Registration No. 333-95925
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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FORTUNE BRANDS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 13-3295276
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
300 Tower Parkway, Lincolnshire, Illinois 60069
(Address of Principal Executive Offices) (Zip Code)
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Fortune Brands
Hourly Employee Retirement Savings Plan
(Full Title of the Plan)
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MARK A. ROCHE, ESQ., Copy to:
Senior Vice President, General Counsel EDWARD P. SMITH, ESQ.
and Secretary CHADBOURNE & PARKE LLP
FORTUNE BRANDS, INC. 30 Rockefeller Plaza
300 Tower Parkway New York, New York 10112
Lincolnshire, Illinois 60069
(Name and address of agent for service)
Telephone number, including area code, of agent for service: (847) 484-4400
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Adding Exhibits and Furnishing Consent
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<PAGE>
EXPLANATORY NOTE
The prospectus, containing information required by Part I of Form S-8
and related to this Post-Effective Amendment No. 1 to the Fortune Brands, Inc.
Registration Statement on Form S-8 (Registration No. 333-95925), is omitted from
this Post-Effective Amendment No. 1 in accordance with the Note to Part I of
Form S-8.
The Plan changed its name from the MasterBrand Industries, Inc. Hourly
Employee Savings Plan to the Fortune Brands Hourly Employee Retirement Savings
Plan on October 1, 1999.
Fortune Brands changed its name from American Brands, Inc. to Fortune
Brands, Inc. on May 30, 1997.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 8. Exhibits
23a2 - Consent of PricewaterhouseCoopers LLP, independent accountants.
*24a1 - Power of Attorney authorizing certain persons to sign this
Post-Effective Amendment No. 1 on behalf of certain directors and officers of
Registrant.
*24b1- Power of Attorney authorizing certain persons to sign this
Post-Effective Amendment No. 1 on behalf of administrators of the Plan.
99a1 - Fortune Brands Hourly Employee Retirement Savings Plan, as
amended and restated effective as of October 1, 1999.
99b1 - Fortune Brands, Inc. Savings Plan Master Trust, effective as of
October 1, 1999, between Registrant and Fidelity Management Trust Company.
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*Previously filed in the Registration Statement on Form S-8
(Registration No. 333-95925) filed February 1, 2000.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this
Post-Effective Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the Village of
Lincolnshire, State of Illinois, on this 28th day of April, 2000.
FORTUNE BRANDS, INC.
By /s/ Michael R. Mathieson
--------------------------------
(Michael R. Mathieson, Vice President
and Chief Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Post-Effective Amendment No. 1 to the Registration Statement has been
signed by the following persons in the capacities indicated on this 28th day of
April, 2000.
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Signature Title
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Norman H. Wesley* Chairman of the Board and Chief Executive
- ----------------------------------------------------- Officer (principal executive officer) and
(Norman H. Wesley) Director
Craig P. Omtvedt* Senior Vice President and Chief Financial
- ----------------------------------------------------- Officer
(Craig P. Omtvedt) (principal financial officer)
/s/ Michael R. Mathieson Vice President and Chief
- ----------------------------------------------------- Accounting Officer
(Michael R. Mathieson) (principal accounting officer)
Eugene R. Anderson* Director
- -----------------------------------------------------
(Eugene R. Anderson)
Patricia O. Ewers* Director
- -----------------------------------------------------
(Patricia O. Ewers)
Thomas C. Hays* Director
- -----------------------------------------------------
(Thomas C. Hays)
John W. Johnstone, Jr.* Director
- -----------------------------------------------------
(John W. Johnstone, Jr.)
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Signature Title
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<S> <C>
Sidney J. Kirschner* Director
- -----------------------------------------------------
(Sidney J. Kirschner)
Gordon R. Lohman* Director
- -----------------------------------------------------
(Gordon R. Lohman)
Charles H. Pistor, Jr.* Director
- -----------------------------------------------------
(Charles H. Pistor, Jr.)
Eugene A. Renna* Director
- -----------------------------------------------------
(Eugene A. Renna)
Anne M. Tatlock* Director
- -----------------------------------------------------
(Anne M. Tatlock)
Peter M. Wilson* Director
- -----------------------------------------------------
(Peter M. Wilson)
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*By: /s/ A. Robert Colby
-----------------------------------------------
(A. Robert Colby, Attorney-in-Fact)
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the Plan
has duly caused this Post-Effective Amendment No.1 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
Village of Lincolnshire, State of Illinois, on this 28th day of April, 2000.
FORTUNE BRANDS HOURLY EMPLOYEE
RETIREMENT SAVINGS PLAN
By Norman H. Wesley*
--------------------------------
(Norman H. Wesley, Chairman,
MasterBrand Industries, Inc. Retirement
Plan Investment Committee)
*By /s/ A. Robert Colby
------------------------------------
(A. Robert Colby, Attorney-in-Fact)
Exhibit 23a2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Post-Effective Amendment No. 1 to the Registration Statement on Form S-8 (this
"Post-Effective Amendment No. 1") of Fortune Brands, Inc. ("Registrant"), and
the prospectus related hereto, of our report dated February 3, 2000 relating to
the consolidated financial statements, appearing in the 1999 Annual Report to
Stockholders of Registrant, which is incorporated by reference in Registrant's
Annual Report on Form 10-K for the year ended December 31, 1999. We also consent
to the incorporation by reference of our report dated February 3, 2000 relating
to the financial statement schedule, which appears in such Annual Report on Form
10-K.
PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
April 28, 2000
Exhibit 99a1
FORTUNE BRANDS
HOURLY EMPLOYEE RETIREMENT SAVINGS PLAN
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(Amended and Restated
Effective as of October 1, 1999)
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TABLE OF CONTENTS
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DESCRIPTION PAGE
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ARTICLE I. DEFINITIONS............................................................................. 2
ARTICLE II. ELIGIBILITY AND PARTICIPATION.......................................................... 11
2.01. Eligibility....................................................................... 11
2.02. Continued Participation........................................................... 11
2.03. Change in Status.................................................................. 11
2.04. Reemployment...................................................................... 11
ARTICLE III. 401(k) SAVINGS CONTRIBUTIONS.......................................................... 12
3.01. Tax Deferred Contributions........................................................ 12
3.02. Company Matching Contributions.................................................... 13
3.03. After-Tax Contributions........................................................... 14
3.04. Rollover Contributions............................................................ 14
3.05. Limitation on Annual Amount of Tax Deferred Contributions......................... 15
3.06. Actual Deferral Percentage Tests.................................................. 16
3.07. Actual Contribution Percentage Tests.............................................. 18
3.08. Alternate Percentage Test......................................................... 19
3.09. Special Company Contributions..................................................... 20
3.10. Uniformed Service Absence......................................................... 21
ARTICLE IV. INVESTMENT PROVISIONS.................................................................. 21
4.01. Investment Funds.................................................................. 21
4.02. Investment Fund Elections......................................................... 22
4.03. Administration of Fortune Stock Fund.............................................. 23
4.04. Investment of S&P 500 Index Fund.................................................. 24
4.05. Investment of Value Equity Fund................................................... 24
4.06. Investment of Large-Cap Growth Equity Fund........................................ 24
4.07. Investment of Small-Cap Growth Equity Fund........................................ 25
4.08. Investment of International Equity Fund........................................... 25
4.09. Investment of Growth-Oriented Diversified Fund.................................... 25
4.10. Investment of Balanced Fund....................................................... 25
4.11. Investment of Government Securities Fund.......................................... 26
4.12. Investment of Corporate/Government Bond Fund...................................... 26
4.13. Investment of Short-Term Investment Fund.......................................... 26
4.14. Voting of Shares in Fortune Stock Fund............................................ 26
4.15. Tendering of Shares in Fortune Stock Fund......................................... 29
4.16. Certain Rights Held in Fortune Stock Fund......................................... 31
4.17. Valuation of Investment Funds..................................................... 32
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4.18. Administration of the Gallaher Fund............................................... 32
4.19. Voting of Shares in Gallaher Fund................................................. 33
4.20. Tendering of Gallaher ADRs........................................................ 34
4.21. Voting of Shares in Mutual Funds.................................................. 37
4.22. Unitized Fortune Stock Fund and Gallaher Fund..................................... 38
ARTICLE V. ACCOUNTS................................................................................ 38
5.01. Participants' Accounts............................................................ 38
5.02. Allocation of Earnings and Losses to Accounts..................................... 39
5.03. Allocation of Contributions to Accounts........................................... 39
5.04. Required Information.............................................................. 39
5.05. Transfer of Assets to or from Another Plan........................................ 39
5.06. Annual Additions Limitation....................................................... 40
5.07. Combined Maximum Limitations...................................................... 41
5.08. Definition of Compensation for Purposes of Sections 5.06 and 5.07................. 43
5.09. Limitation of Annual Unadjusted Earnings or Compensation.......................... 43
ARTICLE VI. VESTING AND FORFEITURES................................................................ 43
6.01. Participant Contributions......................................................... 43
6.02. Company Matching Contributions.................................................... 43
6.03. Vesting in Prior Plan............................................................. 43
6.04. Amendments to Vesting Schedule.................................................... 43
6.05. Forfeitures....................................................................... 44
6.06. Reinstatement of Account Balances................................................. 44
ARTICLE VII. PAYMENTS.............................................................................. 45
7.01. Form of Payment................................................................... 45
7.02. Time of Payment................................................................... 46
7.03. Certain Retroactive Payments...................................................... 48
7.04. Designation of Beneficiary........................................................ 48
7.05. Payment in Event of Legal Disability.............................................. 50
7.06. Missing Distributees.............................................................. 50
7.07. Information Required of Distributees.............................................. 50
7.08. Direct Rollover Provision......................................................... 51
7.09. Waiver of 30-Day Notice Period.................................................... 51
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ARTICLE VIII. IN-SERVICE WITHDRAWALS............................................................... 52
8.01. Hardship Withdrawals.............................................................. 52
8.02. Withdrawals Upon Attainment of Age 59 1/2......................................... 53
8.03. In-Service Withdrawals for Inactive Participants.................................. 54
ARTICLE IX. LOANS.................................................................................. 54
9.01. Availability...................................................................... 54
9.02. Effect on Account Balances and Investment Funds................................... 54
9.03. Amount............................................................................ 55
9.04. Term of Loan...................................................................... 55
9.05. Promissory Note................................................................... 55
9.06. Repayment......................................................................... 55
9.07. Reduction of Account Balance...................................................... 55
ARTICLE X. ADMINISTRATION OF PLAN.................................................................. 56
10.01. Fiduciaries...................................................................... 56
10.02. Claims Procedure................................................................. 57
10.03. ERISA Compliance................................................................. 57
10.04. Fiduciary Powers................................................................. 57
10.05. Administrative Rules............................................................. 58
10.06. Committee Procedures............................................................. 58
10.07. Plan Expenses.................................................................... 58
ARTICLE XI. AMENDMENTS AND TERMINATION............................................................. 59
11.01. Reserved Powers.................................................................. 59
11.02. Plan Termination................................................................. 59
11.03. Plan Merger...................................................................... 59
11.04. Successor Employer............................................................... 59
ARTICLE XII. MANAGEMENT OF TRUST................................................................... 60
12.01. Funds in Trust................................................................... 60
12.02. Trustee and Trust Agreement...................................................... 60
12.03. Investment Managers.............................................................. 60
12.04. Conclusiveness of Reports........................................................ 60
ARTICLE XIII. MISCELLANEOUS........................................................................ 61
13.01. Non-Alienation of Benefits....................................................... 61
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(Continued)
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13.02. Action by Participating Employers................................................ 61
13.03. Exclusive Benefit................................................................ 61
13.04. Gender and Number................................................................ 62
13.05. Right to Discharge............................................................... 62
13.06. Absence of Guaranty.............................................................. 62
13.07. Headings......................................................................... 62
13.08. Governing Law.................................................................... 62
ARTICLE XIV. TOP-HEAVY RULES....................................................................... 62
14.01. Top-Heavy Determination.......................................................... 62
14.02. Minimum Vesting.................................................................. 65
14.03. Minimum Contributions............................................................ 65
14.04. Special Annual Additions Limitation.............................................. 65
14.05. Provisions Applicable if Plan Ceases to be Top-Heavy............................. 65
EXHIBIT A........................................................................................... A-1
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FORTUNE BRANDS
HOURLY EMPLOYEE RETIREMENT SAVINGS PLAN
---------------------------------------
The Fortune Brands Hourly Employee Retirement Savings Plan was
established as of January 1, 1996, as an amendment, restatement and continuation
of the Moen Incorporated Employee Savings Plan and the Waterloo Industries, Inc.
Employee Savings Plan for Production and Maintenance Employees (each a "Prior
Plan"). Effective as of October 1, 1999, the Plan is hereby amended and restated
in its entirety and renamed the Fortune Brands Hourly Employee Retirement
Savings Plan.
<PAGE>
ARTICLE I
DEFINITIONS
1.01. The following words and phrases have the respective
meanings stated below unless a different meaning is plainly required by the
context:
(a) "Account(s)" means the Tax Deferred Account, Company
Matching Account, After-Tax Account and Rollover Account so designated and
provided for in Section 5.01.
(b) "Account Balance(s)" means, for each Participant, former
Participant or Beneficiary, the total balance standing to his Account or
Accounts on the date of reference determined in accordance with valuation
procedures described in Article V. Any Account Balances held in the Fortune
Stock Fund or Gallaher Fund are represented by units standing to the credit of
Account Balances in such Funds.
(c) "ADRs" means American Depositary Receipts.
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(d) "After-Tax Account" means any one of the accounts so
designated and provided for in Section 5.01.
(e) "After-Tax Contributions" means any contributions made by
a Participating Employer that are attributable to the reduction in compensation
on an after-tax basis that a Participant elects from such Participating Employer
each Plan Year as described in Section 3.03.
(f) "Alternate Payee" means any spouse, former spouse, child
or other dependent of a Participant who is recognized by a Qualified Domestic
Relations Order as having a right to receive all or a portion of a Participant's
benefits payable under the Plan.
(g) "Approved Form of Election" means a request or an election
made through the voice response system, Internet, intranet or other electronic
media approved by the Retirement Committee or on a written election form filed
with the Participating Employer on a form approved by the Retirement Committee.
Notwithstanding the foregoing, no request or election will be deemed to have
been made until all required documentation, information, signatures, consents,
notarizations and attestations required for such request or election are
provided to the Retirement Committee or its designee.
(h) "Approved Leave of Absence" means an absence authorized or
recognized by a Participating Employer under its standard personnel practices.
In all events an Approved Leave of Absence by reason of "military service" (as
defined in Code Section 414(u)) will end no later than the time at which a
Participant's reemployment rights are protected by federal or state law.
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(i) "Beneficiary" means the person or persons designated by a
Participant, former Participant or Beneficiary to receive any benefits under the
Plan which may be due upon the Participant's, former Participant's or
Beneficiary's death.
(j) "Business Day" means any day on which the New York Stock
Exchange is open.
(k) "Close of Business" means the normal closing time of the
New York Stock Exchange or such other time as is designated by the Retirement
Committee.
(l) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(m) "Company" means MasterBrand Industries, Inc., a Delaware
corporation, and any successors to all or substantially all its business.
(n) "Company Matching Account" means any one of the accounts
so designated and provided for in Section 5.01.
(o) "Company Matching Contributions" means any contributions
made to the Company Matching Account of a Participant by a Participating
Employer as provided for in Section 3.02.
(p) "Compensation" means, except as otherwise provided in
Sections 5.06 and 14.01, the basic salary or wages, overtime, shift premiums,
commissions and bonuses paid by a Participating Employer to a Covered Employee
for personal services, and other amounts includible in the Covered Employee's
gross income on account of such services, including his Tax Deferred
Contributions under this Plan or amounts elected to be contributed under a
program established pursuant to Code Section 125 but limited to $150,000
annually for Plan Years commencing on or after January 1, 1994 (adjusted for
increases in the cost-of-living pursuant to Code Section 401(a)(17) or
regulations of the Internal Revenue Service).
(q) "Covered Employee" means an Employee who is a member of a
group of Employees to which the Plan has been and continues to be extended by a
Participating Employer, including (1) Employees of Moen Incorporated employed in
non-supervisory production or distribution positions, (2) Employees of Waterloo
Industries, Inc. employed in the Pocahontas, Arkansas, Sedalia, Missouri or
Muskogee, Oklahoma Plant of Waterloo Industries, Inc. in production or
maintenance positions, (3) hourly-paid Employees of MasterBrand Cabinets, Inc.
employed in the Littlestown, Pennsylvania, Crossville, Tennessee or Kinston,
North Carolina locations or distribution centers of MasterBrand Cabinets, Inc.,
and (4) hourly-paid Employees of MasterBrand Cabinets, Inc. employed at the
Arthur, Illinois or Auburn, Alabama facilities. The term "Covered Employee" does
not include an Employee covered under a collective bargaining agreement with any
Participating Employer which fails to provide for his inclusion under this Plan,
or an Employee employed at an operating unit acquired or created by a
Participating Employer unless, and until, the Plan is extended to
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Employees at such unit. The term "Covered Employee" also does not include any
individual not classified on a Participating Employer's payroll records as an
Employee even if a court or administrative agency determines that such
individual is a common law employee and not an independent contractor, Leased
Employee or such other category as classified by the Participating Employer.
(r) "Date of Employment" means the date an Employee first
performs an Hour of Service.
(s) "Disability" means a physical or mental condition of a
Participant which renders him permanently incapable of continuing any employment
for wage or profit and for which such Participant receives Social Security
disability benefits. Proof of receipt by the Participating Employer of Social
Security disability benefits will be required.
(t) "Effective Date" means January 1, 1996.
(u) "Eligible Compensation" means Compensation excluding any
(1) severance pay whether paid before or after Severance From Service, (2)
amounts deferred under a plan of a Related Employer until such amounts are paid,
(3) amounts paid under any long-term incentive plan, (4) tax protection payments
or foreign service overbase allowances or premiums, (5) reimbursement for
expenses incurred or to be incurred, (6) non-cash remuneration such as taxable
amounts for life insurance coverage or use of an automobile or stock options or
awards, (7) remuneration paid in currency other than U.S. dollars, or (8)
relocation allowances, sign-on bonuses and other non-recurring payments.
(v) "Employee" means any person employed by a Participating
Employer on a salaried, hourly paid or commission basis, excluding any
independent contractor and any person covered under a collective bargaining
agreement unless the collective bargaining agreement provides for coverage under
the Plan.
(w) "Entry Date" means, with respect to each Covered Employee,
the date as of which the Plan is extended to the group of Employees of which he
is a member and the first day of each subsequent month.
(x) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time.
(y) "Fair Market Value" on any date means the value reported
by the Trustee as being the fair market value at such date as determined by it
according to its usual methods and procedures.
(z) "Fiduciaries" means the Company, the Board of Directors of
the Company and the board of directors of any other Participating Employer, the
Board of Directors of Fortune, the Retirement Committee, the Trusts Investment
Committee and the Trustee, but only with respect to the specific
responsibilities of each as described in Article X.
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The term "Fiduciaries" also includes any Participant, former Participant or
Beneficiary, but only to the extent such Participant, former Participant or
Beneficiary is acting as a named fiduciary (within the meaning of ERISA Section
403(a)(1)) with respect to the exercise of voting rights of shares of Fortune
Common Stock held in the Fortune Stock Fund or Gallaher ADRs held in the
Gallaher Fund or the tender, deposit, sale, exchange or transfer of such shares
or ADRs (and any rights within the meaning of Section 4.16(a)) as provided in
Section 4.15 or 4.16.
(aa) "Forfeiture" means the portion of a Participant's Account
Balances to which he is not entitled at the termination of his employment as
determined in Section 6.05.
(bb) "Fortune" means Fortune Brands, Inc., a Delaware
corporation, its successors and assigns.
(cc) "Fortune Common Stock" means the common stock of Fortune
as now constituted and any other common stock into which it may be
re-classified.
(dd) "Fortune Stock Fund" means the portion of the Trust Fund
so designated and provided for in Section 4.01.
(ee) "Gallaher" means Gallaher Group Plc, a public limited
company incorporated under the laws of England and Wales.
(ff) "Gallaher Fund" means the portion of the Trust Fund so
designated and provided for in Section 4.01.
(gg) "Gallaher Spin-Off" means the distribution of Gallaher
ADRs by Fortune to its stockholders.
(hh) "Highly Compensated Employee" means for a Plan Year any
employee who:
(1) was at any time during the Plan Year or preceding Plan
Year a 5% owner of any Related Employer (within the meaning of Code
Section 416(i)(1)); or
(2) received compensation for the preceding Plan Year from any
Related Employer in excess of $80,000.
The $80,000 amount will be adjusted at the same time and in the same manner as
under Code Section 415(d), except that the base period is the calendar quarter
ended September 30, 1996.
A former Employee will be treated as a Highly Compensated Employee if
such Employee was a Highly Compensated Employee when such Employee incurred a
Severance From Service or if such Employee was a Highly Compensated Employee at
any time after attaining age 55.
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(ii) "Hour of Service" means:
(1) each hour for which an Employee is paid or entitled to
payment for the performance of duties for a Related Employer. These
hours will be credited to the Employee for the computation period or
periods in which the duties are performed;
(2) each hour for which an Employee is paid or entitled to
payment by a Related Employer on account of a period of time during
which no duties are performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday, illness,
incapacity (including disability), layoff, jury duty, military duty or
leave of absence. No more than 501 Hours of Service will be credited
under this section for any single continuous period (whether or not
such period occurs in a single computation period). Hours under this
section will be calculated and credited pursuant to Section 2530.200b-2
of the Department of Labor Regulations, which are incorporated herein
by reference; and
(3) each hour for which back pay, irrespective of mitigation
of damages, is either awarded or agreed to by a Related Employer. The
same Hours of Service will not be credited under paragraph (1) or
paragraph (2), and under this paragraph (3). These hours will be
credited to the computation period or periods to which the award or
agreement pertains rather than the computation period in which the
award, agreement or payment is made.
