surviving
corporation.

(2) The registration fee was calculated, pursuant to Rule 457(f), as one
thirty-third of one percent of $423,303,361 (the aggregate market value of
the 4,554,710 then-outstanding shares of Culbro Common Stock computed at
April 14, 1997).

(3) The amount of common stock, par value $0.01 per share (the "Class B Common
Stock"), of General Cigar Holdings, Inc. to be registered has been
determined on the basis of the conversion ratio for such shares in the
Merger (4.44557 shares of Class B Common Stock for each outstanding share of
Culbro Common Stock).

(4) Subject to adjustment for any Culbro stock options exercised prior to the
Merger.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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CULBRO CORPORATION
387 Park Avenue South
New York, New York 10016-8899
(212) 448-3800
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 2, 1997

PLEASE TAKE NOTICE that the Annual Meeting of Shareholders of Culbro
Corporation ("Culbro") will be held in the Auditorium on the 3rd floor of the
offices of the Corporate Headquarters of Chase Banking Corporation, 270 Park
Avenue, New York, N.Y. on the 2nd day of June 1997, at 11:00 a.m., local time,
to consider and act upon:

(1) the approval and adoption of the Agreement and Plan of Merger, dated
February 27, 1997 (the "Merger Agreement"), among Culbro and General Cigar
Holdings, Inc. ("General Cigar"), pursuant to which Culbro will merge with
and into General Cigar (the "Merger"), upon the terms and subject to the
conditions set forth in the Merger Agreement, as more fully described in the
attached Proxy Statement/Prospectus; in the Merger, each issued and
outstanding share of common stock, par value $1.00 per share, of Culbro (the
"Culbro Common Stock") will be exchanged for 4.44557 shares of Class B
Common Stock of General Cigar, par value $0.01 per share (the "Class B
Common Stock"). Shareholders will have the right to dissent from the Merger
and demand appraisal and payment for their shares under Section 623 of the
New York Business Corporation Law (the "NYBCL") in connection with the
Merger; and

(2) the election of directors of Culbro; and

(3) the approval of the selection of Culbro's independent accountants
for 1997; and

(4) such other business as may properly be brought before the Annual
Meeting or any adjournments thereof.

The terms of the Merger Agreement and the Class B Common Stock to be issued
in connection therewith are described in detail in the accompanying Proxy
Statement/Prospectus. To ensure that your vote will be counted, please complete,
date and sign the enclosed proxy card and return it promptly in the enclosed
postage-paid envelope, whether or not you plan to attend the Annual Meeting. You
may revoke your proxy in the manner described in the accompanying Proxy
Statement/Prospectus at any time before it is voted at the Annual Meeting.

The Board of Directors has fixed the close of business on May 1, 1997 as the
record date for the determination of shareholders entitled to notice of and to
vote at the Annual Meeting. Pursuant to Section 903 of the NYBCL the affirmative
vote of the holders of two-thirds of the outstanding shares of Culbro Common
Stock is required to approve and adopt the Merger Agreement. Pursuant to Section
614 of the NYBCL, assuming a quorum is present, (i) the Board of Directors of
Culbro will be elected by a plurality of the votes cost and (ii) the approval of
the selection of Culbro's independent accountants for 1997 requires the
affirmative vote of the majority of votes cast. Each share of Culbro Common
Stock will entitle the record holder thereof to one vote on each matter put to a
vote at the Annual Meeting. A list of shareholders entitled to notice of and to
vote at the Annual Meeting will be available for inspection by any shareholder
at the offices of Culbro, 387 Park Avenue South, New York, New York, for the ten
days preceding the Annual Meeting.

PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN
THE ENCLOSED RETURN ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN
PERSON EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.

A. ROSS WOLLEN
Secretary

New York, New York
May , 1997
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SUBJECT TO COMPLETION, DATED APRIL 17, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL
PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
JURISDICTION.
<PAGE>
CULBRO CORPORATION
PROXY STATEMENT
------------------

GENERAL CIGAR HOLDINGS, INC.
PROSPECTUS

This Proxy Statement/Prospectus is furnished to the shareholders of Culbro
Corporation ("Culbro") in connection with the solicitation by the Board of
Directors of proxies for the Annual Meeting of Shareholders to be held on June
2, 1997 at 11:00 a.m. local time, in the Auditorium of Chase Banking
Corporation, 270 Park Avenue, New York, New York, for the purposes set forth in
the accompanying notice of meeting.

This Proxy Statement/Prospectus also constitutes a prospectus of General
Cigar Holdings, Inc. ("General Cigar") with respect to 20,248,242 shares of
Class B common stock, par value $0.01 per share, of General Cigar ("Class B
Common Stock"), subject to adjustment for any Culbro stock options exercised
prior to the Merger. See "Certain Employee Benefit Matters--Culbro Benefit Plans
to be Assumed by General Cigar--Culbro Stock Option Plans." In the Merger, each
issued and outstanding share of common stock, par value $1.00 per share, of
Culbro ("Culbro Common Stock") will be converted into approximately 4.44557
shares of Class B Common Stock. Following the Merger, each share of Class B
Common Stock will be freely convertible into one share of Class A Common Stock,
par value $0.01 per share, of General Cigar ("Class A Common Stock" and,
together with the Class B Common Stock, the "Common Stock"). See "The
Merger--The Merger."

This Proxy Statement/Prospectus is first being mailed to holders of Culbro
Common Stock on or about May 5, 1997. Any proxy received in the accompanying
form may be revoked by the person executing it at any time before the authority
thereby granted is exercised. Proxies received by the Board of Directors in such
form will be voted at the meeting or any adjournment thereof as specified
therein by the person giving the proxy; if no specification is made the shares
represented by such proxy will be voted (i) for the approval of the adoption of
the Merger Agreement, a copy of which is attached hereto as Annex I, and the
transactions contemplated thereby; (ii) for the election of directors as
described in this Proxy Statement/Prospectus; and (iii) for approval of the
selection of Price Waterhouse LLP as independent accountants for Culbro for
1997. For voting purposes (as opposed to for purposes of establishing a quorum)
abstentions and broker non-votes will not be counted in determining whether the
directors standing for election have been elected or whether the other matters
to be voted on have been approved. Approval of the Merger requires the positive
vote of two-thirds of the outstanding shares of Culbro. Proposals by
shareholders for Culbro's 1998 Annual Meeting of Shareholders must be received
by Culbro before November 15, 1997. If the anticipated Merger of Culbro into
General Cigar takes place in 1997 there will be no Culbro 1998 Annual Meeting of
Shareholders.

Management knows of no matters which may be brought before the Annual
Meeting or any adjournment thereof other than those described in the
accompanying notice of meeting and routine matters incidental to the conduct of
the meeting. However, if any other matter should come before the meeting or any
adjournment thereof, it is the intention of the persons named in the
accompanying form of proxy or their substitutes to vote the proxy in accordance
with their judgment on such matters.

The cost of solicitation of proxies by the Board of Directors will be borne
by Culbro. Such solicitation will be made by mail and in addition may be made by
officers and employees of Culbro personally or by telephone, facsimile machine
or telegram. Proxies and proxy material will also be distributed through
brokers, custodians and other like parties.

Each holder of shares of Culbro Common Stock will be entitled to one vote
for each share held of record by such person at the close of business on May 1,
1997, which is the record date fixed by the Board of Directors for the
determination of shareholders entitled to notice of, and to vote at, the meeting
or any adjournment thereof. As of such date Culbro believes it will have
outstanding 4,554,710 shares of Culbro Common Stock (excluding 4,318 shares of
treasury stock).

THE SHARES OF CLASS B COMMON STOCK OFFERED HEREBY HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/ PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this Proxy Statement/Prospectus is , 1997.
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TABLE OF CONTENTS

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PAGE
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AVAILABLE INFORMATION...................................................................................... 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................................................ 3
SUMMARY.................................................................................................... 4
RISK FACTORS............................................................................................... 12
THE ANNUAL MEETING......................................................................................... 19
THE MERGER................................................................................................. 20
SELECTED FINANCIAL DATA.................................................................................... 27
UNAUDITED PRO FORMA FINANCIAL STATEMENTS................................................................... 29
CULBRO CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS... 35
GENERAL CIGAR HOLDINGS, INC. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS............................................................................................... 39
BUSINESS................................................................................................... 44
MANAGEMENT................................................................................................. 57
CERTAIN EMPLOYEE BENEFIT MATTERS........................................................................... 61
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS OF CULBRO AND GENERAL CIGAR................................. 68
PRINICIPAL STOCKHOLDERS.................................................................................... 68
DESCRIPTION OF CAPITAL STOCK............................................................................... 71
DESCRIPTION OF THE CREDIT FACILITY......................................................................... 74
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................................................... 75
COMPARISON OF STOCKHOLDER RIGHTS........................................................................... 76
LEGAL MATTERS.............................................................................................. 82
EXPERTS.................................................................................................... 82
ELECTION OF CULBRO BOARD OF DIRECTORS...................................................................... 83
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION-INTERLOCKS AND INSIDER PARTICIPATION............... 84
STOCK PERFORMANCE GRAPH.................................................................................... 86
SELECTION OF INDEPENDENT ACCOUNTANTS....................................................................... 87
INDEX TO FINANCIAL STATEMENTS.............................................................................. F-1
ANNEX I--AGREEMENT AND PLAN OF MERGER
ANNEX II--GRIFFIN INFORMATION STATEMENT
ANNEX III--NEW YORK BUSINESS CORPORATION LAW Section623
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROXY STATEMENT/PROSPECTUS IN CONNECTION WITH THE OFFERING OF SECURITIES MADE
HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY
SECURITIES IN ANY JURISDICTION IN WHICH IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER
OR SOLICITATION OR TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY
DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF CULBRO OR
GENERAL CIGAR OR ANY OF THEIR RESPECTIVE SUBSIDIARIES SINCE THE DATE HEREOF OR
THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

AVAILABLE INFORMATION

General Cigar and Culbro are subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports and other information with the Securities and
Exchange Commission (the "Commission") relating to their business, financial
position, results of operations and other matters. Such reports and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, DC 20549 and at its Regional Offices located at The Citicorp Center,
500 West Madison Street, Chicago Illinois 60661, and 7 World Trade Center, 15th
Floor, New York, New York 10048. Copies of such material also can be obtained
from the Public Reference Section of the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, DC 20549 at prescribed rates. The Commission
maintains a web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding General Cigar and Culbro.
The Class A Common Stock and the Culbro Common Stock are listed on the New York
Stock Exchange ("NYSE"). Such material can also be inspected at the offices of
the NYSE, 20 Broad Street, New York, New York 10005.

General Cigar has filed with the Commission a registration statement on Form
S-4 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the securities to be issued pursuant to
the Merger Agreement. This Proxy Statement/Prospectus does not contain all
information set forth in the Registration Statement, certain portions of which
have been omitted pursuant to the rules and regulations of the Commission.
Reference is made to the Registration Statement and to the exhibits relating
thereto for further information with respect to General Cigar and the securities
offered hereby.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents related to Culbro, filed with the Commission by
Culbro pursuant to the Exchange Act, are incorporated by reference in this Proxy
Statement/Prospectus: (a) Annual Report on Form 10-K for the fiscal year ended
November 30, 1996, as amended by the Report on Form 10-K/A filed on March 28,
1997; (b) Report on Form 8-K filed on April 7, 1997; and (c) Report on Form 10-Q
filed on April 15, 1997. The Report on Form 10-Q filed with the Commission by
General Cigar on April 15, 1997 is incorporated by reference in this Proxy
Statement/Prospectus.

All documents and reports filed by Culbro or General Cigar pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Proxy Statement/Prospectus and prior to the date of the Annual Meeting shall be
deemed to be incorporated by reference in this Proxy Statement/Prospectus and to
be a part hereof from the dates of filing of such documents or reports. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Proxy Statement/Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Proxy Statement/Prospectus.

THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (OTHER THAN
EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED
BY REFERENCE) ARE AVAILABLE, WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT/PROSPECTUS IS DELIVERED, ON
WRITTEN OR ORAL REQUEST, TO CULBRO CORPORATION, 387 PARK AVENUE SOUTH, NEW YORK,
NEW YORK 10016-8899 (TELEPHONE NUMBER (212) 448-3800), ATTN: SECRETARY. IN ORDER
TO ENSURE TIMELY DELIVERY OF THE INCORPORATED DOCUMENTS, REQUESTS SHOULD BE
RECEIVED NO LATER THAN MAY , 1997.

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SUMMARY

THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN
THIS PROXY STATEMENT/PROSPECTUS. REFERENCE IS MADE TO, AND THIS SUMMARY IS
QUALIFIED IN ITS ENTIRETY BY, THE MORE DETAILED INFORMATION CONTAINED ELSEWHERE
IN THIS PROXY STATEMENT/PROSPECTUS AND THE ANNEXES HERETO. CULBRO SHAREHOLDERS
ARE URGED TO READ THIS PROXY STATEMENT/PROSPECTUS AND THE ANNEXES HERETO
CAREFULLY AND IN THEIR ENTIRETY. UNLESS THE CONTEXT OTHERWISE REQUIRES, ALL
REFERENCES IN THIS PROXY STATEMENT/PROSPECTUS TO "GENERAL CIGAR" MEAN GENERAL
CIGAR HOLDINGS, INC. AND ITS SUBSIDIARIES.

THE COMPANIES

CULBRO CORPORATION

Culbro was incorporated in New York in 1906 under the name United Cigar
Manufacturers Co. In 1917, the corporation's name was changed to General Cigar
Co., Inc., and in 1976 the name was changed again to the current name, Culbro
Corporation. Culbro is a holding company, substantially all of whose assets are
its ownership interests in General Cigar and Griffin Land & Nurseries, Inc.
("Griffin").

Culbro's principal executive offices are located at 387 Park Avenue South,
New York, New York, 10016-8899, and its telephone number is (212) 448-3800.

GRIFFIN LAND & NURSERIES, INC.

Griffin was incorporated in Delaware in March 1970 under the name Culbro
Realty and Development Corporation. In June 1976 the corporation merged with and
into Culbro Land Resources, Inc., and on March 18, 1997 the name was changed to
the current name, Griffin Land & Nurseries, Inc. Griffin is currently a
wholly-owned subsidiary of Culbro and conducts Culbro's non-tobacco related
businesses. Prior to the Merger, Culbro intends to effect a PRO RATA
distribution (the "Distribution") to the shareholders of Culbro of all issued
and outstanding shares of Class B Common Stock, par value $0.01 per share, of
Griffin ("Griffin Common Stock"). The Distribution is contingent principally
upon (i) either a tax ruling or an opinion of counsel satisfactory to Culbro
that the Distribution constitutes a tax-free reorganization under Section 355 of
the Internal Revenue Code and (ii) the approval by the holders of 66 2/3% of
outstanding Culbro Common Stock of the Merger. For information relating to
Griffin, see Annex II.

GENERAL CIGAR HOLDINGS, INC.

General Cigar was incorporated in Delaware in December, 1996. General Cigar
is a holding company with no business operations of its own. Its only material
assets are all of the outstanding capital stock of its subsidiaries, General
Cigar Co., Inc., GCH Transportation, Inc., Club Macanudo, Inc. and Club Macanudo
(Chicago), Inc. and all of the ownership interests in its office building at 387
Park Avenue South in New York City.

General Cigar is the largest manufacturer and marketer in the U.S. in both
units and dollar sales of brand name premium cigars (imported, hand-made or
hand-rolled cigars made with long filler and all natural tobacco leaf). General
Cigar's Macanudo and Partagas brands are the two top selling premium cigar
brands sold in the U.S. General Cigar believes that higher priced branded
premium cigars constitute the fastest growing segment of the premium cigar
market. Approximately 80% of General Cigar's premium cigar sales in fiscal 1996
were at suggested retail prices of $3.00 or more per unit. General Cigar's unit
sales at or above this price point have increased at approximately a 90%
compound annual growth rate ("CAGR") during the past four years. General Cigar,
through its well known brands such as Garcia y Vega, also is a leading
participant in the growing mass market cigar segment. From fiscal 1993 to fiscal
1996, General Cigar's net sales increased from $76.8 million to $154.7 million
and operating profit increased from $2.4 million to $20.2 million, representing
CAGRs of 26.3% and 104.2%, respectively. After giving effect to the acquisition
(the "Villazon Acquisition") by General Cigar in January 1997 of substantially
all

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of the assets of Villazon & Company, Inc. and all of the stock of its affiliate,
Honduras American Tabaco, S.A. de C.V. (collectively referred to herein as
"Villazon") on a pro forma basis, General Cigar's net sales and operating profit
for 1996 would have been $195.3 million and $31.9 million, respectively.

General Cigar markets its cigars under a number of well-known brand names.
General Cigar's premium cigars include the Macanudo, Partagas, Temple Hall,
Canaria d'Oro, Cifuentes and Ramon Allones brands. General Cigar also owns the
rights to market cigars in the U.S. under the names Cohiba and Bolivar. The
Villazon Acquisition has added a variety of other brand names to General Cigar's
line of premium cigars, including Punch, Hoyo De Monterrey and El Rey Del Mundo.
General Cigar, after giving effect to the Villazon Acquisition, owns the U.S.
trademark rights to seven of the top ten traditional premium Cuban brand names
ranked according to 1995 worldwide sales by all cigar marketers. Macanudo was
rated "best cigar" by ROBB REPORT in 1992, the first year in which ROBB REPORT
rated cigars, and "best cigar" again in 1994 and 1995 (the category was not
included in the 1993 ROBB REPORT). In 1996, ROBB REPORT chose eight "best
cigars," including Macanudo, Partagas 150 Signature, Hoyo De Monterrey Excalibur
No. 2 and Cohiba. General Cigar's mass market large cigars include Garcia y
Vega, White Owl, Robt. Burns and Wm. Penn. General Cigar's mass market small
cigars include the Tiparillo and Tijuana Smalls brands, as well as smaller sizes
of its other mass market brands. General Cigar does not participate in the
market for little cigars, which are cigars that resemble cigarettes. General
Cigar also is the exclusive U.S. distributor of French made Djeep disposable
lighters, and it operates Club Macanudo, a cigar bar located in New York City.

General Cigar believes that increasing demand for cigars continues to offer
General Cigar substantial growth opportunities. Since 1993, cigar smoking has
experienced a resurgence resulting in an increase in consumption and retail
sales of cigars across all major categories, especially in the premium cigar
segment. This growth produced overall retail sales in the U.S. cigar market of
an estimated $1.25 billion in 1996, the largest dollar sales in the industry's
history. Based on industry estimates of 1996 results, unit sales of premium and
mass market cigars (excluding little cigars) in the U.S. have increased at CAGRs
of 35.4% and 9.6%, respectively, from 1993 to 1996, while retail dollar sales of
both categories have increased more rapidly due to price increases. General
Cigar believes that sales of premium cigars exceeded 270 million units in the
U.S. in 1996, an increase of over 60% from 1995 unit sales.

General Cigar believes that this increase in cigar consumption and retail
sales is the result of a number of factors, including: (i) the improving image
of cigar smoking resulting from increased publicity, including the success of
CIGAR AFICIONADO and SMOKE magazines and the increased visibility of cigar
smoking by celebrities (such as Arnold Schwarzenegger, Mel Gibson, Demi Moore
and Jack Nicholson); (ii) the emergence of an expanding base of younger, highly
educated, affluent adults age 25 to 35 and the growing interest of this group in
luxury goods, including premium cigars; (iii) the increase in the number of
adults over the age of 40 (a demographic group believed to smoke more cigars
than any other demographic group); and (iv) the proliferation of establishments,
such as restaurants and clubs, where cigar smoking is encouraged, as well as
"cigar smokers" dinners and other special events for cigar smokers.

General Cigar's pro forma financial results, including the effect of the
Villazon Acquisition, reflect its strong position within the growing cigar
industry. In fiscal 1996, General Cigar had pro forma net sales of $196.7
million and pro forma operating profit of $32.3 million. General Cigar's
backorders of cigars, excluding Villazon backorders, increased from $21.0
million at wholesale at December 2, 1995 to $78.0 million at wholesale at
November 30, 1996. During 1996, General Cigar discontinued accepting premium
cigar orders from its nine largest customers and currently allocates product to
such customers as it becomes available.

General Cigar attributes its strong market position to the following
competitive strengths: (i) well-known brand names, which in the premium cigar
market are the leading brands in their categories; (ii) a broad range of product
offerings within both the premium and mass market segments of the U.S. cigar
markets; (iii) its positioning as the only cigar manufacturer that is also a
major grower and supplier of

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Connecticut Shade wrapper tobacco, one of the most popular premium wrapper
tobaccos in the world; (iv) a commitment to, and reputation for, manufacturing
quality cigars; (v) its marketing expertise; (vi) its efficient manufacturing
operations; and (vii) a highly experienced management team that includes
individuals from families with up to five generations of experience in the U.S.
and Cuban cigar/tobacco businesses.

General Cigar's executive offices are located at 387 Park Avenue South, New
York, New York 10016-8899, and the telephone number is (212) 448-3800. Its
website is http://cigarworld.com. Information on General Cigar's website is not
deemed to be a part of or incorporated by reference into this Proxy
Statement/Prospectus.

THE VILLAZON ACQUISITION

On January 21, 1997 General Cigar acquired (the "Villazon Acquisition")
substantially all of the assets of Villazon & Company, Inc. and all of the stock
of its affiliate, Honduras American Tabaco, S.A. de C.V. (collectively referred
to herein as "Villazon") for approximately $80.6 million, including certain
direct acquisition costs and net of $9.9 million of cash. The acquisition was
funded in part by the issuance of $24.4 million aggregate principal amount of
notes (the "Seller Notes"). Through the Villazon Acquisition, General Cigar
acquired facilities in Tampa, Florida, San Pedro Sula and Danli, Honduras, and
Upper Saddle River, New Jersey, as well as the U.S. trademark rights to several
traditional Cuban trademarks and widely recognized names in the premium cigar
industry, including Punch, Hoyo De Monterrey and El Rey Del Mundo.

The acquisition of Villazon gives General Cigar a broader taste spectrum in
cigars, substantially increases its manufacturing capacity and provides access
to new sources of tobacco for all of its product offerings. The addition of
cigars made in Honduras, one of the fastest-growing countries of origin for
cigars worldwide, complements General Cigar's Dominican and Jamaican made cigars
in addition to diversifying its manufacturing base across three countries.
Management believes that Villazon's operations complement General Cigar's and
will enable General Cigar to leverage, over time, its cost structure, its sales
and distribution networks and its marketing expertise, resulting in improved
growth and profitability.

THE OFFERING; SUMMARY DESCRIPTION OF CAPITAL STOCK

In February 1997, General Cigar consummated an initial public offering of
Class A Common Stock (the "Offering"). The Offering consisted of 6,900,000
shares of Class A Common Stock, which comprises all of the Class A Common Stock
presently outstanding. In addition, General Cigar has 3,300,000 shares of Class
A Common Stock reserved for issuance under the General Cigar Holdings 1997 Stock
Option Plan, 665,600 of which are subject to options issued by General Cigar
subsequent to the Offering and 1,960,511 of which are reserved for issuance upon
exercise of options outstanding under Culbro's option plans. See "Certain
Employee Benefit Matters--1997 Stock Option Plan."

General Cigar also has outstanding 20,248,282 shares of Class B Common
Stock, all of which are held by Culbro. Each share of Class B Common Stock is
convertible at any time into one share of Class A Common Stock and converts
automatically into one share of Class A Common Stock upon a sale to any person
other than a Permitted Transferee (as defined herein). Issuance of all Class B
Common Stock to the shareholders of Culbro as a result of the Merger is not a
transfer but will constitute an issuance to a Permitted Transferee. See
"Description of Capital Stock." The Class A Common Stock and Class B Common
Stock vote as a single class on all matters, except as otherwise required by
law, with each share of Class A Common Stock entitling its holder to one vote
and each share of Class B Common Stock entitling its holder to ten votes. The
20,248,282 shares of Class B Common Stock held by Culbro represent approximately
75% of the issued and outstanding Common Stock and approximately 97% of the
combined voting power of the outstanding shares of Common Stock. After giving
effect to the Merger, all shares of Class B Common Stock will be held by the
holders of the Culbro Common Stock (including a group of

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individuals and trusts which holds approximately 50% of Culbro's common stock
known as the "Cullman & Ernst Group," who will own approximately 37% of the
issued and outstanding Common Stock and approximately 48% of the combined voting
power of the outstanding shares of Common Stock after the Merger).

THE ANNUAL MEETING

DATE, TIME AND PLACE OF ANNUAL MEETING

The Annual Meeting will be held on June 2, 1997 at 11:00 a.m. local time, at
the Auditorium on the 3rd floor of the offices of the Corporate Headquarters of
Chase Banking Corporation, 270 Park Avenue, New York, New York.

PURPOSE OF ANNUAL MEETING

At the Annual Meeting, the holders of shares of Culbro Common Stock will
consider and vote upon (i) the adoption of the Merger Agreement and the
transactions contemplated therein, (2) the election of the Board of Directors of
Culbro and (3) the approval of the selection of Culbro's independent accountants
for 1997.

RECORD DATE

The Board of Directors of Culbro has fixed the close of business on May 1,
1997 as the record date for the determination of holders of Culbro Common Stock
entitled to notice of and to vote at the Culbro Annual Meeting. On the record
date Culbro believes that there will be approximately 4,554,710 shares of Culbro
Common Stock outstanding (subject to adjustment for any Culbro stock options
exercised prior to the Merger), each entitled to one vote.

REQUIRED VOTE; QUORUM

The Merger Agreement and transactions contemplated thereby must be adopted
by the affirmative vote of the holders of 66 2/3% of the outstanding Culbro
Common Stock pursuant to Section 903 of the NYBCL. Pursuant to Section 614 of
the NYBCL, assuming a quorum is present, (i) the Board of Directors of Culbro
will be elected by a plurality of the votes cast and (ii) the approval of the
selection of Culbro's independent accountants for 1997 requires the affirmative
vote of the majority of votes cast.

The Culbro Board of Directors recommends that the Culbro shareholders vote
for (i) the approval of the Merger Agreement, (ii) the election of the nominated
Directors and (iii) the approval of the selection of Culbro's independent
accountants for 1997.

At the Annual Meeting, only shares voted for the adoption of the Merger will
be counted as voted in favor in determining whether the Merger is approved.
Therefore, abstentions and broker non-votes will have the same effect as votes
against adoption of the Merger. In the election of directors, votes that are
withheld and broker non-votes will have no effect on the outcome of the election
of the directors. Under the rules of the NYSE, brokers who hold shares in street
name for beneficial owners are not permitted to vote to adopt the Merger or for
the election of directors in connection with the Merger without instructions
from the beneficial owners.

Under the NYBCL and the Culbro By-Laws, the presence, in person or by proxy,
of a majority of the outstanding shares of Culbro Common Stock is necessary to
constitute a quorum of shareholders to take action at the Annual Meeting. Shares
which are present, or represented by a proxy, at the Annual Meeting will be
counted for quorum purposes regardless of whether the holder of such shares
abstains with regard to the proposal to adopt the Merger or withholds a vote
with respect to the election of the Board of Directors or selection of the
independent accountants. Under applicable New York Law, if a broker

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returns a proxy with regard to at least one proposal but has not voted on
another proposal, such broker non-vote still will count for purposes of
determining a quorum.

REVOCABILITY OF PROXIES

Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is exercised at the Annual Meeting by delivering
to the Secretary of Culbro at its principal executive offices, a written notice
of revocation or a duly executed proxy bearing a later date or by attending the
Annual Meeting and voting in person.

THE MERGER

BACKGROUND: THE ASSET TRANSFERS, THE DISTRIBUTION AND THE MERGER

On February 27, 1997 (the "Asset Transfer Date"), Culbro completed certain
asset transfers (the "Asset Transfers"). Pursuant to the Asset Transfers (i) all
of Culbro's assets and liabilities relating to its cigar business (not already
held by General Cigar), including approximately 1,100 acres of land used in the
tobacco growing operations and Club Macanudo, a cigar bar in New York City, and
certain other assets and liabilities, including Culbro's corporate headquarters,
were transferred to General Cigar, and (ii) substantially all of Culbro's
non-tobacco related assets and liabilities, including all of its assets and
liabilities relating to its nursery business and real estate business, together
with Culbro's 25% interest in Centaur Communications Limited ("Centaur") and its
interests in The Eli Witt Company ("Eli Witt") and related liabilities, were
transferred to Griffin. As a result of the Asset Transfers Culbro is a holding
company substantially all of the assets of which are its ownership interests in
General Cigar and Griffin. See "The Merger--The Merger."

Prior to the Merger, Culbro intends to effect the Distribution to the
shareholders of Culbro of all issued and outstanding shares of Griffin Common
Stock. The Merger is contingent upon completion of the Distribution. The
Distribution is contingent principally upon (i) either a tax ruling or an
opinion of counsel satisfactory to Culbro that the Distribution constitutes a
tax-free reorganization under Section 355 of the Internal Revenue Code and (ii)
the approval by the holders of 66 2/3% of the outstanding Culbro Common Stock of
the Merger. As a result of the Distribution each holder of Culbro Common Stock
on the date which is days prior to the date of the Distribution (the
"Distribution Record Date") will receive one share of Griffin Common Stock for
each share of Culbro Common Stock held by such holder as of the Distribution
Record Date. All of the Griffin Common Stock outstanding on the date of the
Distribution will thereby be transferred to holders of Culbro Common Stock on a
PRO RATA basis.

Upon consummation of the Distribution, Culbro will be a holding company
substantially all of the assets of which will be its ownership interests in
General Cigar. Culbro intends to effect the Distribution because it believes
that it is in the best interests of Culbro and General Cigar to separate the
cigar business from the unrelated businesses of Culbro. By effecting the
Distribution, Culbro believes that Culbro, General Cigar and their shareholders
will benefit by allowing the cigar business and non-tobacco related businesses
to be evaluated on a stand-alone basis.

On or about August 26, 1997 (but no sooner without the prior consent of
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") and subject to the
approval thereof by the shareholders of Culbro), Culbro will merge with and into
General Cigar. General Cigar will be the surviving corporation in the Merger and
will issue to the holders of the Culbro Common Stock 4.44557 shares of Class B
Common Stock for each share of the Culbro Common Stock outstanding on the date
of the Merger, or approximately 20,248,282 shares of Class B Common Stock in the
aggregate, subject to adjustment for any options exercised prior to the Merger.
The members of the Cullman & Ernst Group, who collectively hold approximately
50% of Culbro's common stock, have indicated that they will vote their shares of
Culbro Common Stock in favor of the Merger and will not sell or otherwise
transfer any of their shares of Culbro

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Common Stock prior to the earlier to occur of August 26, 1997 or the
consummation of the Merger. The Merger was approved by Culbro as the sole
stockholder of General Cigar prior to the Offering.

RECOMMENDATION AND REASONS FOR THE MERGER

In the summer of 1996, Culbro began considering the acquisition of Villazon
and its financial consequences, including the desirability of making a public
offering of common stock. Culbro reviewed its structure with both its financial
advisors and potential underwriters for an offering of common stock and
concluded that the best structure for a public offering was a "pure play" cigar
company with no prior trading history. This structure would result in more net
dollars at any reasonable percentage dilution. To achieve this, Culbro created
General Cigar to make the public offering. The underwriters and financial
advisors also agreed that added liquidity, through not having a holding company
structure with both Culbro and General Cigar as public companies traded on the
NYSE, was desirable. To achieve this end and to reduce ongoing costs, Culbro
proposed the Merger following the Distribution so that the resulting structure
would be two public companies, General Cigar and Griffin, each pursuing its
separate business with its separate resources. The cigar business thereby would
be able to receive substantially higher proceeds from the Offering because it
would be viewed as a "pure play" cigar company. It would eventually have greater
liquidity as the result of the issuance of added public shares at the time of
the Merger which the underwriters viewed as desirable. In addition, the probable
discount to (i) Culbro Common Stock associated with holding the cigar business
through a holding company that did not own all of the cigar company stock and
(ii) the Class A Common Stock associated with owning stock of an entity
controlled by a single enterprise with potentially different expansion and
dividend policies, would be eliminated by the Merger.

Upon consummation of the Distribution, Culbro will be a holding company,
substantially all of the assets of which will be its ownership interests in
General Cigar. General Cigar is also a holding company with substantially no
assets other than its ownership interests in General Cigar Co., Inc. and other
wholly-owned subsidiaries involved in the cigar business. The Merger will
eliminate the double holding company corporate structure which is now in place.
Moreover, after the Merger General Cigar will be the sole publicly traded entity
holding the assets and operations of the cigar business and is expected to have
greater market liquidity than either General Cigar or Culbro prior to the
Merger. The Board of Directors of each of Culbro and General Cigar has decided
that it is in the best interests of each company to consummate the Merger.

EXCHANGE OF CERTIFICATES

As soon as practicable after the Merger, holders of certificates that
formerly represented shares of Culbro Common Stock will receive a letter of
transmittal containing instructions for the surrender of such certificates in
exchange for certificates representing shares of Class B Common Stock. If the
holder is entitled to a fractional share of Class B Common Stock, the holder may
buy or sell a fractional share of Class B Common Stock through the transfer
agent, which will effect purchases or sales on behalf of such holder at such
times as the transfer agent deems appropriate through broker-dealers which it
selects, and pay the proceeds or deliver shares to such holder. Following the
Merger, each outstanding share of Class B Common Stock will be freely
convertible into one share of Class A Common Stock. Any sale of Culbro Common
Stock after the Merger will result in the issuance to the buyer of such Culbro
Common Stock of Class A Common Stock. See "The Merger--Exchange of Certificates"
and "Description of Capital Stock."

APPRAISAL RIGHTS

Holders of Culbro Common Stock who elect to dissent from the approval and
adoption of the Merger Agreement and who (a) deliver to Culbro a written demand
for appraisal of their shares of Culbro Common Stock and (b) meet certain other
statutory requirements, will be entitled to have the value of

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<PAGE>
their shares appraised in accordance with Section 623 of the NYBCL, a copy of
which is included as Annex III to this Proxy Statement/Prospectus. See "The
Merger--Appraisal Rights."

ANTICIPATED ACCOUNTING TREATMENT

General Cigar will account for the Merger by a method of accounting similar
to the pooling-of-interests method of accounting under Generally Accepted
Accounting Principles ("GAAP"). See "Unaudited Pro Forma Combined Financial
Statements."

LISTING OF GENERAL CIGAR COMMON STOCK

The Class A Common Stock is listed on the NYSE under the symbol "MPP." The
Class B Common Stock is not listed on any national securities exchange or quoted
on any automated quotation system. However, holders of Class B Common Stock who
wish to sell their shares may sell them on the NYSE, as the transfer agent will
automatically convert the Class B Common Stock sold into Class A Common Stock.
Holders of Class B Common Stock may freely convert their Class B Common Stock
into Class A Common Stock at any time.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

Assuming that the Merger and related transactions will take place as
described elsewhere in this Proxy Statement/Prospectus, at the closing, Latham &
Watkins, special counsel to Culbro and General Cigar, will deliver its opinion
to the effect that, among other things, the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), and as a result, for Federal income tax
purposes, Culbro will recognize no gain or loss upon the Merger, and holders of
Culbro Common Stock will recognize no gain or loss upon the conversion of shares
of Culbro Common Stock into shares of Class B Common Stock, except for gain or
loss recognized on receipt of cash in lieu of any fractional share interest in
Class B Common Stock. All holders of Culbro Common Stock should read carefully
the detailed discussion under the caption "Certain Federal Income Tax
Consequences."

On December 16, 1996, Culbro filed a request for a ruling from the Internal
Revenue Service (the "Service") to the effect that, among other things, the
Distribution will qualify as a tax free spin-off under Section 355 of the Code,
and that, for Federal income tax purposes: (i) no gain or loss will be
recognized by (and no amount will be included in the income of) a holder of
Culbro Common Stock upon the receipt of Class B Common Stock of Griffin in the
Distribution; and (ii) no gain or loss will be recognized by Culbro upon the
Distribution.

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COMPARATIVE PER SHARE DATA

Set forth below are income per common share and equivalents from continuing
operations and unaudited book value per common share and equivalents of Culbro
on both a historical and an unaudited pro forma consolidated basis. In addition,
the following information sets forth the income from continuing operations and
book value for General Cigar on an unaudited per share equivalent pro forma
basis. Pro forma income from continuing operations per share is derived from the
pro forma combined information presented elsewhere herein, which gives effect to
the Merger under a method of accounting similar to a pooling-of-interests method
of accounting under GAAP.

The information set forth below should be read in conjunction with the
respective audited and unaudited financial statements of Culbro and General
Cigar, which appear elsewhere, or are incorporated by reference, in this Proxy
Statement/Prospectus.

<TABLE>
<CAPTION>
NOVEMBER 30, MARCH 1,
1996 1997
------------- -----------
<S> <C> <C>
Culbro--Historical

Income from continuing operations (1).............................................. $ 1.80 $ 0.47

Book value (2)..................................................................... $ 30.09 $ 30.55

General Cigar--Historical (3)

General Cigar--Pro Forma adjusted for ratio of exchange

Income from continuing operations (1).............................................. $ 0.68 $ 0.19

Book value(2)...................................................................... $ 5.68 $ 5.96
</TABLE>

- ------------------------

(1) Amounts presented are for the year ended November 30, 1996 and the thirteen
weeks ended March 1, 1997.

(2) Amounts presented are as of the dates shown.

(3) General Cigar was a wholly owned subsidiary of Culbro and its capital
structure at November 30, 1996 and March 1, 1997 does not permit a
meaningful presentation of earnings per share or book value per share.
Accordingly, earnings per share and book value per share are not presented
herein.

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<PAGE>
RISK FACTORS

CULBRO'S SHAREHOLDERS SHOULD BE AWARE THAT THE DISTRIBUTION AND OWNERSHIP OF
CLASS B COMMON STOCK IN EXCHANGE FOR CULBRO COMMON STOCK INVOLVES CERTAIN RISK
FACTORS, INCLUDING THOSE WHICH COULD ADVERSELY AFFECT THE VALUE OF THEIR
HOLDINGS DESCRIBED BELOW AND ELSEWHERE IN THIS PROXY STATEMENT/PROSPECTUS.
CULBRO'S SHAREHOLDERS SHOULD ALSO BE AWARE THAT, BECAUSE SUBSTANTIALLY ALL OF
CULBRO'S ASSETS WILL BE ITS OWNERSHIP INTEREST IN GENERAL CIGAR FOLLOWING THE
DISTRIBUTION, THEIR CONTINUING OWNERSHIP OF CULBRO COMMON STOCK INVOLVES MANY OF
THE RISKS DESCRIBED BELOW. BECAUSE IN THE MERGER THE CULBRO COMMON STOCK WILL BE
CONVERTED INTO THE RIGHT TO RECEIVE CLASS B COMMON STOCK, CULBRO SHAREHOLDERS
SHOULD CONSIDER CAREFULLY THE INFORMATION SET FORTH UNDER THE CAPTIONS
"DESCRIPTION OF GENERAL CIGAR CAPITAL STOCK" AND "COMPARISON OF STOCKHOLDER
RIGHTS" IN ADDITION TO THE FOLLOWING FACTORS.

DECLINING MARKET FOR CIGARS THROUGH 1993

According to industry sources, the cigar industry experienced declining unit
sales between 1964 and 1993 at a compound annual rate of 3.3%. General Cigar
experienced similar trends in the unit volume of its cigars during such period.
While the cigar industry has experienced significantly better trends in unit
sales since 1993, there can be no assurance that the recent positive trends will
continue. Management believes that a considerable percentage of the recent
increase in cigar unit sales, especially with respect to premium cigars, is
attributable to new cigar smokers attracted by the improving image of cigar
smoking and the increased visibility of cigar smoking by celebrities. There can
be no assurance that recent increases in cigar unit sales are indicative of
long-term trends or that these new customers will continue to smoke cigars in
the future. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business--Market Overview."

EXTENSIVE AND INCREASING REGULATION OF TOBACCO PRODUCTS

Cigar manufacturers, like other producers of tobacco products, are subject
to regulation at the federal, state and local levels. The recent trend is toward
increasing regulation of the tobacco industry, and the recent increase in
popularity of cigars could lead to an increase in regulation of cigars. A
variety of bills relating to tobacco issues have been introduced in the U.S.
Congress, including bills that would have (i) prohibited the advertising and
promotion of all tobacco products or restricted or eliminated the deductibility
of such advertising expenses, (ii) increased labeling requirements on tobacco
products to include, among other things, addiction warnings and lists of
additives and toxins, (iii) shifted regulatory control of tobacco products and
advertisements from the U.S. Federal Trade Commission (the "FTC") to the U.S.
Food and Drug Administration (the "FDA"), (iv) increased tobacco excise taxes
and (v) required tobacco companies to pay for health care costs incurred by the
federal government in connection with tobacco related diseases. Hearings have
been held on certain of these proposals; however, to date, none of such
proposals have been passed by Congress. Future enactment of such proposals or
similar bills may have an adverse effect on the results of operations or
financial condition of General Cigar.

In addition, the majority of states restrict or prohibit smoking in certain
public places and restrict the sale of tobacco products to minors. Local
legislative and regulatory bodies also have increasingly moved to curtail
smoking by prohibiting smoking in certain buildings or areas or by requiring
designated "smoking" areas. Further restrictions of a similar nature could have
an adverse effect on the sales or operations of General Cigar. Numerous
proposals also have been considered at the state and local level restricting
smoking in certain public areas, regulating point of sale placement and
promotions and requiring warning labels.

Although federal law has required health warnings on cigarettes since 1965
and on smokeless tobacco since 1986, there is no federal law requiring that
cigars carry such warnings. California, however, requires "clear and reasonable"
warnings to consumers who are exposed to chemicals determined by the state to
cause cancer or reproductive toxicity, including tobacco smoke and several of
its constituent chemicals.

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Although similar legislation has been introduced in other states, no action has
been taken. There can be no assurance that such legislation introduced in other
states will not be passed in the future or that other states will not enact
similar legislation. Consideration at both the federal and state level also has
been given to consequences of tobacco smoke on others who are not currently
smoking (so called "second-hand" smoke). There can be no assurance that
regulation relating to second hand smoke will not be adopted or that such
regulation or related litigation would not have a material adverse effect on
General Cigar's results of operations or financial condition.

Increased cigar consumption and the publicity such increase has received may
increase the risk of additional regulation. There can be no assurance as to the
ultimate content, timing or effect of any additional regulation of tobacco
products by any federal, state, local or regulatory body, and there can be no
assurance that any such legislation or regulation would not have a material
adverse effect on General Cigar's business. See "Business--The Tobacco
Industry--Regulation."

TOBACCO INDUSTRY LITIGATION

The tobacco industry has experienced and is experiencing significant
health-related litigation involving tobacco and health issues. Plaintiffs in
such litigation have sought and are seeking compensatory and, in some cases,
punitive damages, for various injuries claimed to result from the use of tobacco
products or exposure to tobacco smoke. General Cigar has in the past been named
in certain health-related litigation. There can be no assurance that there would
not be an increase in health-related litigation against the cigarette and
smokeless tobacco industries or similar litigation in the future against cigar
manufacturers. The costs to General Cigar of defending prolonged litigation and
any settlement or successful prosecution of any material health-related
litigation against manufacturers of cigars, cigarettes or smokeless tobacco or
suppliers to the tobacco industry could have a material adverse effect on
General Cigar's results of operations or financial condition. The recent
increase in the sales of cigars and the publicity such increase has received may
have the effect of increasing the probability of legal claims. Also, a recent
study published in the journal SCIENCE reported that a chemical found in tobacco
smoke has been found to cause genetic damage in lung cells that is identical to
damage observed in many malignant tumors of the lung and, thereby, directly
links lung cancer to smoking. The National Cancer Institute also has announced
that it will issue a report in 1997 describing research into cigars and health.
This study and this report could affect pending and future tobacco regulation or
litigation. See "--Extensive and Increasing Regulation of Tobacco Products" and
"Business--The Tobacco Industry--Litigation."

RELATIONS WITH CUBA

Cuba historically has had, and continues to have, the highest reputation for
premium cigars in the world. Many of General Cigar's premium cigar brand names
are of Cuban origin. General Cigar acquired some of these brand names from their
Cuban owners in the aftermath of Castro's revolution and registered others with
the U.S. Patent and Trademark Office. General Cigar's rights to many of these
brand names generally are limited to sales in the U.S.

It is expected that, if and when normalization of relations between the U.S.
and Cuba occurs, manufacturers of Cuban cigars, either alone or in combination
with other manufacturers or distributors of tobacco products, will attempt to
enter the U.S. market. The entry of Cuban premium cigars into the U.S. market
could increase competition in General Cigar's core premium cigar market and
could have a material adverse effect on General Cigar's premium cigar business.

EFFECTS OF INCREASES IN EXCISE TAXES

Cigars have long been subject to federal, state and local excise taxes, and
such taxes frequently have been increased or proposed to be increased, in some
cases significantly, to fund various legislative initiatives. In particular,
there have been proposals by the federal government in the past to reform health

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<PAGE>
care through a national program to be funded principally through increases in
federal excise taxes on tobacco products. Enactment of new or significant
increases in existing federal, state or local excise taxes could result in
decreased unit sales of cigars which could have a material adverse effect on
General Cigar's business. See "Business--The Tobacco Industry--Excise Taxes."

RISKS RELATING TO DEMAND FOR CIGARS

General Cigar's ability to increase its production of premium and mass
market cigars to meet increases in demand has been, and in the future may be,
constrained by a shortage of properly aged and blended tobacco ready for
manufacturing. In general, the aging process for filler tobacco requires that
tobacco be purchased up to three years in advance of actual use in the
manufacturing process. An important part of the manufacturing process for
premium cigars involves blending flavors of different tobacco leaves, a process
that takes approximately 16 weeks. During 1996, General Cigar discontinued
shipping Macanudo cigars for a two month period as excessive demand led to a
shortage of properly aged and blended tobacco. Accordingly, there can be no
assurance that increases in demand beyond General Cigar's current expectations
would not result in similar tobacco shortfalls and thereby adversely affect
General Cigar's ability to manufacture its products.

General Cigar's ability to increase its production of premium cigars also
may be limited by a shortage of skilled laborers. Although General Cigar is
hiring and training new skilled laborers, the training process can take up to
one year and not all trainees are able to complete General Cigar's training
program. While General Cigar is pursuing measures to increase its production of
premium cigars, there can be no assurance that these measures will enable
General Cigar to meet any future level of demand for its premium cigars. Any
material inability of General Cigar to fill its premium cigar orders in a timely
manner could have a material adverse effect on General Cigar's business,
including the loss of sales by General Cigar and the potential loss of future
sales to other brands which consumers purchase in the absence of available
supplies of General Cigar's brands. See "--Social, Political and Economic Risks
Associated with Foreign Operations and International Trade" and
"Business--Backorders."

While the cigar industry, including General Cigar, has experienced
increasing demand for cigars during the last several years, there can be no
assurance that such trends will continue. In the event anticipated industry
growth does not continue or General Cigar experiences a reduction in demand,
General Cigar may experience excess inventory or production capacity which could
have an adverse effect on General Cigar's business or results of operations.

SOCIAL, POLITICAL AND ECONOMIC RISKS ASSOCIATED WITH FOREIGN OPERATIONS AND
INTERNATIONAL TRADE

A substantial portion of the manufacturing operations of General Cigar
(including all of General Cigar's manufacturing operations for its premium
cigars) is located in territories and countries outside of the U.S., including
the Dominican Republic, Jamaica and Honduras. In addition, General Cigar buys
tobacco directly from a large number of suppliers located in territories and
countries outside the U.S., including Brazil, Cameroon, the Central African
Republic, Germany, Italy, Turkey, the Dominican Republic, the Philippines,
Indonesia, Honduras, Ecuador and Mexico. General Cigar is exposed to the risk of
changes in social, political and economic conditions inherent in foreign
operations and international trade, including changes in the laws and policies
that govern foreign investment and international trade in territories and
countries where it currently has operations and conducts international trade, as
well as, to a lesser extent, changes in U.S. laws and regulations relating to
foreign investment and trade. Any such social, political or economic changes
could pose, among other things, the risk of finished product and raw material
supply interruption or significant increases in finished product and raw
material prices. In particular, political or labor unrest in the Dominican
Republic, Honduras or Jamaica could result in interruptions in production of
General Cigar's premium cigars, which would cause an immediate halt in shipments
by General Cigar due to its lack of inventory of manufactured cigars.
Accordingly, there can be

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<PAGE>
no assurance that any such changes in social, political or economic conditions
will not have a material adverse effect on General Cigar's business.

RESTRICTIONS IMPOSED BY THE TERMS OF GENERAL CIGAR'S INDEBTEDNESS

The terms and conditions of the Credit Facility (as defined) impose, and the
terms and conditions of future debt instruments of General Cigar or its
subsidiaries may impose, restrictions on General Cigar and its subsidiaries that
affect, among other things, their ability to incur debt, pay dividends or make
distributions, make acquisitions, create liens, sell assets, and make certain
investments. The terms of the Credit Facility require General Cigar Co., Inc.,
the wholly owned subsidiary of General Cigar through which General Cigar
conducts its material operations, to maintain specified financial ratios and
satisfy certain tests, including maximum leverage ratios and minimum interest
coverage ratios. In addition, the Credit Facility restricts the ability of
General Cigar to pay dividends except under certain circumstances. See
"Description of the Credit Facility."

The ability of General Cigar and its subsidiaries to comply with the terms
of their respective debt instruments can be affected by events beyond their
control, including events such as changes in prevailing economic conditions,
changes in consumer preferences and changes in the competitive environment,
which could impair General Cigar's operating performance. There can be no
assurance that General Cigar and its subsidiaries will be able to comply with
the provisions of their respective debt instruments, including compliance by
General Cigar Co., Inc. with the financial ratios and tests contained in the
Credit Facility. Breach of any of these covenants or the failure to fulfill the
obligations thereunder and the lapse of any applicable grace periods would
result in an event of default under the applicable debt instruments, and the
holders of such indebtedness could declare all amounts outstanding under their
debt instruments to be due and payable immediately. Any such declaration under a
debt instrument is likely to result in an event of default under one of the
other debt instruments of General Cigar and its subsidiaries. There can be no
assurance that the assets or cash flows of General Cigar or its subsidiaries
would be sufficient to repay in full borrowings under their respective
outstanding debt instruments, whether upon maturity or in the event of
acceleration upon an event of default, or upon a required repurchase in the
event of a change of control, or that General Cigar would be able to refinance
or restructure the payments on such indebtedness. See "--Impact of Holding
Company Structure" and "Description of the Credit Facility."

IMPACT OF HOLDING COMPANY STRUCTURE

General Cigar is a holding company with no business operations of its own.
General Cigar's only material assets are all of the outstanding capital stock of
its subsidiaries, General Cigar Co., Inc., GCH Transportation, Inc., Club
Macanudo, Inc. and Club Macanudo (Chicago), Inc., and all of the ownership
interests in General Cigar's office building in New York City. Accordingly,
General Cigar is dependent upon the earnings and cash flows of, and dividends
and distributions from, General Cigar's subsidiaries to pay its expenses and
meet its obligations, and to pay any cash dividends or distributions on the
Common Stock that may be authorized by the Board of Directors of General Cigar.
There can be no assurance that General Cigar Co., Inc. or any other subsidiary
will generate sufficient earnings and cash flows to pay dividends or distribute
funds to General Cigar to enable General Cigar to pay its expenses and meet its
obligations or that applicable state law and contractual restrictions, including
negative covenants contained in the debt instruments of General Cigar's
subsidiaries then in effect, will permit such dividends or distributions. See
"--Restrictions Imposed by the Terms of General Cigar's Indebtedness."

RISKS RELATING TO TRADEMARKS

General Cigar's success and ability to compete are dependent to a
significant degree on its brand names. General Cigar relies primarily on
trademark law to protect its brand names. Although General Cigar vigorously
defends its trademarks against infringement by others, including counterfeiters,
policing

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unauthorized use of General Cigar's trademarks is difficult. The illegal use of
General Cigar's trademarks may have an adverse effect on General Cigar's
business, financial condition and operating results.

General Cigar has registered its trademarks in the U.S. and certain foreign
countries and will continue to do so as new trademarks are developed or
acquired. The laws of countries outside of the U.S. may afford General Cigar
little or no effective protection of certain of its trademarks. Moreover,
General Cigar does not hold the right to use certain of its well-known
trademarks and brand names, including Partagas and Cohiba, in most foreign
markets. Empresa Cubana Del Tabaco, d.b.a. Cubatabaco ("Cubatabaco") filed a
petition on January 15, 1997 in the United States Patent and Trademark Office
("USPTO") to cancel General Cigar's two United States trademark registrations of
the name Cohiba for use in connection with cigars. Cubatabaco's petition was
filed in response to the USPTO's anticipated rejection of its attempt to
register its Cohiba trademark in the United States. If Cubatabaco were
successful in this proceeding, then General Cigar's U.S. registrations of the
name Cohiba for use in connection with cigars would be cancelled. Under certain
circumstances, the results of this proceeding could be used in a subsequent
action to enjoin use of the name Cohiba by General Cigar. See "Business--The
Tobacco Industry--Litigation."

General Cigar in the future may receive notices of claims of infringement of
other parties' trademarks. There can be no assurance that claims for
infringement or invalidity, or claims for indemnification resulting from
infringement claims, will not be asserted or prosecuted against General Cigar.
Any such claims, with or without merit, could be time-consuming to defend,
result in costly litigation and divert management's attention and resources.

MANAGEMENT OF GROWTH

General Cigar has experienced rapid growth over the last several years and
plans further production expansion in an effort to meet increases in demand for
premium and mass market cigars. General Cigar's rapid growth and planned
expansion present numerous operational challenges to General Cigar's senior
management and employees. General Cigar faces similar challenges with respect to
the integration of Villazon into General Cigar's operations. General Cigar's
growth has placed, and will continue to place, significant demands on General
Cigar's management, working capital and financial management control systems.
General Cigar also has contracted to upgrade its information management systems
to provide for better tracking of inventories used in manufacturing. There can
be no assurance, however, that such improvements will be adequate as demand
continues to increase. In addition, the integration of such new systems may
cause disruptions in manufacturing that could adversely affect General Cigar's
business.

RISKS RELATING TO THE DISTRIBUTION AND THE MERGER

CONTROL BY CERTAIN STOCKHOLDERS; ANTI-TAKEOVER EFFECTS OF DUAL CLASSES OF STOCK;
OTHER ANTI-TAKEOVER PROVISIONS

The Cullman & Ernst Group presently holds 2,237,147 shares of Culbro Common
Stock, constituting approximately 50% of the issued and outstanding shares of
Culbro Common Stock. Following the Merger, 9,945,393 shares of Class B Common
Stock, constituting 37% of the issued and outstanding Common

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Stock and 48% of the voting power, will be held by the Cullman & Ernst Group.
The Cullman & Ernst Group has sole voting and investment power with respect to
shares of Culbro Common Stock held by it and will have sole voting and
investment power with respect to the 9,945,393 shares of Class B Common Stock
that it will hold following the Merger. Each share of Class B Common Stock has
ten votes with respect to matters requiring the approval of the holders of
Common Stock, while each share of the Class A Common Stock, including shares
offered hereby, has one vote on such matters. As a result, the Cullman & Ernst
Group will have substantial control over General Cigar and may have the power to
elect all of its directors and to approve any action requiring stockholder
approval, including adopting amendments to General Cigar's certificate of
incorporation and approving mergers or sales of all or substantially all of
General Cigar's assets. The Schedule 13D filed by the Cullman & Ernst Group with
the Securities and Exchange Commission (the "SEC") with respect to its holdings
in Culbro states that there is no undertaking other than an informal
understanding that the members of the Cullman & Ernst Group will hold and vote
their shares together. In the normal course of business the members of the
Cullman & Ernst Group have acted together with respect to their shares of Culbro
Common Stock. Such control by the Cullman & Ernst Group, together with certain
provisions of General Cigar's certificate of incorporation and by-laws as well
as certain provisions of the Delaware General Corporation Law (the "DGCL"),
could increase the difficulty of effecting a change of control of General Cigar
without their approval. See "Description of Capital Stock."

NO PRIOR MARKET FOR COMMON STOCK; DETERMINATION OF PUBLIC OFFERING PRICE

Prior to the Offering there was no public market for the Class A Common
Stock. The Class A Common Stock is now listed on the NYSE under the symbol
"MPP". The Class B Common Stock is not listed on any national securities
exchange or quoted on any automated quotation system. However, holders of Class
B Common Stock who wish to sell their shares may sell them on the NYSE, as the
transfer agent will automatically convert the Class B Common Stock sold into
Class A Common Stock. Holders of Class B Common Stock may freely convert their
Class B Common Stock into Class A Common Stock at any time. There can be no
assurance as to liquidity of the trading market for the Class A Common Stock
following the Merger.

SHARES ELIGIBLE FOR FUTURE SALE

As of April 15, 1997, 6,900,000 shares of Class A Common Stock and 4,554,710
shares of Culbro Common Stock (which are expected to be exchanged for 20,248,282
shares of Class B Common Stock in the Merger, subject to adjustment for any
Culbro stock options exercised prior to the Merger) were outstanding. The
6,900,000 shares of Class A Common Stock sold in the Offering are freely
transferable without restriction under the Securities Act of 1933, as amended
(the "Securities Act"), except for shares acquired in the Offering by
"affiliates" of General Cigar, as that term is defined in Rule 144 promulgated
under the Securities Act. All of the 4,554,710 shares of Culbro Common Stock
outstanding are freely transferable without restriction under the Securities
Act, except for shares held by affiliates of Culbro. All of the shares of Class
B Common Stock that will be outstanding upon consummation of the Merger will be
freely transferable without restriction under the Securities Act, except for
shares held by affiliates of General Cigar. Transfers of shares of Common Stock
and Culbro Common Stock by affiliates of General Cigar and Culbro, respectively,
are subject to the volume restrictions of Rule 144.

Subject to certain exceptions, General Cigar, the executive officers and
directors of General Cigar, Culbro and certain shareholders of Culbro (who in
the aggregate hold 2,276,112 shares of Culbro Common Stock, or 2,722,623 shares,
assuming exercise of outstanding options held by such persons) each have agreed
that they will not, without the prior written consent of DLJ, offer, sell,
contract to sell, grant any option to purchase or otherwise dispose of any
shares of Common Stock or Culbro Common Stock or any securities convertible into
or exercisable or exchangeable for such Common Stock or Culbro Common

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Stock or in any other manner transfer all or a portion of the economic
consequences associated with the ownership of any such Common Stock or Culbro
Common Stock until August 26, 1997.

After August 26, 1997 and upon consummation of the Merger, or earlier with
the written consent of DLJ, the holders of 6,900,000 shares of Class A Common
Stock will continue to have, and holders of 20,248,282 shares of Class B Common
Stock for the first time will have, the right to sell such shares without
restriction under the Securities Act, except that transfers by affiliates of
General Cigar will be subject to the volume limitations of Rule 144.

General Cigar intends to file a registration statement on Form S-8 under the
Securities Act to register the issuance of 3,300,000 shares of Class A Common
Stock reserved for issuance upon the exercise of options, including 570,555
shares of Class A Common Stock issuable upon exercise of options to be issued
upon consummation of the Offering under the 1997 Stock Option Plan and 1,960,511
shares of Class A Common Stock issuable upon exercise of Culbro options
following the Merger. As a result, any shares of Class A Common Stock issued
upon exercise of such stock options will be available, subject to special rules
for affiliates and applicable lock-up arrangements, for resale in the public
market. See "Certain Employee Benefit Matters."

No prediction can be made as to the effect, if any, that future sales of
Common Stock, or the availability of shares for future sale, will have on the
market price of the Common Stock prevailing from time to time. Sales of
substantial amounts of Class A Common Stock (including shares issued upon the
exercise of stock options or upon conversion of shares of Class B Common Stock),
or the perception that such sales could occur, could adversely affect prevailing
market prices for the Class A Common Stock.

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THE ANNUAL MEETING

DATE, TIME AND PLACE OF ANNUAL MEETING

PURPOSE OF ANNUAL MEETING

RECORD DATE

The Board of Directors of Culbro has fixed the close of business on May 1,
1997 as the record date for the determination of holders of Culbro Common Stock
entitled to notice of and to vote at the Culbro Annual Meeting. On the record
date Culbro believes that there will be 4,554,710 shares of Culbro Common Stock
outstanding, each entitled to one vote.

REQUIRED VOTE; QUORUM

Under the NYBCL and the Culbro By-Laws the presence, in person or by proxy,
of a majority of the outstanding shares of Culbro Common Stock is necessary to
constitute a quorum of shareholders to take action at the Annual Meeting. Shares
which are present, or represented by a proxy, at the Annual Meeting will be
counted for quorum purposes regardless of whether the holder of such shares
abstains with regard to the proposal to adopt the Merger or withholds a vote
with respect to the election of the Board of Directors or selection of the
independent accountants. Under applicable New York Law, if a broker returns a
proxy with regard to at least one proposal but has not voted on another
proposal, such broker non-vote still will count for purposes of determining a
quorum.

REVOCABILITY OF PROXIES

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offices, a written notice of revocation or a duly executed proxy bearing a later
date or by attending the Annual Meeting and voting in person.

THE MERGER

BACKGROUND

For a number of years, Culbro was exclusively engaged in the cigar business.
Beginning in the late 1960s, as cigar sales started a long-term decline in
units, Culbro began diversifying into businesses which seemed to be natural
extensions of the cigar business, especially those which could use assets
originally related to the cigar business. Among the new businesses were the
landscape nursery business and real estate development businesses, both of which
used land originally acquired for growing wrapper tobacco. Both the landscape
nursery and real estate businesses proved to be capital intensive, but each
usually generated operating profits. However, beginning in the early 1990s,
their results weakened and their capital requirements strained Culbro. Beginning
in 1993, meanwhile, cigar unit sales began to increase, and available dollars
were allocated to the cigar business.

In the summer of 1996, Culbro began considering the acquisition of Villazon
and its financial consequences, including the desirability of making a public
offering of Common Stock. Culbro reviewed its structure with both its financial
advisors and potential underwriters for an offering of Common Stock and
concluded that the best structure for a public offering was a "pure play" cigar
company with no prior trading history. This structure would result in more net
dollars at any reasonable percentage dilution. To achieve this, Culbro created
General Cigar to make the public offering. The underwriters and financial
advisors also agreed that added liquidity, through not having a holding company
structure with both Culbro and General Cigar as public companies traded on the
NYSE, was desirable. To achieve this end and to reduce ongoing costs, Culbro
proposed the Merger following the Distribution so that the resulting structure
would be two public companies, General Cigar and Griffin, each pursuing its
separate business with its separate resources. The cigar business thereby would
be able to receive substantially higher proceeds from the Offering because it
would be viewed as a "pure play" cigar company. It would eventually have greater
liquidity as the result of the issuance of added public shares at the time of
the Merger which the underwriters viewed as desirable. In addition, the probable
discount to (i) Culbro Common Stock associated with holding the cigar business
through a holding company that did not own all of the cigar company stock and
(ii) the Class A Common Stock associated with owning stock of an entity
controlled by a single enterprise with potentially different expansion and
dividend policies, would be eliminated by the Merger.

General Cigar, Culbro and Griffin are parties to a Distribution Agreement
(the "Distribution Agreement") and other related agreements. The Distribution
Agreement provides for (i) consummation of the Asset Transfers, (ii) the
Distribution of Griffin Common Stock to the existing shareholders of Culbro
following consummation of the Offering and (iii) the Merger following the
Distribution.

THE ASSET TRANSFERS

Pursuant to the Distribution Agreement, Culbro transferred to General Cigar
all of the common stock of General Cigar Co., Inc., Club Macanudo, Inc., Club
Macanudo (Chicago), Inc. and all of Culbro's interest in the building located at
387 Park Avenue South, New York, New York. In addition, Culbro transferred to
General Cigar Co., Inc. approximately 1,100 acres of its real estate holdings in
the Connecticut River Valley used to cultivate cigar wrapper tobacco. In
connection with these transfers, General Cigar received all licenses, permits,
accounts receivable, prepaid expenses, reserves and other current assets related
to the cigar business. Pursuant to the Distribution Agreement Culbro transferred
to Griffin substantially all the non-tobacco related assets of Culbro,
including: (i) all of the common stock of Imperial Nurseries, Inc., a
wholly-owned subsidiary of Culbro; (ii) approximately 5,500 acres of land in
Connecticut, Massachusetts and Florida, as well as several nursery wholesale and
retail centers;

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(iii) Culbro's interests in Eli Witt and assets previously owned by Eli Witt;
(iv) its 25% interest in Centaur; (v) all licenses, permits, accounts
receivable, prepaid expenses, reserves and other current assets (other than
cash) related to the real estate and nursery business; and (vi) $7.0 million in
cash.

Under the Distribution Agreement General Cigar assumed all liabilities
relating to the cigar business and the assets transferred to General Cigar and
General Cigar Co., Inc. These liabilities include all of Culbro's retained
indebtedness (other than those liabilities related to the assets transferred to
Griffin), including bank and corporate debt, all expenses related to the Asset
Transfers, the Offering, the Distribution and the Merger and certain other
contingent liabilities. Similarly, Griffin assumed all liabilities relating to
the real estate business and the nursery business and relating to the assets
transferred to Griffin. These liabilities include all of Griffin's assumed and
retained indebtedness, including bank and corporate debt, other liabilities
relating to the assets transferred to Griffin and certain additional tax
liabilities.

As a result of the Asset Transfers, Culbro is a holding company
substantially all of the assets of which are the stock of General Cigar and
Griffin. Each of General Cigar and Griffin operates independently of the other,
subject to the limited relationships as described below.

