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EXHIBIT A ARTICLE XII INCENTIVE COMPENSATION FOR OFFICERS AND KEY PERSONNEL SECTION 1. Incentive Compensation Amount: (a) As soon as reasonably may be after the end of the calendar year 1958, and of each calendar year of the Company's existence thereafter, the 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) certifying the Incentive Compensation Amount for such calendar year. Such Incentive Com- pensation Amount shall be the total amount resulting from application to the Net Operating Income for such calendar year of the following percentages: 3% of the first $12,000,000 of such Net Operating Income; 4% of such Net Operating Income in excess of $12,000,000 but not in excess of $15,000,000 ; 5% of such Net Operating Income in excess of $15,000,000 but not in excess of $20,000,000 ; 6% of such Net Operating Income in excess of $20,000,000. (b) Notwithstanding the provisions of Sec. 1(a) above, no Incentive Com- pensation Amount shall be deemed to have been earned, and no incentive compen- sation shall be paid, for any calender year unless (i) a cash dividend shall have been declared and paid on the Common Stock of the Company in such year and (ii) the above-mentioned certificate of the Treasurer for such calendar year shall certify that the Net Operating Income for such calendar year exceeded 12 % of the- Net Worth for such calendar year. SECTION 2. Determination of Allotments: (a) The Board of Directors shall for each calendar year cause to be allotted to each of the following officers and key personnel an amount equal to the per- NoTE : See definitions of terms in Sec. 11 below.

centage of the Incentive Compensation Amount for such calendar year set opposite the description of his position below : the President of the Company -10% of such Incentive Com- pensation Amount; the Executive Vice President of the Company 8% of such Incentive Com- pensation Amount ; each of not more than four other Vice Presi- dents of the Company, except as stated below such other officers and key personnel of the Lorillard Companies, including officers and key personnel who are members of the Board of Directors, and in such amounts as the Board may determine_ 6% of such Incentive Com- pensation Amount; 58% of such Incentive Com- pensation Amount but not in excess of 4% to any one person. (b) The President shall have the duty of recommending to the Board of Directors to what officers and key personnel other than the President and Vice Presidents, and in what amounts, the portion of the Incentive Compensation Amount that may be allotted to such persons shall be allotted to them. The Board, as to officers and key personnel who may be members of the Board, shall in no event make allotments to such members of amounts in excess of those recommended by the President. (c) If any President or any Vice President shall have served as such for less than the full calendar year, the allotment to such person shall bear the same propor- tion to the full amount due such office as the time so served bears to the full calendar year. (d) If, for all or any part of a calendar year, the office of Executive Vice President shall be vacant, then there may be allotted to a fifth Vice President an amount equal to 6% of the Incentive Compensation Amount for such calendar year, 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 have existed shall bear to the full calendar year. (e) If, for any reason, the full amounts hereinabove provided for in respect of the President and the Vice Presidents shall for any year not be allotted to them, 2

then any amount not so allotted to the President and the Vice Presidents shall be added to the amount that otherwise would have been allotted to other officers and key personnel so that for each year the entire Incentive Compensation Amount shall be allotted to officers and key personnel under this By-law. SECTION 3. Contingent Compensation Group: The Contingent Compensation Group for any calendar year shall consist of such of the Participants for such calendar year as shall be determined according to rules and regulations of general application established by the Committee as in effect on November 15 of such calendar year. The allotment made to each of the persons in the Contingent Compensation Group with respect to any calendar year shall be divided into two parts, consisting of the Current Allotment and the Con- tingent Allotment. Each such division shall be made pursuant to a formula of general application established by the Committee and communicated to the Board of Directors as a part of the above-mentioned rules and regulations. Such formula shall provide that the first Five thousand dollars ($5,000) of the allotment to each Participant shall be paid as a Current Allotment and that, of the allotment in excess of Five thousand dollars ($5,000), not more than seventy-five per centum (75%) nor less than twenty-five per centum (25%) shall be paid as a Current Allotment. The Committee may at any time or from time to time amend its rules and regulations, including such formula, provided that any such amendment shall have been communicated to the Board of Directors prior to November 15 of the calendar year for which such amendment is to take effect. SECTION 4. Payment of Allotments Other Than Contingent Allotments: Subject to the provisions of Sec. 3, allotments to all Participants other than those in the Contingent Compensation Group, and Current Allotments to Partici- pants in the Contingent Compensation Group, shall be paid in full in cash as soon as practicable after such allotments shall have been made. SECTION 5. Payment of Contingent Allotments: (a) Subject to the provisions set forth in Secs. 5(b) and 5(c) below, payment of the total amount of all Contingent Allotments made to a Participant shall be made to him, or, in case of his death prior to the commencement of payments on account of such total amount, to his Beneficiary, in 120 equal monthly installments 3