(jj) "Investment Fund(s)" means the Fortune Stock Fund,
Gallaher Fund, S&P 500 Index Fund, Value Equity Fund, Large-Cap Growth Equity
Fund, Small-Cap Growth Equity Fund, International Equity Fund, Growth-Oriented
Diversified Fund, Balanced Fund, Government Securities Fund,
Corporate/Government Bond Fund, Short-Term Investment Fund and Loan Fund held
under the Trust Fund as designated pursuant to Section 4.01.
(kk) "Investment Manager" means one or more investment counsel
appointed as provided in Section 12.03.
(ll) "Leased Employee" means any person who is not a
Participant and who provides services to a Participating Employer pursuant to an
agreement between the Participating Employer and any other person (leasing
organization) and has performed such services on a substantially full-time basis
for at least a year primarily under the direction or control of the
Participating Employer. A Leased Employee will be deemed an Employee for
purposes of crediting Vesting Service and Years of Eligibility Service, but will
not be eligible for benefits under the Plan unless he otherwise satisfies the
criteria for eligibility under Section 2.01 as a Covered Employee.
(mm) "Loan Fund" means the portion of the Trust Fund so
designated and provided for in Section 4.01.
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(nn) "Non-Participating Employer" means any Related Employer
which is not a Participating Employer.
(oo) "Participating Employer" means, individually, the Company
and Moen Incorporated, Waterloo Industries, Inc., MasterBrand Cabinets, Inc. and
Master Lock Company and any other Related Employer which adopts this Plan for
its eligible Employees.
(pp) "Plan" means this Fortune Brands Hourly Employee
Retirement Savings Plan.
(qq) "Plan Administrator" means the Company.
(rr) "Plan Year" means the calendar year.
(ss) "Prior Plan" means, where applicable, the (1) Moen
Incorporated Employee Savings Plan or its predecessor, the Moen Incorporated
Savings Plus Plan and (2) Waterloo Industries, Inc. Employee Savings Plan for
Production and Maintenance Employees.
(tt) "Qualified Domestic Relations Order" means any domestic
relations order (as defined in Code Section 414(p)) that creates, recognizes or
assigns to an Alternate Payee the right to receive all or a portion of a
Participant's benefits payable hereunder and that meets the requirements of Code
Section 414(p), as determined by the Retirement Committee.
(uu) "Related Employer" means the Company and any corporation
or other business entity which is included in a controlled group of corporations
within which the Company is also included, as provided in Code Section 414(b)
(as modified for purposes of Sections 5.06 and 5.07 of this Plan by Code Section
415(h)), or which is a trade or business under common control with the Company,
as provided in Code Section 414(c) (as modified, for purposes of Sections 6.04
and 6.05, by Code Section 415(h)), or which constitutes a member of an
affiliated service group within which the Company is also included, as provided
in Code Section 414(m), or which is required to be aggregated with the Company
pursuant to regulations issued under Code Section 414(o).
(vv) "Restatement Date" means October 1, 1999.
(ww) "Retirement" means retirement under a retirement plan of a
Related Employer or, if the Participant is not covered by a retirement plan of a
Related Employer, retirement (1) on or after age 65, (2) on or after age 55 and
completion of at least five years of Vesting Service or (3) due to disability
that qualifies him for benefits under a long-term disability income plan
maintained by a Related Employer or Disability Insurance Benefits under the
federal Social Security Act.
(xx) "Retirement Committee" means the MasterBrand Industries,
Inc. Retirement Committee.
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(yy) "Rollover Account" means any of the accounts so
designated and provided for in Section 5.01(d).
(zz) "Rollover Contributions" means amounts attributable to
part or all of an "eligible rollover distribution" (within the meaning of Code
Section 402(c)(4) and the Treasury Regulations thereunder) transferred to this
Plan pursuant to Section 3.04 as the result of the distribution of a
Participant's account under another qualified trust, individual retirement
account or individual retirement annuity as defined in Section 3.04.
(aaa) "Service" means, subject to the provisions of Section
6.06, the period commencing on the employee's Date of Employment and ending on
his Severance From Service.
(bbb) "Severance From Service" means the earlier of the
following dates:
(1) the date on which an Employee terminates employment, is
discharged, retires or dies; or
(2) the first anniversary of the first day of a period in
which an Employee remains absent from service (with or without pay)
with all Related Employers for any reason other than one listed in
paragraph (1) next above. If such Employee is on an Approved Leave of
Absence on such first anniversary, he will be deemed to have incurred a
Severance From Service on the expiration of such Approved Leave of
Absence, unless he returns to active employment with a Related Employer
on or before that date. Notwithstanding anything herein to the
contrary, an Employee will not incur a Severance From Service due to an
absence for maternity or paternity reasons until the second anniversary
of the first date of such absence. For purposes of this section, an
absence from work for maternity or paternity reasons means an absence:
(A) by reason of the pregnancy of the individual;
(B) by reason of a birth of a child of the individual;
(C) by reason of the placement of a child with the
individual in connection with the adoption of such child by such
individual; or
(D) for purposes of caring for such child for a period
beginning immediately following such birth or placement.
The Employee will be required to furnish the Retirement Committee with
such timely information as the Retirement Committee may reasonably
require to establish both that the absence from work is for maternity
or paternity reasons and the number of days for which there was such an
absence.
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A transfer from employment with one Related Employer to
another Related Employer will not be considered a Severance From Service.
(ccc) "Tax Deferred Account" means any one of the accounts so
designated and provided for in Section 5.01.
(ddd) "Tax Deferred Contributions" means any contributions
made by a Participating Employer that are attributable to the reduction in
compensation on a pre-tax basis a Participant agrees to accept from such
Participating Employer each Plan Year as described in Section 3.01.
(eee) "Termination of Employment Without Fault" means any
involuntary separation of a Participant by a Participating Employer or
Non-Participating Employer other than by reason of Retirement, Disability,
failure to maintain work standards, dishonesty or other misconduct prejudicial
to the Participating Employer or Non-Participating Employer by which the
Participant is employed, absence without prescribed notice, or refusal to return
from layoff or Approved Leave of Absence within the prescribed period.
(fff) "Trust" means the trust created and maintained for the
purposes of the Plan.
(ggg) "Trust Agreement" means Fortune Brands, Inc. Savings
Plans Master Trust Agreement, as it may be amended from time to time.
(hhh) "Trustee" means the trustee from time to time acting
under the Trust Agreement, including any successor trustee.
(iii) "Trust Fund" means all money, securities and other
property held under the Trust Agreement for the purposes of the Plan, together
with the income therefrom.
(jjj) "Trusts Investment Committee" means the Trusts
Investment Committee of Fortune.
(kkk) "Vesting Service" means a Participant's credit for
purposes of determining his right to a nonforfeitable benefit under the Plan, as
determined in accordance with Article VI. Vesting Service means service as an
Employee with any Related Employer, determined as follows:
(1) Vesting Service will be determined from the Participant's
Date of Employment or reemployment in completed full years and
fractions of years in excess of completed full years, each 12 months of
employment constituting a full year of Vesting Service, and each 30
days of employment completed in excess of full years of Vesting Service
counted as 1/12th of a year of Vesting Service.
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(2) Subject to paragraph (3) below, each Employee will be
credited with Vesting Service during any period of employment with any
Related Employer, extending to the date he incurs a Severance From
Service.
(3) Notwithstanding any other provision of the Plan to the
contrary, if a Participant incurs a Severance From Service and is
subsequently reemployed by any Related Employer, his Vesting Service
will be reinstated, as follows:
(A) if the Employee is reemployed within 12 months
after the date he is first absent from active employment, the
Vesting Service he had at the date of first absence from
active employment will be reinstated upon his reemployment,
and he will receive credit for Vesting Service for the period
between the date he was first absent from active employment
and his reemployment; or
(B) if the Employee is reemployed after 12 months
have elapsed after he is first absent from active employment,
the Vesting Service he had at the date he was first absent
from active employment will be reinstated upon his
reemployment, but he will not receive credit for Vesting
Service for the period between the date he is first absent
from active employment and the date of his reemployment.
Notwithstanding the foregoing, the Vesting Service of each Participant
for the period prior to January 1, 1996 will not be less than as
determined under the provisions of the applicable Prior Plan.
(lll) "Year of Eligibility Service" means any consecutive
12-month period of employment, as herein set forth, during which an Employee
completes 1,000 or more Hours of Service. The first consecutive 12-month period
to be taken into account for this purpose will be the consecutive 12-month
period commencing with the Employee's Date of Employment or date of
reemployment. The second consecutive 12-month period to be taken into account
for this purpose will be the Plan Year which includes the first anniversary of
the Employee's Date of Employment or the Employee's date of reemployment. All
subsequent 12-month periods to be taken into account for this purpose will
correspond with Plan Years.
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ARTICLE II
ELIGIBILITY AND PARTICIPATION
2.01. Eligibility.
(a) Participation Prior to Restatement Date. Each Covered
Employee who was a Participant on the day prior to the Restatement Date will
continue to be a Participant on the Restatement Date, provided he remains a
Covered Employee.
(b) Participation On or After Restatement Date. Each Covered
Employee who was not a Participant on the day prior to the Restatement Date will
be eligible to have Tax Deferred Contributions and After-Tax Contributions made
on his behalf in accordance with Sections 3.01 and 3.03, respectively, on the
earlier of (1) the date he is employed in a position where he is regularly
scheduled to work at least 20 hours per week (provided such date is on or after
October 1, 1999), and (2) the first Entry Date coincident with or succeeding the
date on which he completes at least one Year of Eligibility Service, in each
case provided he is a Covered Employee on that date.
2.02. Continued Participation. Each Covered Employee who
becomes a Participant will thereafter continue as such through his Severance
From Service. No Tax Deferred Contributions or After-Tax Contributions will be
made, however, for a Participant with respect to any period of employment during
which he is not a Covered Employee.
2.03. Change in Status. If an Employee is transferred from a
position in which he was not a Covered Employee to a position in which he is a
Covered Employee, he will be eligible to become a Participant or resume Tax
Deferred Contributions and After-Tax Contributions, as the case may be, as of
the first day coincident with or next following the later to occur of (i) such
transfer or (ii) satisfaction of the requirements of Section 2.01; provided,
however, that an Employee who at the time of transfer was contributing under
another defined contribution plan (as defined in Code Section 414(i)) that
provides for matching Employer contributions will be eligible as soon as
practicable after the later of (i) or (ii) above.
2.04. Reemployment. Any Participant who terminates employment
and is subsequently reemployed as a Covered Employee will become a Participant
upon his reemployment.
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ARTICLE III
401(k) SAVINGS CONTRIBUTIONS
3.01. Tax Deferred Contributions.
(a) Rate of Tax Deferred Contributions. Each Participant may
enter into a salary reduction agreement with his Participating Employer which
will apply to all Compensation received thereafter. The salary reduction
agreement will provide that the Participant agrees to a reduction in salary from
the Participating Employer by an amount equal to an integral percentage of up to
21% of his Compensation. The Participating Employer will make a Tax Deferred
Contribution to the Plan on behalf of such Participant, corresponding to the
amount of such reduction for each pay period. The Participating Employer may
limit the maximum salary reduction percentage to a lesser percentage of
Compensation, provided such policy does not impermissibly discriminate against
Covered Employees who are not Highly Compensated Employees. Tax Deferred
Contributions will be paid at least monthly to the Trustee by the Participating
Employers. Any election pursuant to this Section 3.01 must be made by an
Approved Form of Election. Such election will be effective on the first day of
the first payroll period for which the Participating Employer can process such
election.
(b) Automatic Enrollment. If a Covered Employee fails to
affirmatively enroll in the Plan or fails to affirmatively decline enrollment in
the Plan within 60 days from the date that the Covered Employee is first
eligible to make Tax Deferred Contributions in accordance with Sections 2.01 and
2.02, such Covered Employee will be deemed to have entered into a salary
reduction agreement with his Participating Employer to reduce his Compensation
on a pre-tax basis by 3%. The Participating Employer of the Covered Employee
will make a Tax Deferred Contribution on behalf of such Covered Employee,
corresponding to the amount of such reduction. Such deemed election will
commence on the first day of the first pay period for which the Covered
Employee's Participating Employer can process the deemed election, provided such
election will not take effect before the 60th day following the date the Covered
Employee first becomes eligible to make Tax Deferred Contributions.
(c) Changes in Rate of Tax Deferred Contributions. Each
Participant may elect to change the rate of, discontinue or resume his Tax
Deferred Contributions at any time by making an Approved Form of Election. Any
such election will be effective on the first day of the first payroll period for
which the Participating Employer can process such election. The Retirement
Committee may establish additional rules regarding the timing and frequency of a
change in the amount of Tax Deferred Contributions or, provided such policy is
applied uniformly, to all Participants of the Participating Employer.
Notwithstanding any other provision of this Plan to the contrary, a
Participating Employer may refuse to give effect to any salary reduction
agreement entered into by a Participant at any time if the Participating
Employer determines that such refusal is necessary to ensure that the additions
to a Participant's
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Accounts for any Plan Year will not exceed the limitations set forth in Sections
3.05, 3.06, 3.07 and Sections 5.06, 5.07 and 5.08 of the Plan.
3.02. Company Matching Contributions.
(a) Rate of Company Matching Contributions. Subject to the
conditions and limitations of this Article III and Article XIII, each of
Participating Employers MasterBrand Cabinets, Inc., Moen Incorporated and
Waterloo Industries, Inc., will contribute under the Plan each year for each
Participant in its employ during such year an amount based on the Tax Deferred
Contributions and After-Tax Contributions, if any, made on his behalf during
such year by such Participating Employer. The Company Matching Contribution for
each Participant employed by Moen Incorporated and each Participant employed by
Waterloo Industries, Inc. will be equal to 50% of the Participant's Tax Deferred
Contributions and After-Tax Contributions, if any, to the extent the rate of
such Tax Deferred Contributions and After-Tax Contributions, if any, in effect
from time to time does not exceed 6% of his Eligible Compensation. The Company
Matching Contribution for each hourly-paid Participant employed in the
Littlestown, Pennsylvania, Crossville, Tennessee or Kinston, North Carolina
locations or distribution centers of MasterBrand Cabinets, Inc. will be equal to
20% of the Participant's Tax Deferred Contributions and After-Tax Contributions
to the extent the rate of such Tax Deferred Contributions and After-Tax
Contributions does not exceed 3% of his Eligible Compensation. The Company
Matching Contribution for each Participant employed in the Schrock Cabinet
business of MasterBrand Cabinets, Inc. will be equal to 50% of the Participant's
Tax Deferred Contributions or After-Tax Contributions to the extent the rate of
such Tax Deferred Contributions or After-Tax Contributions in effect from time
to time does not exceed 5% of his Eligible Compensation and an additional 50% of
the Participant's Tax Deferred Contributions or After-Tax Contributions to the
extent the rate of such Tax Deferred Contributions or After-Tax Contributions in
effect from time to time does not exceed 3% of his Eligible Compensation.
Company Matching Contributions will be paid at least monthly to the Trustee by
the Participating Employers.
(b) Eligibility for Allocation. With the exception of
Participants employed by Master Lock Company and certain Participants employed
by MasterBrand Cabinets, Inc., on whose behalf no Company Matching Contributions
will be made, each Participant who is a Covered Employee of a Participating
Employer will be entitled to an allocation of Company Matching Contributions
under this Section 3.02 if he made Tax Deferred Contributions or After-Tax
Contributions during the Plan Year.
(c) Additional Limitations. Notwithstanding the foregoing and
in addition to the limitations set forth in Sections 3.06 and 3.07, no Company
Matching Contributions will be made with respect to excess Tax Deferred
Contributions distributed pursuant to Section 3.05 or excess After-Tax
Contributions distributed pursuant to Section 3.07 and Company Matching
Contributions made with respect thereto will be returned to the Participating
Employer pursuant to Section 13.03.
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(d) Special Company Matching Contributions. Waterloo
Industries, Inc. will make an additional Company Matching Contribution only for
Plan Year 1999 in the amount of $200 for each Covered Employee employed at its
Pocahontas, Arkansas and Sedalia, Missouri facilities who was employed prior to
Plan Year 1999. The additional Company Matching Contribution will be made
whether or not the Covered Employee makes Tax Deferred Contributions or
After-Tax Contributions. A Covered Employee initially employed during Plan Year
1998 will not be eligible for an allocation of the additional Company Matching
Contribution until completion of a Year of Eligibility Service. A Covered
Employee who is allocated the additional Company Matching Contribution will be
deemed to be a Participant with respect thereto even though the Covered Employee
does not make Tax Deferred Contributions or Company Matching Contributions.
3.03. After-Tax Contributions.
(a) Rate of After-Tax Contributions. Each Participant may
enter into a salary reduction agreement to accept a reduction in salary from the
Participating Employer on an after-tax basis by an amount equal to an integral
percentage of up to 21% of his Compensation, minus the percentage he elected to
contribute on a pre-tax basis. The Participating Employer will make an After-Tax
Contribution to the Plan on behalf of such Participant, corresponding to the
amount of such reduction for each pay period. The Participating Employer may
limit the maximum salary reduction percentage to a lesser percentage of
Compensation, provided such policy does not impermissibly discriminate against
Employees who are not Highly Compensated Employees. After-Tax Contributions will
be paid at least monthly to the Trustee by the Participating Employers. Any
election pursuant to this Section 3.03(a) must be made by an Approved Form of
Election. Such election will be effective on the first day of the first payroll
period for which the Participating Employer can process such election.
(b) Changes in Rate of After-Tax Contributions. Each
Participant may elect to change the rate of, discontinue or resume his After-Tax
Contributions at any time by making an Approved Form of Election. Any such
election will be effective on the first day of the first payroll period for
which the Participating Employer can process such election. The Retirement
Committee may establish additional rules regarding the timing and frequency of a
change in the amount of After-Tax Contributions, provided such policy is applied
uniformly to all Participants of the Participating Employer.
3.04. Rollover Contributions.
(a) Eligible Amounts. Regardless of whether a Covered Employee
has become a Participant in the Plan, a Covered Employee who is eligible to make
Tax Deferred Contributions to the Plan in accordance with Section 3.01 may at
any time transfer (or cause to be transferred) to the Trust Fund:
(1) up to the entire amount of money and other property
received from another qualified trust under Code Section 401(a) which
constitutes an eligible rollover
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distribution within the meaning of Code Section 402(c)(4), provided
that (A) such amount must be received by the Trustee within 60 days
after the Covered Employee's receipt of such payment or (B) such amount
is directly transferred to the Trust Fund from such other qualified
trust; and
(2) up to the entire amount of money and other property
received by the Covered Employee that was held separately in an
"individual retirement account" or an "individual retirement annuity"
(as defined in Code Section 408) which contains only those amounts
described above in paragraph (1) plus any earnings thereon, provided
that such amount is received by the Trustee within 60 days after the
Covered Employee's receipt of such payment.
After-Tax Contributions may not be rolled into this Plan. The Covered Employee
must obtain the prior approval of his Participating Employer or its designee to
make a rollover contribution to this Plan. The Covered Employee must furnish his
Participating Employer or its designee with a written statement that the
contribution to the Trust Fund is a rollover contribution, together with such
other statements and information as may be required by his Participating
Employer or its designee in order to establish that such contribution does not
contain amounts from sources other than provided above and that such rollover
contribution otherwise meets the requirements of law. Acceptance by the Trustee
of any amount under these provisions may not be construed as a determination of
the Covered Employee's tax consequences by either the Participating Employer,
the Trustee or their respective designees.
(b) Limitation on Assets Transferred. Except as otherwise
provided in this Section 3.04, assets will not be transferred to the Plan or
Trust Fund from any other plan or trust.
3.05. Limitation on Annual Amount of Tax Deferred
Contributions.
(a) Maximum Annual Amount. The maximum amount of Tax Deferred
Contributions which may be made on behalf of each Participant in any calendar
year to this Plan and any other qualified plan may not exceed $10,000, adjusted
for each year to take into account any cost of living increase provided for such
year under Code Section 402(g). For purposes of this Section 3.05, the term
"qualified plan" means any tax qualified plan under Code Section 401(k), any
simplified employee pension cash or deferred arrangement as described in Code
Section 402(h)(1)(B), any eligible deferred compensation plan under Code Section
457, any plan described in Code Section 501(c)(18) and any employer
contributions made on behalf of the Participant for the purchase of an annuity
contract under Code Section 403(b) pursuant to a salary reduction arrangement.
(b) Procedure for Requesting Return of Excess Deferrals. If a
Participant makes elective deferrals to this Plan and to any other qualified
plan in excess of the dollar limit specified above for the Participant's taxable
year, then the Participant must notify his Participating Employer in writing by
March 1 of the following year of the amount, if any, to be refunded from this
Plan. The notice must specify the amount of excess Tax Deferred
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Contributions received by the Plan for the preceding year. The notice must be
accompanied by the Participant's written statement that if the excess is not
distributed, the Tax Deferred Contributions, when added to amounts deferred
under other qualified plans, exceed the limit imposed on the Participant by Code
Section 402(g) for the taxable year in which the deferral occurred. If the
Participant fails to notify the Retirement Committee by March 1, no refund will
be made pursuant to this Section 3.05.
(c) Return of Excess Deferrals. The amount to be refunded will
be paid to the Participant in a single payment no later than April 15 following
the close of the taxable year and will include any income or loss allocated to
the refund, as determined in Section 3.05(d), for the period during the
Participant's taxable year. Although the excess deferral may be refunded, it
will still be considered as an elective deferral for the Plan Year in which it
was originally made and will be included in the Actual Deferral Percentage of a
Highly Compensated Employee.
