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I MINUTES OF THE ANNUAL MEETING OF THE STOCKHOLDERS OF P. LORILLARD COMPANY, HELD IN THE NORTH BALLROOM OF THE HOTEL ASTOR, BROADWAY, BETWEEN 44th AND 45th STREETS, NEW YORK, NEW YORK, ON APRIL 6, 1954, AT ELEVEN O'CLOCK IN THE FORENOON. Mr. H. A. Kent, Chairman of the Board of the Company, acted as Chairman of the meeting at the request of Mr. W. J. Halley, President, who presided and called the meeting to order in accordance with Section 4, Article II of the By-laws of the Company, and Miss Anna F. Woessner, Secretary of the Company, acted as Secretary of the meeting. There were produced on behalf of the Board of Directors, the transfer books and stock books of the Company and there was presented a full, true and complete list, in alphabetical order, of all the stockholders of the Company entitled to notice of and to vote at this meeting, and to vote at the ensuing election, with the resi- dence of each and the number of shares held by each, to wit: The stockholders of record at 3:30 P. M. on March 8, 1954, the record date f ixed by the Board of Directors for the determination of the stockholders entitled to notice of and to vote at this meeting. The Chairman stated that these books were produced and this list was presented as required by law for the inspection of the stockholders present; and such books and list remained open for inspection dur- ing the whole of the meeting. There was presented a copy of the Notice of the Meeting with Proxy Statement and form of proxy, together with affidavits showing mailing thereof and publication of the notice of meeting in accord- ance with law and the By-laws of the Company, the same being as follows: i 10 v ~ ca Ln ~ ~

STATE OF NEW YORK ) :ss: COUNTY OF NEW YORK ) On this lst day of April, 1954, before me personally came ANNA F. WOESSNER, to me known, who being by me duly sworn, did depose and say that she resides at Jersey City, County of Hudson, State of New Jersey; that she is Secretary of P. Lorillard Company, a New Jersey Corporation, and was Secretary of said corporation at the times hereinafter mentioned; that she caused a copy of the annexed printed notice signed by her of the Annual Meeting of the Stockholders of the said corporation called to be held in the North Ballroom of the Hotel Astor, Broadway, between 44th and 45th Streets, New York City, New York, on April 6, 1954, at eleven o'clock in the forenoon, proxy statement, annual report, and a form of the annexed proxy, to be mailed, postage prepaid, at least twenty (20) days prior to said meeting to each stockholder of record appearing on the books of said corporation at the close of business on March 8, 1954, addressed to each such stockholder at the address given thereon; and that3ie caused a public notice of the time and place of holding said meeting to be published on March 23rd and March 30th, 1954, in the New York Times, a daily newspaper of general circulation, published in the City, County and State of New York. Subscribed and sworn to before me this lst day of ARril, 1954. lIAMLnEL MINTZ~t N6:E&#V #rUALfC, State of New ~haie No. 24-2727560 QBB1f{led in Kings Counb G03itrt,tex F t;eri with VM XortR Coyct: Cicr'• & Resiater ~!r9i5€~~3C F.3'.}vrs Efarch 3r], 1955

Pdndicl 7ress,Inc. Telephone Worth 4-2900 2 2 Thames Street New York 6, N. Y. Teletype NY 1-3167 AFFIDAVIT OF MAILING State of New York ) ss.: County of New York ) Peter G. Pandick, being duly sworn, deposes and says: That I am Superintendent of Pandick Press, Inc., located at 22 Thames Street, in the City, County and State of New York. That on the 26th day of February 19542 I super- vised the mailing of 28,210 pieces domestic and 52 pieces foreign addressed to the stockholders of P. Lorillard Company. That the mailing was completed by inserting in each envelope one (1) copy of each of the following: Proxy (name and address of stockholder stenciled by New York Trust Company) Notice and Proxy Statement Annual Report Return Addressed Envelope That I caused said 28,262 envelopes to be enclosed in United States Mail sacks and deposited, postage prepaid, in a Post Off ice, 90 Church Street branch, regularly main- tained by the Government of the United States in the City of New York. Sworn to before me this / -~7 day of March 1954. 'rn . K0,4- . j4A12OLf5 1ori Nnt~r1~ Public. State o; ~- QualitieZ in Nassau Court~' No. 34 2Q4o35 fifed with Ne~" P nSs & Bronx Cou ?'? `'3a t9sr lerm Exr eS s t UF Fk Y