in cash without interest commencing on January 1 of the year following the year in which such Participant shall cease, by reason of death or otherwise, to be an employee of the Lorillard Companies, or as soon as practicable thereafter. In the case of the death of a Participant after the commencement of payments to him on account of the total amount of the Contingent Allotments made to him, the then remaining unpaid portion thereof shall continue to be paid in installments, at such times and in such manner as if such Participant were living, to the Beneficiary of such Participant. (b) With respect to the total amount of Contingent Allotments, or the then remaining unpaid portion thereof, which shall be payable to any Participant who shall at that time no longer be an employee of the Lorillard Companies or to the Beneficiary of any Participant, but in no other case, the Committee shall possess absolute discretion to accelerate the time of payment of such total amount, or remaining unpaid portion thereof, as the case may be, to any extent that, in its absolute discretion, it shall deem equitable or desirable under the circumstances. (c) Payment of each Contingent Allotment to a Participant in the Contingent Compensation Group or to his Beneficiary shall be subject to the following provisions : (i) If such Participant shall cease to be an employee of the Lorillard Companies within a period of three years following the close of the calendar year for which a Contingent Allotment shall have been made to him, such Contingent Allotment and the Company's obligation in respect thereof shall be reduced to the amount resulting from multiplication of such Contingent Allotment by a fraction, the numerator of which shall be the number of full quarter-years during which he shall have been an employee of the Lorillard Companies following the close of the calendar year for which such Contingent Allotment shall have been made, and the denominator of which shall be twelve. No reduction in such Contingent Allotment or the Company's obligation in respect thereof shall be made, however, if such termination of employment shall have resulted from death, disability or retirement (including early retirement) under the Employees' Retirement Plan of the Company or shall occur under circumstances deemed by the Committee, in its sole discretion, not to be contrary to the interests of the Company. (ii) If such Participant, following the date on which he shall cease to be an employee of the Lorillard Companies, shall engage or be employed, whether as 4

owner, stockholder, partner, officer, employee or otherwise, in any occupation connected with the manufacture or distribution of products in competition with any of the Lorillard Companies at any time after the expiration of a period of thirty days after the mailing to him of written notice by the Secretary of the Company to refrain from doing so, or if such Participant shall, at any time following the date on which he shall cease to be an employee of the Lorillard Companies, (A) disclose to unauthorized persons information relative to the business of the Lorillard Companies which he shall have reason to believe is confidential or (B) otherwise act, or conduct himself, in a manner which he shall have reason to believe is inimical or contrary to the best interests of the Lorillard Companies, the Company's obligation to make any further payment on account of the total amount of the Contingent Allotments to such Participant shall forthwith terminate, but the foregoing provisions shall not obligate such Participant to repay any sum theretofore paid him by the Company on account of the Contingent Allotments made to him. Ownership as an investor of not more than five per cent (5%) of the outstanding shares of the stock of any company listed on a national securities exchange or having at least one hundred (100) shareholders shall not in itself constitute a violation of the terms of the foregoing provisions, regardless of the nature of the business of such company. (iii) If any Participant shall attempt to assign his rights under the Plan in viola- tion of the provisions of Sec. 7 below, the Company's obligation to make any further payment to such Participant or his Beneficiary shall forthwith terminate. If any Beneficiary shall attempt so to assign his rights, the Company's obligation to make any further payment to such Beneficiary shall forthwith terminate. (iv) The determination as to whether an event has occurred resulting in a termina- tion or reduction of the Company's obligation in accordance with the foregoing provisions of this Sec. 5 shall be made by the Committee in its absolute discre- tion and the decision of the Committee with respect thereto shall be conclusive. (d) In case an event shall have occurred which shall have terminated or reduced the Company's obligation to pay all or any part of the total amount of the Contingent Allotments to such Participant, the amount represented by the resulting decrease in the Company's obligation shall not be available for allotment under the Plan. 5