(d) Income or Loss Allocable for Taxable Year. The income or
loss allocable to excess pre-tax deferrals for the Participant's taxable year
will be determined by multiplying the income or loss for the Participant's
taxable year allocable to the Participant's elective deferrals for such year by
a fraction, the numerator of which is the amount of excess pre-tax deferrals for
such taxable year and the denominator of which is equal to the sum of (1) the
total Account Balances in the Participant's Tax Deferred Account as of the
beginning of the taxable year, plus (2) the Participant's Tax Deferred
Contributions for such taxable year. No adjustment will be made for any period
following such taxable year.
3.06. Actual Deferral Percentage Tests.
(a) Tests. The Actual Deferral Percentage for the Highly
Compensated Employees may not exceed for any Plan Year the greater of:
(1) the Actual Deferral Percentage for all other Covered
Employees, multiplied by 1.25; or
(2) the Actual Deferral Percentage for all other Covered
Employees, multiplied by two; provided, however, the Actual Deferral
Percentage for the Highly Compensated Employees does not exceed the
Actual Deferral Percentage for all other Covered Employees by more than
two percentage points.
For the purpose of the foregoing tests:
(1) those Covered Employees who were not directly or
indirectly eligible to have Tax Deferred Contributions made for them at
any time during the Plan Year will be disregarded;
(2) if two or more plans which include cash or deferred
arrangements are considered one plan for purposes of Code Section
401(a)(4) or 410(b) (other than Code
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Section 410(b)(2)(A)(ii)), the cash or deferred arrangements included
in those plans will be treated as one arrangement; and
(3) if a Highly Compensated Employee is a participant in two
or more cash or deferred arrangements of the Related Employers, all
such cash or deferred arrangements will be treated as one cash or
deferred arrangement for determining the Actual Deferral Percentage of
that Highly Compensated Employee.
(b) Actual Deferral Percentage. The Actual Deferral Percentage
for a specified group of Covered Employees for a Plan Year will be the average
of the ratios (calculated separately) for the Covered Employees in such group
of:
(1) the amount of Tax Deferred Contributions and Special
Company Contributions pursuant to Section 3.09 actually paid to the
Trustee on behalf of each such Covered Employee for such Plan Year, to
(2) his Compensation for such Plan Year.
The Company or its designee may change the method for calculating the Actual
Deferral Percentage by substituting the Actual Deferral Percentage of non-Highly
Compensated Employees from the prior Plan Year for that of the current Plan
Year, but only in accordance with Code Section 401(k)(3)(A) and IRS Notice 98-1
(or any superseding guidance).
(c) Return of Excess Contributions. The Company or its
designee will determine after the end of the Plan Year whether the Actual
Deferral Percentage results satisfy either of the tests contained in Section
3.06(a). If neither test is satisfied, the excess amount for each Highly
Compensated Employee will be distributed to the Participant (together with any
income allocable thereto) within 12 months following the Plan Year for which the
excess Tax Deferred Contributions were made.
These excess contributions and any income allocable thereto
will be allocated to the Highly Compensated Employees with the largest amounts
of Tax Deferred Contributions taken into account in calculating the tests
contained in Section 3.06(a) hereof for the Plan Year in which the excess arose,
beginning with the Highly Compensated Employee with the largest amount of such
Tax Deferred Contributions and continuing in descending order until all excess
contributions (and income) have been allocated. For purposes of the preceding
sentence, the "largest amount" will be determined after distribution of any
excess contributions (and income).
(d) Adjustment for Income or Losses. The excess Tax Deferred
Contributions for each Highly Compensated Employee will be adjusted for income
or loss during the Plan Year, in the manner prescribed in Section 3.05(d).
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(e) Forfeiture of Company Matching Contributions. Tax Deferred
Contributions which are refunded will cause the corresponding Company Matching
Contributions, whether vested or nonvested, to be forfeited.
(f) Definition of Compensation. For purposes of this Section
3.06, the term "Compensation" will have the meaning prescribed in Code Section
414(s).
3.07. Actual Contribution Percentage Tests.
(a) Tests. The Actual Contribution Percentage for the Highly
Compensated Employees may not exceed for any Plan Year the greater of:
(1) the Actual Contribution Percentage for all other Covered
Employees, multiplied by 1.25; or
(2) the Actual Contribution Percentage for all other Covered
Employees, multiplied by two; provided, however, the Actual
Contribution Percentage for the Highly Compensated Employees does not
exceed the Actual Contribution Percentage for all other Covered
Employees by more than two percentage points.
For the purpose of the foregoing tests:
(1) those Covered Employees who were not directly or
indirectly eligible to have After-Tax Contributions or Company Matching
Contributions made for them at any time during the Plan Year will be
disregarded;
(2) if two or more plans to which employee contributions and
matching contributions are made are considered one plan for purposes of
Code Section 401(a)(4) or 410(b) (other than Code Section
410(b)(2)(A)(ii)), all employee contributions and matching
contributions will be treated as made under the same plan;
(3) if two or more plans are permissively aggregated for
purposes of the foregoing tests, the aggregated plans must also satisfy
Code Sections 401(a)(4) and 410(b) as though they were one plan; and
(4) if a Highly Compensated Employee is a participant in two
or more plans of the Related Employers to which employee contributions
or matching contributions are made, all such plans will be treated as
one plan for purposes of determining the Actual Contribution Percentage
of that Highly Compensated Employee.
(b) Actual Contribution Percentage. The Actual Contribution
Percentage for a specified group of Covered Employees for a Plan Year will be
the average of the ratios (calculated separately) for the Covered Employees in
such group of:
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(1) the amount of Company Matching Contributions and After-Tax
Contributions actually paid to the Trustee on behalf of each such
Covered Employee for such Plan Year, to
(2) his Compensation for the Plan Year.
The Company or its designee may change the method for
calculating the Actual Contribution Percentage by substituting the Actual
Contribution Percentage of non-Highly Compensated Employees from the prior Plan
Year for that of the current Plan Year, but only in accordance with Code Section
401(m)(2)(A) and IRS Notice 98-1 (or any superseding guidance).
To the extent permitted by Treasury Regulations, Tax Deferred
Contributions and non-elective employer contributions under any other
tax-qualified retirement plan may be added to (1) above.
(c) Return of Excess Contributions. The Company or its
designee will determine after the end of the Plan Year whether the Actual
Contribution Percentage results satisfy either of the tests contained in Section
3.07(a). If neither test is satisfied, the excess amount ("Excess Aggregate
Contributions") for each Highly Compensated Employee will be distributed to him
(together with any income allocable thereto) within 12 months following the Plan
Year for which the Excess Aggregate Contributions were made.
These Excess Aggregate Contributions and any income allocable
thereto will be allocated to the Highly Compensated Employees with the largest
amounts of Company Matching Contributions and After-Tax Contributions taken into
account in calculating the tests contained in Section 3.07(a) hereof for the
Plan Year in which the excess arose, beginning with the Highly Compensated
Employee with the largest amount of such Company Matching Contributions and
After-Tax Contributions and continuing in descending order until all the Excess
Aggregate Contributions (and income) have been allocated. For purposes of the
preceding sentence, the "largest amount" will be determined after distribution
of any Excess Aggregate Contributions (and income).
(d) Adjustment for Income and Loss. The Excess Aggregate
Contributions for each Highly Compensated Employee will be adjusted for income
or loss during the Plan Year, in the manner prescribed in Section 3.05(d).
(e) Definition of Compensation. For purposes of this Section
3.07, the term "Compensation" will have the meaning prescribed in Code Section
414(s).
3.08. Alternate Percentage Test. In the event that the Actual
Deferral Percentage for the Highly Compensated Employees for any Plan Year is
more than the Actual Deferral Percentage for all other Covered Employees
multiplied by 125% and the Actual Contribution Percentage for Highly Compensated
Employees for the same Plan Year is more than the Actual Contribution Percentage
for all other Covered Employees multiplied by 125%,
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then the sum of the Actual Deferral Percentage for Highly Compensated Employees
plus the Actual Contribution Percentage for Highly Compensated Employees for
such Plan Year may not exceed the greater of:
(a) the sum of:
(1) 125% of the greater of (A) the Actual Deferral Percentage
of the group of all other Covered Employees, or (B) the Actual
Contribution Percentage of the group of all other Covered Employees,
and
(2) two percentage points plus the lesser of (A) the Actual
Deferral Percentage of the group of all other Covered Employees, or (B)
the Actual Contribution Percentage of the group of all other Covered
Employees.
In no event, however, will the amount described in subsection
3.08(a)(2) exceed 200% of the lesser of (2)(A) and (B) next above; and
(b) the sum of:
(1) 125% of the lesser of (A) the Actual Deferral Percentage
of the group of all other Covered Employees, or (B) the Actual
Contribution Percentage of the group of all other Covered Employees,
and
(2) two percentage points plus the greater of (A) the Actual
Deferral Percentage of the group of all other Covered Employees, or (B)
the Actual Contribution Percentage of the group of all other Covered
Employees.
In no event, however, will the amount described in this
subsection 3.08(b)(2) exceed 200% of the lesser of (2)(A) and (B) next above.
In the event the sum of the Actual Deferral Percentage for
Highly Compensated Employees plus the Actual Contribution Percentage for Highly
Compensated Employees exceeds the amount set forth in this Section 3.08, the
Actual Deferral Percentage for the Highly Compensated Employees or the Actual
Contribution Percentage for the Highly Compensated Employees will be reduced in
the manner provided in Sections 3.06 and 3.07, until such excess no longer
exists.
3.09. Special Company Contributions.
(a) Determination of Special Rate. In order to meet the
nondiscrimination requirements of Code Sections 401(k) and 401(m) (as set forth
in Sections 3.06 and 3.07 of the Plan), any Participating Employer may, in its
discretion and by action of its board of directors, establish a special rate of
employer contributions applicable only to certain Participants who are not
Highly Compensated Employees of such Participating Employer.
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(b) Allocation of Special Company Contributions. If
contributions made under this Section 3.09 are made to meet the
nondiscrimination requirements of Code Section 401(k) (as set forth in Section
3.06 of the Plan), then such contributions will be deemed, for all Plan purposes
except Section 8.01, to be Tax Deferred Contributions, and will be allocated to
the Tax Deferred Accounts of the Participants for whom the contributions were
made; provided, however, that Company Matching Contributions will not be made
based upon such contributions. If contributions made under this Section 3.09 are
made to meet the nondiscrimination requirements of Code Section 401(m) (as set
forth in Section 3.07 of the Plan), then such contributions will be deemed, for
all Plan purposes except Section 8.01, to be Company Matching Contributions, but
will be allocated to the Tax Deferred Accounts of the Participants for whom the
contributions were made employed by such Participating Employer who made Tax
Deferred Contributions and such contributions will be fully vested upon deposit.
3.10. Uniformed Service Absence. Notwithstanding any provision
of this Plan to the contrary, effective as of December 12, 1994, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with Code Section 414(u).
ARTICLE IV
INVESTMENT PROVISIONS
4.01. Investment Funds.
(a) Separate Funds. The Trust Fund will consist of the
following separate Investment Funds, to be administered as provided in Sections
4.03 through 4.13, respectively, and the "Loan Fund," to be administered as
provided in Article IX:
(1) Fortune Stock Fund;
(2) Gallaher Fund;
(3) S&P 500 Index Fund;
(4) Value Equity Fund;
(5) Large-Cap Growth Equity Fund;
(6) Small-Cap Growth Equity Fund;
(7) International Equity Fund;
(8) Growth-Oriented Diversified Fund;
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(9) Balanced Fund;
(10) Government Securities Fund;
(11) Corporate/Government Bond Fund; and
(12) Short-Term Investment Fund.
(b) Assets Pending Allocation, Investment in Investment Funds
and Maturity and Redemption. Contributions to the Plan may be uninvested pending
allocation to the Investment Funds. The Investment Manager of each Investment
Fund, or the Trustee if there is no Investment Manager, may invest the
Investment Fund in short-term investments or hold the assets thereof uninvested
pending orderly investment and to permit distributions, reallocations and
transfers therefrom.
4.02. Investment Fund Elections. A Participant's Account
Balances and contributions allocable to a Participant's Accounts will be
invested in the Investment Funds as follows:
(a) Initial Investment of Contributions. Except as provided in
Section 4.02(f), each Participant may elect that the Tax Deferred Contributions,
Company Matching Contributions, After-Tax Contributions and Rollover
Contributions allocable to his Accounts be invested, collectively with
investment gains and losses allocated on a pro rata basis, in whole multiples of
1%, in any one or more of the Investment Funds. The same investment election
will apply to a Participant's Tax Deferred Contributions, Company Matching
Contributions and After-Tax Contributions. Any Tax Deferred Contributions that
are automatically made pursuant to Section 3.01(b) and Company Matching
Contributions thereon will be invested in the Balanced Fund until the
Participant elects to change his investment of such contributions in accordance
with this Section 4.02(d). Notwithstanding the foregoing, a separate investment
election may be made for Rollover Contributions. Except as otherwise provided in
Section 4.02(a), each Participant may elect to change his investment elections
with respect to new contributions allocable to his Account.
(b) Interfund Transfers. Except as otherwise provided in
Section 4.02(d), each Participant may at any time elect that his Account
Balances be rearranged, in any one or more of the Investment Funds.
(c) Election Procedures. Any election to invest contributions,
change the investment for new contributions or make interfund transfers within
the Plan (other than an automatic election made pursuant to Section 3.01(b))
must be made through an Approved Form of Election. Any such election made before
the Close of Business on a Business Day will be effective and valued as of the
day such election is made. Any such election made on a day other than a Business
Day or after the Close of Business on a Business Day will be effective and
valued as of the next Business Day.
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(d) Limitations on Investments. Notwithstanding the foregoing,
no contributions may be invested in the Gallaher Fund and no transfers may be
made into the Gallaher Fund.
(e) Investment in Absence of Election. If a Participant fails
to make an investment election in accordance with Section 4.02(a), the
contributions referred to in Section 4.02(a) will be invested in the Balanced
Fund.
(f) 1999 Transition Period. In order to provide for the
orderly reconciliation and transfer of Account Balance information required as a
result of the change in the Plan's recordkeeper and Trustee effective as of
October 1, 1999, certain transactions affecting Accounts will not be performed
during the transition period beginning July 21, 1999 and ending on a date to be
determined by the Plan Administrator (the "Transition Period"). During the
Transition Period, all requests for in-service withdrawal (other than a hardship
withdrawal) forms and distribution forms through the Plan's voice response
system must be made no later than July 21, 1999 and all requests for such
in-service withdrawals and distributions must be completed and submitted, on a
form approved by the Retirement Committee, with the Participating Employer no
later than July 31, 1999. During the Transition Period, all requests for
hardship withdrawal forms and loan forms through the Plan's voice response
system must be made no later than August 21, 1999 and all requests for hardship
withdrawals and loans must be completed and submitted, on a form approved by the
Retirement Committee, with the Participating Employer no later than August 31,
1999. During the Transition Period, all elections to make interfund transfers,
change the investment of contributions, change the rate of Tax Deferred
Contributions and After-Tax Contributions and enroll in the Plan must be made
through the Plan's voice response system no later than August 21, 1999. Any
requests or forms that are not submitted by the applicable deadline, and any
requests or forms that are submitted with missing or incomplete documentation,
information, signatures, consents, notarizations or attestations that is not
provided or completed by the deadline, will not be processed.
4.03. Administration of Fortune Stock Fund. Subject to the
provisions of the Trust Agreement and Sections 4.14 through 4.16, the Trustee
will administer the Fortune Stock Fund as follows:
(a) Investment. The assets of the Fortune Stock Fund,
including all income thereon and increments thereto, will be invested primarily
in Fortune Common Stock; provided, however, that, in order to permit orderly
investment in Fortune Common Stock and pending such investment, the Trustee may
hold uninvested any monies received by it in or for the Fortune Stock Fund or
may invest in collective short-term investment funds of the Trustee.
(b) Registration Upon Distribution. Upon any distribution from
the Fortune Stock Fund as a single distribution pursuant to Section 7.01(a)(2),
all whole shares of Fortune Common Stock distributable therefrom will be
registered in the name of the distributee and delivered to him together with any
cash from the Fortune Stock Fund to which the distributee is entitled.
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(c) Distributions Other Than in Stock. Upon any distribution
from the Fortune Stock Fund pursuant to the provisions of Article VII other than
as a single distribution pursuant to Section 7.01(a)(2), the Trustee will retain
all shares which would otherwise be distributable to the distributee and
distribute in lieu thereof their Fair Market Value on the applicable Business
Day.
(d) Transfers Among Investment Funds. Upon any transfer from
any Investment Fund pursuant to the provisions of Section 4.02(b), the Trustee
will, to the extent practicable, retain all shares which would otherwise have to
be liquidated by reason of such transfer and transfer in lieu thereof their Fair
Market Value on the applicable Business Day.
(e) Rights Exercise; Sale of Stock. To the extent practicable,
the Trustee will make transactions with respect to or sell all rights to buy
Fortune Common Stock (other than rights within the meaning of Section 4.16,
which will be exercised only in accordance with Section 4.16) received with
respect to any shares held in the Fortune Stock Fund. The Trustee may determine
to sell or exercise such rights. To the extent that there is insufficient cash
in the Fortune Stock Fund with which to exercise any such rights, or to make
distribution or transfer of the Fair Market Value of any stock subject to
retention, the Trustee may, in its discretion, sell such rights or retained
stock or any part thereof; in the case of any retained stock so sold the Fair
Market Value thereof will be the net proceeds of sale instead of the Fair Market
Value determined as provided in Article I. The Trustee may also obtain cash in
such other manner deemed appropriate by the Trustee provided such other manner
is permitted by applicable law, will not affect the continued qualified status
of the Plan or the tax-exempt status of the Trust under the Code and will not
result in a "prohibited transaction" (as defined in the Code or ERISA).
4.04. Investment of S&P 500 Index Fund. Subject to the
provisions of the Trust Agreement and of Section 4.03(e), the assets of the S&P
500 Index Fund, including all income thereon and increments thereto, will be
invested and reinvested in a mutual fund that invests in 500 stocks that make up
the S&P 500 proportionately to each stock weighting in the index, as selected by
the Trusts Investment Committee.
4.05. Investment of Value Equity Fund. Subject to the
provisions of the Trust Agreement and of Section 4.03(e), the assets of the
Value Equity Fund, including all income thereon and increments thereto, will be
invested and reinvested in any and all common stocks, preferred stocks and other
equity securities which the Investment Manager believes have a low price
relative to the company's earnings or cash flow, or relative to the past price
history of the stock, as will be selected by the Investment Manager or, if there
is no such Investment Manager, by the Trustee; provided, however, that the
Trusts Investment Committee may determine that the Value Equity Fund be
comprised of a mutual fund having substantially the foregoing characteristics.
4.06. Investment of Large-Cap Growth Equity Fund. Subject to
the provisions of the Trust Agreement and of Section 4.03(e), the assets of the
Large-Cap Growth Equity
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Fund, including all income thereon and increments thereto, will be invested and
reinvested primarily in stocks of medium to large-size companies with
above-average earnings or sales growth, as selected by the Investment Manager
or, if there is no such Investment Manager, by the Trustee; provided, however,
that the Trusts Investment Committee may determine that the Large-Cap Growth
Equity Fund be comprised of a mutual fund having substantially the foregoing
characteristics.
4.07. Investment of Small-Cap Growth Equity Fund. Subject to
the provisions of the Trust Agreement and of Section 4.03(e), the assets of the
Small-Cap Growth Equity Fund, including all income thereon and increments
thereto, will be invested and reinvested primarily in small to medium-size
companies that are early in their life cycle but which have the potential to
become major enterprises (emerging growth companies), as selected by the
Investment Manager or, if there is no such Investment Manager, by the Trustee;
provided, however, that the Trusts Investment Committee may determine that the
Small-Cap Growth Equity Fund be comprised of a mutual fund having substantially
the foregoing characteristics.
4.08. Investment of International Equity Fund. Subject to the
provisions of the Trust Agreement and of Section 4.03(e), the assets of the
International Equity Fund, including all income thereon and increments thereto,
will be invested and reinvested primarily in stocks of companies incorporated
outside the United States, as selected by the Investment Manager or, if there is
no such Investment Manager, by the Trustee; provided, however, that the Trusts
Investment Committee may determine that the International Equity Fund be
comprised of a mutual fund having substantially the foregoing characteristics.
4.09. Investment of Growth-Oriented Diversified Fund. Subject
to the provisions of the Trust Agreement and of Section 4.03(e), the assets of
the Growth-Oriented Diversified Fund, including all income thereon and
increments thereto, will be invested and reinvested in such bonds, debentures,
notes, equipment trust certificates, investment trust certificates, preferred
stocks, common stocks, other securities (including any bonds, debentures, stock
and other securities of Fortune) primarily of companies with strong financial
characteristics and good long-term prospects for above-average earnings or sales
growth, or other properties, not necessarily of the nature hereinbefore
itemized, as will be selected by the Investment Manager or, if there is no such
Investment Manager, by the Trustee; provided, however, that the Trusts
Investment Committee may determine that the Growth-Oriented Diversified Fund be
comprised of a mutual fund having substantially the foregoing characteristics.
4.10. Investment of Balanced Fund. Subject to the provisions
of the Trust Agreement and of Section 4.03(e), the assets of the Balanced Fund,
including all income thereon and increments thereto, will be invested and
reinvested primarily in companies which have a low price relative to the
company's earnings or cash flow, or relative to the past price history of the
stock, as selected by the Investment Manager or, if there is no such Investment
Manager, by the Trustee; provided, however, that the Trusts Investment Committee
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may determine that the Balanced Fund be comprised of a mutual fund having
substantially the foregoing characteristics.