The Distribution Agreement also contains general indemnities between Culbro
(or General Cigar, following the Merger) and Griffin and the procedures by which
indemnification may be claimed. The Distribution Agreement provides for, on the
one hand, Culbro and General Cigar to indemnify Griffin for any losses,
liabilities or damages (including attorneys fees) in connection with any claim
or action in respect of any of the liabilities to be assumed or retained by
Culbro and General Cigar and, on the other hand, Griffin to similarly indemnify
Culbro and General Cigar in connection with any claim or action in respect of
any liabilities retained or assumed by Griffin. In each instance, indemnities
are offset by insurance proceeds recovered by the indemnified party that reduce
the amount of the loss, liability or damage. In addition, the Distribution
Agreement contains provisions for the administration of insurance policies
shared by the parties and provisions for the sharing of information and related
services among the parties. Upon consummation of the Merger, Culbro's
obligations with respect to such indemnities will become the obligations of
General Cigar. With respect to corporate governance, the Distribution Agreement
requires the resignation of all Griffin directors and officers from any
positions they previously held with Culbro, General Cigar or General Cigar Co.,
Inc., and each of their respective subsidiaries, and the resignation of all
Culbro, General Cigar or General Cigar Co., Inc. directors and officers from any
positions they previously held with Griffin and each of its subsidiaries, except
that Edgar M. Cullman and John L. Ernst will retain their seats on the Griffin
board of directors notwithstanding their various positions at Culbro and General
Cigar, and Edgar M. Cullman will be the Chairman of the Board of Griffin.

RELATED AGREEMENTS

Pursuant to the Distribution Agreement, Culbro and Griffin have entered into
certain agreements described below. Culbro's rights and obligations under each
of the agreements described below will be assumed by General Cigar as a result
of the Merger.

TAX SHARING AGREEMENT

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redetermination of such tax liabilities by the applicable taxing authorities
will be paid by the member or affiliated group to which the adjustment relates,
with Griffin assuming responsibility for all adjustments relating to Culbro and
its affiliates other than General Cigar and its subsidiaries. Griffin is
responsible for filing returns and paying taxes relating to any member of the
Griffin affiliated group for periods that begin before and end after the
Distribution and for periods that begin after the Distribution. Culbro and
Griffin have agreed to cooperate with each other and to share information in
preparing such tax returns and in dealing with other tax matters.

SERVICES AGREEMENT

Culbro and Griffin have entered into a services agreement (the "Services
Agreement") pursuant to which Culbro agreed to provide a number of
administrative and other services to Griffin for a period of at least one year.
These services include administration of Griffin insurance policies, internal
audit, preparation of tax returns, transportation and general in-house legal
services. Griffin will make an annual payment of approximately $600,000 to, and
will reimburse out-of-pocket expenses incurred by, Culbro and its subsidiaries,
in connection with such services. Culbro will make the above services available
to Griffin on an as-needed basis for a period of at least one year following the
Distribution. Pursuant to the Merger, Culbro's obligations under the Services
Agreement will be assumed by General Cigar.

BENEFITS AND EMPLOYMENT MATTERS ALLOCATION AGREEMENT

Culbro and Griffin have entered into a Benefits and Employment Matters
Allocation Agreement which provides for the assumption by General Cigar of
certain Culbro employee benefit plans and the conversion of outstanding options
and other accrued benefits into outstanding options and awards of General Cigar
and Griffin. For a discussion of the allocations to be made pursuant to the
Benefits and Employment Matters Allocation Agreement, see "Certain Employee
Benefit Matters."

LEASES

Griffin as lessor and General Cigar Co., Inc. as lessee have entered into a
lease for certain agricultural real property in Connecticut and Massachusetts
(the "Agricultural Lease"), and prior to the Distribution, will enter into a
lease for certain commercial space in Connecticut (the "Commercial Lease"). The
Agricultural Lease applies to approximately 500 acres of arable land transferred
to Griffin by Culbro for possible commercial development in the long-term, but
which will provide General Cigar with a source of Connecticut Shade wrapper
tobacco. General Cigar Co., Inc.'s use of the land is limited by the terms of
the Agricultural Lease to the cultivation of cigar wrapper tobacco. The
Agricultural Lease has an initial term of ten years and provides for the
extension of the lease for additional periods thereafter. In addition, at
Griffin's option the Agricultural Lease may be terminated with respect to 100
acres of such land annually upon one year's prior notice. The rent payable by
General Cigar Co., Inc. under the Agricultural Lease is principally equal to the
aggregate amount of all taxes and other assessments payable by Griffin
attributable to the land leased. The Commercial Lease if entered into would be
for approximately 25,000 square feet of office space in the Griffin Center South
office complex in Bloomfield, Connecticut. The Commercial Lease would have an
initial term of ten years and provide for the extension of the lease for
additional annual periods thereafter. The rent payable by General Cigar Co.,
Inc. under the Commercial Lease and the Agricultural Lease would be approximate
market rates.

THE DISTRIBUTION

The Distribution Agreement also provides for the pro rata distribution by
Culbro to the shareholders of Culbro of all issued and outstanding shares of
common stock of Griffin. The Distribution will occur subsequent to the Offering
and will be contingent principally upon (i) either a tax ruling or an opinion of
counsel satisfactory to Culbro that the Distribution constitutes a tax free
reorganization under Section 355 of the Internal Revenue Code and (ii) approval
of the Merger by the Culbro shareholders.

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THE MERGER

If approved by the Culbro shareholders, the Merger would be effected on or
about August 26, 1997, or sooner with the consent of DLJ, subject to the
completion of the Distribution. Pursuant to an Agreement and Plan of Merger that
has been approved and adopted by General Cigar and by the Board of Directors of
Culbro, Culbro will be merged with and into General Cigar. The members of the
Cullman & Ernst Group have indicated that they will vote their shares of Culbro
Common Stock in favor of the Merger. The Merger was approved by Culbro as sole
stockholder of General Cigar prior to the Offering. General Cigar will be the
surviving corporation in the Merger and will issue to the holders of the common
stock of Culbro 4.44557 shares of Class B Common Stock for each share of the
Culbro Common Stock outstanding on the date of the Merger (or approximately
20,248,282 shares of Class B Common Stock in the aggregate, subject to
adjustment for any Culbro stock options exercised prior to the Merger). Each
option to purchase Culbro Common Stock outstanding prior to the Merger will be
converted into an option to acquire 4.44557 shares of Class A Common Stock. See
"Certain Employee Benefit Matters--Culbro Benefit Plans to be Assumed by General
Cigar--Culbro Stock Option Plans."

CONDITIONS TO THE MERGER

The Merger is contingent upon (i) the consummation of the Distribution and
(ii) the approval by the holders of 66 2/3% of outstanding Culbro Common Stock
of the Merger.

RECOMMENDATION AND REASONS FOR THE MERGER

In the summer of 1996, Culbro began considering the acquisition of Villazon
and its financial consequences, including the desirability of making a public
offering of Common Stock. Culbro reviewed its capital structure with both its
financial advisors and potential underwriters for an offering of Common Stock
and concluded that the best structure for a public offering was a "pure play"
cigar company with no prior trading history. This structure would result in more
net dollars at any reasonable percentage dilution. To achieve this, Culbro
created General Cigar to make the public offering. The underwriters and
financial advisors also agreed that added liquidity, through not having a
holding company structure with both Culbro and General Cigar as public companies
traded on the NYSE was desirable. To achieve this end and to reduce ongoing
costs, Culbro proposed the Merger following the Distribution so that the
resulting structure would be two public companies, General Cigar and Griffin,
each pursuing its separate business with its separate resources. The cigar
business thereby would be able to receive substantially higher proceeds from the
Offering because it would be viewed as a "pure play" cigar company. It would
eventually have greater liquidity as the result of the issuance of added public
shares at the time of the Merger which the underwriters viewed as desirable. In
addition, the probable discount to (i) Culbro Common Stock associated with
holding the cigar business through a holding company that did not own all of the
cigar company stock and (ii) the Class A Common Stock associated with owning
stock of an entity controlled by a single enterprise with potentially different
expansion and dividend policies, would be eliminated by the Merger.

Culbro intends to effect the Distribution because it believes that it is in
the best interests of Culbro and General Cigar to separate the cigar business
from the unrelated businesses of Culbro. By effecting the Distribution, Culbro
believes that Culbro, General Cigar and their shareholders will benefit by
allowing the cigar business and non-tobacco related businesses to be evaluated
on a stand-alone basis.

Upon consummation of the Distribution, Culbro will be a holding company,
substantially all of the assets of which will be its ownership interests in
General Cigar. General Cigar is also a holding company with substantially no
assets other than its ownership interests in General Cigar Co., Inc. and other
wholly-owned subsidiaries involved in the cigar business. The Merger will
eliminate the double holding company corporate structure which is now in place.
After the Merger General Cigar will be the sole publicly traded entity holding
the assets and operations of the cigar business and is expected to have greater
market

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liquidity than either General Cigar or Culbro prior to the Merger. The Board of
Directors of each of Culbro and General Cigar have decided that it is in the
best interests of each company to consummate the Merger.

EXCHANGE OF CERTIFICATES

APPRAISAL RIGHTS

Pursuant to the Merger Agreement and the NYBCL, the owners of Culbro Common
Stock will have dissenters' rights in connection with the Merger, and may
dissent from the Merger and demand in writing that Culbro pay the "fair value"
of the Culbro Common Stock.

The following is a brief summary of the rights under Section 623 of the
NYBCL of any holder of Culbro Common Stock who dissents form the Merger. The
discussion in this Proxy Statement/Prospectus of dissenters' rights under the
NYBCL is subject to and qualified in its entirety by reference to the applicable
statutory provisions of Section 623 of the NYBCL, the text of which is attached
to this Proxy Statement/Prospectus as Annex III.

A beneficial or record holder of Culbro Common Stock will have the right to
dissent with respect to the Merger and, subject to certain conditions, will be
entitled to receive a cash payment equal to the "fair value" of such
shareholder's Culbro Common Stock. Each beneficial owner asserting dissenters'
rights must assert such rights with respect to all of the shares of which such
shareholder is the beneficial owner or over which it has the power to direct the
vote, and such shareholder must submit to Culbro, with or prior to such
shareholder's assertion of dissenters' rights, the record shareholders' written
consent to such dissent. A record shareholder may assert dissenters' rights as
to fewer than all of the Culbro Common Stock registered in such record
shareholder's name only if such record shareholder dissents with respect to all
of the Culbro Common Stock beneficially owned by any one person and notifies
Culbro in writing of the name and address of each person on whose behalf such
record shareholder asserts dissenters' rights. Any shareholder of record who is
otherwise entitled to exercise dissenter's right may exercise such rights
notwithstanding the fact that such shareholder purchased shares of Culbro on or
after , 19 .

A dissenting shareholder must deliver to Culbro, within 20 days after
receipt of this Proxy Statement/ Prospectus, a written objection to the Merger.
A shareholder who does not satisfy this requirement will not be entitled to
dissenters' rights. A vote against the Merger will not in itself satisfy the
written objection requirement, and failure to vote against the Merger will not
in itself constitute a waiver of dissenters' rights with respect to such
shareholder's Culbro Common Stock. The written objection should be delivered to
Culbro's principal executive offices at 387 Park Avenue South, New York, New
York 10016-8899.

If Culbro's shareholders approve the Merger, Culbro must, not later than ten
days after the Effective Time, send written notice (accompanied by a copy of
Section 623 of the NYBCL) to each dissenting shareholder (i) stating where such
dissenting shareholder must send its written payment demand, (ii) stating where
and when certificates representing Culbro Common Stock must be deposited, (iii)
containing a form for a demanding payment and (iv) setting a date by which such
written payment

24
<PAGE>
demand must be received, which not may be fewer than 30 nor more than 60 days
after the date of the notice. A dissenting shareholder who does not demand
payment and deposit its Culbro Common Stock within the time provided by such
notice will not be entitled to dissenters' rights.

Culbro is required to pay to each dissenting shareholder who complies with
the procedures described above, within 30 days after the later of the Effective
Time and the date the payment demand is received, the amount that Culbro
estimates to be the fair value of such dissenting shareholder's Culbro Common
Stock, plus accrued interest from the Effective Time to the date of payment at
the average rate then currently paid by Culbro, on its principal bank loans, or,
if none, at a rate which is fair and equitable under all of the circumstances.
Culbro will provide, along with such payment, certain financial information,
including Culbro's balance sheet, income statement and statement of changes in
shareholders' equity for the last fiscal year and the latest available interim
financial statements, an explanation of how Culbro estimated the fair value of
the shares, an explanation of how the accrued interest was calculated and
certain other information. Culbro may send a statement to such dissenting
shareholder setting forth its estimate of the fair value of such dissenting
shareholder's Culbro Common Stock and offering to pay such amount, with
interest, as a final settlement of such dissenting shareholder's demand for
payment. Any dissenting shareholder who is dissatisfied with such payment or
such offer may, within 30 days of such payment or offer for payment, notify
Culbro in writing of such dissenting shareholder's estimate of the fair value of
its Culbro Common Stock and the amount of interest due and demand payment
thereof.

If any dissenting shareholder's demand for payment is not settled within 60
days after receipt by Culbro of such dissenting shareholder's payment demand,
the NYBCL requires that Culbro commence a proceeding and petition the court to
determine the fair value of the Culbro Common Stock and accrued interest, naming
all dissenting shareholders whose demands remain unsettled as parties to the
proceeding. The court may appoint one or more persons as appraisers to receive
evidence and recommend the fair value of the Culbro Common Stock. The dissenting
shareholders will be entitled to the same discovery rights as parties in other
civil actions. Each dissenting shareholder made a party to the proceeding will
be entitled to judgment for the amount, if any, by which the court finds the
fair value of its Culbro Common Stock, plus interest, exceeds the amount paid to
such shareholder by Culbro. If such a proceeding is not commenced within the
60-day period, Culbro must pay such dissenter whose demand remains unsettled the
amount demanded.

Shareholders should recognize that such a determination of fair value by the
court could rest in a price higher than, lower than or equal to the price
available to such shareholders pursuant to the Merger. The fair value of a
dissenting shareholder's shares is defined under the NYBCL as the value
immediately before the effective date of the Merger, excluding any appreciation
or depreciation in anticipation of the Merger unless such exclusion would be
inequitable.

Court costs and appraisal fees in such a valuation proceeding would be
assessed against Culbro, except that the court may assess such costs against
some or all of the dissenting shareholders to the extent that the court finds
that the dissenting shareholders acting arbitrarily, vexatiously or not in good
faith in demanding payment. The court may also assess the fees and expenses of
counsel and expects of the respective parties in amounts that the court finds
equitable: (i) against Culbro, if the court finds that it did not substantially
comply with certain provisions of the NYBCL concerning dissenters' rights, and
(ii) against the dissenting shareholders or against Culbro, if the court finds
that the party against whom the fees and expenses are assessed acted
arbitrarily, vexatiously or not in good faith. If the court finds that services
of counsel for any dissenting shareholders were of substantial benefit to other
dissenting shareholders similarly situated, the court may award to such counsel
reasonable fees to be paid out of the amounts awarded to dissenting shareholders
who benefited from the proceedings.

It is expected that any payments to Culbro shareholders as the result of the
exercise of appraisal rights would be made by General Cigar as the surviving
entity in the Merger.

25
<PAGE>
ANTICIPATED ACCOUNTING TREATMENT

General Cigar will account for the Merger by a method of accounting similar
to the pooling-of-interests method of accounting under GAAP. See "Unaudited Pro
Forma Combined Financial Statements."

LISTING OF GENERAL CIGAR COMMON STOCK

The Class B Common Stock currently is not, and will not be, listed on any
national securities exchange or quoted on any automated quotation system. The
Class A Common Stock is listed on the New York Stock Exchange under the symbol
"MPP." Class B Common Stock is freely convertible into Class A Common Stock.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

Assuming that the Merger and related transactions will take place as
described elsewhere in this Proxy Statement/Prospectus, at the closing, Latham &
Watkins, special counsel to Culbro and General Cigar, will deliver its opinion
to the effect that, among other things, the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended, and as a result, for Federal income tax purposes, Culbro
will recognize no gain or loss upon the Merger, and holders of Culbro Common
Stock will recognize no gain or loss upon the conversion of shares of Culbro
Common Stock into shares of Class B Common Stock, except for gain or loss
recognized on receipt of cash in lieu of any fractional share interest in Class
B Common Stock. All holders of Culbro Common Stock should read carefully the
detailed discussion under the caption "Certain Federal Income Tax Consequences."

26
<PAGE>
SELECTED FINANCIAL DATA

CULBRO

The Selected Financial Data of Culbro Corporation for fiscal 1992, fiscal
1993, fiscal 1994, fiscal 1995 and fiscal 1996 set forth below have been derived
from the audited Consolidated financial statements of Culbro. The Selected
Financial Data of Culbro Corporation for the thirteen weeks ended March 2, 1996
and March 1, 1997 set forth below have been derived from the unaudited
Consolidated financial statements of Culbro. The Selected Data should be read in
conjunction with "Culbro Corporation Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere herein. The
information presented below reflects CMS Gilbreth Packaging Systems, Inc. ("CMS
Gilbreth") as a discontinued operation. The 1994, 1995 and 1996 information
reflects the deconsolidation of Eli Witt in April 1994 and accounting for the
investment in Eli Witt under the equity method.

<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
----------------------
MARCH 2, MARCH 1,
1992 1993 1994 1995 1996 1996 1997
------------ ------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
Net sales and other
revenue............ $ 1,106,914 $ 1,317,680 $ 134,335 $ 168,996 $ 204,812 $ 32,902 $ 53,488
Operating profit..... 12,216 13,848 3,153 18,644 19,853 2,542 5,746
Income (loss) from
continuing
operations......... (31) (1,218) (2,172) (7,504) 8,399 428 2,264
Income (loss) per
common share from
continuing
operations......... (0.01) (0.45) (0.50) 1.69 1.80 0.09 0.47
Net income (loss).... 1,868 (7,452) 1,152 11,189 7,856 924 2,264
Net income (loss) per
common share....... 0.43 (1.89) 0.27 2.52 1.68 0.20 0.47
Dividends per common
share.............. 0.60 -- -- -- -- -- --
Working capital...... 96,542 120,147 69,003 64,671 95,430 70,163 45,158
Property and
equipment, net..... 83,637 99,994 61,894 61,059 66,829 62,024 72,211
Total assets......... 400,609 419,791 268,057 277,818 243,444 277,018 339,740
Long-term debt....... 145,163 174,969 98,612 84,089 49,925 89,278 69,447
Shareholders'
equity............. 119,035 110,882 112,037 124,975 135,788 126,623 138,056
Book value per common
share at end of
period............. 27.63 25.74 26.01 28.47 30.09 28.71 30.55
Weighted average
common shares and
equivalents
outstanding........ 4,308,000 4,308,000 4,308,000 4,440,000 4,664,000 4,622,000 4,803,000
</TABLE>

27
<PAGE>
GENERAL CIGAR

The Selected Combined Financial Data of General Cigar for fiscal 1992 and
for the thirteen weeks ended March 2, 1996 and March 1, 1997 have been derived
from the unaudited combined financial statements of General Cigar. The Selected
Combined Financial Data of General Cigar for fiscal 1993 have been derived from
the audited Combined Financial Statements of General Cigar. The Selected
Combined Financial Data of General Cigar for fiscal 1994, fiscal 1995 and fiscal
1996 have been derived from the audited Combined Financial Statements of General
Cigar included elsewhere in this Proxy Statement/Prospectus. The following
selected financial data should be read in conjunction with "General Cigar
Holdings, Inc. Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the Combined Financial Statements of General Cigar
and Notes thereto included elsewhere in this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
FISCAL YEAR
----------------------------------------------------- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MARCH 2, MARCH 1,
1992 1993 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- ----------- -----------

<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales and other revenue.................... $ 77,131 $ 76,825 $ 89,538 $ 124,033 $ 154,676 $ 28,832 $ 49,798
Cost of goods sold............................. 48,651 49,165 54,285 69,683 86,240 16,242 27,515
--------- --------- --------- --------- --------- ----------- -----------
Gross profit................................... 28,480 27,660 35,253 54,350 68,436 12,590 22,283
Selling, general and administrative expenses... 27,059 25,282 27,210 36,726 44,593 8,586 14,428
Other nonrecurring expense..................... -- -- -- -- 3,600 -- --
--------- --------- --------- --------- --------- ----------- -----------
Operating profit............................... 1,421 2,378 8,043 17,624 20,243 4,004 7,855
Gain on insurance settlement................... -- -- -- 2,586 --
Other nonoperating income (expense)............ 299 134 (23) (597) 853 162 317
Interest expense............................... 327 264 607 1,049 951 262 1,274
--------- --------- --------- --------- --------- ----------- -----------
Income before income taxes..................... 1,393 2,248 7,413 18,564 20,145 3,904 6,898
Income tax provision........................... 579 941 2,863 7,240 7,738 1,509 2,621
--------- --------- --------- --------- --------- ----------- -----------
Income before cumulative effect of accounting
change....................................... 814 1,307 4,550 11,324 12,407 2,395 4,277
Cumulative effect of accounting change for
post-retirement benefits, net of tax
provision.................................... -- (4,356) -- -- -- -- --
--------- --------- --------- --------- --------- ----------- -----------
Net income (loss).............................. $ 814 $ (3,049) $ 4,550 $ 11,324 $ 12,407 $ 2,395 $ 4,277
--------- --------- --------- --------- --------- ----------- -----------
--------- --------- --------- --------- --------- ----------- -----------
OTHER DATA:
Gross margin................................... 36.9% 36.0% 39.4% 43.8% 44.2% 43.7% 44.7%
Operating margin............................... 1.8% 3.1% 9.0% 14.2% 13.1% 13.9% 15.8%
EBITDA (1)(2).................................. $ 5,541 $ 5,923 $ 11,291 $ 23,163 $ 24,909 $ 4,967 $ 9,039
EBITDA margin (2)(3)........................... 7.2% 7.7% 12.6% 18.7% 16.1% 17.2% 18.2%
Net cash provided by (used in) operating
activities................................... $ 8,224 $ (3,835) $ 12,683 $ 9,536 $ (4,919) $ (5,387) $ 3,218
Net cash used in investing activities.......... (4,435) (1,691) (1,384) (616) (9,701) (1,952) (58,175)
Net cash (used in) provided by financing
activities................................... (3,799) 5,526 (10,865) (9,062) 14,707 7,393 60,609
Capital expenditures........................... 4,435 1,691 1,884 2,841 9,701 1,952 1,932

BALANCE SHEET DATA (AT END OF PERIOD):
Working capital................................ $ 35,673 $ 45,001 $ 41,176 $ 43,632 $ 65,121 $ 51,484 $ 7,667
Total assets................................... 98,908 104,551 100,974 113,655 145,042 114,570 240,607
Long-term debt................................. 3,292 2,901 6,998 11,352 11,079 11,363 66,551
Culbro investment.............................. 75,874 78,740 68,160 66,095 93,719 75,757 47,764
</TABLE>

- ------------------------

(1) EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization. EBITDA is presented because it is a widely
accepted financial indicator used by certain investors and analysts to
analyze and compare companies on the basis of operating performance. EBITDA
is not intended to represent cash flows for the period, nor has it been
presented as an alternative to operating income as an indicator of operating
performance and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with generally accepted
accounting principles. See the Combined Financial Statements and the Notes
thereto appearing elsewhere in this Proxy Statement/Prospectus.

(2) In fiscal 1995 the Company had a $2.6 million gain from an insurance
settlement. Excluding this gain, EBITDA would have been $20.6 million and
EBITDA margin would have been 16.6%. In fiscal 1996 the Company had a
nonrecurring expense of $3.6 million. Excluding this expense, EBITDA would
have been $28.5 million and EBITDA margin would have been 18.4%.

(3) EBITDA margin represents EBITDA as a percentage of net sales. EBITDA margin
is presented because it is a widely accepted financial indicator used by
certain investors and analysts to analyze and compare companies on the basis
of operating performance. EBITDA margin should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles. See the Combined
Financial Statements and the Notes thereto appearing elsewhere in this Proxy
Statement/Prospectus.

28
<PAGE>
UNAUDITED PRO FORMA FINANCIAL STATEMENTS

The "Culbro Historical" column presented in the Unaudited Pro Forma Combined
Statement of Operations for the Year Ended November 30, 1996 reflects the
audited consolidated results of operations of Culbro, as adjusted to conform to
General Cigar's financial statement presentation. The "Culbro Historical" column
presented in the Unaudited Pro Forma Consolidated Statement of Operations for
the 13 Weeks Ended March 1, 1997 reflects the unaudited results of operations of
Culbro, as adjusted to conform to General Cigar's financial statement
presentation. The Unaudited Pro Forma Statements of Operations were prepared to
reflect the impact on Culbro of the following transactions as if each had
occurred at the beginning of the relevant period: (i) the Villazon Acquisition;
(ii) the Distribution and the assumption by General Cigar of certain liabilities
at the time of the Asset Transfers (the "Liability Assumption"); (iii) the
Offering; and (iv) the Merger, pursuant to which Culbro will be merged into
General Cigar, with General Cigar as the surviving entity. Because the Villazon
Acquisition and the Liability Assumption each occurred during the 13 weeks ended
March 1, 1997, the effects of such transactions following their respective
effective dates are reflected in the "Culbro Historical" column in the Unaudited
Pro Forma Consolidated Statement of Operations, rather than in the pro forma
adjustments thereto.

The "Culbro Historical" column presented in the Unaudited Pro Forma
Consolidated Balance Sheet as of March 1, 1997 reflects the unaudited assets,
liabilities and shareholders equity of Culbro, as adjusted to conform to General
Cigar's financial statement presentation. The Unaudited Pro Forma Consolidated
Balance Sheet as of March 1, 1997 was prepared to reflect the impact on Culbro
of the following transactions as if each had occurred on March 1, 1997 (i) the
Distribution, (ii) the Offering and (iii) the Merger pursuant to which Culbro
will be merged into General Cigar. Because the Villazon Acquisition occurred
prior to March 1, 1997, such transaction is reflected in the "Culbro Historical"
column. Because the Liability Assumption occurred prior to March 1, 1997, such
transaction is reflected in the "Griffin Historical" column.

In the opinion of management, all adjustments necessary to fairly present
this pro forma information have been made. The Unaudited Pro Forma Financial
Statements are based upon, and should be read in conjunction with the
Consolidated Financial Statements of Culbro and Notes thereto incorporated by
reference in this Proxy Statement/Prospectus, the Combined Financial Statements
of General Cigar and Notes thereto included elsewhere in this Proxy
Statement/Prospectus and the Combined Financial Statements of Griffin Land &
Nurseries, Inc. and Notes thereto included in Annex II. The pro forma
information does not purport to be indicative of the results that would have
been reported had such events actually occurred on the dates specified, nor is
it indicative of General Cigar's future results if the aforementioned
transactions are completed.

29
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ADJUSTMENTS FOR VILLAZON ADJUSTMENTS FOR
ACQUISITION DISTRIBUTION
-------------------------- PRO FORMA FOR ---------------------------
CULBRO VILLAZON VILLAZON VILLAZON GRIFFIN LIABILITY PRO FORMA FOR
HISTORICAL(1) HISTORICAL(2) ADJUSTMENTS ACQUISITION HISTORICAL(6) ASSUMPTION DISTRIBUTION
------------ ------------- ----------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales and
other revenue... $ 201,202 $ 40,617 $ 241,819 $ (46,531) $ 195,288
Costs and
expenses:
Cost of goods
sold............ 120,449 20,830 141,279 (34,210) 107,069
Selling, general
and
administrative
expenses........ 57,140 5,658 $ 2,498(3) 65,296 (12,666) 52,630
Other expense..... 4,500 4,500 (900) 3,600
------------ ------------- ----------- ------------- ------------ -------------
Operating
profit.......... 19,113 14,129 (2,498) 30,744 1,245 31,989
Income from equity
investment...... 303 303 (303)
Other nonoperating
income, net..... 2,657 278 2,935 (1,917) 1,018
Interest
expense......... 8,758 552 6,908(4) 16,218 (7,805) $ 3,258(7) 11,671
------------ ------------- ----------- ------------- ------------ ------------- -------------
Income before
income taxes.... 13,315 13,855 (9,406) 17,764 6,830 (3,258) 21,336
Income tax
provision....... 4,916 114 1,621(5) 6,651 2,767 (1,270)(5) 8,148
------------ ------------- ----------- ------------- ------------ ------------- -------------
Income before
minority
interest........ 8,399 13,741 (11,027) 11,113 4,063 (1,988) 13,188
Income
attributable to
minority
interest........
------------ ------------- ----------- ------------- ------------ ------------- -------------
Income from
continuing
operations...... $ 8,399 $ 13,741 $ (11,027) $ 11,113 $ 4,063 $ (1,988) $ 13,188
------------ ------------- ----------- ------------- ------------ ------------- -------------
------------ ------------- ----------- ------------- ------------ ------------- -------------
Income per common
share from
continuing
operations...... $ 1.80*
------------
------------
Weighted average
common shares
and equivalents
outstanding..... 4,664*
------------
------------

CULBRO/
OFFERING PRO FORMA FOR MERGER GENERAL CIGAR
ADJUSTMENTS OFFERING ADJUSTMENTS PRO FORMA
----------- ------------- --------------- -----------------
<S> <C><C> <C> <C> <C>
Net sales and
other revenue... $ 195,288 $ 195,288
Costs and
expenses:
Cost of goods
sold............ 107,069 107,069
Selling, general
and
administrative
expenses........ 52,630 52,630
Other expense..... 3,600 3,600
----------- ------------- ------- --------
Operating
profit.......... 31,989 31,989
Income from equity
investment......
Other nonoperating
income, net..... 1,018 1,018
Interest
expense......... $ (8,747)(8) 2,924 2,924
----------- ------------- ------- --------
Income before
income taxes.... 8,747 30,083 30,083
Income tax
provision....... 3,411(5) 11,559 11,559
----------- ------------- ------- --------
Income before
minority
interest........ 5,336 18,524 18,524
Income
attributable to
minority
interest........ 4,736(9) 4,736 $ (4,736)(10)
----------- ------------- ------- --------
Income from
continuing
operations...... $ 600 $ 13,788 $ 4,736 $ 18,524
----------- ------------- ------- --------
----------- ------------- ------- --------
Income per common
share from
continuing
operations...... $ 0.68 *
--------
--------
Weighted average
common shares
and equivalents
outstanding..... 27,428 (11)*
--------
--------
</TABLE>

- ------------------------

* Each outstanding share of Culbro Common Stock will be exchanged for 4.44557
shares of General Cigar Class B Common Stock in the Merger.

See Notes to Unaudited Pro Forma Financial Statements

30
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE 13 WEEKS ENDED MARCH 1, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ADJUSTMENTS FOR VILLAZON ADJUSTMENTS FOR
ACQUISITION DISTRIBUTION
-------------------------------- PRO FORMA FOR ---------------------------
CULBRO VILLAZON VILLAZON VILLAZON GRIFFIN LIABILITY
HISTORICAL(1) HISTORICAL(12) ADJUSTMENTS ACQUISITION HISTORICAL(6) ASSUMPTION
------------- --------------- --------------- -------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net sales and other revenue.. $ 52,523 $ 5,592 $ 58,115 $ (2,725)
Costs and expenses:
Cost of goods sold........... 29,519 3,103 32,622 (1,943)
Selling general and
administrative expenses.... 17,575 1,158 $ 212(3) 18,945 (3,208)
Other expense................
------------- ------ ----- -------------- ------------- ------------
Operating profit............. 5,429 1,331 (212) 6,548 2,426
Income from equity
investment................. (22) (22) 22
Other nonoperating income,
net........................ 317 317
Interest expense............. 2,073 50 585(4) 2,708 (799) $ 804(7)
------------- ------ ----- -------------- ------------- ------------
Income before income taxes... 3,651 1,281 (797) 4,135 3,247 (804)
Income tax provision......... 1,387 500 (311)(5) 1,576 1,234 (314)(5)
------------- ------ ----- -------------- ------------- ------------
Income before minority
interest................... 2,264 781 (486) 2,559 2,013 (490)
Income attributable to
minority interest..........
------------- ------ ----- -------------- ------------- ------------
Income from continuing
operations................. $ 2,264 $ 781 $ (486) $ 2,559 $ 2,013 $ (490)
------------- ------ ----- -------------- ------------- ------------
------------- ------ ----- -------------- ------------- ------------

Income per common share from
continuing operations...... $0.47*
-------------
-------------

Weighted average common
shares and equivalents
outstanding................ 4,803 *
-------------
-------------

CULBRO/
PRO FORMA FOR OFFERING PRO FORMA FOR MERGER GENERAL CIGAR
DISTRIBUTION ADJUSTMENTS OFFERING ADJUSTMENTS PRO FORMA
--------------- ------------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Net sales and other revenue.. $ 55,390 $ 55,390 $ 55,390
Costs and expenses:
Cost of goods sold........... 30,679 30,679 30,679
Selling general and
administrative expenses.... 15,737 15,737 15,737
Other expense................
--------------- ------------- -------------- ------------ -------
Operating profit............. 8,974 8,974 8,974
Income from equity
investment.................
Other nonoperating income,
net........................ 317 317 317
Interest expense............. 2,713 $ (2,163)(8) 550 550
--------------- ------------- -------------- ------------ -------
Income before income taxes... 6,578 2,163 8,741 8,741
Income tax provision......... 2,496 844(5) 3,340 3,340
--------------- ------------- -------------- ------------ -------
Income before minority
interest................... 4,082 1,319 5,401 5,401
Income attributable to
minority interest.......... 1,381(9) 1,381 $ (1,381) 10)
--------------- ------------- -------------- ------------ -------
Income from continuing
operations................. $ 4,082 $ (62) $ 4,020 $ 1,381 $ 5,401
--------------- ------------- -------------- ------------ -------
--------------- ------------- -------------- ------------ -------
Income per common share from
continuing operations...... $0.19 *
-------
-------
Weighted average common
shares and equivalents
outstanding................ 28,200 (11)*
-------
-------
</TABLE>

- ------------------------

* Each outstanding share of Culbro Common Stock will be exchanged for 4.44557
shares of General Cigar Class B Common Stock in the Merger.

See Notes to Unaudited Pro Forma Financial Statements

31
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

AS OF MARCH 1, 1997

<TABLE>
<CAPTION>
DISTRIBUTION
ADJUSTMENTS/
CULBRO GRIFFIN OFFERING MERGER CULBRO/GENERAL CIGAR
HISTORICAL(1) HISTORICAL(6) ADJUSTMENTS ADJUSTMENTS(16) PRO FORMA
------------ ------------ ------------ ------------ ---------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash.......................................... $ 12,559 $ (6,498) $ 6,061
Accounts receivable, net...................... 33,816 (1,730) 32,086
Inventories................................... 94,244 (30,109) 64,135
Deferred income taxes......................... 2,783 (2,783)
Other current assets.......................... 5,338 (801) 4,537
------------ ------------ ------------ ------------ --------
Total current assets.......................... 148,740 (41,921) 106,819
Property and equipment, net................... 72,211 (14,421) 57,790
Real estate held for sale or lease, net....... 25,404 (25,404)
Investment in real estate joint ventures...... 3,348 (3,348)
Intangible assets............................. 70,617 70,617
Other......................................... 20,160 (14,779) 5,381
------------ ------------ ------------ ------------ --------
Total assets.................................. 340,480 (99,873) 240,607
------------ ------------ ------------ ------------ --------
------------ ------------ ------------ ------------ --------

LIABILITIES AND STOCKHOLDERS' EQUITY/CULBRO
INVESTMENT
Accounts payable and accrued liabilities...... 24,694 (3,437) 21,257
Current portion of long-term debt............. 75,741 (242) $ (74,370) 13) 1,129
Income taxes payable.......................... 2,407 (11) 2,396
------------ ------------ ------------ ------------ --------
Total current liabilities..................... 102,842 (3,690) (74,370) 24,782
Long-term debt................................ 69,447 (2,896) (38,630) 13) 27,921
Deferred income taxes......................... 6,770 6,770
Other noncurrent liabilities.................. 23,365 (2,995) 20,370
------------ ------------ ------------ ------------ --------
Total liabilities............................. 202,424 (9,581) (113,000) 79,843

Minority interest in subsidiary............... 41,104 (14 $ (41,104)

Common Stock.................................. 4,549 (4,549)
Class A Common Stock.......................... 69 69
Class B Common Stock.......................... 201 201
Additional paid in capital.................... 13,529 71,896 (15 75,069 160,494
Retained earnings/Culbro Investment........... 120,806 (90,292) (30,514)
Common stock in Treasury...................... (828) 828
------------ ------------ ------------ ------------ --------
Total shareholders' equity/Culbro Investment.. 138,056 (90,292) $ 71,896 $ 41,104 160,764
------------ ------------ ------------ ------------ --------
Liabilities and shareholders' equity/Culbro
Investment.................................. $ 340,480 $ (99,873) $ 240,607
------------ ------------ ------------ ------------ --------
------------ ------------ ------------ ------------ --------
</TABLE>

See Notes to Unaudited Pro Forma Financial Statements

32
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS

(1) Reflects Culbro Corporation historical results for the fiscal year ended
November 30, 1996 and as of and for the thirteen weeks ended March 1, 1997,
as adjusted to conform to General Cigar's basis of financial statement
presentation.

(2) Represents the combined totals of both Honduras American Tabaco, S.A. de
C.V. ("HATSA") and Villazon & Company, Inc. The unaudited pro forma
combining statement of operations for 1996 is presented below and reflects
the elimination of sales and cost of goods sold.

UNAUDITED PRO FORMA COMBINING STATEMENT OF OPERATIONS
YEAR ENDING DECEMBER 31, 1996

<TABLE>
<CAPTION>
HATSA VILLAZON ELIMINATIONS COMBINED
--------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Net sales................................................. $ 12,585 $ 40,446 $ (12,414) $ 40,617
Cost of goods sold........................................ 8,298 24,646 (12,114) 20,830
--------- ----------- ------------ -----------
Gross profit.............................................. 4,287 15,800 (300) 19,787
Selling, general and administrative expenses.............. 278 5,380 5,658
--------- ----------- ------------ -----------
Operating profit.......................................... 4,009 10,420 (300) 14,129
Other nonoperating income (expense), net.................. (12) 290 278
Interest expense.......................................... 552 552
--------- ----------- ------------ -----------
Income before income taxes................................ 3,997 10,158 (300) 13,855
Income tax provision...................................... 114 114
--------- ----------- ------------ -----------
Net income................................................ $ 3,997 $ 10,044 $ (300) $ 13,741
--------- ----------- ------------ -----------
--------- ----------- ------------ -----------
</TABLE>

(3) Reflects estimated amortization expense of intangible assets to be recorded
in connection with the Villazon Acquisition and additional depreciation
expense related to the estimated increase in Villazon's property and
equipment as a result of purchase accounting adjustments. Estimated
intangible assets of $70 million include trademarks and goodwill, if any,
which General Cigar anticipates will be amortized over 30 years on a
straight line basis. The additional depreciation expense is based on an
estimated increase of $3 million to the historical cost of Villazon's
property and equipment, depreciated on a straight line basis over an average
useful life of 20 years. The period used for goodwill amortization is based
on a preliminary estimate of the reasonable period for which such costs are
expected to be recovered and is based in part on the earnings and history of
the entities acquired.

(4) Reflects (i) amortization of financing fees relating to the Credit Facility
and (ii) estimated interest expense on $91.5 million of indebtedness
(consisting of $24.4 million of notes issued in connection with the Villazon
Acquisition (the "Seller Notes") and $67.1 million of indebtedness incurred
under the Credit Facility) used to finance the Villazon Acquisition,
excluding interest on $5.1 million of Seller Notes which was previously
included on the Villazon historical balance sheets as long-term debt due to
owners. Prior to the Offering, borrowings under the Credit Facility bore
interest at the Eurodollar rate plus 2% (7.44%). The Seller Notes bore
interest at prime plus 1/2% (8.75%). If interest rates on such debt were to
increase (decrease) by 1/8 of 1%, net income would (decrease) increase by
less than $0.1 million.

(5) Reflects Federal Income tax (35%) and state income tax of approximately 4%
which is net of Federal tax benefits.

(6) Reflects elimination as a result of the Distribution of operations
represented by the historical combined financial statements of Griffin which
include substantially all the non-tobacco related assets of Culbro, as
adjusted to conform to General Cigar's basis of financial statement
presentation.

(7) Reflects estimated interest expense on approximately $43.8 million of Culbro
debt assumed by General Cigar in connection with the Liability Assumption.
Interest expense under the Credit Facility is based on the Eurodollar rate
plus 2%, which is assumed to be 7.44%.

(8) Reflects a decrease in interest expense as a result of net proceeds of
$113.0 million from the Offering applied towards the repayment of (i) $98.6
million of indebtedness under the Credit Facility bearing interest at the
Eurodollar rate plus 2% (7.44%) and (ii) $14.4 million of indebtedness
reflecting a portion of the Seller Notes bearing interest at a rate of prime
plus 1/2% (8.75%). The Credit Facility provides for a reduction of interest
rates to the Eurodollar rate plus 3/4%.

(9) Reflects the net income of General Cigar attributed to the approximately 26%
minority ownership as a result of the Offering.

(10) Represents the elimination of the income attributable to the minority
interest in General Cigar.

(11) The pro forma number of weighted average shares outstanding includes all of
the outstanding shares of Class A Common Stock and Class B Common Stock
outstanding after the Offering. The total number of weighted average shares
outstanding used in the computation of pro forma earnings per share also
includes the dilutive effect of additional shares issuable upon exercise of
all Culbro stock options outstanding at the Offering date.

33
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS (CONTINUED)

(12) Reflects the unaudited combined operating results of both HATSA and
Villazon & Company, Inc. for the one month period prior to the acquisition
of HATSA and Villazon & Company, Inc. by Culbro. Subsequent to the effective
date of the acquisition, the combined operating results of HATSA and
Villazon & Company, Inc. are included in the Culbro historical results.

(13) Reflects net proceeds from the Offering of $113.0 million applied toward
the repayment of (i) $74.4 million of short-term debt consisting of $60.0
million under the Credit Facility and $14.4 of Seller Notes, and (ii) $38.6
million of long-term debt outstanding under the Credit Facility.

(14) Reflects the minority interest in General Cigar as a result of the
Offering. Minority interest reflects approximately 26% of the net book value
of General Cigar as of the balance sheet date.

(15) Reflects increase in Culbro's additional paid in capital as a result of the
excess of the Offering proceeds of $113.0 million over the minority interest
in General Cigar as of the balance sheet date.

(16) Reflects the effect of the Merger on General Cigar's capital structure
primarily the elimination of the minority interest in General Cigar, the
elimination of the Culbro Common Stock outstanding and the issuance of the
Class A and Class B Common Stock, the elimination of the existing retained
earnings and the increase in the additional paid in capital.

34
<PAGE>
CULBRO CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion of the financial condition and results of
operations of Culbro should be read in conjunction with the Consolidated
Financial Statements and the related Notes thereto incorporated by reference in
this Proxy Statement/Prospectus.

RESULTS OF OPERATIONS

THIRTEEN WEEKS ENDED MARCH 1, 1997 COMPARED TO THIRTEEN WEEKS ENDED MARCH 2,
1996

Net sales increased $20.6 million to $53.5 million in the 1997 first quarter
from $32.9 million in the 1996 first quarter, due principally to the sales
increase in the cigar business. Net sales in the cigar business increased $21.0
million to $49.8 million in the 1997 first quarter from $28.8 million in the
1996 first quarter. The higher cigar sales were due to increased volume at
General Cigar, principally in premium cigars, and price increases in all cigar
categories. A portion of the increased volume was directly due to the
acquisition in early 1997 of Villazon, which is included for two months in the
current quarter. Net sales of Culbro's other businesses were slightly lower.

Culbro's operating profit increased to $5.7 million in the 1997 first
quarter from $2.5 million in the 1996 first quarter due to increased operating
profit in the cigar business. The increased operating profit in the cigar
business was due to the increased sales noted above and higher margins on cigar
sales. The improved margins were due to the price increases and a more favorable
sales mix. Consistent with prior years, the nursery products business incurred
an operating loss in the 1997 first quarter due to the seasonal nature of this
business. Overall operating results in Culbro's real estate business were
unchanged. Increased profit from the New York City office building was offset by
lower results in the Connecticut real estate business, due principally to lower
revenue. The nonoperating income in the 1996 first quarter reflected dividend
income from the Eli Witt preferred stock that Culbro previously held. The
preferred stock was exchanged in satisfaction of the related subordinated note
payable in the 1996 fourth quarter.

The lower interest expense reflects the reduction of debt in the 1996 fourth
quarter, principally from the proceeds from the sale of CMS Gilbreth
substantially offset by the interest on the debt incurred to acquire Villazon.
Net income in the 1996 first quarter included the results of a discontinued
operation, CMS Gilbreth, which was sold in the 1996 fourth quarter.

FISCAL 1996 COMPARED TO FISCAL 1995

In 1996, Culbro sold its packaging and labeling systems business, CMS
Gilbreth, and has reported CMS Gilbreth's results as a discontinued operation.
Results of prior years were restated to reflect the current presentation.

Income from continuing operations increased from $7.5 million in 1995 to
$8.4 million in 1996 due principally to higher operating profit in the cigar
business, partially offset by the effect of other expense of $4.5 million (see
below) recorded in contemplation of the Offering.

Higher profit in the cigar business reflected an increase in net sales of
approximately 25%. The increase in net sales reflected principally higher unit
sales of premium cigars, and higher prices in all cigar categories. Continued
strong sales and prices of premium cigars and higher prices in the mass market
category more than offset slightly lower unit volume in certain brands of mass
market cigars. Management believes that volume in mass market cigars was
adversely affected by repositioning and renaming certain brands. Gross profit in
the cigar business increased, reflecting higher prices, benefits from mix due to
relatively higher sales of premium cigars, and the increased volume. Operating
expense in the cigar business increased due principally to the higher sales
volume. The operating results of the Club Macanudo cigar bar which opened in
1996 were not material.

35
<PAGE>
Operating profit in the nursery products business, Imperial Nurseries, was
substantially unchanged from last year. The effect of higher net sales was
offset by lower margins and higher operating expenses.

In the Connecticut real estate business, operating results decreased from
last year due to lower property sales and a loss of approximately $0.4 million
on the sale of an equity interest in a real estate joint venture. The joint
venture sale generated proceeds of approximately $4 million. Operating results
of the New York City office building increased due to higher rental revenue from
leasing previously vacant space.

General corporate expense increased by $2.3 million due to other expense of
$4.5 million partially offset by lower annual incentive compensation expense in
1996 compared to 1995. The other expense of $4.5 million in 1996 represents the
cost of terminating a long-term incentive compensation plan and severance costs
for corporate employees, in contemplation of the Offering.

Interest expense decreased from 1995 reflecting lower debt levels in 1996
and overall lower interest rates.

The loss from discontinued operations reflects the loss on the sale of CMS
Gilbreth, partially offset by operating profit prior to the sale. Operating
results of CMS Gilbreth declined from last year due principally to lower sales.

FISCAL 1995 COMPARED TO 1994

The income from continuing operations in 1995, compared to a loss from
continuing operations in 1994, reflected substantially higher operating profit
in the cigar business. The higher profit in the cigar business reflected higher
unit volume and higher prices in all cigar categories. Gross profit was higher
due to the higher sales and increased gross margins. The increase in gross
margins reflected a more favorable mix due to relatively higher sales of premium
cigars and lower fixed costs per unit due to the higher volume. Operating
expenses in the cigar business increased due to the higher volume. As a
percentage of net sales, operating expenses decreased slightly in fiscal 1995
due to expenses increasing at a lower rate relative to the increase in sales.

Operating results in Culbro's nursery products business increased in 1995
due to improved pricing and lower costs, partially offset by the effect of lower
volume. Imperial's 1995 results included a charge of $1 million to reserve for
excess field grown plant inventories due to projected market conditions.
Imperial plans to reduce its investment in field grown plant inventories.

In Culbro's real estate segment, operating results of the Connecticut real
estate business increased, reflecting the effect of the $3.6 million charge
recorded in 1994 to write off previously expended costs on certain projects that
were not being developed as originally planned. Excluding the effect of this
one-time charge in 1994, operating results in the Connecticut real estate
business in 1995 were substantially unchanged. Conditions in the commercial and
residential real estate markets in the greater Hartford area continued to hamper
development activities. Although leasing activities were strong in 1995, lower
lease rates reflected the soft commercial market. Results in Culbro's commercial
office building in New York City improved slightly due to higher rental income
from short-term leases.

General corporate expense increased due principally to accruals for
management incentive compensation, related to the increased earnings in 1995.

Results from Culbro's equity investments in 1995 reflected a loss at Centaur
compared to income in 1994. Centaur's lower results reflected a weakening in the
British economy. Culbro's 1994 results from equity investments included a loss
at Eli Witt prior to the deconsolidation of that company in April 1994.

In 1995, Culbro's results included certain nonoperating items, both income
and expense, which substantially offset each other. A gain of approximately $2.6
million on an insurance settlement reflected the proceeds received from two of
the claims related to a General Cigar office and warehouse facility destroyed by
fire in May 1994. Additional claims related to this incident remain outstanding.
Included in

36
<PAGE>
other nonoperating income, net were approximately $2.2 million of expenses
reflecting Culbro's support of its investment in Eli Witt and expenses related
to a terminated transaction for the sale of 51% of General Cigar.

Interest expense increased in 1995 because of a full year of interest
accrued on the 10% exchangeable subordinated note, as compared to a partial year
in 1994. The accrued dividend income and accretion on the preferred stock of Eli
Witt, included in other nonoperating income, net, is equal to the accrued
interest expense on the subordinated note.

Net income increased in 1995 compared to 1994 due to the higher income from
continuing operations and slightly higher results from the discontinued
operation, CMS Gilbreth, which was sold in 1996. CMS Gilbreth's results
increased as a result of higher sales and cost reduction benefits from closing a
facility in 1994, partially offset by higher spending on research and
development.

LIQUIDITY AND CAPITAL RESOURCES

In the 1997 first quarter, cash used in operating activities was less than
1996 due principally to higher net income as a result of increased operating
profit in the cigar business. Cash used in investing activities principally
reflected the acquisition of Villazon and capital expenditures primarily to
expand production capacity at General Cigar. Financing activities reflect the
borrowing from the Credit Facility used to finance the Villazon Acquisition.

In 1996, cash used in operating activities of continuing operations
reflected principally higher tobacco inventories at General Cigar Co., Inc. to
meet the current demand for cigars and to secure certain tobacco supplies to
meet the anticipated future demand for cigars. The increase in accounts
receivable reflected the increased cigar sales. The decrease in deferred taxes
reflected the reversal of excess deferred taxes due to lower than expected taxes
on the sale of CMS Gilbreth, and the reclassification to current liabilities of
deferred taxes for the reversal of timing differences. These items were
partially offset by proceeds from the sale by Culbro's Connecticut real estate
business of an equity investment in a real estate joint venture.

Cash provided by investing activities principally included the proceeds from
the sale of CMS Gilbreth. The increase in capital expenditures in 1996 versus
1995 related to investment in General Cigar's manufacturing facilities to meet
increased demand for premium cigars. In order to increase production, General
Cigar recently expanded its manufacturing facilities in the Dominican Republic
and Jamaica, and expects to increase production at its facilities in Honduras,
which were recently acquired as a result of the acquisition of Villazon (see
below). The cash used in financing activities reflects the reduction of debt
from the proceeds of the CMS Gilbreth sale.

On February 28, 1997, the Culbro's newly formed subsidiary, General Cigar
Holdings, Inc., completed an initial public offering of 6,900,000 shares of its
Class A Common Stock, representing approximately 26% of the common equity
ownership of General Cigar. The proceeds from the Offering, after underwriters'
discounts and commissions and estimated other expenses, were approximately $113
million, and were used to repay debt, a substantial portion of which was
incurred in the acquisition of Villazon (see below). Culbro owns the remaining
equity ownership of General Cigar in the form of Class B Common Stock. General
Cigar has no operations of its own, and its principal asset is all of the
outstanding common stock of General Cigar. Under the terms of a Distribution
Agreement entered into on February 27, 1997 among Culbro, General Cigar and
Griffin, Culbro transferred certain assets and liabilities to General Cigar and
Griffin. The Distribution Agreement also provided for the transfer of the assets
of Culbro's non-tobacco businesses and investments, principally the nursery
business, Imperial Nurseries, most of the New England real estate holdings and
the investment in Centaur to Griffin. Subject to (1) either a tax ruling or an
opinion of counsel satisfactory to Culbro to the effect that the Distribution
constitutes a tax-free reorganization under Section 355 of the Code and (ii) the
approval by the holders of 66 2/3% of the outstanding Culbro Common Stock of the
Merger, Culbro intends to effect the Distribution. The only significant asset
Culbro will have after the Distribution will be its investment in General Cigar.
Culbro will

37
<PAGE>
then consummate the Merger, subject to approval of 66 2/3% of its shareholders,
with and into General Cigar, with the Culbro's shareholders at that time
receiving approximately 4.44557 shares of Class B Common Stock of General Cigar
in exchange for each share of Culbro Common Stock.

On January 21, 1997, General Cigar acquired Villazon for approximately $80.6
million consisting of $90.5 million of purchase price and direct acquisition
costs, less $9.9 million of cash acquired. At closing, cash paid to the sellers
was $64.6 million and $24.4 million of seller notes were issued. The acquisition
of Villazon was financed from the initial borrowings under the Credit Facility,
which was repaid from the Offering proceeds.

On January 21, 1997, General Cigar entered into the Credit Facility which
provided financing for the acquisition of Villazon and repayment of the amount
outstanding under Culbro's previously existing credit facility. The Credit
Facility provides financing only for General Cigar and its subsidiaries. In
addition, under the terms of the Distribution Agreement, on February 27, 1997,
General Cigar transferred $7.0 million to Griffin and its subsidiaries.
Subsequent to the Offering, the cash flows of Griffin have been segregated from
the cash flows of General Cigar. After repayment of the debt from the Offering
proceeds, Culbro's remaining debt was approximately $32.0 million, reflecting
approximately $29.0 million of debt in the cigar business and approximately $3.0
million of mortgages in Griffin.

Management believes that cash flow from the operations of its respective
businesses, current and anticipated credit facilities, and selective asset sales
will be sufficient to fund future operations.

38
<PAGE>
GENERAL CIGAR HOLDINGS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion of the financial condition and results of
operations of General Cigar should be read in conjunction with the Combined
Financial Statements and the related Notes thereto included elsewhere in this
Proxy Statement/Prospectus.

OVERVIEW

General Cigar was formed on December 12, 1996. General Cigar is a holding
company with no business operations of its own. General Cigar's only material
assets are all of the outstanding capital stock of its subsidiaries, General
Cigar Co., Inc., GCH Transportation, Inc., Club Macanudo, Inc. and Club Macanudo
(Chicago), Inc. and all of the ownership interests in General Cigar's office
building in New York City, all of which assets were acquired in the Asset
Transfers effected prior to the date of the Offering.

General Cigar's results in each of the periods presented include allocations
to General Cigar of Culbro corporate overhead of $1.8 million in the 13 weeks
ended March 1, 1997 (the "1997 first quarter") and $1.6 million in the 13 weeks
ended March 2, 1996 (the "1996 first quarter"), and $5.5 million, $8.8 million,
and $7.2 million in fiscal 1994, fiscal 1995 and fiscal 1996, respectively.
These allocations may not necessarily reflect the additional expenses General
Cigar would have incurred as a separate stand-alone entity. The combined
financial statements include interest expense on debt specifically incurred by
General Cigar. General Cigar assumed an estimated $43.8 million of Culbro debt
prior to the Offering as part of the Culbro obligations assumed under the
Liability Assumption portion of the Asset Transfers. This debt was not an
obligation of General Cigar in earlier periods and General Cigar generally has
been a net cash provider to Culbro. Accordingly, this debt and related interest
expense were not part of General Cigar's capital structure in the combined
financial statements for any of the periods presented, but became part of
General Cigar's capital structure during the 1997 first quarter. These results
therefore should be read in conjunction with the unaudited combined pro forma
results of operations in Note 4 of the Combined Financial Statements and the
Unaudited Pro Forma Combined Financial Statements included elsewhere in this
Proxy Statement/Prospectus.

Since 1993, cigar smoking has experienced a resurgence resulting in an
increase in consumption and retail sales of cigars across all major categories,
especially in the premium cigar segment. This growth produced overall retail
sales in the U.S. cigar market of an estimated $1.25 billion in 1996, the
largest dollar sales in the industry's history. Industry unit sales of premium
and mass market cigars have increased at CAGRs of 35.4% and 9.6%, respectively,
from 1993 to 1996, while retail dollar sales in both categories have increased
more rapidly due to price increases. General Cigar believes that sales of
premium cigars exceeded 270 million units in the U.S. in 1996, an increase of
over 60% from 1995 unit sales. Historically, General Cigar has not utilized deep
discounts to generate additional volume, and does not anticipate the use of such
discounts in the foreseeable future.

RESULTS OF OPERATIONS

The discussion set forth below relates to the financial condition and
results of operations of General Cigar as of and for the 1997 first quarter,
1996 first quarter, fiscal 1996, fiscal 1995 and fiscal 1994.

39
<PAGE>
Following are certain data related to the results of operations of General
Cigar, calculated as a percentage of net sales:

<TABLE>
<CAPTION>
THIRTEEN WEEKS
FISCAL YEAR ENDED
------------------------------- --------------------------------
<S> <C> <C> <C> <C> <C>
1994 1995 1996 MARCH 2, 1996 MARCH 1, 1997
--------- --------- --------- --------------- ---------------
Net sales................................................ 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold....................................... 60.6 56.2 55.8 56.3 55.3
Gross profit............................................. 39.4 43.8 44.2 43.7 44.7
Selling, general and administrative expenses............. 30.4 29.6 28.8 29.8 29.0
Other nonrecurring expense............................... -- -- 2.3 -- --
Operating profit......................................... 9.0 14.2 13.1 13.9 15.8
Interest expense......................................... 0.7 0.8 0.6 0.9 2.6
Income before income tax................................. 8.3 15.0 13.0 13.5 13.9
Net income............................................... 5.1 9.1 8.0 8.3 8.6
</TABLE>

THIRTEEN WEEKS ENDED MARCH 1, 1997 COMPARED TO THIRTEEN WEEKS ENDED MARCH 2,
1996

Net sales increased 72.7%, or $21.0 million, to $49.8 million in the 1997
first quarter from $28.8 million in the 1996 first quarter. The increase in net
sales reflected principally higher unit sales of cigars, principally premium
cigars, and higher prices in all cigar categories. The 1997 first quarter
included sales from the newly acquired Villazon business for two months of the
quarter.

Gross profit increased 77.0%, or $9.7 million, to $22.3 million in the 1997
first quarter from $12.6 million in the 1996 first quarter. Gross margin
increased to 44.7 % in the 1997 first quarter from 43.7% in the 1996 first
quarter. The increase in gross margin reflected higher prices and the benefit of
relatively higher sales of premium cigars.

Selling, general and administrative expenses increased 68.0%, or $5.8
million, to $14.4 million in the 1997 first quarter from $8.6 million in the
1996 first quarter. As a percentage of net sales, selling, general and
administrative expenses were 29.0% in the 1997 first quarter compared to 29.8%
in the 1996 first quarter. The decrease in selling, general and administrative
expenses as a percentage of sales in the 1997 first quarter was due to the lower
rate of increase in these expenses compared to the rate of the sales increase.
Operating profit almost doubled to $7.8 million in the 1997 first quarter, from
$4.0 million in the 1996 first quarter. As a result of the higher gross margin
and lower expense to sales ratio, operating margin increased to 15.8% in the
1997 first quarter compared to 13.9% in the 1996 first quarter.

The higher interest expense in the 1997 first quarter reflects principally
the cost of financing the Villazon Acquisition. The bank financing for the
acquisition and certain of the seller notes were repaid with the net proceeds
from the Offering, which were received early in the 1997 second quarter.

Net income increased 78.6% to $4.3 million in the 1997 first quarter
compared to $2.4 million in the 1996 first quarter.

FISCAL 1996 COMPARED TO FISCAL 1995

Net sales increased 24.7%, or $30.6 million, to $154.7 million in fiscal
1996 compared to $124.0 million in fiscal 1995. This increase in net sales
reflected principally higher unit sales of premium cigars, and higher prices in
all cigar categories. Continued strong sales and prices of premium cigars, and
higher prices in the mass market cigar category more than offset slightly lower
unit volume in certain brands of mass market cigars. Nearly all of such increase
resulted from increased sales to existing customers. In response to a shortage
of properly aged and blended tobacco caused by excessive demand, General Cigar
elected to stop shipping Macanudo cigars for two months in fiscal 1996 rather
than risk compromising its quality standards. Management believes that volume in
mass market cigars was adversely affected by repositioning and renaming certain
brand names.

40
<PAGE>
Gross profit increased 25.9%, or $14.1 million, to $68.4 million in fiscal
1996 compared to $54.4 million in fiscal 1995. Gross margin increased to 44.2%
in fiscal 1996 from 43.8% in fiscal 1995. The increase in gross margin reflected
higher prices, benefits from mix due to relatively higher sales of premium
cigars, and lower fixed costs per unit due to the higher volume and improved
manufacturing efficiencies.

Selling, general and administrative expenses increased 21.4%, or $7.9
million, to $44.6 million in fiscal 1996 from $36.7 million for fiscal 1995.
Selling, general and administrative expenses in fiscal 1996 include
approximately $1.9 million of legal expenses incurred in connection with certain
legal proceedings. See "Legal Proceedings--Other Litigation." As a percentage of
net sales, selling, general and administrative expenses decreased to 28.8% in
fiscal 1996, from 29.6% in fiscal 1995. The decrease in selling, general and
administrative expenses as a percentage of net sales in fiscal 1996 is due
principally to these expenses increasing at a lower rate than the increase in
sales.

Other nonrecurring expense of $3.6 million in fiscal 1996 includes the
allocation to General Cigar of charges recorded by Culbro in connection with the
termination of a management long-term incentive compensation plan which was
based on Culbro's stock price, and the acceleration of the vesting of benefits
under the plan in anticipation of the Offering. Additionally, the other
nonrecurring expense item includes accruals for severance and related expenses
in connection with a headcount reduction at the Culbro corporate office. General
Cigar's allocable share of these expenses was determined substantially on the
same basis as the allocation of Culbro's general and administrative expenses and
is considered to be reasonable. See Note 5 to the Combined Financial Statements
of General Cigar included elsewhere herein.

Operating profit increased 14.9%, or $2.6 million, to $20.2 million for
fiscal 1996 from $17.6 million for fiscal 1995. Including the effect of the
other nonrecurring expense referred to above, operating margin decreased to
13.1% during fiscal 1996 from 14.2% during fiscal 1995.

Net income increased 9.6%, or $1.1 million, to $12.4 million in fiscal 1996
from $11.3 million in fiscal 1995. Income in fiscal 1995 included $2.6 million
of pre-tax income from an insurance settlement.

FISCAL 1995 COMPARED TO FISCAL 1994

Net sales in fiscal 1995 increased 38.5%, or $34.5 million, to $124.0
million compared to $89.5 million in fiscal 1994. This increase reflected higher
unit volume and higher prices in all cigar categories. The increase in premium
cigar sales was higher than the increase in the mass market category and
accounted for approximately 53.0% of General Cigar's total increase in sales in
fiscal 1995. Nearly all of such increase resulted from increased sales to
existing customers.

Gross profit increased 54.2%, or $19.1 million, in fiscal 1995 to $54.4
million compared to $35.3 million in fiscal 1994. Gross margin increased to
43.8% from 39.4% in fiscal 1994. The increase in gross profit and margin
reflected higher unit sales and prices, a more favorable mix due to relatively
higher sales of premium cigars, and lower fixed cost per unit due to the higher
volume.

Selling, general and administrative expenses increased 35.0%, or $9.5
million, to $36.7 million in fiscal 1995, from $27.2 million in fiscal 1994. As
a percentage of net sales, selling, general and administrative expenses
decreased from 30.4% in fiscal 1994 to 29.6% in fiscal 1995. The decrease was
primarily due to selling, general and administrative expenses increasing at a
lower rate relative to the increase in net sales.

Operating profit increased 119.1%, or $9.6 million, to $17.6 million in
fiscal 1995 compared to $8.0 million in fiscal 1994. Operating margin increased
to 14.2% during fiscal 1995 from 9.0% in fiscal 1994.

Net income increased 148.9%, or $6.8 million, to $11.3 million in fiscal
1995 from $4.6 million in fiscal 1994. Income in fiscal 1995 included
approximately $2.6 million of pre-tax income resulting from the collection on an
insurance claim in connection with a fire at a Connecticut tobacco warehouse and
administrative office in 1994, partially offset by other nonoperating expenses.
Higher interest expense in fiscal 1995 related to interest under a mortgage on
387 Park Avenue South. The mortgage was incurred in fiscal 1995.