SECTION 6. Administration of the Plan: (a) The Plan shall be administered by the Committee, which shall have power to construe and interpret the Plan and to adopt rules and regulations for its admin- istration. (b) The Committee shall consist of such number of the Board, but not less than three (3), as shall be appointed by the Board and who shall serve at the pleasure of the Board. Subject to the immediately preceding sentence, the mem- bership of the Committee may be increased, changed or reduced from time to time by the Board. None of the members of the Committee shall be eligible to be awarded an allotment, contingent or otherwise, at any time when he shall be a member of the Committee or with respect to any calendar year in which he shall have served as a member of the Committee. All expenses of administering the Plan, including reasonable compensation to the members of the Committee, shall be borne by the Company. (c) The Committee shall conduct its business and hold meetings as determined by it from time to time and any action taken by the Committee at meetings duly called shall require the affirmative vote of at least a majority of its members. The Committee shall adopt and may amend its own rules of procedure and shall keep an accurate and complete record of its proceedings. SECTION 7. Certain Provisions Relating to Participation: (a) No Participant nor any person claiming under or through him nor any other person shall have any right or interest, whether vested or otherwise, in the Plan or its continuance or in or to the payment of any allotment under the Plan, contingent or otherwise, unless and until all the terms, conditions and the pro- visions of the Plan that affect such allotment and its payment shall have been fully complied with as specifically provided in the Plan and the rules and regulations of the Committee thereunder. No rights under the Plan, contingent or otherwise, shall be assignable or subject to any encumbrance, pledge or charge of any nature, except that a Participant may, under such rules and regulations as the Committee may establish, designate a Beneficiary to receive his award or any unpaid portion thereof. (b) Nothing contained in the Plan shall require the Company to segregate or earmark any cash or other property, and no Participant or Beneficiary shall have any interest in any fund or specific property. 6

(c) Neither the adoption of the Plan nor its operation shall in any way affect the right and power of the Lorillard Companies to dismiss or otherwise terminate the employment of any officer or other employee at any time for any reason. (d) By accepting any benefits under the Plan, each Participant and each person claiming under or through him shall be conclusively deemed to have evidenced his acceptance and ratification of, and consent to, the provisions of the Plan and any action or decision taken or made under the Plan by the Company, the Board of Directors and the Committee. SECTION 8. General Provisions. (a) Anything herein to the contrary notwithstanding, the certificate of the Treasurer with respect to the Incentive Compensation Amount for a calendar year, when endorsed with the approval of the independent Auditors of the Com- pany, shall be in all respects final and conclusive on the Company, its Board of Directors and stockholders, the Committee, the Participants and their Beneficiaries and all others claiming under the Plan or otherwise, as to the correctness of the computations under Sec. 1 for such calendar year, and shall remain final and conclusive for the purpose of the Incentive Compensation Amount for such calendar year irrespective of any subsequent happening or subsequently dis- covered miscalculation or error and irrespective of the results of any subsequent audit or review by the Commissioner of Internal Revenue or by any other agency or tribunal affecting any item entering into Net Operating Income or Net Worth. (b) Any action taken or decision made by the Company, the Board of Directors, or the Committee arising out of or in connection with the construction, administration, interpretation or effect of the Plan, or of any rules and regulations adopted thereunder, shall lie within its absolute discretion and shall be conclusive and binding upon all Participants and all persons claiming under or through any Participant. (c) The Board of Directors and the Committee may rely upon any informa- tion supplied to them by any officer of the Company, or by the Company's independ- ent Auditors, and may rely upon the advice of such Auditors or of counsel, in connection with the administration of the Plan, and shall be fully protected in relying upon such information and advice. 7