4.11. Investment of Government Securities Fund. Subject to the
provisions of the Trust Agreement and of Section 4.03(e), the assets of the
Government Securities Fund, including all income thereon and increments thereto,
will be invested and reinvested primarily in such obligations issued or
guaranteed by the United States Government or its agencies, or by any State or
local government or their agencies, as will be selected by the Investment
Manager or, if there is no such Investment Manager, by the Trustee; provided,
however, that the Trusts Investment Committee may determine that the Government
Securities Fund be comprised of a mutual fund having substantially the foregoing
characteristics.
4.12. Investment of Corporate/Government Bond Fund. Subject to
the provisions of the Trust Agreement and of Section 4.03(e), the assets of the
Corporate/Government Bond Fund, including all income thereon and increments
thereto, will be invested and reinvested primarily in investment grade corporate
bonds, bonds issued by the United States Government or its agencies, domestic
bank obligations and commercial paper, as selected by the Investment Manager or,
if there is no such Investment Manager, by the Trustee; provided, however, that
the Trusts Investment Committee may determine that the Corporate/Government Bond
Fund be comprised of a mutual fund having substantially the foregoing
characteristics.
4.13. Investment of Short-Term Investment Fund. Subject to the
provisions of the Trust Agreement and of Section 4.03(e), the assets of the
Short-Term Investment Fund, including all income thereon and increments thereto,
will be invested and reinvested in bonds, debentures, mortgages, equipment or
other trust certificates, notes, obligations issued by or guaranteed by the
United States Government or its agencies, domestic bank certificates of deposit,
domestic bankers' acceptances and repurchase agreements, and high grade
commercial paper, all of which will bear a fixed rate of return and are intended
to minimize market fluctuations, as will be selected by the Investment Manager,
or if there is no such Investment Manager, by the Trustee (which may include
investment in the Trustee's short-term collective investment fund); provided,
however, that the Trusts Investment Committee may determine that the Short-Term
Investment Fund be comprised of a mutual fund having substantially the foregoing
characteristics.
4.14. Voting of Shares in Fortune Stock Fund.
(a) Trustee Voting. Notwithstanding any other provision of the
Plan or the Trust Agreement to the contrary, the Trustee will have no discretion
or authority to exercise any voting rights with respect to Fortune Common Stock
held in the Fortune Stock Fund except as provided in this Section 4.14.
(b) Participant Direction. Each Participant, former
Participant or Beneficiary will be entitled to direct the Trustee, and the
Trustee will solicit the written direction of such Participant, former
Participant or Beneficiary, as to the manner in which any
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voting rights of shares of Fortune Common Stock attributable to his
proportionate interest in the Fortune Stock Fund are to be exercised with
respect to any matter on which holders of Fortune Common Stock are entitled to
vote by proxy, consent or otherwise, and the Trustee will exercise the voting
rights of such shares with respect to such matter in accordance with the most
recent timely direction received by the Trustee from such Participant, former
Participant or Beneficiary. With respect to the voting rights of shares of
Fortune Common Stock held in the Fortune Stock Fund as to which timely
directions have not been received by the Trustee as provided in the preceding
sentence, the Trustee will exercise the voting rights of such shares in the same
manner and in the same proportion in which the voting rights of shares as to
which such directions were received by the Trustee are to be exercised as
provided in the preceding sentence. The Trustee will combine fractional
interests of Participants, former Participants and Beneficiaries in shares of
Fortune Common Stock held in the Fortune Stock Fund to the extent possible so
that the voting rights with respect to such matter are exercised in a manner
which reflects as accurately as possible the collective directions given by
Participants, former Participants and Beneficiaries. In giving directions to the
Trustee as provided in this Section 4.14(b), each Participant, former
Participant or Beneficiary will be acting as a named fiduciary within the
meaning of ERISA Section 403(a)(1) ("Named Fiduciary") with respect to the
exercise of voting rights of shares of Fortune Common Stock in accordance with
such directions pursuant to both the first and the second sentences of this
Section 4.14(b). For purposes of this Section 4.14(b), the number of shares of
Fortune Common Stock attributable at any particular time to the interest of a
Participant, former Participant or Beneficiary in the Fortune Stock Fund will be
the product of the total number of shares of Fortune Stock Fund multiplied by a
fraction the numerator of which is the amount allocated to the Fortune Stock
Fund then in his Accounts and the denominator of which is the total number of
shares of Fortune common stock in Fortune Stock Fund.
(c) Trustee to Communicate Voting Procedures. The Trustee will
communicate or cause to be communicated to all Participants, former Participants
and Beneficiaries the procedures regarding the exercise of voting rights of
shares of Fortune Common Stock held in the Fortune Stock Fund. The Trustee will
distribute or cause to be distributed as promptly as possible to all
Participants, former Participants and Beneficiaries entitled to give directions
to the Trustee as to the exercise of voting rights with respect to any matter
all communications and other materials, if any, that the Trustee may receive
from any person or entity (including Participating Employers) that are being
distributed to the holders of Fortune Common Stock and either are directed
generally to such holders or relate to any matter on which holders of Fortune
Common Stock are entitled to vote by proxy, consent or otherwise, and the
Participating Employers will promptly furnish to the Trustee all such
communications and other materials, if any, as are being distributed by or on
behalf of Fortune. The Participating Employers and the Retirement Committee will
provide the Trustee with such information, documents and assistance as the
Trustee may reasonably request in connection with any communications or
distributions to Participants, former Participants and Beneficiaries as
aforesaid. This information will include the names and current addresses of
Participants, former Participants and Beneficiaries and the number of shares of
Fortune Common Stock credited to the accounts of each of them, upon which the
Trustee may conclusively rely.
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Notwithstanding any other provision of this Section 4.14(c) or the Trust
Agreement to the contrary, except if the Participating Employers serve as
recordkeeper, to the extent necessary to provide the Participating Employers
with information necessary to accurately maintain records of the interest in the
Plan of Participants, former Participants and Beneficiaries, the Trustee will
use its best efforts (1) to keep confidential the direction (or the absence
thereof) from each Participant, former Participant or Beneficiary in connection
with the exercise of voting rights of shares of Fortune Common Stock held in the
Fortune Stock Fund and the identity of such Participant, former Participant or
Beneficiary, and (2) not to divulge such direction or identity to any person or
entity, including, without limitation, Fortune, the Company, any other
Participating Employer or Non-Participating Employer, and any director, officer,
employee or agent thereof. It is the intent of this Section 4.14(c) that
Fortune, each other Participating Employer, and each Non-Participating Employer
and their directors, officers, employees and agents not be able to ascertain the
direction given (or not given) by any Participant, former Participant or
Beneficiary in connection with the exercise of voting rights of such shares.
(d) Invalidity. If a court of competent jurisdiction issues an
opinion, order or decree which, in the opinion of counsel to Fortune or the
Trustee, will, in all or any particular circumstances, (1) invalidate under
ERISA or otherwise any provision or provisions of the Plan or the Trust
Agreement with respect to the exercise of voting rights of shares of Fortune
Common Stock held in the Fortune Stock Fund, or (2) cause any such provision or
provisions to conflict with ERISA, or (3) require the Trustee not to act or such
voting rights not to be exercised in accordance with such provision or
provisions, then, upon written notice thereof to the Trustee (in the case of an
opinion of counsel to Fortune) or to Fortune (in the case of an opinion of
counsel to the Trustee), such provision or provisions will be given no further
force or effect in such circumstances. Except to the extent otherwise specified
in such opinion, order or decree, the Trustee will have no discretion or
authority in such circumstances to exercise voting rights with respect to shares
of Fortune Common Stock held in the Fortune Stock Fund, but will exercise such
voting rights in accordance with the most recent timely directions received from
Participants, former Participants and Beneficiaries to the extent such
directions have not been invalidated. To the extent the Trustee exercises any
fiduciary responsibility it may have in any circumstances with respect to any
exercise of voting rights of shares of Fortune Common Stock held in the Fortune
Stock Fund, the Trustee in exercising its fiduciary responsibility, unless
pursuant to the requirements of ERISA or otherwise it is unlawful to do so (1)
will take into account directions timely received from Participants, former
Participants and Beneficiaries as valid directions with respect to the exercise
of such voting rights, and (2) to the extent the Trustee deems it appropriate,
will take into consideration any relevant non-financial factors in addition to
any financial factors bearing on any exercise of such voting rights.
4.15. Tendering of Shares in Fortune Stock Fund.
(a) Tender by Trustee. Notwithstanding any other provision of
the Plan or the Trust Agreement to the contrary, the Trustee will have no
discretion or authority to tender, deposit, sell, exchange or transfer any
shares of Fortune Common Stock (which, for purposes
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of this Section 4.15, will include any rights within the meaning of Section
4.16(a)) held in the Fortune Stock Fund pursuant to any tender offer (as defined
herein) except as provided in this Section 4.15. For purposes of this Section
4.15, a "tender offer" will mean any tender or exchange offer for or request or
invitation for tenders or exchanges of shares of Fortune Common Stock and will
include, without limitation, any such tender offer made by or on behalf of
Fortune.
(b) Participant Direction. Each Participant, former
Participant or Beneficiary will be entitled to direct the Trustee, and the
Trustee will solicit the written direction of such Participant, former
Participant or Beneficiary, as to the tendering, depositing, selling, exchanging
or transferring of shares of Fortune Common Stock attributable to his
proportionate interest in the Fortune Stock Fund pursuant to any tender offer,
and the Trustee will tender, deposit, sell, exchange or transfer such shares (or
will retain such shares in the Fortune Stock Fund) pursuant to such tender offer
in accordance with the most recent timely direction received by the Trustee from
such Participant, former Participant or Beneficiary. With respect to shares of
Fortune Common Stock held in the Fortune Stock Fund as to which timely
directions have not been received by the Trustee from Participants, former
Participants and Beneficiaries to whose interests in the Fortune Stock Fund such
shares are attributable, such Participants, former Participants and
Beneficiaries will be deemed to have directed the Trustee that such shares be
retained in the Fortune Stock Fund subject to all provisions of the Plan and the
Trust Agreement and applicable law and not be tendered, deposited, sold,
exchanged or transferred pursuant to such tender offer, and the Trustee will not
tender, deposit, sell, exchange or transfer any of such shares pursuant thereto.
If, under the terms of such tender offer or otherwise, any shares of Fortune
Common Stock tendered or deposited pursuant thereto may be withdrawn, the
Trustee will (1) use its best efforts to solicit the direction of each
Participant, former Participant or Beneficiary as to the exercise of withdrawal
rights with respect to shares of Fortune Common Stock that have been tendered or
deposited pursuant to this Section 4.15(b), and (2) exercise (or refrain from
exercising) such withdrawal rights in the same manner as will reflect the most
recent timely directions received with respect to the exercise of such
withdrawal rights. The Trustee will not withdraw shares except pursuant to a
timely direction of a Participant, former Participant or Beneficiary. The
Trustee will combine fractional interests of Participants, former Participants
and Beneficiaries in shares of Fortune Common Stock held in the Fortune Stock
Fund to the extent possible so that such shares are tendered, deposited, sold,
exchanged or transferred, and withdrawal rights with respect thereto are
exercised, in a manner which reflects as accurately as possible the collective
directions given or deemed to have been given by Participants, former
Participants and Beneficiaries in accordance with this Section 4.15(b). In
giving or being deemed to have given directions to the Trustee as provided in
this Section 4.15(b), each Participant, former Participant or Beneficiary will
be acting as a Named Fiduciary with respect to the tender, deposit, sale,
exchange or transfer of shares of Fortune Common Stock (or the retention of such
shares in the Fortune Stock Fund) in accordance with such directions pursuant to
both the first and second sentences of this Section 4.15(b) and the exercise of
(or the refraining from exercising) withdrawal rights with respect to shares of
Fortune Common Stock tendered or deposited pursuant to the third sentence of
this Section 4.15(b).
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(c) Trustee to Communicate Tender Procedures. In the event of
a tender offer as to which Participants, former Participants and Beneficiaries
are entitled to give directions as provided in this Section 4.15(c), the Trustee
will communicate or cause to be communicated to all Participants, former
Participants and Beneficiaries entitled to give directions the procedures
relating to their right to give directions as Named Fiduciaries to the Trustee
and in particular the consequences of any failure to provide timely written
direction to the Trustee. In the event of such a tender offer, the Trustee will
distribute or cause to be distributed as promptly as possible to all
Participants, former Participants and Beneficiaries entitled to give directions
to the Trustee with respect to such tender offer all communications and other
materials, if any, that the Trustee may receive from any person or entity
(including the Participating Employers) that are being distributed to the
holders of the securities to whom such tender offer is directed and either are
directed generally to such holders or relate to such tender offer, and the
Participating Employers will promptly furnish to the Trustee all such
communications and other materials, if any, as are being distributed by or on
behalf of Fortune. The Participating Employers and the Retirement Committee will
provide the Trustee with such information, documents and assistance as the
Trustee may reasonably request in connection with any communications or
distributions to Participants, former Participants and Beneficiaries as
aforesaid. This information will include the names and current addresses of
Participants, former Participants and Beneficiaries and the number of shares of
Fortune Common Stock credited to the accounts of each of them, upon which the
Trustee may conclusively rely. Notwithstanding any other provision to the
contrary of the Plan or the Trust Agreement, except if the Participating
Employers serve as recordkeeper, to the extent necessary to provide the
Participating Employers with information necessary to accurately maintain
records of the interest in the Plan of Participants, former Participants and
Beneficiaries, the Trustee will use its best efforts (1) to keep confidential
the direction (or the absence thereof) from each Participant, former Participant
or Beneficiary with respect to any tender offer and the identity of such
Participant, former Participant or Beneficiary, and (2) not to divulge such
direction or identity to any person or entity, including, without limitation,
Fortune, the Company, any other Participating Employer and any Non-Participating
Employer and any director, officer, employee or agent thereof. It is the intent
of this Section 4.15(c) that Fortune, the Company, each other Participating
Employer and each Non-Participating Employer and their directors, officers,
employees and agents not be able to ascertain the direction given (or not given)
or deemed to have been given by any Participant, former Participant or
Beneficiary with respect to any tender offer.
(d) Invalidity. If a court of competent jurisdiction issues an
opinion, order or decree which, in the opinion of counsel to Fortune or the
Trustee, will, in all or any particular circumstances, (1) invalidate under
ERISA or otherwise any provision or provisions of the Plan or the Trust
Agreement with respect to the tendering, depositing, sale, exchange or transfer
of shares of Fortune Common Stock held in the Fortune Stock Fund or the exercise
of any withdrawal rights with respect to shares tendered or deposited pursuant
to a tender offer, or (2) cause any such provision or provisions to conflict
with ERISA, or (3) require the Trustee not to act or such shares not to be
tendered, deposited, sold, exchanged or transferred or such withdrawal rights
not to be exercised in accordance with such provision or provisions, then, upon
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written notice thereof to the Trustee (in the case of an opinion of counsel to
Fortune ), or to Fortune (in the case of an opinion of counsel to the Trustee),
such provision or provisions will be given no further force or effect in such
circumstances. Except to the extent otherwise specified in such opinion, order
or decree, the Trustee will have no discretion or authority in such
circumstances to tender, deposit, sell, transfer or exchange shares of Fortune
Common Stock held in the Fortune Stock Fund (or the retention of such shares in
the Fortune Stock Fund) pursuant to a tender offer or with respect to the
exercise of (or refraining from exercising) any withdrawal rights with respect
to shares tendered or deposited pursuant to a tender offer, but will act in
accordance with the most recent timely directions received from Participants,
former Participants and Beneficiaries to the extent such directions have not
been invalidated. To the extent the Trustee, in order to comply with ERISA or
other applicable law, exercises any fiduciary responsibility it may have in any
circumstances with respect to the tendering, depositing, sale, exchange or
transfer of shares of Fortune Common Stock held in the Fortune Stock Fund or the
exercise of any withdrawal rights with respect to shares tendered or deposited
pursuant to a tender offer, the Trustee in exercising its fiduciary
responsibility, unless pursuant to the requirements of ERISA or otherwise it is
unlawful to do so, (1) will take into account directions timely received from
Participants, former Participants and Beneficiaries as being the most indicative
of their best interests with respect to a tender offer, and (2) to the extent
the Trustee deems it appropriate, will take into consideration any relevant
non-financial factors in addition to any relevant financial factors bearing on
any sale, exchange or transfer or any exercise of withdrawal rights.
(e) Proceeds of Tender. The proceeds of any sale, exchange or
transfer of shares of Fortune Common Stock pursuant to the direction of a
Participant, former Participant or Beneficiary in accordance with this Section
4.15(e) will be allocated to his Accounts in the same manner, in the same
proportion and as of the same date as were the shares sold, exchanged or
transferred and will be governed by the provisions of this Section 4.15(e) and
all other applicable provisions of the Plan and the Trust Agreement. Such
proceeds will be deemed to be held in the Fortune Stock Fund and will be subject
to this Section 4.15(e) and the other applicable provisions of the Plan and the
Trust Agreement. Pending receipt of directions as to which of the remaining
Investment Funds the proceeds should be invested in, the proceeds will be
invested in the Balanced Fund.
4.16. Certain Rights Held in Fortune Stock Fund.
(a) Disposition of Preferred Share Purchase Rights. If the
Preferred Share Purchase Rights of Fortune (or any rights issued by Fortune in
substitution or replacement thereof) held in the Fortune Stock Fund ("rights")
become separately transferable or exercisable, the Trustee shall dispose of the
rights by selling the rights to Fortune at a price recommended by an independent
financial advisor retained by the Trustee at Fortune's expense.
(b) Exchange of Rights. If, prior to the sale of the rights by
the Trustee to Fortune, Fortune determines to exchange the rights for shares of
Fortune Common Stock, the Trustee will surrender the rights that it holds in
exchange for shares of Fortune Common Stock.
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(c) Invalidity. If a court of competent jurisdiction issues an
opinion, order or decree which, in the opinion of counsel to Fortune or the
Trustee, will, in all or any particular circumstances, (1) invalidate under
ERISA or otherwise any provision or provisions of the Plan or the Trust
Agreement with respect to the sale, exchange or retention of any rights held in
the Fortune Stock Fund, (2) cause any such provision or provisions to conflict
with ERISA, or (3) require the Trustee not to act or such rights not to be sold,
exchanged or retained in accordance with such provision or provisions, then,
upon written notice thereof to the Trustee (in the case of an opinion of counsel
to Fortune), or to Fortune (in the case of an opinion of counsel to the
Trustee), such provision or provisions will be given no further force or effect
in such circumstances. Except to the extent otherwise specified in such opinion,
order or decree, the Trustee will sell all the rights to a third party or
parties with, if the Trustee so deems it appropriate, the assistance of an
independent financial adviser retained by the Trustee at the expense of Fortune.
(d) Allocation of Proceeds. The proceeds of any sale, exercise
or exchange of rights in accordance with this Section 4.16(d) will be allocated
to the Account of a Participant, former Participant or Beneficiary in the same
manner, in the same proportion and as of the same date as were the shares to
which the sold, exercised or exchanged rights were attributable and will be
governed by all other applicable provisions of the Plan and the Trust Agreement.
Such proceeds will be deemed to be held in the Fortune Stock Fund and will be
subject to this Section 4.16(d) and the other applicable provisions of the Plan
and the Trust Agreement. Such proceeds will be deemed to be held in the Fortune
Stock Fund and will be subject to this Section 4.16(d) and all other applicable
provisions of the Plan and the Trust Agreement. Pending receipt of directions as
to which of the remaining Investment Funds the proceeds should be invested in,
the proceeds shall be invested in the Balanced Fund.
4.17. Valuation of Investment Funds. As of each Business Day,
the Trustee will report to the Retirement Committee the Fair Market Value of the
assets of each Investment Fund and the number of units in the Fortune Stock Fund
and Gallaher Fund. The Fair Market Value of an Investment Fund will be the value
of such Investment Fund as of the Close of Business on such Business Day. The
number of units and value of units in the Fortune Stock Fund and Gallaher Fund
will be determined in accordance with Section 4.22.
4.18. Administration of the Gallaher Fund.
(a) Gallaher ADRs Transferred to Gallaher Fund. ADRs with
respect to Gallaher stock ("Gallaher ADRs") received by the Fortune Stock Fund
in the Gallaher Spin-Off will be transferred to the Gallaher Fund.
(b) Distributions With Respect to Gallaher ADRs. The proceeds
of any distribution received by the Gallaher Fund with respect to Gallaher ADRs
will be invested in the other Investment Funds on a pro rata basis in accordance
with each Participant's current investment election under Section 4.02. Nothing
in this Section 4.18(b), however, restricts the Trustee's ability to retain in
the Gallaher Fund any additional Gallaher ADRs received as a
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result of a stock dividend, stock split or similar transaction. Contributions
will not be invested in the Gallaher Fund, nor may any transfers be made to the
Gallaher Fund from any of the other Investment Funds.
4.19. Voting of Shares in Gallaher Fund.
(a) Trustee Voting. Notwithstanding any other provision of the
Plan or the Trust Agreement to the contrary, the Trustee will have no discretion
or authority to provide any voting instructions with respect to Gallaher ADRs
held in the Gallaher Fund except as provided in this Section 4.19.