41
<PAGE>
PRO FORMA FISCAL 1996 COMPARED TO ACTUAL FISCAL 1995

The Unaudited Pro Forma Combined Statement of Operations reflects higher
sales and operating profit from Villazon, partially offset by higher interest
expense from the acquisition debt and debt assumed from Culbro remaining
outstanding after the application of the net proceeds from the Offering. The
Unaudited Pro Forma Combined Balance Sheet reflects the effects of the Villazon
Acquisition, principally the acquisition of trademarks and goodwill, if any, and
the capitalization of General Cigar with the equity from the Offering, as well
as debt incurred under the Credit Facility and the Seller Notes.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $3.2 million in the 1997 first
quarter compared to net cash used in operating activities of $5.4 million in the
1996 first quarter. The cash generated in 1997 reflected principally the higher
earnings, a lower increase in inventories and a lower reduction in accounts
payable compared to the 1996 first quarter. Investing activities in the 1997
first quarter reflected the acquisition cost of Villazon, excluding the portion
financed with seller notes. The financing activities reflected the bank
borrowings used to finance the Villazon Acquisition.

Net cash flows used in operating activities were $4.9 million for fiscal
1996 compared to net cash flows provided by operating activities of $9.5 million
in fiscal 1995. The use of cash in fiscal 1996 compared to cash flow generated
in fiscal 1995 reflected substantially higher inventory purchases to meet the
current demand for cigars and to secure certain tobacco supplies to meet the
anticipated future demand for cigars, and a greater reduction in accounts
payable due to the timing of the payment dates of certain liabilities. General
Cigar anticipates purchasing and carrying increased levels of tobacco inventory
over the next several years. Net cash flows provided by operating activities
were $12.7 million in fiscal 1994. In fiscal 1995, cash flows provided by
operations were lower compared to fiscal 1994 due to the net increase in working
capital related to the higher sales. The increase in working capital in fiscal
1995 partially offset benefits of higher net income.

General Cigar will fund its capital projects using internal cash flow and,
if needed, borrowings under the Credit Facility. The capital expenditures in
fiscal 1994 and fiscal 1995 relate primarily to investments in cigar
manufacturing equipment and are part of the normal replacement and upgrading of
General Cigar's manufacturing equipment and facilities. The capital expenditures
in fiscal 1996 primarily relate to investment in General Cigar's manufacturing
facilities to meet the increased demand for General Cigar's premium cigars. In
order to increase production to meet demand, General Cigar recently completed
expansion of its manufacturing facilities in the Dominican Republic, has begun
to expand its facilities in Jamaica and expects to increase production at its
facilities in Honduras. General Cigar expects that it will make capital
expenditures of approximately $10.3 million in fiscal 1997, $5.0 million of
which will be made in connection with the expansion of these facilities. General
Cigar has increased substantially its inventory of long filler tobacco needed
for making premium cigars.

Cash flow provided by financing activities in fiscal 1996 was $14.7 million,
and in fiscal 1995 and fiscal 1994 cash flow used in financing activities was
$9.1 million and $10.9 million, respectively. In each fiscal year, the cash
flows from financing activities reflected principally the transfer of General
Cigar's net cash flow to Culbro or net cash transfers from Culbro to fund
General Cigar's operations. The net cash transfers from Culbro in fiscal 1996
reflected the Culbro funding of the increased tobacco purchases.

During each of the fiscal years presented in the accompanying combined
financial statements, the cash management and treasury activities of General
Cigar were integrated with those of Culbro. General Cigar's cash receipts were
transferred daily into Culbro's cash account and General Cigar's cash
disbursement accounts were reimbursed by Culbro on a daily basis.

Culbro maintained credit facilities which it utilized to finance
transactions relating to General Cigar and Culbro's other subsidiaries. General
Cigar did not maintain its own separate credit facilities and the accompanying
financial statements do not reflect any allocation of Culbro's debt to General
Cigar. General Cigar maintained an intercompany account with Culbro in which its
net cash flow and other

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<PAGE>
intercompany transactions with Culbro were recorded. See Note 5 to the Combined
Financial Statements. The intercompany account with Culbro and General Cigar's
retained earnings and historical capital accounts are included in the Combined
Financial Statements as "Culbro Investment."

On March 5, 1997, General Cigar received approximately $113.0 million of net
proceeds from the Offering completed on February 28, 1997. The proceeds were
used to repay bank borrowings that had been used to fund the Villazon
Acquisition and the assumed Culbro general corporate debt, and to repay certain
of the Villazon seller notes. Immediately following such debt repayments,
General Cigar's total outstanding debt was approximately $29.0 million,
consisting principally of $10.0 million of seller notes related to the Villazon
Aquisition, mortgage and equipment financing of $12.0 million and $7.0 million
remaining on the Credit Facility, which was subsequently repaid from General
Cigar's cash flow. General Cigar has available $50 million under the Credit
Facility which it entered into on January 21, 1997.

Management believes that cash from operations and current borrowing capacity
are sufficient to fund its operations and its anticipated future growth.

BACKORDERS

The increased demand for premium cigars has caused General Cigar's
backorders of premium cigars, exclusive of Villazon, to increase from $21.0
million at wholesale at December 2, 1995 to $78.0 million at wholesale at
November 30, 1996. Currently, General Cigar does not accept orders from its nine
largest customers for premium cigars, but instead allocates to each of them a
portion of its production. Therefore, General Cigar's backorder figure at
November 30, 1996 excludes any orders from its nine largest premium cigar
customers, although the figure at December 2, 1995 includes such customers'
orders. General Cigar believes that a portion of the backorders reflects the
practice of certain customers to order more premium cigars than needed in
anticipation of a reduction in the number of cigars included in the order when
filled due to short supplies. Accordingly, backorder figures may not reflect
actual lost sales for any of the periods shown. Although General Cigar has taken
measures to reduce the amount of backorders for its cigars, there can be no
assurance that such measures will be adequate.

INFLATION

General Cigar has historically been able to pass inflationary increases for
raw materials and other costs onto its customers through price increases and
anticipates that it will be able to do so in the future.

SEASONALITY

General Cigar's business is generally not seasonal. Cigar unit volume,
however, is usually higher in the fourth quarter during the Christmas shopping
season and slightly lower in the first quarter following the Christmas season.

RECENTLY ISSUED ACCOUNTING STANDARDS

In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of." This Statement requires that long-lived
assets and certain intangibles held and used by a business entity be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. General Cigar continually
reviews its long-lived assets and intangible assets, considering future
performance of those assets in assessing the need for adjustments to their
carrying values. General Cigar will perform such reviews in the future in
accordance with the methods prescribed by SFAS No. 121.

In October 1995, the FASB issued Statement No. 123, "Accounting for
Stock-Based Compensation." This Statement establishes a fair value method of
accounting for, or disclosing, stock-based compensation plans. General Cigar
intends to adopt the disclosure provisions of this standard which require
disclosing the pro forma effect on net income and earnings per share of the fair
value method of accounting for stock-based compensation. The adoption of the
disclosure provisions will not affect combined financial condition, results of
operations or cash flows.

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<PAGE>
BUSINESS

CULBRO'S BUSINESS IS TO ACT AS A HOLDING COMPANY WITH RESPECT TO GENERAL
CIGAR AND GRIFFIN. FOR A DESCRIPTION OF GRIFFIN'S BUSINESS, SEE ANNEX II HEREOF.
SET FORTH BELOW IS A DESCRIPTION OF THE BUSINESS OF GENERAL CIGAR.

GENERAL

Founded in 1906, General Cigar is the largest manufacturer and marketer in
the U.S. in both units and dollar sales of brand name premium cigars (imported,
hand-made or hand-rolled cigars made with long filler and all natural tobacco
leaf). General Cigar's Macanudo and Partagas brands are the two top selling
premium cigar brands sold in the U.S. General Cigar believes that higher priced
branded premium cigars constitute the fastest growing segment of the premium
cigar market. Approximately 80% of General Cigar's premium cigar sales in fiscal
1996 were at suggested retail prices of $3.00 or more per unit. General Cigar's
unit sales at or above this price point have increased at approximately a 90%
CAGR during the past four years. General Cigar, through its well known brands
such as Garcia y Vega, also is a leading participant in the growing mass market
cigar segment. From fiscal 1993 to fiscal 1996, General Cigar's net sales
increased from $76.8 million to $154.7 million and operating profit increased
from $2.4 million to $20.2 million, representing CAGRs of 26.3% and 104.2%,
respectively. After giving effect to the Villazon Acquisition, on a pro forma
basis, General Cigar's net sales and operating profit for 1996 would have been
$195.3 million and $31.9 million, respectively.

In 1906, General Cigar's direct predecessor, United Cigar Manufacturers
("UCM"), incorporated, sold its stock to the public and listed on the New York
Stock Exchange. The public offering notice with respect to that offering listed
the expert appraiser of UCM's cigar tobacco leaf as Joseph Cullman, the
grandfather and great grandfather, respectively, of General Cigar's current
Chairman and President. The Cullman family's interest and expertise in tobacco
and the cigar industry have developed for over a century and continue today.

MARKET OVERVIEW

The cigar market is divided into three principal categories: premium cigars,
mass market cigars (large and small) and little cigars. After declining from its
peak in 1964, unit sales of cigars in the U.S. increased to 4.4 billion units in
1996 from 3.4 billion units in 1993. Unit sales of premium cigars, which had
remained essentially flat since 1981 despite continued declines in mass market
cigar unit sales, increased at a CAGR of approximately 35.4% from 1993 to 1996.
Led by growth in premium cigars, the U.S. cigar market has

44
<PAGE>
grown at a CAGR of 8.7% from 1993 to 1996, while retail dollar sales have grown
at a CAGR of 19.9% over the same period.

General Cigar believes that this increase in cigar consumption and retail
sales is the result of a number of factors, including: (i) the improving image
of cigar smoking resulting from increased publicity, including the success of
Cigar Aficionado and Smoke magazines and the increased visibility of cigar
smoking by celebrities (such as Arnold Schwarzenegger, Mel Gibson, Demi Moore
and Jack Nicholson); (ii) the emergence of an expanding base of younger, highly
educated, affluent adults age 25 to 35 and the growing interest of this group in
luxury goods, including premium cigars; (iii) the increase in the number of
adults over the age of 40 (a demographic group believed to smoke more cigars
than any other demographic group); and (iv) the proliferation of establishments,
such as restaurants and clubs, where cigar smoking is encouraged, as well as
"cigar smokers" dinners and other special events for cigar smokers.

CATEGORIES OF CIGARS

PREMIUM CIGARS. Premium cigars are imported, hand-made or hand-rolled
cigars made with long filler and all natural tobacco leaf. Unit sales of premium
cigars in the U.S. increased by 10.7% in 1993, by 14.5% in 1994, by 30.5% in
1995 and by an estimated 66.2% in 1996. The Dominican Republic, Honduras and
Jamaica collectively accounted for approximately 84.0% of premium cigars
imported into the U.S. in 1995. Many of the finest premium cigars sold in the
U.S. trace their roots to pre-Castro Cuba and the Cuban emigres who continued
making premium cigars in Jamaica, the Dominican Republic, Honduras and Florida.
See "--Making a General Cigar Premium Cigar."

MASS MARKET CIGARS. Mass market cigars generally are domestic, machine-made
cigars that use less-expensive short filler tobacco and are made with
homogenized tobacco binders and either homogenized sheet wrappers or natural
leaf wrappers. Unit sales of mass market cigars in the U.S. decreased by 4.3% in
1993, increased by 9.0% in 1994, increased by 8.6% in 1995 and increased by an
estimated 11.4% in 1996. Unit sales of more expensive mass market cigars, using
natural leaf wrappers, grew by 12.9% in 1995, as consumers appear to have
migrated to more expensive, higher quality mass market cigars.

LITTLE CIGARS. Little cigars are the lowest priced cigars. Little cigars
weigh less than three pounds per 1,000, are similar in size to cigarettes and
typically have filters. Little cigars are domestic, machine made cigars that use
short filler tobacco and homogenized sheet wrapper. Little cigars are not made
with binders. Unit sales of little cigars in the U.S. decreased by 1.1% in 1993,
increased by 6.1% in 1994, increased by 2.2% in 1995 and increased by an
estimated 3.8% in 1996. General Cigar does not participate in the market for
little cigars.

The following table sets forth certain data with respect to U.S. cigar unit
sales and retail sales for the premium, mass market and little cigar markets for
the periods shown:

<TABLE>
<CAPTION>
1993 1994 1995 1996E CAGR
--------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
(IN MILLIONS)
Unit sales:
Premium.................................................. 110.0 125.9 164.3 273.0 35.4%
Mass market.............................................. 2,028.0 2,211.1 2,400.7 2,673.3 9.6
Little cigars............................................ 1,288.0 1,367.0 1,397.0 1,450.5 4.0
--------- --------- --------- -----------
Total.................................................. 3,426.0 3,704.0 3,962.0 4,396.8 8.7
--------- --------- --------- -----------
--------- --------- --------- -----------
Retail sales............................................... $ 725.0 $ 898.0 $ 1,054.0 $ 1,250.0 19.9%
--------- --------- --------- -----------
--------- --------- --------- -----------
</TABLE>

- ------------------------

Source: Bureau of Alcohol, Tobacco and Firearms; Cigar Association of
America ("CAA") Annual Survey of Cigars. 1996 figures are based on CAA
estimates. Retail sales are based in part on General Cigar's estimate of sales
of little cigars. Data for 1996 are based in part on General Cigar's estimates.

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<PAGE>
CIGAR TOBACCOS

Tobacco is grown around the world, but production of the finest cigar
tobaccos is concentrated in the Tropics, especially Cuba, Cameroon, Central West
Africa, the Dominican Republic, Ecuador, Honduras, Indonesia, Mexico and
Nicaragua. The Connecticut River Valley, however, produces some of the finest
wrapper tobacco in the world. Connecticut Shade wrapper tobacco is grown under a
gauze shade to produce a finer, thinner leaf with smaller veins than that of
sun-grown tobaccos. Some wrapper tobacco, as well as all high-quality binder and
filler tobacco, is exposed to the full strength of the sun throughout the
growing season, producing a thicker leaf with stronger flavors and darker
colors. Premium binder and long filler tobaccos sell for approximately $4 to $7
per pound, while premium cigar wrapper tobaccos sell for approximately $20 to
$40 per pound and the best Connecticut Shade wrapper tobaccos sell for
approximately $42 to $44 per pound.

Tobacco is grown from seeds that are germinated in greenhouses in raised
seedbeds. After six weeks, the healthiest seedlings are transplanted to fields.
Commencing six weeks after transplanting, the leaves are picked, starting with
the bottom of the stalk, three leaves at a time, once a week over a six week
period. Once harvested, the tobacco goes through a period of curing and
fermentation. In the curing stage, the wrapper tobacco is hung in tobacco sheds
for approximately five weeks to remove moisture and cause the green leaves to
turn into the desired golden brown color. In the fermentation stage, workers
carefully build slightly moistened tobacco into piles weighing approximately
3,000 pounds known as "bulks." Temperatures inside the bulks reach as high as
120 F as the tobacco "sweats" in the early stages of fermentation. The tobacco
is turned multiple times before fermentation is complete. Workers then sort the
tobacco, first according to color and clarity and then according to size. Sorted
leaves are then tied into "hands," each consisting of 40 leaves. The hands are
then "mulled," or softly fermented in cases weighing up to 130 pounds, and
packed in bales, usually surrounded by burlap, to age. Premium cigar tobaccos
generally age for approximately one to three years, although "vintage" premium
tobaccos may age for up to ten years.

General Cigar purchases premium cigar wrapper tobacco from growers
throughout the world, including Cameroon (for use in making the Partagas and
Ramon Allones cigars), Ecuador (for use in making the Punch and Hoyo De
Monterrey cigars) and Mexico (for use in making the Canaria d'Oro cigar).
General Cigar is a grower and supplier of Connecticut Shade tobacco used in
making the Macanudo and Temple Hall cigars. The Connecticut Shade tobacco used
for wrapper on General Cigar's cigars is sent to the Dominican Republic from
Connecticut for curing and fermentation, after which it is shipped back to the
U.S. for aging in a process known as a "winter sweat." After aging for one year,
the bales of Connecticut Shade are returned to the Dominican Republic for an
additional period of fermentation, and are then sent back to the U.S. a second
time for additional aging before being shipped to General Cigar's cigar
manufacturing facilities in the Dominican Republic and Jamaica.

General Cigar purchases all of its binder and long filler tobaccos from
growers throughout the world, primarily the Dominican Republic, Mexico and other
countries. The binder tobacco is purchased in leaf form, while the long filler
tobacco is purchased in "frog" strip form, with half of the stem removed.
General Cigar procures commitments for binder and long filler tobacco two years
in advance of delivery. These tobaccos grow for one year and are fermented for
one year, after which they are baled and delivered to warehouses in Pennsylvania
for aging. Binder and long filler tobacco generally is aged from one to two
years. Throughout the growing and fermenting process, representatives of General
Cigar periodically inspect tobacco for which General Cigar has received a sale
commitment.

MAKING A GENERAL CIGAR PREMIUM CIGAR

To assure that its premium cigars are consistently of the highest quality,
General Cigar employs a painstaking, labor-intensive process, requiring the
skilled judgment of experienced master cigar-makers and numerous intricate steps
on the part of trained craftsmen. A tobacco leaf used in the manufacture of

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<PAGE>
any of General Cigar's premium cigars may be touched as many as 100 times before
it is smoked as part of a finished cigar.

THE WRAPPER. After sufficient aging, baled wrapper tobacco is opened and
examined for quality. The hands of wrapper tobacco are moistened in a process
known as "casing." Then each individual tobacco leaf is "stripped" to remove the
stem, and the half leaves are selected according to the length appropriate for
each cigar size. Finally, the sorted half leaves are counted into "pads" of 50
and sent to the cigar floor.

THE BINDER AND LONG FILLER. After aging, the binder and long filler tobacco
leaves are sent to one of General Cigar's cigar factories. There, the binder
tobacco is cased, stripped, sized and sorted into pads of 50 in a process
similar to that used in preparing the wrapper tobacco and is then sent to the
cigar floor. The long filler leaves are placed in a moistening hot room in order
to separate the individual leaves. The long filler leaves are then blended by
hand by placing leaf upon leaf and boxing them in cedar boxes for storage in
cedar storage rooms for three to five weeks in a process designed to marry the
various aromas of the leaves in order to create a uniform taste. Following this
blending process, the long filler tobacco is sent to the cigar floor.

MAKING THE CIGAR. Bunchers, working side by side with wrapper-rollers, take
leaves from filler boxes and, taking care to maintain the appropriate mixture of
light and heavy tobaccos, roll them by hand inside a dark, supple binder leaf.
The bunch is then placed in a wooden mold that shapes it to the specific length
and ring gauge of a particular cigar size. After approximately 30 minutes, the
bunch is removed from the mold for wrapping. The wrapper-roller places the
wrapper leaf upside down on a cutting board so that the smooth, unveined side of
the leaf will appear on the outside of the cigar and uses a "Cuban knife" to
trim each wrapper to the correct shape for a particular cigar size. The
wrapper-roller then wraps the shaped bunch in the wrapper and seals the head of
the cigar with a natural, flavorless gum from the tragacanth tree.

The finished cigars are then "bundled" in lots of 50 and inspected for
weight and firmness, as well as size, density, uniformity and texture. Finished
cigars are aged for three to 12 weeks in a cedar room. Trained selectors arrange
the finished cigars in separate groups chosen by subtle color differences.
Master cigar-makers smoke samples to assure quality. Cigars then are
individually banded and cellophaned or tubed and placed in handcrafted cigar
boxes to be shipped to General Cigar's customers.

BACKORDERS

SALES AND MARKETING

General Cigar believes that it is recognized as one of the most successful
marketers of cigars in the U.S., having achieved Advertising Age's 1996 "Top
Marketing 100" award for the Macanudo brand.

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<PAGE>
General Cigar believes that it spends considerably more on consumer advertising
than its nearest competitor, even in times when it is experiencing significant
backorders.

General Cigar sells its cigar products throughout the U.S. to over 1,300
customers, consisting of wholesale distributors, direct buying chains (including
food, drug, mass merchant and convenience store chains), tobacconists, specialty
retailers (such as Neiman Marcus and Orvis) and consumer catalogue retailers. No
single customer accounts for more than 10% of General Cigar's total sales.

General Cigar recently has created a full-time, in-house sales analysis
group, which reviews cigar industry consumption reports prepared by national
sales audit firms, as well as sales information provided by retailers with
respect to which General Cigar acts as category manager. General Cigar also
employs a direct sales force to develop and service its sales to wholesalers,
distributors, direct buying chains and tobacconists. General Cigar's sales
force, which has increased by 60% since 1994, is composed of two groups, one
group responsible for the sale of all General Cigar's products and a separate
group of "premium specialists" focusing on the sale and promotion of premium
cigars with tobacconists, cigar clubs, restaurants, premium cigar distributors
and other specialty retailers. Both sales groups utilize a fact-based approach
to category selling designed to optimize category performance for General
Cigar's retail customers and improve the performance of General Cigar's brands.
General Cigar believes that the utilization of a separate premium selling group
positions it to maintain a high degree of focus on its premium product category
while enabling the sales force to serve a broad mass market customer base.
General Cigar's sales force operates nationally with account coverage structured
geographically to provide for close relationships with local customers.

General Cigar actively pursues innovative outlets for marketing its premium
cigars to the luxury goods consumer, such as golf pro shops and upscale wine
shops. General Cigar also has developed a program through which it markets
cigars and cigar menus directly to restaurants. With respect to its mass market
brands, General Cigar has adopted a program to promote its brands with certain
retailers, such as CVS and Walmart/McLane, by acting as tobacco "category
manager." General Cigar also provides a wide variety of cigar merchandising
fixtures and point-of-sales support to its retailers. These fixtures help to
maintain an attractive in-store product presentation and to improve shelf space
and positioning of General Cigar's brands.

General Cigar advertises its premium cigar products in magazines, such as
CIGAR AFICIONADO and SMOKE, as well as magazines targeted to an upscale audience
such as ROLLING STONE, FORBES and GOLF DIGEST and in newspapers and on radio.
General Cigar advertises its mass market cigar products primarily through
newspapers, sports magazines and similar publications. In addition, General
Cigar's website, "cigarworld.com," was selected one of the best cigar product
websites by YAHOO magazine. General Cigar has substantially increased its
marketing and advertising expenditures in order to continue to build the brand
recognition of its leading premium cigar brands, as well as to support new
product introductions. Since 1993, General Cigar has brought to market a broad
array of new products and brand extensions primarily in connection with its
brand-oriented cigar marketing, including limited edition cigars under the
Partagas 150 and multi-year Macanudo Vintage offerings, Macanudo and Partagas
branded fashion apparel and branded cigar smoking accessories.

Sales of General Cigar's cigar products outside of the U.S. currently are
not material, although General Cigar plans to increase its international
presence, particularly with respect to the Macanudo brand. General Cigar will
focus its efforts in the United Kingdom, Germany, France, Spain, China and
certain countries in South America, as well as duty free markets worldwide.
General Cigar recently became the only U.S. cigar maker to receive approval from
the government of China to market and sell its products in that country. General
Cigar already has begun distributing premium and mass market cigars in China.

48
<PAGE>
TRADEMARKS

General Cigar's success and ability to compete are dependent to a
significant degree on its trademarks. General Cigar generally owns the
trademarks under which its products are sold. General Cigar has registered its
trademarks in the U.S. and many other countries and will continue to do so as
new trademarks are developed or acquired. General Cigar holds the right to use
the Macanudo trademark and brand name for cigars in many countries worldwide.
General Cigar does not, however, hold or own the right to use certain of its
well-known trademarks and brand names, including Partagas and Cohiba, in certain
foreign markets. General Cigar's ability to expand into such markets by
capitalizing on the strength of its brand names in the U.S. may be limited by
its inability to use or acquire such brand names in those foreign markets.
General Cigar pays royalties to the prior owners of certain of its trademarks.
Such payments are not material. General Cigar owns the U.S. trademarks listed
below:

<TABLE>
<S> <C>
PREMIUM CIGAR BRANDS MASS MARKET CIGAR BRANDS
- --------------------------------------------- ---------------------------------------------
MACANUDO GARCIA Y VEGA
PARTAGAS WHITE OWL
PUNCH TIPARILLO
HOYO DE MONTERREY ROBT. BURNS
COHIBA TIJUANA SMALLS
EXCALIBUR WM. PENN
RAMON ALLONES LORD BEACONSFIELD
TEMPLE HALL VILLA DE CUBA
EL REY DEL MUNDO PEDRO IGLESIAS
CANARIA D'ORO TOP STONE
CIFUENTES VILLAZON DELUXE
BOLIVAR
BELINDA
BANCES
</TABLE>

General Cigar vigorously defends its trademarks from their improper use by
others, including the manufacturers of counterfeit cigars.

RAW MATERIALS

General Cigar has strong relationships with tobacco suppliers and is
expanding its commercial and technical ties with local growers to secure a
variety of sources for raw materials, ensure the quality of its raw materials
and maximize cost savings.

The most important material in the manufacture of cigars is properly aged
tobacco. Arrangements for the procurement of tobacco typically are made at the
time the tobacco is planted, approximately three to four years before the
tobacco will be manufactured into cigars. General Cigar buys tobacco directly
from a large number of suppliers worldwide and does not believe that it is
dependent on any single source for tobacco. During 1996, General Cigar
discontinued shipping Macanudo cigars for a two month period as excessive demand
led to a shortage of properly aged and blended tobacco. General Cigar has
experienced shortages in Cameroon-grown natural wrapper tobacco, which is used
in making Partagas cigars, due to the increase in demand for high quality
natural wrapped cigars. Because General Cigar is a leading grower and supplier
of Connecticut Shade tobacco, which is used in making Macanudo cigars, General
Cigar has not experienced similar shortages with respect to Connecticut Shade.
The increase in demand has caused the price of natural wrapper and premium cigar
tobaccos to increase. General Cigar has an extensive seed development program to
improve the wrapper tobacco characteristics. General Cigar lost certain seed
samples and records in a fire in 1994. See "Risk Factors--Constraints on Ability
to Satisfy Demand," "Risk

49
<PAGE>
Factors--Social, Political and Economic Risks Associated with Foreign Operations
and International Trade" and "--Backorders."

COMPETITION

General Cigar is the largest manufacturer and marketer in the U.S. in both
units and dollar sales of brand name premium cigars. General Cigar's main
competitors in the branded and private label premium markets include Davidoff,
Fuente, Consolidated Cigar Holdings Inc. and Nestor Plasencia. In addition, the
increased demand for cigars and the relatively low barriers to entry have led to
many new entrants in the premium cigar manufacturing business. General Cigar's
main competitors in the mass market cigar market are Swisher International Group
Inc., Consolidated Cigar Holdings, Inc., and Havatampa/Phillies Cigar
Corporation.

THE TOBACCO INDUSTRY

REGULATION

Cigar manufacturers, like other producers of tobacco products, are subject
to regulation at the federal, state and local levels. Federal law has recently
required states, in order to receive full funding for federal substance abuse
block grants, to establish a minimum age of 18 years for the purchase of tobacco
products, together with an appropriate enforcement program. The recent trend is
toward increasing regulation of the tobacco industry, and the recent increase in
popularity of cigars could lead to an increase in regulation of cigars. A
variety of bills relating to tobacco issues have been introduced in the U.S.
Congress, including bills that would have (i) prohibited the advertising and
promotion of all tobacco products or restricted or eliminated the deductibility
of such advertising expenses, (ii) increased labeling requirements on tobacco
products to include, among other things, addiction warnings and lists of
additives and toxins, (iii) shifted regulatory control of tobacco products and
advertisements from the FTC to the FDA, (iv) increased tobacco excise taxes and
(v) required tobacco companies to pay for health care costs incurred by the
federal government in connection with tobacco related diseases. Hearings have
been held on certain of these proposals; however, to date, none of such
proposals have been passed by Congress. Future enactment of such proposals or
similar bills may have an adverse effect on the results of operations or
financial condition of General Cigar.

In August 1996, the FDA published a final rule on tobacco in the Federal
Register. Specifically, the rule prohibits a variety of activities relating to
the sale of cigarettes and smokeless tobacco, including the distribution of
non-tobacco items, such as hats and tee shirts, that carry cigarette logos.
These regulations are not currently applicable to cigars; however, there can be
no assurance that these regulations will not be extended to include cigars in
the future. A significant portion of General Cigar's Djeep lighter sales is to
cigarette manufacturers who sell or give away such lighters with their
cigarettes. These regulations, if effective in this respect despite numerous
court challenges, would have a material adverse effect on General Cigar's Djeep
lighter business.

California, for example, requires "clear and reasonable" warnings to
consumers who are exposed to chemicals determined by the state to cause cancer
or reproductive toxicity, including tobacco smoke and several of its constituent
chemicals. In addition, legislation recently introduced in Massachusetts would,
if

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enacted, require warning labels on cigar boxes. Although similar legislation has
been introduced in other states, no action has been taken. Although federal law
has required health warnings on cigarettes since 1965 and on smokeless tobacco
since 1986, there is no federal law requiring that cigars carry such warnings.
There can be no assurance that such legislation introduced in other states will
not be passed in the future or that other states will not enact similar
legislation. Consideration at both the federal and state level also has been
given to consequences of tobacco smoke on non-smokers (so called "second-hand"
smoke). There can be no assurance that regulations relating to second-hand smoke
will not be adopted or that such regulations or related litigation would not
have a material adverse effect on General Cigar's results of operations or
financial condition. General Cigar has received complaints from neighbors with
respect to cigar smoke emanating from its Club Macanudo establishment in New
York City. There can be no assurance that such complaints will not lead to
fines, regulation and/or litigation that could adversely affect Club Macanudo.

The U.S. Environmental Protection Agency (the "EPA") published a report in
January 1993 with respect to the respiratory health effects of second-hand
smoke, which concluded that widespread exposure to environmental tobacco smoke
presents a serious and substantial public health concern. Issuance of the
report, which is based primarily on studies of passive cigarette smokers, may
lead to further legislation designed to protect non-smokers. Also, a study
recently published in the journal Science reported that a chemical found in
cigarette smoke has been found to cause genetic damage in lung cells that is
identical to damage observed in many malignant tumors of the lung and, thereby,
directly links lung cancer to smoking. The National Cancer Institute also has
announced that it will issue a report in 1997 describing research into cigars
and health. The study and these reports could affect pending and future tobacco
regulation and litigation. See "--Litigation."

LITIGATION

Historically, the cigar industry has experienced less health-related
litigation than the cigarette and smokeless tobacco industries have experienced.

Litigation against the cigarette industry historically has been brought by
individual cigarette smokers. In 1992, the United States Supreme Court in
Cipollone v. Liggett Group, Inc. ruled that federal legislation relating to
cigarette labeling requirements preempts claims based on failure to warn
consumers about the health hazards of cigarette smoking, but does not preempt
claims based on express warranty, misrepresentation, fraud or conspiracy. To
date, individual cigarette smokers' claims against the cigarette industry
generally have been unsuccessful. A jury in Florida, however, recently
determined that a cigarette manufacturer was negligent in the production and
sale of its cigarettes and sold a product that was unreasonably dangerous and
defective, awarding the plaintiffs a total of $750,000 in damages.

Current tobacco litigation generally falls within one of three categories:
class actions, individual actions or actions brought by individual states
generally to recover Medicaid costs allegedly attributable to tobacco-related
illnesses. The pending actions allege a broad range of injuries resulting from
the use of tobacco products or exposure to tobacco smoke and seek various
remedies, including compensatory and, in some cases, punitive damages together
with certain types of equitable relief such as the establishment of medical
monitoring funds and restitution. The major tobacco companies vigorously are
defending these actions.

51
<PAGE>
In May 1996, the Fifth Circuit Court of Appeals in Castano v. American
Tobacco, et al. reversed a Louisiana district court's certification of a
nationwide class consisting essentially of nicotine dependent cigarette smokers.
Notwithstanding the dismissal, new class actions asserting claims similar to
those in Castano recently have been filed in certain states. To date, two
pending class actions against major cigarette manufacturers have been certified.
The first case is limited to Florida citizens allegedly injured by their
addiction to cigarettes; the other is limited to flight attendants allegedly
injured through exposure to secondhand smoke. See "--Legal Proceedings."

Cubatabaco filed a petition on January 15, 1997 in the USPTO to cancel
General Cigar's two United States trademark registrations of the name Cohiba for
use in connection with cigars. Cubatabaco's petition was filed in response to
the USPTO's anticipated rejection of its attempt to register its Cohiba
trademark in the United States. General Cigar believes its Cohiba registrations
were properly issued by the USPTO and are valid. General Cigar first filed for
registration of the Cohiba trademark in the United States in 1978, which it
believes was prior to Cubatabaco's first commercial use of the mark. General
Cigar will vigorously defend its registrations in this proceeding, which could
be pending for a number of years. If Cubatabaco were successful in this
proceeding, then General Cigar's U.S. registrations of the name Cohiba for use
in connection with cigars would be cancelled and, under certain circumstances,
the results of this proceeding could be used in a subsequent action to enjoin
use of the name Cohiba by General Cigar. General Cigar's sales of Cohiba cigars
represent a very small percentage of its premium cigar sales.

EXCISE TAXES

Cigars long have been subject to federal, state and local excise taxes, and
such taxes frequently have been increased or proposed to be increased, in some
cases significantly, to fund various legislative initiatives. The federal excise
tax rate on large cigars (weighing more than three pounds per thousand cigars)
is 12.75% of the manufacturer's selling price, net of the federal excise tax and
certain other exclusions, capped at $30.00 per thousand cigars.

In the past, there have been various proposals by the federal government to
fund legislative initiatives through increases in federal excise taxes on
tobacco products. In 1993, the Clinton Administration proposed a significant
increase in excise taxes on cigars, pipe tobacco, cigarettes and other tobacco
products to fund the Clinton Administration's health care reform program.
General Cigar believes that the volume of cigars sold would have been
dramatically reduced if excise taxes were enacted as originally proposed as part
of the Clinton Administration's health care reform program. Future enactment of
significant increases in excise taxes, such as those initially proposed by the
Clinton Administration or other proposals not linked specifically to health care
reform, would have a material adverse effect on the business of General Cigar.
General Cigar is unable to predict the likelihood of the passage or the
enactment of future increases in tobacco excise taxes.

Tobacco products also are subject to certain state and local taxes. Deficit
concerns at the state level continue to exert pressure to increase tobacco
taxes. The number of states that impose excise taxes on cigars is 42. State
cigar excise taxes are not subject to caps similar to the federal cigar excise
tax. From time to time, the imposition of state and local taxes has had some
impact on sales regionally. The enactment of new state excise taxes and the
increase in existing state excise taxes are likely to have an adverse effect on
regional sales as cigar consumption generally declines.

LEGAL PROCEEDINGS

TOBACCO LITIGATION

General Cigar is a party to lawsuits incidental to its business. General
Cigar, together with a variety of other tobacco product manufacturers and
retailers, has been named in eight suits in Florida since 1995; however, it has
been served in only five of these lawsuits and in four such cases was
voluntarily dismissed as

52
<PAGE>
a defendant (without prejudice in each such dismissed case). One of the suits in
which General Cigar has been named but not served is a putative class action,
filed on or about August 30, 1996, brought against General Cigar and 13 other
defendants on behalf of Florida residents alleged to be addicted to nicotine and
injured as a result of smoking cigarettes. In addition, General Cigar and 13
others were named as defendants in two "form" complaints that identified no
plaintiffs, filed in August 1996, apparently in contemplation of filing
additional complaints on behalf of individual plaintiffs. General Cigar has not
been served with complaints in any such cases. General Cigar believes that the
outcome of such legal proceedings as are pending will not in the aggregate have
a material adverse effect on General Cigar's consolidated financial position.
General Cigar carries general liability insurance but has no health hazard
policy, which, to the best of General Cigar's knowledge, is consistent with
industry practice. There can be no assurance, however, that there will not be an
increase in health-related litigation against the cigarette and smokeless
tobacco industries or similar litigation in the future against cigar
manufacturers. The costs to General Cigar of defending prolonged litigation and
any settlement or successful prosecution of any material health-related
litigation against manufacturers of cigars, cigarettes or smokeless tobacco or
suppliers to the tobacco industry could have a material adverse effect on
General Cigar's business. The recent increase in the consumption of cigars and
the publicity such increase has received may have the effect of increasing the
probability of legal claims.

OTHER LITIGATION

In the spring of 1995, General Cigar discovered and immediately notified
U.S. Customs officials that packages of marijuana were passing through its
Dothan, Alabama plant, apparently secreted by persons still unknown in cigar
shipping cartons originating from General Cigar's Kingston, Jamaica plant.
General Cigar has since fully cooperated with U.S. Customs and other federal and
state officials throughout their investigation of this alleged drug trafficking.

As a result of investigating the drug shipments, General Cigar uncovered
information which led to the conviction of one of its senior managers on 25
counts of mail fraud. The employee is awaiting sentencing and his accomplices
now are serving prison sentences. The employee brought suit for wrongful
termination and alleged a number of illegal activities by General Cigar Co.,
Inc., including payments to officials of foreign governments, pricing practices
and election campaign contribution violations. The alleged improper campaign
contributions, aggregating $11,000, have been refunded by such campaigns and
General Cigar is seeking a conciliation agreement with respect thereto with the
Federal Election Commission. Subsequently, General Cigar Co., Inc. was served
with a U.S. Grand Jury subpoena in Connecticut relating to the allegations in
the lawsuit filed by the former employee. This investigation has since been
terminated.

In May 1995, the SEC began an informal investigation into trading in Culbro
Common Stock in the period prior to Culbro's announcement of an agreement in
principle to sell a 51% interest in General Cigar Co., Inc. The SEC staff was
provided with numerous documents they requested and they interviewed several
officers of Culbro and General Cigar. General Cigar does not know the status of
the investigation, but it has received no communication from the SEC in several
months.

Pursuant to the terms of a Distribution Agreement between Culbro and
Griffin, Griffin will acquire Culbro's 50.1% interest in Eli Witt. In November
1996, Eli Witt filed for protection under Chapter 11 of the Federal Bankruptcy
Law. Prior to February 1993, Eli Witt was a wholly-owned subsidiary of Culbro
and filed consolidated tax returns with Culbro. Culbro, Eli Witt and other
parties engaged in two complex acquisitions and reorganizations in 1993 and
1994, pursuant to which Culbro received significant distributions from Eli Witt
to repay Culbro debt, including substantial amounts Culbro had previously
borrowed from unaffiliated third parties to fund Eli Witt's business. Culbro
subsequently loaned $5 million to Eli Witt. It is anticipated that these
transactions (including the transfer of funds to Culbro) will be reviewed by Eli
Witt creditors and other parties in interest in connection with the Chapter 11
case. To date, one creditor has written to the unsecured creditors committee
proposing an inquiry into this matter. General

53
<PAGE>
Cigar believes that any such proceedings are not likely to have a material
adverse effect on General Cigar's business, financial condition or results of
operations.

EMPLOYEES

General Cigar employs approximately 5,000 persons, which includes 1,000
seasonal employees. At present, employees at General Cigar's Kingston, Jamaica
location are represented by two unions, the Trade Union Congress ("TUC"), which
represents production and maintenance workers, and the Bustamante International
Trade Union ("BITU"), which represents supervisors and office and clerical
employees. General Cigar's contract with TUC expires in March 1999, and its
contract with BITU expires in December 1997. On occasion, work stoppages have
occurred during the negotiation of new union contracts in Jamaica, and there can
be no assurance that such a stoppage will not occur in connection with the
negotiation of any new contract. In addition, employees at General Cigar's
Tampa, Florida facility are represented by the Cigar Makers' Union Local 533 of
the Retail, Wholesale and Department Store Union AFL-CIO-CLC. No other employees
of General Cigar are represented by unions. General Cigar believes that its
relations with its employees are satisfactory. Recently, the increased demand
for cigars has led to increased demand for cigar rollers, and a number of these
employees have taken advantage of employment opportunities with competitors and
new market entrants.

PROPERTIES

LAND HOLDINGS

General Cigar owns approximately 1,100 acres of land in the Connecticut
River Valley used in its tobacco growing operations. In addition, General Cigar
will lease for a ten-year period approximately 500 acres of arable land in
Connecticut. Griffin at its option may terminate the lease as to 100 acres
annually.

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<PAGE>
PRINCIPAL PROPERTIES

As of February 25, 1997, the principal properties owned or leased by General
Cigar for use in its business included:

<TABLE>
<CAPTION>
OWNED LEASE
OR EXPIRATION APPROXIMATE
LOCATION LEASED DATE NATURE OF OPERATION FLOOR SPACE(1)
- --------------------------- ---------- ---------- ----------------------------------- ----------------------
<S> <C> <C> <C> <C>
New York, New York Owned N/A Executive Offices--New York 210,000(2)
Headquarters
New York, New York Leased 8/31/05 Club Macanudo--Cigar Bar 5,000
Kingston, Jamaica, W.I. Owned N/A Cigar Manufacturing 119,000
Dothan, Alabama Leased(3 ) 11/1/01 Cigar Manufacturing & Warehousing 165,000
Hatfield, Massachusetts Owned N/A Tobacco Warehouse 81,000
Santiago, Dominican Leased(4 ) 10/31/01 Tobacco Processing, Cigar 384,243
Republic Manufacturing & Storage
Dominican Republic Leased 9/15/01 Tobacco Growing 80 acres
Bloomfield, Connecticut Leased 8/30/06 General Cigar Co., Inc. Executive 11,137
Offices
Bloomfield, Connecticut Leased 10/17/06 General Cigar Co., Inc. Bloomfield 12,500
Headquarters
Bloomfield, Connecticut Leased 11/30/97 Warehouse 11,644
Ellington, Connecticut Owned N/A Tobacco Growing 202 acres
Granby, Connecticut Owned N/A Tobacco Growing 449.3 acres
Suffield, Connecticut Owned N/A Tobacco Growing 204.8 acres
San Pedro Sula, Honduras Owned N/A Manufacturing & Distribution 6.9 acres(7)
San Pedro Sula, Honduras Leased 3/31/99 Offices 421 square meters
Danli, Honduras Owned N/A Manufacturing & Distribution 5,500 square meters
Tampa, Florida Owned N/A Executive Offices, Manufacturing & 57,500
Distribution
Upper Saddle River, New Leased(5 ) 12/31/00 Sales & Distribution 21,500
Jersey
Chicago, Illinois Leased 9/30/01(6 ) Club Macanudo--Cigar Bar 11,000
</TABLE>

- ------------------------

(1) In square feet, except where indicated.

(2) General Cigar uses approximately 25,000 square feet. The balance is leased
or available for lease.

(3) Industrial Revenue Bond financing lease. General Cigar owns a 52,500 square
foot warehouse in Dothan, Alabama that is leased to a third party.

(4) General Cigar leases property in Santiago, Dominican Republic for its cigar
manufacturing, tobacco processing and tobacco warehousing operations. These
operations are conducted in several different facilities which are subject
to 11 different leases. The leases have expiration dates ranging from 1998
to 2001 and each is subject to a renewal option. General Cigar subleases
70,000 square feet of these facilities to Shade Leaf Processors.

55
<PAGE>
(5) Subject to a two-year renewal at General Cigar's option. General Cigar also
has agreed to lease an additional 6,000 square feet at this facility, on the
same terms as the premises currently leased, from the earlier of July 22,
1997 and departure of the current tenant of such additional space.

(6) Subject to a five-year renewal at General Cigar's option.

(7) Entire area of site.

In addition, General Cigar is planning to construct a new warehouse in
Bloomfield, Connecticut.

General Cigar believes that its existing manufacturing facilities and
distribution centers are adequate for the current level of General Cigar's
operations. General Cigar is, however, in the process of expanding its
operations to meet increasing demand. General Cigar recently completed the
expansion of its manufacturing space at its Dominican Republic facilities, and
has begun to expand its manufacturing space in Jamaica, through a combination of
new construction and reconfiguration of existing space at those facilities to
increase the overall square footage devoted to the manufacturing process.
General Cigar expects that it will make capital expenditures of approximately
$5.0 million in fiscal 1997 in connection with the expansion of these
facilities. As a result of these measures, as well as additional training and
the introduction of double-shifting at certain facilities, General Cigar
believes that its manufacturing facilities will be capable of meeting expected
demand for cigars by the end of 1997. General Cigar believes that additional
facilities, if necessary, would be readily available on a timely basis on
commercially reasonable terms. Further, General Cigar believes that the leased
space that houses its existing manufacturing and distribution facilities is not
unique and could be readily replaced, if necessary, at the end of the terms of
its existing leases on commercially reasonable terms.

General Cigar believes that its facilities are well maintained and in
substantial compliance with environmental laws and regulations.

56
<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information with respect to General
Cigar's executive officers, directors and certain other key employees. The
Directors listed are Directors of Culbro as well as of General Cigar.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------- --- ---------------------------------------------------------------------------
<S> <C> <C>
Edgar M. Cullman............... 79 Chairman of the Board and Director
Edgar M. Cullman, Jr. ......... 51 President, Chief Executive Officer and Director
Jay M. Green................... 49 Executive Vice President, Chief Financial Officer and Treasurer
Austin T. McNamara............. 42 Executive Vice President and Chief Operating Officer
A. Ross Wollen................. 53 General Counsel, Senior Vice President and Secretary
Joseph C. Aird................. 52 Senior Vice President--Controller
Robert Loftus.................. 46 Vice President and Assistant Controller
Alfons Mayer................... 70 Senior Vice President of Tobacco of General Cigar Co., Inc.
Benjamin F. Menendez........... 60 Senior Vice President of Premium Special Projects of General Cigar Co.,
Inc.
Angel Daniel Nunez............. 45 Senior Vice President of Tobacco Growing and Processing of General Cigar
Co., Inc.
John M. Rano................... 50 Senior Vice President of Marketing and Product Development of General Cigar
Co., Inc.
Frank Fina, Jr. ............... 54 Senior Vice President of New Business Development of General Cigar Co.,
Inc.
W. Brent Currier............... 36 Vice President of Sales and Field Marketing of General Cigar Co., Inc.
Bruce A. Barnet................ 51 Director
John L. Bernbach............... 52 Director
John L. Ernst.................. 56 Director
Thomas C. Israel............... 52 Director
Dan W. Lufkin.................. 65 Director
Graham V. Sherren.............. 59 Director
Peter J. Solomon............... 58 Director
Francis T. Vincent, Jr. ....... 58 Director
</TABLE>

EDGAR M. CULLMAN has been the Chairman of the Board of General Cigar since
December 1996. From 1962 to 1996 he served as Chief Executive Officer of Culbro.
Mr. Cullman has served as a Director of Culbro since 1961 and has been Chairman
of Culbro since 1975. He also is a Director of Centaur Communications Limited,
Bloomingdale Properties, Inc. and Eli Witt. Eli Witt filed for relief from its
creditors under Chapter 11 of the Federal Bankruptcy Code in November 1996.
Edgar M. Cullman is the father of Edgar M. Cullman, Jr. and the uncle of John L.
Ernst.

EDGAR M. CULLMAN, JR. is the President and Chief Executive Officer of both
Culbro and General Cigar, and he also is a Director of both Culbro and General
Cigar. Mr. Cullman was elected President and Chief Executive Officer of General
Cigar in December 1996. He was elected Chief Executive Officer of Culbro in 1996
after serving as the Chief Operating Officer of Culbro for 12 years. He has been
President of Culbro since 1984 and has been a Director of Culbro since 1982. In
1992, 1993 and 1995 he was President of Culbro Land Resources, Inc. Mr. Cullman
is also a Director of First Financial Caribbean Corporation, Bloomingdale
Properties, Inc. and Eli Witt. Eli Witt filed for relief from its creditors
under Chapter 11 of the Federal Bankruptcy Code in November 1996.

57
<PAGE>
JAY M. GREEN is the Executive Vice President, Chief Financial Officer and
Treasurer of both General Cigar and Culbro. He was appointed to this position
with General Cigar in December 1996 and has served in the same capacity with
Culbro since 1988. Mr. Green is a director of Players International, Inc. and
Eli Witt. Eli Witt filed for relief from its creditors under Chapter 11 of the
Federal Bankruptcy Code in November 1996.

AUSTIN T. MCNAMARA has been the Executive Vice President and Chief Operating
Officer of General Cigar since December 1996 and has been the President of
General Cigar Co., Inc. since 1994. He was the Senior Vice President of Sales
and Marketing of General Cigar Co., Inc. from 1993 to 1994. Prior to joining
General Cigar Co., Inc. in 1993, he was the Group Vice President, General
Manager in the Process Foods Division of Chiquita Brands International and held
several Brand Management positions at Procter & Gamble.

A. ROSS WOLLEN is the General Counsel, the Senior Vice President and
Secretary of both General Cigar and Culbro. He was elected in this capacity at
General Cigar in December 1996 and has served Culbro as General Counsel since
1980, as Senior Vice President since 1983 and as Secretary since 1987.

JOSEPH C. AIRD is the Senior Vice President--Controller of both General
Cigar and Culbro. He was named to that position at General Cigar in December
1996, and he assumed that office with Culbro in 1995. Mr. Aird has served as a
Vice President of Culbro since 1987. He also is a director of Eli Witt. Eli Witt
filed for relief from its creditors under Chapter 11 of the Federal Bankruptcy
Code in November 1996.

ROBERT LOFTUS has been the Vice President and Assistant Controller of
General Cigar since December 1996. He has been the Vice President, Finance of
General Cigar Co., Inc. since 1993. From 1988 until 1993 Mr. Loftus served as
the Controller of General Cigar Co., Inc.

ALFONS MAYER is the Senior Vice President of Tobacco of General Cigar Co.,
Inc. Throughout his 44 year tenure with General Cigar Co., Inc., he has held
positions of increasing responsibility, mostly related to the world-wide
purchasing and processing of tobacco for which he has received industry-wide
recognition, including being named Tobacco Personality of the year by the
Tobacco Journal International in 1992. Prior to his employment with General
Cigar Co., Inc., he participated in a family-owned tobacco leaf processing
company in Argentina (1945-1952).

BENJAMIN F. MENENDEZ is the Senior Vice President of Premium Special
Projects at General Cigar Co., Inc. He has held his office at General Cigar Co.,
Inc. since July 1995. Previously Mr. Menendez had served as Vice President of
Caribbean Group Operations division of General Cigar Co., Inc. from 1994 to 1995
and as Vice President of Premium Cigar Manufacturing from 1985 to 1994. Mr.
Menendez is a member of the well-known cigar family of Menendez and Garcia, the
producers of Montecristo and H. Upmann cigars in Cuba prior to Castro's
revolution. After leaving Cuba he lived in the Canary Islands and Brazil and
continued to manufacture cigars.

ANGEL DANIEL NUNEZ was appointed Senior Vice President of Tobacco Growing
and Processing of General Cigar Co., Inc. in 1992. Mr. Nunez began his tenure
with General Cigar Co., Inc. in 1980 as Manager of Culbro Vega Leaf Tobacco in
the Dominican Republic. In 1986, he was transferred to General Cigar Dominicana
(a division of General Cigar) as Assistant to the General Manager, assumed the
title of Assistant General Manager in 1988, and was promoted to General Manager
in 1989. He was promoted in 1990 to Vice President of Operations for the
Dominican Republic facility.

JOHN M. RANO is the Senior Vice President of Marketing and Product
Development for General Cigar Co., Inc. He was appointed to his post at General
Cigar Co., Inc. in November 1994. Previously, Mr. Rano had served as Vice
President of Marketing General Cigar Co., Inc. from 1992 to 1994 and as Sales
Development Manager from 1984 to 1992.

58
<PAGE>
FRANK FINA, JR. is the Senior Vice President of New Business Development for
General Cigar Co., Inc. He has served in his capacity at General Cigar Co., Inc.
since January 1994. Mr. Fina previously served as Vice President of Domestic
Sales at General Cigar Co., Inc. from 1982 to 1994. He has been with General
Cigar since 1963.

W. BRENT CURRIER is the Vice President of Sales and Field Marketing of
General Cigar Co., Inc. He has been in his current position at General Cigar
Co., Inc. since June 1994. Prior to joining General Cigar Co., Inc., Mr. Currier
served as Vice President--Eastern Zone for E.J. Brach Corporation from 1988 to
1994, where he managed direct and broker sales forces in 17 states.

BRUCE A. BARNET is a Director of both General Cigar and Culbro. He has been
a Director of General Cigar since December 1996 and a Director of Culbro since
1990. He is the President and Chief Executive Officer of Cahners Publishing
Company, a magazine publishing company. He was the President and Chief Executive
Officer of Cowles Enthusiast Media from March 1993 until March 1996, and was a
private investor from 1991 to 1992. Mr. Barnet is also a director of Reed
Elsevier, Inc., Batteries, Batteries Inc., Mainspring Communications and the
American Business Press.

JOHN L. BERNBACH is a Director of both General Cigar and Culbro. He has been
a Director of General Cigar since December 1996 and a Director of Culbro since
1988. He has been the Chairman and Chief Executive Officer of The Bernbach
Group, Inc., a consulting company, since 1994. Mr. Bernbach was the Chairman and
Chief Executive Officer of North American Television, Inc. (television
production and distribution) from August 1995 to August 1996 and still serves as
Non-executive Chairman and Director. Mr. Bernbach was Vice-Chairman of DDB
Needham Worldwide, Inc., an advertising agency, from October 1993 to June 1994
and also was its President and a director from 1986 to 1993. He is Chairman of
the Board of Avenue China, Inc. and is a director of Northbridge Programming,
Inc. and an Advisor to the Board of Wemco, Inc.

JOHN L. ERNST is a Director of both General Cigar and Culbro. He has been a
Director of General Cigar since December 1996 and a Director of Culbro since
1983. He is the Chairman of the Board and President of Bloomingdale Properties,
Inc., an investment and real estate company. Mr. Ernst also is a director of
First Financial Caribbean Corporation.

THOMAS C. ISRAEL is a Director of both General Cigar and Culbro. He has been
a Director of General Cigar since December 1996 and a Director of Culbro since
1989. Mr. Israel is a director and Chairman of A.C. Israel Enterprises, Inc., an
investment company.

DAN W. LUFKIN is a Director of both General Cigar and Culbro. He has been a
Director of General Cigar since December 1996 and a Director of Culbro since
1976. Mr. Lufkin also is a private investor.

GRAHAM V. SHERREN is a Director of both General Cigar and Culbro. He has
been a Director of General Cigar since December 1996 and a Director of Culbro
since 1987. Mr. Sherren is Chairman and Chief Executive Officer of Centaur
Communications Limited, as well as a director of each of Hundred Acre Securities
Ltd., InType Ltd., Gieves Group Ltd., Angerstein Plc and Duplo International
Ltd.

PETER J. SOLOMON is a Director of both General Cigar and Culbro. He has been
a Director of General Cigar since December 1996 and a Director of Culbro since
1980. Mr. Solomon also is Chairman of Peter J. Solomon Company Limited and Peter
J. Solomon Securities Company Limited. In addition, he is a director of
Centennial Cellular Corporation, Century Communications Corporation, Charrette
Corporation, Monro Muffler Brake, Inc., Office Depot, Inc. and Phillips-Van
Heusen Corporation.

FRANCIS T. VINCENT, JR. is a Director of both General Cigar and Culbro. He
has been a Director of General Cigar since December 1996 and a Director of
Culbro since 1992. Mr. Vincent currently runs Vincent Enterprises and is a
private investor. He was senior advisor to Peter J. Solomon Company Limited from
1993 to 1994 and the Commissioner of Major League Baseball from 1989 to 1992.
Mr. Vincent is a director of Oakwood Homes Corp., Time Warner, Inc. and
Westfield America, Inc.

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<PAGE>
EXECUTIVE COMPENSATION PAID BY CULBRO AND GENERAL CIGAR

Each of the executive officers named below is an executive officer of
General Cigar. Messrs. Cullman, Cullman, Jr., Green, Wollen and Aird also are
officers of Culbro, while Mr. McNamara is also an officer of General Cigar Co.,
Inc., a wholly-owned subsidiary of General Cigar. General Cigar was incorporated
in December 1996. Accordingly, no compensation was paid to any of its executive
officers as such for fiscal 1996 or prior years. The following table sets forth
the annual and long-term compensation for the Chief Executive Officer and the
four highest-paid executive officers for Culbro (the "Culbro Officers") and for
General Cigar (the "General Cigar Officers") (including, with respect to General
Cigar, compensation from employment by affiliates of General Cigar), as well as
the total compensation paid to each individual during the last three calendar
years, in connection with such employment.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
AWARDS
----------------------------------------------------------------------
--------------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING
NAME AND PRINCIPAL POSITION(1) YEAR SALARY BONUS COMPENSATION(2) AWARD OPTIONS(5)
- ------------------------------------------ --------- ---------- ------------ ---------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>

Edgar M. Cullman.......................... 1996 $ 400,000 $ -- $ 17,256 -- --
Chairman of the Board (Culbro and 1995 375,000 -- 13,689 -- --
General Cigar) 1994 360,000 -- 23,628 -- --

Edgar M. Cullman, Jr...................... 1996 400,000 -- 30,012 -- 100,000
President and Chief Executive Officer 1995 367,000 1,164,400(3) 29,871 -- --
(Culbro and General Cigar) 1994 352,000 -- 33,716 -- --

Jay M. Green.............................. 1996 355,000(4) 65,000 1,128,068 -- --
Executive Vice President Chief Financial 1995 355,000 666,607(3) 24,912 -- --
Officer and Treasurer (Culbro and 1994 340,000 -- 26,714 -- 125,000
General Cigar)

Austin T. McNamara........................ 1996 250,000 148,025 319,915 -- 10,000
Executive Vice President and Chief 1995 200,000 375,629(3) 15,712 -- 15,000
Operating Officer (General Cigar) 1994 190,000 158,603 15,510 -- 12,400

A. Ross Wollen............................ 1996 225,000 55,000 25,589 -- 5,000
Senior Vice President, General Counsel 1995 205,000 377,501(3) 109,879 -- 15,000
and Secretary (Culbro and General Cigar) 1994 176,925 -- 30,182 -- 11,500

Joseph C. Aird............................ 1996 145,000 45,000 204,368 -- 3,000
Vice President-Controller (Culbro and 1995 130,970 163,657(3) 72,273 -- 4,000
General Cigar) 1994 115,500 -- 26,607 -- 4,500
</TABLE>

- ------------------------

(1) Each of the executive officers identified was employed by Culbro during each
of the last three years, except for Austin T. McNamara, who was employed by
General Cigar Co., Inc. during such period. Until April 1996, Edgar M.
Cullman was the Chief Executive Officer of Culbro. Amounts shown exclude
$778,778, $621,960 and $655,872 to be paid over three years beginning in
1997 to Messrs. Cullman, Jr., Green and Wollen, respectively, as a result of
the termination and payout of benefits under Culbro's 1995-1997 Long Term
Performance Plan. See "Certain Employee Benefit Matters--Culbro Long Term
Performance Plan."

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(2) Amounts shown include matching contributions made by Culbro under its
Savings Plan and other miscellaneous cash benefits, but do not include
funding for or receipt of retirement plan benefits. No executive officer who
would otherwise have been includable in such table resigned or terminated
employment during 1996. The amounts shown in 1996 for Messrs. Green and
McNamara include value realized upon exercise of options of $1,102,163 and
$303,169, respectively.

(3) Annual and long-term bonuses were paid in 1996 with respect to performance
in 1995 and the 1993-95 cycle, respectively.

(4) All but $46,664 of such compensation was deferred pursuant to Culbro's
Deferred Incentive Compensation Plan.

(5) Numbers shown are in shares of Culbro Common Stock. Upon consummation of the
Merger, each option will be exercisable for such number of shares of Class A
Common Stock as is equal to 4.44557 multiplied by the number of shares of
Culbro Common Stock shown.

COMPENSATION OF DIRECTORS

Directors who do not receive compensation as officers or employees of
General Cigar or any of its affiliates will be paid an annual retainer fee of
$20,000 and a fee of $900 for each meeting of the Board of Directors or any
committee thereof they attend, plus reasonable out-of-pocket expenses.

CERTAIN EMPLOYEE BENEFIT MATTERS

1997 STOCK OPTION PLAN

General Cigar has adopted a new Stock Option Plan (the "General Cigar
Holdings 1997 Stock Option Plan"). A total of 3,300,000 shares of Class A Common
Stock will be available for issuance under the General Cigar Holdings 1997 Stock
Option Plan and existing Culbro Stock Option Plans (which will be assumed by
General Cigar following the Merger as described below). The General Cigar
Holdings 1997 Stock Option Plan, together with the assumed Culbro Stock Option
Plans, are referred to as the "1997 Stock Option Plan." Options granted under
the General Cigar Holdings 1997 Stock Option Plan will be incentive stock
options or nonqualified options. The General Cigar Holdings 1997 Stock Option
Plan contains a limitation on the dollar amount of incentive stock options which
may be granted to any employee and restrictions pertaining to any grant to an
employee who beneficially owns 10% or more of the outstanding Common Stock.
General Cigar has granted options with respect to approximately 2,700,000 shares
of Class A Common Stock available for issuance pursuant to the General Cigar
Holdings 1997 Stock Option Plan. Options granted under the General Cigar
Holdings 1997 Stock Option Plan prior to the Offering will become exercisable
with respect to one-third of the underlying shares on each of the third, fourth
and fifth anniversaries after the date of the grant and will terminate not more
than ten years following the date of the grant. The exercise price of such
options is $18.00 per share. Pursuant to the General Cigar Holdings 1997 Stock
Option Plan, options to purchase a number of shares of Class A Common Stock at
an aggregate exercise price of $1.0 million will be granted to certain persons
employed by Villazon pursuant to the Villazon Acquisition. See "--Employment and
Consulting Agreements of Frank Llaneza, Daniel Blumenthal and Constantino
Gonzalez." In addition, pursuant to the General Cigar Holdings 1997 Stock Option
Plan, an option to purchase 100,000 shares of Class A Common Stock will be
granted to Austin T. McNamara.

CULBRO EMPLOYEE BENEFIT PLANS TO BE ASSUMED BY GENERAL CIGAR

The following is a summary of certain of Culbro's employee benefit plans and
awards pursuant thereto that General Cigar has assumed or will assume, as of the
date of the Asset Transfers, the date of Distribution or the date of the Merger,
as the case may be, as described below. Assumption of the Culbro

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<PAGE>
plans will be effected pursuant to the Benefits and Employment Matters
Allocation Agreement entered into prior to the Distribution.

CULBRO STOCK OPTION PLANS

Culbro maintains three employee stock option plans (collectively, the
"Culbro Employee Stock Option Plans") under which unexercised options currently
are outstanding: (i) the Culbro Corporation 1991 Employees Incentive Stock
Option Plan (the "1991 Plan"); (ii) the Culbro Corporation 1992 Stock Plan (the
"1992 Plan"); and (iii) the Culbro Corporation 1996 Stock Plan (the "1996
Plan"). As of December 31, 1996 options for 46,114 shares, 196,400 shares, and
100,000 shares of Culbro Common Stock were outstanding under the 1991 Plan, the
1992 Plan and the 1996 Plan, respectively. The Culbro Employee Stock Option
Plans currently are administered by the Compensation Committee of the Board of
Directors of Culbro (the "Culbro Compensation Committee"). Options granted under
the Culbro Employee Stock Option Plans are intended to be incentive stock
options or nonqualified options. Options granted under the 1991 Plan and the
1992 Plan are not exercisable until three years after the date of grant and
terminate eight years from the date of the grant. Options granted under the 1996
Plan are exercisable in equal installments over five years beginning on the
third anniversary of the date of grant at increasing exercise prices. See
"--Stock Option Information."

Culbro maintains two stock option plans for its non-employee Directors, the
1993 Stock Option Plan for Non-Employee Directors (the "1993 Director Plan") and
the 1996 Stock Option Plan for Non-Employee Directors (the "1996 Director
Plan"). Under the 1993 Director Plan, options to purchase 2,000 shares of Culbro
Common Stock were granted to each non-employee Director of Culbro in each of
1993, 1994 and 1995. In total, options exercisable with respect to 42,000 shares
of Culbro Common Stock were granted under the 1993 Director Plan, of which
options exercisable with respect to 36,000 shares were outstanding as of
December 31, 1996. Options granted under the 1993 Director Plan have exercise
prices between $14.38 and $19.50 per share. No further options will be granted
pursuant to the 1993 Director Plan. Under the 1996 Director Plan, options
exercisable for 1,000 shares of Culbro Common Stock will be granted annually to
non-employee Directors of Culbro. There are a total of 25,000 shares of Culbro
Common Stock reserved for issuance under the 1996 Director Plan, of which
options exercisable for 7,000 shares were granted in April 1996 at an exercise
price of $63.81.

Pursuant to the Benefits and Employment Matters Allocation Agreement, as of
the date of the Distribution, except as described below with respect to
incentive stock options, each current holder of an option to acquire shares of
Culbro Common Stock pursuant to the 1991 Plan, the 1992 Plan, the 1996 Plan, the
1993 Director Plan or the 1996 Director Plan (together, the "Culbro Stock Option
Plans") will receive in exchange therefor two separately exercisable options,
one option to purchase shares of Culbro Common Stock (a "Culbro Option") and one
option to purchase shares of Griffin Common Stock (a "Griffin Option"), each
containing terms substantially equivalent in the aggregate to those of such
holder's pre-Distribution option except that cross-over options (i.e. Culbro
Options held by persons who are employed by, or who are non-employee directors
of, Griffin following the Distribution, and Griffin Options held by persons who
are employed by, or who are non-employee directors of, Culbro following the
Distribution, respectively) shall become fully exercisable upon the date of the
Distribution. With respect to each holder of a nonqualified option, the combined
aggregate exercise price of the Culbro Option and the Griffin Option shall be
equal to the aggregate exercise price of the pre-Distribution option. With
respect to each holder of an incentive stock option, the number of shares with
respect to which each Culbro Option and each Griffin Option are exercisable, and
the exercise price for each Culbro Option and each Griffin Option, will be set
so as to preserve the Exercise Ratio and the Aggregate Spread (both as described
below) attributed to options currently outstanding, such determination to be
based on the respective trading prices of Culbro Common Stock and Griffin Common
Stock following the Distribution. The "Exercise Ratio" of the Culbro Option and
the Griffin Option, respectively, shall be set such that on a share by share
basis, the ratio of the exercise price of the Culbro Option and the Griffin
Option to the

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<PAGE>
value of Culbro Common Stock or Griffin common stock, respectively, shall be
equal to the ratio of the pre-Distribution exercise price to the
pre-Distribution value of stock subject to the option. The "Aggregate Spread" of
an option is an amount equal to the difference between the exercise price of an
option and the price of a share of Culbro Common Stock immediately prior to the
Distribution multiplied by the number of shares underlying such option.