P. LORILLARD COMPANY Notice of Annual Meeting of Stockholders JERSEY CITY, N. J., FEBRUARY 26, 1954 To the Stockholders of P. Lorillard Company: NOTICE is hereby given that the Annual Meeting of the Stockholders of P. LottuLLAM COMPANY, a New Jersey Corporation, will be held at the Hotel Astor, Broadway, between 44th and 45th Streets, New York City, at eleven o'clock in the forenoon of the 6th day of April, 1954, for the following: (1) the election of thirteen (13) Directors to hold office until the next Annual Meeting of Stockholders or until their successors are elected and qualified; (2) to consider and vote upon the amendment of Article XII of the By-laws of the Company entitled "Incentive Compensation for Officers and Key Personnel" which has been formulated and advised by the Board of Directors of the Company and which is described in the enclosed Proxy Statement; and (3) the transaction of such other business as may properly come before said meeting and any adjournment or adjournments thereof. The Stock Transfer Books will not be closed, but only stockholders of record at the close of business on March 8, 1954 shall be entitled to vote, notwithstanding any transfer of any stock on the books of the Company after such record date. ANNA F. WOESSNER, Secretary. , If unable to be present at the meeting, please sign the enclosed Proxy and return it in the accompanying envelope so that the meeting may be properly held. PLEASE NOTE : In accordance with the authority given to the Directors by the stock- holders at the Annual Meeting held in 1951, the Directors have designated the place for the Annual Meeting this year as the North Ballroom on the 8th floor of the Hotel Astor on Broadway, between 44th and 45th Streets, New York City. Please use central elevators to reach the Ballroom. The Hotel Astor is conveniently located near the 42nd Street stations of all of the west-side subways.

Proxy Statement RIGHT TO REVOKE PROXY ANY STOCKHOLDER giving the proxy enclosed with this statement has the power to revoke the proxy at any time prior to the exercise thereof. Your attention is called to the pro- vision of New Jersey law providing that the attendance at the meeting of a stockholder who may have theretofore given a proxy shall not have the effect of revoking the proxy unless the stockholder so attending shall in writing so notify the secretary of the meeting at any time prior to the voting of the proxy. Unless the persons named in the proxy are prevented by circumstances beyond their control from acting, the proxy will be voted at the said meeting and at any adjournment or adjournments thereof in the manner specified therein. BY WHOM AND THE MANNER IN WHICH THE PROXY IS BEING SOLICITED The proxy is solicited by and on behalf of the management of P. LORILLARD COMPANY. The expense of the solicitation of proxies for this meeting, including the cost of mailing, will be borne by the Company. In addition to the use of the mails, the Company may request persons holding stock in their name or custody, or in the name of nominees, to send proxy material to their principals and request authority for the execution of the proxies and will reimburse such persons for their expense in so doing at a total estimated cost of about One Thousand Five Hundred Dollars ($1,500). To the extent necessary in order to assure sufficient representation at the meeting, officers and regular employees of the Company, at no additional compensation, will request the return of proxies personally, by telephone or telegram. The extent to which this will be necessary depends entirely on how promptly proxies are received, and stockholders are urged to send in their proxies without delay. The management has no knowledge or information that any other person will specially engage any employees to solicit proxies. VOTING SECURITIES OUTSTANDING The outstanding number of each class of voting securities of the Company and the number of votes to which each class is entitled are as follows : Common Stock Pref erred Stock Total Number of Shares . . . 2,852,855 98,000 2,950,855 Number of Votes . . . 2,852,855 98,000 2,950,855 Only stockholders of record at the close of business on March 8, 1954 will be entitled to vote. -o 2 ~ ~ m CA) cn o~ 00