(b) Participant Direction. Each Participant, former
Participant or Beneficiary will be entitled to direct the Trustee, and the
Trustee will solicit the direction of such Participant, former Participant or
Beneficiary, as to the manner in which the Gallaher ADR depositary should be
instructed to vote the Gallaher shares underlying the Gallaher ADRs attributable
to his interest in the Gallaher Fund. The Trustee will instruct the Gallaher ADR
depositary that such Gallaher ADRs be voted with respect to any matter in
accordance with the most recent timely direction received by the Trustee from
such Participant, former Participant or Beneficiary. With respect to the voting
of Gallaher ADRs held in the Gallaher Fund as to which timely directions have
not been received by the Trustee, the Trustee will instruct the Gallaher ADR
depositary to vote the Gallaher shares underlying the Gallaher ADRs in the same
manner and in the same proportion in which the Gallaher ADRs as to which such
directions were timely received by the Trustee are to be voted. The Trustee will
combine fractional interests of Participants, former Participants and
Beneficiaries in Gallaher ADRs held in the Gallaher Fund to the extent possible
so that the voting instructions to the Gallaher ADR depositary with respect to
such matter are provided in a manner which reflects as accurately as possible
the collective directions given by Participants, former Participants and
Beneficiaries. In giving directions to the Trustee as provided in this Section
4.19(b), each Participant, former Participant or Beneficiary will be acting as a
named fiduciary within the meaning of ERISA Section 403(a)(1) ("Named
Fiduciary") with respect to the voting rights of Gallaher ADRs in accordance
with such directions pursuant to this Section 4.19(b).
(c) Trustee to Communicate Voting Procedures. The Trustee will
communicate or cause to be communicated to all Participants, former Participants
and Beneficiaries the procedures regarding the voting of Gallaher ADRs held in
the Gallaher Fund. The Trustee will distribute or cause to be distributed as
promptly as possible to all Participants, former Participants and Beneficiaries
entitled to give directions to the Trustee as to voting with respect to any
matter all communications and other materials, if any, that the Trustee may
receive from any person or entity that are being distributed to the holders of
Gallaher ADRs and either are directed generally to such holders or relate to any
matter on which holders of Gallaher ADRs are entitled to provide voting
instructions by proxy, consent or otherwise, and the Participating Employers
will promptly furnish to the Trustee all such communications and other
materials, if any, as are being distributed by or on behalf of Gallaher. The
Participating Employers will provide the Trustee with such information,
documents and assistance as the
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Trustee may reasonably request in connection with any communications or
distributions to Participants, former Participants and Beneficiaries as
aforesaid. This information will include the names and current addresses of
Participants, former Participants and Beneficiaries and the Gallaher ADRs
credited to the accounts of each of them, upon which the Trustee may
conclusively rely. Notwithstanding any provision of this Section 4.19(c) to the
contrary, the Plan or the Trust Agreement, except if the Participating Employers
serve as recordkeeper, to the extent necessary to provide the Participating
Employers with information necessary to accurately maintain records of the
interest in the Plan of Participants, former Participants and Beneficiaries, the
Trustee will use its best efforts (1) to keep confidential the direction (or the
absence thereof) from each Participant, former Participant or Beneficiary in
connection with the voting of Gallaher ADRs held in the Gallaher Fund and the
identity of such Participant, former Participant or Beneficiary, and (2) not to
divulge such direction or identity to any person or entity, including, without
limitation, Gallaher, Fortune, the Company, any other Participating Employer and
any Non-Participating Employer and any director, officer, employee or agent
thereof, it being the intent of this Section 4.19(c) that Gallaher, Fortune, the
Company, each other Participating Employer, and each Non-Participating Employer
and their directors, officers, employees and agents not be able to ascertain the
direction given (or not given) by any Participant, former Participant or
Beneficiary in connection with the voting of Gallaher ADRs.
(d) Invalidity. If a court of competent jurisdiction issues an
opinion, order or decree which, in the opinion of counsel to Fortune or the
Trustee, will, in all or any particular circumstances, (1) invalidate under
ERISA or otherwise any provision or provisions of the Plan or the Trust
Agreement with respect to the voting of Gallaher ADRs held in the Gallaher Fund,
(2) cause any such provision or provisions to conflict with ERISA, or (3)
require the Trustee not to act or such voting rights not to be exercised in
accordance with such provision or provisions, then, upon notice thereof to the
Trustee (in the case of an opinion of counsel to Fortune), or to Fortune (in the
case of an opinion of counsel to the Trustee), such provision or provisions will
be given no further force or effect in such circumstances. Except to the extent
otherwise specified in such opinion, order or decree, the Trustee will have no
discretion or authority in such circumstances to provide voting instructions
with respect to Gallaher ADRs held in the Gallaher Fund, but will exercise such
voting rights in accordance with the most recent timely directions received from
Participants, former Participants and Beneficiaries to the extent such
directions have not been invalidated. To the extent the Trustee exercises any
fiduciary responsibility it may have in any circumstances with respect to
providing voting instructions regarding Gallaher ADRs held in the Gallaher Fund,
the Trustee in exercising its fiduciary responsibility, unless pursuant to the
requirements of ERISA or otherwise it is unlawful to do so, will take into
account directions timely received from Participants, former Participants and
Beneficiaries as being valid directions.
4.20. Tendering of Gallaher ADRs.
(a) Tender by Trustee. Notwithstanding any other provision of
the Plan or the Trust Agreement to the contrary, the Trustee will have no
discretion or authority to tender, deposit, sell, exchange or transfer any
Gallaher ADRs held in the Gallaher Fund (or to give
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directions to the Gallaher ADR depositary with respect to securities underlying
the Gallaher ADRs) pursuant to any tender offer (as defined herein) except as
provided in this Section 4.20(a). For purposes of this Section 4.20(a), a
"tender offer" will mean any tender or exchange offer for or request or
invitation for tenders or exchanges of Gallaher ADRs (or securities underlying
the Gallaher ADRs), and will include, without limitation, any such tender offer
made by or on behalf of Gallaher.
(b) Participant Direction. Each Participant, former
Participant or Beneficiary will be entitled to direct the Trustee, and the
Trustee will solicit the direction of such Participant, former Participant or
Beneficiary, as to the tendering, depositing, selling, exchanging or
transferring of Gallaher ADRs attributable to his proportionate interest in the
Gallaher Fund (or to provide instructions to the Gallaher ADR depositary with
respect to securities underlying the Gallaher ADRs) pursuant to any tender
offer, and the Trustee will tender, deposit, sell, exchange or transfer Gallaher
ADRs (or will retain such shares in the Gallaher Fund) (or will provide
instructions to the Gallaher ADR depositary with respect to securities
underlying the Gallaher ADRs) pursuant to such tender offer in accordance with
the most recent timely direction received by the Trustee from such Participant,
former Participant or Beneficiary. With respect to Gallaher ADRs held in the
Gallaher Fund as to which timely directions have not been received by the
Trustee from Participants, former Participants and Beneficiaries, such
Participants, former Participants and Beneficiaries will be deemed to have
directed the Trustee to retain such Gallaher ADRs in the Gallaher Fund (or to
provide instructions to the Gallaher ADR depositary that securities underlying
the Gallaher ADRs be retained by the Gallaher ADR depositary) subject to all
provisions of the Plan and the Trust Agreement and not be tendered, deposited,
sold, exchanged or transferred pursuant to such tender offer, and the Trustee
will act in accordance therewith. In the event that, under the terms of such
tender offer or otherwise, any Gallaher ADRs (or securities underlying Gallaher
ADRs) tendered or deposited pursuant thereto may be withdrawn, the Trustee will
use its best efforts to solicit the direction of each Participant, former
Participant or Beneficiary as to the exercise of withdrawal rights with respect
to Gallaher ADRs (or securities underlying Gallaher ADRs) that have been
tendered or deposited pursuant to this Section 4.20(b), and the Trustee will
exercise (or refrain from exercising) (or instruct the Gallaher ADR depositary
to exercise or refrain from exercising) such withdrawal rights in the same
manner as will reflect the most recent timely directions received with respect
thereto. The Trustee will not withdraw Gallaher ADRs (or instruct the Gallaher
ADR depositary to withdraw securities underlying Gallaher ADRs) except pursuant
to a timely direction of a Participant, former Participant or Beneficiary. The
Trustee will combine fractional interests of Participants, former Participants
and Beneficiaries in Gallaher ADRs held in the Gallaher Fund to the extent
possible so that such Gallaher ADRs are tendered, deposited, sold, exchanged or
transferred, and withdrawal rights with respect thereto are exercised, in a
manner which reflects as accurately as possible the collective directions given
or deemed to have been given by Participants, former Participants and
Beneficiaries in accordance with this Section 4.20(b). In giving or being deemed
to have given directions to the Trustee as provided in this Section 4.20(b),
each Participant, former Participant or Beneficiary will be acting as a Named
Fiduciary in accordance with such directions pursuant to this Section 4.20(b).
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(c) Trustee to Communicate Tender Procedures. In the event of
a tender offer as to which Participants, former Participants and Beneficiaries
are entitled to give directions as provided in this Section 4.20(c), the Trustee
will communicate or cause to be communicated to all Participants, former
Participants and Beneficiaries entitled to give directions the procedures
relating to their right to give directions as Named Fiduciaries to the Trustee
and in particular the consequences of any failure to provide timely direction to
the Trustee. In the event of such a tender offer, the Trustee will distribute or
cause to be distributed as promptly as possible to all Participants, former
Participants and Beneficiaries entitled to give directions to the Trustee with
respect to such tender offer all communications and other materials, if any,
that the Trustee may receive from any person or entity that are being
distributed to the holders of the securities to whom such tender offer is
directed and either are directed generally to such holders or relate to such
tender offer. The Participating Employers and the Retirement Committee will
provide the Trustee with such information, documents and assistance as the
Trustee may reasonably request in connection with any communications or
distributions to Participants, former Participants and Beneficiaries as
aforesaid. This information will include the names and current addresses of
Participants, former Participants and Beneficiaries and the Gallaher ADRs or
securities underlying such Gallaher ADRs credited to the accounts of each of
them, upon which the Trustee may conclusively rely. Notwithstanding any other
provision of this Section 4.20(c) or the Trust Agreement to the contrary, except
if the Participating Employers serve as recordkeeper, to the extent necessary to
provide the Participating Employers with information necessary to accurately
maintain records of the interest in the Plan of Participants, former
Participants and Beneficiaries, the Trustee will use its best efforts (1) to
keep confidential the direction (or the absence thereof) from each Participant,
former Participant or Beneficiary with respect to any tender offer and the
identity of such Participant, former Participant or Beneficiary, and (2) not to
divulge such direction or identity to any person or entity, including, without
limitation, Gallaher, Fortune, the Company any other Participating Employer and
any Non-Participating Employer and any director, officer, employee or agent
thereof. It is the intent of this Section 4.20(c) that Gallaher, Fortune, the
Company, each other Participating Employer and each Non-Participating Employer
and their directors, officers, employees and agents not be able to ascertain the
direction given (or not given) or deemed to have been given by any Participant,
former Participant or Beneficiary with respect to any tender offer.
(d) Invalidity. If a court of competent jurisdiction issues an
opinion, order or decree which, in the opinion of counsel to Fortune or the
Trustee, will, in all or any particular circumstances, (1) invalidate under
ERISA or otherwise any provision or provisions of the Plan or the Trust
Agreement with respect to the tendering, depositing, sale, exchange or transfer
of Gallaher ADRs (or securities underlying Gallaher ADRs) held in the Gallaher
Fund or the exercise of any withdrawal rights with respect to Gallaher ADRs (or
securities underlying Gallaher ADRs) tendered or deposited pursuant to a tender
offer, or (2) cause any such provision or provisions to conflict with ERISA, or
require the Trustee not to act or such Gallaher ADRs (or securities underlying
Gallaher ADRs) not to be tendered, deposited, sold, exchanged or transferred or
such withdrawal rights not to be exercised in accordance with such provision or
provisions, then, upon written notice thereof to the Trustee, (in the case of an
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opinion of counsel to Fortune), or to Fortune (in the case of an opinion of
counsel to the Trustee), such provision or provisions will be given no further
force or effect in such circumstances. Except to the extent otherwise specified
in such opinion, order or decree, the Trustee will have no discretion or
authority in such circumstances to tender, deposit, sell, transfer or exchange
Gallaher ADRs held in the Gallaher Fund (or the retention of such shares in the
Gallaher Fund), or to give instructions to the Gallaher ADR depositary with
respect to securities underlying Gallaher ADRs, pursuant to a tender offer or
with respect to the exercise of (or refraining from exercising) any withdrawal
rights with respect thereto, but will act in accordance with the most recent
timely directions received from Participants, former Participants and
Beneficiaries to the extent such directions have not been invalidated. To the
extent the Trustee exercises any fiduciary responsibility it may have in any
circumstances with respect to the tendering, depositing, sale, exchange or
transfer of Gallaher ADRs held in the Gallaher Fund, or giving instructions to
the Gallaher ADR depositary with respect to securities underlying Gallaher ADRs,
or the exercise of any withdrawal rights with respect thereto, the Trustee in
exercising its fiduciary responsibility, unless pursuant to the requirements of
ERISA or otherwise it is unlawful to do so, will take into account directions
timely received from Participants, former Participants and Beneficiaries as
being valid directions.
(e) Proceeds of Tender. The proceeds of any sale, exchange or
transfer of Gallaher ADRs (or securities underlying Gallaher ADRs) pursuant to
the direction of a Participant, former Participant or Beneficiary will be
allocated pursuant to the directions of the Participant, former Participant or
Beneficiary, and absent a direction, will be invested in the Balanced Fund and
will not be held in the Gallaher Fund.
4.21. Voting of Shares in Mutual Funds. At the time of mailing
of notice of each annual or special stockholders' meeting of any mutual fund
under any Investment Fund, the Trustee will send a copy of the notice and all
proxy solicitation materials to each Participant, former Participant and
Beneficiary who has shares of the mutual fund credited to such Participant's,
former Participant's or Beneficiary's Accounts, together with a voting direction
form for return to the Trustee or its designee. Participants, former
Participants and Beneficiaries will have the right to direct the Trustee as to
the manner in which the Trustee is to vote shares credited to the Accounts of
such Participant, former Participant or Beneficiary that are invested in mutual
funds under Investment Funds. The Trustee will vote the shares as directed by
the Participant, former Participant or Beneficiary. The Trustee will not vote
shares for which it has not received a direction from the Participant, former
Participant or Beneficiary. During the Transition Period described in Section
4.02(f), the Trusts Investment Committee will have the right to direct the
Trustee as to the manner in which the Trustee is to vote the shares of the
mutual funds in the Investment Funds. Following the Transition Period described
in Section 4.02(h), the Trusts Investment Committee will continue to have the
right to direct the Trustee as to the manner in which the Trustee is to vote the
mutual fund shares held in the short-term liquidity reserves in the Fortune
Stock Fund and Gallaher Fund. With respect to all additional rights relating to
shares held in the mutual funds under the Investment Funds, the Trustee will
follow the directions of the Participants, former Participants and Beneficiaries
and, if no such directions are received, the directions of the Trusts Investment
Committee.
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4.22. Unitized Fortune Stock Fund and Gallaher Fund. As of the
Close of Business on September 30, 1999, the Fortune Stock Fund and Gallaher
Fund will be converted into units by dividing the Fair Market Value of all
amounts (including employer stock and any short-term investments) held in the
respective fund by $10.00. At the Close of Business on October 1, 1999 and on
each Business Day thereafter, the value of a unit in the Fortune Stock Fund or
Gallaher Fund ("Closing Unit Value") will be determined by dividing the Fair
Market Value of such fund by the number of units in such fund before taking into
account Additions to and Reductions from such fund (as defined below). After the
Closing Unit Value is determined, at the Close of Business on each Business Day,
the total number of units in the Fortune Stock Fund and Gallaher Fund will be
re-determined to take into account new units resulting from Additions to such
fund (as defined below) and canceled units resulting from Reductions from such
fund (as defined below). As of the Close of Business on such Business Day, the
total number of new units resulting from Additions to the Fortune Stock Fund or
Gallaher Fund will be the number equal to (A) the total amount of the Additions
to such fund divided by (B) the Closing Unit Value. As of the Close of Business
on such Business Day, the total number of units to be canceled under the Fortune
Stock Fund and Gallaher Fund will be the number equal to (A) the total amount of
Reductions from such fund divided by (B) the Closing Unit Value. Whenever all or
any part of the Account Balances in the Fortune Stock Fund or Gallaher Fund is
reduced from such fund as a result of a Reduction, the value of the reduced
amount will equal the Closing Unit Value multiplied by the number of whole and
fractional units credited to such Accounts. For purposes of this Section 4.22,
"Additions" means any amounts added to the Fortune Stock Fund or Gallaher Fund
during the day as a result of contributions to, reinstatement of Account
Balances under and interfund transfers pursuant to the provisions of the Plan
into such fund since the Close of Business on the immediately preceding Business
Day. For purposes of this Section 4.22, "Reductions" means any amounts reduced
from the Fortune Stock Fund or Gallaher Fund as a result of any in-service
withdrawals, loans, distributions, interfund transfers, return of any excess
amounts and forfeitures pursuant to the provisions of the Plan from such fund
since the Close of Business on the immediately preceding Business Day.
ARTICLE V
ACCOUNTS
5.01. Participants' Accounts. The Retirement Committee will
maintain or cause to be maintained the following separate Accounts for each
Participant (and, as long as may be appropriate, for each former Participant and
Beneficiary):
(a) Tax Deferred Account. A Tax Deferred Account will be
maintained for each Participant on whose behalf Tax Deferred Contributions are
made pursuant to Section 3.01 of this Plan and on whose behalf any tax deferred
contributions were made under a Prior Plan, and such contributions and any
earnings and losses thereon will be allocated to such Tax Deferred Account.
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(b) Company Matching Account. A Company Matching Account will
be maintained for each Participant on whose behalf Company Matching
Contributions are made pursuant to Section 3.02 of this Plan and on whose behalf
any company matching contributions were made under a Prior Plan, and such
contributions and any earnings and losses thereon will be allocated to such
Company Matching Account.
(c) After-Tax Account. An After-Tax Account will be maintained
for each Participant on whose behalf After-Tax Contributions are made pursuant
to Section 3.03 of this Plan and on whose behalf any after-tax contributions
were made under a Prior Plan, and such contributions and any losses and earnings
thereon will be allocated to such After-Tax Account.
(d) Rollover Account. A Rollover Account will be maintained
for each Participant on whose behalf any amount has been rolled over to this
Plan pursuant to Section 3.04 of this Plan and, except as otherwise specified in
this Section 5.01, on whose behalf any amount has been transferred or rolled
over to a Prior Plan, and such amounts and any earnings and losses thereon will
be allocated to such Rollover Account.
5.02. Allocation of Earnings and Losses to Accounts. Earnings
and losses will be allocated to the Accounts of all Participants as of each
Business Day by credit or deduction therefrom, as the case may be, of the
increase or decrease in the value of the Investment Funds in which such Accounts
are invested since the immediately preceding Business Day attributable to
interest, dividends, changes in market value, expenses and gains and losses
realized from the sale of assets.
5.03. Allocation of Contributions to Accounts. As of the Close
of Business on each Business Day, Tax Deferred Contributions, Company Matching
Contributions, After-Tax Contributions and Rollover Contributions made to the
Plan during the period then ended by or on behalf of each Participant will be
credited to such Participant's Tax Deferred Account, Company Matching Account,
After-Tax Account and Rollover Account, respectively.
5.04. Required Information. Each Participating Employer will
furnish to the Company all such information reasonably requested by the Company
to enable it to complete the allocations hereunder, and the Company may rely in
all respects upon such information so furnished.
5.05. Transfer of Assets to or from Another Plan. If another
employee plan is merged into this Plan, for purposes of this Plan any amount
attributable to elective salary reduction contributions under Code Section
401(k) thereunder will be combined with amounts attributable to Tax Deferred
Contributions; any amounts attributable to employee contributions (or
contributions considered as taxable income) thereunder will be combined with
amounts attributable to After-Tax Contributions but will be withdrawable to the
extent permitted by the Company; and any amounts attributable to employer
matching thereunder will be accounted for separately under this Plan and will be
vested to at least the extent provided in such other employee plan.
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The Company may, in its discretion, permit the direct
Trustee-to-Trustee transfer of assets to the Plan from another employee plan, or
the rollover of an eligible rollover distribution within the meaning of Code
Section 402(c)(4) on behalf of a Covered Employee, regardless of whether the
Covered Employee has become a Participant in the Plan. If such a transfer is
made though a Trustee-to-Trustee transfer, it will be treated as a merger
hereunder. If such a transfer is made through a rollover of an eligible rollover
distribution, the transferred amount will be accounted for separately under this
Plan and fully vested at all times. The Company may also, in its discretion,
permit the transfer of assets from the Plan to another employee plan. Each
Covered Employee who is not a Participant on whose behalf an amount has been
transferred to the Plan pursuant to this Section 5.05, will be treated as a
Participant solely for the purposes of the provisions of this Plan pertaining to
rollover contributions.
5.06. Annual Additions Limitation.
(a) Maximum Annual Additions. The sum of the Annual Additions
(as defined in Section 5.06(c)) to a Participant's Accounts in any Plan Year
will not exceed the lesser of:
(1) $30,000; or
(2) 25% of the Participant's Compensation (as defined for this
purpose in Section 5.06).
The limitations set forth in (1) next above will be adjusted annually for
increases in the cost of living, in accordance with regulations issued by the
Secretary of the Treasury pursuant to the provisions of Code Section 415(d) (or
such other Federal income tax statutory provisions as will at the time be
applicable).
