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21 0170954 B ☨® CAPT E GARGES*JR 142 MILL SPRING RD MANHASSET NY 11030 FIGHT ASTHMA COLONIAL EMPLOYEES MUTUAL FUND, INC. 400 Madison Avenue, New York 17, N. Y. PROXY STATEMENT To the Stockholders of Colonial Airlines, Inc.: Colonial Employees Mutual Fund, Inc as a stockholder of Colonial Airlines is hereby urging you to cast your votes on the Annual Meeting of the Stockholders of Colonial Airlines on April 20, 1955, against the proposed sale of the assets of Colonial Airlines to Eastern Air Lines.* Nature of Colonial Employees Mutual Fund, Inc. The Fund is a corporation organized under the laws of the State of New York. It was organized for the purpose of affording the employees of Colonial Airlines some voice in the management and destiny of a Company in whose service many of them have spent their mature lives and to whose welfare and future all of them have been loyally dedicated. Stock ownership in the Fund is limited to Colonial employees. In order to afford each employee an equal opportunity to voice his or her view as to the course that management should take, employee stock ownership has been limited to one share per employee, the purchase price being $10 per share. In the short time since the organization of the Fund, 415 employees out of a total of approximately 785 employees of Colonial Airlines have either purchased or subscribed to the Fund. These employees come from every department of Colonial— flying personnel, traffic and flight control, maintenance, and general administrative personnel. The Fund's Board of Directors, which is elected by the cumulative voting of the employee-stockholders, during the month of March examined the proposed sale of the Colonial Eastern. Following the examination, the Board voted unanimously to disapprove the sale. The total stockholdings of the Fund in Colonial Airlines, due to the policy of limited ownership that has been pursued, are not large. They are, indeed, small, consisting only of 110 shares. The stockholders of the Fund have, however, a larger interest in Colonial than that represented by the holdings of the Fund. Each of them is an employee of Colonial and has made an investment that is hard to measure except in terms of loyalty and of a belief in the future of the airline. That loyalty and faith, in the opinion of the Fund, has been an important factor in the proud safety record of Colonial. Reasons for Disapproval of the Proposed Sale It has not been easy for the Directors of the Fund to take the position that they have taken. They are of the opinion that the Management of the Company for many years past has been far from what the airline as such required. Contrariwise, they realize that Eastern's management has made of its system an outstanding and financially sound airline. They know also that the result of the agreement of the sale has been to enhance the value of Colonial's stock to a level that would not be merited by the independent performance of Colonial to date. They are aware also of the sharp injunction of the Civil Aeronautics Board in 1952, quoted * A copy of the agreement of January 28, 1955 between Colonial Airlines, Inc. and Eastern Air Lines for the sale of all the assets and properties of Colonial has heretofore been distributed as Attachment 1 to the Proxy Statement of Management. For information concerning the terms of this agreement, a description of the business of Colonial Airlines and Eastern Air Lines, financial statements of Colonial and Eastern, a review of the market price of the securities of Colonial and Eastern, the outstanding voting securities of Colonial and the rights of dissenting stockholders of Colonial in the event the sale is approved, reference is made to the Proxy Statement of Management dated March 29, 1955 and to the Attachments thereto.