i 9 ELECTION OF DIRECTORS At this Annual Meeting, thirteen (13) Directors are to be elected, who shall hold office until the next following Annual Meeting of Stockholders or until their successors are duly elected and qualified. It is the intention of the persons named in the enclosed form of proxy to vote such proxy for the election of the nominees named below. If any of the nominees named below is not a candidate for election as a Director at the meeting-an event which the management does not anticipate-the proxies will be voted for a substi- tute nominee and the other nominees named below. Name of Nominee Principal Occupation or Employment Name of Corporation in which such occupation is carried on Approximate amount of each class of Year securities of the when Company beneficially first owned directly or elected indirectly as of Director February 16,1954 Herbert A. Kent Chairman of P. Lorillard Company 1939 3,700 shares of William J. Halley the Board of Directors President P. Lorillard Company 1941 Common Stock 2,000 shares of Frank Hopewell Executive P. Lorillard Company 1940 Common Stock 2,515 shares of Irvin H. Peak Vice President Vice President P. Lorillard Company 1943 Common Stock 1,779 shares of Lewis Gruber and Director of Leaf Activities Vice President P. Lorillard Company 1946 Common Stock 1,200 shares of Joseph J. Blacknall and Director of Sales Vice President P. Lorillard Company 1950 Common Stock 916 shares of Alden James and Director of Manufacturing Vice President P. Lorillard Company 1950 Common Stock 1,000 shares of F. Gladden Searle and Director of Advertising Industrialist 1943 Common Stock 2,200 shares of C St k Donald A. Henderson Treasurer Twentieth Century- 1946 ommon oc 128 shares of F Fil C C k Melvin E. Dawley Vice President, ox m orp. Lord & Taylor- 1950 ommon Stoc 300 shares of arris B. Parmele Director and General Merchandise Manager Director of Department Store . Lorillard Company 950 Common Stock 50 shares of Harold F. Temple Research Director of P. Lorillard Company 1943* Common Stock 1,250 shares of Frederic M. Walson Brand Development Director of P. Lorillard Company 1953 Common Stock 100 shares of Purchasing Common Stock * Has served continuously since, except for period January 16, 1950, to April 28, 1953. Mr. Temple, who has been in the employ of the Company for longer than the last five years, held the position of Director of Export Operations during 1949 until December 5, 1949. On that date, Mr. Temple became Merchandising Manager and held that position until June 4, 1951, when he became Director of Brand Development. Mr. Temple has served continuously as Director of Brand Development since June 4, 1951. Mr. Walson, who has been in the employ of the Company for longer than the last five years, held the position of Senior Buyer during 1949 and up to August 1, 1950, when he became Assistant Director of Purchasing. On September 1, 1950, Mr. Walson became, and has since served continuously as, Director of Purchasing. 3

REMUNERATION OF ALL DIRECTORS AND NOMINEES DURING THE FISCAL YEAR ENDED DECEMBER 31, 1953 There is set forth below, in tabular form, amounts paid or set aside by the Company and its subsidiary for each person who was a Director of the Company at any time during the fiscal year ended December 31, 1953, and each person who was one of the three highest paid officers of the Company during said fiscal year, and who received aggregate remu- neration exceeding $30,000, exclusive of amounts paid or set aside pursuant to the Employees' Retirement Plan, and for Officers and Directors as a group, the following information : Name Herbert A. Kent . . . . . . . $ (*) Frederic M. Walson . . . . , Officers and Directors as a group H. B. Parmele. . Robert M. Ganger Harold F. Temple Todd Wool . . Alden James . . Joseph J. Blacknall William J. Halley . . . . . . Frank Hopewell . . . . . . . Irvin H. Peak . . . . . . . . Lewis Gruber . . . . . . . . Salary Estimated Annual Incentive Benefit on Compensation Retirement Acerued ( * ) 55,833.33 $ 31,732.29 (1) 55,000.00 42,000.00 36,000.00 36,000.00 31,250.00 32,833.33 25,000.00(2) 23,958.33 21,241.66 20,000.00(3) 14,549.99 509,708.29 74,041.98 58,175.85 47,598.43 47,598.43 39,665.37 42,309.73 23,799.21 22,990.10 31,732.29 26,443.56 17,000.00 495,187.24 $ 17,938.00 12,978.00 8,217.00 8,550.00 7,079.00 4,061.00 7,304.00 9,541.00 6,441.00 (3) 5,820.00 121,819.00 These estimates assume continued employment at salary rate in effect December 31, 1953, until normal retirement dates. NoTE 1: Mr. Kent has passed the retirement age and received $11,619.48 in accordance with the terms of the Employees' Retirement Plan in addition to the compensation set forth above. He will continue to receive this amount annually until his death and thereafter his wife, if she survives him, will receive $11,619.48 per annum until her death. This amount is not included in the Estimated Annual Benefit on Retirement for Officers and Directors as a group. NOTE 2: Mr. Wool retired as Director, Vice President and Secretary of the Company on June 30, 1953, and in addition to his salary of $18,000 for that period, he was continued in the employ of the Company and received $7,000 for the remainder of the year. NoTE 3: Mr. Ganger resigned as Director and President of the Company as of April 28, 1953, and he was paid the amounts shown above for 1953 services through that date. In addition, the Company and Mr. Ganger entered into a contract on that date providing for the payment by the Company to him of $5,000 per month commencing with the month of May, 1953, and ending with the month of April, 1954. Under such contract, Mr. Ganger received an aggregate of $40,000 with respect to the balance of the year 1953 and, upon the expiration of such contract, will have received an aggregate of $20,000 during the year 1954. Mr. Ganger will receive no benefits under the Employees' Retirement Plan. All of the remuneration set forth was received by the persons named in their capacities as officers or employees of the Company. 4 v ou w 07 v 0

