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P. LORILLARD COMPANY Notice of Annual Meeting of Stockholders TO BE HELD APRIL 6, 1965 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 Georgian Ballroom, Americana Hotel, 52nd Street and Seventh Avenue, New York, N. Y., at 2:00 o'clock in the afternoon of April 6, 1965, for the following: (1) The election of fifteen (15) directors to hold office until the next Annual Meeting of Stockholders and until their successors are elected and qualified; and (2) 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 16, 1965, will be entitled to vote, notwithstanding any transfer of any stock on the books of the Company after such record date. ANNA F. WOESSNER, Secretary. Jersey City, N. J. February 26, 1965 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.

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 adj ournment or adj ournments 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 ;vill reimburse such persons for their expense in so doing at a total estimated cost of about Ten Thousand Dollars ($10,000). 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 employ ees to solicit proxies. 2

VOTING SHARES On January 30, 1965, there were 6,593,798 issued shares of the Company's Common Stock and 98,000 shares of its Preferred Stock. Every stockholder is entitled to one vote for each share of Common Stock and one vote for each share of Preferred Stock registered in his name at the close of business on February 16, 1965. ELECTION OF DIRECTORS At this Annual Meeting, fifteen (15) directors are to be elected, who shall hold office until the next following Annual Meeting of Stockholders and 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. Principal Name of Occupation or Nominee Employment Name of Year Corporation when in which such first occupation is elected carried on Director Approsimate amount of each class of securitirs of the Company bencjicially owned directly or indirectly as of January 30,1965 J. Edgar Bennett Executive Vice P. Lorillard Company 1960 11,247 shares of Morgan J. Cramer President, Operations President and P. Lorillard Company 1958 Common Stock(4) (5) 12,418 shares of John J. Darby Chief Executive Officer Comptroller P. Lorillard Company 1964 Common Stock(1) (4) (5) 3,661 shares of George 0. Davies Executive Vice P. Lorillard Company 1955 Common Stock (4) 22,573 shares of President, Finance Common Stock(4) (5) Melvin E. Dawley President and Lord & Taylor- 1950 1.126 shares of Chief Executive Department Stores Officer Common Stock Henry E. Erickson Vice President, P. Lorillard Company 1961 1,712 shares of Director of Leaf Activities Common Stock (5) 3

ame of Nominee rincipal Occupation or Employment Name of Cor¢oration in which such occupation is carried on Year when first elected Director Approximate amount of each class of securities of the Company beneficially owned directly or indirectly as of 7amuary 30, 1965 Lewis Gruber Consultant P. Lorillard Company 1946 14,392 shares of Common Stock (2) (4) Donald A. Henderson Vice President, Twentieth Century-Fox 1946 Finance Film Corporation 656 shares of Common Stock Robert Meyer Managing Heintz van Landewyck Director s.a.r.l.-tobacco prod- ucts 300 shares of Common Stock William A. Jordan W. D. Okerson Vice President, P. Lorillard Company Sales Vice President, P. Lorillard Company Manufacturing 1963 1964 1,745 shares of Common Stock (4) 816 shares of Common Stock (5) Harris B. Parmele Harold X. Schreder Vice President, P. Lorillard Company Director of Research President Distributors Group, 1950 1956 19,452 shares of Common Stock(4) 224 shares of arold E. Stassen Inc.-Investment Bankers and Group Securities, Inc. -Mutual Fund Attorney Stassen, Kephart, 963 Common Stock ,050 shares of Sarkis & Scullin Common Stock Manuel Yellen Executive Vice P. Lorillard Company 1956 29,011 shares of President, Sales Common Stock(3) (4) (5) and Advertising (1) Includes 4,400 shares held in trusts. (2) Includes 7,400 shares held in trusts. (3) Includes 337 shares held as custodian for his children and 2,950 shares held in trusts. (4) Includes shares held in escrow for release in instalments, subject to compliance with prescribed conditions, over ten and fifteen-year periods following termination of employment. The numbers of shares to be released annually during the ten-year period and, where applicable, during the fifteen-year period are, respectively, as follows: J. Edgar Bennett, 32 and 174 • Morgan J. Cramer, 107 and 291; John J. Darby, 43 ; George 0. Davies, 437 and 246; Lewis Gruber, 699; William A. Jordan, 29; Harris B. Parmele, 455 and 246; Manuel Yellen, 437 and 246. 4

