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P. LORILLARD COMPANY Notice of Annual Meeting of Stockholders TO BE HELD APRIL 3, 1962 To the Stockholders of P. Lorillard Company: NOTICE is hereby given that the Annual Meeting of the Stockholders of P. LORILLARD COMPANY, a New Jersey corporation, will be held at the Biltmore Hotel, Madison Avenue and 43rd Street, New York, N. Y., at 11:00 o'clock in the forenoon of April 3, 1962, 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) Consideration of and voting upon a proposal to amend Article THIRD of the Certificate of Incorporation of the Company as described in the annexed Proxy Statement (Proposal A) ; r (3) Consideration of and voting upon a proposal to amend the By-laws of the Company as described in the annexed Proxy Statement (Proposal B) ; and (4) 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 February 15, 1962, will be entitled to vote, notwithstanding any transfer of any stock on the books of the Company after such record date. Jersey City, N. J. February 23, 1962 ANNA F. WOESSNER, Secretary. I0 If unable to be present at the meeting, please sign the enclosed Proxy and return '%'"4 it in the accompanying envelope so that the meeting may be properly held. w m 0

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 provision 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 Nine Thousand Dollars ($9,000). To the extent necessary in order to assure sufficient representation at the meeting, officers and regular employees of the Company and others regularly retained by 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. 2

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 Preferred Stock Total Number of Shares------------- 6,570,934 98,000 6,668,934 Number of Votes_ ----- 6,570,934 98,000 6,668,934 Only stockholders of record at the close of business on February 15, 1962, will be entitled to vote. 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 substitute nominee and the other nominees named below. Approximate amount of each class of Name of Year securities of the corporation when Company beneficially Princi¢al in which such f°rst owned directly or Name of Occu¢atson or occu¢ation is elected indirectly as of Nominee Employment carried on Director January 11, 1962 Lewis Gruber Chairman of the P. Lorillard Company 1946 22,000 shares of Board and Chief Common Stock(1) (4) Executive Officer Morgan J. Cramer President P. Lorillard Company 1958 5,476 shares of Common Stock(2) (4) George 0. Davies Vice President P. Lorillard Company 1955 11,000 shares of and Director Common Stock (4) of Finance Manuel Yellen Vice President P. Lorillard Company 1956 17,317 shares of and Director Common Stock(3) (4) of Sales Harris B. Parmele Vice President P. Lorillard Company 1950 11,400 shares of and Director Common Stock (4) of Research J. Edgar Bennett Vice President P. Lorillard Company 1960 7,800 shares of and Director of Common Stock(4) Manufacturing 3

ame of Nominee Albert L. Dion rincipal Occupatwn or Employment General Sales Name of corporation in which such occupation is carried on P. Lorillard Company Year when first e ected Director 1961 Approximate amount of each class of securities of the Company beneficially owned directly or indirectly as of January 11, 1962 1,300 shares of Henry E. Erickson Manager Director of Leaf P. Lorillard Company 1961 Common Stock (4) 312 shares of George W. Davidson Activities Executive Federal Tin Company 1957 Common Stock 6,000 shares of F. Gladden Searle Vice President Industrialist 1943 Common Stock 2,000 shares of Donald A. Henderson Melvin E. Dawley Harold x. Schreder Treasurer and Secretary President and Director Executive Vice President Twentieth Century-Fox Film Corp. Lord & Taylor- Department Stores Distributors Group, Inc.-Investment Bankers and Group Securities, Inc. -Mutual Fund 1946 1950 1956 Common Stock 656 shares of Common Stock 1,126 shares of Common Stock 224 shares of Common Stock (1) Includes 2,400 shares held in trusts. (2) Includes 2,100 shares held in a trust. (3) Includes 317 shares held as custodian for his children. (4) Does not include shares held in escrow for release in instalments over a ten-year period following termination of employment (see page 6). The number of shares to be released annually during such period is as follows: Lewis Gruber, 699; Morgan J. Cramer, 73; George 0. Davies, 357; Manuel Yellen, 357; Harris B. Parmele, 375; J. Edgar Bennett, 25; and Albert L. Dion, 17. Each of the nominees named above is now a director of the Company and, collectively, such nominees comprise the entire membership of the Board. Each of such nominees was elected to his present office by a vote of security holders at a meeting for which proxies were solicited under Regulation 14 of the Securities and Exchange Commission except Albert L. Dion who, for more than the last five years, had served the Company in various sales capacities until January 26, 1960, and as General Sales Manager thereafter and Henry E. Erickson who, for more than the last five years, had served the Company in various manufacturing and leaf capacities, becoming Director of Leaf Activities on November 15, 1961. 4