AUDITORS The Board of Directors has appointed Messrs. Haskins & Sells, Certified Public Account- ants, to be the independent Auditors of your Company, and a representative of that firm will be present at the Annual Meeting of Stockholders. PROPOSED AMENDMENT TO THE BY-LAWS .0 r. T +_j During recent years a large number of companies have been either adopting or amend- ing bonus and other compensation plans to authorize the deferment of a portion or portions of such compensation and bonus to future years. In view of this, the President appointed a Committee, consisting of Donald A. Henderson, Melvin E. Dawley and F. Gladden Searle, the three Directors of the Company who are not also employees, and Thomas L. Perkins, Counsel and Assistant Secretary, to investigate and report to him and the Board of Directors on the desirability of some such plan for the Company. That Committee has made a report to the Board of Directors which in substance recommends that the By-laws be made sufficiently flexible to authorize the payment of incentive com- pensation, in whole or in part, in the future upon terms and conditions from time to time prescribed by the Board of Directors or a Committee appointed by the Board. Amounts so deferred would not bear any interest. The recommendation of the Committee would not increase the total amount of incen- tive compensation above the amount payable under the present By-law. It would merely have the effect of permitting the deferment of some of the payments to later years. It is at present contemplated that conditions would be attached to receipt of the future payments, such as continued employment for a further period of years. As to this, no decision has yet been reached and possibly no such requirement will be imposed. However, the Company is advised by counsel that if conditions of this nature are imposed, the Company, under the present state of the law, will probably be able to deduct such payments for income tax purposes only in the years in which the payments are actually made by the Company. There is, therefore, the possibility that payments might be made in years in which the tax advantages to the Company would be less than the Company would have realized had payments been made in the year of accrual. In the converse, it is equally possible that such payments might be made in years when the tax deductions were more advantageous to the Company. The Company is also advised that, if future payments are contingent in nature, the individual to whom payments are made will probably not be liable to income tax thereon until the year of receipt, which may be, of course, a distinct advantage to such individual. The plan also has definite advantages to the Company. The tax advantages to the individual mentioned above should help the Company attract and retain the services of highly competent personnel. Contingencies can be placed upon the payment of the deferred compensation which should help in maintaining continuity of management. The Company has the use of the deferred amounts without the payment of any interest thereon. Apart from any other consideration, your Company cannot afford to offer its executives terms less favorable than can be obtained elsewhere and must keep pace with the times. The only other changes in the By-law are technical ones to provide, when necessary, for accrual as well as payment of the incentive compensation which is to be computed in accordance with the provisions of the present By-law. The proposed new By-law which is being submitted by the management for the vote of the stockholders reads as follows : 5