S (5) Includes shares of Common Stock purchased on September 1, 1964, under a stock purchase agreement providing for the immediate sale and transfer of shares, with a down payment of $5 per share to be made forthwith, annual instalments of approximately 2% % of prin- cipal to be paid thereafter, the unpaid balance, secured by the shares as collateral, to be paid within five years, and simple interest at 2%% on the unpaid balance, with a right of prepayment in full but only as to all shares. The amount of the purchase price less the down payment referred to above then outstanding under each such agreement, and the amount remaining unpaid as of February 1, 1965, were approximately as follows: J. E. Bennett, $20,000; M. J. Cramer, $59,000; G. 0. Davies, $139,000; H. E. Erickson, $20,000; W. D. Okerson, $20,000; Manuel Yellen, $139,000; directors and officers as a group, $453,000. All of the nominees, except for Mr. Meyer, are now directors and, except for Messrs. Darby, Okerson and Meyer, were elected by the stockholders. Mr. Darby, for more than the last five years, has served the Company as Comptroller. Mr. Okerson, for more than the last five years, has served the Company in various manufacturing capacities, becoming Vice President, Manufacturing, on May 20, 1964. Mr. Meyer, for more than the last five years, has served as Managing Director of Heintz van Landewyck s.a.r.l. REMUNERATION AND OTHER TRANSACTIONS WITH DIRECTORS AND NOMINEES FOR THE FISCAL YEAR ENDED DECEMBER 31, 1964 The following table sets forth all direct remuneration paid by the Company and its subsidiaries for the fiscal year ended December 31, 1964, to (1) each person who was a director of the Company at any time during such year and whose aggregate direct 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 direct 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. 5

(A ) ame of Individual (B) apacities in whick remuneration waa received (C) Aggregate Direct Remuneration (including current incentive compensation for 1964) (D) Contingent compensation Qayablein three annual instalments in 1966, 1967 and 1968 if earned out J. E. Bennett_____ Executive Vice President, $ 86,806.00 $ 45,037.37 M. J. Cramer__ _______ Operations; Vice President and Assistant to President President and Chief Execu- 136,395.00 78,540.20 J. J. Darby------ tive Officer Comptroller 29,001.42 10,000.00 G. O. Davies._______ Executive Vice President, 72,269.60 45,898.07 H. E. Erickson Finance; and Vice Presi- dent Vice President 80,000.00 52,124.12 L. Gruber__ Chairman of the Board; and 70,833.37(1) - W. A. Jordan Consultant Vice President, Sales; and 56,146.47 18,750.00 W. D. Okerson Assistant Director of Sales Vice President, Manufactur- 31,166.69 10,000.00 H. B. Parmele ing; and Director of Manu- facturing Vice President 59,370.00 52,124.12 M. Yellen.._ Executive Vice President, 78,988.52 45,037.36 Sales and Advertising; and Vice President Directors and Officers as a group____ 1,041,258.99(2) 375,136.24 (1) Mr. Gruber retired on November 30, 1964, but continues as a director and as a con- sultant to the Company under a two-year contract terminating November 30, 1966, pursuant to which he is being paid a retainer at the rate of $25,000 a year. The figure given for his remuneration in the above table includes the sum of $2,083.37 paid under the contract for the month of December 1964. (2) Does not include premium of $1,966.37 paid by the Company for an insurance policy on the life of F. Gladden Searle, who served as a director during 1964, following reduction from $37,000 to $18,500 of group term coverage of Mr. Searle upon attainment of age seventy. In addition to the above, the sum of $27,800 was paid as compensation for legal services in inter- national matters to the law firm of Stassen, Kephart, Sarkis & Scullin of which Harold E. Stassen is a partner. The foregoing table reflects all current and contingent awards for 1964 to officers and directors under the Company's incentive compensation plan. The retirement benefits to which employees, including officers and directors, are entitled are set forth in the table on page 7. Since the beginning of the last fiscal year, 439 employees, including officers and directors, participated in the offering to employees of shares of the Company's Common Stock made on July 31, 1963 described hereafter. 6 t