REMUNERATION AND OTHER TRANSACTIONS WITH DIRECTORS AND NOMINEES FOR THE FISCAL YEAR ENDED DECEMBER 31, 1961 The following table sets forth all direct remuneration paid by the Company and its subsidiaries for the fiscal year ended December 31, 1961, to (1) each person who was a director of the Company at any time during such year and whose aggregate remuneration for such year exceeded $30,000; (2) each person who was one of the three highest paid officers of the Company during such year and whose aggregate remuneration for such year exceeded $30,000; and (3) all persons, as a group, who were directors or officers of the Company at any time during such year. Estimated annual retirement benefits to the same persons at normal retirement date under the Employees' Retirement Plan as now in effect are set forth in column (5) of the table. (1) (2) (3) (4) ame Lewis Gruber alary $ 75,000.00 Current Incentive Compensation $ 53,341.46 Capacities in Wh4ch Remuneration Was Received Chairman of the Board-_-_ Morgan J. Cramer- 41,250.00 53,903.39 President and Vice President_ George 0. Davies__-_ 40,000.00 49,300.88 Vice President __- ___ Manuel Yellen 40,000.00 49,300.88 Vice President Harris B. Parmele___ 39,000.00 49,300.88 Vice President J. Edgar Bennett____ 30,000.00 48,845.98 Vice President and Director of Albert L. Dion_-__ 21,250.00 19,250.00 Manufacturing General Sales Manager__________ Henry E. Erickson___ 14,041.67 19,000.00 Director of Leaf Activities and George W. Davidson__ 25,500.00 20,000.00 Assistant Director thereof____ Executive Vice President- Fred M. Taylor__-__ 20,000.00 16,250.00 Federal Tin Company_---------- Director of Leaf Activities_____ Officers and directors as a group_ 554,669.06 523,694.33 (5) Est:mated Annual Retire- n:ent Benefit at Normal Re- tirement Datc(a) $19,623 20,526 18,789 20,892 22,011 21,264 14,738 17,184 14,502 7,599 (a) In each case, the estimate assumes continued employment until normal retirement date at the salary rate in effect December 31, 1961, and with the same current incentive compensation as that for 1961, and election of a joint and survivor annuity providing benefits to the survivor also. For the contingent awards of incentive compensation payable during each of the ten years (fifteen years in the case of contingent awards for 1960 and subsequent years) after termination of employment, see page 6. Note: The salary and current incentive compensation for 1961 of Harold F. Temple who was the President of the Company at the time of his death during that year were $43,750 and $45,420.86, respectively. 5