(d) No member of the Board of Directors or of the Committee shall be liable for any act or failure to act of any other member of such Board or Committee, as the case may be, or of any officer, agent or employee. (e) The fact that a member of the Board of Directors shall at the time be, or shall theretofore have been or thereafter may be, a Participant or person who has received or who is eligible to receive an allotment shall not disqualify him from taking part in and voting at any meeting as a director in favor of or against any amendment or repeal of the Plan, provided that such amendment or repeal shall provide no benefit for directors as such and provided further that such amend- ment or repeal shall be of general application. (f) There shall be deducted from all payments of allotments all taxes required to be withheld therefrom under the applicable laws or other regulations of any governmental authority, whether Federal, state or local and whether domestic or foreign. (g) In the event of a change in the Company's fiscal year, this Plan shall apply, with appropriate pro rata adjustments, to any intermediate period not consisting of twelve months and shall then apply to each fiscal year following, and the term "calendar year" shall under such circumstances be deemed to refer to the Company's fiscal year. (h) Any communication under the Plan to the Board of Directors shall be deemed to have been delivered to the Board when delivered to the Secretary of the Company for transmission to the Board, irrespective of whether the Board shall then be in session. Any communication under the Plan to the Committee shall be deemed to have been delivered to the Committee when delivered to its Secretary for transmission to the Committee, irrespective of whether the Committee shall then be in session. (i) Headings are given to the paragraphs of the Plan solely as a convenience to facilitate reference; such headings shall not be deemed in any way material or relevant to the construction of the Plan or any provision thereof. (j) The use of the masculine gender shall also include within its meaning the feminine. The use of the singular shall also include within its meaning the plural, and vice versa. 8

SECTION 9. Amendment or Repeal: (a) The Plan and this Section of the By-laws may be amended or repealed by the stockholders of the Company or, if, as and when the Committee shall recom- mend, but not otherwise, by the Board of Directors, provided, however, that (i) Only the stockholders of the Company may amend the provisions of the Plan so as (A) to increase for any calendar year the Incentive Compensation Amount for such year, or the percentages thereof that may be allotted to the President, the Executive Vice President, or other Vice Presidents; (B) to change the provision, in Sec. 6(b) of the Plan, that none of the members of the Committee shall be eligible to be awarded an allotment, contingent or other- wise, at any time when he shall be a member of the Committee or with respect to any calendar year in which he shall have served as a member of the Committee; or (C) to change the provisions of this Sec. 9; (ii) The provisions of the Plan as in effect on November 15 of any calendar year shall in all respects remain in effect with respect to any allotment, contingent or otherwise, made or to be made for such calendar year, notwithstanding the amendment or repeal of the Plan subsequent to November 15 of such calendar year by either the Board of Directors or stockholders ; (b) 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. SECTION 10. Effective Date of Amended Plan: This amended Plan shall take effect for the calendar year 1958 and shall apply to calendar years thereafter. SECTION 11. Definitions: Unless otherwise required by the context, the terms used in the Plan shall have the meaning ascribed to such terms in this Sec. 11. BENEFICIA,RY : As applied to a particular Participant, such one or more persons or entities (including a trust), other than the Participant or his estate or his creditors or the creditors of his estate, or an entity in which any of the foregoing 9

may have an interest, as shall be designated in a written document executed by such Participant in such form as shall be approved by the Committee and delivered to that Committee. Such designation may name one or more principal Beneficiaries and one or more contingent Beneficiaries, and may make provision for various contingencies, subject to such rules of general application as may be established by the Committee. Such designation may be changed, amended or revoked by such Participant at any time and from time to time by a similar written document. If, at the time when any amount on account of any one or more allotments to him shall become payable at or after the death of such Participant, there shall not be any such living person or any such entity in existence, named in a valid designation with respect to a Beneficiary on file with the Committee, the term "Beneficiary" shall mean such person or persons among his spouse and descendants as the Com- mittee, in its absolute discretion, shall designate, and, if such Participant shall leave no spouse or descendant, the term "Beneficiary" shall mean such person or persons among his relatives by blood or marriage as the Committee, in its absolute discretion, shall designate. In case, at the death of a Participant, there shall be more than one designation by such Participant on file with the Committee, the last designation filed shall control. BOARD OF DIRECTORS OR BOARD : The Board of Directors of the Company. COMMITTEE: The committee appointed to administer the Plan pursuant to See. 6 above. COMPANY : P. Lorillard Company, a corporation organized and existing under the laws of the State of New Jersey. CONTINGENT ALLOTMENT : The portion of the allotment to any Participant in the Contingent Compensation Group contingently payable in the future pursuant to Secs. 3 and 5 of the Plan. CONTINGENT COMPENSATION GROUP : The group determined as provided in Sec. 3 of the Plan. CURRENT ALLOTMENT: The portion of the allotment to any Participant in the Contingent Compensation Group to be paid in cash pursuant to Sec. 4 of the Plan. 10