Upon consummation of the Merger, each Culbro Option will be converted into
an option to purchase Class A Common Stock (a "General Cigar Option"). The
number of shares with respect to which a General Cigar Option is exercisable and
the exercise price for a General Cigar Option will be subject to adjustment
based on the ratio of the number of shares of Common Stock issuable in the
Merger with respect to each share of Culbro Common Stock. The Culbro Options
will not be exercisable for Class A Common Stock until the Merger has been
consummated. In order to assure that the exercise of Culbro Options prior to the
consummation of the Merger does not result in disproportionate dilution to the
Culbro shareholders, Culbro will pay to General Cigar the amount of the exercise
price received upon the exercise of such Culbro Option and in exchange therefor
General Cigar will provide to Culbro a number of shares of Common Stock equal to
the number of shares of Culbro Common Stock issued upon exercise of such Culbro
Option multiplied by 4.44557.

STOCK OPTION INFORMATION

The following table sets forth the number of stock options granted to each
of the Culbro Officers and the General Cigar Officers during fiscal 1996.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------- VALUE AT ASSUMED
PERCENTAGE OF ANNUAL RATES OF
NUMBER OF TOTAL OPTIONS STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR TEN
UNDERLYING EMPLOYEES IN EXERCISE OR YEAR OPTION TERM
OPTIONS 1996 FISCAL BASE PRICE EXPIRATION --------------------------
NAME GRANTED (#)(1) YEAR ($/SHARE) DATE 5% 10%
- --------------------------------- -------------- --------------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Edgar M. Cullman, Jr............. 100,000 74.4% (2) 1/16/04 $ 2,633,368 $ 8,422,455
A. Ross Wollen................... 1,500 1.1% $ 59.38 2/21/04 $ 56.016 $ 141,954
A. Ross Wollen................... 3,500 2.6% $ 46.75 1/16/04 $ 102,903 $ 260,776
Austin T. McNamara............... 10,000 7.4% $ 59.38 2/21/04 $ 373,438 $ 946,364
Joseph C. Aird................... 500 0.4% $ 59.38 2/21/04 $ 18,670 $ 47,320
Joseph C. Aird................... 2,500 1.9% $ 46.75 1/16/04 $ 73,500 $ 186,275
</TABLE>

- ------------------------

(1) Upon consummation of the distribution, each holder of an option to acquire
shares of Culbro Common Stock as set forth herein will receive in exchange
therefor two separately exercisable options: a Culbro Option and a Griffin
Option. See "--Culbro Stock Option Plans."

(2) 40,000 of such options are exercisable at $66.00 per share, 40,000 of such
options are exercisable at $72.60 per share and 20,000 of such options are
exercisable at $80.00 per share.

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<PAGE>
Edgar M. Cullman did not hold any options at 1996 fiscal year end. The
following table presents the value of options exercised in fiscal 1996 and the
value of unexercised options held by the other Culbro Officers and General Cigar
Officers at November 30, 1996.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING OPTIONS VALUE OF UNEXERCISED
HELD AT FISCAL YEAR END IN-THE-MONEY OPTIONS
VALUE (#) AT FISCAL YEAR END (1)
SHARES ACQUIRED REALIZED -------------------------- ---------------------------
NAME ON EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------- --------------- ------------ ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Edgar M. Cullman, Jr.............. -- -- -- 100,000 $ 0 $ 0
Jay M. Green...................... 24,300 $ 1,102,163 85,200 75,000 $ 3,913,825 $ 3,975,000
A. Ross Wollen.................... 12,697 $ 676,115 19,003 31,500 $ 774,249 $ 1,184,375
Austin T. McNamara................ 6,900 $ 303,169 3,000 37,400 $ 120,750 $ 1,185,850
Joseph C. Aird.................... 8,789 $ 437,689 8,211 7,000 $ 399,999 $ 204,625
</TABLE>

- ------------------------

(1) The amounts presented in this column have been calculated based upon the
difference between the fair market value of $57.00 of Culbro Common Stock on
November 30, 1996 and the exercise price of each stock option. See "--Culbro
Stock Option Plans."

CULBRO ANNUAL INCENTIVE COMPENSATION PLAN

The Culbro Compensation Committee meets during the first quarter of each
year to assess the performance during the preceding fiscal year of the officers
of Culbro and senior officers of its subsidiaries and to recognize and reward
meritorious performance by payment of incentive compensation with respect to
such year. Pursuant to a plan approved for 1996 by the Culbro Board of
Directors, such annual incentive compensation was based upon predetermined
percentages of each recipient's annual salary and depended upon the achievement
of specified financial and strategic goals. Incentive compensation is payable in
cash subject to deferral under Culbro's Deferred Incentive Compensation Plan.
Culbro's 1996 annual plan resulted in the payments to Culbro executives set
forth under "Management--Executive Compensation." Culbro employees who do not
participate in the incentive compensation plan may be eligible for annual bonus
payments depending upon operating unit results. Following the consummation of
the Asset Transfers, General Cigar intends to assume and continue the Annual
Incentive Compensation Plan, subject to any adjustments necessary to reflect the
Distribution and the Merger. In addition, it is currently contemplated that
General Cigar employees who do not participate in the incentive compensation
plan may be eligible to receive annual bonus payments depending on General Cigar
results.

CULBRO LONG TERM PERFORMANCE PLAN

In 1988, the Culbro Compensation Committee and the Culbro Board of Directors
approved the Long Term Performance Plan (the "Performance Plan") which is
intended to provide additional cash compensation to certain officers of Culbro
and senior officers of its subsidiaries selected by the Culbro Compensation
Committee. Payments under the Performance Plan are based on the financial
performance of the subsidiaries and Culbro over three-year performance cycles,
which began in 1989 and every other year thereafter. The third three-year
performance cycle which began with fiscal year 1993 resulted in the payments set
forth under "Management--Executive Compensation." The Performance Plan was
amended for the three-year performance period 1995-1997. Certain senior officers
of General Cigar Co., Inc. and certain other subsidiaries are eligible to
receive rewards based upon the return on net assets for the applicable business
unit.

In late 1996, the Culbro Board of Directors, on the recommendation of the
Culbro Compensation Committee, approved the full vesting and termination of the
1995-1997 Performance Plan as it pertains to Culbro corporate executives. These
awards total approximately $3.4 million and will be paid in installments from
1997 to 1999. See "Management--Executive Compensation."

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<PAGE>
Pursuant to the Asset Transfers, General Cigar assumed the Performance Plan
with respect to participants employed by General Cigar Co., Inc., subject to any
adjustments necessary to reflect the Distribution and the Merger. Employees of
subsidiaries other than General Cigar Co., Inc. are eligible to receive the
portion of their award, if any, earned through the date of the Asset Transfers,
and all such employees ceased participating in the Performance Plan following
the date of the Asset Transfers. Determination and payment of any award under
the Performance Plan with respect to participants other than participants
employed by General Cigar Co., Inc. will be made by the subsidiary for which the
employee was employed.

CULBRO DEFERRED INCENTIVE COMPENSATION PLAN

In 1982, the Culbro Board of Directors adopted the Deferred Incentive
Compensation Plan to be administered by the Culbro Compensation Committee,
pursuant to which recipients of incentive compensation and directors' fees may
elect to defer receipt thereof under a defined contribution arrangement. Amounts
deferred earn interest, compounded quarterly, at the prime rate less 1%. Such
amounts are not intended to be recognized for tax purposes until received.
Participating recipients may designate the amount and the time periods of
deferral. Participants have no vested rights in deferred amounts credited to
their accounts and are general creditors of Culbro until such amounts actually
are paid. Pursuant to the Asset Transfers, General Cigar has assumed and will
continue the Deferred Incentive Compensation Plan, subject to any adjustments
necessary to reflect the Distribution and the Merger. Upon the assumption of the
Deferred Incentive Compensation Plan by General Cigar, participants will become
general creditors of General Cigar until deferred amounts credited to their
accounts are paid.

CULBRO SAVINGS PLAN

The Culbro Board of Directors adopted a Savings Plan in 1982 (the "Savings
Plan"). The Savings Plan covers salaried and hourly employees of Culbro and its
participating subsidiaries who are employed in the U.S., are over age 21 and
have six months of service. In 1996, a participating employee could have (i)
saved up to 5% of annual base salary through payroll deductions, with Culbro
contributing $0.40 on each dollar contributed and (ii) saved an additional 10%
of annual base salary without receiving any matching contributions. Highly
compensated employees are limited to an additional 3% of annual base salary
without receiving any matching contributions. Contributions made in 1996 through
payroll deductions not in excess of $9,500 per employee may have been
accumulated as pre-tax savings pursuant to Section 401(k) of the Internal
Revenue Code. Participants are permitted to choose to allocate their
contributions among several alternative investment options. Pursuant to the
Asset Transfers, Griffin is responsible for any amounts under the Savings Plan
due to its employees as of the date of the Asset Transfers.

During fiscal 1996, Culbro's matching contributions under the Savings Plan
for the accounts of the Culbro Officers and General Cigar Officers are included
in the Summary Compensation Table set forth under "Management--Executive
Compensation."

Effective as of the date of the Distribution, Savings Plan participants
employed by Griffin will cease to be eligible to participate in the Savings
Plan. Following the Distribution, Culbro will continue to maintain the Savings
Plan. Upon the consummation of the Merger, General Cigar will assume and
continue to maintain the Savings Plan.

CULBRO RETIREMENT PLAN

Retirement benefits are payable under Culbro's Employees Retirement Plan
(the "Retirement Plan") for officers and other employees of Culbro and its
participating subsidiaries. Directors who are not employees do not participate.
Benefits are accrued under the Plan on a career-average earnings basis and
through 1996, the pension credit is 1.1% for annual compensation up to the
individual's covered compensation as determined from published Social Security
tables and 1.65% for annual compensation

65
<PAGE>
above said amounts. Compensation is the base rate of earnings as of the first
business day of each Plan Year payable for service during the Plan Year
excluding overtime, bonuses, incentive compensation or other additional
compensation. The estimated annual benefits payable as a life annuity upon
retirement at normal retirement age, which assumes service will continue until
age 65 at 1996 base salaries, for Messrs. Cullman, Jr., Green, Wollen, McNamara
and Aird are $101,991, $56,641, $65,324, $59,044 and $49,977, respectively. The
retirement benefit of $165,544, subject to certain inflation adjustments, for
Edgar M. Cullman reflects the fact that he deferred receipt since age 65 from
1983 to 1989.

Effective as of the Distribution, the benefits of all Retirement Plan
participants employed by Griffin following the Distribution will be frozen, and
such participants will cease to accrue further benefits under the Retirement
Plan. All such participants will be fully vested in any benefits accrued through
the date of the Distribution. Following the Distribution, Culbro will continue
to maintain the Retirement Plan. Upon the consummation of the Merger, General
Cigar will assume and continue to maintain the Retirement Plan, and
participants, other than those employed by Griffin following the Distribution,
will continue to accrue benefits in the Retirement Plan in accordance with its
terms.

CULBRO INSURANCE AND HEALTH PROGRAMS

Culbro maintains a variety of employee welfare benefit plans providing life,
hospitalization, medical and long-term disability insurance for its salaried and
certain hourly paid employees. In addition Culbro provides life, hospitalization
and medical insurance for certain of its retired employees. Culbro's aggregate
contributions for such employee welfare benefit plans in fiscal 1996 amounted to
approximately $3.3 million. Culbro plans to maintain such welfare benefit plans
and insurance arrangements for all eligible pre-Asset Transfers employees, and
that upon the consummation of the Merger, General Cigar will assume and continue
such welfare benefit plans and insurance arrangements. Any such plan or
arrangement benefiting persons employed by Griffin following the Asset Transfer
Date will be subject to certain fee sharing arrangements with Griffin.

In 1976, Culbro adopted an Executive Life Insurance Program (the "Program")
pursuant to which insurance was purchased for middle and senior level officers
and employees. Insurance coverage of $20,000 was provided for each $10,000
salary increment in excess of $50,000 and additional coverage of $10,000 was
provided for each $10,000 salary increment in excess of $100,000 up to a maximum
insurance coverage of $250,000. As of July 1, 1988 the Program was suspended and
all benefits remain as they were as of that date. No new participants have been
offered benefits under this Program since its suspension. The aggregate face
amount of such coverage through November 30, 1996 was approximately $2.8
million. The amounts paid by Culbro in fiscal 1996 as premiums totaled
approximately $80,000, which was paid in part from a loan against the cash value
of said insurance and the balance in cash.

EMPLOYMENT AGREEMENT OF JAY M. GREEN

In 1994, Culbro entered into an employment agreement with Jay M. Green,
Culbro's Chief Financial Officer (the "Employment Agreement"). The Employment
Agreement provides that Mr. Green be employed as Executive Vice
President--Finance and Administration and Treasurer for a period of five years
from April 1994 to April 1999 at a base salary of $340,000 (subject to increase
annually as determined by the Culbro Compensation Committee). If Mr. Green is
terminated by Culbro without cause, he will be entitled to receive a cash
severance payment of 150% of his annual salary. The Employment Agreement also
provides for a grant of an option (the "Option") to purchase 125,000 shares of
Culbro Common Stock at an exercise price of $4 per share.

The Option vests and becomes exercisable with respect to 20% of the
underlying common stock per year, on each of the five anniversaries of the date
of the grant. The Option expires (a) on the tenth anniversary date of the date
it becomes exercisable, or (b) after the date Mr. Green ceases to be an employee
of Culbro or its subsidiaries, (i) within one year following Mr. Green's death
or disability,

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<PAGE>
(ii) within three months following a voluntary termination and (iii) immediately
upon a termination for cause. The Option shall become immediately exercisable
with respect to all shares covered thereby in the event of a termination without
cause after the first 30 months of the Employment Agreement; provided that the
Option shall expire within three months of such termination. Additionally, in
the event that the Cullman & Ernst Group owns less than 40% of Culbro's common
stock (or the Common Stock, following the assumption of the Employment Agreement
by General Cigar), the Option shall become exercisable in its entirety. Mr.
Green may not be permitted to exercise such number of options in any year which
would result in his total compensation exceeding the $1.0 million income tax
deduction cap of Section 162(m), unless such exercises are approved by the
Section 162(m) Subcommittee of the Board of Directors of Culbro Corporation, and
the Culbro Compensation Committee and would not require further approval of the
shareholders of Culbro. Such limitation may not apply in the final year of the
Option.

General Cigar assumed Culbro's obligations under the Employment Agreement
pursuant to the Asset Transfers. Upon consummation of the Distribution, Mr.
Green will receive, in exchange for his Option, two separately exercisable
options: one Culbro Option and one Griffin Option. Upon consummation of the
Merger, Mr. Green's Culbro Option will be converted into a General Cigar Option.
The number of shares with respect to which a General Cigar Option is
exercisable, and the exercise price for a General Cigar Option, will be subject
to adjustment based on the ratio of Class A Common Stock to Culbro Common Stock
in the Merger. See "--Culbro Stock Option Plans."

EMPLOYMENT AND CONSULTING AGREEMENTS OF FRANK LLANEZA, DANIEL BLUMENTHAL AND
CONSTANTINO GONZALEZ

Simultaneously with the consummation of the Villazon Acquisition, General
Cigar Co., Inc. entered into employment and consulting agreements (the
"Consulting Agreements") with Frank Llaneza, Daniel Blumenthal and Constantino
Gonzalez, officers of Villazon (the "Villazon Officers"). The Consulting
Agreements provide that the Villazon Officers will act as principal executives
of General Cigar Co., Inc. and will continue to discharge the duties
historically associated with their positions at Villazon. The Villazon Officers
will serve in such positions until January 31, 2000. Each of Mr. Llaneza's and
Mr. Blumenthal's salary will be $250,000 per year, while Mr. Gonzalez's salary
will be $200,000 per year. No other payments will be made under the Consulting
Agreements. The Villazon Officers will serve as consultants with respect to all
aspects of the business, including product development and customer and supplier
relations, from February 1, 2000 until January 31, 2001. Thereafter, the
Villazon Officers will advise General Cigar Co., Inc. from time to time, until
January 31, 2002.

The Villazon Officers are entitled to receive options pursuant to the
General Cigar Holdings 1997 Stock Option Plan. Mr. Llaneza and Mr. Blumenthal
are each are entitled to receive options for 20,000 shares of Class A Common
Stock with an exercise price of $18.00 per share for a total exercise price of
$360,000, while Mr. Gonzalez is entitled to receive options for 15,555.5 shares
of Class A Common Stock with an exercise price of $18.00 per share for a total
exercise price of $280,000. See "--1997 Stock Option Plan."

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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

OF CULBRO AND GENERAL CIGAR

Since December 1, 1995, Frederick M. Danziger, a member of the Cullman &
Ernst Group and the husband of Lucy C. Danziger, has been Of Counsel to the law
firm of Latham & Watkins. During Culbro's 1996 fiscal year, such firm received
fees and disbursements of approximately $1.5 million from Culbro for services
rendered. See "Principal Stockholders."

The interior design firm of Cullman & Kravis, which is part-owned by a
member of the Cullman & Ernst Group, provided interior design services for Club
Macanudo, Inc. and for renovations to Culbro's New York City facilities. In
1996, a total of approximately $526,000 was paid to such firm in reimbursement
for the purchase of furniture, fabrics and painting and for fees and
commissions.

General Cigar recently entered into an agreement with John L. Bernbach, a
Director of General Cigar, pursuant to which Mr. Bernbach will provide
consulting services to General Cigar with respect to its international
operations, for which General Cigar will pay Mr. Bernbach a fee of $75,000 per
year.

Messrs. Cullman are members of the Board of Directors of Bloomingdale
Properties, Inc. of which Mr. Ernst is Chairman and President. Edgar M. Cullman
is a member of the Board of Directors of Centaur, of which Mr. Sherren is Chief
Executive Officer.

Mr. Solomon is Chairman of Peter J. Solomon Company Limited ("PJSC"), an
investment banking firm. Such firm provides Culbro with strategic and financial
advisory services as well as specific transaction-related advisory services
pursuant to an engagement letter. In 1995, PJSC was paid a retainer of $75,000
for providing such advisory services. In 1996, PJSC was paid a retainer of
$140,625 for such advisory services and was paid a transaction fee of $825,000
for services rendered as financial advisor in connection with the sale of
Culbro's CMS Gilbreth Packaging Systems, Inc. division. In addition, Culbro
reimbursed PJSC for certain expenses incurred in connection with the rendering
of such services. In connection with the Offering, at the request of General
Cigar, the Underwriters have agreed to pay Peter J. Solomon Securities Company
Limited, an affiliate of PJSC, a fee of $700,000. See "Underwriting."

Real estate management and advisory services have been provided to Culbro by
an affiliate of Bloomingdale Properties, Inc., with which members of the Cullman
& Ernst Group are associated. A fee of approximately $200,000 was paid by Culbro
in 1996 for management of Culbro's New York office building and for other real
estate advisory services.

PRINCIPAL STOCKHOLDERS

Culbro beneficially owns 20,248,282 shares of Class B Common Stock,
constituting all of the outstanding shares of Class B Common Stock. No shares of
Class A Common Stock were outstanding prior to the Offering. Before giving
effect to the Merger, Culbro will continue to own 20,248,282 shares of Class B
Common Stock (subject to adjustment for any Culbro stock options exercised prior
to the Merger), constituting 75% of the outstanding Common Stock and 97% of the
voting power of the outstanding Common Stock. Pursuant to the Merger, each of
the 4,554,710 outstanding shares of Culbro Common Stock (subject to adjustment
for any Culbro stock options exercised prior to the Merger) will be converted
into the right to receive 4.44557 shares of Class B Common Stock, and each share
of Class B Common Stock owned by Culbro will be canceled. As a result, the
holders of Culbro Common Stock immediately preceding the Merger will own
20,248,282 shares of Class B Common Stock (subject to adjustment for any Culbro
stock options exercised prior to the Merger), constituting 75% of the
outstanding Common Stock and 97% of the voting power of the outstanding Common
Stock, following the Merger. For information regarding the Merger, see "The
Merger." For a description of the Class A Common Stock and the Class B Common
Stock, see "Description of Capital Stock."

The following table sets forth certain information regarding beneficial
ownership of the (i) Culbro Common Stock as of February 4, 1997 and (ii) the
Common Stock as of December 31, 1996, after giving

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effect to the Merger, in each case, by each person who is known by General Cigar
to beneficially own more than 5% of the outstanding shares of Common Stock, each
director, Culbro Officer and General Cigar Officer and all directors and
executive officers of General Cigar as a group. Unless otherwise indicated, all
shares of Common Stock shown represent Class B Common Stock. Unless otherwise
indicted, the address of each person named in the table below is Culbro
Corporation, 387 Park Avenue South, New York, New York 10016.

<TABLE>
<CAPTION>
CULBRO COMMON COMMON STOCK OF
STOCK GENERAL CIGAR
PRIOR TO THE MERGER FOLLOWING THE MERGER
------------------------ ------------------------
<S> <C> <C> <C> <C>
SHARES PERCENT SHARES PERCENT
BENEFICIALLY OF BENEFICIALLY OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED TOTAL OWNED TOTAL
- ------------------------------------------------------------- ----------- ----------- ----------- -----------
Edgar M. Cullman (2)......................................... 974,874 21.4 4,333,870 16.0
Edgar M. Cullman Jr. (2)..................................... 891,658 19.6 3,963,927 14.6
Louise B. Cullman (2)(3)..................................... 834,347 18.3 3,709,147 13.7
Susan R. Cullman (2)(3)...................................... 784,529 17.2 3,487,678 12.8
Lucy C. Danziger (2)(3)...................................... 1,051,264 23.1 4,673,467 17.2
John L. Ernst (2)............................................ 420,271 9.2 1,868,343 6.9
B. Bros. Realty Limited Partnership (4)...................... 233,792 5.1 1,039,338 3.8
Gabelli Funds, Inc. (5)...................................... 868,200 19.1 3,859,644 14.2
Dan W. Lufkin................................................ 14,000 * 62,237 *
Thomas C. Israel............................................. 9,000(6) * 40,010(6) *
Peter J. Solomon............................................. 5,000(6) * 22,227(6) *
Francis T. Vincent, Jr....................................... 5,000(6) * 22,227(6) *
John L. Bernbach............................................. 2,600(7) * 11,558(7) *
Graham V. Sherren............................................ 2,500(7) * 11,113(7) *
Bruce A. Barnet.............................................. 4,100(6) * 18,226(6) *
Jay M. Green................................................. 110,900(8) 2.4 493,013(8) 1.8
Austin T. McNamara........................................... 15,400(9) * 68,461(9) *
A. Ross Wollen............................................... 43,368(10) * 192,795(10) *
Joseph C. Aird............................................... 10,584 * 47,052 *
All officers and directors as a group (14 persons)(11)....... 1,689,815 37.1 7,512,191 27.5
</TABLE>

- ------------------------

* Less than 1%

(1) This information reflects the definition of beneficial ownership adopted by
the Commission. Beneficial ownership shown reflects sole investment and
voting power, except as reflected in footnote 2. Where more than one person
shares investment and voting power in the same shares such shares may be
shown more than once. Such shares are reflected only once, however, in the
total for all directors and officers. Includes options exercisable within 60
days granted to directors pursuant to the Stock Option Plans for
Non-employee Directors and options exercisable within 60 days held by each
Named Executive Officer. Excluded are shares held by charitable foundations
and trusts of which members of the Cullman and Ernst Group are officers and
directors. As of December 20, 1996, a group consisting of Messrs. Cullman,
direct members of their families and trusts for their benefit, Mr. Ernst,
his sister and direct members of their families and trusts for their
benefit, a partnership in which members of the Cullman and Ernst families
hold substantial direct and indirect interests and charitable foundations
and trusts of which members of the Cullman and Ernst families are directors
or trustees, owned an aggregate of approximately 2,237,147 shares of
Culbro's common stock (approximately 50% of the outstanding shares of Culbro
Common Stock). Among others, Messrs. Cullman and Mr. Ernst hold investment
and voting power or shared investment and voting power over such shares.
Certain of such shares are pledged as security for loans payable under
standard pledge arrangements. A form filed with the Commission on behalf of
the Cullman & Ernst Group states that there is no formal

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agreement governing the group's holding and voting of such shares but that
there is an informal understanding that the persons and entities included in
the group will hold and vote together the shares owned by each of them in
each case subject to any applicable fiduciary responsibilities. Louise B.
Cullman is the wife of Edgar M. Cullman. Susan R. Cullman and Lucy C.
Danziger are the daughters of Edgar M. Cullman and Louise B. Cullman.

(2) Included within the Culbro shares shown as beneficially owned by Edgar M.
Cullman are 863,576 shares in which he holds shared investment and/or voting
power; included within the shares shown as beneficially owned by Mr. Ernst
are 411,321 shares in which he holds shared investment and/or voting power;
and included within the shares shown as beneficially owned by Edgar M.
Cullman, Jr. are 751,490 shares in which he holds shared investment and/or
voting power. Included within the shares shown as beneficially owned by
Louise B. Cullman are 730,937 shares in which she holds shared investment
and/or voting power; included within the shares shown as beneficially owned
by Susan R. Cullman are 690,042 shares in which she holds shared investment
and/or voting power; included within the shares shown as beneficially owned
by Lucy C. Danziger are 969,422 shares in which she holds shared investment
and/or voting power. Excluded in each case are shares held by charitable
foundations and trusts in which such persons or their families or trusts for
their benefit are officers and directors. Messrs. Cullman, Ernst and
Cullman, Jr. disclaim beneficial interest in all shares over which there is
shared investment and/or voting power and in all excluded shares.

(3) The address of each of Louise B. Cullman, Susan R. Cullman and Lucy C.
Danziger is c/o 641 Lexington Avenue, New York, New York.

(4) The address of B. Bros. Realty Limited Partnership is 641 Lexington Avenue,
New York, New York.

(5) The address of such person is Gabelli Funds, Inc., One Corporate Center,
Rye, New York, NY 10580. A form filed with the Commission in September 1991
by Gabelli Funds, Inc. as subsequently amended indicates that the securities
have been acquired by Gabelli Funds, Inc. and its wholly-owned subsidiaries
on behalf of their investment advisory clients. Culbro has been informed
that no individual client of Gabelli Funds, Inc. has ownership of more than
5% of outstanding Culbro Common Stock.

(6) 4,000 of such shares reflect options which, upon consummation of the Merger,
will be exercisable for 17,782 shares of Class A Common Stock.

(7) 2,000 of such shares reflect options which, upon consummation of the Merger,
will be exercisable for 8,891 shares of Class A Common Stock.

(8) 110,200 of such shares reflect options which, upon consummation of the
Merger, will be exercisable for 489,901 shares of Class A Common Stock.

(9) All of such shares reflect options which, upon consummation of the Merger,
will be exercisable for 68,461 shares of Class A Common Stock.

(10) 30,503 of such shares reflect options which, upon consummation of the
Merger, will be exercisable for 135,603 shares of Class A Common Stock.

(11) Excluding shares held by certain charitable foundations the officers and/or
directors of which include certain officers and directors of General Cigar.

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DESCRIPTION OF CAPITAL STOCK

General Cigar's authorized capital stock consists of 50,000,000 shares of
Class A Common Stock, 25,000,000 shares of Class B Common Stock and 20,000,000
shares of preferred stock, par value $0.01 per share (the "Preferred Stock"), of
which 20,248,242 shares of Class B Common Stock are outstanding. The following
summary description of the capital stock of General Cigar is qualified in its
entirety by reference to the form of Amended and Restated Certificate of
Incorporation of General Cigar (the "Amended Certificate") and By-Laws of
General Cigar (the "By-Laws"), a copy of each of which is filed as an exhibit to
the Registration Statement of which this Proxy Statement/Prospectus forms a
part.

CLASS A COMMON STOCK AND CLASS B COMMON STOCK

The Amended Certificate provides for two classes of common stock, Class A
Common Stock and Class B Common Stock, which are substantially identical, except
for disparity in voting power. See "Risk Factors--Control by Certain
Stockholders; Anti-Takeover Effects of Dual Classes of Stock; Other Anti-
Takeover Provisions."

Each share of Class A Common Stock entitles the holder of record to one vote
and each share of Class B Common Stock entitles the holder of record to ten
votes at each annual or special meeting of stockholders, in the case of any
written consent of stockholders, and for all other purposes. The holders of
Class A Common Stock and Class B Common Stock vote as a single class on all
matters submitted to a vote of the stockholders, except as otherwise provided by
law. Neither the holders of Class A Common Stock nor the holders of Class B
Common Stock have cumulative voting or preemptive rights. General Cigar, as a
condition to counting the votes cast by any holder of Class B Common Stock at
any annual or special meeting of stockholders, in the case of any written
consent of stockholders, or for any other purpose, may require the furnishing of
such affidavits or other proof as it may reasonably request to establish that
the Class B Common Stock held by such holder has not been converted, by virtue
of the provisions of the Amended Certificate, into Class A Common Stock.

The holders of the Class A Common Stock and Class B Common Stock are
entitled to receive dividends and other distributions as may be declared thereon
by the Board of Directors of General Cigar out of assets or funds of General
Cigar legally available therefor, subject to the rights of the holders of any
series of Preferred Stock and any other provision of the Amended Certificate.
The Amended Certificate provides that if at any time a dividend or other
distribution in cash or other property is paid on Class A Common Stock or Class
B Common Stock, a like dividend or other distribution in cash or other property
also will be paid on Class B Common Stock or Class A Common Stock, as the case
may be, in an equal amount, except that voting securities paid on the Class B
Common Stock may have ten times the number of votes per share as voting
securities paid on the Class A Common Stock. In the case of any split,
subdivision, combination or reclassification of Class A Common Stock or Class B
Common Stock, the shares of Class A Common Stock or Class B Common Stock, as the
case may be, also will be split, subdivided, combined or reclassified so that
the number of shares of Class A Common Stock and Class B Common Stock
outstanding immediately following such split, subdivision, combination or
reclassification will bear the same relationship to each other as that which
existed immediately prior thereto.

In the event of any liquidation, dissolution or winding up of General Cigar,
the holders of Class A Common Stock and the holders of Class B Common Stock are
entitled to receive the assets and funds of General Cigar available for
distribution after payments to creditors and to the holders of any Preferred
Stock of General Cigar that may at the time be outstanding, in proportion to the
number of shares held by them, respectively, without regard to class.

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shall consist in any part of voting securities (or of options or warrants to
purchase, or of securities convertible into or exchangeable for, voting
securities), the holders of Class B Common Stock may receive, on a per share
basis, voting securities with ten times the number of votes per share as those
voting securities to be received by the holders of Class A Common Stock (or
options or warrants to purchase, or securities convertible into or exchangeable
for, voting securities with ten times the number of votes per share as those
voting securities issuable upon exercise of the options or warrants to be
received by the holders of the Class A Common Stock, or into which the
convertible or exchangeable securities to be received by the holders of the
Class A Common Stock may be converted or exchanged).

The Amended Certificate provides that no person holding record or beneficial
ownership of shares of Class B Common Stock (a "Class B Holder") may transfer,
and General Cigar will not register the transfer of, such shares of Class B
Common Stock, except to a Permitted Transferee. For purposes of the foregoing,
the issuance of shares of Class B Common Stock to holders of Culbro Common Stock
as a result of the Merger will not be deemed to be a transfer. A transfer to a
Permitted Transferee generally means a transfer to an affiliate of the Class B
Holder, which may include transfers into estates, from trusts to their
beneficiaries and from owners into trusts. In certain circumstances set forth in
the Amended Certificate, the change in ownership or control of a record or
beneficial holder of Class B Common Stock will also result in the conversion of
such holder's Class B Common Stock into Class A Common Stock. Notwithstanding
the foregoing, any holder of Class B Common Stock may pledge shares of Class B
Common Stock as collateral for any indebtedness or other obligations without
triggering a conversion of such Class B Common Stock into Class A Common Stock.
The Amended Certificate also provides that General Cigar will not register the
transfer of any shares of Class B Common Stock unless the transferee and the
transferor of such Class B Common Stock have furnished such affidavits and other
proof as General Cigar reasonably may request to establish that such proposed
transferee is a Permitted Transferee. In addition, upon any purported transfer
of shares of Class B Common Stock not permitted under the Amended Certificate,
including as a result of a foreclosure upon shares of Class B Common Stock
subject to a pledge, all shares of Class B Common Stock purported to be so
transferred will be deemed to be converted into shares of Class A Common Stock,
and stock certificates formerly representing such shares of Class B Common Stock
will be deemed to represent such number of shares of Class A Common Stock as
equals the number of shares of Class A Common Stock into which such shares of
Class B Common Stock could be converted pursuant to the terms of the Amended
Certificate.

PREFERRED STOCK

The Board of Directors, without further stockholder authorization, is
authorized to issue, from time to time, Preferred Stock in one or more series,
to establish the number of shares to be included in any such series and to fix
the designations, powers, preferences and rights of the shares of each such
series and any qualifications, limitations or restrictions thereof, including
dividend rights and preferences over dividends on the Common Stock, conversion
rights, voting rights, redemption rights, the terms of any sinking fund therefor
and rights upon liquidation. The ability of the Board of Directors of General
Cigar to issue Preferred Stock, while providing flexibility in connection with
financing, acquisitions and other corporate purposes, could have the effect of
discouraging, deferring or preventing a change in control of General Cigar or an
unsolicited acquisition proposal, since the issuance of Preferred Stock could be
used to dilute the share ownership of a person or entity seeking to obtain
control of General Cigar. In addition, because the Board of Directors of General
Cigar has the power to establish the preferences, powers and rights of the
shares of any such series of Preferred Stock, it may afford the holders of any
Preferred Stock preferences, powers and rights (including voting rights) senior
to the rights of the holders of Common Stock, which could adversely affect the
rights of holders of Common Stock.

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SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW

Section 203 ("Section 203") of the General Corporation Law of the State of
Delaware (the "DGCL") provides, in general, that a stockholder acquiring more
than 15% of the outstanding voting stock of a corporation subject to Section 203
(an "Interested Stockholder") but less than 85% of such stock may not engage in
certain Business Combinations (as defined in Section 203) with the corporation
for a period of three years subsequent to the date on which the stockholder
became an Interested Stockholder unless (i) prior to such date the corporation's
board of directors approved either the Business Combination or the transaction
in which the stockholder became an Interested Stockholder or (ii) the Business
Combination is approved by the corporation's board of directors and authorized
by a vote of at least 66 2/3% of the outstanding voting stock of the corporation
not owned by the Interested Stockholder. The Amended Certificate contains a
provision electing not to be governed by Section 203.

LIMITATIONS ON DIRECTORS' LIABILITY

The Amended Certificate contains a provision which eliminates the personal
liability of a director to General Cigar and its stockholders for certain
breaches of his or her fiduciary duty of care as a director. This provision does
not, however, eliminate or limit the personal liability of a director (i) for
any breach of such director's duty of loyalty to General Cigar or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Delaware
statutory provisions making directors personally liable, under a negligence
standard, for unlawful dividends or unlawful stock repurchases or redemptions or
(iv) for any transaction from which the director derived an improper personal
benefit. This provision offers persons who serve on the Board of Directors of
General Cigar protection against awards of monetary damages resulting from
breaches of their duty of care (except as indicated above), including grossly
negligent business decisions made in connection with takeover proposals for
General Cigar. As a result of this provision, the ability of General Cigar or a
stockholder thereof to successfully prosecute an action against a director for a
breach of his duty of care has been limited. However, the provision does not
affect the availability of equitable remedies such as an injunction or recision
based upon a director's breach of his duty of care. The SEC has taken the
position that the provision will have no effect on claims arising under the
federal securities laws.

In addition, the Amended Certificate and By-Laws provide mandatory
indemnification rights, subject to limited exceptions, to any person who was or
is party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by reason of the fact that such person is
or was a director or officer of General Cigar, or is or was serving at the
request of General Cigar as a director or officer of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise.
Such indemnification rights include reimbursement for expenses incurred by such
person in advance of the final disposition of such proceeding in accordance with
the applicable provisions of the DGCL.

TRANSFER AGENT AND REGISTRAR

Chemical Mellon Shareholder Services, LLC is the transfer agent and
registrar for the Common Stock.

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DESCRIPTION OF THE CREDIT FACILITY

On January 21, 1997, General Cigar Co., Inc. entered into a Credit Agreement
with certain lenders and The Chase Manhattan Bank ("Chase"), as administrative
agent, which provides for credit facilities (collectively, the "Credit
Facility") comprised of a $60.0 million term loan and a revolving credit
facility aggregating $60.0 million.

Prior to the consummation of the Offering, borrowings under the Credit
Facility bore interest at a rate equal to 2.0% above the rate at which
eurodollar deposits for one, two, three or six months (at General Cigar's
option) are offered to Chase in the interbank eurodollar market (the "Eurodollar
Rate"), or 1.0% above the "ABR Rate," which is defined as the higher of (i) the
rate of interest publicly announced by Chase as its prime rate in effect at its
principal office in New York City (the "Prime Rate") and (ii) the federal funds
effective rate from time to time plus 0.5%. Currently, the rate is the ABR Rate
or 0.75% above the Eurodollar Rate. As a result of the use of proceeds from the
Offering to reduce borrowings under the Credit Facility the $60.0 million term
loan has been retired and the commitment under the revolving credit facility has
been reduced to $50.0 million. Approximately $3.0 million was outstanding under
the revolving credit facility on April 16, 1997.

The Credit Facility includes financial and ratio covenants, including fixed
charge coverage, current ratio and tangible net worth and maximum leverage
tests. The Credit Facility also includes negative covenants including
limitations on indebtedness, liens, guarantee obligations, mergers,
consolidations, liquidations and dissolutions, sales of assets, leases,
dividends and other payments in respect of capital stock, capital expenditures,
investments, loans and advances, optional payments and modifications of
subordinated and other debt instruments, transactions with affiliates, sale and
leasebacks, changes in fiscal year, negative pledge clauses and changes in lines
of business.

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CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following discussion is a general summary of the material United States
Federal income tax consequences of the Merger. This discussion is based upon the
Code, regulations, proposed or promulgated thereunder, judicial precedent
relating thereto, and current rulings and administrative practice of the
Service, in each case as in effect as of the date hereof and all of which are
subject to change at any time, possibly with retroactive effect. It is assumed
that shares of Culbro Common Stock are held as "capital assets" within the
meaning of Section 1221 of the Code. This discussion does not address all
aspects of Federal income taxation that might be relevant to particular holders
of Culbro Common Stock in light of their status or personal investment
circumstances; nor does it discuss the consequences to such holders who are
subject to special treatment under the Federal income tax laws, such as foreign
persons, dealers in securities, regulated investment companies, life insurance
companies, other financial institutions, tax-exempt organizations, pass-through
entities, or taxpayers who hold Culbro Common Stock as part of a "straddle,"
"hedge" or "conversion transaction" or who have a "functional currency" other
than the United States dollar. In addition, this discussion does not address the
tax consequences to holders of options under the Culbro stock option plans.

HOLDERS OF CULBRO COMMON STOCK SHOULD CONSULT THEIR TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING THE APPLICABILITY
AND EFFECT OF ANY FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS.

TAX CONSEQUENCES OF THE MERGER

The Merger is intended to qualify as a reorganization under Section 368(a)
of the Code. Assuming that the Merger and related transactions will take place
as described elsewhere in this Proxy Statement/ Prospectus, at the closing,
Latham & Watkins will deliver its opinion to the effect that, for Federal income
tax purposes (i) the Merger will be treated as a reorganization within the
meaning of Section 368(a) of the Code, (ii) no gain or loss will be recognized
by Culbro or General Cigar as a result of the Merger and (iii) no gain or loss
will be recognized by a holder of Culbro Common Stock as a result of the Merger
except with respect to cash received by such holder in lieu of any fractional
share interest in Class B Common Stock.

Assuming the Merger is treated as a reorganization within the meaning of
Section 368(a) of the Code, no gain or loss will be recognized for Federal
income tax purposes by Culbro or General Cigar as a result of the Merger. Except
as described below with respect to cash received in lieu of any fractional share
interest in Class B Common Stock, a holder of Culbro Common Stock will not
recognize gain or loss on the conversion of shares of Culbro Common Stock into
shares of Class B Common Stock pursuant to the Merger. The aggregate tax basis
of the Class B Common Stock received by such holder will be the same as the
aggregate tax basis of the Culbro Common Stock surrendered therefor (reduced by
the amount of such tax basis allocable to fractional shares for which cash is
received). The holding period of the Class B Common Stock will include the
holding period of the Culbro Common Stock surrendered therefor.

CASH IN LIEU OF A FRACTIONAL SHARE. Cash received by a holder of Culbro
Common Stock in lieu of a fractional share interest in Class B Common Stock will
be treated as received in exchange for such fractional share interest, and gain
or loss will be recognized for Federal income tax purposes in an amount equal to
the difference between the amount of cash received and the portion of the basis
of the Culbro Common Stock allocable to such fractional share interest. Such
gain or loss will be capital gain or loss and will be long-term capital gain or
loss if such share of Culbro Common Stock has been held for more than one year
at the Effective Time.

BACKUP WITHHOLDING. Under the Code, a holder of Culbro Common Stock may be
subject, under certain circumstances, to backup withholding at a 31% rate with
respect to the amount of cash, if any, received in lieu of a fractional share
pursuant to the Merger unless such holder provides proof of an

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applicable exemption or a correct taxpayer identification number, and otherwise
complies with applicable requirements of the backup withholding rules. Any
amounts withheld under the backup withholding rules are not an additional tax
and may be refunded or credited against the holder's Federal income tax
liability, provided the required information is furnished to the Service.

COMPARISON OF STOCKHOLDER RIGHTS

The following is a summary of certain of the material differences between
the rights of holders of Culbro Common Stock and the rights of holders of Class
B Common Stock. As Culbro is organized under the laws of New York and General
Cigar is organized under the laws of Delaware, some of these differences arise
from differences between various provisions of the corporate laws of those
states. Others arise from differences in the provisions of the respective
certificates of incorporation and by-laws of Culbro and General Cigar.

DUAL CLASSES OF STOCK

Holders of Culbro Common Stock will receive shares of Class B Common Stock
of General Cigar as a result of the Merger. Each share of Class B Common Stock
is entitled to ten votes on all matters submitted to holders of Common Stock for
approval (as compared to one vote per share of Class A Common Stock). Upon
consummation of the Merger, the outstanding Class B Common Stock will comprise
approximately 37% of the issued and outstanding Common Stock, but will have
approximately 48% of the voting power, in the aggregate, of the outstanding
Common Stock. See "Description of Capital Stock."

AMENDMENTS TO CERTIFICATE OF INCORPORATION

Under New York law, except for certain specified matters, an amendment or
change to the Culbro Certificate of Incorporation (the "Culbro Certificate of
Incorporation") must be authorized by a vote of the Culbro Board of Directors,
followed by a vote of the holders of a majority of all outstanding shares
entitled to vote thereon at a meeting of shareholders.

Under Delaware Law, amendments to General Cigar's Amended Certificate
require the approval of stockholders holding a majority of the outstanding
shares entitled to vote on such amendment and a majority of the outstanding
stock of such class entitled to vote on such amendment as a class, unless a
greater proportion is specified in the certificate of incorporation or by the
provisions of the DGCL.

AMENDMENTS TO BY-LAWS

Under New York law, by-laws may be adopted, amended or repealed by a
majority vote of all shareholders entitled to vote in the election of directors.
When provided by the certificate of incorporation or a by-law adopted by the
shareholders, as is the case with Culbro, the board of directors may also adopt,
amend or repeal by-laws. Any by-law adopted by the board of directors without
shareholder approval may be amended or repealed by a majority of votes cast at a
meeting of shareholders.

Delaware law provides that after a corporation has received any payment for
its stock, the power to adopt, amend or repeal by-laws resides with the
stockholders entitled to vote. A corporation may, however, grant to its board of
directors in its certificate of incorporation concurrent power to adopt, amend
or repeal by-laws. General Cigar's Amended Certificate expressly authorizes the
General Cigar Board of Directors to make, alter or repeal the General Cigar
By-Laws.

DIRECTORS

Under New York law, a corporation's board of directors must consist of at
least three directors, unless the shares of the corporation are beneficially
owned by less than three shareholders, in which case the number of directors
shall not be less than the number of shareholders. Under the Culbro by-laws (the

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"Culbro By-laws"), the number of directors constituting the Culbro Board of
Directors is determined by the Culbro Board of Directors, but may not be less
than three nor more than 17.

Under Delaware law, a corporation's board of directors must consist of one
or more members, with the number fixed by the corporation's by-laws or the
certificate of incorporation. Under the General Cigar By-Laws, the Board of
Directors may have one or more members, the number to be fixed from time to time
by resolution of the Board of Directors.

Under New York law, directors, when taking action, including action which
may relate to a change in control of the corporation, are entitled to consider
both the long-term and the short-term interests of the corporation and its
shareholders and the effects that any such actions may have in the short-term or
the long-term on the corporation's prospects, current employees, customers and
creditors. Delaware has no comparable statutory provision.

REMOVAL OF DIRECTORS

Under New York law, any or all directors may be removed for cause by vote of
the shareholders. A director may be removed without cause by shareholder vote
only if the certificate of incorporation or the by-laws so provide. The Culbro
By-Laws provide that directors may be removed for cause only by the affirmative
vote of a majority of the entire Board of Directors, and any or all of the
Directors may be removed, with or without cause, by vote of the shareholders,
except as may be otherwise expressly provided by law.

Delaware law allows any director or the entire board of directors to be
removed, with or without cause, by the vote of the holders of a majority of the
shares entitled to vote.

NEWLY CREATED DIRECTORSHIPS AND VACANCIES

Under New York law, newly created directorships resulting from an increase
in the number of directors and vacancies occurring for any reason, other than
the removal of a director without cause, may be filled by vote of the board of
directors. If the number of directors then in office is less than a quorum, any
vacancies may be filled by vote of a majority of the directors then in office.
Unless a provision of the certificate of incorporation or a by-law adopted by
the shareholders provides otherwise, vacancies occurring in the board of
directors through removal of directors without cause must be filled by a vote of
shareholders. The Culbro By-Laws provide that newly created directorships or
vacancies resulting from any cause may be filled only by a majority of the
Culbro Board of Directors then in office, regardless of whether less than a
quorum exists. Pursuant to New York law, any director elected by the vote of the
Culbro Board of Directors is not assigned to a particular class and will serve
only until the next annual meeting of shareholders.

Delaware law provides that, unless otherwise provided in the certificate of
incorporation or by-laws, vacancies, including those due to removal without
cause and newly created directorships, may be filled by majority vote of the
directors then in office, even if the number of directors then in office is less
than a quorum. In addition, if, at the time of filling any vacancy or newly
created directorship, the directors then in office constitute less than a
majority of the whole board, the Delaware Court of Chancery may, upon
application of stockholders holding at least 10% of the shares outstanding at
the time and entitled to vote, summarily order an election to be held to fill
any such vacancies or newly created directorships, or to replace the directors
chosen by the directors then in office. Such elections are to be conducted in
accordance with the procedures provided by Delaware law for holding stockholder
meetings.

VOTE REQUIRED FOR CERTAIN TRANSACTIONS

New York law generally requires the authorization of a corporation's board
of directors and the affirmative vote of two-thirds of a corporation's
outstanding shares entitled to vote in order to effect a

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merger, a consolidation, a share exchange or the sale, lease, or other
disposition of all or substantially all of a corporation's assets. Delaware law
requires approval of the board of directors and the affirmative vote of a
majority of the outstanding stock entitled to vote thereon to authorize any such
action, except that, unless required by its certificate of incorporation, no
stockholder vote is required of a corporation surviving a merger if (i) such
corporation's certificate of incorporation is not amended by the merger, (ii)
each share of stock of such corporation will be an identical share of the
surviving corporation after the merger and (iii) either no shares are to be
issued by the surviving corporation or the number of shares to be issued in the
merger does not exceed 20% of such corporation's outstanding common stock
immediately prior to the effective date of the merger. Both New York and
Delaware law contain provisions allowing mergers and consolidations of domestic
with foreign corporations, so long as the other jurisdiction allows such a
combination and the domestic corporation follows the procedures applicable to
it.

Under New York law, a shareholder vote is required for a corporation to
redeem more than 10% of its stock from shareholders at a price above the market
price. Delaware does not have a comparable statutory provision.

BUSINESS COMBINATIONS

New York law regulates tender offers for the equity shares of New York
corporations having principal offices or significant business operations within
New York. The Security Takeover Disclosure Act (the "Takeover Act") applies to
offers with respect to which, after acquisition of the shares, the offeror would
be the owner of more than five percent of the target company's equity
securities. In such cases, no tender offer may be made unless the offeror files
with the New York attorney general at his New York City office a registration
statement containing information required by certain sections of the Takeover
Act. The Takeover Act also regulates tender offers not subject to the
requirements of Section 14(d) of the Exchange Act and sets forth, among other
things, the period of time within which shares may be deposited and withdrawn
pursuant to a takeover bid, the requirement that shares be purchased on a pro
rata basis and the requirement that when an offeror increases the consideration
offered in a takeover bid, the offeror must pay such increased consideration
with respect to all shares accepted. Delaware law does not contain any
comparable provision.

New York law also provides that a "resident domestic corporation" may not
engage in any business combination with any "interested shareholder" (defined as
the beneficial owner of 20% or more of a corporation's voting stock) for a
five-year period after the interested shareholder attains such status unless the
board of directors had approved either the business combination or the
transaction resulting in interested shareholder status prior to the date on
which the interested shareholder became a 20% holder. Resident domestic
corporations are those organized under New York law that meet various criteria
regarding the loci of offices, employees, or share ownership. After five years,
no resident domestic corporation may engage in a business combination with an
interested shareholder other than (i) a business combination or transaction that
had been approved by the board prior to the date the person became an interested
shareholder, (ii) a business combination approved by the affirmative vote of the
holders of a majority of the voting stock not beneficially owned by that
interested shareholder at a meeting called for such purpose or (iii) the
aggregate amount of cash and the market value, as of the consummation date, of
consideration to be received per share by holders of outstanding shares of
common stock in the business combination is at least equal to a certain "fair
price" as determined by various criteria set forth in the statute, subject to
certain exceptions. These provisions do not apply at all to certain corporations
or transactions. Among such exceptions is one for corporations who elect in
their certificates of incorporation not to be governed by these provisions.
Culbro has not presently made such an election. An amendment to the Culbro
Certificate of Incorporation would not be effective until eighteen months
following its adoption by majority vote of the shares of non-interested
shareholders and would not apply to those who were already interested
shareholders.

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Delaware law prevents an "interested stockholder" (defined as a holder who
acquires 15% or more of a target company's stock) from entering into a business
combination within three years after the date it acquires such stock. These
provisions are subject to certain exceptions, including exceptions which allow
corporations, in certain instances, to adopt certificates of incorporation or
by-laws that elect not to be governed by these provisions. General Cigar has
elected, in its Amended Certificate, not to be governed by these provisions.

APPRAISAL RIGHTS

Under New York and Delaware law, holders of shares have the right, in
certain circumstances, to dissent from certain corporate reorganizations by
demanding payment in cash for their shares equal to the fair value (excluding
any appreciation or depreciation as a consequence or in expectation of the
transaction) of such shares, as determined by agreement with the corporation or
by an independent appraiser appointed by a court in an action timely brought by
the corporation or the dissenters.

New York law affords dissenters' rights of appraisal upon certain mergers,
consolidations, sales and other dispositions of assets requiring shareholder
approval and share exchanges. Delaware law grants dissenters' appraisal rights
only in the case of certain mergers and not in the case of a sale or transfer of
assets or a purchase of assets for stock regardless of the number of shares
being issued. Delaware law does not grant appraisal rights in a merger to
holders of shares listed on a national securities exchange or held of record by
more than 2,000 stockholders unless the plan of merger converts such shares into
anything other than stock of the surviving corporation or stock of another
corporation which is either listed on a national securities exchange or held of
record by more than 2,000 stockholders (or cash in lieu of fractional shares or
some combination of the above). New York has no exceptions to such rights
comparable to those afforded by Delaware law.

The availability of appraisal rights to shareholders of Culbro who dissent
from the Merger is discussed under "The Merger--Appraisal Rights."

LIMITATION ON DIRECTORS' LIABILITY

Under New York law, a corporation's certificate of incorporation may contain
a provision limiting or eliminating the personal liability of directors to the
corporation or its shareholders for damages for breaches of duty in such
capacity. No such provision may eliminate or limit liability if a judgment or
other final adjudication establishes that the director's acts or omissions (i)
were in bad faith, (ii) involved intentional misconduct or a knowing violation
of law, (iii) involved financial profit or some other advantage to which the
director was not legally entitled or (iv) resulted in violation of a statute
prohibiting certain dividend declarations, certain payments to stockholders
after dissolution, and particular types of loans. In addition, no such provision
may eliminate or limit the liability of a director for acts occurring prior to
adoption of the limitation of liability. The Culbro Articles of Incorporation
contain a provision limiting the liability of the directors except to the extent
that such exemption from liability is not permitted under New York law.

Delaware law allows a corporation to limit or eliminate the personal
liability of directors to the corporation and its stockholders for monetary
damages for breaches of a director's fiduciary duty as a director. However, such
a limitation does not affect the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for intentional or negligent payment of unlawful
dividends or stock redemptions or (iv) for any transaction from which the
director derived an improper personal benefit. Additionally, the corporation may
not limit or eliminate liability for acts or omissions occurring prior to the
effective date of such a provision in the corporate certificate of
incorporation. General Cigar's Amended Certificate limits the liability of
General Cigar's directors to the fullest extent permitted by Delaware law.

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INDEMNIFICATION

Both New York and Delaware law contain provisions setting forth conditions
under which a corporation may indemnify its directors and officers. These
provisions are generally referred to as "statutory indemnification" provisions.
Both also permit corporations to adopt by-laws that provide for additional
indemnification of directors and officers. These non-exclusive provisions are
generally referred to as "non-statutory indemnification" provisions.
Non-statutory indemnification provisions are generally adopted to expand the
circumstances and liberalize the conditions under which indemnification will
occur. New York law contains specific restrictions on the kind of matters for
which non-statutory indemnification will be permitted; Delaware law does not
contain any specific restrictions.

The Culbro By-Laws require it to indemnify to the maximum extent permissible
under New York law its officers and directors for liability arising out of their
actions in such capacity. No indemnification is provided to a director or
officer who is finally adjudicated (i) to have committed acts in bad faith or
resulting from active and deliberate dishonesty, that, in either case, were
material to the cause of action adjudicated or (ii) to have personally gained a
financial profit or other advantage to which such director was not legally
entitled.

The General Cigar By-laws require it to indemnify to the maximum extent
permissible under Delaware law its officers and directors for liability arising
out of their actions in such capacity.

LOANS TO DIRECTORS AND OFFICERS

Under New York law, a corporation may make a loan to a director only after
authorization by the affirmative vote of shares other than those of the
director-borrower. Under Delaware law, a corporation may make loans to,
guarantee the obligations of, or otherwise assist, its officers or other
employees and those of its subsidiaries, including any officer or employee who
is a director of a corporation or any of its subsidiaries, when such action, in
the judgment of the corporation's directors, may reasonably be expected to
benefit the corporation.

SPECIAL MEETINGS

Under New York and Delaware law, special meetings of stockholders may be
called by the board of directors and by such other person or persons authorized
to do so by the corporation's certificate of incorporation or by-laws. In
addition, New York law provides that if, for a period of one month after the
date fixed by or under the by-laws for the annual meeting of shareholders, or if
no date has been fixed for a period of 13 months after the last annual meeting,
there is a failure to elect a sufficient number of directors to conduct the
business of the corporation, the board of directors may call a special meeting
for the election of directors. If the board fails to do so within 14 days of
expiration of that period of time, holders of 10% of the shares entitled to vote
in an election of directors may demand the call of a special meeting for the
election of directors. Under Delaware law, if an annual meeting is not held
within 30 days of the date designated for such a meeting, or is not held for a
period of 13 months after the last annual meeting, the Delaware Court of
Chancery may summarily order a meeting to be held upon the application of any
stockholder or director. In both New York and Delaware, the number of shares
represented at such meeting constitutes a quorum without regard to other
provisions of law.

The Culbro By-laws provide that a special meeting of shareholders may be
called only by the Board of Directors, the Chairman of the Board or the
President, and shall be called upon the written request of two or more Directors
or the written consent of the shareholders as authorized under NYBCL Section
603.

The General Cigar By-laws provide that special meetings of stockholders may
be called at any time by the Chairman of the Board, the President, the Board of
Directors or by the holders of a majority of the outstanding shares of stock
entitled to vote at such meetings.

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STOCKHOLDER ACTION

Under New York and Delaware law, unless the certificate of incorporation
provides otherwise, stockholder action is generally by majority vote, except
under New York law, directors are elected by a plurality vote.

STOCKHOLDER ACTION BY WRITTEN CONSENT

Under New York law, any shareholder action required or permitted to be taken
by shareholder vote may be taken with the unanimous written consent of
shareholders. The certificate of incorporation may provide, to the extent it is
not inconsistent with New York law, that such stockholder action may be taken
upon the written consent of less than all outstanding shares. The Culbro
Certificate of Incorporation does not provide for written consent by less than
all of the stockholders.

Unless a certificate of incorporation provides otherwise, Delaware law
allows any action required to be taken, or which may be taken, at an annual or
special meeting of stockholders to be taken without prior notice and without a
vote so long as the written consent of not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted is delivered to the
corporation.

PAYMENT OF DIVIDENDS

Under both New York and Delaware law, a corporation may generally pay
dividends out of surplus. New York requires a board of directors to make certain
disclosures when paying dividends out of any account other than earned surplus.
Delaware law also permits a corporation to pay dividends, if there is no
surplus, out of net profits for the fiscal year in which the dividend is
declared and/or for the preceding fiscal year. Dividends out of net profits may
not be paid when the capital of the corporation amounts to less than the
aggregate amount of capital represented by the issued and outstanding stock of
all classes having a preference upon the distribution of assets.

RIGHTS OR OPTIONS

New York law requires the approval of the holders of a majority of the
outstanding shares entitled to vote for a plan to issue or the issuance of any
rights or options to directors, officers and employees as an incentive to
service or continued service with the corporation, a subsidiary or affiliate.
Such approval is not required for the issuance of any rights or options of a
corporation in substitution for rights or options issued by another corporation,
in connection with such other corporation's merger or consolidation with, or the
acquisition of its shares or all or part of its assets by, the corporation or
its subsidiary. Under Delaware law, rights or options to purchase shares of any
class of stock may be authorized by a corporation's board of directors. However,
various other legal requirements would generally make stockholder approval of
stock option plans or warrants desirable.

In addition, under both New York and Delaware law, a corporation may create
and issue rights or options entitling the holders thereof to purchase from the
corporation any shares of its capital stock on terms and conditions set by its
board of directors. New York law specifically permits a "resident domestic
corporation" to restrict the exercise, or transfer of any rights or options by a
beneficial owner of 20% or more of its outstanding voting stock. Delaware does
not have a comparable statutory provision but Delaware courts have upheld rights
or options which contain similar limitations.

However, General Cigar will remain subject to the rules of the NYSE which
require shareholder approval of the option plans in certain instances. Except
where the establishment of a stock option plan involves the issuance of 1% of
the number of shares of common stock or 1% of the voting power outstanding, the
NYSE requires that adoption of a stock option plan be approved by the
shareholders. The NYSE does not require shareholder approval of a plan to issue
warrants or rights generally to security

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holders of a company or broadly based plans or arrangements including employees
who are not officers or directors or in a case where the stock options are to be
issued as an inducement essential to an individual's entering into an employment
contract with the company.

PREEMPTIVE RIGHTS

Under New York law, unless a certificate of incorporation provides
otherwise, shareholders have certain preemptive rights. In general, these rights
allow shareholders whose unlimited dividend rights or voting rights would be
adversely affected by the issuance of new stock to purchase, on terms and
conditions set by the board of directors, that proportion of the new issue that
would preserve the relative dividend or voting rights of such shareholders.

Delaware law states that, absent a provision in a corporation's certificate
of incorporation, a stockholder does not possess preemptive rights unless such
rights arose prior to July 3, 1967 and were not terminated subsequently by
appropriate action. The General Cigar Certificate of Incorporation does not
contain a provision granting preemptive rights.

The foregoing summary does not purport to be a complete statement of the
rights of holders of Common Stock and General Cigar Shares under, and is
qualified in its entirety by reference to, New York law and Delaware law,
respectively, and the Culbro Certificate of Incorporation and By-Laws and
General Cigar's Amended Certificate and By-Laws.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for
General Cigar by Latham & Watkins, New York, New York. Frederick M. Danziger, Of
Counsel to Latham & Watkins, is a Director and shareholder of Culbro and a
member of the Cullman & Ernst Group. See "Certain Relationships and Related
Transactions."

EXPERTS

The Combined Financial Statements of General Cigar Holdings, Inc. as of
December 2, 1995 and November 30, 1996 and for each of the fiscal years ended
December 3, 1994, December 2, 1995 and November 30, 1996 included in this
Prospectus have been so included in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.

The Consolidated Financial Statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K/A of Culbro Corporation for the year
ended November 30, 1996 have been so incorporated in reliance on the report of
Price Waterhouse LLP, independent accountants, given on authority of said firm
as experts in auditing and accounting.

The Combined Financial Statements of Griffin Land & Nurseries, Inc. as of
December 2, 1995 and November 30, 1996 and for each of the fiscal years ended
December 3, 1994, December 2, 1995 and November 30, 1996 included in Annex II
hereof have been so included in reliance on the report of Price Waterhouse LLP,
independent accountants, given on authority of said firm as experts in auditing
and accounting.

The Financial Statements of Villazon & Company, Inc. as of December 31, 1995
and 1996 and for each of the years ended December 31, 1994 and 1995 and 1996
included in this Prospectus have been so included in reliance on the report of
Price Waterhouse LLP, independent certified public accountants, given on the
authority of said firm as experts in auditing and accounting.

The Financial Statements of Honduras American Tabaco, S.A. de C.V. as of
December 31, 1995 and 1996, and for each of the years ended December 31, 1994
and 1995 and 1996 included in this Prospectus have been so included in reliance
on the report of Price Waterhouse, independent accountants, given on the
authority of said firm as experts in auditing and accounting.

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ELECTION OF CULBRO BOARD OF DIRECTORS

At the 1997 Annual Meeting of Shareholders, 10 directors (which will
comprise the entire Board) are to be elected. The Board of Directors proposes
the nominees listed below for election as directors to serve until the 1998
Annual Meeting of Shareholders and until their successors are duly elected and
qualified. All of the nominees have served as directors since the last Annual
Meeting. Frederick M. Danziger is not standing for re-election to the Board of
Directors of Culbro due to the fact that he has become the President, Chief
Executive Officer and a director of Griffin in connection with the Distribution.
Separation of the two companies following the Distribution is considered to be
important. The directors must be elected by a plurality of the votes cast in
person or by proxy by shareholders entitled to vote at the meeting. If for any
reason any nominee or nominees become unavailable for election, the proxy
holders will vote for such substitute nominee or nominees as may be designated
by the Board of Directors.

INFORMATION CONCERNING DIRECTORS

The nominees and current Directors of Culbro are also the current directors
of General Cigar. Certain information concerning the Directors appears in the
"Management-Directors and Executive Officers" section of this Proxy
Statement/Prospectus.

The Board of Directors held nine meetings during 1996. Culbro has the
following Committees of the Board of Directors: (i) Audit (members include
Messrs. Barnet, Bernbach, Israel, Lufkin and Vincent, Jr.); (ii) Compensation
(members include Messrs. Barnet, Ernst, Lufkin, Solomon and Vincent, Jr.); (iii)
Executive (members include Messrs. Cullman, Cullman, Jr., Danziger, Ernst and
Lufkin); (iv) Finance (members include Messrs. Cullman, Cullman, Jr., Danziger,
Lufkin and Solomon); (v) Nominating (members include Messrs. Cullman, Ernst and
Lufkin); and (vi) Strategic Planning (members include Messrs. Barnet, Bernbach,
Cullman, Jr., Israel, Sherren and Vincent, Jr.). Directors as a whole attended
approximately 92% of the aggregate of all Board and Committee meetings (of
Committees of which they were members).

Members of the Board of Directors who are not employees of Culbro received
$20,000 per year and $900 for each Board and Committee meeting attended in 1996.
Committee chairmen received $1300 for each Committee meeting attended, except
for the chairmen of the Audit and Compensation Committees who received $1600.
Reduced amounts were paid if more than one meeting was held on any day. Non-
employee Directors who are not members of the Cullman & Ernst Group (See
"Principal Stockholders") participate in Culbro's stock option plans for
non-employee Directors.