(b) Procedure for Preventing and Correcting Excess Annual
Additions. If the Annual Additions to a Participant's Accounts in any Plan Year
exceeds the maximum annual limits as a result of the allocation of Forfeitures,
a reasonable error in estimating Compensation, a reasonable error in determining
the amount of pre-tax deferrals or under such other facts and circumstances
which the Commissioner of Internal Revenue finds justifiable, the portion of any
After-Tax Contributions, and thereafter any Company Matching Contributions
otherwise allocable to a Participant's Accounts will be reduced by the amount
necessary to reduce the amount apportionable to a Participant to the lesser of
the amounts set forth in Section 5.06(a)(1) or (2). If the Annual Additions to a
Participant's Accounts for 1996 or any subsequent Plan Year exceed the maximum
annual limits as a result of a reasonable error in estimating Compensation, a
reasonable error in determining the amount of pre-tax deferrals or under any
such other facts and circumstances which the Commissioner of Internal Revenue
finds justifiable, the excess amount will be held unallocated in a suspense
account. If a suspense account is in existence at any time during a Plan Year
pursuant to this section, it will not participate in the allocation of any
investment gains and losses. If a suspense account is in existence at any time
during a Plan Year, all amounts in the suspense account must be allocated and
reallocated to Participant's Accounts before any After-Tax Contributions,
Company
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Matching Contributions or Tax Deferred Contributions may be made to the Plan for
that Plan Year. Amounts allocated from the suspense account will be applied to
reduce After-Tax Contributions, Company Matching Contributions and Tax Deferred
Contributions in the order that they otherwise would have been contributed to
the Plan. Excess amounts may not be distributed to Participants or former
Participants.
(c) Definition of Annual Additions. For purposes of this Plan,
the term "Annual Additions" means the amounts allocated to a Participant's
Accounts during the year that constitute:
(1) the Company Matching Contributions allocated to such
Participant's Accounts;
(2) the Tax Deferred Contributions and After-Tax Contributions
allocated to such Participant's Accounts; and
(3) Forfeitures.
(d) Consolidation of Defined Contribution Plans. For purposes
of this Section 5.06, this Plan and any other qualified defined contribution
plan maintained by any Related Employer will be considered as a single defined
contribution plan if a Participant is a participant in both plans. Amounts
allocated to a Participant's individual medical benefit account, as defined in
Code Section 415(l)(1), which is part of a defined benefit plan maintained by a
Participating Employer or Related Employer will be treated as annual additions
to a defined contribution plan. Amounts derived from contributions which are
attributable to post-retirement medical benefits allocated to the separate
account of a Participant who is a key employee, as defined in Code Section
419A(d), under a welfare benefit fund, as defined in Code Section 419(e),
maintained by a Participating Employer or Related Employer, will be treated as
annual additions to a defined contribution plan. Notwithstanding the foregoing,
the compensation limit described in Section 5.06(a)(2) will not apply to any
contribution for medical benefits (within the meaning of Code Section
419A(f)(2)) after separation from service which is otherwise treated as an
annual addition under Code Section 415(l)(1). If a reduction is necessary under
Section 5.06(b), then the reduction will be made to the Annual Additions under
one of such plans as determined by the Retirement Committee and the governing
bodies of such other plans.
5.07. Combined Maximum Limitations. With respect to Plan Years
commencing prior to January 1, 2000, if any Participant is also participating in
any other qualified plan (within the meaning of Code Section 401) maintained by
a Participating Employer or Related Employer, then for any limitation year,
which will be the Plan Year, the sum of the "Defined Benefit Plan Fraction" and
the "Defined Contribution Plan Fraction" for such limitation year will not
exceed one. For purposes of this Section 5.07, such sum will be determined in
accordance with the following:
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(a) The "Defined Benefit Plan Fraction" for any year is a
fraction:
(1) the numerator of which is the projected annual benefit of
the Participant under each defined benefit plan (determined as of the
close of the year); and
(2) the denominator of which is the lesser of the maximum
dollar limitation in effect under Code Section 415(b)(1)(A) for such
limitation year times 1.25, or the amount which may be taken into
account under Code Section 415(b)(1)(B) for such limitation year times
1.4.
(b) The "Defined Contribution Plan Fraction" for any year is a
fraction:
(1) the numerator of which is the sum of the annual additions
to the Participant's account under each defined contribution plan as of
the close of the year; and
(2) the denominator of which is the sum of the lesser of the
following amounts determined for such limitation year and each prior
year of service with the Participating Employer or Related Employer:
(A) the product of 1.25 multiplied by the dollar
limitation in effect under Code Section 415(c)(1)(A) for such
limitation year; or
(B) The product of 1.4 multiplied by the amount which may
be taken into account under Code Section 415(c)(1)(B) for such
limitation year.
For purposes of this Section 5.07, all defined benefit or
defined contribution plans will be treated as one plan by class. If the above
limitation would otherwise be exceeded in any limitation year, the Participant's
benefits under the defined benefit plans will be limited. If any such defined
benefit plan fails to provide for such reduction of benefits, the annual
additions under this Plan will be reduced to the extent necessary to comply with
the above limitation.
If the Plan satisfied the applicable requirements of Code
Section 415 as in effect for all limitation years beginning before April 1,
1987, an amount will be subtracted from the numerator of the Defined
Contribution Plan Fraction (not exceeding such numerator), as prescribed by the
Secretary of the Treasury, so that the sum of the Defined Benefit Plan Fraction
and the Defined Contribution Plan Fraction computed under Code Section 415(e)(1)
does not exceed one.
Notwithstanding any other provision of this Plan to the
contrary, effective as of January 1, 2000, this Section 5.07 will no longer
limit the benefits of any Participant and will be deleted from the Plan without
need for further amendment.
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5.08. Definition of Compensation for Purposes of Sections 5.06
and 5.07. Solely for the purpose of applying the limitations of Sections 5.06
and 5.07, the term "Compensation" will mean a Participant's W-2 income for the
limitation year. Compensation for a limitation year will include compensation
actually paid or includable in gross income during such limitation year as well
as any elective deferrals (as defined in Code Section 402(g)(3)) and any amount
which is contributed or deferred by a Participating Employer at the election of
the Participant and which is not includable in the gross income of the
Participant by reason of Code Section 125.
5.09. Limitation of Annual Unadjusted Earnings or
Compensation. For purposes of this Plan, the Unadjusted Earnings or Compensation
of a Participant will be limited to $150,000 in each Plan Year (adjusted for
increases in the cost of living pursuant to rulings of the Secretary of the
Treasury).
ARTICLE VI
VESTING AND FORFEITURES
6.01. Participant Contributions. A Participant will at all
times be 100% vested in his Tax Deferred Account, After-Tax Account and Rollover
Account.
6.02. Company Matching Contributions. Each Covered Employee
who was a Participant in the Plan on the day before the Restatement Date will be
100% vested in his Company Matching Account. Each Covered Employee who becomes a
Participant on or after the Restatement Date will be 100% vested in his Company
Matching Account on the day after he completes one year of Vesting Service.
6.03. Vesting in Prior Plan. Notwithstanding any other
provision of this Plan to the contrary, a Participant who participated in a
Prior Plan will be vested in his Accounts at least to the extent he was vested
under such Prior Plan.
6.04. Amendments to Vesting Schedule. No amendment to the
Plan's vesting schedules will deprive a Participant of his nonforfeitable rights
to benefits accrued to the date of such amendment. If any vesting schedule of
the Plan is amended, each Participant with at least three years of Vesting
Service may elect to have his nonforfeitable percentage determined without
regard to such amendment. The period during which the election may be made will
commence with the date the amendment is adopted and will end on the later of:
(a) 60 days after the amendment is adopted;
(b) 60 days after the amendment is effective; and
(c) 60 days after the Participant is issued written
notice of the amendment by Fortune.
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6.05. Forfeitures. Any Account Balances in a Participant's
Accounts that do not become distributable pursuant to Article VII will be
regarded as Forfeitures upon such Participant's Severance From Service. All
amounts forfeited in accordance with this Article VI will be used to reduce
contributions of the Participant's Participating Employer. Pending allocation to
reduce contributions of the Participant's Participating Employer, such amounts
will be invested in the Balanced Fund.
6.06. Reinstatement of Account Balances. If a former
Participant who has received a distribution of less than the full amount of his
Account Balances thereafter becomes a Participant, the Participant may, provided
a Break in Service of five years has not occurred, repay in cash the amount of
his Account Balances which previously had been distributed in accordance with
Article VII. Upon such repayment, the amount so repaid will be reinstated (a) as
of the day on which such repayment is made if such repayment is received by the
Trustee before the Close of Business on a Business Day, or (b) as of the next
Business Day if such repayment is received by the Trustee on a day other than a
Business Day or after the Close of Business on a Business Day. Any such repaid
amount will be nonforfeitable. If a Participant or former Participant who has
received a distribution of less than the full amount of his Account Balances
resumes employment before incurring a Break in Service of five years, the amount
of the Account Balances that the Participant or former Participant did not
receive will be reinstated as of the Business Day next succeeding or coincident
with his reemployment regardless of whether such Participant has repaid the
amount of his Account Balances which previously had been distributed in
accordance with Article VII. Such reinstated amounts will be invested in the
Balanced Fund until such Participant makes an investment election on an Approved
Form of Election with respect to such reinstated amounts. If repayment or
reinstatement of such amount is not made as provided herein, the amount of the
Participant's Account Balances previously distributed and the amount that the
Participant did not receive will be disregarded in the determination of the
Participant's Account Balances. For purposes of Section 6.06, a "Break in
Service" means any period commencing with the Participant's Severance From
Service and continuing for at least 12 consecutive months until reemployment by
any Related Employer. In the event an Employee is reemployed by a Participating
Employer or Related Employer within the 12 consecutive month period following
Severance From Service, a Break in Service will be deemed not to have occurred
and the Employee will be considered to have been in Service during such period
he was not employed. In the event the Employee is not so reemployed within such
12 consecutive month period, the Break in Service will be deemed to have
commenced on his Severance From Service. Notwithstanding the foregoing, any
former Participant who terminated employment under a Prior Plan before January
1, 1996 and who becomes a Participant in this Plan, will be immediately 100%
vested in any unvested Account Balances attributable to company matching
contributions at the time of his termination of employment.
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ARTICLE VII
PAYMENTS
7.01. Form of Payment.
(a) Payment Forms. Except as otherwise set forth in Section
7.03, the vested percentage of the Participant's Account Balances will be paid
to or for the benefit of the Participant or his Beneficiary, as of the payment
dates specified in Section 7.02 and in such one or more of the following forms
of settlement as the Participant or his Beneficiary elects:
(1) by a single payment in cash;
(2) by a single payment in whole shares of Fortune Common
Stock or Gallaher ADRs to the extent that the portion of such
Participant's Account Balances allocated to the Fortune Stock Fund or
to the Gallaher Fund is evenly divisible by the fair market value of
such stock or Gallaher ADRs on the Business Day as of which such
Account Balances are determined and the remainder of such Participant's
Account Balances in cash; or
(3) by periodic installments in cash during a period not to
exceed the life expectancy of the Participant or former Participant or
the joint life expectancy of the Participant or former Participant and
his designated Beneficiary determined at the date payments begin.
(b) Conversion From Periodic Installments to Lump Sum. If a
Participant, former Participant or his Beneficiary is receiving periodic
installments or is entitled to a deferred payment pursuant to Section 7.02, upon
the request of such Participant, former Participant or Beneficiary through an
Approved Form of Election, all of the Account Balances will be paid in a single
payment or otherwise applied for the benefit of such Participant, former
Participant or Beneficiary. Such Account Balances will be valued (1) as of the
day on which such request is received by the Retirement Committee or its
designee, if such request is received before the Close of Business on a Business
Day, or (2) as of the next Business Day, if such request is received by the
Retirement Committee or its designee on a day other than a Business Day or after
the Close of Business on a Business Day. Except as otherwise provided in Article
VIII, a Participant, former Participant or his Beneficiary who is receiving
periodic installments or who is entitled to a deferred payment pursuant to
Section 7.02 may not receive a partial single sum payment of his Account
Balances.
Notwithstanding the foregoing, a former Participant who
terminated employment due to Retirement or his Beneficiary, who is receiving
periodic installments or is entitled to a deferred payment pursuant to Section
7.02, may elect through an Approved Form of Election to receive partial single
sum payments of his Account Balances in cash. Whenever a Participant's Account
Balances are withdrawn pursuant to this Section 7.01(b), such Account
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Balances will be reduced from his Accounts in the order prescribed in Section
8.02(d). Such Account Balances will be valued (1) as of the day on which such
request is received by the Retirement Committee or its designee, if such request
is received before the Close of Business on a Business Day, or (2) as of the
next Business Day, if such request is received by the Retirement Committee or
its designee on a day other than a Business Day or after the Close of Business
on a Business Day. Notwithstanding the foregoing, for each former Participant,
no more than two such partial payments may be made in any 12-month period and
the minimum amount of such partial payment will be $1,000.
(c) Allocation of Earnings and Losses. As long as a
Participant, former Participant or his Beneficiary is receiving periodic
installments pursuant to Section 7.01(a)(3) or is entitled to a deferred payment
pursuant to Section 7.02, such Participant, former Participant or his
Beneficiary will continue to share proportionately in the net income or losses
of the Investment Funds but will not share in any contributions of the
Participating Employer for any Plan Year after the Participant becomes a former
Participant other than the contribution for his last year of participation, if
he is otherwise eligible for such contributions.
(d) Lump Sum Payment of Amounts of $5,000 or Less.
Notwithstanding the foregoing, if the vested value of the Account Balances of a
Participant, former Participant or Beneficiary does not exceed $5,000, payment
will be made as soon as practicable in a single payment in cash. If the vested
value of such Account Balances is zero, then such vested value will be deemed
paid to the Participant immediately as a full distribution of the vested value
of his Account Balances. Notwithstanding the foregoing, if the Participant,
former Participant or Beneficiary has begun receiving payments and there is at
least one periodic payment that has yet to be made, such vested value will not
be paid in a single payment in cash without such Participant's or former
Participant's consent (and his spouse's or surviving spouse's consent, if
applicable).
(e) Reduction of Account Balances and Investment Funds From
Periodic Installments. Payments made in periodic installments pursuant to
Section 7.01(a)(3) will be withdrawn from a Participant's Account Balances in
the order prescribed in Section 8.02(d). Payments in periodic installments made
pursuant to Section 7.01(a)(3) will be withdrawn from the Investment Funds in
which such Accounts are invested on a pro rata basis.
7.02. Time of Payment.
(a) Payment Upon Termination of Employment. Subject to Section
7.02(c) below, if a Participant terminates employment for any reason (whether
Retirement, Disability, Termination of Employment Without Fault, death or other
reason), his vested Account Balances will be paid to or applied for the
Participant's benefit as soon as practicable following the later of the
Participant's termination of employment or receipt by the Retirement Committee
or its designee of a request for payment through an Approved Form of Election.
Such Account Balances will be valued (1) as of the day on which such request is
received by the Retirement Committee or its designee, if such request is
received before the Close of Business on a
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Business Day, or (2) as of the next Business Day, if such request is received by
the Retirement Committee or its designee on a day other than a Business Day or
after the Close of Business on a Business Day. Payment will be made in one of
the forms specified in Section 7.01 or Section 7.03, where applicable. Except as
otherwise provided in Section 7.01(b), if a Participant, former Participant or
Beneficiary elects payment of his Account Balances in periodic installments
pursuant to Section 7.01(a)(3), the Participant, former Participant or
Beneficiary may change the amount (either through a decrementing counter or
fixed dollar amount) of such periodic installments no more frequently than once
per calendar year.
(b) Payment Beginning Date. Unless a Participant elects
otherwise in accordance with Section 7.02(c), payment of the Participant's
Account Balances will be paid in a single cash payment in accordance with
Section 7.02(a) not later than the 60th day after the close of the Plan Year in
which the Participant attains age 65 or terminates employment, whichever is
later.
(c) Deferred Payment. Except as otherwise provided in Section
7.02(b), if the Account Balances of a Participant, former Participant or
Beneficiary exceed $5,000 (or such other amount permitted by Treasury
Regulations) at the time the Account Balances become payable, the Account
Balances will not be paid to him or applied to his benefit, unless the
Participant, former Participant or Beneficiary elects otherwise through an
Approved Form of Election. The Participant, former Participant or Beneficiary
may elect that payments be deferred until the minimum required beginning date
described in Section 7.02(d). As long as the Account Balances are being so held,
such Participant, former Participant or Beneficiary will, to the extent provided
in Section 7.02, continue to share proportionately the net income or net loss
and expenses of the Investment Funds but will not share in any contributions
made by a Participating Employer for any Plan Year after the Participant became
a former Participant.
(d) Minimum Payment Requirements. A Participant, former
Participant or Beneficiary designated pursuant to Section 7.04(a) may also elect
through an Approved Form of Election before payment of Account Balances begins,
that payment be further deferred (except as otherwise provided in Section
7.02(b)). Notwithstanding any other provision of this Plan to the contrary, a
Participant or former Participant who has incurred a Severance From Service or
who is a 5% owner as defined in Code Section 416(i)(1) (whether he incurred a
Severance From Service or not), must begin receiving benefits no later than
April 1 of the calendar year that follows the calendar year in which the
Participant or former Participant attains age 70 1/2. Benefits must be paid (1)
over a period not longer than the life of the Participant or former Participant
and his designated Beneficiary or (2) over a period not extending beyond the
life expectancy of the Participant or former Participant or the joint life
expectancies of the Participant or former Participant and his designated
Beneficiary. If a Participant or former Participant dies before his entire
interest has been paid to him, or if payment has begun to his designated
Beneficiary, the Participant's or former Participant's entire interest (or the
remaining part of such interest if payment has commenced) will be distributed
within five years after his death (or the death of his designated Beneficiary).
Notwithstanding the foregoing, the preceding sentence will not apply if (A) the
payment of the Participant's or
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former Participant's interest begins and is for a certain term permitted under
(2) and such payment to the designated Beneficiary begins within one year after
the Participant's or former Participant's death or (B) the portion of the
Participant's or former Participant's Accounts to which his surviving spouse is
entitled will be paid over a period not extending beyond the life expectancy of
the surviving spouse and such payment begins no later than the date on which the
Participant or former Participant would have attained age 70 1/2. If the
Participant or former Participant dies after payments have begun, the remaining
portion of such interest will continue to be paid at least as rapidly as under
the method of payment being used before the Participant's or former
Participant's death. All payments will be made in accordance with the
regulations under Code Section 401(a)(9), including Treasury Regulation Section
1.401(a)(9)-2.
(e) Notice Requirement. Any election pursuant to Section
7.01(b) or this Section 7.02 must be made through an Approved Form of Election.
(f) Earlier Payments to Alternate Payees. Notwithstanding any
provision of this Plan to the contrary, an Alternate Payee may elect to receive,
pursuant to the terms of a Qualified Domestic Relations Order, a payment at any
time sooner than the "earliest retirement age" (within the meaning of Code
Section 414(p)(4)(B)), which payment will be made from the Plan as soon as
practicable after the election has been received by the Participant's
Participating Employer.
7.03. Certain Retroactive Payments. If the amount of the
payment required to be made or to begin on the date determined under Section
7.02 cannot be ascertained by such date, a payment retroactive to such date may
be made no later than 60 days after the earliest date on which the amount of
such payment can be ascertained under the Plan.
7.04. Designation of Beneficiary.
(a) Designation by Participant. At any time before payment of
the Account Balances in a Participant's Accounts or, if payment has begun in
periodic installments, then at any time before payment of the last installment,
a Participant or former Participant may designate a Beneficiary or Beneficiaries
(who may be executors or trustees and who will be the same person or persons for
each of the Participant's Accounts) in a writing filed with the Participating
Employer or its designee on a form approved by the Retirement Committee, signed
by the Participant or former Participant. The Participant or former Participant
in a writing filed with his Participating Employer or its designee on a form
approved by the Retirement Committee a designation of someone else as a
Beneficiary, at any time before payment of his Account Balances or, if begun in
periodic installments, then at any time before the payment of his last
installment has been paid. The spouse of a Participant or former Participant
will in all cases be deemed to be the Beneficiary of the Participant or former
Participant unless (1) the Participant or former Participant prior to death has
filed with the Participating Employer on a form approved by the Retirement
Committee a designation of someone else as Beneficiary, and (2) the spouse of
the Participant or former Participant has consented in writing to such
designation and the consent acknowledges the effect of the
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designation and is witnessed by a notary public. The spouse's consent may be
dispensed with only if the Participant establishes to the satisfaction of the
Participating Employer or its designee that the spouse's consent cannot be
obtained because the spouse cannot be located or because of such other reasons
as may be prescribed by Treasury Regulations. If there is no effective
Beneficiary designation by a Participant or former Participant on file with the
Participating Employer or its designee when Account Balances would otherwise be
payable to a Beneficiary designated by a Participant or former Participant, then
such balance will be distributed to (1) the spouse of the Participant or former
Participant, or (2) if there is no spouse, to the executor of the will or the
administrator of the estate of the Participant or former Participant or, (3) if
no such executor or administrator is appointed within six months after the death
of such Participant or former Participant, the Retirement Committee will direct
that payment be made, in such shares as the Retirement Committee will determine,
to the child, parent or other blood relative of such Participant or former
Participant, or any of them, or to such other person or persons as the
Retirement Committee may determine.
(b) Conclusive Presumption. If the Company, after reasonable
inquiry, is unable within one year to determine whether any designated
beneficiary did survive the event that entitled him to receive payment of any
sum hereunder, it will be conclusively presumed that such beneficiary did in
fact die prior to such event.