Incentive compensation under the Company's incentive compensation plan for key personnel may be paid currently and as contingent awards. Contin- gent awards of incentive compensation for 1964 and subsequent years under Article XII of the By-laws are payable in three equal annual instalments, com- mencing with the second year following the year for which the awards are made, if earned out by continued services and, in the event of retirement or other approved termination of employment, by non-competition and conduct not preju- dicial to the Company. Contingent awards for years prior to 1964 were contin- gently payable following termination of employment over a period of fifteen years (ten years in the case of contingent awards for years prior to 1960). The amounts so contingently payable to the directors and officers referred to in the foregoing table during each of the fifteen years following termination of employ- ment (and, in parentheses, where applicable, any additional amount payable during each of the ten years following termination of employment) are as follows: J. E. Bennett, $4,682.58; M. J. Cramer, $8,693.19; J. J. Darby, $1,571.33 ($500.61) ; G. 0. Davies, $4,682.58; H. E. Erickson, $5,015.91; L. Gruber, $22,735.85 ($7,412.45) ; W. A. Jordan, $1,835.00 ($388.92) ; W. D. Okerson, $250.34; H. B. Parmele, $4,682.58; M. Yellen, $4,682.58; directors and officers as a group, $60,091.93 ($9,176.98). All the remuneration set forth was received by, or contingently payable to, the persons named in their capacities as officers or employees of the Company. The following table illustrates the estimated normal annual retirement allow- ances payable under the Employees' Retirement Plan of the Company upon retire- ment at age 65 to employees in the earnings classifications and with the years of service shown : Employee's Average Annual Earnings During the Highest Consecutive Total Annual Benefits For 5 of the 10 year s - Years of Credited Ser Sh i Preceding Retirement ~ 20 Years own v ce 25 Years 30 Years $ 25,000 ---------- - $ 6,980 $ 8,680 $10,370 35,000 9,980 12,430 14,870 50,000-------- __ ~_ 14,480 18,050 21,620 ~ 75,000 ----------------- _ 21,980 27,430 32.870 ~ 100,000-______-_______ 29,480 36,800 44,120 -4 cu 125,000______ _~ 36,980 46 180 50 000 ca 140,000 ___ 41,480 , 50,000 , 50,000 OD CD 7 .p

Under Article XV of the By-laws, the Company has a Stock Purchase, Option and Incentive Plan pursuant to which an offering of Common Stock was made by the Company on July 31, 1963, to a totall of 697 employees, including officers and directors, in each case at a purchase price of $44.75 per share, 100 percent of the fair market value on such date. Three forms of offering were used, namely, a stock subscription arrangement, a stock purchase Arrangement and a stock option arrangement. The stock subscription arrangement calls for the issue of stock only when full payment for the stock has been made, requires no down payment but prescribes authorization of payroll deductions over a period ending in July, 1968, with interest credits to the employee's account compounded semi-annually at the rate of three per cent per annum on amounts deducted from payroll. The employee has the right at any time until the stock is issued to rescind his purchase as to all (but not as to part) of the shares subscribed for and to the return of all amounts so withheld plus interest credits. The employee has the right of prepay- ment, but only in full and only on or after August 1, 1966. If employment termi- nates prior to that date, the purchase is deemed rescinded. Under this arrange- ment, 407 employees subscribed for a total of 19,720 shares of the Company's Common Stock during 1964. The stock subscription arrangement was not made available to any officer or director listed in the remuneration table, but 185 shares were subscribed for by other officers as a group on August 3, 18 and 27, 1964. The market values of the Company's Common Stock, based upon the mean between the highest and lowest selling prices of the Company's Common Stock on the New York Stock Exchange on such dates, were $44.06, $44.75 and $46.50, respectively. The stock purchase arrangement provides for the immediate sale and transfer of shares, with ten per cent of the purchase price (but no less than $5 per share) to be paid forthwith, annual instalments of approximately two and one-half percent to be paid thereafter, the unpaid balance to be paid over a period ending in July, 1968, with right of prepayment in full but only as to all shares, and simple interest payable to the Company at two and one-half percent to be charged on the unpaid balance of the purchase price. The employee is entitled to all dividends on the stock, such dividends being at a rate of approximately 5.6 % based on a purchase price of $44.75 per share and upon the dividend rate currently paid on outstanding shares. The stock is held as collateral, subject to being returned to 8