PROPOSED REVISION OF ARTICLE XII OF THE BY-LAWS OF P. LORILLARD COMPANY ARTICLE XII. INCENTIVE COMPENSATION FOR OFFICERS AND KEY PERSONNEL. SECTION 1. As soon as reasonably may be after the end of the calendar year 1954,* and of each calendar year of the Company's existence thereafter, the [Director of Finance] * Treasurer shall submit to the Board of Directors a certificate (which certificate shall be endorsed with the approval of the independent Auditors of the Company) certi- fying the amount of "incentive compensation income" for such calendar year, which "incentive compensation income" shall be an amount equal to the consolidated net income of the Company and its subsidiary companies for such calendar year, determined in accordance with generally accepted principles of accounting, figured before deducting Federal taxes based on income or the payments or accruals to be made pursuant to this By-law, minus the sum of (a) 38% of such consolidated net income so figured, (b) an amount equal to the dividends for such calendar year to which the holders of any out- standing stock of the Company other than the Common Stock of the Company may be entitled, and (c) an amount equal to $1.20 per share on the average number of shares of the Common Stock of the Company (including stock represented by scrip certificates) outstanding during such calendar year. For the purpose of this paragraph any stock of any class held in the treasury of the Company shall be considered not to be outstanding. SEC. 2. The Board of Directors shall cause to be paid to or accrued for the benefit of each of the following officers and key personnel of the Company, as hereinafter pro- vided, an amount equal to that percentage of the "incentive compensation income" as thus certified and approved which is set opposite the description of his position below: * the President of the Company_ 1% of such income ; the Executive Vice President 8/10 of 1% of such income; each of not more than four other Vice Presidents, except as stated below_______ 6/10 of 1% of such income; such other officers and key personnel of the Com- pany and its subsidiaries, including officers and key personnel who are members of the Board of Directors, in such amounts as the Board may determine _ 5.8% of such income, but not in excess of 4/10 of 1% to any one person. If any President and/or any Vice President shall have served as such for less than the full calendar year the payment to or accrual for such person shall bear the same proportion to the full amount due such office as the time so served bears to the full calendar year. If, for all or any part of a particular calendar year, the office of Executive Vice President shall be vacant, then there may be paid to or accrued for a fifth Vice President an amount equal to 6/10 of 1% of such income, if such vacancy shall have existed for the full calendar year, or, if such vacancy shall not have existed for the full calendar year, a sum which shall bear the same proportion to such amount as the time during which such vacancy shall exist shall bear to the full calendar year. * See NoTE, page 7. ~ ~ L'i

i If for any reason the full amounts allocated herein to the President and the Vice Presidents shall in any year not be paid to or accrued for them, or if any amount accrued f or any individual under this By-law should be f orf eited as hereaf ter authorized, then any amount not so paid to or accrued for the President and Vice Presidents shall be added to the amount that would otherwise have been paid to or accrued f or other officers and key personnel and any amount so f orf eited shall be paid to or accrued f or such other officers and key personnel, so that [in] for each year 10% of "incentive compensation income" shall be [paid to] distributed to Management under this By-law. SEC. 3. The President shall have the duty of recommending to the Board of Directors to or for what officers and key personnel other than the President and Vice Presidents, and in what amounts, the portion of the "incentive compensation income" allocated to such persons shall be paid or accrued. The Board, as to officers and key personnel who may be members of the Board, shall in no event pay to or accrue f or such members amounts in excess of those recommended by the President. SEC. 4. Any amount allocated to an individual as above set forth may, in the dis- cretion of the Board of Directors or a Committee appointed by the Board of Directors for that purpose, be paid in full following allocation or be paid in whole or in part to such individual (or, in the event of his death, to his beneficiaries), in a future year or years, upon a contingent basis subject to forfeiture or without contingency, in instalments or outright, and otherwise upon such terms and conditions, if any, as the Board of Directors or such Committee may from time to time determine. No amounts so allocated shall bear interest. SEC. [4] 5. The acts and findings of the [Director of Finance] Treasurer and Audi- tors in certifying and approving the "incentive compensation income" for any such year and the acts of the Board of Directors or a Committee thereof appointed f or the purpose in causing payment or accrual and distribution to be made thereof shall be binding and conclusive. 1 SEC. [5] 6. This Article of the By-laws may be amended or repealed only by the ; action of the stockholders of the Company, and not by the Directors. The Directors shall ! at least once in every five years present this Article of the By-laws to a Stockholders ( Meeting for such action as the stockholders care to take. NOTE: In the above proposed revision of Article XII of the By-laws brackets represent matter in the present By-law being omitted in the proposed amendment. Italics represent added matter. The first phrase of SEC. 2. of the present By-law reads as follows: SEO. 2. The Board of Directors shall cause the following payments and distributions to be made from the "incentive compensation income" as thus certified and approved: The Directors at a meeting held February 17, 1954, adopted the report of the Committee and formulated and advised the amendment of Article XII of the By-laws so that as amended it would be in the form and language of the proposed amended By-law set forth above in full. For the reasons stated in the report of the Committee, the management strongly feels that this amendment to Article XII of the By-laws will be to the great advantage of the Company and the stockholders. The amended By-law provides that from "incentive compensation income" (which may be defined as an amount equal to the consolidated net income of the Company and its subsidiary companies figured before deducting Federal taxes based on income or the payments or accruals to be made pursuant to this By-law minus the sum of (a) 38% of 7