(c) Designation by Surviving Primary Beneficiary. Each primary
Beneficiary designated pursuant to Section 7.04(a) who survives the Participant
or former Participant ("Surviving Primary Beneficiary") may designate a
secondary Beneficiary or Beneficiaries ("Secondary Beneficiary") to receive all
or any portion of the Account Balances otherwise payable to the Surviving
Primary Beneficiary as of the Surviving Beneficiary's date of death. The
Surviving Primary Beneficiary may only make such designation after the
Participant's or former Participant's death. Such Secondary Beneficiary may be
an executor or trustee and will be the same person or persons for each of the
Participant's Accounts. Notwithstanding any other provision of this Plan to the
contrary, any balance payable to any Secondary Beneficiary will be paid pursuant
to one of the payment methods provided in Section 7.01(a)(1) or (a)(2), as
elected by the Secondary Beneficiary as soon as practicable after the date of
the Surviving Primary Beneficiary's death. Such balance will be computed as of
the Business Day coincident with the Surviving Primary Beneficiary's date of
death, if such date of death is on a Business Day. If the Surviving Primary
Beneficiary's date of death does not occur on a Business Day such balance will
be computed as of the Business Day immediately preceding such date of death. Any
designation made pursuant to this Section 7.04(c) may be made at any time before
the payment of the Participant's or former Participant's Accounts to the
Surviving Primary Beneficiary, or if payment has begun in periodic installments,
before payment of the last installment to the Surviving Primary Beneficiary. Any
designation by a Surviving Primary Beneficiary must be made in a writing filed
with the Participating Employer or its designee on a form approved by the
Retirement Committee and signed by the Surviving Primary Beneficiary. Any
Surviving Primary Beneficiary may revoke or change his designation of a
Secondary Beneficiary, in a writing filed with the Participating Employer or its
designee on a form approved by the Retirement Committee, at any time before such
Account
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Balances have been paid to the Surviving Primary Beneficiary or, if payment has
begun in periodic installments, at any time before payment of the last
installment to the Surviving Primary Beneficiary. If no effective designation of
Beneficiary pursuant to this Section 7.04(c) is on file with the Participating
Employer or its designee upon the death of the Surviving Primary Beneficiary,
any balance otherwise then payable to the Surviving Primary Beneficiary will be
(1) paid to the spouse of the Surviving Primary Beneficiary, or (2) if there is
no spouse, to the executor of the will or the administrator of the estate of the
Surviving Primary Beneficiary, or (3) if no such executor or administrator is
appointed within six months after the death of the Surviving Primary
Beneficiary, the Retirement Committee will direct that distribution be made, in
such shares as the Retirement Committee will determine, to the child, parent or
other blood relative of the Surviving Primary Beneficiary, or any of them, or to
such other person or persons as the Retirement Committee may determine.
7.05. Payment in Event of Legal Disability. If a Participant,
former Participant or Beneficiary is under a legal disability or, by reason of
illness or mental or physical disability, is unable, in the opinion of the
Retirement Committee, to attend to his personal financial matters properly, the
Trustee may make such payments in such of the following ways as the Retirement
Committee directs to the spouse, child, parent or other blood relative of such
Participant, former Participant or Beneficiary, or any of them, or to such other
person or persons as the Retirement Committee determines until such date as the
Retirement Committee determines that such incapacity no longer exists.
7.06. Missing Distributees. If all or any part of the interest
of any Participant, former Participant or Beneficiary becomes payable hereunder
and his whereabouts are then unknown to the Participating Employer or its
designee, and the Participating Employer or its designee fails to receive a
claim for such payment from the person entitled to such payment, or from any
other person validly acting in his behalf, then within two years thereafter, the
amount of such payment will be forfeited as of the next Business Day.
Notwithstanding the foregoing, if the person entitled to receive such payment
subsequently claims it, the amount will be restored. Any such Forfeiture will be
applied as soon as practicable to reduce Participating Employer contributions
under the Plan.
7.07. Information Required of Distributees. Each Participant,
former Participant and Beneficiary of a deceased Participant will file with the
Participating Employer or its designee from time to time in writing his post
office address and each change of post office address. Any communication,
statement or notice addressed to such person at his last post office address
filed with the Participating Employer or its designee, or if no such address was
filed with the Participating Employer or its designee then at his last post
office address as shown in the Participating Employer's records, if any, will be
binding on such person for all purposes of this Plan. Neither any Participating
Employer, the Trustee or their respective designees will be obligated to search
for or ascertain the whereabouts of any Participant, former Participant or
Beneficiary.
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7.08. Direct Rollover Provision.
(a) Direct Rollover Option. Notwithstanding any provision of
this Plan to the contrary that would otherwise limit a distributee's election
under this paragraph (a), a distributee may elect, at the time and manner
prescribed by the Plan Administrator, to have any portion of an eligible
rollover distribution paid directly to an eligible retirement plan specified by
the distributee in a direct rollover.
(b) Eligible Rollover Distribution Defined. For purposes of
this Section 7.08, an eligible rollover distribution is any distribution of all
or any portion of the balance to the credit of the distributee, except that an
eligible rollover distribution will not include: (1) any distribution that is
one of a series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the distributee or the
joint lives (or joint life expectancies) of the distributee and the
distributee's designated Beneficiary, or for a specified period of ten years or
more, (2) any distribution to the extent such distribution is required under
Code Section 401(a)(9), (3) the portion of any distribution that is not
includible in gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities) and (4) any
hardship distribution described in Code Section 401(k)(2)(B)(i)(IV), which will
include "hardship withdrawals" described in Section 8.01.
(c) Eligible Retirement Plan Defined. For purposes of this
Section 7.08, an eligible retirement plan is (1) an individual retirement
account described in Code Section 408(a), (2) an individual retirement annuity
described in Code Section 408(b), (3) an annuity plan described in Code Section
403(a), or (4) a qualified trust described in Code Section 401(a), that accepts
the distributee's eligible rollover distribution; provided, however, in the case
of an eligible rollover distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or individual retirement
annuity.
(d) Distributee Defined. For purposes of this Section 7.08, a
distributee is an Employee or former Employee. In addition, the Employee's or
former Employee's surviving spouse and the Employee's or former Employee's
spouse or former spouse who is the Alternate Payee under a Qualified Domestic
Relations Order, are distributees with regard to the interest of the spouse or
former spouse.
(e) Direct Rollover Defined. For purposes of this Section
7.08, a direct rollover is any payment by the Plan to the eligible retirement
plan specified by the distributee.
7.09. Waiver of 30-Day Notice Period. If a payment is one to
which Code Sections 401(a)(11) and 417 do not apply, such payment may begin less
than 30 days after the notice required under Treasury Regulation Section
1.411(a)-11(c) is given, provided that:
(a) the Participant is informed that the Participant has a
right to a period of at least 30 days after receiving the notice to
consider the decision of whether to elect a payment (and, if
applicable, a particular payment option); and
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(b) the Participant, after receiving the notice, affirmatively
elects a distribution.
ARTICLE VIII
IN-SERVICE WITHDRAWALS
8.01. Hardship Withdrawals.
(a) Amount. A Participant may, prior to his Severance From
Service, apply for a hardship withdrawal of all or any part of the vested
Account Balances in his Accounts not previously withdrawn (excluding earnings on
Tax Deferred Contributions after December 31, 1988). The minimum amount that may
be withdrawn for any hardship withdrawal is $500 or the total remaining balance
in the Participant's Accounts, whichever is less.
(b) Frequency. Subject to such uniform and nondiscriminatory
rules as may be promulgated from time to time by the Retirement Committee, a
Participant may apply not more frequently than twice during any 12-month period
for a hardship withdrawal of all or any part of his Account Balances not
previously withdrawn (excluding earnings credited on Tax Deferred Contributions
after December 31, 1988).
(c) Hardship Required. The withdrawal must be for an immediate
and heavy financial need of the Participant for which funds are not reasonably
available from other resources of the Participant. A Participant will be deemed
to have an immediate and heavy financial need if the hardship is on account of
(1) unreimbursed medical expenses incurred by the Participant, the Participant's
spouse, or any dependents, or necessary for such person to obtain medical care,
(2) the purchase of the principal residence of the Participant (excluding
regular mortgage payments), (3) tuition and related educational fees for
post-secondary education for the Participant, the Participant's spouse, or any
dependents for the following 12 months, and (4) the need to prevent eviction
from or foreclosure on the Participant's principal residence. A Participant will
be deemed to have established that the amount to be withdrawn is not reasonably
available from other resources if the Participant has obtained all other
in-service withdrawals, distributions and nontaxable loans available under this
Plan and any other plan maintained by his Participating Employer. The
Participating Employer or its designee will determine whether a financial
hardship exists and the amount to be paid as a result of the hardship. Such
determination will be made in accordance with the Code and the applicable
regulations and using a uniform and nondiscriminatory standard. If the
Participating Employer or its designee approves the hardship withdrawal, the
hardship withdrawal will not exceed the amount required to meet the need created
by the hardship, including any amounts necessary to pay any Federal income taxes
or penalties reasonably anticipated to result from the withdrawal.
(d) Notice Requirement. Any application for a hardship
withdrawal made pursuant to this Section 8.01 must be made through an Approved
Form of Election.
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(e) Effective Date and Valuation Date. A hardship withdrawal
will be effective and valued (1) as of the day on which such request is approved
by the Participating Employer or its designee, if such approval is made before
the Close of Business on a Business Day or (2) as of the next Business Day, if
such request is approved by the Participating Employer or its designee on a day
other than a Business Day or after the Close of Business on a Business Day.
Payment of any amount withdrawn pursuant to this Section 8.01 will be made as
soon as practicable on or after the effective date of such hardship withdrawal.
(e) Effect on Account Balances and Investment Funds. Whenever
a Participant's Account Balances are withdrawn pursuant to this Section 8.01,
such Account Balances will be reduced from his Accounts in the following order:
(1) any After-Tax Account; (2) any Rollover Account; (3) any Tax Deferred
Account; and (4) any Company Matching Account. Amounts allocated to the
Investment Funds in the Accounts from which amounts are withdrawn pursuant to
this Section 8.01 will be reduced on a pro rata basis.
(f) Limitations. If a hardship withdrawal is made pursuant to
this Section 8.01, the Participant may not make Tax Deferred Contributions or
After-Tax Contributions for a period of 12 months following the date he receives
the payment, and the dollar limitation specified in Section 3.05 will be reduced
for the Plan Year following the year of withdrawal by the amount of any Tax
Deferred Contributions made by the Participant during the Plan Year of the
hardship withdrawal.
8.02. Withdrawals Upon Attainment of Age 59 1/2.
(a) Amount. In addition to any other withdrawals that may be
made pursuant to this Article VIII, and subject to the limitations set forth in
Section 8.02(e), a Participant may before his Severance From Service apply for a
withdrawal of all or any portion of his vested Account Balances in his Accounts
after he has attained age 59 1/2.
(b) Notice Requirement. Any application for a withdrawal made
pursuant to this Section 8.02 must be made through an Approved Form of Election.
(c) Effective Date and Valuation Date. A withdrawal made
pursuant to this Section 8.02 will be effective and valued (1) as of the day on
which such request is approved by the Retirement Committee or its designee, if
such approval is made before the Close of Business on a Business Day, or (2) as
of the next Business Day, if such request is approved by the Retirement
Committee or its designee on a day other than a Business Day or after the Close
of Business on a Business Day. Payment of any amount withdrawn pursuant to this
Section 8.02 will be made as soon as practicable on or after the effective date
of such withdrawal in a single sum payment in cash.
(d) Effect on Account Balances and Investment Funds. Whenever
a Participant's Account Balances are withdrawn pursuant to this Section 8.02,
such Account Balances will be reduced from his Accounts in the following order:
(1) any After-Tax Account; (2) any Rollover Account; (3) any Tax Deferred
Account; and (4) any Company
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Matching Account. Amounts allocated to the Investment Funds in the Accounts from
which amounts are withdrawn pursuant to this Section 8.02 will be reduced on a
pro rata basis.
(e) Limitations. In addition to any hardship withdrawal, a
Participant may not receive more than two in-service withdrawals under this
Article VIII in any 12-month period. The minimum amount that may be withdrawn
for any in-service withdrawal (except a hardship withdrawal) is $1,000 or the
total remaining balance in the Participant's Accounts, whichever is less.
8.03. In-Service Withdrawals for Inactive Participants.
Notwithstanding any other provision of this Plan to the contrary, any
Participant who is transferred to a Non-Participating Employer or a class of
employees that is not eligible to participate in this Plan will be eligible to
receive in-service withdrawals under Sections 8.01 and 8.02.
ARTICLE IX
LOANS
9.01. Availability. Loans may be made to Participants in
accordance with this Article IX under uniform rules and conditions as the
Retirement Committee may prescribe. A Participant may borrow from the vested
portion of his Account Balances. A loan must be requested through an Approved
Form of Election. The Retirement Committee or its designee may require the
Participant to sign certain documents and provide certain written documentation
as it deems necessary. A Participant may not have outstanding more than one loan
to acquire any dwelling unit which within a reasonable time is to be used as the
principal residence of the Participant and one loan for any other purpose. A
Participant may not apply for a new loan until 30 days after the prior loan is
repaid in full. A Participant who transfers employment to a Non-Participating
Employer or a class of employees that is not eligible to participate in the Plan
may also apply to borrow in accordance with this Section 9.01. A former
Participant whose Accounts have not been paid out and who is a party-in-interest
within the meaning of ERISA Section 3(14) may apply to borrow to the extent
required by Federal law.
9.02. Effect on Account Balances and Investment Funds.
Whenever all or any part of a Participant's Account Balances are borrowed, the
amount representing such vested Account Balances or part thereof transferred to
the Loan Fund will be reduced in the following order: (a) any Company Matching
Account, (b) any Tax-Deferred Account, (c) any Rollover Account, and (d) any
After-Tax Account. A loan will be withdrawn from the respective Investment Funds
in which such vested Account Balances are invested on a pro rata basis. A loan
will be effective and the amount of the loan will be transferred to the Loan
Fund (1) as of the day on which such loan application is approved by the
Retirement Committee or its designee, if such approval is made before the Close
of Business on a Business Day, or (2) as of the next Business Day, if such loan
application is approved by the Retirement Committee or its designee on a day
other than a Business Day or after the Close of Business on a Business Day.
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9.03. Amount. The amount of any loan made pursuant to this
Article IX will not be less than $1,000. The aggregate amount of all such loans
to a Participant or eligible former Participant will not exceed 50% of the
vested portion of his Account Balances under the Plan, and will not exceed
$50,000 minus the highest outstanding Plan loan balance during the 12-month
period ending the day before the loan is made.
9.04. Term of Loan. The term of a loan will not exceed five
years. Notwithstanding the foregoing, the term of a loan will not exceed ten
years if its purpose is to acquire any dwelling unit which within a reasonable
time is to be used as the principal residence of the Participant.
9.05. Promissory Note. A secured promissory note will be
delivered to the Trustee or its agent pledging as collateral a portion of the
Participant's vested interest in his Accounts not less than the amount of the
borrowing. Interest on a loan will be fixed by the Retirement Committee or its
designee at a rate reasonably equivalent to prevailing market interest rates.
9.06. Repayment. The loan will be repaid in regular
installments in each pay period, by means of payroll deductions. Prepayment of a
loan in its entirety without penalty will be permitted at any time. Partial
prepayment of a loan will not be permitted provided that a Participant or former
Participant may repay his loan in part if the loan becomes due and payable as a
result of a termination of employment for any reason for up to 60 days after
such termination of employment. Notwithstanding the foregoing, repayment by (a)
a Participant who is on an Approved Leave of Absence, (b) a Participant who
transfers employment to a Non-Participating Employer or class of employees that
is not eligible to participate in the Plan, or (c) a former Participant who is a
party-in-interest within the meaning of ERISA Section 3(14) will be made by such
Participant or former Participant on at least a monthly basis to the Trustee or
its agent by means of a certified check or money order delivered to the Trustee
or its agent. A loan which is not repaid when due will be deemed to be in
default. A loan will constitute an earmarked investment of the borrowing
Participant's Accounts. Loan repayments will be credited to the Participant's
Account or Accounts from which the loan was made monthly as of the date such
payment is received by the Trustee or its agent on a pro rata basis. Loan
repayments will be credited to the Investment Funds monthly in accordance with
the Participant's investment election under Section 4.02 in effect at the time
of repayment of the loan or, in the absence of such investment election, to the
Balanced Fund.
9.07. Reduction of Account Balance. Upon a Participant's
termination of employment or at such other time as the Participant's Account
Balances are distributed before a loan is repaid in full, the unpaid balance
thereof, together with interest due and payable thereon, will become due and
payable, and the Trustee will first satisfy the indebtedness from the amount
payable to the Participant before making any payments to Participant. If a loan
becomes in default, foreclosure on the promissory note and attachment of
security on such loan will not occur until a distributable event occurs under
the Plan.
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ARTICLE X
ADMINISTRATION OF PLAN
10.01. Fiduciaries.
(a) The Fiduciaries will have only those specific powers,
duties, responsibilities and obligations as are specifically given them under
this Plan and the Trust Agreement or delegated to them by the Company. The Board
of Directors of Fortune will have the sole authority to appoint and remove the
Trustee and the members of the Trusts Investment Committee and to amend or
terminate, in whole or in part, the Trust. The Board of Directors of the Company
will have the sole authority to amend or terminate, in whole or in part, this
Plan and to appoint and remove the members of the Retirement Committee. The
Company will be the Plan Administrator for the purposes of ERISA and will have
the responsibility for the administration of this Plan, which responsibility is
specifically described in this Plan and the Trust Agreement, except that the
Retirement Committee will have the sole responsibility for the performance of
those administrative duties specifically given it as described in this Plan.
Except to the extent delegated to another Investment Manager, the Trustee will
have the responsibility for the administration and management of the assets held
under the Trust, all as specifically provided in the Trust Agreement. The Trusts
Investment Committee will have the sole authority to appoint any Investment
Manager. The Investment Managers will have the sole authority to vote proxies
with respect to any securities held in the Trust, except as otherwise provided
in Section 4.21 and except for proxies with respect to Fortune Common Stock held
in the Fortune Stock Fund and Gallaher ADRs held in the Gallaher Fund.
(b) Each Fiduciary may rely upon any direction, information,
or action of another Fiduciary with respect to matters within the responsibility
of such other Fiduciary as being proper under this Plan or any funding
instrument and is not required under this Plan or funding instrument to inquire
into the propriety of any such direction, information, or action. To the maximum
extent permitted by law, it is intended under this Plan that each Fiduciary will
be responsible for the proper exercise of its own powers, duties,
responsibilities, and obligations under this Plan and will not be responsible
for any act or failure to act of another Fiduciary. To the maximum extent
permitted by ERISA, no other Fiduciary will be liable for any loss which may
result from a decision of an Investment Manager with respect to Plan assets
under its control.
(c) To the maximum extent permitted by applicable law, the
Company will indemnify the members of the Board of Directors of the Company, the
Participating Employers, the members of the Retirement Committee, the members of
the Board of Directors of Fortune, the members of the Trusts Investment
Committee and any other employee of the Company who may be delegated
responsibility under the Plan and save them and each of them harmless from the
effects and consequences of their acts, omissions, and conduct in their
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official capacity except to the extent that such effects and consequences will
result from their own willful misconduct.
10.02. Claims Procedure. The Retirement Committee will make
all determinations as to the right of any person to a benefit. Any denial by the
Retirement Committee of the claim for benefits under the Plan by a Participant
or Beneficiary will be stated in writing by the Retirement Committee and
delivered or mailed to the Participant or Beneficiary within 90 days after
receipt by the Retirement Committee; and such notice will set forth the specific
reasons for the denial. In the event of a denial of a claim, a claimant may
notify the Retirement Committee in writing within 60 days after receipt of
written denial of the claim that the claimant wishes a review of the denial of
the claim and present to the Retirement Committee a written statement of the
claimant's position. The Retirement Committee will act upon such request for
review within 60 days after receipt thereof unless special circumstances require
further time, but in no event later than 120 days after receipt. If the
Retirement Committee confirms the denial in whole or in part, the Retirement
Committee will present in a written notice to the claimant the specific reasons
for denial and specific references to the Plan provisions on which the decision
was based, in a manner calculated to be understood by the claimant.
10.03. ERISA Compliance. The Company or its designee will
exercise such authority and responsibility as it deems appropriate in order to
comply with ERISA and governmental regulations issued thereunder relating to
records of Participants' benefits under the Plan; notifications to Participants;
annual registration with the Internal Revenue Service; and annual reports to the
Department of Labor.
10.04. Fiduciary Powers. The Retirement Committee will have
such duties and powers as may be necessary to discharge its duties hereunder,
including, but not by way of limitation, the following:
(a) to construe and interpret the Plan, decide all questions
of eligibility and determine the manner and time of payment of any
benefits hereunder;
(b) to prescribe procedures to be followed by Participants or
beneficiaries filing applications for benefits;
(c) to prepare and distribute, in such manner as the Company
determines to be appropriate, information explaining the Plan;
(d) to receive from the Participating Employers, the Trustee,
and Participants such information as is necessary for the proper
administration of the Plan;
(e) to prepare such annual reports with respect to the
administration of the Plan as are reasonable and appropriate; to submit
annually to the Board of Directors of the Company a report showing in
reasonable detail the assets of the Plan and giving a brief account of
the operation of the Plan for the preceding Plan Year;
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(f) to receive, review, and keep on file (as it deems
convenient or proper) reports of the financial condition, and of the
receipts and disbursements, of the Trust;
(g) to determine, without limitation, the meaning of the term
"Employee" and "Covered Employee" and which employees are eligible to
participate in the Plan and receive benefits hereunder;
(h) to direct the Trustee with respect to the payment of
benefits; and
(i) to employ agents, attorneys, accountants, or other persons
(who also may be employed by any Related Employer or the Trustee), and
to allocate or delegate to them such powers, rights, and duties as the
Retirement Committee may consider necessary or advisable to properly
carry out the administration of the Plan, including maintaining the
accounts of Participants, provided that such allocation or delegation,
and the acceptance thereof by such agents, attorneys, accountants, or
other persons, will be in writing.