the Company if the purchase price is not paid before the end of the period in July, 1968, without refund of any payments made or release of shares equivalent to such payments, but with no further liability on the part of the employee. If employment is terminated within two years after the purchase agreement is made, the Company is entitled to repurchase all shares for the amounts paid by the employee exclusive of interest. Thirty-two employees agreed to purchase a total of 17,950 shares under this arrangement and such shares were all sold and transferred at the purchase price of $44.75 per share upon receipt by the Company of the required down payment of $5 a share. Each such stock purchase contract was executed under date of September 1, 1964, on which date the mean between the highest and lowest selling prices of the Company's Common Stock on the New York Stock Exchange was $47.31 per share. Included among the employees agreeing to purchase shares under the stock purchase arrangement were the follow- ing directors and officers referred to in the remuneration table : J. E. Bennett, 500 shares; M. J. Cramer, 1,500 shares; G. O. Davies, 3,500 shares; H. E. Erickson, 500 shares; W. D. Okerson, 500 shares; M. Yellen, 3,500 shares; directors and as a group, 11,400 shares. The stock option arrangement provides for an option term of ten years or such shorter period, but not less than five years, as may be required to qualify the option for specified tax treatment under the applicable provisions of the Internal Revenue Code, subject in any event to earlier termination upon death or severance of employment. Subject to specified exceptions, shares acquired on the exercise of options are required to be held for two years after such exercise. Each optionee must agree to serve the Company for a period of at least two years from the date of grant. No stock options were granted since the beginning of the last fiscal year under the stock option arrangement nor were any other options granted. Except as stated above in connection with the stock purchase arrangement, no options were exercised by any officer or director since the beginning of the last fiscal year. On August 21, 1964, the Company purchased 4,600 shares of its Common Stock from Mr. Gruber at a purchase price of $46.125 per share. On that date, the mean between the highest and lowest selling prices of the Company's Common Stock on the New York Stock Exchange was $46.75 per share. 9

Mr. Robert Meyer, a nominee for election as a director, is Managing Director of Heintz van Landewyck s.a.r.l., a Luxembourg tobacco manufacturer (herein- after called HVL), all of the share capital of which is owned by Mr. Meyer and members of his family. P. Lorillard International S. A., a wholly-owned subsidiary of the Company, and HVL each own a half interest in P. Lorillard s.a.r.l., a Luxem- bourg corporation, which, since April 1964, has manufactured and sold under license certain of the Company's brands for several of the Common Market countries. Prior to that time, HVL manufactured and sold such brands under license for the Benelux countries. In exchange for the one-half interest in the share capital of P. Lorillard s.a.r.l. owned by HVL, P. Lorillard s.a.r.l. received real property and improvements thereon having a cost of about $245,000 and valued for the purpose of such exchange at approximately $265,000, machinery and equipment valued for the purpose of such exchange at about $195,000 (the amount agreed upon by representatives of P. Lorillard International S. A. as the approximate cost thereof if purchased elsewhere), and other assets, including tobacco inventories valued at cost for the purpose of such exchange. AUDITORS The Board of Directors has appointed Messrs. Haskins & Sells, Certified Public Accountants, to be the independent auditors of your Company, and a representa- tive 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 26, 1965. 10