The Audit Committee, whose Chairman is Mr. Israel, reviews audit reports and
the scope of audit by both Culbro's internal audit staff and its independent
accountants and related matters pertaining to the preparation and examination of
Culbro's financial statements. From time to time such Committee makes
recommendations to the Board of Directors with respect to the foregoing matters
as well as with respect to the appointment of Culbro's independent accountants.
The Audit Committee held three meetings in 1996 and recommended to the Board of
Directors the selection of Price Waterhouse LLP (See "Selection of Independent
Accountants").

The Nominating Committee, whose Chairman is Mr. Ernst, recommended to the
Board of Directors the election of the director-nominees proposed in this Proxy
Statement/Prospectus for election by the shareholders. The Nominating Committee
reviews incumbent directors and the qualifications of candidates suggested from
all sources, including Board members, management and shareholders. Shareholders
desiring to recommend candidates for election as directors at Culbro's 1998
Annual Meeting of Shareholders should submit names and appropriate biographical
information to the Secretary of Culbro before November 1, 1997. If the
anticipated Merger of Culbro into General Cigar takes place in 1997 there will
be no Culbro 1998 Annual Meeting of Shareholders.

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For information about the Compensation Committee, see Compensation Committee
Report on Executive Compensation--Interlocks and Insider Participation.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION -

INTERLOCKS AND INSIDER PARTICIPATION

The Culbro Compensation Committee, whose Chairman is Mr. Ernst, supervises
management compensation and employee benefits and administers Culbro's pension,
stock option, savings, health, incentive compensation and other employee benefit
plans. It held four meetings in 1996.

CULBRO COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

GENERAL

Pursuant to Article III, Section 11 of Culbro's By-Laws, the Culbro
Compensation Committee annually recommends "to the Board compensation for
officers and principal employees and agents, and its recommendations for their
participation in any compensation or other plan for the benefit of employees...
and shall administer all such plans...." It has been the practice of the Culbro
Compensation Committee to review, consider and approve the recommendations of
management as to all compensation paid by Culbro and its subsidiaries exceeding
$75,000 per annum.

Edgar M. Cullman, the Chairman of the Board, and Edgar M. Cullman, Jr., the
chief executive officer and president, are both members of the Cullman & Ernst
Group which owns approximately 50.1% of outstanding Culbro Common Stock (see
"Principal Stockholders"). In recent years they have declined to participate in
Culbro's Stock Option Plans and Edgar M. Cullman, also does not participate in
the Annual Plan or the Long Term Performance Plan. However, Edgar M. Cullman,
Jr. was a participant in the 1996 Stock Plan and was granted an option to
purchase 100,000 shares of Culbro Common Stock.

POLICIES

The Culbro Compensation Committee intends that stock options and cash
performance awards serve as a significant part of executives' (other than the
chief executive) total compensation package, and thus they are granted and
awarded in consideration of present and anticipated performance as well as past
performance. Moreover, the stock options and cash performance awards are
intended to offer the top executives significant long-term incentives to
increase their efforts on behalf of Culbro and its subsidiaries and to focus
managerial efforts on enhancing shareholder value. In March, 1996, the Board of
Directors approved the adoption by the Culbro Compensation Committee of a
guideline which requires that all employees and directors retain, during the
period of their employment or service, not less than 50% of the aggregate of all
(i) options granted, (ii) shares issued upon the exercise of options granted and
(iii) shares awarded, in 1996 and thereafter. As indicated above, the Culbro
Compensation Committee's compensation philosophy is to have long-term incentives
that pay more for superior performance and less if performance does not achieve
that level. The Culbro Compensation Committee, in making its determination with
respect to stock option and performance award grants and awards to the
individual senior executives, was guided by the percentage of the individual's
base salary that the estimated value of the stock options and cash performance
awards would comprise. In the case of Edgar M. Cullman, Jr. incentives are
achieved through potential payments of incentive compensation and the 1996 Stock
Plan.

SALARY AND CASH BONUSES

The chief executive officer's salary was increased 9% in 1996. Cash bonuses
were paid with respect to 1996 only pursuant to the Annual Incentive
Compensation Plan. See "Certain Employee Benefit Matters--Culbro Employee
Benefit Plans to be Assumed by General Cigar--Culbro Annual Incentive
Compensation Plan." The Culbro Compensation Committee does not believe it need
now adopt any policy with respect to the $1,000,000 deduction cap of Internal
Revenue Code Section 162(m) since no executive

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officer is expected to receive compensation in such year in excess of such
amount. Pursuant to his Employment Agreement, Mr. Green may not be permitted to
exercise such number of options in any year which would result in his total
compensation exceeding the $1,000,000. This provision was amended to permit such
exercise at the discretion of the Compensation Committee and without shareholder
approval.

ANNUAL INCENTIVE COMPENSATION

The Culbro Compensation Committee established and administers the Annual
Incentive Compensation Program which is designed to recognize and reward
meritorious performance during the previous fiscal year. Such compensation is
based upon predetermined percentages of each recipient's annual salary and
depends upon the achievement of specified financial and subjective goals. Edgar
M. Cullman does not participate in this Program. A total of $165,000 was payable
in 1997 with respect to fiscal year 1996 to the Culbro Officers.

COMPENSATION COMMITTEE

John L. Ernst, CHAIRMAN

Bruce A. Barnet

Dan W. Lufkin

Peter J. Solomon

Francis T. Vincent, Jr.

SECTION 162(M) SUBCOMMITTEE

Bruce A. Barnet

Dan W. Lufkin

Francis T. Vincent, Jr.

The Culbro Compensation Committee Report on Executive Compensation shall not
be deemed incorporated by reference by any general statement incorporating by
reference this proxy statement into any filing under the Securities Act of 1933
or the Securities Exchange Act of 1934, except to the extent that Culbro
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Mr. Cullman is chairman of Culbro and until April 11, 1996 was a member of
the Compensation Committee. Messrs. Cullman are members of the Board of
Bloomingdale Properties, Inc. of which Mr. Ernst, chairman of Culbro's
Compensation Committee, is Chairman and President. Mr. Cullman is Chairman of
the Compensation Committee of Centaur Communications Limited, of which Mr.
Sherren is chief executive officer. Mr. Sherren is a member of Culbro's Board
but does not serve on its Compensation Committee.

Real estate management and advisory services have been provided to Culbro by
an affiliate of Bloomingdale Properties, Inc., with which members of the Cullman
& Ernst Group are associated. A fee of

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approximately $200,000 was paid by Culbro in 1996 for management of Culbro's New
York office building and for other real estate advisory services. Mr. Ernst is
Chairman of Bloomingdale Properties, Inc.

STOCK PERFORMANCE GRAPH

The following graph compares the yearly percentage changes in the cumulative
total shareholder return (assuming the reinvestment of dividends) on Culbro
Common Stock with the cumulative total return of Standard & Poor's 500 Consumer
Goods Composite Index and the Russell 2000 Index from November 1991 to November
1996. It is assumed in the graph that the value of each investment was $100 at
November 1991.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
CULBRO RUSSELL 2000 INDEX S&P 500 CONSUMER GOODS INDEX
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 91.64 120.49 116.53
1993 95.75 141.83 115.15
1994 75.89 137.67 115.03
1995 280.00 175.62 151.13
1996 315.62 200.78 135.21
</TABLE>

Because Culbro during the years shown was composed of four diverse businesses,
no published industry or line of business index was appropriate. Nor could it
construct an accurate peer group. The Russell 2000 was selected because it is
comprised of similarly capitalized companies.

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SELECTION OF INDEPENDENT ACCOUNTANTS

The Board of Directors has selected the firm of Price Waterhouse LLP as
independent accountants to audit the financial statements of Culbro for the
fiscal year ending November 29, 1997. This selection was recommended by the
Audit Committee of the Board of Directors. Price Waterhouse LLP has been the
independent accountants for Culbro for many years. The fees of Price Waterhouse
LLP approximated $ for all services rendered to Culbro with respect to its
1996 fiscal year.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE SELECTION OF
PRICE WATERHOUSE LLP.

The submission of this proposal to a vote of shareholders is not legally
required. If this selection of Price Waterhouse LLP is not approved, the Board
of Directors will reconsider its selection. A vote of the majority of the shares
of common stock of Culbro represented (in person or by proxy) and voting at the
meeting, provided that at least a majority of such stock is represented at the
meeting, is required to adopt this proposal.

A representative of Price Waterhouse LLP is expected to be present at the
Annual Meeting and will be given an opportunity to make a statement if so
desired and to respond to appropriate questions.
------------------------

A copy of Culbro's Annual Report on Form 10-K is available without charge to
Culbro's shareholders. A written request should be sent to:

Culbro Corporation
387 Park Avenue South
New York, New York 10016-8899
Attention: Corporate Secretary

Dated: May , 1997

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INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
GENERAL CIGAR HOLDINGS, INC.--INTERIM FINANCIAL STATEMENTS
Consolidated Balance Sheet as of November 30, 1996 and March 1, 1997....................................... F-2
Consolidated Statement of Operations for the Thirteen Weeks Ended March 2, 1996 and
March 1, 1997............................................................................................ F-3
Consolidated Statement of Cash Flows for the Thirteen Weeks Ended March 2, 1996 and
March 1, 1997............................................................................................ F-4
Notes to Consolidated Financial Statements................................................................. F-5

GENERAL CIGAR HOLDINGS, INC.--ANNUAL FINANCIAL STATEMENTS
Report of Independent Accountants.......................................................................... F-11
Combined Balance Sheet as of December 2, 1995 and November 30, 1996........................................ F-12
Combined Statement of Operations for the Fiscal Years Ended December 3, 1994, December 2, 1995 and November
30, 1996................................................................................................. F-13
Combined Statement of Cash Flows for the Fiscal Years Ended December 3, 1994, December 2, 1995 and November
30, 1996................................................................................................. F-14
Notes to Combined Financial Statements..................................................................... F-15

VILLAZON & COMPANY, INC.
Report of Independent Certified Public Accountants......................................................... F-30
Statements of Income for the Years Ended December 31, 1994, 1995 and 1996.................................. F-31
Balance Sheets as of December 31, 1995 and 1996............................................................ F-32
Statements of Cash Flows for the Years Ended December 31, 1994, 1995 and 1996.............................. F-33
Statements of Changes in Stockholders' Equity for the Years Ended December 31, 1994, 1995 and 1996......... F-34
Notes to Financial Statements.............................................................................. F-35

HONDURAS AMERICAN TABACO, S.A. DE C.V.
Report of Independent Accountants.......................................................................... F-43
Balance Sheets as of December 31, 1995 and 1996............................................................ F-44
Statements of Operations and Retained Earnings for the Years Ended December 31, 1994, 1995 and 1996........ F-45
Statements of Cash Flows for the Years Ended December 31, 1994, 1995 and 1996.............................. F-46
Notes to Financial Statements.............................................................................. F-47
</TABLE>

F-1
<PAGE>
GENERAL CIGAR HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
NOVEMBER 30, MARCH 1,
1996 1997
------------ -----------
<S> <C> <C>
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents............................................................. $ 409 $ 6,061
Receivables, less allowance of $482 and $514.......................................... 31,295 32,086
Inventories........................................................................... 53,702 64,135
Other current assets.................................................................. 3,673 4,537
------------ -----------
Total current assets.................................................................. 89,079 106,819
Property and equipment, net........................................................... 52,507 57,790
Intangible assets, net................................................................ -- 70,617
Other assets.......................................................................... 3,456 5,381
------------ -----------
Total assets.......................................................................... $ 145,042 $ 240,607
------------ -----------
------------ -----------
LIABILITIES AND CULBRO INVESTMENT
CURRENT LIABILITIES
Accounts payable and accrued liabilities.............................................. $ 22,827 $ 21,257
Long-term debt due within one year.................................................... 1,131 75,499
Income taxes.......................................................................... -- 2,396
------------ -----------
Total current liabilities............................................................. 23,958 99,152
Long-term debt........................................................................ 11,079 66,551
Accrued retirement benefits........................................................... 12,525 15,760
Deferred income taxes................................................................. 1,057 6,770
Other noncurrent liabilities.......................................................... 2,704 4,610
------------ -----------
Total liabilities..................................................................... 51,323 192,843
Culbro Investment..................................................................... 93,719 47,764
------------ -----------
Total liabilities and Culbro Investment............................................... $ 145,042 $ 240,607
------------ -----------
------------ -----------
</TABLE>

See Notes to Consolidated Financial Statements.

F-2
<PAGE>
GENERAL CIGAR HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
13 WEEKS ENDED
----------------------------
<S> <C> <C>
MARCH 2, MARCH 1,
1996 1997
------------- -------------
Net sales and other revenue........................................................ $ 28,832 $ 49,798
Cost of goods sold................................................................. 16,242 27,515
------------- -------------
Gross profit....................................................................... 12,590 22,283
Selling, general and administrative expenses....................................... 8,586 14,428
------------- -------------
Operating profit................................................................... 4,004 7,855
Nonoperating income................................................................ 162 317
Interest expense................................................................... 262 1,274
------------- -------------
Income before income taxes......................................................... 3,904 6,898
Income tax provision............................................................... 1,509 2,621
------------- -------------
Net income......................................................................... $ 2,395 $ 4,277
------------- -------------
------------- -------------
Pro forma net income per common share.............................................. $ 0.08 $ 0.15
------------- -------------
------------- -------------
Pro forma weighted average common shares and equivalents outstanding............... 28,200,000 28,200,000
------------- -------------
------------- -------------
</TABLE>

See Notes to Consolidated Financial Statements.

F-3
<PAGE>
GENERAL CIGAR HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
13 WEEKS ENDED
-----------------------
<S> <C> <C>
MARCH 2, MARCH 1,
1996 1997
----------- ----------
OPERATING ACTIVITIES:
Net income................................................................................. $ 2,395 $ 4,277
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization............................................................ 801 867
Changes in assets and liabilities, net of Villazon Acquisition and Liability Assumption
(see Note 6):
Decrease in accounts receivable.......................................................... 6,142 5,134
Increase in inventories.................................................................. (6,088) (3,969)
Decrease in accounts payable and accrued liabilities..................................... (7,455) (4,879)
Increase (decrease) in deferred income taxes............................................. (1,064) 490
Other, net............................................................................... (118) 1,298
----------- ----------
Net cash provided by (used in) operating activities........................................ (5,387) 3,218
----------- ----------
INVESTING ACTIVITIES:
Acquisition of Villazon, net of cash acquired.............................................. -- (56,243)
Additions to property and equipment........................................................ (1,952) (1,932)
----------- ----------
Net cash used in investing activities...................................................... (1,952) (58,175)
----------- ----------
FINANCING ACTIVITIES:
Net transactions with Culbro, excluding Liability
Assumption (see Note 6).................................................................. 7,267 (215)
Increase in debt, principally from Villazon Acquisition in 1997............................ 273 62,450
Payments of debt........................................................................... (147) (180)
Other, net................................................................................. -- (1,446)
----------- ----------
Net cash provided by financing activities.................................................. 7,393 60,609
----------- ----------
Net increase in cash and cash equivalents.................................................. 54 5,652
Cash and cash equivalents at beginning of period........................................... 322 409
----------- ----------
Cash and cash equivalents at end of period................................................. $ 376 $ 6,061
----------- ----------
----------- ----------
</TABLE>

See Notes to Consolidated Financial Statements.

F-4
<PAGE>
GENERAL CIGAR HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

BASIS OF PRESENTATION

The unaudited financial statements of General Cigar Holdings, Inc. (the
"Company") included in this report have been prepared in conformity with the
standards of accounting measurement set forth in Accounting Principles Board
Opinion No. 28 and any amendments thereto adopted by the Financial Accounting
Standards Board ("FASB"). The accompanying financial statements should be read
in conjunction with the Company's 1996 financial statements included in Form
S-1, as filed with the Securities and Exchange Commission on February 26, 1997,
and should be read in conjunction with the Notes to Financial Statements
appearing in that report. All adjustments which are, in the opinion of
management, necessary for a fair presentation of results for the interim periods
reported herein have been reflected.

The results of operations for the quarter ended March 1, 1997 are not
necessarily indicative of the results to be expected for the full year.

The Company was formed on December 12, 1996. Up until the Company's initial
public offering (See Note 2) on February 28, 1997, the Company was a wholly
owned subsidiary of Culbro Corporation ("Culbro"). The accompanying consolidated
financial statements of the Company include the accounts of the Company and its
subsidiaries General Cigar Co., Inc. ("General Cigar"), Club Macanudo, Inc.
("Club Macanudo"), 387 PAS Corp. ("387 PAS") and GCH Transportation, Inc., a
non-operating entity which owns certain of the Company's transportation
equipment. Club Macanudo and 387 PAS were not material to the Company's results
of operations in any of the periods presented. All of these businesses and
assets, and certain liabilities, were transferred to the Company by Culbro
pursuant to a Distribution Agreement among the Company, Culbro, and Culbro's
wholly owned subsidiary, Griffin Land & Nurseries, Inc. ("Griffin"). Prior to
March 18, 1997, Griffin was known as Culbro Land Resources, Inc.

INVENTORIES

The Company's inventories are stated at the lower of cost or market using
the average cost method. Raw materials include tobacco in the process of aging,
a substantial amount of which will not be used or sold within one year. It is
industry practice to include such inventories in current assets. Raw materials
also include tobacco in bond which is subject to customs duties payable upon
withdrawal from bond. Following industry practice, the Company does not include
such duties in inventories until paid.

PROPERTY AND EQUIPMENT

Property and equipment are carried at cost. Depreciation is determined on a
straight-line basis over the estimated useful asset lives for financial
reporting purposes and principally on accelerated methods for tax purposes.

REVENUE RECOGNITION

Sales and the related cost of sales are recognized upon shipment of
products. The Company generally accepts returns of cigars that are stale or
damaged in transit. Sales revenue is recorded net of anticipated returns based
on historical experience. Sales returns are not material.

F-5
<PAGE>
GENERAL CIGAR HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)
ADVERTISING AND PROMOTION EXPENSE

Advertising and promotion costs are expensed when incurred. Production costs
of future media advertising are deferred until the advertising first occurs.

EARNINGS PER SHARE

For the periods presented herein, the Company was a wholly owned subsidiary
of Culbro. Accordingly, earnings per share are presented on a pro forma basis.

Pro forma net income per common share in the 1997 quarter, and in the 1996
quarter, was computed assuming that the Company's Class B common shares
outstanding, which totaled 20,087,182, plus related stock options, and the
Company's 6,900,000 Class A shares outstanding at the Offering date were all
outstanding at the beginning of these respective quarters. The options included
in these calculations were based on the treasury stock method.

RECENTLY ISSUED ACCOUNTING STANDARDS

In March 1995, the FASB issued Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of
("SFAS 121"). This Statement requires that long-lived assets and certain
intangibles held and used by a business entity be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Prior to the issuance of this Statement the
Company periodically reviewed its long-lived assets considering future
performance of those assets and the need for adjustments to their carrying
values. The Company has adopted SFAS No. 121 and performs such reviews in
accordance with the methods prescribed by this Statement.

In October 1995, the FASB issued Statement No. 123, "Accounting for
Stock-Based Compensation." This Statement establishes a fair value method of
accounting for, or disclosing, stock-based compensation plans. The Company
intends to adopt the disclosure provisions of this standard which require
disclosing the pro forma effect on net income and earnings per share of the fair
value method of accounting for stock-based compensation. The adoption of the
disclosure provisions will not affect consolidated financial condition, results
of operations, or cash flows.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and revenue and expenses during the period reported. Actual results
could differ from those estimates. Estimates are used when accounting for
allowance for uncollectible accounts receivable, depreciation and amortization,
employee benefit plans, taxes, and contingencies, among others.

F-6
<PAGE>
GENERAL CIGAR HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)

2. STOCK OFFERING

On February 28, 1997, the Company sold 6.9 million shares of its Class A
Common Stock in an initial public offering (the "Offering"), reflecting
approximately 26% of its common equity ownership. The net proceeds from the
Offering, after underwriters' discounts and commissions and estimated other
expenses, were approximately $113 million and were received on March 5, 1997
(subsequent to the end of the first quarter). The proceeds were used to reduce
debt, a substantial portion of which was incurred in connection with the
Villazon Acquisition (see Notes 3 and 4). Each share of Class A Common Stock
entitles its holder to one vote. Culbro owns the remaining equity ownership of
the Company in the form of Class B Common Stock, which entitles its holder to
ten votes for each share. Accordingly, Culbro holds approximately 97% of the
combined voting power of the Company's outstanding common stock.

3. VILLAZON ACQUISITION

On January 21, 1997, the Company completed the acquisitions of two
affiliated companies, Villazon & Company, Inc., a U.S. corporation, and Honduras
American Tabaco, S.A. de C. V., a Honduran corporation (collectively
"Villazon"), for approximately $80.6 million consisting of $90.5 million of
purchase price and direct acquisition costs less $9.9 million of cash acquired
at closing. Cash paid to the sellers was $64.6 million and $24.4 million
aggregate principal amount of seller notes were issued (the "Villazon
Acquisition"). Both companies are engaged in the cigar business. The Villazon
Acquisition is accounted for using the purchase method of accounting. Cost in
excess of net assets acquired, primarily trade names and other intangible
assets, is approximately $70 million (see unaudited pro forma condensed
financial information in Note 4). The Company entered into a Credit Agreement to
finance the acquisition. Proceeds from the Offering were used to reduce amounts
outstanding under the Credit Agreement and to repay $14.4 million of the seller
notes. The remaining $10 million of seller notes bear interest at prime plus
1/2% and are due January 2002.

4. CONSOLIDATED CONDENSED PRO FORMA FINANCIAL INFORMATION

The following consolidated condensed unaudited pro forma financial statement
of operations reflects the Villazon Acquisition, including the associated
borrowings to finance the acquisition, the Liability Assumption (see Note 6) and
the Offering as if these transaction were completed at the beginning of the
respective periods. The unaudited consolidated condensed pro forma balance sheet
reflects the effect of the Offering as if it had taken place at the balance
sheet date. The Villazon Acquisition and the Liability Assumption are already
reflected in the Company's balance sheet at March 1, 1997. The unaudited pro
forma consolidated condensed financial information presented herein may not
necessarily reflect the results of operations and financial position that
actually would have been achieved had the transactions discussed above actually
taken place at the assumed dates.

F-7
<PAGE>
GENERAL CIGAR HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)

4. CONSOLIDATED CONDENSED PRO FORMA FINANCIAL INFORMATION (CONTINUED)
CONSOLIDATED CONDENSED PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
13 WEEKS ENDED,
--------------------------
<S> <C> <C>
MARCH 2, MARCH 1,
1996 1997
------------ ------------
Net sales......................................................... $ 35,282 $ 55,390
------------ ------------
Operating profit.................................................. 5,429 8,974
Other nonoperating income......................................... 162 317
Interest expense.................................................. 657 550
------------ ------------
Income before taxes............................................... 4,934 8,741
Income tax expense................................................ 1,911 3,340
------------ ------------
Net income........................................................ $ 3,023 $ 5,401
------------ ------------
------------ ------------
Net income per common share....................................... $ 0.11 $ 0.19
------------ ------------
------------ ------------
Weighted average common shares and equivalents outstanding........ 28,200,000 28,200,000
------------ ------------
------------ ------------
</TABLE>

CONSOLIDATED CONDENSED PRO FORMA BALANCE SHEET (UNAUDITED)

<TABLE>
<CAPTION>
MARCH 1,
1997
----------
<S> <C>
Current assets.................................................................... $ 106,819
Property and equipment, net....................................................... 57,790
Intangible assets................................................................. 70,617
Other assets...................................................................... 5,381
----------
Total assets...................................................................... $ 240,607
----------
----------
Current liabilities............................................................... $ 24,782
Long-term debt.................................................................... 27,921
All other noncurrent liabilities.................................................. 27,140
----------
Total liabilities................................................................. 79,843
Shareholders' equity.............................................................. 160,764
----------
Total liabilities and shareholders' equity........................................ $ 240,607
----------
----------
</TABLE>

5. LONG-TERM DEBT

On January 21, 1997, the Company entered into a Credit Agreement with
certain banks which provided financing of $120 million principally for the
Villazon Acquisition and repayment of Culbro's general corporate debt. The
Credit Agreement, which expires in January 2000, included a $60 million term
loan and a revolving credit facility of $60 million. Subsequent to the end of
the quarter, net proceeds of approximately $113 million were received from the
Offering and used to repay the term loan and amounts outstanding under the
revolving credit facility. After the Offering, the commitment under the
revolving

F-8
<PAGE>
GENERAL CIGAR HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)

5. LONG-TERM DEBT (CONTINUED)
credit facility is $50 million. In accordance with the terms of the Credit
Agreement, borrowings under the revolving credit facility bear interest, at the
Company's option, of either (1) 1% above the prime rate, (2) the Eurodollar rate
plus 0.75% or (3) a combination thereof. The Company pays a commitment fee of
1/4 of 1% on the unused portion of the revolving credit facility. The Credit
Agreement includes limitations on indebtedness, investments and other
significant transactions, as defined.

6. RELATED PARTY TRANSACTIONS

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

The consolidated statement of operations reflects general and administrative
expenses of approximately $1.8 million in the 1997 first quarter and $1.6
million in the 1996 first quarter, allocated by Culbro to the Company for
services performed by Culbro. The charges were based principally on the
Company's proportionate share of expenses relating to the Culbro corporate
activities associated with the Company's operations and are considered by
management to be reasonable.

CULBRO INVESTMENT

Changes in the Culbro Investment account are summarized as follows:

<TABLE>
<CAPTION>
13 WEEKS ENDED,
--------------------
<S> <C> <C>
MARCH 2, MARCH 1,
1996 1997
--------- ---------
Balance beginning of period............................................. $ 66,095 $ 93,719
Net income.............................................................. 2,395 4,277
--------- ---------
68,490 97,996
--------- ---------
Transactions with Culbro:
Liability Assumption (see below)........................................ -- (50,017)
Net operating cash flow transferred (to) from Culbro.................... 4,126 (4,640)
Allocated Culbro general and administrative expenses.................... 1,632 1,804
Intercompany income taxes............................................... 1,509 2,621
--------- ---------
Total transactions with Culbro, net..................................... 7,267 (50,232)
--------- ---------
Balance end of period................................................... $ 75,757 $ 47,764
--------- ---------
--------- ---------
</TABLE>

On February 27, 1997, pursuant to the Distribution Agreement, the Company
consummated the Liability Assumption, in which the Company assumed Culbro
liabilities of approximately $50 million, including principally Culbro's general
corporate debt, accrued retirement obligations, accounts payable and other
items.

F-9
<PAGE>
GENERAL CIGAR HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)

7. SUPPLEMENTAL FINANCIAL INFORMATION

INVENTORIES

Inventories consist of:

<TABLE>
<CAPTION>
NOVEMBER 30, MARCH 1,
1996 1997
------------ ---------
<S> <C> <C>
Raw materials and supplies.......................................... $ 43,704 $ 46,248
Work-in-process..................................................... 4,529 4,983
Finished goods...................................................... 5,469 12,904
------------ ---------
$ 53,702 $ 64,135
------------ ---------
------------ ---------
</TABLE>

PROPERTY AND EQUIPMENT

Property and equipment consist of:

<TABLE>
<CAPTION>
NOVEMBER 30, MARCH 1,
1996 1997
------------ ----------
<S> <C> <C>
Land............................................................... $ 2,534 $ 2,479
Buildings.......................................................... 58,225 61,068
Machinery and equipment............................................ 33,470 38,220
------------ ----------
94,229 101,767
Accumulated depreciation........................................... (41,722) (43,977)
------------ ----------
$ 52,507 $ 57,790
------------ ----------
------------ ----------
</TABLE>

CASH FLOW

The cash and noncash activities related to the Villazon Acquisition are
summarized as follows:

<TABLE>
<S> <C>
Estimated fair values of net assets acquired....................... $ 90,520
Notes issued to sellers............................................ (24,370)
---------
Payments in connection with the acquisition........................ 66,150
Cash acquired...................................................... (9,907)
---------
Payments in connection with acquisition, net of cash acquired...... $ 56,243
---------
---------
</TABLE>

F-10
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholder
of General Cigar Holdings, Inc.

In our opinion, the accompanying combined balance sheet and the related combined
statements of operations and of cash flows present fairly, in all material
respects, the combined financial position of General Cigar Holdings, Inc. (a
wholly-owned subsidiary of Culbro Corporation) at December 2, 1995 and November
30, 1996 and the results of their combined operations and their combined cash
flows for each of the fiscal years ended December 3, 1994, December 2, 1995 and
November 30, 1996 in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

PRICE WATERHOUSE LLP

New York, New York
January 28, 1997

F-11
<PAGE>
GENERAL CIGAR HOLDINGS, INC.
COMBINED BALANCE SHEET
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 2, NOVEMBER 30,
1995 1996
------------ ------------ PRO FORMA FOR
LIABILITY
ASSUMPTION
NOVEMBER 30,
1996 (1)
-------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash................................................................. $ 322 $ 409 $ 409
Accounts receivable, less allowance of $465 and $482................. 23,840 31,295 31,295
Inventories.......................................................... 37,843 53,702 53,702
Other current assets................................................. 3,312 3,673 3,673
------------ ------------ -------------
Total current assets................................................. 65,317 89,079 89,079

Property and equipment, net.......................................... 46,492 52,507 52,507
Other assets......................................................... 1,846 3,456 3,456
------------ ------------ -------------
Total assets......................................................... $ 113,655 $ 145,042 $ 145,042
------------ ------------ -------------
------------ ------------ -------------
LIABILITIES AND CULBRO INVESTMENT
CURRENT LIABILITIES
Accounts payable and accrued liabilities............................. $ 20,740 $ 22,827 $ 24,361
Current portion of long-term debt.................................... 945 1,131 1,131
------------ ------------ -------------
Total current liabilities............................................ 21,685 23,958 25,492

Long-term debt....................................................... 11,352 11,079 54,879
Accrued retirement benefits.......................................... 12,100 12,525 15,409
Deferred income taxes................................................ 2,121 1,057 --
Other noncurrent liabilities......................................... 302 2,704 4,004
------------ ------------ -------------
Total liabilities.................................................... 47,560 51,323 99,784

Commitments and contingencies (See Note 13).......................... -- -- --

Culbro Investment.................................................... 66,095 93,719 45,258
------------ ------------ -------------
Total liabilities and Culbro Investment.............................. $ 113,655 $ 145,042 $ 145,042
------------ ------------ -------------
------------ ------------ -------------
</TABLE>

See Notes to Combined Financial Statements.

(1) Reflects the assumption of certain liabilities by the Company. The
liabilities include principally the estimated Culbro debt of $43.8million to
be assumed, certain accrued retirement obligations and other items.

F-12
<PAGE>
GENERAL CIGAR HOLDINGS, INC.

COMBINED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED,
--------------------------------------
<S> <C> <C> <C>
DECEMBER 3, DECEMBER 2, NOVEMBER 30,
1994 1995 1996
----------- ----------- ------------
Net sales............................................................... $ 89,538 $ 124,033 $ 154,676
Cost of goods sold...................................................... 54,285 69,683 86,240
----------- ----------- ------------
Gross profit............................................................ 35,253 54,350 68,436
Selling, general and administrative expenses............................ 27,210 36,726 44,593
Other nonrecurring expense.............................................. -- -- 3,600
----------- ----------- ------------

Operating profit........................................................ 8,043 17,624 20,243
Gain on insurance settlement............................................ -- 2,586 --
Other nonoperating (expense) income..................................... (23) (597) 853
Interest expense........................................................ 607 1,049 951
----------- ----------- ------------
Income before income taxes.............................................. 7,413 18,564 20,145
Income tax provision.................................................... 2,863 7,240 7,738
----------- ----------- ------------
Net income.............................................................. $ 4,550 $ 11,324 $ 12,407
----------- ----------- ------------
----------- ----------- ------------
</TABLE>

See Notes to Combined Financial Statements.

F-13
<PAGE>
GENERAL CIGAR HOLDINGS, INC.

COMBINED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED,
--------------------------------------
<S> <C> <C> <C>
DECEMBER 3, DECEMBER 2, NOVEMBER 30,
1994 1995 1996
----------- ----------- ------------
OPERATING ACTIVITIES:
Net income.............................................................. $ 4,550 $ 11,324 $ 12,407
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization......................................... 3,271 3,550 3,813
Gain on insurance settlement.......................................... -- (2,586) --
Deferred income taxes................................................. 43 (236) (1,064)
Changes in assets and liabilities which increase (decrease) cash:
Accounts receivable................................................. 302 (10,600) (7,492)
Inventories......................................................... 1,571 (733) (15,859)
Other current assets................................................ (212) (1,204) (361)
Accounts payable and accrued liabilities............................ 2,000 9,834 2,087
Accrued retirement benefits......................................... 453 843 425
Other, net............................................................ 705 (656) 1,125
----------- ----------- ------------
Net cash provided by (used in) operating activities..................... 12,683 9,536 (4,919)
----------- ----------- ------------
INVESTING ACTIVITIES:
Additions to property and equipment..................................... (1,884) (2,841) (9,701)
Proceeds from insurance settlement...................................... 500 2,225 --
----------- ----------- ------------
Net cash used in investing activities................................... (1,384) (616) (9,701)
----------- ----------- ------------
FINANCING ACTIVITIES:
Net transactions with Culbro............................................ (15,131) (13,389) 15,217
Increase in debt........................................................ 5,000 5,000 476
Repayment of indebtedness............................................... (734) (673) (563)
Class A Common Stock issuance costs..................................... -- -- (423)
----------- ----------- ------------
Net cash (used in) provided by financing activities..................... (10,865) (9,062) 14,707
----------- ----------- ------------
Net increase (decrease) in cash......................................... 434 (142) 87
Cash at beginning of period............................................. 30 464 322
----------- ----------- ------------
Cash at end of period................................................... $ 464 $ 322 $ 409
----------- ----------- ------------
----------- ----------- ------------
</TABLE>

See Notes to Combined Financial Statements.

F-14
<PAGE>
GENERAL CIGAR HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

1. CERTAIN TRANSACTIONS

The accompanying combined financial statements include the accounts of
General Cigar Holdings, Inc. (the "Company")(See Note 3--Basis of Presentation),
and reflect its financial position, results of operations and cash flows after
elimination of intercompany accounts and transactions. The Company, a
wholly-owned subsidiary of Culbro Corporation ("Culbro"), was formed on December
12, 1996 and holds all of the outstanding stock of General Cigar Co., Inc.
("General Cigar"). The Company has no business operations of its own and its
principal asset is all of the outstanding stock of General Cigar. In January
1997, in addition to the transfer of all of the outstanding Common Stock of
General Cigar Co., Inc., certain other assets, including principally 1,100 acres
of land, all of the outstanding common stock of 387 PAS Corp. ("387 PAS"), Club
Macanudo, Inc., Club Macanudo (Chicago), Inc. and GCH Transportation, Inc. were
transferred to the Company (the "Additional Asset Transfers") and the Company
assumed certain related liabilities and substantially all of the debt of Culbro
in accordance with the terms of a Distribution Agreement (the "Distribution
Agreement") among the Company, Culbro and Culbro Land Resources, Inc. ("CLR").
The Additional Asset Transfers are reflected in the accompanying combined
financial statements at Culbro's historical cost. The Additional Asset
Transfers, the transfer of General Cigar Stock and the assumption by the Company
of the liabilities and debt of Culbro referred to above are herein collectively
referred to as the "Asset Transfers." The Distribution Agreement also provides
for the assumption of employee benefit arrangements of Culbro by the Company,
for a tax sharing agreement and for a potential distribution of the stock (the
"Distribution") of CLR to Culbro's shareholders. Following the Distribution,
subject to certain conditions, Culbro will be merged (the "Merger") with and
into the Company. Such transactions are not reflected in the accompanying
combined financial statements.

2. VILLAZON ACQUISITION

On January 21, 1997, the Company completed its acquisition of two affiliated
companies, Villazon and Company, Inc., a U.S. corporation, and Honduras American
Tabaco, S.A. de C.V., a Honduran corporation (collectively "Villazon"), for
approximately $81.4 million consisting of $90.5 million of purchase price and
direct acquisition costs, less $9.1 million of cash acquired. $64.6 million of
cash was paid at closing and $24.4 million aggregate principal amount of seller
notes were issued (the "Villazon Acquisition"). Both companies are engaged in
the cigar business. The Villazon Acquisition will be accounted for using the
purchase method of accounting. Cost in excess of the fair value of net assets
acquired, primarily trade names and other intangible assets, is expected to be
approximately $71 million. The Company secured a loan to finance the
acquisition, and anticipates that the loan will be repaid either entirely or
partially, with the proceeds from the expected Offering. (See Notes 4 and 7)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying combined financial statements of the Company include the
accounts of General Cigar, Club Macanudo, Inc. ("Club Macanudo") and 387 PAS.
Club Macanudo was incorporated in 1995 and operates a cigar bar in New York
City, which opened on May 1, 1996. 387 PAS holds Culbro's corporate headquarters
which is approximately 80% leased to unrelated commercial tenants. Club Macanudo
and 387 PAS were not material to the Company's results of operations in any of
the periods presented. Subsequent to November 30, 1996, the Company formed Club
Macanudo (Chicago), Inc., which will operate a cigar bar in Chicago and GCH
Transportation, Inc., a non operating entity which owns certain of the Company's
transportation equipment.

F-15
<PAGE>
GENERAL CIGAR HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The combined financial statements have been presented as if the Company had
operated as an independent stand-alone entity for all periods presented. Such
financial statements may not necessarily present the financial position, results
of operations and cash flows the Company would have reported had it actually
operated as a stand-alone entity. See Note 4 for unaudited combined condensed
pro forma financial information.

FISCAL YEAR

The Company's fiscal year ends on the Saturday nearest November 30. Fiscal
1994, 1995 and 1996 ended on December 3, 1994, December 2, 1995 and November 30,
1996, respectively. Fiscal 1994 contained 53 weeks and fiscal 1995 and 1996
contained 52 weeks.

RECLASSIFICATION

Certain amounts in the prior years financial statements have been
reclassified to conform to the current year's presentation.

INVENTORIES

The Company's inventories are stated at the lower of cost or market using
the first-in, first-out ("FIFO") method. Raw materials include tobacco in the
process of aging, a substantial amount of which will not be used or sold within
one year. It is industry practice to include such inventories in current assets.
Raw materials also include tobacco in bond which is subject to customs duties
payable upon withdrawal from bond. Following industry practice, the Company does
not include such duties in inventories until paid.

PROPERTY AND EQUIPMENT

REVENUE RECOGNITION

ADVERTISING AND PROMOTION EXPENSE

Advertising and promotion costs are expensed when incurred. Production costs
of future media advertising are deferred until the advertising first occurs.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The amounts included in the financial statements for accounts receivable,
accounts payable and accrued liabilities reflect their fair values because of
the short-term maturity of these instruments. The fair values of the Company's
other financial instruments are discussed in Note 7.

F-16
<PAGE>
GENERAL CIGAR HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EARNINGS PER SHARE

The Company is a wholly-owned subsidiary of Culbro and its historical
capital structure does not permit a meaningful presentation of earnings per
share. Accordingly, earnings per share are not presented herein.

RECENTLY ISSUED ACCOUNTING STANDARDS

In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of." This Statement requires that long-lived
assets and certain intangibles held and used by a business entity be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The Company continually
reviews its long-lived assets and intangible assets, considering future
performance of those assets in assessing the need for adjustments to their
carrying values. The Company will perform such reviews in the future in
accordance with the methods prescribed by SFAS No. 121.

In October 1995, the FASB issued Statement No. 123, "Accounting for
Stock-Based Compensation." This Statement establishes a fair value method of
accounting for, or disclosing, stock-based compensation plans. The Company
intends to adopt the disclosure provisions of this standard which require
disclosing the pro forma effect on net income and earnings per share of the fair
value method of accounting for stock-based compensation. The adoption of the
disclosure provisions will not affect combined financial condition, results of
operations, or cash flows.

USE OF ESTIMATES

4. COMBINED CONDENSED PRO FORMA FINANCIAL INFORMATION (UNAUDITED)

The following combined condensed unaudited pro forma financial information
reflects the Company as if the liability portion of the Asset Transfers had
occurred and the Villazon Acquisition had been consummated. The unaudited pro
forma combined condensed statement of operations assumes that the transactions
took place at the beginning of fiscal 1996. The unaudited pro forma combined
condensed balance sheet assumes that the items discussed above occurred at the
balance sheet date. The unaudited pro forma financial information presented
herein may not necessarily reflect the results of operations and financial
position had these items discussed above actually taken place on these dates.
The pro forma financial information reflects the elimination of intercompany
accounts.

F-17
<PAGE>
GENERAL CIGAR HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

4. COMBINED CONDENSED PRO FORMA FINANCIAL INFORMATION (UNAUDITED) (CONTINUED)
COMBINED CONDENSED PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED) (DOLLARS IN
THOUSANDS)

<TABLE>
<CAPTION>
NOVEMBER 30,
1996
------------
<S> <C>
Net sales....................................................................... $ 196,694
------------
Operating profit................................................................ 32,324
Other nonoperating income, net.................................................. 1,532
Interest expense................................................................ 11,669
------------
Income before income taxes...................................................... 22,187
Income tax provision............................................................ 8,535
------------
Net income...................................................................... $ 13,652
------------
------------
</TABLE>

COMBINED CONDENSED PRO FORMA BALANCE SHEET (UNAUDITED) (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
NOVEMBER 30,
1996
------------
<S> <C>
Current assets.................................................................. $ 110,788
Property and equipment, net..................................................... 56,857
Intangible assets............................................................... 71,352
Other assets.................................................................... 5,798
------------
Total assets.................................................................... $ 244,795
------------
------------
Current liabilities............................................................. $ 101,295
Long-term debt.................................................................. 72,029
Other noncurrent liabilities.................................................... 26,213
------------
Total liabilities............................................................... 199,537
Culbro Investment............................................................... 45,258
------------
Total liabilities and Culbro Investment......................................... $ 244,795
------------
------------
</TABLE>

5. RELATED PARTY TRANSACTIONS

CULBRO INVESTMENT

The Company maintained an intercompany account with Culbro in which the
intercompany transactions including cash transfers and the liability for benefit
and insurance costs and allocated general and administrative expenses described
below were recorded. The balance in the intercompany account at the end of each
period presented has been included in Culbro Investment in the combined balance
sheet. The

F-18
<PAGE>
GENERAL CIGAR HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

5. RELATED PARTY TRANSACTIONS (CONTINUED)
Culbro Investment account also includes the cumulative net earnings of the
Company and its capital stock. The changes in the Culbro Investment account are
summarized as follows:

<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED,
--------------------------------------
DECEMBER 3, DECEMBER 2, NOVEMBER 30,
1994 1995 1996
----------- ----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Balance beginning of year............................................... $ 78,741 $ 68,160 $ 66,095
Net income............................................................ 4,550 11,324 12,407
----------- ----------- ------------
83,291 79,484 78,502
----------- ----------- ------------
Transactions with Culbro:
Net operating cash flow transferred to Culbro......................... (23,483) (29,409) (3,290)
Allocated Culbro general and administrative expenses.................. 5,489 8,780 7,169
Allocated Culbro other nonrecurring expense........................... -- -- 3,600
Intercompany income taxes............................................. 2,863 7,240 7,738
----------- ----------- ------------
Total transactions with Culbro, net..................................... (15,131) (13,389) 15,217
----------- ----------- ------------
Balance end of year..................................................... $ 68,160 $ 66,095 $ 93,719
----------- ----------- ------------
----------- ----------- ------------
Average intercompany balance due from Culbro............................ $ (5,097) $ (19,357) $ (18,443)
----------- ----------- ------------
----------- ----------- ------------
</TABLE>

At the end of each month during the three year period ended November 30,
1996, the Company provided cumulative cash flow to Culbro.

TREASURY

Through the date of the expected Offering, the Company's treasury activities
will remain integrated into Culbro's cash management system. The Company's cash
receipts are transferred daily into Culbro's cash account and the Company's cash
disbursement accounts are reimbursed by Culbro on a daily basis. The difference
between cash transferred by the Company to Culbro and reimbursements by Culbro
to the Company's disbursement accounts has been reflected in Culbro Investment
in the combined balance sheet.

INTERCOMPANY ACTIVITIES

The Company's employees participate in certain benefit programs which are
sponsored and administered by Culbro. See Note 8 for discussion of employee
benefit plan costs. The Company's risk insurance and employee medical coverage
are provided through insurance policies and programs purchased by Culbro on
behalf of the Company and Culbro's other subsidiaries. The cost of these items
was allocated based on the specific insurance data related to each subsidiary.
All direct charges relating to the Company for these services, and the Company's
participation in these plans have been charged to the Company by Culbro, and
included in the Company's combined financial statements.

A substantial amount of Culbro management time and resources were related to
the operations of the Company, and Culbro also performed certain specific
administrative functions for the Company, including legal, tax, treasury, human
resources and internal audit. In addition to the direct charges above for
employee benefits and risk insurance, the combined statement of operations
reflects general and administrative expenses of $5.5 million, $8.8 million and
$7.2 million for 1994, 1995 and 1996, respectively,

F-19
<PAGE>
GENERAL CIGAR HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

5. RELATED PARTY TRANSACTIONS (CONTINUED)
allocated by Culbro to the Company for these services. These charges were based
principally on the Company's proportionate share of expenses relating to the
Culbro corporate activities associated with the Company's operations and are
considered by management to be reasonable. These amounts may not necessarily be
indicative of the additional general and administrative expenses the Company
would have incurred had it operated independently during the years presented.

No interest has been charged or paid to Culbro on the net investment
account, and accordingly intercompany interest expense has not been included in
the combined statements of operations. See Notes 4 and 7.

OTHER RELATED PARTY TRANSACTIONS

During 1996, the Company entered into transactions in the ordinary course of
business, with entities with which certain stockholders and board of directors
members of Culbro are associated. In 1996 the aggregate cost of such services to
these firms was approximately $2.3 million.

6. INTERCOMPANY INCOME TAXES

All current tax liabilities were paid by Culbro and accordingly the
Company's current tax liabilities are reflected in the Culbro Investment
account.

Historically, the combined results of operations of the Company were
included in Culbro's consolidated U.S. federal income tax returns, and will be
included in such returns until the Distribution and Merger are consummated. The
income tax provisions and deferred tax liabilities have been calculated in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 109
"Accounting for Income Taxes" as if the Company had filed separate tax returns.
The provision for income taxes is summarized as follows:

<TABLE>
<CAPTION>
1994 1995 1996
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal........................................................ $ 2,374 $ 6,435 $ 7,647
State and local................................................ 446 1,041 1,155
Deferred, principally federal.................................... 43 (236) (1,064)
--------- --------- ---------
$ 2,863 $ 7,240 $ 7,738
--------- --------- ---------
--------- --------- ---------
</TABLE>

The reasons for the difference between the United States statutory income
tax rate and the effective rates are shown in the following table:

<TABLE>
<CAPTION>
1994 1995 1996
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Tax expense at statutory rates................................... $ 2,520 $ 6,497 $ 7,051
State and local income taxes..................................... 294 677 751
Other............................................................ 49 66 (64)
--------- --------- ---------
$ 2,863 $ 7,240 $ 7,738
--------- --------- ---------
--------- --------- ---------
</TABLE>

F-20
<PAGE>
GENERAL CIGAR HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

6. INTERCOMPANY INCOME TAXES (CONTINUED)
The significant components of net deferred tax liabilities are as follows:

<TABLE>
<CAPTION>
1995 1996
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Depreciation............................................................ $ 7,094 $ 7,015
Postretirement benefit liabilities...................................... (2,303) (2,367)
Pension liabilities..................................................... (1,826) (1,901)
Other................................................................... (844) (1,690)
--------- ---------
$ 2,121 $ 1,057
--------- ---------
--------- ---------
</TABLE>

In connection with the expected Offering, Culbro and the Company will enter
into a Tax Sharing Agreement which will provide, among other things, for the
allocation between Griffin and the Company of federal, state, local and foreign
tax liabilities for all periods through the Distribution and Merger. With
respect to the consolidated tax returns filed by Culbro, the Tax Sharing
Agreement will provide that the Company will be liable for any amounts that it
would have been required to pay with respect to any deficiencies assessed,
generally as if it had filed separate tax returns.

7. LONG-TERM DEBT

Long-term debt includes:

<TABLE>
<CAPTION>
DECEMBER 2, NOVEMBER 30,
1995 1996
----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Building mortgage................................................. $ 5,000 $ 5,000
Equipment loan.................................................... 4,488 4,218
Capital leases.................................................... 2,809 2,992
----------- ------------
Total............................................................. 12,297 12,210
Less: due within one year......................................... 945 1,131
----------- ------------
Total long-term debt.............................................. $ 11,352 $ 11,079
----------- ------------
----------- ------------
</TABLE>

As of November 30, 1996, the annual payment requirements under the terms of
the building mortgage and equipment loan, for the years 1997 through 2001 are
$0.3 million, $0.4 million, $5.4 million, $0.4 million and $0.4 million,
respectively. The building mortgage is on the 387 PAS corporate office building
which had a net book value of $29.5 million at November 30, 1996. The mortgage,
which bears interest at 2.0% above LIBOR, matures in March 1999 and requires
periodic payments of only interest until maturity. The equipment loan was
entered into in January 1994, and bears interest at 7.25% per annum and has a
term of ten years, with a balloon payment of $1.2 million due at maturity. The
equipment had a net book value of $3.0 million at November 30, 1996.

On January 21, 1997, the Company entered into a Credit Agreement with
certain banks which provided financing of $120.0 million for the Villazon
Acquisition, for repayment of the Culbro debt obligation assumed by the Company
in the liability portion of the Asset Transfers and for general working capital
purposes. The Credit Agreement includes a $60.0 million term loan, due on
January 20, 1998 that is required to be prepaid at the time of and with a
portion of the proceeds from the expected Offering, and a revolving credit
facility of $60.0 million, which expires in January 2000. Proceeds from the
expected

F-21
<PAGE>
GENERAL CIGAR HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

7. LONG-TERM DEBT (CONTINUED)
Offering will be used to repay the term loan and reduce amounts outstanding
under the revolving credit facility. In accordance with the terms of the Credit
Agreement, during the period prior to the completion of the expected Offering,
the borrowings under the term loan and revolving credit facility will bear
interest, at the Company's option, of either (1) 1% above the Alternate Base
Rate ("ABR"), which is defined as the greater of the Prime Rate or the Federal
Funds Effective Rate plus 0.5%, (2) the Eurodollar rate plus 2%, or (3) a
combination thereof. After completion of the expected Offering, provided that
the Offering generates proceeds of at least $70.0 million, the borrowings under
the revolving credit facility will bear interest, at the Company's option, of
either (1) the ABR, (2) the Eurodollar rate plus 0.75% or (3) a combination
thereof. The Company will pay a commitment fee of 3/8 of 1% on the unused
portion of the revolving credit facility prior to the expected Offering and 1/4
of 1% after the expected Offering provided the Offering generates proceeds of at
least $70 million. The Credit Agreement includes limitations on indebtedness,
investments and other significant transactions, as defined.

The Company expects to assume approximately $43.8 million of Culbro debt
prior to the Offering as part of the Culbro obligations assumed under the
liability portion of the Asset Transfers. This debt was not an obligation of the
Company in earlier periods and the Company generally has been a net cash
provider to Culbro. Accordingly, this debt and its related interest expense were
not part of the Company's capital structure in the combined financial statements
for any of the periods presented.

Management believes that the amounts reflected on the balance sheet for debt
obligations reflect their current market values based on market interest rates
for comparable risks, maturities and collateral.

F-22
<PAGE>
GENERAL CIGAR HOLDINGS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

8. RETIREMENT BENEFITS

PENSION PLAN

The Company's employees participate in Culbro's noncontributory defined
benefit pension plan, which covers substantially all employees of Culbro and its
subsidiaries. The plan's benefits are based on employees' years of service and
compensation. Contributions to the plan are made in accordance with the
provisions of the Employee Retirement Income Security Act. Pension expense of
$0.6 million, $0.4 million and $0.7 million for 1994, 1995 and 1996,
respectively, included in the combined statement of operations reflects the
Company's proportionate share of Culbro's consolidated pension expense based on
the benefit costs attributable to its employees, as determined by the plan's
actuaries. Pension expense in 1996 included $0.3 million related to early
retirement of certain of the Company's employees.

The Company intends to maintain this plan and will be directly responsible
for all of the pension obligations of the plan, including those relating to its
employees and its former employees, as well as all vested employees of Culbro
and its subsidiaries under the plan. The Company expects to continue to provide
its current employees with the existing level of benefits under the plan; all
other Culbro employees will cease to be active participants in the plan. In
connection with the Distribution and Merger, the Company and CLR will enter into
an Employee Benefits Administration Agreement for the purpose of defining the
responsibilities for the administration of the plan. As of November 30, 1996,
the Plan was overfunded and Culbro has not made any contributions to the plan in
the past five years. The pro forma unaudited financial information in Note 4
reflects the effect of the Company's assumption of the Culbro Plan assets and
obligations as if it had occurred on the dates noted therein.

The status of the Culbro pension plan as determined by the plan's actuaries
at December 2, 1995 and November 30, 1996 was as follows (dollars in thousands):

<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Present value of benefits earned by participants including vested
benefits of $53,730 and $52,095 at December 2, 1995 and November
30, 1996, respectively............................................. $ 54,274 $ 52,668
--------- ---------
--------- ---------
Plan assets at fair value, primarily equities........................ $ 64,639 $ 70,711
Present value of projected benefit obligations....................... 56,882 54,759
--------- ---------
Plan assets in excess of projected benefit obligations............... 7,757 15,952
Amount included on Culbro balance sheet.............................. 5,993 6,697
--------- ---------
Unrecognized net asset............................................... $ 13,750 $ 22,649
--------- ---------
--------- ---------
Unrecognized net asset includes:
Net gain from experience differences and assumption changes.......... $ 14,190 $ 23,101
Less: Changes due to plan amendments................................. (203) (321)
Net pension obligation at adoption of SFAS No. 87............... (237) (131)
--------- ---------
Unrecognized net asset............................................... $ 13,750 $ 22,649
--------- ---------
--------- ---------
</TABLE>

Discount rates of 7.50% and 7.75% were used to compute the present value of
pension benefits at December2, 1995 and November 30, 1996, respectively. A 5%
rate of increase in future compensation levels was used to estimate the
projected pension obligations at both December 2, 1995 and November 30, 1996.
The expected rate of return on pension plan assets in 1994, 1995 and 1996 was
estimated at 9% representing the average long-term rate expected from the
investment of plan assets.

F-23
<PAGE>
GENERAL CIGAR HOLDINGS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

8. RETIREMENT BENEFITS (CONTINUED)
OTHER POSTRETIREMENT BENEFITS

Through the date of the Offering, the Company's employees will participate
in Culbro's postretirement benefits program, which provides principally health
and life insurance benefits to certain of its retired employees. The cost of
such benefits attributable to the Company's employees under the plan's benefit
formula was $0.5 million in fiscal 1994 and in fiscal 1995, respectively, and
$0.4 million in fiscal 1996.

The Company's proportionate share of the present value of the liabilities
for accumulated postretirement benefits, as determined by the Plan's actuaries,
is shown below. None of these liabilities have been funded at December2, 1995
and November 30, 1996.

<TABLE>
<CAPTION>
1995 1996
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Retirees................................................................ $ 3,678 $ 3,434
Fully eligible active participants...................................... 1,474 1,530
Other active participants............................................... 608 361
Unrecognized net gain from experience differences and
assumption changes.................................................... 308 907
--------- ---------
Liability for other postretirement benefits............................. $ 6,068 $ 6,232
--------- ---------
--------- ---------
</TABLE>

The Company expects that it will continue to provide its employees with the
same level of retiree medical benefits as those provided under the Culbro
program. Additionally, the Company will assume approximately $1.1 million of
retiree medical benefits related to former Culbro employees.

Discount rates of 7.50% and 7.75% were used to compute the accumulated
postretirement benefit obligations at December 2, 1995 and November 30, 1996,
respectively. Because the Company's obligation for retiree medical benefits is
fixed, any increase in the medical cost trend would have no effect on the
accumulated postretirement benefit obligation, service cost or interest cost.

The adoption of SFAS No. 106 in 1993 has not had an adverse effect on cash
flows because postretirement benefits are funded as incurred.

9. STOCK OPTION PLANS

Upon consummation of the Merger and Distribution, the Company intends to
convert all employee stock options outstanding under Culbro's stock option plans
into options to purchase shares of common stock of the Company and shares of
common stock of CLR. The number of outstanding options and exercise prices would
be adjusted to preserve the value of the options. The combined financial
statements of the Company do not reflect any effects that these plans have had
in Culbro's consolidated financial statements. The status of, and transactions
in, the Culbro stock option plans for the periods presented are as summarized
below:

EMPLOYEES STOCK OPTION PLANS

The Culbro 1996 Stock Plan (the "1996 Plan"), the 1992 Stock Plan (the "1992
Plan") and the 1991 Employees Incentive Stock Option Plan (the "1991 Plan") for
officers and key employees, made available 500,000, 300,000 and 210,000 shares
of common stock, respectively, for purchase at prices equal to the fair market
value at date of grant. A portion of the options outstanding under these plans
may be exercised as incentive stock options, which under current tax laws do not
provide any tax deductions to Culbro.

F-24
<PAGE>
GENERAL CIGAR HOLDINGS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

9. STOCK OPTION PLANS (CONTINUED)
Options are not exercisable until three years from the date of grant and may
be exercised over a period ending not later than ten years from the date of
grant. The exercise period for each grant was determined by Culbro's
Compensation Committee.

At November 30, 1996, a total of 400,000 and 40,300 shares under the 1996
Plan and 1992 Plan, respectively, were available for future grant. There are no
shares available for future grant under the 1991 Plan. None of the options
outstanding at November 30, 1996 may be exercised as stock appreciation rights.
Transactions under the 1996, 1992 and 1991 Plans are summarized as follows:

<TABLE>
<S> <C>
Options outstanding at November 27, 1993.................................. 280,700
Granted during 1994....................................................... 88,300
Expired, canceled and exercised........................................... (33,400)
-----------
Options outstanding at December 3, 1994................................... 335,600
Granted during 1995....................................................... 68,000
Expired, canceled and exercised........................................... (92,200)
-----------
Options outstanding at December 2, 1995................................... 311,400
Granted during 1996....................................................... 134,400
Expired, canceled and exercised........................................... (103,286)
-----------
Options outstanding at November 30, 1996.................................. 342,514
-----------
-----------

Option prices range between:......................................... $12.25 and $80.00

Options exercisable:
December 3, 1994.......................................................... 109,000
December 2, 1995.......................................................... 86,100
November 30, 1996......................................................... 78,114
Expiration of the 1991 Plan............................................... 2001
Expiration of the 1992 Plan............................................... 2002
Expiration of the 1996 Plan............................................... 2006
Number of option holders at November 30, 1996............................. 13
</TABLE>

CULBRO NONEMPLOYEE DIRECTORS STOCK OPTION PLAN

Options granted under the 1996 Stock Option Plan for Nonemployee Directors
(the "1996 Non-employee Plan") and the 1992 Stock Option Plan for Nonemployee
Directors (the "1992 Nonemployee Plan") will also be converted, after adjustment
for dilution, into options to purchase common shares of the Company. Under these
plans 70,000 options have been made available to purchase shares of Culbro
common stock for purchase at prices equal to the fair market value at date of
grant. Options canceled become available for future grant. Options are not
exercisable until three years from the date of grant and may be exercised over a
period ending not later than eight years from the date of grant. As of November
30, 1996, 18,000 options remained available for future grant under the 1996
Nonemployee Plan and 3,000 options remained available for future grant under the
1992 Nonemployee Plan. None of the options outstanding at November 30, 1996 may
be exercised as stock appreciation rights.

F-25
<PAGE>
GENERAL CIGAR HOLDINGS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

9. STOCK OPTION PLANS (CONTINUED)
Transactions under the 1996 and 1992 Nonemployee Plans are as follows:

<TABLE>
<S> <C>
Options outstanding at November 27, 1993.................................. 14,000
Granted during 1994....................................................... 14,000
-----------
Options outstanding at December 3, 1994................................... 28,000
Granted during 1995....................................................... 14,000
-----------
Options outstanding at December 2, 1995................................... 42,000
Granted during 1996....................................................... 7,000
Exercised during 1996..................................................... (6,000)
-----------
Options outstanding at November 30, 1996.................................. 43,000
-----------
-----------

Options prices range between......................................... $14.38 and $63.81

Number of option holders at November 30, 1996............................. 7
</TABLE>

EMPLOYMENT AGREEMENT

Upon consummation of the Distribution and Merger, an employment agreement
entered into in May 1994 between Culbro and an officer of Culbro will become an
obligation of the Company. The agreement provides for the issuance of 125,000
Culbro stock options, exercisable at the rate of 25,000 per year from 1995
through 1999 at an option price of $4.00 per share. These options will become
options to purchase shares of the Company, and the option price will be adjusted
to reflect the dilutive effect referred to above. Through November 30, 1996,
15,000 of these options had been exercised under this agreement. The annual
compensation expense for this agreement is $267,000 through April 1999
reflecting the amortization of the difference between the option price and the
quoted market price at the date of grant.

10. LEASES

The Company has the following noncancelable leases relating principally to a
manufacturing facility and vehicles.

CAPITAL LEASES

Future minimum lease payments under capital leases and the present value of
such payments as of November 30, 1996 were:

<TABLE>
<CAPTION>
(DOLLARS IN
THOUSANDS)
<S> <C>
1997............................................................................. $ 1,124
1998............................................................................. 907
1999............................................................................. 707
2000............................................................................. 430
2001............................................................................. 286
-----------
Total minimum lease payments..................................................... 3,454
Less: Amounts representing interest.............................................. 462
-----------
Present value of minimum lease payments (a)...................................... $ 2,992
-----------
-----------
</TABLE>

- ------------------------

(a) Includes current portion of $0.8 million on November 30, 1996.

F-26
<PAGE>
GENERAL CIGAR HOLDINGS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

10. LEASES (CONTINUED)
At December 2, 1995 and November 30, 1996, buildings, machinery and
equipment included capital leases amounting to $3.9 million and $4.2 million,
respectively, which is net of accumulated depreciation of $3.1 million and $3.4
million, respectively. Depreciation expense relating to capital leases was $0.7
million in 1994, 1995 and 1996.

OPERATING LEASES

Future minimum rental payments under noncancellable leases as of November
30, 1996 were:

<TABLE>
<CAPTION>
(DOLLARS IN
THOUSANDS)
<S> <C>
1997............................................................................. $ 802
1998............................................................................. 771
1999............................................................................. 735
2000............................................................................. 687
2001............................................................................. 544
Later years...................................................................... 2,175
-----------
Total minimum lease payments..................................................... $ 5,714
-----------
-----------
</TABLE>

Total rental expense for all operating leases in 1994, 1995 and 1996 was
$0.1 million, $0.1 million and $0.6 million, respectively.

11. SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION

NET SALES

Excise taxes paid on cigar sales of $5.5 million, $7.0 million and $7.9
million for 1994, 1995 and 1996, respectively, are included in net sales and
cost of goods sold.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE

Included in selling, general and administrative expenses were advertising
expenses of $1.0 million, $2.8 million and $4.4 million for 1994, 1995 and 1996,
respectively.

OTHER NONRECURRING EXPENSE

Other nonrecurring expense in 1996 includes the allocation to the Company of
charges recorded by Culbro in connection with the termination of a management
long-term incentive compensation plan which was based on Culbro's stock price,
and the acceleration of the vesting of benefits under the plan, in anticipation
of the expected Offering. Additionally, the other nonrecurring expense item
includes accruals for severance and related expenses in connection with a
headcount reduction at the Culbro corporate office. The Company's allocable
share of these expenses was determined substantially on the same basis as the
allocation of Culbro's general and administrative expenses referred to in Note 5
and is considered to be reasonable.

GAIN ON INSURANCE SETTLEMENT

The gain on insurance settlement in the 1995 statement of operations
reflects the settlement of a property insurance claim related to a 1994 fire
that destroyed an administration and warehouse facility owned and operated by
General Cigar. The gain reflected total proceeds of $2.7 million less the book
value of the destroyed building.

F-27
<PAGE>
GENERAL CIGAR HOLDINGS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

11. SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION (CONTINUED)
OTHER NONOPERATING INCOME (EXPENSE)

Other nonoperating income (expense) includes principally the net results of
leasing activity in the 387 PAS office building. In 1995, the net expense
included a breakup fee paid and certain other expenses incurred by General Cigar
to terminate a proposed agreement to sell approximately fifty percent of its
business.

INVENTORIES

Inventories consists of:

<TABLE>
<CAPTION>
DECEMBER 2, NOVEMBER 30,
1995 1996
----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Raw materials and supplies........................................ $ 30,640 $ 43,704
Work-in-process................................................... 2,633 4,529
Finished goods.................................................... 4,570 5,469
----------- ------------
$ 37,843 $ 53,702
----------- ------------
----------- ------------
</TABLE>

PROPERTY AND EQUIPMENT

Property and equipment consist of:

<TABLE>
<CAPTION>
DECEMBER 2, NOVEMBER 30, ESTIMATED
1995 1996 USEFUL LIVES
----------- ------------ ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Land........................................... $ 2,542 $ 2,534
Buildings and improvements..................... 54,592 58,225 10 to 40 years
Machinery and equipment........................ 27,830 33,470 3 to 7 years
----------- ------------
84,964 94,229
Accumulated depreciation....................... (38,472) (41,722)
----------- ------------
$ 46,492 $ 52,507
----------- ------------
----------- ------------
</TABLE>

Included in land and buildings is the Company's New York City headquarters
building, which had a cost of $39.5 million and accumulated depreciation of
$10.0 million at November 30, 1996.