Contingent awards of incentive compensation under Article XII of the By-laws are payable (subject to prescribed conditions) in equal monthly instalments over a period of ten years (fifteen years in the case of contingent awards for 1960 and subsequent years) following the close of the year in which employment by the Company terminates. The respective amounts of contingent awards of incentive compensation for 1961 for the directors and officers referred to in the above table, contingently payable to them during each of the fifteen years after termination of employment and constituting, in each case, one-fifteenth of the contingently pay- able part of the incentive compensation award for such year (column a), and the total respective instalments contingently payable to them during each of the ten years (column b) and each of the fifteen years (column c) after termination of employment as a result of all contingent awards for years prior to 1961, consti- tuting, respectively, one-tenth and one-fifteenth of the total of all such awards, are : (a) (b) (c) J. Edgar Bennett-------- ________e_ $ 4,435.86 $ 372.34 $ 779.56 Morgan J. Cramer____ 5,447.35 1,761.10 3,926.49 George W. Davidson------------ 333.33 1,500.00 255.50 George 0. Davies_____________-_ 4,526.84 4,185.22 4,424.68 Albert L. Dion 316.67 403.37 316.67 Henry E. Erickson_______ - - - Lewis Gruber 5,334.96 7,412.45 7,775.66 Harris B. Parmele____ 4,526.84 4,182.85 4,424.68 Fred M. Taylor______ 250.00 437.50 236.56 Manuel Yellen 4,526.84 4,186.06 4,424.68 Directors and officers as a group 33,832.86 60,237.09 33,442.40 The amounts in column (b) above (except those for Messrs. Davidson, Erick- son and Taylor) reflect a reduction in respect of fully earned but unpaid portions of contingent awards for 1959 and prior years as the result of payment thereof in shares of the Company's Common Stock. Such shares were transferred by the Company on January 24, 1962, to a total of 14 employees, subject to prescribed conditions, and were placed by the employees in escrow to be released, over a ten- year period following termination of employment, subject to compliance with the non-competition and other continuing conditions to the receipt of contingent 6

awards set forth in the Company's incentive compensation plan. Pending release from escrow, the employee is the record owner of the shares and his current incen- tive compensation is to be reduced by the dividends that he receives on such shares. The number of shares transferred to each employee was determined on the basis of a price of $66.07 a share, which was the average per share cost to the Company of the shares acquired by it for the purpose. On January 24, 1962, the mean between the highest and lowest quoted selling prices of the Company's Common Stock on the New York Stock Exchange was $57.93 a share. The number of shares to be released annually over the above-mentioned ten-year period to each person referred to in the above table is shown in footnote 4 on page 4. All of the remuneration set forth was received by the persons named in their capacities as officers or employees of the Company and its subsidiaries. During the fiscal year ended December 31, 1961, certain of the persons named above exercised options to purchase shares of Common Stock of the Company exercisable at a purchase price, in each case, of $39.50 per share, pursuant to agreements entered into by the Company and such persons on September 18, 1959, under the Company's Restricted Stock Option Plan, as follows (the number of shares and the market value per share-the mean between the high and low prices on the New York Stock Exchange on each date of purchase-being shown) : J. Edgar Bennett, 2,000, $71.81; Morgan J. Cramer, 3,000, $61.94; Albert L. Dion, 1,000, $61.94; Henry E. Erickson, 300, $62.50; Fred M. Taylor, 500, $58.62. Officers and directors as a group exercised options for 6,800 shares of Common Stock of the Company, all during the last quarter of 1961, when the price range per share on the New York Stock Exchange was $72.37-$58.25. PROPOSED AMENDMENTS TO CERTIFICATE OF INCORPORATION AND BY-LAWS Article THIRD of the Certificate of Incorporation of the Company, as presently in effect, has not been amended since incorporation of the Company in 1911. Under such Article, the Company's business is limited to activities directly or indirectly related to the purchase, manufacture and sale of tobacco and tobacco products. Management believes that such Article TxIR,D, in its present form, is outmoded and should be amended to bring it more nearly in keeping with modern concepts of corporate activity. 7