Total depreciation expense was $3.2 million, $3.5 million and $3.7 million
for 1994, 1995, and 1996, respectively.

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities include trade payables of $8.0
million and $11.5 million for 1995 and 1996, respectively, accrued salaries,
wages and other compensation of $5.8 million and $4.5 million for 1995 and 1996,
respectively, and other accrued liabilities of $7.0 million and $6.8 million for
1995 and 1996, respectively, primarily accrued workers compensation and general
liability insurance.

SUPPLEMENTAL CASH FLOW INFORMATION

Tax payments were made by Culbro on behalf of the Company. General Cigar has
been included in Culbro's consolidated federal income tax returns (see Note 6).
Accordingly, tax payments made by Culbro are reflected in net transactions with
Culbro on the combined statement of cash flows. Interest paid by the Company was
$0.6 million, $1.0 million and $1.0 million for 1994, 1995 and 1996,
respectively.

F-28
<PAGE>
GENERAL CIGAR HOLDINGS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

12. BUSINESS SEGMENT INFORMATION

The Company's operations are conducted within one business segment
comprising the manufacturing and marketing of cigars, sold primarily in the
United States, and related activities including the distribution of lighters,
and the operation of a cigar bar. The Company's export sales are not material.

13. COMMITMENTS AND CONTINGENCIES

A portion of the insurance claims related to the loss of an administration
and warehouse facility owned and operated by General Cigar was settled in 1995
(see Note 11), but certain claims remain outstanding. The amounts, if any, for
which these claims will be settled cannot be evaluated at this time.

In connection with the sale of a former subsidiary by Culbro, the Company
remains liable on a machinery lease obligation of approximately $3.0 million
assumed by the purchaser of that former subsidiary.

At November 30, 1996 the Company has entered into firm commitments for
capital expenditures of approximately $5.7 million for the expansion of its
manufacturing and distribution facilities and the addition of machinery and
equipment.

The Company believes that the outcome of currently pending legal proceedings
will not, in the aggregate, have a material adverse effect on the Company's
combined financial position.

F-29
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Shareholders and Directors
of Culbro Corporation

In our opinion, the accompanying balance sheets and the related statements of
income, of changes in stockholders' equity and of cash flows present fairly, in
all material respects, the financial position of the purchased assets of
Villazon & Company, Inc. (as described in Note 1) at December 31, 1995 and 1996,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

As disclosed in the financial statements, the Company has extensive transactions
and relationships with related parties. Because of these relationships, it is
possible that the terms of these transactions are not the same as those that
would result from transactions among wholly unrelated parties.

PRICE WATERHOUSE LLP

Tampa, Florida
March 21, 1997

F-30
<PAGE>
VILLAZON & COMPANY, INC.
STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
<S> <C> <C> <C>
1994 1995 1996
------------- ------------- -------------
Net sales........................................................... $ 19,901,972 $ 24,152,535 $ 40,446,038
------------- ------------- -------------
Costs and expenses:
Cost of sales..................................................... 12,491,696 14,975,595 24,645,299
Selling, general and administrative............................... 3,934,883 4,315,678 5,380,206
------------- ------------- -------------
16,426,579 19,291,273 30,025,505
------------- ------------- -------------
Operating income.................................................... 3,475,393 4,861,262 10,420,533
------------- ------------- -------------
Other income (expense):
Interest income................................................... 32,219 133,463 223,998
Interest expense.................................................. (274,161) (452,401) (552,408)
Other............................................................. 41,570 17,830 65,861
------------- ------------- -------------
(200,372) (301,108) (262,549)
------------- ------------- -------------
Income from continuing operations before income taxes............... 3,275,021 4,560,154 10,157,984
Income taxes........................................................ 39,496 46,666 113,563
------------- ------------- -------------
Net income.......................................................... $ 3,235,525 $ 4,513,488 $ 10,044,421
------------- ------------- -------------
------------- ------------- -------------
Earnings per share.................................................. $ 758.80 $ 1,058.51 $ 2,355.63
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

The accompanying Notes to Financial Statements are an integral part of these
financial statements.

F-31
<PAGE>
VILLAZON & COMPANY, INC.
BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
<S> <C> <C>
1995 1996
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents........................................................ $ 4,525,753 $ 9,731,183
Accounts receivable:
Trade--less allowance of $3,477 and $1,590..................................... 3,572,768 5,566,897
Related party receivables........................................................ 76,213 299,000
Insurance claim receivable....................................................... 104,110
Inventories...................................................................... 3,157,553 3,070,966
Advances to suppliers, net....................................................... -- 472,139
Prepaid expenses................................................................. 182,373 181,604
------------- -------------
Total current assets....................................................... 11,618,770 19,321,789

Deposits........................................................................... -- 40,450
Cash surrender value of insurance on lives of officers, net of policy loans of
$55,027 and $0................................................................... 867,186 1,082,706
Available-for-sale securities...................................................... 41,121 51,021
Property, plant and equipment, net................................................. 840,361 718,597
Trademarks, at cost, less accumlulated amortization of $34,313 and $29,138......... 96,460 183,379
------------- -------------
Total assets............................................................... $ 13,463,898 $ 21,397,942
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Debt due within one year......................................................... $ 468,200 $ 3,686
Accounts payable................................................................. 798,532 1,205,128
Related party payables........................................................... -- 1,629,674
Income taxes payable............................................................. 12,946 66,370
Accrued liabilities:
Bonuses, vacation, salaries and wages.......................................... 196,294 218,697
Contribution to profit-sharing plan............................................ 224,099 248,434
Other.......................................................................... 1,423 4,255
------------- -------------
Total current liabilities.................................................. 1,701,494 3,376,244

Long-term debt..................................................................... 3,260,056 5,139,756
------------- -------------
Total liabilities.......................................................... 4,961,550 8,516,000
------------- -------------
Commitments and contingencies (Notes 7, 8 and 10)

Stockholders' equity:
Common stock, $50 par value: authorized 10,000 shares; issued and outstanding
4,264 shares................................................................... 213,200 213,200
Capital in excess of par value................................................... 223,659 223,659
Unrealized gains on securities................................................... 41,121 51,021
Retained earnings................................................................ 8,024,368 12,394,062
------------- -------------
Total stockholders' equity................................................. 8,502,348 12,881,942
------------- -------------
Total liabilities and stockholders' equity................................. $ 13,463,898 $ 21,397,942
------------- -------------
------------- -------------
</TABLE>

The accompanying Notes to Financial Statements are an integral part of these
financial statements.

F-32
<PAGE>
VILLAZON & COMPANY, INC.
STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
<S> <C> <C> <C>
1994 1995 1996
------------ ------------ -------------
OPERATING ACTIVITIES
Net income............................................................ $ 3,235,525 $ 4,513,488 $ 10,044,421
Adjustments to reconcile net income to net cash provided by operating
activities:
Gain on sale of assets.............................................. (21,000) -- --
Depreciation and amortization....................................... 119,061 138,295 169,978
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable--trade...................................... (510,166) (516,934) (1,994,129)
Related party receivable........................................ (44,609) 12,446 (222,787)
Insurance claim receivable...................................... -- (104,110) 104,110
Inventories..................................................... 938,262 278,095 86,587
Advances to suppliers........................................... -- -- (472,139)
Prepaid expenses................................................ 27,980 (54,702) 769
Trademarks...................................................... (28,391) (34,069) (96,485)
Deposits........................................................ -- -- (40,450)
Increase (decrease) in liabilities:
Accounts payable................................................ 130,786 79,166 406,596
Related party payables.......................................... (647,472) (77,500) 1,629,674
Income taxes payable............................................ 10,988 (12,011) 53,424
Accrued liabilities............................................. 31,924 16,196 49,570
------------ ------------ -------------
Net cash provided by operating activities............................. 3,242,888 4,238,360 9,719,139
------------ ------------ -------------
INVESTING ACTIVITIES
Decrease (increase) in cash surrender value of insurance on lives of
officers............................................................ 96,546 (51,655) (215,520)
Purchase of property, plant and equipment............................. (46,290) (538,880) (35,802)
Proceeds (payments) from sale of property, plant and equipment........ 51,055 16,337 (2,846)
------------ ------------ -------------
Net cash provided by (used in) investing activities................... 101,311 (574,198) (254,168)
------------ ------------ -------------
FINANCING ACTIVITIES
Net proceeds (payments) on related party debt......................... 10,498 (45,347) (461,352)
Net proceeds from long-term debt...................................... 378,764 689,177 1,876,538
Distributions to stockholders......................................... (1,314,685) (3,300,699) (5,674,727)
------------ ------------ -------------
Net cash used in financing activities................................. (925,423) (2,656,869) (4,259,541)
------------ ------------ -------------
Net increase in cash.................................................. 2,418,776 1,007,293 5,205,430
Cash and cash equivalents at beginning of year........................ 1,099,684 3,518,460 4,525,753
------------ ------------ -------------
Cash and cash equivalents at end of year.............................. $ 3,518,460 $ 4,525,753 $ 9,731,183
------------ ------------ -------------
------------ ------------ -------------
SUPPLEMENTAL DISCLOSURES
Cash paid for income taxes.......................................... $ 18,307 $ 58,678 $ 60,139
------------ ------------ -------------
------------ ------------ -------------
Cash paid for interest.............................................. $ 274,161 $ 452,356 $ 553,830
------------ ------------ -------------
------------ ------------ -------------
NONCASH INVESTING AND FINANCING ACTIVITIES:
Available-for-sale securities received as a result of
demutualization of insurance company.............................. $ -- $ 41,121 $ --
------------ ------------ -------------
------------ ------------ -------------
</TABLE>

The accompanying Notes to Financial Statements are an integral part of these
financial statements.

F-33
<PAGE>
VILLAZON & COMPANY, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

<TABLE>
<CAPTION>
COMMON STOCK CAPITAL IN TOTAL
----------------------- EXCESS OF UNREALIZED RETAINED STOCKHOLDERS'
SHARES AMOUNT PAR VALUE GAINS EARNINGS EQUITY
----------- ---------- ---------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993......... 4,264 $ 213,200 $ 223,659 $ -- $ 4,890,739 $ 5,327,598
Net income for the year 1994....... 3,235,525 3,235,525
Distributions to stockholders...... (1,314,685) (1,314,685)
----- ---------- ---------- ----------- ------------- -------------
Balance at December 31, 1994......... 4,264 213,200 223,659 -- 6,811,579 7,248,438
Change in unrealized gains on
available-for-sale securities.... 41,121 41,121
Net income for the year 1995....... 4,513,488 4,513,488
Distributions to stockholders...... (3,300,699) (3,300,699)
----- ---------- ---------- ----------- ------------- -------------
Balance at December 31, 1995......... 4,264 213,200 223,659 41,121 8,024,368 8,502,348
Change in unrealized gains on
available-for-sale securities.... 9,900 9,900
Net income for the year 1996....... 10,044,421 10,044,421
Distributions to stockholders...... (5,674,727) (5,674,727)
----- ---------- ---------- ----------- ------------- -------------
Balance at December 31, 1996......... 4,264 $ 213,200 $ 223,659 $ 51,021 $ 12,394,062 $ 12,881,942
----- ---------- ---------- ----------- ------------- -------------
</TABLE>

The accompanying Notes to Financial Statements are an integral part of these
financial statements.

F-34
<PAGE>
VILLAZON & COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

BASIS OF PRESENTATION AND SUBSEQUENT EVENT

Pursuant to a purchase agreement dated December 20, 1996 (effective January
1, 1997), General Cigar Co., Inc., ("General") a subsidiary of Culbro
Corporation, acquired certain operations and substantially all of the assets of
Villazon and Company, Inc. (the "Company"), which is in the business of
producing and selling of cigars. The final purchase price of $38,450,000 in cash
along with $10,000,000 in promissory notes, the 1996 profits and the assumption
of certain liabilities, is contingent upon any purchase price adjustments made
on the December 31, 1996 balance sheet. The assets acquired consist of the
Villazon and Company ("Villazon") and its related divisions, Danby-Palicio
("Danby") and Tinder Box Wholesale ("TBW") (collectively known as Villazon and
Co., Inc.). The Company's principal facilities consist of cigar manufacturing
operations in Tampa, Florida and distribution operations in Upper Saddle River,
New Jersey. Excluded from the assets acquired was the Company's 79.01% ownership
interest in James B. Russell, Inc. ("JBR") (see Note 6) and two pieces of real
property located in Ybor City and Miami, Florida. Prior to the acquisition, the
financial results of the Company included the consolidated results of JBR, which
was not acquired by General. The accompanying financial statements present the
financial position, results of operations and cash flows of Villazon and Co.,
Inc., on a carved out basis as if the assets acquired had been an independent
reporting entity for all periods presented.

The statements of income include all revenues and costs directly
attributable to the Company, and the allocation of certain corporate expenses
which were allocated to JBR (see Note 6). Expenses have historically been
allocated based on the nature of the expense. Allocated expenses include
administrative services, rent, legal and accounting fees, certain employee
benefits and other similar overhead costs. All of the allocations and estimates
in the statements of income are based on assumptions that the Company's
management believes are reasonable under the circumstances. However, these
allocations and estimates are not necessarily indicative of the costs and
expenses that would have resulted if JBR had operated as a separate entity.

Subsequent to the purchase transaction, the stock and remaining assets of
the Company will be known as Preferred Havana, Inc.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on deposit in time deposit accounts
which mature within 90 days of purchase.

INVENTORIES

Supplies, work in process and finished goods are valued at the lower of cost
(using the first-in, first-out method) or market. Leaf tobacco is valued at the
lower of cost (using the specific identification method) or market.

Leaf tobacco includes tobacco in the process of aging, a substantial amount
of which may not be used within one year. It is industry practice to include
such inventories as current assets. Leaf tobacco also includes tobacco in bond
which is subject to custom duties upon withdrawal from bond. Following industry
practice, the Company does not include such duties in inventories until paid.

F-35
<PAGE>
VILLAZON & COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
AVAILABLE-FOR-SALE SECURITIES

Management determines the appropriate classification of securities at the
time of acquisition and re-evaluates such designation as of each balance sheet
date. Marketable equity securities are classified as available-for-sale.
Available-for-sale securities are carried at fair value, with the unrealized
gains and losses reported in a separate component of stockholders' equity.
Available-for-sale securities at December 31, 1995 and 1996 are equity
securities in an insurance company issued at the time of conversion from a
mutual to a stock company with zero cost basis and estimated fair value of
$41,121 and $51,021, respectively.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are recorded at cost and depreciated using
either straight line or accelerated methods. Maintenance and repairs are charged
to expense as incurred.

TRADEMARKS

Trademarks consist of registered trade names of cigars or other tobacco
brands, and are initially capitalized at acquisition cost. Costs associated with
renewal of trademark registrations are also capitalized. Trademarks are being
amortized on a straight line basis over 5 to 15 years. Related amortization
expense of $2,956, $8,769 and $9,566 for the years ended December 31, 1994, 1995
and 1996, respectively, is included in selling, general and administrative
expenses.

REVENUE RECOGNITION

Sales and the related costs of sales are recognized upon shipment of
products. Excise taxes for the years ended December 31, 1994, 1995 and 1996,
were approximately $1,005,000, $1,149,000 and $1,571,826, respectively, and are
included in net sales and cost of sales in the statements of income.

EARNINGS PER SHARE

Earnings per share of common stock is computed by dividing net income by the
weighted average number of common shares outstanding during the period. Primary
and fully diluted earnings per share are equivalent.

ESTIMATES

Preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements. Actual results could
differ from the estimates.

FINANCIAL INSTRUMENTS

The Company's financial instruments include cash and cash equivalents,
accounts receivable, advances to suppliers, cash surrender value of insurance on
lives of officers, available-for-sale securities, notes payable, accounts
payable and long-term debt. In the opinion of management, the carrying amount of
these financial instruments approximates their fair value.

F-36
<PAGE>
VILLAZON & COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to concentrations
of credit risk consist primarily of accounts receivable. The Company's customers
are geographically dispersed but are concentrated in the tobacco industry. The
Company historically has had no material losses on its accounts receivable from
customers in excess of allowances provided. The Company's two largest customers
accounted for approximately $3,516,139 (16%) and $3,136,208 (14%) in 1994,
$4,048,250 (15%) and $3,633,613 (13%) in 1995; and $10,040,082 (25%) and
$4,831,586 (12%) of net sales in 1996.

2. INVENTORIES:

Inventories consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
<S> <C> <C>
1995 1996
------------ ------------
Leaf tobacco...................................................... $ 502,959 $ 857,985
Work in process................................................... 899,229 322,896
Finished goods.................................................... 1,322,395 1,288,066
Supplies.......................................................... 432,970 602,019
------------ ------------
$ 3,157,553 $ 3,070,966
------------ ------------
------------ ------------
</TABLE>

3. ADVANCES TO SUPPLIERS:

Advances to Suppliers at December 31, 1996 consist of the following:

<TABLE>
<S> <C>
Advances to tobacco grower........................................ $ 410,000
Advances--other................................................... 175,830
Reserve for uncollectible advances................................ (113,691)
---------
$ 472,139
---------
---------
</TABLE>

During 1996, the Company, under a three year verbal agreement with a tobacco
supplier, advanced $410,000 to finance the growing, harvesting, curing and
sorting of tobacco. The Company will be reimbursed for its advances from annual
proceeds from the sale of crop. In addition, annual net income, if any, of the
supplier during the term of the arrangement will be divided equally between the
supplier and the financiers of the tobacco growing venture. The Company will
have the right of first refusal to purchase its proportionate share of tobacco
grown during the term of the arrangement. The Company is at risk for potential
crop loss. As of December 31, 1996, no tobacco has been purchased by the Company
from the supplier.

The Company has also advanced approximately $176,000 to two tobacco
suppliers in South America and Mexico during 1996 as a deposit on future
purchases.

F-37
<PAGE>
VILLAZON & COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

4. PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment and related accumulated depreciation and
amortization of capital leases are summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
<S> <C> <C>
1995 1996
----------- -----------
Land............................................................... $ 49,998 $ 49,998
Buildings and improvements......................................... 374,682 377,528
Machinery and equipment............................................ 601,866 597,583
Transportation equipment........................................... 543,423 543,854
Office furniture and equipment..................................... 347,856 369,085
Leasehold improvements............................................. 146,574 151,790
----------- -----------
2,064,399 2,089,838
Less accumulated depreciation...................................... (1,224,038) (1,371,241)
----------- -----------
$ 840,361 $ 718,597
----------- -----------
----------- -----------
</TABLE>

Depreciation is determined on the straight-line and accelerated methods
using estimated useful lives as follows:

<TABLE>
<S> <C>
Buildings and improvements.................................. 5--31 1/2
years
Machinery and equipment..................................... 4--15 years
Transportation equipment.................................... 3--12 years
Office furniture and equipment.............................. 5--10 years
Leasehold improvements...................................... 5--10 years
</TABLE>

Depreciation expense was $116,105, $129,526 and $160,412 in 1994, 1995 and
1996, respectively.

5. DEBT:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
<S> <C> <C>
1995 1996
------------ ------------
Prime plus 1/2% (8.75% at December 31, 1995) unsecured demand notes payable to related
parties............................................................................. $ 461,352 $ --
Prime plus 1/2% (8.75% at December 31, 1996) unsecured notes payable to officers and
stockholders, due in 1999 or payable 13 months after notice 3,256,370 5,139,756
10.38% capital lease obligation on UPS manifest system, due $1,912 per quarter through
1997................................................................................ 10,534 3,686
------------ ------------
3,728,256 5,143,442
Less amount due within one year....................................................... (468,200) (3,686)
------------ ------------
Long-term debt due after one year..................................................... $ 3,260,056 $ 5,139,756
------------ ------------
------------ ------------
</TABLE>

Total interest expense to related parties was $267,634 in 1994, $445,180 in
1995 and $549,702 in 1996.

F-38
<PAGE>
VILLAZON & COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. DEBT: (CONTINUED)
The maturities of long-term debt at December 31, 1996 are as follows:

Subsequent to December 31, 1996 long term debt payable to the officers and
stockholders of the Company was repaid by General in accordance with the
purchase agreement (see Note 1).

6. RELATED PARTY TRANSACTIONS:

The Company has had transactions in the normal course of business with
various other corporations, certain of whose directors or officers are also
directors of the Company.

HATSA

Certain stockholders of the Company hold a 45% interest in Honduras American
Tabaco, S.A. ("HATSA"). The Company purchases cigars, boxes and tobacco leaf
from HATSA, and the Company sells tobacco and other supplies purchased from
third parties to HATSA. Purchases and sales are netted, resulting in a net
receivable or payable to HATSA. The net receivable (payable) was $17,587 at
December 31, 1995 and ($1,629,674) at December 31, 1996. Payments to HATSA are
made when requested by HATSA. Approximately $5,668,000 in purchases were made in
1994, $7,450,000 in 1995 and $12,414,000 in 1996, and approximately $1,590,000
in sales were made in 1994, $2,141,000 in 1995 and $2,790,000 in 1996.

NATSA

Nicaragua American Tobacco S.A. ("NATSA") was formed in 1996 and is owned by
parties related to the Company including a minority stockholder and an employee.
The Company began purchasing cigars from NATSA in 1996 and, at December 31,
1996, is the only customer. The Company has advanced money to NATSA for future
purchases and sells tobacco purchased from other suppliers to NATSA, resulting
in a net receivable from NATSA of approximately $255,622 at year-end. The
Company had total purchases from NATSA of approximately $2,129,000 during the
year.

Prior to the acquisition of the Company by General, all interests held in
NATSA were divested by the Company's stockholders in accordance with the
purchase agreement referred to in Note 1.

MANUFACTURERS BANK

Certain stockholders and members of the Company's Board of Directors are
also stockholders and members of the Board of Directors of The Manufacturers
Bank of Florida. The Company uses banking services provided by and purchases
certificates of deposit issued by The Manufacturers Bank of Florida. Fees paid
to The Manufacturers Bank of Florida were immaterial.

F-39
<PAGE>
VILLAZON & COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

6. RELATED PARTY TRANSACTIONS: (CONTINUED)
TINDER BOX INTERNATIONAL

A major stockholder of the Company owns 37.5% of Tinder Box International,
Ltd. (TBI). In August 1989, the Company entered into a ten-year license
agreement with TBI which provides the Company the right to sell and distribute
specialized products. In consideration of the license granted, the Company
remits a royalty to TBI based on a percentage of net sales of the products sold
under the license. The license agreement provides for a 6% royalty percentage
which will increase to 7% or 8% if related sales during any twelve-month period
exceed $3,000,000 or $5,000,000, respectively. Prior to 1994, the license
agreement was verbally amended to reduce the royalty percentage to 3% on sales
$3,000,000 and less. Royalty expense for the years ended December 31, 1994, 1995
and 1996 was approximately $37,000, $43,000 and $64,000, respectively (at 3% of
the related sales).

The terms of the license agreement also contain certain covenants whereby at
the option of the licensee or licensor, the license agreement may be terminated.
These terms include the sale of majority ownership of the Company or a sale of
all or a substantial portion of the Company's stock. Additionally, the Company
has agreed that if TBI is sold, the Company will terminate its ownership of
Tinderbox Wholesale Division which was originally purchased from TBI. TBI shall
purchase all of the Company's inventories of Tinder Box Products, at licensee's
cost, and all of the equipment, fixtures and supplies which the Company
purchased from TBI at the lesser of market value or depreciated cost.

JBR

Certain stockholders and members of the Board of Directors own the 20.99% of
JBR that is not owned by the Company. Two of the Company's divisions, Danby and
Tinder Box Wholesale ("TBW"), occupy the same premises as JBR in Upper Saddle
River, New Jersey, and share certain administrative services (see Note 10).
Danby, TBW and JBR incur certain related administrative and overhead expenses as
a result of occupying these same premises. At December 31, 1995 and 1996
Villazon had a receivable of approximately $58,000 and $38,000, respectively,
from JBR for administrative expenses incurred on behalf of JBR. During the years
ended December 31, 1994, 1995 and 1996, $242,000, $266,000 and $270,000 in
administrative and rental expenses were allocated to JBR.

OTHER

Rentals paid to related parties were approximately $253,000 in 1994, 1995
and 1996. See Note 10 for related party leases. Also see Note 5 for related
party debt.

7. STOCK PURCHASE AGREEMENT:

Under an agreement between the Company and its stockholders, any stockholder
desiring to pledge, encumber or otherwise dispose of his stock in the Company
during his lifetime shall first obtain the written consent of the Company and
the stockholders. Stock may be sold, however, if the stock is first offered to
the Company and the nonselling stockholders at the same price and on the same
terms and conditions as those offered to the third party. The offered shares may
be sold to any other person if both the Company and the remaining stockholders
do not exercise their rights. Under terms of the agreement, the purchase price
of each share of stock purchased in a transfer upon death shall be $3,517.82
unless redetermined by agreement of the Company and the stockholders.

F-40
<PAGE>
VILLAZON & COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

7. STOCK PURCHASE AGREEMENT: (CONTINUED)
The stock purchase agreement also calls for the Company to maintain life
insurance policies to insure or partially insure its obligations under the
agreement. Additionally, in the event a stockholder sells all of his stock in
the Company, the stockholder shall have the right to purchase from the Company
the insurance policies on his life for a price equal to the cash surrender value
and accumulated dividends, less the balance of any outstanding loans.

8. EMPLOYEE BENEFITS:

All factory employees are participants in the Cigar Makers' Union Local 533,
Retail, Wholesale and Department Store Union Plan which is a multi-employer
defined contribution plan. The Company's contribution is based on the rate of
$.70 per hour for the first 40 hours per week per employee in 1994, 1995 and
1996. Under the Employee Retirement Income Security Act of 1974, as amended by
the Multi-employer Pension Plan Amendments Act of 1980, an employer is liable
for a proportionate part of the plan's unfunded vested benefits.

The relative position of each employer with respect to actuarial present
value of accumulated benefits and net assets available for benefits, however, is
not available to the Company.

Profit-sharing plans cover nonunion employees who meet certain eligibility
requirements. The plans are funded by discretionary contributions from the
Company and JBR.

The expenses of these plans are as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
<S> <C> <C> <C>
1994 1995 1996
---------- ---------- ----------
Union plan charge to cost of sales........................................... $ 128,976 $ 143,234 $ 144,793
Profit-sharing plan charged to selling, general and administrative
expenses................................................................... 185,727 211,763 218,066
---------- ---------- ----------
$ 314,703 $ 354,997 $ 362,859
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

9. INCOME TAXES:

The Company has elected by unanimous consent of its stockholders to be taxed
under the provisions of Subchapter S of the Internal Revenue Code. Under those
provisions, the Company generally does not pay federal corporate income taxes on
its taxable income. Instead, the stockholders are liable for individual federal
income taxes on their respective share of the Company's taxable income. Certain
states do not recognize the Subchapter S election and, accordingly, require the
payment of taxes by the Company. Income tax expense associated with those states
that do not recognize the Subchapter S election was approximately $39,000,
$47,000 and $114,000 at December 31, 1994, 1995 and 1996, respectively.

10. COMMITMENTS AND CONTINGENCIES:

OPERATING LEASES

The Company occupies premises in Upper Saddle River, New Jersey. The
building is owned by Glordiane Realty, a partnership of the principals of the
Company. A ten year lease, effective December 1, 1984, provided for rent of
approximately $24,000 ($4,000 relating to JBR) per month effective July 1, 1985

F-41
<PAGE>
VILLAZON & COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

10. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
plus a proportionate share of any increase in realty taxes and expenses.
Subsequent to year-end the rental agreement was revised and provided for monthly
rentals of approximately $13,500 per month. This rental agreement became
effective January 1, 1997 and extends through December 31, 2000.

Future minimum rental commitments for all noncancelable operating leases are
as follows:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, TOTAL
- ---------------------------------------------------------------------------------- ----------
<S> <C>
1997.............................................................................. $ 184,223
1998.............................................................................. 162,223
1999.............................................................................. 162,223
2000.............................................................................. 162,223
</TABLE>

LITIGATION

The Company is party to litigation in the normal course of business. While
the result of litigation cannot be predicted with certainty, the Company
believes that the final outcome of all litigation will not have a material
adverse effect on the Company's financial condition.

TOBACCO TAXES

On February 25, 1997, the Company was notified by subpoena that the New York
State Department of Taxation and Finance, as part of an industry wide
investigation, is investigating six years of financial information to determine
if the Company is liable for back taxes on the import of tobacco. The state of
New York requires a tobacco import tax to be paid by a distributor, on behalf of
a retailer, and is calculated as 20% of the wholesale cost. While management
believes that the final outcome will not have a material effect on the Company's
financial condition, the result of this litigation cannot presently be
determined.

F-42
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Directors of
Culbro Corporation

In our opinion, the accompanying balance sheets and the related statements
of operations and retained earnings and of cash flows present fairly, in all
material respects, the financial position of Honduras American Tabaco, S. A. de
C. V. at December 31, 1996 and December 31, 1995 and the results of its
operations and its cash flows for the years ended December 31, 1996, 1995 and
1994 in conformity with generally accepted accounting principles in the United
States of America. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

As discussed in the financial statements, the Company has extensive
transactions and relationships with related parties. Because of these
relationships, it is possible that the terms of these transactions are not the
same as those that would result from transactions among wholly unrelated
parties.

PRICE WATERHOUSE
Tegucigalpa, Honduras
March 12, 1997

F-43
<PAGE>
HONDURAS AMERICAN TABACO, S. A. DE C. V.
BALANCE SHEETS
(EXPRESSED IN US DOLLARS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
<S> <C> <C>
1996 1995
------------ ------------

<CAPTION>
ASSETS
<S> <C> <C>
Current assets:
Cash................................................................................ $ 176,508 $ 611,512
Accounts receivable--trade.......................................................... 95,820 115,314
Related party receivable............................................................ 1,629,673 --
Inventories......................................................................... 3,693,247 3,670,742
Prepaid expenses.................................................................... 18,070 14,424
------------ ------------
Total current assets.............................................................. 5,613,318 4,411,992
Property, plant and equipment, net.................................................... 569,369 395,808
Other assets.......................................................................... 6,000 6,000
------------ ------------
Total assets...................................................................... $ 6,188,687 $ 4,813,800
------------ ------------
------------ ------------
<CAPTION>

LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>

Current liabilities:
Accounts payable and accrued liabilities............................................ $ 27,233 $ 83,020
Related party payables.............................................................. 6,058 280,623
------------ ------------
Total current liabilities......................................................... 33,291 363,643
------------ ------------

Stockholders' Equity:
Common stock........................................................................ 2,105,328 2,105,328
Retained earnings................................................................... 4,050,068 2,344,829
------------ ------------
Total stockholders' equity........................................................ 6,155,396 4,450,157
------------ ------------
Total liabilities and stockholders' equity........................................ $ 6,188,687 $ 4,813,800
------------ ------------
------------ ------------
</TABLE>

The accompanying notes to financial statements are an integral part of these
financial statements.

F-44
<PAGE>
HONDURAS AMERICAN TABACO, S.A. DE C.V.
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(EXPRESSED IN US DOLLARS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
<S> <C> <C> <C>
1996 1995 1994
------------- ------------ ------------
Net sales......................................................... $ 12,585,145 $ 7,282,830 $ 5,832,953
------------- ------------ ------------
Cost and expenses:
Cost of goods sold.............................................. 8,297,715 5,249,450 3,818,682
Administrative expenses......................................... 278,555 202,965 168,099
------------- ------------ ------------
Operating profit.................................................. 4,008,875 1,830,415 1,846,172
Other income (expense)............................................ 36,171 (2,045) 9,048
Foreign currency losses........................................... (47,579) (337,799) (344,818)
------------- ------------ ------------
Net income........................................................ 3,997,467 1,490,571 1,510,402
Retained earnings--beginning of year.............................. 2,344,829 2,302,035 1,562,881
Distribution to stockholders...................................... (2,292,228) (1,447,777) (771,248)
------------- ------------ ------------
Retained earnings--end of year.................................... $ 4,050,068 $ 2,344,829 $ 2,302,035
------------- ------------ ------------
------------- ------------ ------------
Earnings per share................................................ $ 19.98 $ 7.45 $ 7.55
------------- ------------ ------------
------------- ------------ ------------
</TABLE>

The accompanying notes to financial statements are an integral part of these
financial statements.

F-45
<PAGE>
HONDURAS AMERICAN TABACO, S.A. DE C.V.
STATEMENTS OF CASH FLOWS
(EXPRESSED IN US DOLLARS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
<S> <C> <C> <C>
1996 1995 1994
------------ ------------ ------------
OPERATING ACTIVITIES:
Net income............................................................ $ 3,997,467 $ 1,490,571 $ 1,510,402
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING
ACTIVITIES:
Depreciation.......................................................... 84,957 78,359 78,900

CHANGES IN OPERATING ASSETS AND LIABILITIES:
(Increase) decrease in assets:
Accounts receivable--trade.......................................... 19,494 (32,426) 66,124
Related party receivables........................................... (1,629,673) 77,500 930,820
Inventories......................................................... (22,505) (608,206) (840,352)
Prepaid expenses.................................................... (3,646) (4,485) 7,503
Increase (decrease) in liabilities:
Related party payables.............................................. (274,565) 107,438 23,050
Accounts payable and accrued liabilities............................ (55,787) (38,105) (248,452)
------------ ------------ ------------
Net cash provided by operating activities............................... 2,115,742 1,070,646 1,527,995
------------ ------------ ------------

INVESTING ACTIVITIES:
Purchase of property, plant and equipment............................. (258,518) (76,672) (290,381)
------------ ------------ ------------
Net cash used in investing activities................................... (258,518) (76,672) (290,381)
------------ ------------ ------------
FINANCING ACTIVITIES:
Paid in capital....................................................... -- 475,698 --
Distribution to stockholders.......................................... (2,292,228) (1,447,777) (771,248)
------------ ------------ ------------
Net cash used in financing activities................................... (2,292,228) (972,079) (771,248)
------------ ------------ ------------
Net (decrease) increase in cash......................................... (435,004) 21,895 466,366
Cash at beginning of year............................................... 611,512 589,617 123,251
------------ ------------ ------------
Cash at end of year..................................................... $ 176,508 $ 611,512 $ 589,617
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

The accompanying notes to financial statements are an integral part of these
financial statements.

F-46
<PAGE>
HONDURAS AMERICAN TABACO, S. A. DE C.V.
NOTES TO FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS

Honduras American Tabaco, S. A. de C.V. ("the Company") manufactures and
sells cigars and related tobacco products. The Company sells approximately 95%
of its production to Villazon & Company, Inc., a related party company located
in the United States.

The Company's maximum authorized fully paid common stock is L 10,000,000
(equivalent to $2,105,328 at December 31, 1996) represented by 200,000 shares of
par value L 50 each.

2. SIGNIFICANT ACCOUNTING POLICIES

A summary of significant accounting policies adopted by the Company, in
accordance with generally accepted accounting principles in the United States,
are summarized as follows:

TRANSLATION OF FINANCIAL STATEMENTS INTO U. S. DOLLARS. The Company's
records are maintained in Honduran lempiras (L), and in U.S. dollars as from
November 1, 1996, consequently a translation into U.S. dollars was applied to
the local currency prepared financial statements at December 31, 1995 and 1994
in accordance with Statement of Financial Accounting Standards ("SFAS") No. 52,
"Foreign Currency Translation". U.S. dollars was established as functional
currency for purposes of the translation. Monetary assets and liabilities are
translated at year end exchange rates and non-monetary items are translated at
historical rates. Income and expense accounts are translated at the average
rates in effect during the year, except for depreciation and cost of product
sales which are translated at historical rates. Gains and losses from changes in
exchange rates are recognized in income in the year of occurrence.

INVENTORIES. Supplies, work in process and finished goods are stated at the
lower of cost or market using the first-in, first-out method. Leaf tobacco is
valued at the lower of cost or market using the specific identification method.
Leaf tobacco includes tobacco in the process of aging, a substantial amount of
which may not be used within one year. It is industry practice to include such
inventories as current assets.

PROPERTY, PLANT AND EQUIPMENT. Property, plant and equipment are recorded
at cost. Depreciation is determined on a straight-line basis over the estimated
useful assets lives for financial statement reporting purposes. Expenditures for
maintenance and repairs are charged to expense when incurred.

REVENUE RECOGNITION. Sales and the related costs of sales are recognized
primarily upon shipment of products. Sales are presented net of goods returned
by customers.

EARNINGS PER SHARE. Earnings per share of common stock is computed by
dividing net income by the number of common shares outstanding during the year.

ESTIMATES. Preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements. Actual
results could differ from the estimates.

FINANCIAL INSTRUMENTS. The Company's financial instruments include cash,
accounts receivable and accounts payable. In the opinion of management, the
carrying amount of these financial instruments approximates their fair value.

CONCENTRATION OF CREDIT RISKS. Financial instruments that potentially
subject the Company to concentrations of credit risk consist primarily of
accounts receivable. The Company historically has had no material losses on its
accounts receivable from customers in excess of allowances provided. The
Company's

F-47
<PAGE>
HONDURAS AMERICAN TABACO, S. A. DE C.V.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
largest customer is Villazon & Company, Inc. which accounted for approximately
92%, 95% and 92% of net sales for the years ended December 31, 1996, 1995 and
1994, respectively.

SEVERANCE COMPENSATION. Accrued severance compensation for employees under
the terms of the Honduran Labor Code may be payable to them in the event of
dismissal. It is Company's policy to pay this compensation to its employees
regardless of dismissal events at year end.

ADJUSTMENTS AND RECLASSIFICATIONS. Certain adjustments and
reclassifications in the financial statements have been made to comply with
accounting principles generally accepted in the United States.

3. INVENTORIES

As of December 31, inventories consist of the following:

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Leaf tobacco...................................................... $ 2,596,163 $ 2,747,267
Supplies.......................................................... 999,634 914,982
Leaf tobacco in transit........................................... 90,029 --
Goods in transit.................................................. 7,421 8,493
------------ ------------
$ 3,693,247 $ 3,670,742
------------ ------------
------------ ------------
</TABLE>

4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment and related accumulated depreciation are
summarized as follows:

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Land.............................................................. $ 80,242 $ 36,595
Buildings and improvements........................................ 549,662 422,731
Machinery and equipment........................................... 566,179 486,496
Transportation equipment.......................................... 127,967 127,967
Office furniture and equipment.................................... 99,385 91,128
------------ ------------
1,423,435 1,164,917
Less--Accumulated depreciation.................................... (854,066) (769,109)
------------ ------------
$ 569,369 $ 395,808
------------ ------------
------------ ------------
</TABLE>

Depreciation is determined on the straight-line method using estimated
useful lives as follows:

<TABLE>
<CAPTION>
Buildings and improvements........................................ 10 years
<S> <C>
Machinery and equipment........................................... 4-5 years
Transportation equipment.......................................... 5 years
Office furniture and equipment.................................... 4-5 years
</TABLE>

F-48
<PAGE>
HONDURAS AMERICAN TABACO, S. A. DE C.V.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. STOCK PURCHASE AGREEMENT AND PROPOSED SALE

Under an agreement between the Company and its stockholders, any stockholder
desiring to pledge, encumber or otherwise dispose of his stock in the Company
during his lifetime shall first obtain the written consent of the Company and
the stockholders. Stock may be sold, if the stock is first offered to the
nonselling stockholders at the same price and on the same terms and conditions
as those offered to the third party. The offered shares may be sold to any other
person if both the Company and the remaining stockholders do not exercise their
rights. Under terms of the agreement, no purchase price has been predetermined
for each share of stock purchased in a transfer upon death.

6. TAX BENEFITS

The Company is eligible to benefit from the Temporary Import Regime (RIT)
through resolutions issued by the Ministry of Economy, which expire in the year
1998. Tax benefits include:

a) Exemption from payment of certain taxes and customs duties on
imports of equipment and raw materials used in the production and
exportation of cigars and related products.

b) Exemption from payment of income tax, for a 10 year period, on
profits generated by cigars and related products exports to foreign
countries, excluding the Central American region.

7. OPERATING LEASES

Future minimum rental payments under a noncancellable lease agreement with a
related party as of December 31, 1996 are:

Total rental expenses for operating leases were approximately $33,800,
$16,000 and $12,000 in 1996, 1995 and 1994, respectively.

8. SUBSEQUENT EVENT

Pursuant to a stock purchase agreement dated December 23, 1996, General
Cigar Co., Inc., a subsidiary of Culbro Corporation, acquired all the stock of
the Company for $20 million in cash. The transaction was completed January 21,
1997 and is effective as of January 1, 1997. The final purchase price is
contingent upon any purchase price adjustments made on the December 31, 1996
financial statements.

F-49
<PAGE>
ANNEX I
AGREEMENT AND PLAN OF MERGER
OF
CULBRO CORPORATION
(A NEW YORK CORPORATION)
INTO
GENERAL CIGAR HOLDINGS, INC.
(A DELAWARE CORPORATION)

AGREEMENT AND PLAN OF MERGER (this "Agreement"), entered into as of this
27th day of February, 1997, made by and between Culbro Corporation, a New York
corporation ("Culbro"), and General Cigar Holdings, Inc., a Delaware corporation
("Holdings").

WHEREAS, Holdings is in the process of consummating an initial public
offering of Class A Common Stock (the "Offering"). Immediately following the
Offering, Holdings will have 6,000,000 outstanding shares of Class A Common
Stock, par value $0.01 per share, and 20,087,182 outstanding shares of Class B
Common Stock, par value $0.01 per share.

WHEREAS, Culbro has 4,518,472 shares of common stock outstanding and 385,514
shares of common stock issuable upon the exercise of outstanding options as of
the date of this Agreement.

WHEREAS, the Board of Directors of Culbro and Holdings, respectively, deem
it advisable and generally to the advantage and welfare of the two corporate
parties and their respective shareholders that Culbro merge with Holdings under
and pursuant to the provisions of the Business Corporation Law of the State of
New York and of the General Corporation Law of the State of Delaware (the
"Merger").

NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained and of the mutual benefits hereby provided, it is
agreed by and between the parties hereto as follows:

1. MERGER. Culbro shall be merged into Holdings effective as of the
Effective Time (as defined below).

2. EFFECTIVE TIME. The Effective Time shall be a date mutually agreed to by
the parties (the "Effective Time"), which date shall be as soon as practicable
following the satisfaction of the following conditions: (i) the completion of
the Distribution (as defined in the Distribution Agreement between Culbro and
Culbro Land Resources, Inc. ("CLR")); and (ii) the approval of the Merger by the
shareholders of Culbro, provided that in no event shall the Effective Time occur
earlier than 180 days after the consummation of the Offering without the consent
of Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"). At the Effective
Time, the parties shall cause the Merger to be consummated by filing a
Certificate of Merger with the Secretaries of State of the State of New York and
the State of Delaware, the forms of which are attached hereto as Exhibits A and
B.

3. SURVIVING CORPORATION. Holdings shall survive the Merger herein
contemplated and shall continue to be governed by the laws of the State of
Delaware, but the separate corporate existence of Culbro shall cease forthwith
upon the occurrence of the Effective Time.

4. AUTHORIZED CAPITAL. The authorized capital stock of Holdings following
the Effective Time shall be 50,000,000 shares of Class A Common Stock, par value
$0.01 per share, 25,000,000 shares of Class B Common Stock, par value $0.01 per
share and 20,000,000 shares of Preferred Stock, par value $0.01 per share,
unless and until the same shall be changed in accordance with the laws of the
State of Delaware.

5. CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
Holdings as it exists at the Effective Time shall be the Certificate of
Incorporation of Holdings following the Effective Time unless and until the same
shall be amended or repealed in accordance with the provisions thereof, which
<PAGE>
power to amend or repeal is hereby expressly reserved and all rights or powers
of whatsoever nature conferred in such Certificate of Incorporation or herein
upon any stockholder or director or officer of Holdings or upon any other
persons whomsoever are subject to the reserved power.

6. BYLAWS. The Bylaws of Holdings as they exist at the Effective Time shall
be the Bylaws of Holdings following the Effective Time unless and until the same
shall be amended or repealed in accordance with the provisions thereof.

7. BOARD OF DIRECTORS AND OFFICERS. The members of the Board of Directors
and the officers of Holdings immediately after the Effective Time shall be those
persons who were the members of the Board of Directors and the officers,
respectively, of Holdings immediately prior to the Effective Time, and such
persons shall serve in such offices, respectively, for the terms provided by law
or in the Bylaws, or until their respective successors are elected and
qualified.

8. FURTHER ASSURANCE OF TITLE. If at any time Holdings shall consider or be
advised that any acknowledgements or assurances in law or other similar actions
are necessary or desirable in order to acknowledge or confirm in and to Holdings
any right, title, or interest of Culbro held immediately prior to the Effective
Time, Culbro and its proper officers and directors shall and will execute and
deliver all such acknowledgements or assurances in law and do all things
necessary or proper to acknowledge or confirm such right, title, or interest in
Holdings as shall be necessary to carry out the purposes of this Agreement, and
Holdings and the proper officers and directors thereof are fully authorized to
take any and all such action in the name of Culbro or otherwise.

9. CONVERSION OF HOLDINGS CLASS A COMMON STOCK. Each share of Class A Common
Stock, par value $0.01 per share, of Holdings issued and outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, remain an issued and outstanding share
of Class A Common Stock, par value $0.01 per share, of Holdings immediately
following the Merger.

10. CONVERSION OF OUTSTANDING STOCK OF CULBRO. Forthwith upon the occurrence
of the Effective Time, each issued and outstanding share of common stock, par
value $1.00 per share, of Culbro and all rights in respect thereof shall be
converted into 4.44557 fully paid and nonassessable shares of Class B Common
Stock of Holdings, and each certificate nominally representing shares of common
stock of Culbro shall for all purposes be deemed to evidence the ownership of
4.44557 shares of Class B Common Stock of Holdings for each such share of common
stock of Culbro. The holders of such certificates shall not be required
immediately to surrender the same in exchange for certificates of Class B Common
Stock of Holdings, but, as certificates nominally representing shares of common
stock of Culbro are surrendered for transfer, Holdings will cause to be issued
certificates representing shares of Class B Common Stock of Holdings, and, at
any time upon surrender by any holder of certificates nominally representing
shares of common stock of Culbro, Holdings will cause to be issued therefor
certificates for a number of shares of Class B Common Stock of Holdings equal to
the product of

(i) 4.44557, multiplied by

(ii) the number of shares of common stock of Culbro represented by the
certificate delivered for exchange;

provided that all shares of Class B Common Stock shall be subject to conversion
to shares of Class A Common Stock upon transfer (other than to Permitted
Transferees, as defined in the Holdings Certificate of Incorporation), in
accordance with the Holdings Certificate of Incorporation, and holders of shares
of Culbro common stock transferred after the Merger (other than to Permitted
Transferees) will receive certificates for shares of Class A Common Stock in
lieu of Class B Common Stock.

11. CONVERSION OF OUTSTANDING STOCK OPTIONS OF CULBRO. Forthwith upon the
occurrence of the Effective Time, each outstanding option to acquire shares of
Culbro common stock shall

2
<PAGE>
automatically be converted into an option to acquire 4.44557 shares of Class A
Common Stock of Holdings, and the per share exercise price of each such
outstanding option to acquire Culbro common stock shall be reformed as a number
equal to the quotient of

(i) the exercise price per share of the option, divided by

(ii) 4.44557.

Other terms of each outstanding option shall be adjusted as necessary to reflect
the consummation of the Merger, provided that, following the Merger, the option
shall provide the option holder with, in the aggregate, substantially identical
economic benefits as were provided prior to the Merger.

12. ADJUSTMENT OF SHARES OF HOLDINGS ISSUED TO CULBRO. If any outstanding
Culbro stock option is exercised after the date of this Agreement, but prior to
the Effective Time, Culbro will pay to Holdings the amount of the exercise price
received with respect to such Culbro option, and in exchange therefor, Holdings
will issue 4.44557 shares of Class B Common Stock of Holdings to Culbro for each
share of common stock of Culbro issued by Culbro upon the exercise of such
Culbro stock option.

13. RIGHTS AND LIABILITIES OF HOLDINGS. At and after the Effective Time,
Holdings shall succeed to and possess, without further act or deed, all of the
estate, rights, privileges, powers, and franchises, both public and private, and
all of the property, real, personal, and mixed, of each of the parties hereto;
all debts due to Culbro or whatever account shall be vested in Holdings; all
claims, demands, property, rights, privileges, powers and franchises and every
other interest of either of the parties hereto shall be as effectively the
property of Holdings as they were of the respective parties hereto; the title to
any real estate vested by deed or otherwise in Culbro shall not revert or be in
any way impaired by reason of the merger, but shall be vested in Holdings; all
rights of creditors and all liens upon any property of either of the parties
hereto shall be preserved unimpaired, limited in lien to the property affected
by such lien at the Effective Time; all debts, liabilities, and duties of the
respective parties hereto shall thenceforth attach to Holdings and may be
enforced against it to the same extent as if such debts, liabilities, and duties
had been incurred or contracted by it; and Holdings shall indemnify and hold
harmless the officers and directors of each of the parties hereto against all
such debts, liabilities and duties and against all claims and demands arising
out of the merger.

14. SERVICE OF PROCESS ON HOLDINGS. Holdings agrees that it may be served
with process in the State of New York in any proceeding for enforcement of any
obligations of Culbro as well as for the enforcement of any obligation of
Holdings arising from the merger, including any suit or other proceeding to
enforce the right of any shareholder as determined in appraisal proceedings
pursuant to the provisions of Section 907(e)(2)(E) of the NYBCL. Holdings hereby
irrevocably appoints the Secretary of State of the State of New York as its
agent to accept service of process in any proceeding referred to in the
preceding sentence.

15. EXPENSES AND RIGHTS OF DISSENTING SHAREHOLDERS. Notwithstanding anything
to the contrary in this Agreement, shares of Culbro common stock (the
"Dissenting Shares") issued and outstanding immediately prior to the Effective
Time that are held by holders (if any) that have not voted in favor of the
Merger or consented thereto in writing and that have demanded appraisal rights
with respect to their shares of common stock of Culbro in accordance with the
applicable provisions of New York law and, as of the Effective Time, shall not
have failed to perfect (or shall not have effectively withdrawn or lost) their
rights to appraisal and payment under applicable provisions of New York law
shall not be converted into the right to receive Class B Common Stock of
Holdings, but holders of Dissenting Shares shall be entitled to receive a cash
payment in the amount of the appraised value of such shares (the "Appraised
Share Value") in accordance with the provisions of applicable New York law,
except that any Dissenting Shares held by a holder that has failed to perfect or
shall have effectively withdrawn or lost its right to appraisal and payment
under applicable provisions of New York law shall be converted into the right to
receive Class B Common Stock of Holdings. Culbro shall give Holdings (i) prompt
notice of any

3
<PAGE>
written demands for appraisal of any shares, attempted withdrawals of such
demands, and any other
instruments served pursuant to the applicable New York law received by Culbro
relating to stockholders' rights of appraisal, and (ii) the opportunity to
direct all negotiations and proceedings with respect to demands for appraisal
under the applicable New York law. Culbro shall not, except with the prior
written consent of Holdings, voluntarily make any payment with respect to any
demands for appraisals of capital stock of Culbro, offer to settle or settle any
such demands or approve any withdrawal of any such demands. None of the shares
of common stock that would have been issued pursuant to Paragraph 10 of this
Agreement in exchange for Dissenting Shares if such Dissenting Shares had been
converted into Class B Common Stock of Holdings will be issued to any holder of
Culbro common stock or any other person or entity. Holdings shall pay all
expenses of carrying this Agreement into effect and of accomplishing the Merger,
including amounts, if any, to which dissenting shareholders of Culbro may be
entitled by reason of this Merger.

16. TERMINATION. This Agreement may be terminated by Culbro or Holdings if
the conditions set forth in Paragraph 2 of this Agreement, determining the
Effective Time of the Merger, are not satisfied prior to January 1, 1998.

17. GOVERNING LAW. This Agreement shall be administered, interpreted and
enforced under the internal laws of the State of New York without regard to
conflicts of laws thereof.

[signature page follows]

4
<PAGE>
IN WITNESS WHEREOF each of the corporate parties hereto, pursuant to
authority duly granted by the Board of Directors, has caused this Agreement to
be executed by its Vice President and attested by its Secretary and its
corporate seal to be hereunto affixed.

<TABLE>
<S> <C> <C>
ATTEST: CULBRO CORPORATION

/s/ A. ROSS WOLLEN BY: /s/ ANTHONY GALICI
-------------------------------------- ------------------------------------------
Secretary Anthony Galici
Vice President

Corporate Seal

ATTEST: GENERAL CIGAR HOLDINGS, INC.

/s/ A. ROSS WOLLEN BY: /s/ JOSEPH C. AIRD
-------------------------------------- ------------------------------------------
Secretary Joseph C. Aird
Senior Vice President

Corporate Seal
</TABLE>

5
<PAGE>
PRELIMINARY INFORMATION STATEMENT DATED APRIL 8, 1997
A REGISTRATION STATEMENT ON FORM 10 RELATING TO STOCK OF GRIFFIN LAND &
NURSERIES, INC. HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BUT
HAS NOT YET BECOME EFFECTIVE. INFORMATION CONTAINED HEREIN IS SUBJECT TO
COMPLETION AND AMENDMENT.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION AND AMENDMENT

------------------------

INFORMATION STATEMENT
---------------------

GRIFFIN LAND & NURSERIES, INC.
CLASS A COMMON STOCK
(PAR VALUE $0.01 PER SHARE)
CLASS B COMMON STOCK
(PAR VALUE $0.01 PER SHARE)

This Information Statement is being furnished in connection with a special
distribution (the "Distribution") by Culbro Corporation ("Culbro") of one (1)
share of Class B Common Stock, par value $0.01 per share ("Class B Common
Stock"), of Griffin Land & Nurseries, Inc. (formerly known as Culbro Land
Resources, Inc.) ("Griffin") for each share of Culbro common stock, par value $1
per share (the "Culbro Common Stock"), held of record as of the close of
business on , 1997 (the "Record Date"). Each share of Class B Common
Stock is exchangeable for one share of Class A Common Stock, par value $0.01 per
share, of Griffin (the "Class A Common Stock" and, together with the Class B
Common Stock, the "Common Stock"). Application will be made to list the Class A
Common Stock on the Nasdaq National Market ("NASDAQ") under the symbol
" ." See "THE DISTRIBUTION--Listing and Trading of the Common Stock; No
Prior Market for the Common Stock." The Distribution will result in 100% of the
outstanding shares of Class B Common Stock being distributed to the holders of
Culbro Common Stock. On , 1997 (the "Distribution Date"), Culbro will
deliver all of the issued and outstanding shares of Class B Common Stock to
, as distribution agent (the "Distribution Agent"), which in
turn will distribute such shares to the holders of Culbro Common Stock as of the
Record Date. It is expected that certificates representing shares of Class B
Common Stock will be mailed by the Distribution Agent on or about ,
1997. See "INTRODUCTION" and "THE DISTRIBUTION--Manner of Effecting the
Distribution." Holders of Culbro Common Stock on the Record Date will not be
required to make any payment or take any other action to receive Class B Common
Stock in the Distribution. Following the Distribution Culbro is expected to
merge with and into its subsidiary General Cigar Holdings, Inc. ("General
Cigar").

Griffin owns substantially all of Culbro's non-tobacco related assets and
liabilities, including all of its assets and liabilities relating to its
landscape nursery business and Connecticut- and Massachusetts-based real estate
business, together with Culbro's approximate 25% interest in Centaur
Communications Limited ("Centaur") and its approximate 50% interest in The Eli
Witt Company ("Eli Witt").

------------------------

NO VOTE OF SHAREHOLDERS IS REQUIRED IN CONNECTION WITH THE DISTRIBUTION.
NO PROXIES ARE BEING SOLICITED, AND YOU ARE REQUESTED NOT TO SEND US A PROXY.

------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY OTHER FEDERAL OR STATE AUTHORITY,
NOR HAS SUCH COMMISSION OR OTHER AUTHORITY PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS INFORMATION STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THIS INFORMATION STATEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES

------------------------

The date of this Information Statement is , 1997
<PAGE>
SUMMARY OF CERTAIN INFORMATION

THIS SUMMARY IS QUALIFIED BY THE MORE DETAILED INFORMATION SET FORTH
ELSEWHERE IN THIS INFORMATION STATEMENT, WHICH SHOULD BE READ IN ITS ENTIRETY.
UNLESS THE CONTEXT OTHERWISE REQUIRES, (I) REFERENCES IN THE INFORMATION
STATEMENT TO CULBRO AND GRIFFIN SHALL INCLUDE THEIR RESPECTIVE SUBSIDIARIES AND
(II) REFERENCES TO A FISCAL YEAR ARE TO THE TWELVE-MONTH PERIOD ENDED THE
SATURDAY NEAREST NOVEMBER 30 OF THE YEAR REFERENCED. CERTAIN CAPITALIZED TERMS
USED IN THIS SUMMARY ARE DEFINED ELSEWHERE IN THIS INFORMATION STATEMENT.

<TABLE>
<S> <C>
Distributing Company.............. Culbro Corporation, a New York corporation ("Culbro").
Following the Distribution, Culbro is expected to merge
with and into General Cigar Holdings, Inc., ("General
Cigar"), a Delaware Corporation.

Distributed Company............... Griffin Land & Nurseries, Inc., a Delaware corporation
("Griffin"), which owns substantially all of the
Connecticut- and Massachusetts-based real estate and the
landscape nursery businesses previously operated by
Culbro, the approximate 25% interest in Centaur
Communications Limited ("Centaur") and the approximate
50% interest in The Eli Witt Company ("Eli Witt")
previously owned by Culbro. Griffin was incorporated
under the laws of Delaware on March 10, 1970.

The Distribution.................. On the Distribution Date, all of the outstanding shares
of Class B Common Stock will be delivered to the
Distribution Agent. On or about , 1997, the
Distribution Agent will mail stock certificates
representing shares of Class B Common Stock to holders
of record of Culbro Common Stock as of the Record Date.
See "THE DISTRIBUTION--Manner of Effecting the
Distribution."

Record Date....................... Close of business on , 1997.

Distribution Date................. Close of business on , 1997.

Distribution Ratio................ Each Culbro shareholder will receive one (1) share of
Class B Common Stock, $.01 par value, of Griffin (the
"Class B Common Stock") for each share of common stock,
$1 par value, of Culbro (the "Culbro Common Stock")
owned on the Record Date.

Shares to be Distributed.......... Based on the number of shares of Culbro Common Stock
outstanding on April 2, 1997, approximately 4,542,872
shares of Class B Common Stock will be issued to Culbro
shareholders in the Distribution. The shares to be
distributed to Culbro shareholders will constitute all
of the shares of Class B Common Stock outstanding
immediately after the Distribution.

Distribution Agent................ .

No Payment Required............... Culbro shareholders will not be required to make any
payment or to take any other action to receive their
portion of the Distribution. See "THE
DISTRIBUTION--Manner of Effecting the Distribution."

Conditions to the Distribution.... The Distribution is conditioned upon, among other
things, (1) declaration of the special dividend by the
Board of Directors
</TABLE>

2
<PAGE>

<TABLE>
<S> <C>
of Culbro (the "Culbro Board") (2) the receipt of a
private letter ruling from the Internal Revenue Service
(the "IRS") or an opinion of counsel, in either case, in
form and substance satisfactory to the Culbro Board as
to the tax consequences of the Distribution (see "--Tax
Consequences") and (3) approval of the Merger (as
defined below) by Culbro shareholders. The Culbro Board
has reserved the right to waive any conditions to the
Distribution or, even if the conditions to the
Distribution are satisfied, to abandon, defer or modify
the Distribution at any time prior to the Distribution
Date. See "INTRODUCTION" and "THE DISTRIBUTION--Manner
of Effecting the Distribution."

The Merger........................ Following the Distribution, but not before August 26,
1997 without the prior written consent of Donaldson,
Lufkin & Jenrette Securities Corporation, and following
the approval by the shareholders of Culbro, Culbro will
merge with and into its subsidiary, General Cigar.

Reasons for the Distribution...... The Distribution will formally separate Culbro's tobacco
and non-tobacco related businesses. After the
Distribution, each business will be conducted by a
separate, publicly held corporation. The Culbro Board
believes that the Distribution will enable the
management of each company to concentrate its attention
and financial resources on the core businesses of such
company, and enhance stockholder value over the
long-term by allowing the investment community to
analyze more effectively the investment characteristics,
performance and future prospects of the two distinct
business groups. The Culbro Board also believes that the
Distribution will provide each company with greater
flexibility in pursuing its independent business
objectives. See "THE DISTRIBUTION--Background and
Reasons for the Distribution."

Tax Consequences.................. The Culbro Board has conditioned the Distribution on
receipt of a private letter ruling from the IRS or an
opinion of counsel satisfactory to the Culbro Board, in
either case, to the effect, among other things, that
receipt of shares of Class B Common Stock by holders of
Culbro Common Stock will be tax free. See "THE
DISTRIBUTION--Federal Income Tax Aspects of the
Distribution."

Trading Market.................... There is currently no public market for the Common
Stock. Application will be made to list the Class A
Common Stock on NASDAQ. See "THE DISTRIBUTION--Listing
and Trading of the Common Stock; No Prior Market for the
Common Stock," and "RISK FACTORS--No Prior Market for
Common Stock."

General Cigar..................... General Cigar Holdings, Inc., incorporated under the
laws of Delaware, is a publicly-held corporation which
conducts the tobacco related businesses of Culbro.
</TABLE>

3
<PAGE>

<TABLE>
<S> <C>
Principal Office of Griffin....... The principal executive offices of Griffin are located
at One Rockefeller Center, New York, New York, 10020.

Board of Directors................ Culbro, as the sole stockholder of Griffin, has elected
the following persons to constitute the Board of
Directors of Griffin; Edgar M. Cullman, Frederick M.
Danziger, John L. Ernst and Winston J. Churchill, Jr.

Risk Factors...................... See "RISK FACTORS" for a discussion of factors that
should be considered in connection with the Class B
Common Stock received in the Distribution.

Financing......................... Prior to the Distribution, Griffin expects to establish
facilities for letters of credit and lines of credit.
See "DESCRIPTION OF CERTAIN INDEBTEDNESS."
</TABLE>

4
<PAGE>
INTRODUCTION

The Board of Directors of Culbro intends to declare a special distribution
(the "Distribution") of one share of Class B Common Stock of Griffin, for each
share of Culbro Common Stock held as of the Record Date. Culbro will effect the
Distribution on the Distribution Date by delivering all of the issued and
outstanding shares of Class B Common Stock to the Distribution Agent for
transfer and distribution to the holders of record of Culbro Common Stock as of
the Record Date. It is expected that certificates representing shares of Class B
Common Stock will be mailed to Culbro shareholders beginning on or about
, 1997.

The principal effect of the Distribution will be to separate Culbro's
tobacco business from its non-tobacco businesses. After the Distribution, the
tobacco business will be conducted by General Cigar and the non-tobacco
businesses will be conducted by Griffin, each as a separate, publicly held
corporation. Effective as of February 27, 1997, Culbro has transferred to
Griffin, as a contribution to capital, substantially all of its assets and
liabilities relating to its landscape nursery and Connecticut- and
Massachusetts-based real estate businesses, as well as Culbro's interest in
Centaur and Eli Witt. Griffin will own and operate substantially all of the real
estate and nursery businesses while General Cigar will own and operate the
tobacco related businesses. See "BUSINESS." The Distribution is intended to
enhance shareholder value over the long term by allowing Griffin and Culbro (and
following the Merger, General Cigar) to concentrate on their respective
businesses, and by enabling the investment community to analyze more effectively
the investment characteristics, performance and future prospects of the two
distinct business groups. The Distribution is also intended to provide each
company with greater flexibility in pursuing its independent business
objectives.

For a description of risk factors in connection with the Distribution and
the related transactions described in this Information Statement, see "RISK
FACTORS."

Griffin was formed as a subsidiary of Culbro on March 10, 1970. There has
been no trading market in Class B Common Stock. However, application will be
made to list the Class A Common Stock of Griffin on the NASDAQ under the symbol
" ." The shares of Class B Common Stock to be distributed in the Distribution
will convert automatically to Class A Common Stock upon the sale or other
transfer thereof, except in certain circumstances. See "DESCRIPTION OF CAPITAL
STOCK."

The Distribution does not require shareholder approval and the Culbro Board
may abandon, defer or modify the Distribution prior to the Distribution Date.
Culbro shareholders will not be entitled to appraisal rights in connection with
the Distribution.

The principal executive offices of Griffin are located at One Rockefeller
Plaza, New York, New York 10020; telephone number (212) .

5
<PAGE>
RISK FACTORS

Shareholders should note the following risk factors, as well as the other
information contained in this Information Statement.

COMPETITION

The landscape nursery business is competitive and Griffin competes against a
number of other companies, including local and regional nursery businesses. Some
of Griffin's competitors may be in a stronger financial position than Griffin.
Numerous real estate developers operate in the portion of Connecticut and
Massachusetts in which Griffin's holdings are concentrated. Some of such
businesses compete in each anticipated business of Griffin and may have greater
financial resources than Griffin. See "BUSINESS--Competition."

ASSUMED LIABILITIES; THE ELI WITT COMPANY

Pursuant to the terms of the Distribution Agreement, Tax Sharing Agreement
and Employee Benefits Allocation Agreement, certain liabilities of Culbro are
being assumed by Griffin, including liabilities relating to the real estate
business and the nursery business, certain specified tax liabilities,
liabilities relating to employees of Griffin and all of Culbro's interests
relating to Eli Witt. As a result of the Asset Transfers, Griffin acquired
Culbro's 50.1% interest in Eli Witt. In November 1996, Eli Witt filed for
protection under Chapter 11 of the Federal Bankruptcy Law. Prior to February
1993, Eli Witt was a wholly-owned subsidiary of Culbro and filed consolidated
tax returns with Culbro. Culbro, Eli Witt and other parties engaged in two
complex acquisitions and reorganizations in 1993 and 1994, pursuant to which
Culbro in 1993 received material distributions both to repay intercompany
indebtedness and as a return of capital from Eli Witt which was used to repay
Culbro's debt, including substantial amounts Culbro had previously borrowed from
unaffiliated third parties to fund Eli Witt's business. Culbro subsequently
loaned $5 million to Eli Witt. It is anticipated that these transactions
(including the transfer of funds to Culbro) will be reviewed by Eli Witt
creditors and other parties in interest in connection with the Chapter 11 case.
To date, one creditor has written to the unsecured creditors committee proposing
an inquiry into this matter. Any claim based on the foregoing, if asserted and
successfully prosecuted, could have a material adverse effect on Griffin's
financial condition. See "BUSINESS--Legal Matters."

NO OPERATING HISTORY AS AN INDEPENDENT COMPANY

Griffin does not have an operating history as an independent public company.
Griffin also will have a new management team in place at the commencement of its
operation as a public company. The Griffin business has historically relied on
Culbro for various financial and administrative services. After the
Distribution, Griffin will require its own lines of credit, banking
relationships and administrative functions although Culbro (and following the
Merger, General Cigar) will continue to provide Griffin with certain
administrative services for a period of at least one year following the
Distribution Date. There can be no assurance that, following the Distribution,
and particularly following the termination of administrative relations with
Culbro (and following the Merger, General Cigar), Griffin will be able to
operate efficiently as an independent public corporation.

DIVIDEND POLICY

Griffin's dividend policy will be established by the Griffin Board from time
to time based on the results of operations and financial condition of Griffin
and such other business considerations as the Griffin Board considers relevant.
It is not anticipated that dividends will be paid for a substantial period of
time following the Distribution. See "DIVIDEND POLICY" and "--Lack of Cash Flow
from Operations; Need for Additional Cash."

6
<PAGE>
NO PRIOR MARKET FOR COMMON STOCK

There has been no prior trading market for the Common Stock and there can be
no assurance as to the prices at which the Common Stock will trade before or
after the Distribution Date. Griffin will apply to list the Class A Common Stock
on NASDAQ. Until the Class B Common Stock is fully distributed, a sufficient
number of shares of Class B Common Stock are converted, through the sale of such
shares or otherwise, into shares of Class A Common Stock and an orderly market
develops, the prices at which the Class A Common Stock trades may fluctuate
significantly. Prices for the Class A Common Stock will be determined in the
trading markets and may be influenced by many factors, including the depth and
liquidity of the market for the Class A Common Stock, investor perceptions of
Griffin and its business and general economic and market conditions. See "THE
DISTRIBUTION--Listing and Trading of the Common Stock; No Prior Market for the
Common Stock."

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

Culbro has applied for a Tax Ruling from the IRS to the effect that, among
other things, for United States federal income tax purposes the Distribution
will be tax-free under Section 355 of the Internal Revenue Code of 1986, as
amended (the "Code"). See "THE DISTRIBUTION--Federal Income Tax Aspects of the
Distribution." The continuing validity of any such ruling, if granted, will be
subject to certain factual representations and assumptions. Neither Culbro nor
Griffin is aware of any facts or circumstances which should cause such
representations and assumptions to be untrue. The Distribution Agreement (as
defined below) provides that neither Culbro nor Griffin is to take any action
inconsistent with, nor fail to take any action required by, the request for the
Tax Ruling or the Tax Ruling unless required to do so by law or permitted to do
so by the prior written consent of the other party or, in certain circumstances,
a supplemental ruling or tax opinion. See "RELATIONSHIP BETWEEN CULBRO AND
GRIFFIN AFTER THE DISTRIBUTION--Distribution Agreement."

LACK OF CASH FLOW FROM OPERATIONS; NEED FOR ADDITIONAL CASH

Although neither Griffin nor any of its subsidiaries currently has
outstanding any material indebtedness, Griffin has operated during the last
several years with little positive net cash flow and losses. See "--Historical
Operating Losses and Net Deficit." In order to develop its real estate business,
Griffin either must sell assets or obtain debt financing. Griffin intends to
consider development opportunities, as well as a variety of financing options,
including the incurrence of one or more forms of indebtedness. There can be no
assurance, however, that any such financing can be obtained by Griffin on
commercially reasonable terms or at all, or that dispositions of assets, if any,
can be made in a sufficiently timely fashion to meet Griffin's cash needs, or at
prices that reflect the fair market value of such assets at the time of any such
dispositions. The inability of Griffin to generate cash in the future could have
an adverse effect on Griffin's ability to develop its property, financial
condition or results of operations.

POTENTIAL RESTRICTIONS IMPOSED BY THE TERMS OF GRIFFIN'S FUTURE INDEBTEDNESS

The terms and conditions of future debt instruments of Griffin or its
subsidiaries may impose restrictions on Griffin and its subsidiaries that
affect, among other things, their ability to incur debt, pay dividends or make
distributions, make acquisitions, create liens, sell assets, and make certain
investments. The ability of Griffin and its subsidiaries to comply with the
terms of their respective debt instruments can be affected by events beyond
their control, including events such as changes in prevailing economic
conditions, changes in consumer preferences and changes in the competitive
environment, which could impair Griffin's operating performance. There can be no
assurance that the assets or cash flows of Griffin or its subsidiaries would be
sufficient to repay in full borrowings under their respective outstanding debt
instruments, whether upon maturity or in the event of acceleration upon an event
of default, or upon a required repurchase in the event of a change of control,
or that Griffin would be able to refinance or restructure the payments on such
indebtedness. See "DESCRIPTION OF CERTAIN INDEBTEDNESS."

7
<PAGE>
HISTORICAL OPERATING LOSSES AND NET DEFICIT

Griffin in recent years has experienced net losses before extraordinary
items. There can be no assurance that Griffin will operate profitably in the
future. See "--Lack of Cash Flow from Operations; Need for Additional Cash,"
"--Potential Restrictions Imposed by the Terms of Griffin's Future Indebtedness"
and "--General Real Estate Investment Risks; Adverse Impact on Ability to Make
Distributions."

LIMITED GEOGRAPHIC DIVERSIFICATION; DEPENDENCE ON CERTAIN REGIONS

Griffin's properties consist almost exclusively of real estate development
properties in the Hartford-Springfield corridor of Massachusetts and Connecticut
and landscape nursery properties in the New England, Mid-Atlantic and
Mid-Western states. Griffin's performance will therefore be linked to economic
conditions and the market for commercial real estate and landscape nursery
products in these regions.

ENVIRONMENTAL MATTERS

Under various federal, state and local laws, ordinances and regulations, an
owner or operator of real estate may be required to investigate and clean up
hazardous or toxic substances or petroleum product releases at such property and
may be held liable to a governmental entity or to third parties for property
damage and for investigation and clean-up costs incurred by such parties in
connection with contamination. The cost of investigation, remediation or removal
of such substances may be substantial, and the presence of such substances, or
the failure to properly remediate such substances, may adversely affect the
owner's ability to sell or rent such property or to borrow using such property
as collateral. In connection with the ownership (direct or indirect), operation,
management and development of real properties, Griffin may be considered an
owner or operator of such properties or as having arranged for the disposal or
treatment of hazardous or toxic substances and, therefore, potentially liable
for removal or remediation costs, as well as certain other related costs,
including governmental fines and injuries to persons and property. See
"BUSINESS--Regulation." In Simsbury, the value of Griffin's land is affected by
the presence of chlordane on a portion of the land which is intended for
residential development. Griffin is examining means of remediation on such
lands. See "BUSINESS--Real Estate Nursery Business."

GENERAL REAL ESTATE INVESTMENT RISKS; ADVERSE IMPACT ON ABILITY TO MAKE
DISTRIBUTIONS

GENERAL. Income from real property investments, may be adversely affected
by the general economic climate (particularly the economic climate of the New
England region, where Griffin's properties are located), the attractiveness of
Griffin's commercial development properties to tenants, zoning or other
regulatory restrictions, competition from other available commercial properties,
the ability of Griffin to provide adequate maintenance and insurance, and
increased operating costs (including insurance premiums and real estate taxes).

UNINSURED LOSS. Griffin carries insurance with respect to its properties
which it deems reasonable. There may be, however, certain types of losses
against which Griffin may not presently be insured.

COSTS OF COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT AND SIMILAR
LAWS. Under the Americans with Disabilities Act of 1990 (the "ADA"), all places
of public accommodation are required to meet certain federal requirements
related to access and use by disabled persons. Although management believes that
its commercial real estate properties are substantially in compliance with
present requirements of the ADA, Griffin has not conducted an audit or
investigation to determine its compliance. There can be no assurance that
Griffin will not incur additional costs of complying with the ADA. A number of
additional federal, state and local laws exist which also may require
modifications to Griffin's commercial real estate properties, or restrict
certain further renovations thereof, with respect to access thereto by disabled
persons. The ultimate amount of the cost of compliance with the ADA or such
legislation is not currently ascertainable, and, while such costs are not
expected to have a material effect on Griffin, such costs could be substantial.

8
<PAGE>
SEASONALITY

Sales in Griffin's landscape nursery business are seasonal, peaking in the
spring, and are affected by commercial and residential building activity as well
as weather conditions. Disruptions in such building activity, due to adverse
weather during the spring season or adverse economic conditions in the regions
in which Griffin conducts its landscape nursery operations, could have an
adverse effect on the results of operations of Griffin, taken as a whole.

INABILITY TO PREDICT DEMAND

Many of the products developed and/or produced by the landscape nursery
business require significant time in order to mature. As a result, the landscape
nursery business is dependent upon the ability to accurately estimate demand
from one to five years in advance of actual demand, making it more difficult for
Griffin to react quickly to sudden changes in demand. A sharp increase in demand
which exceeded Griffin's projections would prevent Griffin from taking full
advantage of such increase and could have an adverse effect on Griffin's
reputation; conversely, a sharp decrease in demand might cause a loss of
inventory value, result in excess inventory and could otherwise have an adverse
effect on Griffin's results of operations.

THE DISTRIBUTION

GENERAL

On the Distribution Date, Culbro intends to distribute all of the
outstanding shares of Class B Common Stock to holders of record on the Record
Date of Culbro Common Stock. Each holder of Culbro Common Stock will receive one
(1) share of Class B Common Stock for each share of Culbro Common Stock held on
the Record Date. Holders of Culbro Common Stock on the Record Date will not be
required to make any payment or to take any other action to receive their
portion of the Distribution.

BACKGROUND AND REASONS FOR THE DISTRIBUTION

The Distribution will formally separate Culbro's tobacco and non-tobacco
related businesses. After the Distribution, the tobacco business will be
conducted by General Cigar and the non-tobacco businesses will be conducted by
Griffin, each as a separate, publicly held corporation. The Culbro Board
believes that the Distribution will enable the management of each company to
concentrate its attention and financial resources on the core businesses of such
company, and enhance stockholder value over the long term by allowing the
investment community to analyze more effectively the investment characteristics,
performance and future prospects of the two distinct business groups. The Culbro
Board also believes that the Distribution will provide each company with greater
flexibility in pursuing its independent business objectives.

MANNER OF EFFECTING THE DISTRIBUTION

On the Distribution Date, all of the outstanding shares of Class B Common
Stock will be delivered to the Distribution Agent for transfer and distribution
to the holders of record of Culbro Common Stock as of the Record Date. It is
expected that certificates representing shares of Class B Common Stock will be
mailed by the Distribution Agent to Culbro shareholders beginning on or about
, 1997.

The Board of Directors of Culbro has reserved the right to abandon, defer or
modify the Distribution and the related transactions described in this
Information Statement at any time prior to 11:59 p.m., New York time, on the day
immediately preceding the Distribution Date.

No holder of Culbro Common Stock will be required to pay any cash or other
consideration for the shares of Class B Common Stock received in the
Distribution or surrender or exchange shares of Culbro Common Stock in order to
receive Class B Common Stock. The Distribution will not affect the number of,

9
<PAGE>
or the rights attaching to, outstanding shares of Culbro Common Stock. All
shares of Class B Common Stock will be fully paid and non-assessable and the
holders of those shares will not be entitled to preemptive rights. See
"DESCRIPTION OF CAPITAL STOCK--Class A Common Stock and Class B Common Stock."

LISTING AND TRADING OF THE COMMON STOCK; NO PRIOR MARKET FOR THE COMMON STOCK

Griffin will apply to list the Class A Common Stock on NASDAQ. Griffin
initially will have approximately 840 shareholders of record, which does not
include beneficial owners whose shares are held of record in the names of
brokers or nominees, based upon the number of record of Culbro as of February
20, 1997. All of such holders initially will hold shares of Class B Common
Stock, each of which shares is exchangeable for a share of Class A Common Stock
(a) at the option of the holder thereof or (b) automatically upon the sale
thereof by the holder to any person who is not a Permitted Transferee. See
"DESCRIPTION OF CAPITAL STOCK." For certain information regarding options to
purchase Common Stock that will be outstanding after the Distribution, see
"RELATIONSHIP BETWEEN CULBRO AND GRIFFIN AFTER THE DISTRIBUTION--Related
Agreements--Benefits and Employment Matters Allocation Agreement" and "CERTAIN
EMPLOYEE BENEFIT MATTERS."

There is not currently a public market for the Class A Common Stock. Prices
at which the Common Stock may trade cannot be predicted. Until the Class B
Common Stock is fully distributed, a sufficient number of shares of Class B
Common Stock are converted, through the sale of such shares or otherwise, into
shares of Class A Common Stock and an orderly market develops, the prices at
which trading in such Class A Common Stock occurs may fluctuate significantly.
The prices at which the Class A Common Stock trades will be determined by the
marketplace and may be influenced by many factors, including, among others, the
depth and liquidity of the market for the Class A Common Stock, investor
perception of Griffin and the industries in which Griffin participates,
Griffin's dividend policy and general economic and market conditions. See "RISK
FACTORS--No Prior Market for Common Stock."

Culbro filed a request for a no-action letter with the Staff of the
Securities and Exchange Commission (the "Commission Staff") on January 21, 1997,
setting forth, among other things, Culbro's view that the Distribution of Class
B Common Stock does not require registration under the Securities Act of 1933,
as amended (the "Securities Act"). Assuming receipt of a favorable decision from
the Commission Staff, it is Griffin's belief that Class B Common Stock
distributed to Culbro's shareholders in the Distribution, and any Class A Common
Stock issued either upon conversion of such Class B Common Stock or upon
exercise of Griffin Options, will be freely transferable, except for securities
received by persons who may be deemed to be "affiliates" of Culbro within the
meaning of Rule 144 of the Securities Act, which persons may not publicly offer
or sell Class B Common Stock received in connection with the Distribution except
pursuant to a registration statement under the Securities Act or pursuant to
Rule 144 (without regard to holding period requirements thereunder). See "SHARES
ELIGIBLE FOR FUTURE SALE."

FEDERAL INCOME TAX ASPECTS OF THE DISTRIBUTION

On December 16, 1996, Culbro filed a request for a ruling from the IRS to
the effect, among other things, that the Distribution will qualify as a tax free
spin-off under Section 355 of the Internal Revenue Code of 1986, as amended (the
"Code"), and that, for Federal income tax purposes:

(1) No gain or loss will be recognized by (and no amount will be
included in the income of) a holder of Culbro Common Stock upon the receipt
of Class B Common Stock in the Distribution.

(2) The aggregate basis of the Culbro Common Stock and the Class B
Common Stock in the hands of the stockholders of Culbro immediately after
the Distribution will be the same as the aggregate basis of the Culbro
Common Stock held immediately before the Distribution, allocated in
proportion to the fair market value of each.

10
<PAGE>
(3) The holding period of the Class B Common Stock received by the
stockholders of Culbro will include the holding period of Culbro Common
Stock with respect to which the Distribution will be made, provided that
such stockholder held the Culbro Common Stock as a capital asset on the
Distribution Date.

(4) No gain or loss will be recognized by Culbro upon the Distribution.

The summary of federal income tax consequences set forth above does not
purport to cover all federal income tax consequences that may apply to all
categories of stockholders. All stockholders should consult their own tax
advisors regarding the particular federal, foreign, state and local tax
consequences of the Distribution to such stockholders.

For a description of the Tax Sharing Agreement pursuant to which Culbro and
Griffin have provided for various tax matters, see "RELATIONSHIP BETWEEN CULBRO
AND GRIFFIN AFTER THE DISTRIBUTION--Related Agreements--Tax Sharing Agreement."

REASONS FOR FURNISHING THE INFORMATION STATEMENT

This Information Statement is being furnished by Culbro solely to provide
information to Culbro shareholders who will receive Class B Common Stock in the
Distribution. It is not, and is not to be construed as, an inducement or
encouragement to buy or sell any securities of Culbro or Griffin. The
information contained in this Information Statement is believed by Culbro and
Griffin to be accurate as of the date set forth on its cover. Changes may occur
after that date, and neither Culbro nor Griffin will update the information
except in the normal course of their respective public disclosure practices.

11
<PAGE>
RELATIONSHIP BETWEEN CULBRO AND GRIFFIN AFTER THE DISTRIBUTION

For purposes of governing certain relationships between Culbro and Griffin
after the Distribution and providing for an orderly transition, Culbro and
Griffin have entered into various agreements, including those described below.
Copies of certain of the agreements are included as exhibits to Griffin's
Registration Statement on Form 10 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), relating to the Class A Common Stock, and the
following discussions with respect to such agreements are qualified in their
entirety by reference to the agreements as filed.

DISTRIBUTION AGREEMENT

In 1997, Culbro, Griffin and General Cigar entered into a distribution
agreement (the "Distribution Agreement") which provides for the pro rata
distribution by Culbro to the shareholders of Culbro of all issued and
outstanding shares of Class B Common Stock. Pursuant to the Distribution
Agreement, Culbro transferred to General Cigar all of the common stock of
General Cigar Co., Inc., Club Macanudo, Inc., Club Macanudo (Chicago), Inc. and
all of Culbro's interest in the building located at 387 Park Avenue South, New
York, New York. In addition, Culbro transferred to General Cigar Co., Inc.
approximately 1,100 acres of its real estate holdings in the Connecticut River
Valley used to cultivate cigar wrapper tobacco. In connection with these
transfers, General Cigar received all licenses, permits, accounts receivable,
prepaid expenses, reserves and other assets related to the cigar business.
Pursuant to the Distribution Agreement, Culbro also transferred to Griffin
substantially all the non-tobacco related assets of Culbro, including: (i) all
of the common stock of Imperial Nurseries, Inc., a wholly-owned subsidiary of
Culbro; (ii) approximately 5,500 acres of land in Connecticut and Florida, as
well as several nursery wholesale and retail centers; (iii) Culbro's interests
in Eli Witt and assets previously owned by Eli Witt; (iv) Culbro's 25% interest
in Centaur; and (v) all licenses, permits, accounts receivable, prepaid
expenses, reserves and other assets (other than cash) related to the real estate
and nursery business. Culbro also transferred to Griffin $7.0 million in cash.
Griffin continues to operate the real estate business owned by it prior to the
Asset Transfers.

Pursuant to the Distribution Agreement, General Cigar assumed all of
Culbro's liabilities relating to the tobacco business and the assets transferred
to General Cigar and General Cigar Co., Inc., and all of Culbro's retained
indebtedness (other than those liabilities related to the assets transferred to
Griffin), including bank and corporate debt, all expenses related to the Asset
Transfers (as defined), the Offering, the Distribution and the Merger and
certain other contingent liabilities. Similarly, Griffin assumed all liabilities
relating to the real estate business and the nursery business and relating to
the assets transferred to Griffin. These liabilities include all of Griffin's
assumed and retained indebtedness, including bank and corporate debt, other
liabilities relating to the assets transferred to Griffin and certain additional
tax liabilities. Griffin also assumed all liabilities of Culbro related to Eli
Witt, which filed for relief from creditors under Chapter 11 of the Federal
Bankruptcy Code in 1996. See "RISK FACTORS--Assumed Liabilities; The Eli Witt
Company."

The transfer of certain assets and liabilities of Culbro referred to in the
previous two paragraphs are referred to herein as the "Asset Transfers."

As a result of the Asset Transfers, Culbro has become a holding company,
substantially all of the assets of which are the stock of General Cigar and
Griffin. Pursuant to the terms of the Distribution Agreement, General Cigar and
Griffin will operate independently of each other.

12
<PAGE>
respect of any liabilities retained or assumed by Griffin. In each instance,
indemnities are limited by insurance proceeds recovered by the indemnified party
that reduce the amount of the loss, liability or damage. In addition, the
Distribution Agreement contains provisions for the administration of insurance
policies shared by the parties and provisions for the sharing of information and
related services among the parties. Upon consummation of the Merger, Culbro's
obligations with respect to such indemnities will become the obligations of
General Cigar. With respect to corporate governance, the Distribution Agreement
requires the resignation of all Griffin directors and officers from any
positions they previously held with Culbro, General Cigar or General Cigar Co.,
Inc., and each of their respective subsidiaries, and the resignation of all
directors of Culbro, General Cigar or General Cigar Co., Inc., from any
positions they previously held with Griffin, except that Edgar M. Cullman and
John L. Ernst will retain their seats on the Griffin board of directors
notwithstanding their positions at Culbro and General Cigar, and Edgar M.
Cullman will be the Chairman of the Board of Griffin.

RELATED AGREEMENTS

TAX SHARING AGREEMENT

Culbro and Griffin have entered into a tax sharing agreement (the "Tax
Sharing Agreement") that defines the parties' rights and obligations with
respect to filing of returns, payments, deficiencies and refunds of federal,
state and other income or franchise taxes relating to Culbro's business for tax
years prior to and including the Distribution. In general, with respect to
periods ending on or before the last day of the taxable year in which the
Distribution occurs, Culbro is responsible for (i) filing both consolidated
federal tax returns for the Culbro affiliated group and combined or consolidated
state tax returns for any group that includes a member of the Culbro affiliated
group, including in each case Griffin and its subsidiaries for the relevant
periods of time that such companies were members of the applicable group and
(ii) paying the taxes relating to such returns. Generally, any subsequent
adjustments resulting from the redetermination of such tax liabilities by the
applicable taxing authorities will be paid by the member or affiliated group to
which the adjustment relates, with Griffin assuming responsibility for all
adjustments relating to Culbro and its affiliates other than General Cigar and
its subsidiaries. Griffin is responsible for filing returns and paying taxes
relating to any member of the Griffin affiliated group for periods that begin
before and end after the Distribution and for periods that begin after the
Distribution. Culbro and Griffin have agreed to cooperate with each other and to
share information in preparing such tax returns and in dealing with other tax
matters.

SERVICES AGREEMENT

Culbro and Griffin have entered into a services agreement (the "Services
Agreement") pursuant to which Culbro has agreed to provide a number of
administrative and other services to Griffin for a period of at least one year.
These services include administration of Griffin's insurance policies, internal
audit, preparation of tax returns, transportation and general in-house legal
services. Griffin will make an annual payment of approximately $600,000 to, and
will reimburse out-of-pocket expenses incurred by, Culbro and its subsidiaries,
in connection with such services. Culbro will make the above services available
to Griffin on an as-needed basis for a period of at least one year following the
Distribution. Pursuant to the Merger, Culbro's obligations under the Services
Agreement will be assumed by General Cigar.

BENEFITS AND EMPLOYMENT MATTERS ALLOCATION AGREEMENT

Culbro and Griffin have entered into the Benefits and Employment Matters
Allocation Agreement (the "Benefits Agreement") which provides generally for the
assumption by General Cigar of certain Culbro employee benefit plans and the
allocation of employee benefits liabilities among Culbro, Griffin and General
Cigar. In addition, the Benefits Agreement provides that upon the Distribution
each option exercisable for shares of Culbro Common Stock will be converted into
an option exercisable for shares of Culbro Common Stock and an option
exercisable for shares of Class A Common Stock of Griffin. The

13
<PAGE>
Benefits Agreement further provides that, following the Distribution upon
consummation of the Merger, options then exercisable for Culbro Common Stock
will be converted into options exercisable for Class A Common Stock of General
Cigar. See "CERTAIN EMPLOYEE BENEFITS MATTERS."

LEASES

Griffin as lessor and General Cigar Co., Inc. as lessee have entered into a
lease for certain agricultural real property in Connecticut and Massachusetts
(the "Agricultural Lease"). The Agricultural Lease is for approximately 500
acres of arable land allocated to Griffin for possible commercial development in
the long-term, but which provides General Cigar with a source of Connecticut
Shade wrapper tobacco. General Cigar Co., Inc.'s use of the land is limited to
the cultivation of cigar wrapper tobacco. The Agricultural Lease has an initial
term of ten years and will provide for the extension of the lease for additional
periods thereafter. In addition, at Griffin's option the Agricultural Lease may
be terminated with respect to 100 acres of such land annually upon one year's
prior notice. The rent payable by General Cigar Co., Inc. under the Agricultural
Lease will be principally equal to the aggregate amount of all taxes and other
assessments payable by Griffin attributable to the land leased. In addition,
Griffin and General Cigar are considering entering into a lease for the use by
General Cigar of certain commercial space in Connecticut (the "Commercial
Lease"). The Commercial Lease, if entered into, would be for approximately
25,000 square feet of office space in the Griffin Center South office complex in
Bloomfield, Connecticut. The Commercial Lease would have an initial term of ten
years and provide for the extension of the lease for additional annual periods
thereafter. The rent payable by General Cigar Co., Inc. under the Commercial
Lease would be at market rates.

14
<PAGE>
SELECTED COMBINED FINANCIAL DATA

The Selected Combined Financial Data of Griffin for fiscal 1992 and fiscal
1993 have been derived from the unaudited combined financial statements of
Griffin. The Selected Combined Financial Data of Griffin for fiscal 1994, fiscal
1995 and fiscal 1996 have been derived from the audited Combined Financial
Statements of Griffin included elsewhere in this Information Statement. The
following Selected Combined Financial Data should be read in conjunction with
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" and the Combined Financial Statements of Griffin and Notes thereto
included elsewhere in this Information Statement. The information presented
below reflects CMS Gilbreth Packaging Systems, Inc. ("CMS Gilbreth") as a
discontinued operation. The 1994, 1995, and 1996 information reflects the
deconsolidation of Eli Witt in April 1994 and subsequent accounting for the
investment in Eli Witt under the equity method. See Note 12 to the Combined
Financial Statements included elsewhere in this Information Statement.

<TABLE>
<CAPTION>
1996
-----------------------
1992 1993 1994 1995 ACTUAL PRO FORMA
------------ ------------ ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA )
STATEMENT OF OPERATIONS DATA:
Net sales and other revenue......... $ 1,028,129 $ 1,239,855 $ 43,024 $ 41,756 $ 46,531 $ 46,531
Operating profit (loss)............. 10,496 11,336 (4,867) 810 (1,245) (221)
Loss from continuing operations..... (1,555) (2,632) (7,157) (4,265) (4,063) (157)
Net income (loss)................... 344 (4,510) (3,833) (580) (4,606) --
Pro forma loss per common share from
continuing operations.............. (0.03)
BALANCE SHEET DATA:
Total assets........................ 302,728 316,056 167,421 165,655 101,775 100,198
Working capital..................... 64,602 74,262 28,112 23,069 36,698 36,655
Long-term debt...................... 141,871 172,068 91,614 72,737 38,846 2,846
Culbro investment................... 44,555 32,406 44,426 61,299 47,449 87,809
</TABLE>

15
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

In 1997, Culbro transferred to Griffin substantially all the non-tobacco
related assets of Culbro, including: (i) all of the common stock of Imperial
Nurseries, Inc., a wholly-owned subsidiary of Culbro; (ii) approximately 5,500
acres of land in Connecticut and Florida, as well as several landscape nursery
wholesale and retail centers; (iii) Culbro's interests in Eli Witt and assets
previously owned by Eli Witt; (iv) Culbro's 25% interest in Centaur; and (v) all
licenses, permits, accounts receivable, prepaid expenses, reserves and other
assets (other than cash) related to the real estate and nursery business. Culbro
also transferred to Griffin $7.0 million in cash. These transactions are
reflected in the Combined Financial Statements of Griffin. Griffin continues to
operate the real estate business owned by it prior to the Asset Transfers.

The Unaudited Pro Forma Combined Statement of Operations for fiscal 1996 was
prepared to reflect (i) the use of proceeds from the sale of CMS Gilbreth, (ii)
the exchange of the shares of preferred stock of Eli Witt in satisfaction of the
subordinated note issued by Culbro to a third party, (iii) the assumption of
certain liabilities by General Cigar as part of the Asset Transfers (the
"Liability Assumption") and the elimination of certain nonrecurring expenses and
(iv) the effect of the Distribution on Griffin's capital structure, as if these
transactions had occured at the beginning of fiscal 1996. The Unaudited Pro
Forma Combined Balance Sheet at November 30, 1996 was prepared to reflect (i)
the Liability Assumption and its effect on related deferred taxes and (ii) the
effect of the Distribution on Griffin's Capital Structure, as if these
transactions had occurred on November 30, 1996. The effect of the sale of CMS
Gilbreth and the exchange of the preferred stock of Eli Witt are reflected
(eliminated) in Griffin's historical combined balance sheet. The column
designated Griffin Historical reflects the results of operations and the assets
and liabilities, as appropriate, of Griffin and Imperial Nurseries on an
historical combined basis.

In the opinion of management, all adjustments necessary to fairly present
this pro forma information have been made. The Unaudited Pro Forma Combined
Financial Statements are based upon, and should be read in conjunction with, the
Combined Financial Statements of Griffin and Notes thereto included elsewhere in
this document. The pro forma information does not purport to be indicative of
the results that would have been reported had such events actually occurred on
the dates specified, nor is it indicative of Griffin's future results.

16
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS FOR FISCAL 1996

<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS FOR
--------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
LIABILITY
ASSUMPTION
EXCHANGE OF ELI AND NON-
GRIFFIN SALE OF CMS WITT PREFERRED RECURRING GRIFFIN
HISTORICAL GILBRETH STOCK EXPENSES DISTRIBUTION PRO FORMA
----------- ------------- --------------- ----------- ----------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Net sales and other
revenue.................... $ 46,531 $ 46,531
Costs and expenses:
Cost of goods sold.......... 34,210 34,210
Selling, general and
administrative expenses.... 12,666 (124)(5) 12,542
Other nonrecurring
expense.................... 900 (900 (6)
----------- ------------- ------- ----------- ----------- ----------
Operating loss.............. (1,245 ) 1,024 (221)
Income from equity
investment................. 303 303
Other nonoperating income,
net........................ 1,917 (1,917 (3)
Interest expense............ 7,805 (2,859 (1) (2,167 (4) (2,271 (7) 508
----------- ------------- ------- ----------- ----------- ----------
Loss before tax benefit..... (6,830 ) 2,859 250 3,295 (426)
Income tax benefit.......... (2,767 ) 1,115 (2) 98 (2) 1,285 (2) (269)
----------- ------------- ------- ----------- ----------- ----------
Loss from continuing
operations................. $ (4,063 ) $ 1,744 $ 152 $ 2,010 $ (157)
----------- ------------- ------- ----------- ----------- ----------
----------- ------------- ------- ----------- ----------- ----------
Loss per common share from
continuing operations...... $ (0.03)
----------
----------
Weighted average common
shares and equivalents
outstanding................ 4,664 (8) 4,664
----------- ----------
----------- ----------
</TABLE>

See Notes to Unaudited Pro Forma Combined Financial Statements

17
<PAGE>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET AS OF NOVEMBER 30, 1996

<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
FOR
------------------------
<S> <C> <C> <C> <C>
LIABILITY
ASSUMPTION
AND NON-
GRIFFIIN RECURRING GRIFFIN PRO
HISTORICAL EXPENSES DISTRIBUTION FORMA
---------- ----------- ----------- -----------
(IN THOUSANDS)
ASSETS
Cash and cash equivalents.............................. $ 7,371 $ 7,371
Accounts receivable, net............................... 3,962 3,962
Inventories............................................ 27,530 27,530
Deferred income taxes.................................. 4,047 (1,577)(9) 2,470
Other current assets................................... 1,158 1,158
---------- ----------- ----------- -----------
Total current assets................................... 44,068 (1,577 ) 42,491
Property and equipment, net............................ 12,676 12,676
Real estate held for sale or lease, net................ 26,862 26,862
Investement in Centaur Communications, Ltd............. 14,695 14,695
Other assets, including investments in real estate
joint ventures....................................... 3,474 3,474
---------- ----------- ----------- -----------
Total assets........................................... $ 101,775 $ (1,577 ) $ 100,198
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
LIABILITIES AND CULBRO INVESTMENT/STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities............... $ 7,093 $ (1,534 10) $ 5,559
Long-term debt due within one year..................... 277 277
---------- ----------- ----------- -----------
Total current liabilities.............................. 7,370 (1,534 ) 5,836
Long-term debt......................................... 38,846 (36,000 11) 2,846
Other noncurrent liabilities........................... 8,110 (4,448 10) 3,662
---------- ----------- ----------- -----------
Total liabiities....................................... 54,326 (41,982 ) 12,344
---------- ----------- ----------- -----------
Culbro Investment...................................... 47,449 40,405(12) (87,854 (8)
Class B common stock................................... 45 (8) 45
Additional paid in capital............................. 87,809 (8) 87,809
---------- ----------- ----------- -----------
Total Culbro Investment/stockholders' equity........... 47,449 40,405 87,854
---------- ----------- ----------- -----------
Total liabilities and Culbro Investment/ stockholders'
equity............................................... $ 101,775 $ (1,577 ) $ 100,198
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
</TABLE>

See Notes to Unaudited Pro Forma Combined Financial Statements

18
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

(1) Reflects reduction of interest expense as a result of using the proceeds
from the sale of CMS Gilbreth Packaging Systems, Inc. to reduce debt. The
net proceeds of approximately $35 million from the sale, which was completed
on November 8, 1996, reduced debt under Culbro's Senior Notes and Credit
Agreement, which had interest rates of 9.9% and 7.0%, respectively.

(2) Reflects Federal income tax (35%) and state income tax (4%), which is net of
Federal tax benefits.

(3) Reflects the elimination of $2.167 million of income from accrued dividends
and accretion on shares of preferred stock of Eli Witt as a result of the
exchange of such preferred stock in satisfaction of a subordinated note
issued by Culbro to a third party, and elimination of other nonoperating
expense of $0.25 million which Griffin incurred in connection with its
investment in Eli Witt.

(4) Reflects the elimination of interest expense on a subordinated note issued
by Culbro to a third party that was satisfied by the exchange of such note
for shares of preferred stock issued by Eli Witt.

(5) Reflects the elimination of pension expense, reflecting management's
decision to discontinue Griffin's participation in the Culbro Corporation
pension plan.

(6) Reflects elimination of the other nonrecurring expense of $0.9 million in
1996. This item represents Griffin's allocated portion of Culbro's
nonrecurring expense for the cost of terminating a long-term compensation
plan and severance for certain employees in contemplation of the
Distribution.

(7) Reflects the reduction of interest expense from the assumption by General
Cigar of the Culbro general corporate debt that was included on Griffin's
historical financial statements.

(8) Reflects the Distribution of Griffin's Class B Common Stock to shareholders
of Culbro in a one-for-one ratio. The Class B Common Stock has a par value
of $0.01 per share.

(9) Reflects the reduction of deferred tax assets as a result of the assumption
of certain liabilities assumed by General Cigar pursuant to the Distribution
Agreement.

(10) Reflects certain liabilities, principally the pension and other
postretirement benefits liabilities, and certain accounts payable balances
assumed by General Cigar pursuant to the Distribution Agreement.

(11) Reflects the Culbro general corporate debt that was assumed by General
Cigar pursuant to the Distribution Agreement.

(12) Reflects the adjustment to the Culbro Investment as a result of the Culbro
general corporate debt and other liabilities being assumed by General Cigar
in accordance with the Distribution Agreement.

19
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION OF THE HISTORICAL FINANCIAL CONDITION AND RESULTS
OF OPERATIONS OF GRIFFIN SHOULD BE READ IN CONJUNCTION WITH THE COMBINED
FINANCIAL STATEMENTS AND THE RELATED NOTES THERETO INCLUDED ELSEWHERE IN THIS
INFORMATION STATEMENT (F-1 TO F-26). THE FOLLOWING DISCUSSION OF THE PRO FORMA
FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF GRIFFIN SHOULD BE READ IN
CONJUNCTION WITH THE UNAUDITED PRO FORMA COMBINED FINANCIAL DATA AND THE RELATED
NOTES THERETO INCLUDED ELSEWHERE IN THIS INFORMATION STATEMENT.

OVERVIEW

Griffin is a wholly owned subsidiary of Culbro. Prior to March 18, 1997,
Griffin was known as Culbro Land Resources, Inc. Griffin principally owns and
operates landscape nursery and Connecticut-and Massachusetts-based real estate
operations, and other non-tobacco related assets and investments, all of which
were held by Griffin or transfered to Griffin in the Asset Transfers effected
under the terms of the Distribution Agreement.

The historical financial statements of Griffin reflect the combined results
of the operations of all of these businesses and assets. Griffin's results in
each of the periods presented also include allocations to Griffin of Culbro
corporate overhead of $2.4 million, $2.1 million and $1.8 million in fiscal
1994, fiscal 1995 and fiscal 1996, respectively. Additionally, $0.9 million of
Culbro nonrecurring expense was allocated to Griffin in fiscal 1996. These
allocations, which may not necessarily reflect the additional expenses Griffin
would have incurred as a separate stand-alone entity, are deemed reasonable by
Griffin management. The combined financial statements include interest expense
on debt specifically incurred by Griffin, and interest expense on Culbro general
corporate debt. The Culbro debt is included in Griffin's historical combined
financial statements. Pursuant to the Distribution Agreement entered into on
February 27, 1997, between Culbro, Griffin and General Cigar, the Culbro general
corporate debt included in Griffin's historical financial statements was assumed
by General Cigar. This debt and related interest expense will not be part of
Griffin's debt structure subsequent to February 27, 1997. Therefore, Griffin's
results of operations should be read in conjunction with the unaudited combined
pro forma results of operations in Note 4 of the Combined Financial Statements
and the Unaudited Pro Forma Combined Financial Statements included elsewhere in
this Information Statement.

PRO FORMA 1996 COMPARED TO ACTUAL FISCAL 1996

The following summary financial information and discussion relate to
Griffin's 1996 results of operations on a pro forma basis. The pro forma
operating data is presented as if the Liability Assumption, the exchange of the
Eli Witt preferred stock for the related subordinated note previously issued by
Culbro and the use of proceeds from the disposition of CMS Gilbreth had all
occurred at the beginning of fiscal 1996. The pro forma balance sheet reflects
the Liability Assumption as if it had occurred at the balance sheet date. The
effect of the sale of CMS Gilbreth and the exchange of the preferred stock are
reflected (eliminated) in Griffin's 1996 Combined Balance Sheet.

20
<PAGE>
1996 SUMMARIZED FINANCIAL INFORMATION

<TABLE>
<CAPTION>
1996 1996
HISTORICAL PRO FORMA
---------- -----------
<S> <C> <C>
Net sales................................................................................. $ 46,531 $ 46,531
---------- -----------
Operating loss............................................................................ (1,245) (221)
Other nonoperating income items........................................................... 2,220 303
Interest expense.......................................................................... 7,805 508
---------- -----------
Loss before income tax benefit............................................................ (6,830) (426)
Income tax benefit........................................................................ (2,767) (269)
---------- -----------
Loss from continuing operations........................................................... $ (4,063) $ (157)
---------- -----------
---------- -----------
Current assets............................................................................ $ 44,068 $ 42,705
---------- -----------
Total assets.............................................................................. $ 101,775 $ 100,412
---------- -----------
---------- -----------
Current liabilities....................................................................... $ 7,370 $ 5,836
---------- -----------
Long-term debt............................................................................ 38,846 2,846
---------- -----------
Culbro Investment/stockholders' equity.................................................... 47,449 88,068
---------- -----------
Total liabilities and Culbro Investment/stockholders' equity.............................. $ 101,775 $ 100,412
---------- -----------
---------- -----------
</TABLE>

Net sales remain unchanged because CMS Gilbreth was reported as a
discontinued operation in the historical financial statements. The lower
operating loss reflects the elimination of Griffin's allocated share of a
nonrecurring corporate expense incurred by Culbro. The lower nonoperating income
reflects the elimination of the accrued dividend income on the Eli Witt
preferred stock that was exchanged for Culbro's subordinated note payable (which
was assumed by Griffin as part of the Asset Transfers). The retirement of the
subordinated note resulted in a reduction of interest expense equal to the
amount of the dividend income. The disposition of the investment in Eli Witt
also resulted in the elimination of approximately $0.3 million of Eli Witt
related expenses.

The reduction in debt from the proceeds from the sale of CMS Gilbreth and
the exchange of the preferred stock of Eli Witt is reflected in the historical
balance sheet. The lower debt balance and the increase in capital (Culbro
Investment) in the pro forma balance sheet reflect the assumption by General
Cigar of the allocated Culbro debt, certain of Griffin's employee retirement
obligations and other liabilities.

ACTUAL RESULTS OF OPERATIONS

The discussion set forth below relates to the financial condition and
results of operations of Griffin as of and for fiscal 1996, fiscal 1995 and
fiscal 1994.

FISCAL 1996 COMPARED TO FISCAL 1995

Net sales and other revenue increased 11.4% or $4.7 million, to $46.5
million in fiscal 1996 compared to $41.8 million in fiscal 1995. The increase in
net sales and other revenue was due to higher net sales and other revenue in
both the landscape nursery and real estate segments. In the landscape nursery
segment, net sales increased 6.2% or $2.1 million to $37.0 million in fiscal
1996 from $34.9 million in fiscal 1995. This increase reflected increased sales
at the wholesale landscape nursery sales and service centers. Net sales and
other revenue in the real estate business increased $2.6 million to $9.5 million
in fiscal 1996 from $6.9 million in fiscal 1995. The increase reflected the sale
of Griffin's 30% interest in a joint venture that owns commercial properties in
Griffin Center and Griffin Center South. The joint venture sale generated net
proceeds of $4.0 million and a pretax loss of $0.4 million. Excluding this
transaction, net sales and

21
<PAGE>
other revenue decreased by $1.8 million, due to lower residential lot sales and
lower sales of undeveloped commercial land.

Griffin incurred an operating loss of $1.2 million in fiscal 1996 compared
to an operating profit of $0.8 million in fiscal 1995. In the landscape nursery
segment, operating profit was $1.6 million in fiscal 1996 compared to $1.7
million in fiscal 1995, reflecting higher operating expenses, which offset the
effect of the higher sales. An increase in gross margins to 29.7% in fiscal 1996
from 29.1% in fiscal 1995 was due to the effect of a $1.0 million charge in 1995
to reserve for excess field-grown plant inventories offset by product mix and
competitive pricing pressures in fiscal 1996. Operating expenses in the
landscape nursery business increased to 25.7% of net sales in fiscal 1996 from
25.1% of net sales in fiscal 1995. The increase reflected higher selling
expenses, and the operating expenses of a new sales and service center. In the
real estate segment, Griffin incurred an operating loss of $0.3 million in
fiscal 1996 compared to an operating profit of $1.2 million in fiscal 1995. The
lower results reflected the loss of $0.4 million on the joint venture sale and
the effect of the lower residential and commercial land sales.

General corporate expense, net, increased to $2.6 million in fiscal 1996
from $2.2 million in fiscal 1995. The increase in fiscal 1996 reflects Griffin's
allocated share of a Culbro nonrecurring corporate compensation expense item.

Results from Griffin's equity investment in Centaur increased to $0.3
million of equity income in fiscal 1996 from an equity loss of $0.2 million in
fiscal 1995. The increase reflected improved business conditions for Centaur's
publishing business in the United Kingdom. Other nonoperating income of $1.9
million in fiscal 1996 and $0.9 million in fiscal 1995 included principally
accretion and accrued dividend income on the preferred stock of Eli Witt of $2.2
million and $2.3 million in fiscal 1996 and fiscal 1995, respectively. In fiscal
1995 the income was partially offset by expenses incurred in connection with
Griffin's support for the refinancing of Eli Witt. The accretion and accrued
dividend income on the preferred stock equaled the interest expense recorded in
those years on a related exchangeable subordinated note payable. In the 1996
fourth quarter shares of preferred stock were exchanged in satisfaction of a
subordinated note issued by Culbro and all accrued interest thereon.

Interest expense decreased to $7.8 million in fiscal 1996 from $8.2 million
in fiscal 1995 due to lower debt levels, reflecting the proceeds from the sale
of CMS Gilbreth which was used to repay debt.

The results of the discontinued CMS Gilbreth operation in fiscal 1996
reflected a loss of $0.5 million, net of tax, compared to income of $3.7
million, net of tax, in fiscal 1995. The 1996 results included a net loss on the
sale of CMS Gilbreth of $1.3 million partially offset by income from this
business of $0.8 million prior to the sale.

FISCAL 1995 COMPARED TO FISCAL 1994

Net sales and other revenue decreased 2.9% or $1.2 million, to $41.8 million
in fiscal 1995 from $43.0 million in fiscal 1994. The decrease was due to lower
net sales and other revenue in both the nursery products and real estate
business segments. In the landscape nursery segment, net sales decreased 1.2% or
$0.4 million to $34.9 million in fiscal 1995 from $35.3 million in fiscal 1994.
The decrease reflected slightly lower sales at the wholesale sales and service
centers. Net sales and other revenue in the real estate segment decreased $0.8
million to $6.9 million in fiscal 1995 from $7.7 million in fiscal 1994. The
decrease was due to lower residential lot sales in fiscal 1995 partially offset
by increased commercial land sales.

Operating profit in fiscal 1995 was $0.8 million compared to an operating
loss of $4.9 million in fiscal 1994. In the landscape nursery segment, operating
profit was $1.7 million in fiscal 1995 compared to an operating loss of $0.6
million in fiscal 1994. The increased operating profit reflected the effect of
higher margins, which increased to 29.1% in fiscal 1995 from 25.0% in fiscal
1994, and lower operating expenses, which decreased to 25.1% of net sales from
27.7% in fiscal 1994. The higher gross margins reflected improved pricing and
lower costs, partially offset by a $1.0 million charge to reserve for excess
field-grown

22
<PAGE>
plant inventories. The decrease in operating expenses reflected lower selling
expenses and improved cost containment measures at the wholesale sales and
service centers. In the real estate segment, operating profit was $1.2 million
in fiscal 1995 as compared to an operating loss of $2.2 million in fiscal 1994.
The increase principally reflected the effect of a $3.6 million charge recorded
in 1994 to write off the costs of certain projects that were not developed as
originally planned. Excluding that item, operating results were substantially
unchanged in fiscal 1995 as compared to fiscal 1994. The effect of lower sales
of residential lots in fiscal 1995 was substantially offset by lower general and
administrative expenses, principally reflecting headcount reduction.

General corporate expense, net, which principally reflects general and
administrative expenses allocated to Griffin from Culbro, increased to $2.2
million in fiscal 1995 from $2.0 million in fiscal 1994.

The loss on equity investments was $0.2 million in fiscal 1995 as compared
to a $1.7 million equity loss in fiscal 1994. The change reflected the inclusion
in fiscal 1994 of results of Eli Witt prior to the deconsolidation of that
subsidiary (see Note 12 to the Combined Financial Statements). The investment in
Centaur had an equity loss of $0.2 million in fiscal 1995 compared to equity
income of $0.4 million in fiscal 1994. The lower results from Centaur were
attributed to a downturn in the British economy.

Other nonoperating income, net, decreased to $0.9 million in fiscal 1995
from $1.4 million in fiscal 1994. The decrease reflected expenses in fiscal 1995
related to Griffin's support for the refinancing of Eli Witt, partially offset
by a full year of accretion and accrued dividend income on the Eli Witt
preferred stock in fiscal 1995 versus a partial year of such income in fiscal
1994. The accretion income and accrued dividends equaled the interest expense on
the exchangeable subordinated note payable.

Interest expense increased to $8.2 million in fiscal 1995 from $8.0 million
in fiscal 1994. The increase was due principally to a full year of interest
expense on the exchangeable subordinated note payable in fiscal 1995 versus a
partial year of interest expense on the subordinated note in fiscal 1994.

Income from the discontinued operation was $3.7 million, net of tax, in
fiscal 1995 compared to $3.3 million, net of tax, in fiscal 1994. The increase
reflected improved margins, due to sales mix, partially offset by higher
operating expenses.

LIQUIDITY AND CAPITAL RESOURCES

Net cash flows used in operating activities of continuing operations were
$2.2 million in fiscal 1996 compared to $3.9 million used in operating
activities in 1995. The lower use of cash reflected principally the benefit from
proceeds from sale of a real estate joint venture, partially offset by
reductions in liabilities, including $3.5 million of deferred taxes relating to
continuing operations, and reductions in accounts payable and accrued
liabilities. The net cash flows used in operating activities of continuing
operations in 1995 of $3.9 million compared to $11.6 million used in operating
activities in fiscal 1994 reflected the lower loss from continuing operations in
fiscal 1995 compared to fiscal 1994 which also included a noncash gain on sale
of Eli Witt stock.

Cash used in operating activities in each of the fiscal years 1994 through
1996 includes pretax interest expense of $8.0 million, $8.2 million and $7.8
million, respectively, principally on allocated Culbro debt which was used to
fund Griffin's operations including both continuing and discontinued operations.
Effective February 27, 1997, pursuant to the Distribution Agreement, the Culbro
debt allocated to Griffin in the historical Combined Financial Statements was
assumed by General Cigar and is not an obligation of Griffin.

Net cash flow provided by investing activities in 1996 included principally
the proceeds from the sale of CMS Gilbreth. The investing activities of 1995 and
1994 include transactions primarily relating to the investment in Eli Witt. In
February 1997, Eli Witt sold all of its assets in a court supervised bankruptcy
sale. Griffin has no investment related to Eli Witt in its 1996 Combined Balance
Sheet and does not expect to

23
<PAGE>
receive any proceeds from the sale. See Notes 12 and 14 to the Combined
Financial Statements contained elsewhere in this Information Statement.

Net cash relating to financing activities in each of the fiscal years 1994
through 1996 includes net payments of debt, principally the debt that was
allocated by Culbro to Griffin. Financing activities also included net
transactions with Culbro, including operating cash flow transferred to Culbro in
fiscal 1996 and cash flow transferred to Griffin by Culbro in fiscal 1995 and
fiscal 1994 to paydown the allocated debt and fund Griffin's operations.

During each of the fiscal years included in the accompanying combined
financial statements, the cash management and treasury activities of the Company
were integrated with those of Culbro. The Company's cash receipts were
transferred daily into Culbro's cash account and the Company's cash disbursement
accounts were reimbursed by Culbro on a daily basis.

The Company did not maintain its own separate credit facilities. Culbro
maintained credit facilities which it utilized to finance transactions relating
to the Company. Borrowings under the Culbro credit facilities are reflected in
the Company's Combined Financial Statements. The Company maintained an

intercompany account with Culbro in which its net cash flow and other
intercompany transactions with Culbro were recorded. See Note 6 in the Combined
Financial Statements. The intercompany account with Culbro and Griffin's
retained earnings and capital accounts are included in the Combined Financial
Statements as Culbro Investment.

Griffin intends to negotiate a line of credit to fund future real estate
projects and for general working capital purposes. Management believes that the
cash flow from operations, cash on hand and, if needed, borrowings under an
anticipated credit facility will be sufficient to fund its future operations in
the near-term. Over the long-term, selective asset sales and additional credit
facilities may be required to fund capital projects.

24
<PAGE>
BUSINESS

Griffin and its subsidiaries comprise principally a landscape nursery and
real estate business. At the end of its 1996 fiscal year Griffin engaged in two
principal lines of business: (1) landscape nursery products, comprised of
growing container and field-grown landscape nursery products for sale
principally to landscape nursery mass merchandisers, and owning and operating
wholesale sales and service centers; and (2) real estate, comprised of owning,
building and managing commercial and industrial properties and developing
residential subdivisions on real estate owned by Griffin in Connecticut and
Massachusetts.

LANDSCAPE NURSERY BUSINESS

The landscape nursery operations of Griffin are operated by its wholly-owned
subsidiary, Imperial Nurseries, Inc. ("Imperial"). Imperial is a grower,
distributor and broker of wholesale landscape nursery stock. The landscape
nursery industry is extremely fragmented, with the industry leader having less
than 1% of total market share. Imperial believes that its volume places it among
the ten largest landscape nursery companies in the country.

Imperial's growing operations are located on property owned partly by
Griffin and partly by Imperial, in Connecticut (1,000 in-ground acres and 400
acres for containers) and in northern Florida (350 acres for containers). The
largest portion of Imperial's container-grown product consists of broad leaf
evergreens, including azaleas and rhododendron. Container-grown product is held
principally from one to five years prior to its sale by Griffin. Its
field-grown, as opposed to container-grown, product includes principally
evergreen pines, hemlocks, spruce and arborvitae. Imperial also contracts with a
grower in the Mid-Atlantic states to grow field-grown product for Imperial. The
agreement provides for Imperial to purchase such product over a five year
period. This program is part of a program intended to reduce Imperial's
investment in field-grown plants and to shorten its product growing cycles to
increase the profitability of the field-grown business. Imperial is also
reviewing other approaches to increasing its return on assets. Among the
possible approaches are holding some of its containerized production for a
longer period and selling such plants in terra cotta or similar containers for
immediate use by customers and adding a broader selection of perennial flowers
directed at increasing both margin and selling price.

The combined field-grown and container operations serve a market comprised
principally of landscapers, retail chain store garden departments, retail
nurseries and garden centers, and wholesale nurseries and distributors.
Imperial-grown products are also distributed through its own wholesale
horticultural sales and service centers. Imperial's major markets service the
Northeast, Mid-Atlantic, Southeast and Mid-West. Nursery sales are seasonal,
peaking in spring, and are affected by commercial and residential building
activity as well as weather conditions. The largest portion of Imperial's assets
are represented by plant inventories.

Imperial operates eight wholesale horticultural sales and service centers
which sell a wide range of plant material, including a large portion purchased
from growers other than Imperial, and horticultural tools and products to the
trade. The centers owned by Imperial are located in Windsor, Connecticut; Aston,
Pennsylvania; Pittsburgh, Pennsylvania; Columbus and Cincinnati, Ohio; White
Marsh, Maryland; and Manassas, Virginia. In addition, Imperial leases a center
in Monroeville, Pennsylvania.

In 1996, Imperial continued to diversify its customer base in order to
reduce its dependence on a few large customers. Currently Imperial's sales are
made to a large variety of customers, none of whom represents more than 3% of
sales.

Containerized growing and shipping capacity has been increased to meet the
potential volume and quality needs of Imperial's customers and to capitalize on
any growth in the Mid-Atlantic and Mid-West markets.

25
<PAGE>
REAL ESTATE BUSINESS

Griffin is directly engaged in the real estate development business on
portions of its land in Connecticut, with headquarters in Bloomfield,
Connecticut. Griffin develops portions of its properties for commercial,
residential and industrial use.

During the last several years, the real estate market in the Hartford area,
particularly that in the northwest quadrant, where the majority of Griffin's
acreage is located, has been depressed by a number of factors, including the
decline of employment in the defense and insurance industries. The development
of Griffin's land was also affected by land planning issues, particularly in the
town of Simsbury. In Simsbury, the value of Griffin's land is affected by the
presence of chlordane on a portion of the land which is intended for residential
development. Griffin is examining means of remediation on its lands and will
seek to subdivide certain of its Simsbury properties over a reasonable period.

Griffin's most substantial development is Griffin Center in Windsor,
Connecticut and Griffin Center South in Bloomfield, Connecticut. Together these
master planned developments comprise approximately 600 acres, half of which have
been developed with nearly 1,750,000 square feet of office and industrial space.
Griffin Center currently includes nine corporate office buildings built by
Griffin. During the 1980's, Griffin sold 70% interests in five of the buildings
to a bank-managed real estate investment fund. In 1996, these buildings were
sold in a transaction initiated by the successor of that partner. Griffin
recorded a pre-tax loss as a result of this transaction. In the 1980's, Griffin
also sold 70% interests in two other office buildings to an insurance company.
Griffin currently maintains a 30% interest in those two office buildings in the
Griffin Center Office Complex which aggregate 160,000 square feet. One other
office building which had been leased to the State of Connecticut was
transferred to the lender to the building in a deed in lieu of foreclosure in
1996.

Griffin Center South, a 130-acre tract, comprises fifteen buildings of
industrial and research/development space. Nine of these buildings have been
retained by Griffin for rental and are 78% rented. The other buildings have been
built on land sold by Griffin to commercial users who own and occupy the space.
Griffin has a master plan state traffic certificate which allows for the
development of an additional 300,000 square feet of space.

Griffin owns a 600-acre tract of land near Bradley International Airport and
Interstate 91 known as the New England Tradeport. To date, 140,000 square feet
of warehouse and light manufacturing space have been developed and are 95%
occupied and a bottling and distribution plant for Pepsi-Cola has been built. A
state traffic control certificate for the future development of 1.3 million
square feet has been obtained for the New England Tradeport. Griffin intends to
direct its primary efforts at the construction and leasing of light industrial
and warehouse facilities at the New England Tradeport. Development at the New
England Tradeport will require investment in offsite infrastructure on behalf of
Windsor, Connecticut and improvement of some state or town roads.

Two additional Griffin parcels available for development include 28 acres in
the Day Hill Technology Center in Windsor, and 100 acres in the South Windsor
Technology Center. State traffic certificates have been obtained for these
parcels for 500,000 square feet and 200,000 square feet of development,
respectively.

In 1988, a subsidiary of Griffin began infrastructure work at Walden Woods,
a 153-acre site in Windsor, Connecticut which was planned to contain more than
365 residential units. Prior to 1992 Griffin had built and sold 45 homes before
discontinuing its home building operations at Walden Woods. Since then two
third-party home builders have completed an additional 64 homes.

Griffin is seeking to develop a joint venture to process bulky waste and
build a transfer station and recycling operation on a portion of its land in
East Granby, Connecticut. In addition, approximately 500 acres are leased for
tobacco growing to General Cigar at rentals approximating carrying cost. The
lease for

26
<PAGE>
these properties, which extends for 10 years, may be terminated, as to 100
acres, annually on one year's prior notice. Griffin also leases office space to
General Cigar.

EQUITY INVESTMENTS

ELI WITT

Griffin owns 50.1% of Eli Witt, a wholesale distributor of tobacco, sundries
and general merchandise. Griffin deconsolidated Eli Witt as of April 25, 1994
and subsequently has accounted for its investment in Eli Witt under the equity
method. In November 1996 Eli Witt filed for protection under Chapter 11 of the
Federal Bankruptcy Law. In connection with such filing Eli Witt sold all of its
operating assets to another wholesale distributor in March 1997. Shareholders of
Eli Witt are not expected to receive any proceeds from the sale. See "--Legal
Matters."

CENTAUR

Griffin owns approximately 25% of the stock of Centaur, a privately-held
publisher of business magazines in the United Kingdom. After a period of time
when results were adversely affected by a number of factors including adverse
business conditions in the United Kingdom, this business is now profitable. Two
members of Griffin's Board of Directors are on the Board of Directors of
Centaur. Griffin's investment in Centaur is carried at approximately $14.0
million.

FINANCIAL INFORMATION REGARDING INDUSTRY SEGMENTS

See Note 5 to the Combined Financial Statements of Griffin included
elsewhere herein for certain financial information regarding the landscape
nursery business and the real estate business.

PROPERTIES

COMMERCIAL REAL ESTATE

<TABLE>
<CAPTION>
LAND AREA
LOCATION OF PROPERTY (ACRES)
- ---------------------------------------------------------------------------------- -----------
<S> <C>
CONNECTICUT
Bloomfield, CT.................................................................... 220
East Granby, CT................................................................... 920
Simsbury, CT...................................................................... 860
South Windsor, CT................................................................. 103
Suffield, CT...................................................................... 350
Windsor, CT....................................................................... 1,220

MASSACHUSETTS
Southwick, MA..................................................................... 425

FLORIDA
Hillsborough County, Florida...................................................... []
Leon County, Florida.............................................................. []
</TABLE>

27
<PAGE>
NURSERY REAL ESTATE

<TABLE>
<CAPTION>
LAND AREA
LOCATION OF PROPERTY (ACRES)
- ---------------------------------------------------------------------------------- -----------
<S> <C>
FLORIDA
Quincy, FL........................................................................ 1,365

PENNSYLVANIA
Monroeville, PA................................................................... 24
Aston, PA......................................................................... 17
Pittsburgh, PA.................................................................... []

VIRGINIA
Manassas, VA...................................................................... 22

OHIO
Columbus, OH...................................................................... 3
Cincinnati, OH.................................................................... 11

MARYLAND
White Marsh, MD................................................................... 20
</TABLE>

LEGAL MATTERS

As a result of the Asset Transfers, Griffin has acquired Culbro's 50.1%
interest in Eli Witt. In November 1996, Eli Witt filed for protection under
Chapter 11 of the Federal Bankruptcy Law. Prior to February 1993, Eli Witt was a
wholly-owned subsidiary of Culbro and filed consolidated tax returns with
Culbro. Culbro, Eli Witt and other parties engaged in two complex acquisitions
and reorganizations in 1993 and 1994, pursuant to which Culbro received
significant distributions from Eli Witt to repay Culbro's debt, including
substantial amounts Culbro had previously borrowed from unaffiliated third
parties to fund Eli Witt's business. Culbro subsequently loaned $5 million to
Eli Witt. It is anticipated that these transactions (including the transfer of
funds to Culbro) will be reviewed by Eli Witt creditors and other parties in
interest in connection with the Chapter 11 case. To date, one creditor has
written to the unsecured creditors committee proposing an inquiry into this
matter. Although Griffin believes that any claim challenging the distributions
described above would be without merit, any such claim, if asserted and
successfully prosecuted, could have a material adverse effect on Griffin's
financial condition. See "RISK FACTORS--Assumed Liabilities; The Eli Witt
Company."

EMPLOYEES

Griffin employs approximately persons, including in its real
estate business and in its landscape nursery business. At present, none
of these employees is represented a union. Griffin believes that its relations
with its employees are satisfactory.

COMPETITION

The nursery business is competitive and Griffin competes against a number of
other companies, including local and regional nursery businesses. Some of
Griffin's competitors may be in a stronger financial position than Griffin.
Numerous real estate developers operate in the portion of Connecticut and
Massachusetts in which Griffin's holdings are concentrated. Some of such
businesses compete in each anticipated business of Griffin and may have greater
financial resources than Griffin. See "RISK FACTORS--Competition."

28
<PAGE>
REGULATION

Under various federal, state and local laws, ordinances and regulations, an
owner or operator of real estate may be required to investigate and clean up
hazardous or toxic substances or petroleum product releases at such property and
may be held liable to a govermental entity or to third parties for property
damage and for investigation and clean-up costs incurred by such parties in
connection with contamination. The cost of investigation, remediation or removal
of such substances may be substantial, and the presence of such substances, or
the failure to properly remediate such substances, may adversely affect the
owner's ability to sell or rent such property or to borrow using such property
as collateral. In connection with the ownership (direct or indirect), operation,
management and development of real properties, Griffin may be considered an
owner or operator of such properties or as having arranged for the disposal or
treatment of hazardous or toxic substances and, therefore, potentially liable
for removal or remediation costs, as well as certain other related costs,
including governmental fines and injuries to persons and property. See "RISK
FACTORS--Environmental Matters."

29
<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information with respect to Griffin's
executive officers, directors and certain other key employees.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------------ --- ------------------------------------------------
<S> <C> <C>
Edgar M. Cullman................................ 79 Chairman of the Board and Director
Frederick M. Danziger........................... 57 President, Chief Executive Officer and Director
Anthony J. Galici............................... 39 Chief Financial Officer
John L. Ernst................................... 56 Director
Winston J. Churchill, Jr........................ 57 Director
</TABLE>

EDGAR M. CULLMAN has been the Chairman of the Board of Griffin since April,
1997. He has been Chairman of the Board of General Cigar since December, 1996.
From 1962 to 1996 he served as Chief Executive Officer of Culbro. Mr. Cullman
has served as a Director of Culbro since 1961 and has been Chairman of Culbro
since 1975. He also is a Director of Centaur Communications Limited,
Bloomingdale Properties, Inc. and Eli Witt. Eli Witt filed for relief from its
creditors under Chapter 11 of the Federal Bankruptcy Code in November 1996.
Edgar M. Cullman is the uncle of John L. Ernst and the father-in-law of
Frederick M. Danziger.

FREDERICK M. DANZIGER has been a Director and the President and Chief
Executive Officer of Griffin since April, 1997, and a director of Culbro since
1975. He was previously involved in the real estate operations of Griffin in the
early 1980s. Mr. Danziger has been Of Counsel to the law firm of Latham &
Watkins since 1995. From 1990 until 1995, Mr. Danziger was a Member of the law
firm of Mudge Rose Guthrie Alexander & Ferndon. Mr. Danziger also is a director
of Monro Muffler/Brake, Inc., Bloomingdale Properties, Inc., First Financial
Caribbean Corporation and Centaur Communications Limited, and is a general
partner of Ryan Instruments, L.P.

ANTHONY J. GALICI has been the Chief Financial Officer of Griffin since
April 1997. Mr. Galici has served as Vice President-Assistant Controller of
Culbro since 1995. Prior to 1995, he was Assistant Controller of Culbro.