Accordingly, management is submitting a proposal which would broaden the permissible scope of the Company's activities. Article TxIlt,p, as presently in effect, appears as Exhibit 1 hereto and the proposed amendment thereof appears as Exhibit 2 hereto. If the proposed amendment appearing as Exhibit 2 hereto should be approved by the stockholders, it would permit the diversification of the Company's opera- tions if, in the future, management should determine it desirable to do so. It is not, however, the present intention of management, if such provision should be approved by the stockholders, to make any material changes in the Company's business and no pending negotiations or understandings exist regarding the acquisition of any particular business. Management also is submitting a proposal conforming generally with Section 14:3-14 of the New Jersey General Corporation Law, providing for indemnifica- tion of the Company's officers and directors. The proposed provision will be substantially in the form annexed hereto as Exhibit 3. The proposals require, in the one case, an amendment to the Certificate of Incorporation and, in the other case, the addition of an article to the Company's By-laws. Proposal A-To Amend Certificate of Incorporation. The adoption of the amendment to Article TxI.Rn of the Certificate of Incorporation which appears as Exhibit 2 hereto requires the affirmative vote of two-thirds in interest of each of the Common Stock and Preferred Stock entitled to vote at the meeting. If the proposed amendment shall be adopted, a Certificate of Amendment to the Certifi- cate of Incorporation will be filed promptly after the meeting with the Secretary of State of the State of New Jersey. If the proposed amendment shall not be adopted, the present Certificate of Incorporation will remain in effect. Proposal B-To Amend By-laws. The adoption of a provision substantially in the form which appears as Exhibit 3 hereto would constitute an amendment to the Company's By-laws so as to add a new Article XIV. The affirmative vote of a majority in interest of the Company's outstanding stock entitled to vote at the meeting is required in order that the proposed amendment to the By-laws may be adopted. 8

AUDITORS The Board of Directors has appointed Messrs. Haskins & Sells, Certified Public Accountants, to be the independent Auditors of your Company, and a represent- ative of that firm will be present at the Annual Meeting of Stockholders. CONCLUSION The Annual Meeting is called for the purposes set forth above and for the trans- action of such other business as may properly come before the meeting. At the date of this Proxy Statement the management knows of no other matters which may come before the meeting. However, if any other matters properly come before the meeting, it is the intention of the persons named in the enclosed form of proxy to vote such proxy in accordance with their judgment. Dated February 23, 1962. EXHIBIT 1 Article Third Of Certificate Of Incorporation As Now In Effect THIRD-The objects for which this Corporation is formed are to dry and cure leaf tobacco and to buy, manufacture, sell, and otherwise deal in tobacco and the products of tobacco in any and all forms ; to construct or otherwise acquire and hold, own, maintain and operate warehouses, factories, offices and other buildings, structures and appliances for the raising, drying, curing, storing, manufacturing, selling and distributing of tobacco and its products in any and all forms. The Corporation shall have power to conduct its business in all its branches, have one or more offices and unlimitedly acquire, hold, mortgage and convey real and personal property in the State of New Jersey and as well in all other States, territories, possessions and dependencies of the United States and in all foreign countries. 9

EXHIBIT 2 Article Third Of Certificate Of Incorporation As Proposed To Be Amended TxixD-The objects for which this Corporation is formed are as follows: (a) To dry and cure leaf tobacco and to buy, manufacture, sell and otherwise deal in tobacco and tobacco products in any and all forms; (b) To compound, manufacture, make, prepare, develop, create, exam- ine, test, analyze, experiment with, purchase, sell, rent, import, export, exploit and generally to deal in and with any and all products, compounds, goods, wares and merchandise of every kind, nature and description and to engage and participate in any trading, manufacturing or mercantile business of any kind or character whatsoever, whether or not related to tobacco or tobacco products ; (c) To acquire and hold for investment or otherwise, by purchase, exchange or otherwise, all or any part of or any interest in the properties, assets, business and goodwill of, or all or any part of the capital stock of, any one or more persons, firms, associations or corporations heretofore or hereafter engaged in any business for which a corporation may now or hereafter be organized under the laws of the State of New Jersey; to pay for the same in cash, property or its own or other securities, and to hold, operate, reorganize, liquidate, sell or in any manner dispose of the whole or any part thereof ; (d) To acquire by purchase, exchange, lease, license or otherwise, and to own, hold, use, develop, operate, sell, assign, lease, transfer, convey, exchange, mortgage, pledge, license or otherwise dispose of or deal in and with real and personal property of every class or description and rights and privileges therein wheresoever situate; (e) To conduct its business in any and all of its branches and maintain offices both within and without the State of New Jersey, in any and all States of the United States of America, in the District of Columbia, in any and all territories, dependencies, colonies or possessions of the United States of America and in foreign countries; and (f) To such extent as a corporation organized under the General Cor- poration Law of the State of New Jersey may now or hereafter do, to do, 10