JOHN L. ERNST is a Director of Griffin, General Cigar and Culbro. He has
been a Director of Griffin since April 1997, a director of General Cigar since
December 1996 and a Director of Culbro since 1983. He is the Chairman of the
Board and President of Bloomingdale Properties, Inc., an investment and real
estate company. Mr. Ernst also is a director of the First Financial Caribbean
Corporation.

WINSTON J. CHURCHILL, JR. has been a Director of Griffin since April 1997.
Mr. Churchill is also chairman of the board of Central Sprinkler Corporation and
IBAH, Inc. and a member of the board of Geotek Communications, Inc. and Tescorp,
Inc. He is a managing general partner of SCP Private Equity Partners, L.P., a
private equity fund sponsored by Safeguard Scientifics Inc., and is chairman of
Churchill Investment Partners, Inc. and CIP Capital, Inc.

EXECUTIVE COMPENSATION

From the time of its incorporation until the date hereof Griffin has been,
and following the date hereof until the consummation of the Distribution,
Griffin will be a wholly-owned subsidiary of Culbro whose policy decisions are
made by Culbro. Neither the Chief Executive Officer nor the Chief Financial
Officer named above were employees of Griffin prior to April 1997. Griffin had
no Chief Executive Officer prior to April 1997, and no current executive officer
of Griffin received material compensation from Griffin during the last three
years.

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<PAGE>
COMPENSATION OF DIRECTORS

Directors who do not receive compensation as officers or employees of the
Company or any of its affiliates will be paid an annual retainer fee of $10,000
and a fee of $500 for each meeting of the Board of Directors or any committee
thereof they attend, plus reasonable out-of-pocket expenses. In addition, such
Directors will receive annually options exercisable for 2,000 shares of Class A
Common Stock exercisable at market prices in existence at the time of grant
pursuant to the Griffin Stock Option Plan. See "CERTAIN EMPLOYEE BENEFIT
MATTERS--the Griffin Stock Option Plan."

CERTAIN EMPLOYEE BENEFIT MATTERS

Griffin and Culbro have entered into the Benefits Agreement which provides
generally that following the date of the Asset Transfers or the Distribution, as
the case may be, persons employed by Griffin shall cease to be eligible to
participate in Culbro employee benefit plans and arrangements, and shall instead
become eligible to participate in certain employee benefit plans and
arrangements maintained or established by Griffin.

GRIFFIN 401(K) PLAN

In connection with the Distribution, Griffin will establish the Griffin Land
& Nurseries, Inc. 401(k) Savings Plan (the "Griffin 401(k) Plan"). Employees of
Griffin who participated in the Culbro Companies 401(k) Savings Plan immediately
prior to the Distribution will become participants in the Griffin 401(k) Plan
upon the Distribution Date, and as soon as practicable thereafter the account
balances of persons employed by Griffin after the Distribution will be
transferred from the Culbro Companies 401(k) Savings Plan to the Griffin 401(k)
Plan. Following the Distribution, employees of Griffin who are employed in the
United States, are at least age [ ] and who have at least [ ] months of
service will be eligible to participate in the Griffin 401(k) Plan. Subject to
applicable Internal Revenue Code limits, Highly Compensated Employees (as
defined in the Plan) who participate in the Plan will generally be able to defer
up to [ ] of compensation through salary deferrals, while employees other than
Highly Compensated Employees will be able to defer up to [ ] of compensation.
Griffin may in its discretion "match" employee deferrals each year. For 1997,
Griffin will contribute [ ] for each dollar a participating employee defers
up to [ ] of such employee's compensation. Such matching contributions made by
Griffin vest at the rate of [ ] per year of service, which includes years of
service with Culbro prior to the Distribution.

GRIFFIN STOCK OPTION PLAN

Effective as of the Distribution Date, Griffin will establish the Griffin
Land & Nurseries, Inc. 1997 Stock Option Plan (the "Griffin Stock Option Plan").
A total of approximately 845,000 shares of Class A Common Stock will be
available for issuance under the Griffin Stock Option Plan. Of such 845,000
shares, 350,000 will be available for issuance with respect to new options that
may be granted to certain officers, employees, consultants and directors of
Griffin following the Distribution. The Griffin Stock Option Plan will be
administered by the Compensation Committee of the Board of Directors of Griffin,
and each option granted under the Griffin Stock Option Plan will be evidenced by
a written stock option agreement that will set forth the material terms of the
option, including the exercise price and vesting schedule. Options granted under
the Griffin Stock Option Plan may be either incentive stock options or non-
qualified stock options. Incentive stock options issued under the Griffin Stock
Option Plan will satisfy certain Internal Revenue Code requirements applicable
thereto.

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<PAGE>
Immediately prior to the Distribution, Griffin intends to grant options to
the following persons in the amounts and at the prices set forth below:

In addition to the 350,000 shares available for issuance with respect to
post-Distribution stock option grants, approximately 495,000 additional shares
will be available for issuance upon the exercise of Culbro stock options that
are reformed as Griffin Options (as defined below) pursuant to the Benefits
Agreement, and such reformed Griffin Options shall be administered under the
Griffin Stock Option Plan pursuant to the terms governing the original Culbro
options as in effect immediately prior to the Distribution.

The Benefits Agreement provides that as of the Distribution Date, each
current holder of an option to acquire shares of Culbro common stock under any
Culbro stock option plan or agreement will receive in exchange therefor two
separately exercisable options, one option to purchase shares of Culbro common
stock (a "Culbro Option") and one option to purchase shares of Griffin Class A
Common Stock (a "Griffin Option"), each containing terms substantially
equivalent in the aggregate to those of such holder's pre-Distribution option.
With respect to each holder of a nonqualified option, the combined aggregate
exercise price of the Culbro Option and the Griffin Option shall be equal to the
aggregate exercise price of the pre-Distribution option. With respect to each
holder of an incentive stock option, the number of shares with respect to which
each Culbro Option and each Griffin Option are exercisable, and the exercise
price for each Culbro Option and each Griffin Option, will be set so as to
preserve the Exercise Ratio and the Aggregate Spread (both as defined below)
attributed to options currently outstanding, such determination to be based on
the respective trading prices of Culbro common stock and Griffin common stock
following the Distribution. The "Exercise Ratio" of the Culbro Option and the
Griffin Option, respectively, shall be set such that on a share by share basis,
the ratio of the exercise price of the Culbro Option and the Griffin Option to
the value of Culbro common stock or Griffin common stock, respectively, shall be
equal to the ratio of the pre-Distribution exercise price to the
pre-Distribution value of stock subject to the option. The "Aggregate Spread" of
an option is an amount equal to the difference between the exercise price of the
option and the price of a share of Culbro common stock immediately prior to the
Distribution multiplied by the number of shares underlying such option.

MISCELLANEOUS BENEFIT PLANS

Following the Asset Transfer Date, persons employed by Griffin who were
eligible to participate in any of the employee welfare benefit plans or
arrangements providing life, hospitalization, medical and long-term disability
insurance maintained by Culbro for its salaried and certain hourly paid
employees will continue to be eligible to participate in such plans and
arrangements for the remainder of the 1997 fiscal year, and Griffin will
participate in certain fee sharing arrangements with Culbro (or General Cigar,
following the Merger) with respect to such plans. Following the 1997 fiscal
year, Griffin intends to maintain substantially similar welfare benefit plans
and arrangements for the benefit of its eligible employees. Following the
Distribution Date, persons employed by Griffin shall cease to accrue any further
benefits under the Culbro Retirement Plan and Griffin will not assume any
liabilities or obligations with respect to the Culbro Retirement Plan. Griffin
will assume sole responsibility for any payment due to Anthony Galici under any
Culbro Annual Incentive Compensation Plan payable with respect to the 1997
fiscal year.

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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Since December 1, 1995, Frederick M. Danziger, President and Chief Executive
Officer of Griffin and a member of the Cullman & Ernst Group, the son-in-law of
Edgar M. Cullman and the husband of Lucy C. Danziger, has been Of Counsel to the
law firm of Latham & Watkins. During Culbro's 1996 fiscal year, such firm
received fees and disbursements of approximately $1.5 million from Culbro for
services rendered. See "PRINCIPAL STOCKHOLDERS."

Messrs. Cullman, Danziger and Ernst are members of the Board of Directors of
Bloomingdale Properties, Inc. of which Mr. Ernst is Chairman and President and
other members of the Cullman & Ernst Group are associated. Real estate
management and advisory services have been provided to Culbro by an affiliate of
Bloomingdale Properties, Inc. A fee of approximately $200,000 was paid by Culbro
in 1996 for management of Culbro's New York office building and for other real
estate advisory services. John Fletcher, an employee of Bloomingdale Properties,
Inc., was a director of Griffin until April 1997 and is expected to be retained
by Griffin as a consultant. The terms of his consulting arrangement have not yet
been determined.

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<PAGE>
PRINCIPAL STOCKHOLDERS

Culbro beneficially owns 4,542,872 shares of Class B Common Stock,
constituting all of the outstanding shares of Class B Common Stock. No shares of
Class A Common Stock will be outstanding prior to consummation of the
Distribution. Following the Distribution the holders of Culbro common stock
immediately preceding the Distribution will own 4,542,872 shares of Class B
Common Stock, constituting 100% of the outstanding Common Stock. Each share of
Class B Common Stock is convertible into one share of Class A Common Stock under
certain circumstances. For a description of the Class A Common Stock and the
Class B Common Stock, see "DESCRIPTION OF CAPITAL STOCK."

The following table sets forth certain information regarding beneficial
ownership of the Culbro Common Stock as of April 2, 1997 and by each person who
is known by Griffin to beneficially own more than 5% of the outstanding shares
of Culbro Common Stock, each director of Griffin and all directors of Griffin as
a group. There are no executive officers of Griffin who received material
compensation for services rendered to Griffin and whose ownership of any shares
of Common Stock would be required to be included in the following table. As of
April 2, 1997, on a pro forma basis after giving effect to the Distribution, the
persons listed below would have held Common Stock (of both Class A and Class B
collectively) in the amounts and percentages set forth below. Unless otherwise
indicated, the address of each person named in the table below is c/o Culbro
Corporation, 387 Park Avenue South, New York, New York, 10016-8899.

<TABLE>
<CAPTION>
CULBRO COMMON STOCK
PRIOR TO THE
DISTRIBUTION
------------------------
SHARES
BENEFICIALLY PERCENT OF
NAME OF BENEFICIAL OWNER OWNED(1) TOTAL
- ------------------------------------------------------------------------ ----------- -----------
<S> <C> <C>
Edgar M. Cullman (2).................................................... 974,874 21.5%
Edgar M. Cullman, Jr. (2)............................................... 891,658 19.6
Louise B. Cullman (2)(3)................................................ 834,347 18.4
Susan R. Cullman (2)(3)................................................. 784,529 17.3
Lucy C. Danziger (2)(3)................................................. 1,051,264 23.1
John L. Ernst (2)....................................................... 420,271 9.3
Frederick M. Danziger (2)(3)............................................ 164,120 3.6
Anthony J. Galici (4)................................................... 5,673 *
B. Bros. Realty Limited Partnership (5)................................. 233,792 5.1
Gabelli Funds, Inc. (6)................................................. 971,800 21.4
All officers and directors as a group (2 persons)(7).................... 590,064 13.0
</TABLE>

- ------------------------

* less than 1%

(1) This information reflects the definition of beneficial ownership adopted by
the SEC. Beneficial ownership shown reflects sole investment and voting
power, except as reflected in footnote 2. Where more than one person shares
investment and voting power in the same shares such shares may be shown more
than once. Such shares are reflected only once, however, in the total for
all directors and officers. Excluded are shares held by charitable
foundations and trusts of which members of the Cullman and Ernst Group are
officers and directors. As of April 2, 1997, a group consisting of Messrs.
Cullman, direct members of their families and trusts for their benefit, Mr.
Ernst, his sister and direct members of their families and trusts for their
benefit, a partnership in which members of the Cullman and Ernst families
hold substantial direct and indirect interests and charitable foundations
and trusts of which members of the Cullman and Ernst families are directors
or trustees, owned an aggregate of approximately 2,237,147 shares of
Culbro's common stock (approximately 50% of the outstanding shares of Culbro
common stock). Among others, Messrs. Cullman, Mr. Ernst and to a

34
<PAGE>
lesser extent Mr. Danziger (who is a member of the Cullman & Ernst Group)
hold investment and voting power or shared investment and voting power over
such shares. Certain of such shares are pledged as security for loans
payable under standard pledge arrangements. A form filed with the SEC on
behalf of the Cullman & Ernst Group states that there is no formal agreement
governing the group's holding and voting of such shares but that there is an
informal understanding that the persons and entities included in the group
will hold and vote together the shares owned by each of them in each case
subject to any applicable fiduciary responsibilities. Louise B. Cullman is
the wife of Edgar M. Cullman. Susan R. Cullman and Lucy C. Danziger are the
daughters of Edgar M. Cullman and Louise B. Cullman, and Lucy C. Danziger is
the wife of Frederick M. Danziger. Edgar M. Cullman Jr. is the son of Edgar
M. Cullman and Louise B. Cullman.

(2) Included within the Culbro shares shown as beneficially owned by Edgar M.
Cullman are 863,576 shares in which he holds shared investment and/or voting
power; included within the shares shown as beneficially owned by Mr. Ernst
are 411,321 shares in which he holds shared investment and/or voting power;
included within the shares shown as beneficiary owned by Mr. Danziger are
147,578 shares in which he holds shares investment and/or voting power; and
included within the shares shown as beneficially owned by Edgar M. Cullman,
Jr. are 751,490 shares in which he holds shared investment and/or voting
power. Included within the shares shown as beneficially owned by Louise B.
Cullman are 730,937 shares in which she holds shared investment and/or
voting power; included within the shares shown as beneficially owned by
Susan R. Cullman are 690,042 shares in which she holds shared investment
and/or voting power; included within the shares shown as beneficially owned
by Lucy C. Danziger are 969,422 shares in which she holds shared investment
and/or voting power. Excluded in each case are shares held by charitable
foundations and trusts in which such persons or their families or trusts for
their benefit are officers and directors. Messrs. Cullman, Ernst, Danziger
and Cullman, Jr. disclaim beneficial interest in all shares over which there
is shared investment and/or voting power and in all excluded shares.

(3) The address of each of Louise B. Cullman, Susan R. Cullman, Lucy C. Danziger
and Frederick M. Danziger is c/o 641 Lexington Avenue, New York, New York.

(4) Includes 4,400 shares subject to Culbro Options exercisable within 60 days.
Upon consummation of the Distribution such Culbro Options will be
exercisable for approximately the same number of shares of Class A Common
Stock. See "CERTAIN EMPLOYEE BENEFIT MATTERS--Griffin Stock Option Plan.

(5) The address of B. Bros. Realty Limited Partnership is 641 Lexington Avenue,
New York, New York.

(6) The address of such person is Gabelli Funds, Inc., One Corporate Center,
Rye, New York, NY 10580. A form filed with the SEC in September 1991 by
Gabelli Funds, Inc. as subsequently amended indicates that the securities
have been acquired by Gabelli Funds, Inc. and its wholly-owned subsidiaries
on behalf of their investment advisory clients. Culbro has been informed
that no individual client of Gabelli Funds, Inc. has ownership of more than
5% of Culbro's common stock.

(7) Excluding shares held by certain charitable foundations the officers and/or
directors of which include certain officers and directors of the Company.

DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 10,000,000 shares of
Class A Common Stock, 5,000,000 shares of Class B Common Stock and 5,000,000
shares of preferred stock, par value $0.01 per share (the "Preferred Stock"), of
which 4,542,872 shares of Class B Common Stock are outstanding. The following
summary description of the capital stock of Griffin is qualified in its entirety
by reference to the form of Amended and Restated Certificate of Incorporation of
Griffin (the "Amended Certificate") and

35
<PAGE>
By-Laws of Griffin (the "By-Laws"), a copy of each of which is filed as an
exhibit to the Registration Statement on Form 10 of which this Information
Statement forms a part.

CLASS A COMMON STOCK AND CLASS B COMMON STOCK

The Amended Certificate provides for two classes of common stock, Class A
Common Stock and Class B Common Stock, which are substantially identical, except
for disparity in voting power.

Each share of Class A Common Stock entitles the holder of record to one vote
and each share of Class B Common Stock entitles the holder of record to ten
votes at each annual or special meeting of stockholders, in the case of any
written consent of stockholders, and for all other purposes. The holders of
Class A Common Stock and Class B Common Stock vote as a single class on all
matters submitted to a vote of the stockholders, except as otherwise provided by
law. Neither the holders of Class A Common Stock nor the holders of Class B
Common Stock have cumulative voting or preemptive rights. Griffin, as a
condition to counting the votes cast by any holder of Class B Common Stock at
any annual or special meeting of stockholders, in the case of any written
consent of stockholders, or for any other purpose, may require the furnishing of
such affidavits or other proof as it may reasonably request to establish that
the Class B Common Stock held by such holder has not been converted, by virtue
of the provisions of the Amended Certificate, into Class A Common Stock.

The holders of the Common Stock are entitled to receive dividends and other
distributions as may be declared thereon by the Griffin Board out of assets or
funds of Griffin legally available therefor, subject to the rights of the
holders of any series of Preferred Stock and any other provision of the Amended
Certificate. The Amended Certificate provides that if at any time a dividend or
other distribution in cash or other property is paid on the Class A Common Stock
or the Class B Common Stock, a like dividend or other distribution in cash or
other property also will be paid on Class B Common Stock or Class A Common
Stock, as the case may be, in an equal amount, except that voting securities
paid on the Class B Common Stock may have ten times the number of votes per
share as voting securities paid on the Class A Common Stock. In the case of any
split, subdivision, combination or reclassification of Class A Common Stock or
Class B Common Stock, the shares of Class A Common Stock or Class B Common
Stock, as the case may be, also will be split, subdivided, combined or
reclassified so that the number of shares of Class A Common Stock and Class B
Common Stock outstanding immediately following such split, subdivision,
combination or reclassification will bear the same relationship to each other as
that which existed immediately prior thereto.

In the event of any liquidation, dissolution or winding up of Griffin, the
holders of Class A Common Stock and the holders of Class B Common Stock are
entitled to receive the assets and funds of Griffin available for distribution
after payments to creditors and to the holders of any Preferred Stock of Griffin
that may at the time be outstanding, in proportion to the number of shares held
by them, respectively, without regard to class.

In the event of any corporate merger, consolidation, purchase or acquisition
of property or stock, or other reorganization in which any consideration is to
be received by the holders of Class A Common Stock or the holders of Class B
Common Stock, the holders of Class A Common Stock and the holders of Class B
Common Stock will receive the same consideration on a per share basis; except
that, if such consideration shall consist in any part of voting securities (or
of options or warrants to purchase, or of securities convertible into or
exchangeable for, voting securities), the holders of Class B Common Stock may
receive, on a per share basis, voting securities with ten times the number of
votes per share as those voting securities to be received by the holders of
Class A Common Stock (or options or warrants to purchase, or securities
convertible into or exchangeable for, voting securities with ten times the
number of votes per share as those voting securities issuable upon exercise of
the options or warrants to be received by the holders of the Class A Common
Stock, or into which the convertible or exchangeable securities to be received
by the holders of the Class A Common Stock may be converted or exchanged).

36
<PAGE>
The Amended Certificate provides that no person holding record or beneficial
ownership of shares of Class B Common Stock (a "Class B Holder") may transfer,
and Griffin will not register the transfer of, such shares of Class B Common
Stock, except to a Permitted Transferee. For purposes of the foregoing, the
transfer of shares of Class B Common Stock to holders of Culbro Common Stock as
a result of the Distribution will not be deemed to be a transfer. A transfer to
a Permitted Transferee generally means a transfer to an affiliate of the Class B
Holder, which may include transfers into estates, from trusts to their
beneficiaries and from owners into trusts. In certain circumstances set forth in
the Amended Certificate, the change in ownership or control of a record or
beneficial holder of Class B Common Stock will also result in the conversion of
such holder's Class B Common Stock into Class A Common Stock. Notwithstanding
the foregoing, any holder of Class B Common Stock may pledge shares of Class B
Common Stock as collateral for any indebtedness or other obligations without
triggering a conversion of such Class B Common Stock into Class A Common Stock.
The Amended Certificate also provides that Griffin will not register the
transfer of any shares of Class B Common Stock unless the transferee and the
transferor of such Class B Common Stock have furnished such affidavits and other
proof as Griffin reasonably may request to establish that such proposed
transferee is a Permitted Transferee. In addition, upon any purported transfer
of shares of Class B Common Stock not permitted under the Amended Certificate,
including as a result of a foreclosure upon shares of Class B Common Stock
subject to a pledge, all shares of Class B Common Stock purported to be so
transferred will be deemed to be converted into shares of Class A Common Stock,
and stock certificates formerly representing such shares of Class B Common Stock
will be deemed to represent such number of shares of Class A Common Stock as
equals the number of shares of Class A Common Stock into which such shares of
Class B Common Stock could be converted pursuant to the terms of the Amended
Certificate.

PREFERRED STOCK

The Board of Directors, without further stockholder authorization, is
authorized to issue, from time to time, Preferred Stock in one or more series,
to establish the number of shares to be included in any such series and to fix
the designations, powers, preferences and rights of the shares of each such
series and any qualifications, limitations or restrictions thereof, including
dividend rights and preferences over dividends on the Common Stock, conversion
rights, voting rights, redemption rights, the terms of any sinking fund therefor
and rights upon liquidation. The ability of the Griffin Board to issue Preferred
Stock, while providing flexibility in connection with financing, acquisitions
and other corporate purposes, could have the effect of discouraging, deferring
or preventing a change in control of Griffin or an unsolicited acquisition
proposal, since the issuance of Preferred Stock could be used to dilute the
share ownership of a person or entity seeking to obtain control of Griffin. In
addition, because the Griffin Board has the power to establish the preferences,
powers and rights of the shares of any such series of Preferred Stock, it may
afford the holders of any Preferred Stock preferences, powers and rights
(including voting rights) senior to the rights of the holders of Common Stock,
which could adversely affect the rights of holders of Common Stock.

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW

37
<PAGE>
LIMITATIONS ON DIRECTORS' LIABILITY

The Amended Certificate contains a provision which eliminates the personal
liability of a director to Griffin and its stockholders for certain breaches of
his or her fiduciary duty of care as a director.

This provision does not, however, eliminate or limit the personal liability
of a director (i) for any breach of such director's duty of loyalty to Griffin
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Delaware statutory provisions making directors personally liable, under a
negligence standard, for unlawful dividends or unlawful stock repurchases or
redemptions or (iv) for any transaction from which the director derived an
improper personal benefit. This provision offers persons who serve on the Board
of Directors of Griffin protection against awards of monetary damages resulting
from breaches of their duty of care (except as indicated above), including
grossly negligent business decisions made in connection with takeover proposals
for Griffin. As a result of this provision, the ability of Griffin or a
stockholder thereof to successfully prosecute an action against a director for a
breach of his duty of care has been limited. However, the provision does not
affect the availability of equitable remedies such as an injunction or recision
based upon a director's breach of his duty of care. The SEC has taken the
position that the provision will have no effect on claims arising under the
federal securities laws.

In addition, the Amended Certificate and By-Laws provide mandatory
indemnification rights, subject to limited exceptions, to any person who was or
is party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by reason of the fact that such person is
or was a director or officer of Griffin, or is or was serving at the request of
Griffin as a director or officer of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise. Such indemnification
rights include reimbursement for expenses incurred by such person in advance of
the final disposition of such proceeding in accordance with the applicable
provisions of the DGCL.

TRANSFER AGENT AND REGISTRAR

Chase Mellon Shareholder Services, LLC is the transfer agent and registrar
for the Common Stock.

POWER TO ISSUE ADDITIONAL SHARES OF COMMON STOCK AND PREFERRED STOCK

Griffin believes that the power of the Griffin Board to issue additional
authorized but unissued shares of Common Stock and Preferred Stock and to
classify or reclassify unissued shares of Griffin capital stock and thereafter
to cause Griffin to issue such classified or reclassified shares of stock will
provide Griffin with increased flexibility in structuring possible future
financings and acquisitions and in meeting other needs which may arise. The
additional classes or series, as well as the Common Stock and Preferred Stock,
will be available for issuance without further action by Griffin's stockholders,
unless such action is required by applicable law or the rules of any stock
exchange or automated quotation system on which Griffin's securities may be
listed or traded. Although the Griffin Board has no intention at the present
time of doing so, it could authorize Griffin to issue a class or series that
could, depending upon the terms of such class or series, delay, defer or prevent
a transaction or a change in control of Griffin that might involve a premium
price for holders of Common Stock or otherwise be in their best interests.

DIVIDEND POLICY

The payment and amount of cash dividends on the Common Stock after the
Distribution will be subject to the discretion of the Griffin Board. Griffin's
dividend policy will be reviewed by Griffin's Board of Directors from time to
time as may be appropriate and payment of dividends on the Common Stock will
depend upon Griffin's financial position, capital requirements and other factors
as the Griffin Board deems relevant. Subject to the foregoing, Griffin presently
does not intend to pay cash dividends in the foreseeable future.

38
<PAGE>
DESCRIPTION OF CERTAIN INDEBTEDNESS

Griffin presently does not have any material indebtedness. It is expected,
however, that following the Distribution Griffin will explore a variety of
financing options, including the possible establishment of a revolving credit
facility, in order to fund future real estate development opportunities. The
terms and conditions of future debt instruments of Griffin or its subsidiaries
may impose restrictions on Griffin and its subsidiaries that affect, among other
things, their ability to incur debt, pay dividends or make distributions, make
acquisitions, create liens, sell assets, and make certain investments. In
addition, the terms and conditions of such indebtedness may restrict the ability
of Griffin to pay dividends except under certain circumstances.

SHARES ELIGIBLE FOR FUTURE SALE

Immediately after consummation of the Distribution, Griffin will have
outstanding 4,542,872 shares of Class A Common Stock, assuming full conversion
of such shares into shares of Class A Common Stock. See "DESCRIPTION OF CAPITAL
STOCK" for a summary of the conversion feature of the Class B Common Stock.

Immediately after consummation of the Distribution, [ ] shares of
Class A Common Stock will be subject to outstanding options. Griffin intends to
file a registration statement on Form S-8 under the Securities Act to register
the sale of 845,000 shares of Class A Common Stock reserved for issuance under
the Griffin Stock Option Plan, including 495,000 shares of Class A Common Stock
issuable upon exercise of Culbro Options following the Distribution. As a
result, any shares of Class A Common Stock issued upon exercise of such stock
options will be available, subject to special rules for affiliates, for resale
in the public market.

In general, under Rule 144, as currently in effect, (i) a person (or persons
whose shares are required to be aggregated) who has beneficially owned shares of
Class A Common Stock as to which at least two years have elapsed since such
shares were sold by Griffin or by an affiliate of Griffin in a transaction or
chain of transactions not involving a public offering ("restricted securities")
or (ii) an affiliate of Griffin who holds shares of Class A Common Stock that
are not restricted securities may sell, within any three-month period, a number
of such shares that does not exceed the greater of 1% of the Class A Common
Stock then outstanding or the average weekly trading volume in the Class A
Common Stock during the four calendar weeks preceding the date on which notice
of such sale required under Rule 144 was filed. Sales under Rule 144 also are
subject to certain provisions relating to the manner and notice of sale and
availability of current public information about Griffin. Affiliates of Griffin
must comply with the requirements of Rule 144, including the two-year holding
period requirement, to sell shares of Class A Common Stock that are restricted
securities. Furthermore, if a period of at least three years has elapsed from
the date restricted securities were acquired from Griffin or an affiliate of
Griffin, a holder of such restricted securities who is not an affiliate of
Griffin at the time of the sale and has not been an affiliate of Griffin at any
time during the three months prior to such sale would be entitled to sell such
shares without regard to the volume limitation and other conditions described
above. The SEC has adopted amendments reducing the required two-year holding
period under Rule 144 to one year and reducing the required three-year holding
period under Rule 144(k) to two years. The amendments may be relied upon by
holders of restricted securities upon publication of the amendments in the
Federal Register and will allow such holders to sell restricted securities in
the open market significantly earlier than currently permitted.

All shares of Class B Common Stock and all shares of Class A Common Stock
issuable upon conversion of such shares of Class B Common Stock will be eligible
for sale in the public market immediately after consummation of the
Distribution; PROVIDED, that all of such shares held by the members of the
Cullman & Ernst Group may be resold only pursuant to, and in accordance with,
the volume, manner of sale and other conditions of Rule 144 described above.

39
<PAGE>
Prior to the Distribution, there has been no public market for the Class A
Common Stock. Although Griffin can make no prediction as to the effect, if any,
that sales of shares of Class A Common Stock by the Cullman & Ernst Group would
have on the market price prevailing from time to time, sales of substantial
amounts of Class A Common Stock or the availability of such shares for sale
could adversely affect prevailing market prices.

ADDITIONAL INFORMATION

Griffin has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form 10 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") with respect to the Common Stock
described herein. This Information Statement does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. Further information may be obtained from the Registration
Statement and such exhibits and schedules. Copies of these documents may be
inspected at and obtained at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Regional
Offices of the Commission at 7 World Trade Center, Suite 1300, New York, New
York 10048 and at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Such reports and other documents may be obtained from the web site that the
Commission maintains at http://www.sec.gov. Copies of such information can also
be obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Application will
be made to list the Class A Common Stock on NASDAQ, subject to official notice
of issuance, under the symbol " ."

Following the Distribution, Griffin will be required to comply with the
reporting requirements of the Exchange Act and will file annual, quarterly and
other reports with the Commission. Additionally, Griffin will be subject to the
proxy solicitation requirements of the Exchange Act and will furnish annual
reports containing audited financial statements to its stockholders in
connection with its annual meetings of stockholders.

No person is authorized to give any information or to make any
representations other than those contained in this Information Statement. Any
other information or representations given or made must not be relied upon as
having been authorized. This Information Statement does not constitute an offer
to sell or a solicitation of an offer to buy any securities. The delivery of
this Information Statement must not under any circumstances be construed as an
implication that there has been no change in the affairs of Griffin subsequent
to the date of this Information Statement.

40
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Report of Independent Accountants..................................................... F-2

Combined Statement of Operations for the Fiscal Years Ended December 3, 1994, December
2, 1995 and November 30, 1996........................................................ F-3

Combined Balance Sheet as of December 2, 1995 and November 30, 1996 and Pro Forma
Combined Balance Sheet as of November 30, 1996....................................... F-4

Combined Statement of Cash Flows for the Fiscal Years Ended December 3, 1994, December
2, 1995 and November 30, 1996........................................................ F-5

Notes to Combined Financial Statements................................................ F-6
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholder
of Griffin Land & Nurseries, Inc.

In our opinion, the accompanying combined balance sheet and the related combined
statements of operations and of cash flows present fairly, in all material
respects, the combined financial position of Griffin Land & Nurseries, Inc. (a
wholly-owned subsidiary of Culbro Corporation) at December 2, 1995 and November
30, 1996 and the results of their combined operations and their combined cash
flows for each of the fiscal years ended December 3, 1994, December 2, 1995 and
November 30, 1996 in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

PRICE WATERHOUSE LLP
New York, New York
April 7, 1997

F-2
<PAGE>
GRIFFIN LAND & NURSERIES, INC.

COMBINED STATEMENT OF OPERATIONS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED,
--------------------------------
DEC. 3, DEC. 2, NOV. 30,
1994 1995 1996
---------- --------- ---------
<S> <C> <C> <C>
Net sales and other revenue..................................................... $ 43,024 $ 41,756 $ 46,531
Costs and expenses:
Cost of goods sold............................................................ 30,034 28,389 34,210
Selling, general and administrative expenses.................................. 14,257 12,557 12,666
Other nonrecurring expense.................................................... 3,600 -- 900
---------- --------- ---------
Operating (loss) profit......................................................... (4,867) 810 (1,245)
Gain on sale of Eli Witt stock.................................................. 2,691 -- --
(Loss) income from equity investments, net...................................... (1,728) (153) 303
Other nonoperating income, net.................................................. 1,446 923 1,917
Interest expense................................................................ 7,978 8,193 7,805
---------- --------- ---------
Loss before income tax benefit.................................................. (10,436) (6,613) (6,830)
Income tax benefit.............................................................. (3,279) (2,348) (2,767)
---------- --------- ---------
Loss from continuing operations................................................. (7,157) (4,265) (4,063)
---------- --------- ---------
Discontinued operation:
Loss on sale of discontinued operation, net of tax benefit and reversal of
deferred taxes of $4,182.................................................... -- -- (1,311)
Income from discontinued operation, net of taxes (1994--$2,273; 1995--$2,580;
1996--$527)................................................................. 3,324 3,685 768
---------- --------- ---------
Net income (loss) from discontinued operation................................... 3,324 3,685 (543)
---------- --------- ---------
Net loss........................................................................ $ (3,833) $ (580) $ (4,606)
---------- --------- ---------
---------- --------- ---------
</TABLE>

See Notes to Combined Financial Statements.

F-3
<PAGE>
GRIFFIN LAND & NURSERIES, INC.

COMBINED BALANCE SHEET

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DEC. 2, NOV. 30,
1995 1996
---------- ---------- PRO FORMA FOR
LIABILITY
ASSUMPTION (A)
NOV. 30, 1996
---------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS

CURRENTS ASSETS
Cash and cash equivalents................................................ $ 7,687 $ 7,371 $ 7,371
Accounts receivable, less allowance of $338 and $302..................... 3,961 3,962 3,962
Inventories.............................................................. 25,931 27,530 27,530
Deferred income taxes.................................................... -- 4,047 2,470
Other current assets..................................................... 1,572 1,158 1,158
---------- ---------- ---------------
TOTAL CURRENT ASSETS..................................................... 39,151 44,068 42,491

Property and equipment, net.............................................. 12,619 12,676 12,676
Real estate held for sale or lease, net.................................. 31,907 26,862 26,862
Investment in preferred stock of Eli Witt................................ 15,122 -- --
Investment in Centaur Communications, Ltd................................ 14,392 14,695 14,695
Other assets, including investments in real estate joint ventures of
$7,964 and $3,403...................................................... 10,356 3,474 3,474
Net assets of discontinued operation..................................... 42,108 -- --
---------- ---------- ---------------
TOTAL ASSETS............................................................. $ 165,655 $ 101,775 $ 100,198
---------- ---------- ---------------
---------- ---------- ---------------
LIABILITIES AND CULBRO INVESTMENT

CURRENT LIABILITIES
Accounts payable and accrued liabilities................................. $ 8,114 $ 7,093 $ 5,559
Long-term debt due within one year....................................... 7,968 277 277
---------- ---------- ---------------
TOTAL CURRENT LIABILITIES................................................ 16,082 7,370 5,836

Long-term debt........................................................... 72,737 38,846 2,846
Deferred income taxes.................................................... 3,692 -- --
Other noncurrent liabilities and deferred credit......................... 11,845 8,110 3,662
---------- ---------- ---------------

TOTAL LIABILITIES........................................................ 104,356 54,326 12,344

COMMITMENTS AND CONTINGENCIES (SEE NOTE 14) -- -- --

CULBRO INVESTMENT........................................................ 61,299 47,449 87,854
---------- ---------- ---------------

TOTAL LIABILITIES AND CULBRO INVESTMENT.................................. $ 165,655 $ 101,775 $ 100,198
---------- ---------- ---------------
---------- ---------- ---------------
</TABLE>

- ------------------------

(a) Reflects the reduction of certain liabilities that were transferred to and
assumed by General Cigar Holdings, Inc. pursuant to a Distribution
Agreement. The liabilities include principally the Culbro debt of $36
million, certain accrued retirement obligations and other items.

See Notes to Combined Financial Statements.

F-4
<PAGE>
GRIFFIN LAND & NURSERIES, INC.

COMBINED STATEMENT OF CASH FLOWS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED,
---------------------------------
DEC. 3, DEC. 2, NOV. 30,
1994 1995 1996
---------- --------- ----------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss........................................................................ $ (3,833) $ (580) $ (4,606)
Adjustments to reconcile net loss to cash provided by (used in) operating
activities:
Depreciation and amortization................................................... 2,142 2,416 2,405
Loss (income) from discontinued operation, before tax........................... (5,597) (6,265) 4,198
Gain on sale of Eli Witt common stock........................................... (2,691) -- --
Loss (income) from equity investments........................................... 1,728 153 (303)
Discount and interest on subordinated note...................................... 1,446 2,349 2,167
Accretion and dividend income on preferred stock of Eli Witt.................... (1,446) (2,349) (2,167)
Proceeds from sale of investment in real estate joint venture................... -- -- 4,042
Deferred income taxes........................................................... (2,995) 1,533 (7,739)
Changes in assets and liabilities which increased (decreased) cash:
Accounts receivable........................................................... (991) (177) (303)
Inventories................................................................... (554) (1,159) (1,599)
Real estate held for sale or lease............................................ 3,248 611 506
Accounts payable and accrued liabilities...................................... (4,714) 499 (1,474)
Other, net...................................................................... 2,612 (902) 2,648
---------- --------- ----------
Net cash used in operating activities of continuing operations.................. (11,645) (3,871) (2,225)
Cash provided by operating activities of discontinued operation................. 10,235 9,435 3,547
---------- --------- ----------
Net cash (used in) provided by operating activities............................. (1,410) 5,564 1,322
---------- --------- ----------
INVESTING ACTIVITIES:
Proceeds from sale of discontinued operation.................................... -- -- 35,030
Additions to property and equipment............................................. (625) (847) (1,378)
Investment in Eli Witt subordinated note........................................ -- (5,000) --
Proceeds from Eli Witt repayment of a mortgage loan to the Company.............. 8,000 -- --
Proceeds from the sale of Eli Witt common stock................................. 672 -- --
Investing activities of discontinued operation.................................. (2,317) (1,450) (947)
---------- --------- ----------
Net cash provided by (used in) investing activities............................. 5,730 (7,297) 32,705
---------- --------- ----------
FINANCING ACTIVITIES:
Net transactions with Culbro.................................................... 15,854 17,453 (9,244)
Payments of debt................................................................ (27,928) (14,829) (25,099)
Increase in debt................................................................ 11,669 -- --
---------- --------- ----------
Net cash (used in) provided by financing activities............................. (405) 2,624 (34,343)
---------- --------- ----------
Net increase (decrease) in cash and cash equivalents............................ 3,915 891 (316)
Cash and cash equivalents at beginning of year.................................. 2,881 6,796 7,687
---------- --------- ----------
Cash and cash equivalents at end of year........................................ $ 6,796 $ 7,687 $ 7,371
---------- --------- ----------
---------- --------- ----------
</TABLE>

See Notes to Combined Financial Statements.

F-5
<PAGE>
GRIFFIN LAND & NURSERIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

1. CERTAIN TRANSACTIONS

The accompanying combined financial statements include the accounts of
Griffin Land & Nurseries, Inc. ("Griffin") and reflect its financial position,
results of operations and cash flows after elimination of intercompany accounts
and transactions. Prior to March 18, 1997, Griffin was known as Culbro Land
Resources, Inc. Griffin is a wholly owned subsidiary of Culbro Corporation
("Culbro").

Griffin, Culbro and General Cigar Holdings, Inc. ("GC Holdings"), a Culbro
subsidiary, entered into a Distribution Agreement (the "Distribution Agreement")
on February 27, 1997. The Distribution Agreement provided for (i) the
consummation of the Asset Transfers (see below), (ii) the distribution of
Griffin's common stock to the existing shareholders of Culbro (the
"Distribution") following the initial public offering (the "Offering") of GC
Holdings Class A common stock, and (iii) following the Distribution, the merger
of Culbro, subject to certain conditions, with and into GC Holdings (the
"Merger"). The Offering was completed on February 28, 1997. The Distribution is
contingent principally upon (i) either a tax ruling (which has been applied for
by Culbro) or an opinion of counsel satisfactory to Culbro that the Distribution
constitutes a tax free organization under Section 355 of the Internal Revenue
Code and (ii) approval of the Merger by the holders of 66 2/3% of the
outstanding Culbro common stock.

Pursuant to the Distribution Agreement, Culbro transferred to Griffin
substantially all the non-tobacco related assets of Culbro, including: (i) all
of the outstanding common stock of Imperial Nurseries, Inc., a wholly owned
subsidiary of Culbro; (ii) approximately 5,500 acres of land in Connecticut and
Florida, as well as nursery wholesale service centers; (iii) Culbro's interests
in Eli Witt and assets previously owned by The Eli Witt Company ("Eli Witt")
(see Note 12); (iv) its 25% interest in Centaur Communications, Ltd.
("Centaur"); and (v) all licenses, permits, accounts receivable, prepaid
expenses, reserves and other current assets (other than cash) related to the
real estate and landscape nursery businesses. The Distribution Agreement also
provided for the assumption by Griffin of all of the liabilities related to the
businesses and assets transferred to Griffin from Culbro. Pursuant to the
Distribution Agreement, $7.0 million in cash was transferred to Griffin and is
reflected on the historical balance sheets. Griffin continues to operate the
real estate business owned prior to the Asset Transfers (see below). All of the
transferred assets and related liabilities are included in the accompanying
combined financial statements at Culbro's historical cost.

The Distribution Agreement also provided for the transfer to and assumption
by GC Holdings of all of Culbro's general corporate debt and certain other
liabilities, principally retirement obligations, which are included in Griffin's
historical financial statements. See Note 4 for the pro forma effect of these
liability transfers on Griffin's financial position and results of operations.

As a result of the transfers described above ( the "Asset Transfers"),
Culbro is a holding company, substantially all of the assets of which are the
stock of Griffin and GC Holdings. Pursuant to the terms of the Distribution
Agreement, Griffin and GC Holdings will operate independently of each other.

Prior to March 18, 1997, Culbro held all 100 issued and outstanding shares
of common stock, par value $0.01 per share, of Griffin (the "Original Shares").
On March 18, 1997, pursuant to the Amended and Restated Certificate of
Incorporation of Griffin each Original Share was exchanged for one share of
Class B Common Stock, par value $0.01 per share, of Griffin (the "Class B Common
Stock"). Prior to the Distribution, Griffin will effect a stock split such that
the number of issued and outstanding shares of Class B Common Stock will equal
the number of then-outstanding shares of common stock, par value $1,

F-6
<PAGE>
GRIFFIN LAND & NURSERIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

1. CERTAIN TRANSACTIONS (CONTINUED)
of Culbro. The Distribution Agreement provides for the pro rata distribution by
Culbro to the shareholders of Culbro of the Class B Common Stock. Each share of
Class B Common Stock entitles its holder to ten votes. Subsequent sales (as
defined) of Class B Common Stock result in conversion of Class B Common Stock
into Class A common stock, which entitles its holder to one vote.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying combined financial statements of Griffin include the
accounts of Griffin's real estate operations, Imperial Nurseries, Inc.
("Imperial Nurseries") and CMS Gilbreth Packaging Systems, Inc. ("CMS
Gilbreth"), which was sold in 1996 (see Note 3) and is reported as a
discontinued operation in these statements. The combined financial statements
have been presented as if Griffin had operated as an independent stand-alone
entity for all periods presented. Such financial statements may not necessarily
present the financial position, results of operations and cash flows Griffin
would have reported had it actually operated as a stand-alone entity. See Note 4
for combined condensed unaudited pro forma financial information. All
intercompany transactions have been eliminated.

Griffin accounts for its investments in Centaur, Eli Witt and real estate
joint ventures under the equity method. Prior to April 1994, Eli Witt was a
consolidated subsidiary of Griffin. Results of real estate joint ventures are
included in operating profit.

BUSINESS SEGMENTS

Griffin is engaged in the landscape nursery and real estate businesses.
Imperial Nurseries, the landscape nursery segment, is engaged in growing plants
which are sold principally to garden centers, wholesalers and merchandisers, and
operating sales and service centers which sell principally to landscapers.
Griffin's real estate segment builds and manages commercial and industrial
properties and develops residential subdivisions on real estate in Connecticut
and Massachusetts that was previously owned by Culbro and transferred to Griffin
in accordance with the Distribution Agreement.

FISCAL YEAR

Griffin's fiscal year ends on the Saturday nearest November 30. Fiscal years
1994, 1995 and 1996 ended December 3, 1994, December 2, 1995 and November 30,
1996, respectively. Fiscal 1994 included 53 weeks, and fiscal 1995 and fiscal
1996 each contained 52 weeks.

INVENTORIES

Griffin's inventories are stated at the lower of cost or market using the
average cost method. Raw materials and work in process are landscape nursery
stock, a substantial amount of which will not be used or sold within one year.
It is industry practice to include such inventories in current assets.

F-7
<PAGE>
GRIFFIN LAND & NURSERIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT

REVENUE AND GAIN RECOGNITION

In the landscape nursery business, sales and the related cost of sales are
recognized upon shipment of products. Sales returns are not material. In the
real estate business, gains on real estate sales are recognized in accordance
with SFAS No. 66, "Accounting for Sales of Real Estate."

FAIR VALUE OF FINANCIAL INSTRUMENTS

The amounts included in the financial statements for accounts receivable,
accounts payable and accrued liabilities reflect their fair values because of
the short-term maturity of these instruments. The fair values of Griffin's other
financial instruments are discussed in Note 8.

EARNINGS PER SHARE

Griffin is a wholly owned subsidiary of Culbro and its historical capital
structure does not permit a meaningful presentation of earnings per share.
Accordingly, earnings per share are not presented herein.

RECENTLY ISSUED ACCOUNTING STANDARDS

In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of." This Statement requires that long-lived
assets and certain intangibles held and used by a business entity be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Prior to the issuance of
this Statement, Griffin periodically reviewed its long-lived assets, considering
future performance of those assets and the need for adjustments to their
carrying values. Griffin has adopted this Statement and performs such reviews in
accordance with the methods prescribed by SFAS No. 121.

In October 1995, the FASB issued Statement No. 123, "Accounting for
Stock-Based Compensation." This Statement establishes a fair value method of
accounting for, or disclosing, stock-based compensation plans. Griffin intends
to adopt the disclosure provisions of this statement which require disclosing
the pro forma effect on net income and earnings per share of the fair value
method of accounting for stock-based compensation. The adoption of the
disclosure provisions will not affect combined financial condition, results of
operations, or cash flows.

USE OF ESTIMATES

F-8
<PAGE>
GRIFFIN LAND & NURSERIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Estimates are used when accounting for allowance for uncollectible accounts
receivable, depreciation and amortization, employee benefit plans, taxes, and
contingencies, among others.

3. BUSINESS DISPOSITION

On November 8, 1996, Griffin completed the sale of its labeling and
packaging systems business, CMS Gilbreth. Net proceeds, after sale expenses,
were $35.0 million, and Griffin recorded a pretax loss of $5.5 million on the
sale, net of operating profit of $1.6 million earned during the phase-out
period. The sale proceeds were used to repay debt.

CMS Gilbreth is reported as a discontinued operation in the accompanying
financial statements. Net sales of CMS Gilbreth were $51.1 million and $51.0
million in 1994 and 1995, respectively, and $43.6 million in 1996 through the
date of sale.

4. COMBINED CONDENSED PRO FORMA FINANCIAL INFORMATION (UNAUDITED)

The following combined condensed unaudited pro forma statement of operations
of Griffin gives effect to: (i) the assumption by GC Holdings of the liability
portion of the Asset Transfers, (ii) the use of proceeds from the sale of CMS
Gilbreth, (iii) the exchange of preferred stock of Eli Witt in satisfaction of
Griffin's obligations to a third party under an exchangeable subordinated note
and (iv) the elimination of certain expenses, primarily pension and the
allocated portion of Culbro's nonrecurring expense for the cost of terminating a
long-term compensation plan and severance for certain employees in contemplation
of the Distribution, that will not be incurred in the future as a result of the
Distribution. The combined condensed unaudited pro forma statement of operations
assumes that these transactions took place at the beginning of fiscal 1996. The
combined condensed unaudited pro forma balance sheet reflects the assumption by
GC Holdings of the liability portion of the Asset Transfers and its effect on
related deferred taxes as if they occurred at the balance sheet date. The effect
of the sale of CMS Gilbreth and the exchange of preferred stock of Eli Witt are
reflected (eliminated) in Griffin's historical 1996 combined balance sheet. The
combined condensed unaudited pro forma financial information presented herein
may not necessarily reflect the results of operations and financial position had
these transactions actually taken place on the assumed dates.

COMBINED CONDENSED PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
1996
---------
<S> <C>
Net sales.......................................................................... $ 46,531
---------
Operating loss..................................................................... (221)
Income from equity investment...................................................... 303
Interest expense................................................................... 508
---------
Loss before income tax benefit..................................................... (426)
Income tax benefit................................................................. (269)
---------
Loss from continuing operations.................................................... $ (157)
---------
---------
</TABLE>

F-9
<PAGE>
GRIFFIN LAND & NURSERIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

4. COMBINED CONDENSED PRO FORMA FINANCIAL INFORMATION (UNAUDITED) (CONTINUED)
COMBINED CONDENSED PRO FORMA BALANCE SHEET (UNAUDITED)

<TABLE>
<CAPTION>
NOV. 30,
1996
----------
<S> <C>
Current assets.................................................................... $ 42,491
Property and equipment, net....................................................... 12,676
Real estate held for sale or lease, net........................................... 26,862
All other assets.................................................................. 18,169
----------
Total assets...................................................................... $ 100,198
----------
----------
Current liabilities............................................................... $ 5,836
Long-term debt.................................................................... 2,846
Other noncurrent liabilities...................................................... 3,662
----------
Total liabilities................................................................. 12,344
Culbro Investment................................................................. 87,854
----------
Total liabilities and Culbro Investment........................................... $ 100,198
----------
----------
</TABLE>

F-10
<PAGE>
GRIFFIN LAND & NURSERIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

5. INDUSTRY SEGMENT INFORMATION

Griffin's businesses operate in two industry segments: landscape nursery and
real estate (see Note 2). Griffin has no operations outside of the United
States, and export sales are not material. Capital expenditures and depreciation
and amortization presented herein include amounts related to capital leases.

<TABLE>
<CAPTION>
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
NET SALES AND OTHER REVENUE
Landscape nursery.................................................. $ 35,315 $ 34,894 $ 37,045
Real estate........................................................ 7,709 6,862 9,486
---------- ---------- ----------
$ 43,024 $ 41,756 $ 46,531
---------- ---------- ----------
---------- ---------- ----------
OPERATING PROFIT (LOSS)
Landscape Nursery.................................................. $ (604) $ 1,732 $ 1,650
Real estate (a).................................................... (2,241) 1,228 (300)
---------- ---------- ----------
Industry segment totals............................................ (2,845) 2,960 1,350
General corporate expense, net (b)................................. 2,022 2,150 2,595
(Loss) income from equity investments, net......................... (1,728) (153) 303
Other nonoperating income, net..................................... 1,446 923 1,917
Gain on sale of Eli Witt common stock.............................. 2,691 -- --
Interest expense................................................... 7,978 8,193 7,805
---------- ---------- ----------
Loss before income tax benefit..................................... $ (10,436) $ (6,613) $ (6,830)
---------- ---------- ----------
---------- ---------- ----------
IDENTIFIABLE ASSETS
Landscape nursery.................................................. 40,636 42,881 43,948
Real estate........................................................ 42,455 41,228 31,664
---------- ---------- ----------
Industry segment totals............................................ 83,091 84,109 75,612
General corporate.................................................. 40,502 39,438 26,163
Net assets of discontinued operation............................... 43,828 42,108 --
---------- ---------- ----------
$ 167,421 $ 165,655 $ 101,775
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

- ------------------------

(a) Real estate segment operating loss in 1994 includes a $3.6 million charge
for the write off of development costs expended in earlier years.

(b) General corporate expense in 1996 includes an allocation to Griffin by
Culbro of $0.9 million for the termination of a compensation plan, severance
and other expenses in contemplation of the Distribution (see Note 1).

F-11
<PAGE>
GRIFFIN LAND & NURSERIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

5. INDUSTRY SEGMENT INFORMATION (CONTINUED)

<TABLE>
<CAPTION>
DEPRECIATION AND AMORTIZATION
CAPITAL EXPENDITURES
------------------------------- -------------------------------
1994 1995 1996 1994 1995 1996
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Landscape nursery...................... $ 594 $ 789 $ 1,258 $ 912 $ 1,132 $ 1,116
Real estate............................ 31 58 120 912 917 889
--------- --------- --------- --------- --------- ---------
Industry segment totals................ 625 847 1,378 1,824 2,049 2,005
General corporate...................... -- -- -- 318 367 400
--------- --------- --------- --------- --------- ---------
$ 625 $ 847 $ 1,378 $ 2,142 $ 2,416 $ 2,405
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>

6. RELATED PARTY TRANSACTIONS

CULBRO INVESTMENT

The Company maintained an intercompany account with Culbro in which
intercompany transactions, including cash transfers and the liability for
benefit and insurance costs and allocated general and administrative expenses
described below, were recorded. The balance in the intercompany account at the
end of each period presented has been included in Culbro Investment in the
combined balance sheet. The Culbro Investment account also includes the
cumulative results of Griffin and its capital stock. The changes in the Culbro
Investment account are summarized as follows:

<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED,
-------------------------------
DEC. 3, DEC. 2, NOV. 30,
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Balance beginning of year.............................................. $ 32,406 $ 44,426 $ 61,299
Net loss............................................................... (3,833) (580) (4,606)
--------- --------- ---------
28,573 43,846 56,693
--------- --------- ---------
Transactions with Culbro:
Net operating cash flow transferred from (to) Culbro................. 14,420 15,141 (5,498)
Allocated Culbro general and administrative expenses................. 2,439 2,080 1,776
Allocated Culbro other nonrecurring expense.......................... -- -- 900
Intercompany income taxes (benefits)................................. (1,006) 232 (6,422)
--------- --------- ---------
Total transactions with Culbro, net.................................... 15,853 17,453 (9,244)
--------- --------- ---------
Balance end of year.................................................... $ 44,426 $ 61,299 $ 47,449
--------- --------- ---------
--------- --------- ---------
Average intercompany balance due to Culbro............................. $ 3,961 $ 20,614 $ 24,718
--------- --------- ---------
--------- --------- ---------
</TABLE>

TREASURY

Through February 27, 1997, Griffin's treasury activities were integrated
into Culbro's cash management system. Griffin's cash receipts were transferred
daily into Culbro's cash account and Griffin's cash disbursement accounts were
reimbursed by Culbro on a daily basis. The difference between cash transferred
by Griffin to Culbro and reimbursements by Culbro to Griffin's disbursement
accounts has been reflected in Culbro Investment in the combined balance sheet.

F-12
<PAGE>
GRIFFIN LAND & NURSERIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

6. RELATED PARTY TRANSACTIONS (CONTINUED)
INTERCOMPANY ACTIVITIES

Griffin's employees participate in certain benefit programs which are
sponsored and administered by Culbro. See Note 9 for discussion of employee
benefit plan costs. Griffin's risk insurance and employee medical coverage are
provided through insurance policies and programs purchased by Culbro on behalf
of Griffin and Culbro's other subsidiaries. The cost of these items was
allocated based on the specific insurance data related to each subsidiary of
Culbro. All direct charges relating to Griffin for these services, and Griffin's
participation in these plans, have been charged to Griffin by Culbro and
included in Griffin's combined financial statements.

A portion of Culbro management time and resources were related to the
operations of Griffin, and Culbro also performed certain specific administrative
functions for Griffin, including legal, tax, treasury, human resources and
internal audit. In addition to the direct charges above for employee benefits
and risk insurance, the combined statement of operations reflects general and
administrative expenses of $2.4 million, $2.1 million and $1.8 million for
fiscal 1994, fiscal 1995 and fiscal 1996, respectively, allocated by Culbro to
Griffin for these services. These charges were based principally on Griffin's
proportionate share of expenses relating to the Culbro corporate activities
associated with Griffin's operations and are considered by management to be
reasonable. These amounts may not necessarily be indicative of the actual
general and administrative expenses Griffin would have incurred had it operated
independently during the years presented.

No interest has been charged or paid to Culbro on the net investment
account. All of the general corporate debt of Culbro is included in Griffin's
financial statements because management determined that this debt related to
Culbro's non-tobacco businesses. Accordingly, interest expense on Culbro's
general corporate debt has been included in the combined statements of
operations. See Notes 4 and 8.

LEASES

Griffin as lessor and General Cigar Co., Inc. ("General Cigar"), a wholly
owned subsidiary of GC Holdings, as lessee, have entered into a lease for
certain agricultural land in Connecticut and Massachusetts (the "Agricultural
Lease") and, prior to the Distribution, will enter into a lease for certain
commercial space in Connecticut (the "Commercial Lease"). The Agricultural Lease
is for approximately 500 acres of arable land allocated to Griffin for possible
commercial development in the long-term, but which will provide General Cigar
with a source of growing Connecticut Shade wrapper tobacco. General Cigar's use
of the land is limited to the cultivation of cigar wrapper tobacco. The
Agricultural Lease has an initial term of ten years and provides for the
extension of the lease for additional periods thereafter. In addition, at
Griffin's option the Agricultural Lease may be terminated with respect to 100
acres of such land annually upon one year's prior notice. The rent payable by
General Cigar under the Agricultural Lease is approximately equal to the
aggregate amount of all taxes and other assessments payable by Griffin
attributable to the land leased. The Commercial Lease will be for approximately
25,000 square feet of office space in the Griffin Center South office complex in
Bloomfield, Connecticut. The Commercial Lease will have an initial term of ten
years and provides for the extension of the lease for additional annual periods
thereafter. The rent payable by General Cigar under the Commercial Lease will be
at market rates.

F-13
<PAGE>
GRIFFIN LAND & NURSERIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

7. INTERCOMPANY INCOME TAXES

All tax liabilities were paid by Culbro and accordingly Griffin's tax
liabilities are reflected in the Culbro Investment account.

Historically, the combined results of operations of Griffin were included in
Culbro's consolidated U.S. federal income tax returns, and will be included in
such returns through the date the Distribution is consummated. The income tax
provisions and deferred tax liabilities have been calculated in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 109 "Accounting for
Income Taxes" as if Griffin had filed separate tax returns. The income tax
provision (benefit) for fiscal 1994, fiscal 1995 and fiscal 1996 are summarized
as follows:

<TABLE>
<CAPTION>
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Continuing operations:
Current federal............................................. $ (2,229) $ (2,973) $ 1,788
Current state and local..................................... (18) (205) 138
Deferred, principally federal............................... (1,032) 830 (4,693)
--------- --------- ---------
Income tax benefit from continuing operations................. (3,279) (2,348) (2,767)
--------- --------- ---------
Discontinued operation:
Current federal............................................. 2,374 2,057 (553)
Current state and local..................................... 365 292 (277)
Deferred, principally federal............................... (466) 231 (2,825)
--------- --------- ---------
Income tax provision (benefit) from discontinued operation.... 2,273 2,580 (3,655)
--------- --------- ---------
Total income tax (benefit) provision.......................... $ (1,006) $ 232 $ (6,422)
--------- --------- ---------
--------- --------- ---------
</TABLE>

The reasons for the difference between the United States statutory income
tax rate and the effective rates for continuing operations are shown in the
following table:

<TABLE>
<CAPTION>
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Tax benefit at statutory rates................................ $ (3,548) $ (2,315) $ (2,391)
State and local income taxes.................................. (12) (133) 90
Foreign investment............................................ (119) 54 (106)
Subsidiary loss accounted for under the equity method......... 706 -- --
Other......................................................... (306) 46 (360)
--------- --------- ---------
$ (3,279) $ (2,348) $ (2,767)
--------- --------- ---------
--------- --------- ---------
</TABLE>

F-14
<PAGE>
GRIFFIN LAND & NURSERIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

7. INTERCOMPANY INCOME TAXES (CONTINUED)
The significant components of the net deferred tax asset (liability) are as
follows:

<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Depreciation and amortization...................................................... $ (2,835) $ (1,390)
Postretirement benefit obligations................................................. 782 604
Pension liabilities................................................................ 754 668
Deferred income attributable to deconsolidated subsidiary.......................... (1,483) --
Inventories........................................................................ 1,751 1,880
Other.............................................................................. (2,661) 2,285
--------- ---------
$ (3,692) $ 4,047
--------- ---------
--------- ---------
</TABLE>

In connection with the Distribution Agreement, Culbro and Griffin entered
into a Tax Sharing Agreement which provides, among other things, for the
allocation between Culbro and Griffin of federal, state, local and foreign tax
liabilities for all periods through the Distribution and Merger. With respect to
the consolidated tax returns filed by Culbro, the Tax Sharing Agreement provides
that Griffin will be liable for any amounts that it would have been required to
pay with respect to any deficiencies assessed, generally as if it had filed
separate tax returns.

8. LONG-TERM DEBT

Long-term debt includes:

<TABLE>
<CAPTION>
DEC 2, NOV. 30,
1995 1996
----------- -----------
<S> <C> <C>
Credit Agreement.............................................................. $ 40,000 $ 36,000
Senior Notes.................................................................. 21,000 --
Exchangeable Subordinated Note, 10% (face value $15 million).................. 12,700 --
Mortgages..................................................................... 6,525 2,644
Capital leases................................................................ 480 479
----------- -----------
Total......................................................................... 80,705 39,123
Less: due within one year..................................................... 7,968 277
----------- -----------
Total long-term debt.......................................................... $ 72,737 $ 38,846
----------- -----------
----------- -----------
</TABLE>

F-15
<PAGE>
GRIFFIN LAND & NURSERIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

8. LONG-TERM DEBT (CONTINUED)

As of November 30, 1996, the annual principal payment requirements under the
terms of the mortgages are $0.1 million for each of the years 1997 through 2001.
The mortgages are on two office buildings which had a combined net book value of
$2.9 million at November 30, 1996. The interest rates on these mortgages range
from 9.0% to 10.2%.

On June 5, 1996, Culbro and its banks entered into the Second Amended and
Restated Credit Agreement (the "1996 Credit Agreement") which replaced the
previous 1993 Credit Agreement that was scheduled to terminate in December 1996.
The 1996 Credit Agreement provided $65 million to Culbro and its subsidiaries
for general working capital purposes and an additional $20 million which was
used to repay the balance of Culbro's Senior Notes. Amounts borrowed by Culbro
under these credit facilities were used to fund Griffin's operations and are
reflected in the accompanying combined financial statements. As per the terms of
the Distribution Agreement, the entire amount borrowed under the Credit
Agreement as of the date of the Distribution Agreement was assumed by GC
Holdings, and therefore will not be part of Griffin's debt structure
prospectively.

In October 1996, Griffin's real estate business satisfied a nonrecourse
mortgage of approximately $3.8 million on a commercial property by transferring
the property to the lender in satisfaction of the outstanding mortgage. The net
book value of the property was substantially equal to the mortgage balance.

In November 1996, Griffin exchanged shares of preferred stock of Eli Witt in
satisfaction of the principal and accrued interest on a $15 million subordinated
note payable to a third-party originally due August 1998. Interest expense in
fiscal 1994, fiscal 1995 and fiscal 1996 included $0.5 million, $0.9 million and
$0.8 million, respectively, for amortization of the original issue discount on
the subordinated note.

In 1993, Culbro entered into two interest rate swap agreements with major
banks as a hedge against interest rate exposure on its variable rate debt. One
such agreement, to fix the borrowing rate at 4.74% on $30 million of variable
rate debt, expired in March 1996. A similar interest rate swap agreement, that
fixed the borrowing rate at 4.89% on an additional $20 million of variable rate
debt, expired in September 1995. The effect of these swap agreements was to
increase interest expense in fiscal 1994 by $0.4 million, reflecting the excess
of payments made to the banks over payments received. In fiscal 1995 and fiscal
1996, interest expense was reduced by $0.6 million and $0.1 million,
respectively, reflecting payments received from the banks under these
agreements.

Management believes that because the interest rate on the 1996 Credit
Agreement adjusts to current market rates, this debt, as stated on the November
30, 1996 balance sheet, approximated its fair market value. Management also
believes that the amounts reflected on the balance sheet for its other debt
facilities reflected their current market values based on market interest rates
for comparable risks, maturities and collateral.

9. RETIREMENT BENEFITS

PENSION PLAN

Griffin's employees participate in Culbro's noncontributory defined benefit
pension plan, which covers substantially all employees of Culbro and its
subsidiaries. The plan's benefits are based on employees' years of service and
compensation. Contributions to the plan are made in accordance with the
provisions of the Employee Retirement Income Security Act. Pension expense of
$0.2 million, $0.1 million

F-16
<PAGE>
GRIFFIN LAND & NURSERIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

9. RETIREMENT BENEFITS (CONTINUED)
and $0.1 million for fiscal 1994, fiscal 1995 and fiscal 1996, respectively,
included in the combined statement of operations, reflects Griffin's direct
share of Culbro's consolidated pension expense based on the benefit costs
attributable to its employees, as determined by the plan's actuaries.

As per the terms of the Distribution Agreement, the plan will be assumed by
GC Holdings. Upon completion of the Distribution, Griffin will terminate its
participation in the plan, and Griffin's employees' years of service and
benefits accrued at that time will be frozen at the date of termination. All
vested pension obligations as of the date of the Distribution Agreement for
Griffin's current and former employees will be assumed by GC Holdings. In
connection with the Distribution and Merger, Griffin and GC Holdings entered
into an Employee Benefits Administration Agreement to define the
responsibilities for the administration of the plan.

In connection with the Distribution Griffin will establish the Griffin Land
& Nurseries, Inc. 401(k) Savings Plan. Griffin may at its discretion "match"
employee deferrals each year.