10.05. Administrative Rules. The Company and the Retirement
Committee may adopt such rules as they deem necessary, desirable or appropriate.
All rules and decisions will be uniformly and consistently applied to all
Participants in similar instances. When making a determination or calculation,
the Company or the Retirement Committee will be entitled to rely upon
information furnished by a Participant or Beneficiary, an Employer or the legal
counsel of an Employer.
10.06. Committee Procedures. The Retirement Committee may act
at a meeting or in writing without a meeting. The Retirement Committee will
elect one of its members as chairman, and appoint a secretary, who may or may
not be a Retirement Committee member. The secretary will keep a record of all
meetings and forward all necessary communications to the Company. The Retirement
Committee may adopt such bylaws and regulations as it deems desirable for the
conduct of its affairs. All decisions of the Retirement Committee will be made
by the vote of the majority including actions in writing taken without a
meeting.
10.07. Plan Expenses. All reasonable expenses in connection
with the administration of the Plan, including fees of the Trustee and its
counsel or agents, expenses incident to investments of the Trust and any
federal, state or other taxes levied against the Trust, fees of accountants,
actuaries, attorneys, and investment managers and any other proper expenses of
administering the Plan as determined by the Retirement Committee, will be paid
from the Trust; provided, however, that the Company may pay such expenses
directly.
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ARTICLE XI
AMENDMENTS AND TERMINATION
11.01. Reserved Powers. The Company will have the power at any
time and from time to time to amend, replace or terminate, in whole or in part,
this Plan; provided, however, that no amendment, under any circumstances, may be
adopted, the effect of which would be to (a) revest in any Participating
Employer any interest in the assets of the Plan or any part thereof, or (b)
decrease, either directly or indirectly, the accrued benefit of any Participant
(except as permitted by Code Section 411(d)(6) and applicable regulations and
rulings); except that amendments may be so made if, in the opinion of counsel
for the Company, such action is necessary to qualify, or maintain the
qualification of, this Plan under the provisions of the Code. Notwithstanding
any other provision of this Plan, each Participating Employer reserves the right
to completely discontinue its contributions hereunder and its participation in
this Plan at any time.
11.02. Plan Termination. Upon the complete discontinuance of
contributions under the Plan by all Participating Employers, and regardless of
any formal corporate action, or upon the complete termination of the Plan, all
Account Balances of all Participants will be fully vested and nonforfeitable,
after payment of all expenses of the Plan. Upon a partial termination of the
Plan by operation of law, the foregoing sentence of this Section 11.02 will
apply to the Participants with respect to whom the Plan is being terminated.
11.03. Plan Merger. In the case of any merger or consolidation
of the Plan with, or the transfer of Plan assets or liabilities to, any other
plan qualified under Code Section 401(a), provision will be made so that each
Participant in the Plan on the date of the merger or transfer, would receive a
benefit immediately after the merger, consolidation or transfer which is equal
to or greater than the benefit he would have been entitled to receive
immediately prior to the merger, consolidation or transfer if the Plan had then
terminated.
11.04. Successor Employer. In the event of the disposition of
an operating unit by the Company or another Participating Employer whereby a
successor person, firm or company continues to carry on all or a substantial
part of its business, and such successor elects to carry on the provisions of
this Plan in such manner as is satisfactory to the Company, the Company may
cause the assets of the Plan allocable to the Covered Employees of such
operating unit to be transferred to the successor funding agent. In the absence
of such a transfer, distribution may be made with respect to such Covered
Employees as if the date of disposition constituted a distributable event
otherwise permitted under the Plan with respect to such Covered Employee.
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ARTICLE XII
MANAGEMENT OF TRUST
12.01. Funds in Trust. All the assets of the Plan will be held
in the Trust, comprising the Fortune Stock Fund, the Gallaher Fund, the S&P 500
Index Fund, the Value Equity Fund, the Large-Cap Growth Equity Fund, the
Small-Cap Growth Equity Fund, the International Equity Fund, the Growth-Oriented
Diversified Fund, the Balanced Fund, the Government Securities Fund, the
Corporate/Government Bond Fund, the Short-Term Investment Fund and the Loan
Fund, for use in accordance with the provisions of the Plan in providing
benefits for Participants, former Participants and Beneficiaries. The assets of
the Trust will be held, invested and disposed of in accordance with the terms of
the Trust Agreement. All contributions under this Plan will be paid to the
Trustee and, except as otherwise provided in Section 13.03, all assets of the
Trust Fund allocable to the Plan, including income from investments and from all
other sources, will be retained for the exclusive benefit of Participants,
former Participants and Beneficiaries, and will be used to pay benefits to such
persons or to pay expenses of administration of the Plan and the Trust to the
extent not paid by the Company or another Participating Employer.
12.02. Trustee and Trust Agreement. The Trust will be held by
a Trustee under a Trust Agreement approved by the Board of Directors of Fortune,
with such powers in the Trustee as will be provided in the Trust Agreement and
in accordance with the provisions of the Plan. The Trust Agreement may provide
for the administration thereunder of the funds of any other defined contribution
plan established by the Company or any other Related Employer and for the
commingling of all funds administered under the Trust Agreement. The Trustee
will be such bank or trust company as may be appointed by the Board of Directors
of Fortune from time to time. The Board of Directors of Fortune may remove a
Trustee at any time, upon reasonable notice, and upon such removal, or upon the
resignation of a Trustee, the Board of Directors of Fortune will appoint a
successor Trustee.
12.03. Investment Managers. The Trusts Investment Committee
may appoint one or more investment counsel as Investment Managers of all or a
portion of the Investment Funds held in the Trust and grant to each such
Investment Manager full and sole authority and responsibility for the investment
and reinvestment of such portion thereof as the Trusts Investment Committee so
directs. The Trusts Investment Committee may remove an Investment Manager at any
time, upon reasonable notice, and upon such removal, or upon the resignation of
an Investment Manager, the Trusts Investment Committee may appoint another
Investment Manager. The Trusts Investment Committee will designate mutual funds
for investments of the Plan.
12.04. Conclusiveness of Reports. Any report of the Trustee
required or permitted under the Plan will be conclusive upon all Participants,
former Participants, and Beneficiaries.
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ARTICLE XIII
MISCELLANEOUS
13.01. Non-Alienation of Benefits.
(a) Interest Non-Transferable. Except as may be required by a
Qualified Domestic Relations Order, benefits under this Plan will not in any way
be subject to the debts or other obligations of any Participant, former
Participant or Beneficiary, and may not be voluntarily or involuntarily sold,
transferred or assigned.
(b) Application of Benefits. If any Participant, former
Participant or Beneficiary or other person having an interest in or under this
Plan or the Trust becomes bankrupt or attempts to anticipate, alienate, sell,
transfer, assign, pledge, encumber or charge any benefit under the Plan or
interest in the Trust, then such benefit or interest will cease and determine,
and in that event the Trustee will hold or apply it, in such shares as the
Retirement Committee determines, to or for the benefit of such Participant,
former Participant or other person, or his spouse, child, parent or other blood
relative, or any of them, or to such other person or persons as the Retirement
Committee may determine, but the Trustee, as the case may be, will be under no
duty to see to the application of any distributions so made.
13.02. Action by Participating Employers. Any action by a
Participating Employer regarding participation in or withdrawal from this Plan
will be evidenced by a resolution of its board of directors certified by its
secretary or assistant secretary under its corporate seal. All actions taken in
administration of this Plan will be taken by the appropriate members of the
Retirement Committee or officers of the Participating Employer or its other
employees authorized to take such actions by such officers.
13.03. Exclusive Benefit. The Participating Employers will
have no right, title or interest in the assets of the Trust, nor will any part
of the assets of the Trust at any time revert to any Participating Employer or
be used for, or diverted to, purposes other than for the exclusive benefit of
Participants, former Participants or their Beneficiaries, or for defraying Plan
expenses, except as follows:
(a) If the Internal Revenue Service initially determines that
the Plan, as applied to any Participating Employer, does not meet the
requirements of a "qualified plan" under Code Section 401(a), the assets of the
Trust attributable to contributions made by that Participating Employer under
the Plan will be returned to that Participating Employer within one year of the
date of denial of qualification of the Plan as applied to that Participating
Employer.
(b) If a contribution or a portion of a contribution is made
by a Participating Employer as a result of a mistake of fact, such contribution
or portion of a contribution will not be considered to have been contributed to
the Trust by that Participating Employer and, after
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having been reduced by any losses of the Trust attributable thereto, will be
returned to that Participating Employer within one year of the date the amount
is paid to the Trust.
(c) Each contribution made by a Participating Employer is
conditioned upon the deductibility of such contribution as an expense for
Federal income tax purposes and, therefore, to the extent that the deduction for
a contribution made by a Participating Employer is disallowed, then such
contribution, or portion of a contribution, after having been reduced by any
losses of the Trust attributable thereto will be returned to that Participating
Employer within one year of the date of disallowance of the deduction.
13.04. Gender and Number. Where the context admits, words in
the masculine gender will include the feminine and neuter genders, the singular
will include the plural and the plural will include the singular.
13.05. Right to Discharge. Every Employee and Participant will
be subject to dismissal from the service of every and all Related Employers to
the same extent as if this Plan had never been created.
13.06. Absence of Guaranty. No Participating Employer in any
way guarantees the Trust against loss or depreciation. The liability of the
Trustee or the Participating Employers to make any payment or distribution under
the Plan related to assets held or to be held in the Trust is limited to the
available assets of the Trust.
13.07. Headings. The headings of Articles and Sections are
included solely for convenience of reference and are not intended in any way to
modify or otherwise to affect the text of the Plan.
13.08. Governing Law. The Plan will be governed by and
administered and construed under the laws of the State of New York except to the
extent that it is required to be governed by and administered and construed
under the laws of the United States of America.
ARTICLE XIV
TOP-HEAVY RULES
14.01. Top-Heavy Determination.
(a) Top-Heavy Test. The Plan is top-heavy for a Plan Year if:
(1) the top-heavy ratio for the Plan exceeds 60% and the Plan
is not part of a required aggregation group or a permissive aggregation
group;
(2) the Plan is part of a required aggregation group, but not
part of a permissive aggregation group, and the top-heavy ratio for the
required aggregation group exceeds 60%; or
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(3) the Plan is part of a required aggregation group and part
of a permissive aggregation group and the top-heavy ratio for every
permissive aggregation group exceeds 60%.
(b) Top-Heavy Ratio. The top-heavy ratio is a fraction:
(1) the numerator of which is the sum of the present value of
accrued benefits under the aggregate defined benefit plans for all key
employees (including any part of the accrued benefit distributed in the
five-year period ending on the determination date(s)) and the sum of
account balances under the aggregate defined contribution plan or plans
for all key employees as of the determination date(s); and
(2) the denominator of which is the sum of the present values
of accrued benefits under the aggregate defined benefit plan or plans
(including any part of the accrued benefit distributed in the five-year
period ending on the determination date(s)) for all Participants and
the sum of the account balances under the aggregate defined
contribution plans for all Participants as of the determination
date(s).
Both the numerator and the denominator are determined in accordance with Code
Section 416 and the applicable regulations. The account balances under a defined
contribution plan in both the numerator and denominator of the top-heavy ratio
are adjusted for any distribution of an account balance made in the five-year
period ending on the determination date. The value of account balances and the
present value of accrued benefits will be determined as of the most recent
valuation date that falls within or ends with the 12-month period ending on the
determination date, except as provided in Code Section 416 and the applicable
regulations for the first and second plan years of a defined benefit plan. The
account balances and accrued benefits will be disregarded if the Participant:
(1) is not a key employee but was a key employee in a prior
year; or
(2) has not been credited with at least one Hour of Service
with any Related Employer at any time during the five-year period
ending on the determination date.
The calculation of the top-heavy ratio, and the extent to which distributions,
rollovers, and transfers are taken into account will be made in accordance with
Code Section 416 and the applicable regulations. Proportional subsidies and
nondeductible employee contributions are ignored in computing the top-heavy
ratio. Nonproportional subsidies are considered in computing the top-heavy
ratio. When aggregating plans, the value of account balances and accrued
benefits will be calculated using the determination dates that fall within the
same calendar year.
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(c) Required Aggregation Group. A required aggregation group
consists of:
(1) each qualified plan of a Related Employer in which at
least one key employee participates or participated at any time during
the determination period (regardless of whether the plan has
terminated); and
(2) any other qualified plan of a Related Employer which
enables a plan described in subsection (1) to meet the requirements of
Code Section 401(a)(4) or 410.
(d) Permissive Aggregation Group. A permissive aggregation
group consists of:
(1) the required aggregation group; and
(2) any other plans of the Related Employers which, when
considered as a group with the required aggregation group, would
continue to satisfy the requirements of Code Sections 401(a)(4) and
410.
(e) Key Employee. A key employee is any employee or former
employee of a Related Employer (and the beneficiaries of such employee) who at
any time during the determination period was:
(1) an officer of a Related Employer with annual compensation
exceeding 50% of the dollar limitation under Code Section 415(b)(1)(A);
(2) an owner (or considered an owner under Code Section 318)
of one of the ten largest interests in a Related Employer if the
individual's annual compensation exceeds the dollar limitation;
(3) a 5% owner of a Related Employer; or
(4) a 1% owner of a Related Employer with annual compensation
exceeding $150,000.
(f) Non-Key Employee. A non-key employee is an employee of a
Related Employer who is not a key employee, including an employee who is a
former key employee.
(g) Determination Period. The determination period is the Plan
Year containing the determination date and the four preceding Plan Years.
(h) Determination Date and Valuation Date. The last day of the
preceding Plan Year is the determination date and the valuation date.
(i) Accrual Method. Solely for determining if the Plan, or any
other plan included in a required aggregation group of which this Plan is a
part, is top-heavy the accrued benefit of an employee of a Related Employer
other than a key employee will be determined
64
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under (1) the method, if any, that uniformly applies for accrual purposes under
all plans maintained by the group, or (2) if there is no such method, as if the
benefit accrued not more rapidly than the slowest accrual rate permitted under
the fractional accrual rate of Code Section 411(b)(1)(C).
14.02. Minimum Vesting. Notwithstanding the provisions of
Article VI, if the Plan is top-heavy in any Plan Year, each Participant who has
an Hour of Service in such Plan Year will have and retain a 100% vested interest
in his Account Balances if he has at least three years of Vesting Service.
14.03. Minimum Contributions. Notwithstanding any other
provision of this Plan to the contrary, for any Plan Year for which the Plan is
top-heavy, unless a Participant who is a non-key employee accrues a benefit
under a retirement plan of a Related Employer for such Plan Year of not less
than 2% of his average annual compensation during the five consecutive years of
his Vesting Service during which his compensation was the greatest multiplied by
his years of Vesting Service not in excess of ten (disregarding any years after
the last Plan Year with respect to which the Plan is top-heavy), each
Participating Employer will make such additional contributions as will be
necessary to provide contributions for each Employee eligible to participate
under Article II who is not a key employee equal to 3% of that Participant's
compensation; provided that such contribution need not exceed the greatest
contribution for any key employee for such Plan Year. The minimum contribution
under this Section 14.03 will apply even though under other Plan provisions the
Employee would not otherwise be entitled to receive an allocation or would have
received a lesser allocation for the year because:
(1) the individual failed to complete 1,000 Hours of Service;
(2) the individual failed to make mandatory contributions to
the Plan; or
(3) the individual's compensation is less than a stated
amount.
For purposes of this Article XIV, the term "compensation" means compensation as
defined in Code Section 415.
14.04. Special Annual Additions Limitation. With respect to
Plan Years commencing prior to January 1, 2000, in any Plan Year for which the
Plan is top-heavy, the fraction 1.0 will be used in place of the fraction 1.25
in applying the limitations in Sections 5.06 and 5.07 to a Participant who has
also participated in a qualified defined benefit plan of a Related Employer.
Notwithstanding any other provision of this Plan to the contrary, effective as
of January 1, 2000, this Section 14.04 will no longer limit the benefits of any
Participant and will be deleted from the Plan without need for further amendment
(and Section 14.05 will automatically be redesignated as 14.05).
14.05. Provisions Applicable if Plan Ceases to be Top-Heavy.
If the Plan is top-heavy with respect to a Plan Year and ceases to be top-heavy
for a subsequent Plan Year
65
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and a Participant has completed three years of Vesting Service on or before the
last day of the most recent Plan Year for which the Plan was top-heavy, the
applicable vesting schedule set forth in Section 14.02 will continue to apply
with respect to a Participant.
MASTERBRAND INDUSTRIES, INC.
Date: 4/27/2000 By: /s/ Kenton R. Rose
-----------------------------------
Kenton R. Rose
66
<PAGE>
EXHIBIT A
TRANSITIONAL PROVISIONS
Transitional Provision for Hourly Employees of Schrock Cabinet
Company. Notwithstanding any other provision of this Plan to the contrary, an
hourly-paid Employee of Schrock Cabinet Company on June 12, 1998 will
participate in this Plan on such date and will be credited with Hours of Service
and periods of employment with Schrock Cabinet Company, a division of White
Consolidated Industries, Inc., prior to the date that Schrock Cabinet Company
became a Related Employer in determining a Year of Eligibility Service and
Vesting Service.
A-1
Exhibit 99b1
MASTER TRUST AGREEMENT
Between
- -------------------------------------------------------------------------------
FORTUNE BRANDS, INC.
And
FIDELITY MANAGEMENT TRUST COMPANY
- -------------------------------------------------------------------------------
FORTUNE BRANDS, INC. SAVINGS PLANS
MASTER TRUST
Dated as of October 1, 1999
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
<S> <C> <C>
Section Page
- ------- ----
Section 1. Definitions..................................................................................2
Section 2. Trust........................................................................................3
Section 3. Exclusive Benefit and Reversion of Contributions.............................................4
Section 4. Disbursements................................................................................5
(a) Administrator Directed Disbursements.............................................................5
(b) Participant Withdrawal Requests..................................................................5
(c) Limitations......................................................................................5
Section 5. Investment of Trust..........................................................................5
(a) Selection of Investment Options..................................................................5
(b) Available Investment Options.....................................................................6
(c) Participant Direction............................................................................6
(d) Mutual Funds.....................................................................................6
Section 6. Administration of Fortune Stock Fund.........................................................7
(a) Investment in Fortune Common Stock...............................................................7
(b) Voting of Shares in Fortune Stock Fund......................................................... 11
(c) Tender Offers...................................................................................14
(d) Certain Rights Held in Fortune Stock Fund.......................................................18
Section 7. Administration of Gallaher Fund.............................................................19
(a) Investment in Gallaher ADRs.....................................................................19
(b) Voting of Gallaher ADRs.........................................................................22
(c) Tendering of Gallaher ADRs......................................................................24
Section 8. Investment Options..........................................................................28
(a) Participant Loans...............................................................................28
(b) Outside Managed Separate Investment Funds.......................................................29
(c) Reliance of Trustee on Directions...............................................................31
Section 9. Trustee Powers..............................................................................31
Section 10. Recordkeeping and Administrative Services to Be Performed...................................32
(a) General.........................................................................................32
(b) Accounts........................................................................................33
(c) Inspection and Audit............................................................................33
(d) Effect of Plan Amendment........................................................................33
(e) Returns, Reports and Information................................................................34
(f) Allocation of Plan Interests....................................................................34
Section 11. Compensation and Expenses..................................................................34
Section 12. Directions and Indemnification.............................................................35
(a) Identity of Administrator and Named Fiduciaries.................................................35
(b) Directions from Fortune or Administrator........................................................35
(c) Directions from Named Fiduciary.................................................................35
(d) Co-Fiduciary Liability..........................................................................36
(e) Indemnification.................................................................................36
(f) Survival........................................................................................36
Section 13. Resignation or Removal of Trustee..........................................................36
(a) Resignation.....................................................................................36
(b) Removal.........................................................................................37
Section 14. Successor Trustee..........................................................................37
(a) Appointment.....................................................................................37
(b) Acceptance......................................................................................37
(c) Corporate Action................................................................................37
Section 15. Termination................................................................................37
Section 16. Resignation, Removal, and Termination Notices..............................................38
Section 17. Duration...................................................................................38
Section 18. Amendment or Modification..................................................................38
Section 19. Electronic Services........................................................................38
Section 20. General....................................................................................39
(a) Performance by Trustee, its Agents or Affiliates................................................39
(b) Delegation by Employer..........................................................................39
(c) Entire Agreement................................................................................40
(d) Waiver..........................................................................................40
(e) Successors and Assigns..........................................................................40
(f) Partial Invalidity..............................................................................40
(g) Section Headings................................................................................40
Section 21. Governing Law..............................................................................40
(a) Massachusetts Law Controls......................................................................40
(b) Trust Agreement Controls........................................................................41
Section 22. Plan Qualification ........................................................................41
</TABLE>
<PAGE>
MASTER TRUST AGREEMENT, dated as of the first day of October, 1999,
between FORTUNE BRANDS, INC., a Delaware corporation, having an office at 1700
East Putnam Avenue, Old Greenwich, Connecticut 06870 ("Fortune"), and FIDELITY
MANAGEMENT TRUST COMPANY, a Massachusetts trust company, having an office at 82
Devonshire Street, Boston, Massachusetts 02109 (the "Trustee").
WITNESSETH:
WHEREAS, Fortune is the sponsor of the Fortune Brands Retirement
Savings Plan (the "Plan"); and
WHEREAS, a subsidiary of Fortune maintains the Fortune Brands Hourly
Employee Retirement Savings Plan, and other affiliates and subsidiaries of
Fortune may in the future maintain qualified defined contribution plans for the
benefit of their eligible employees; and
WHEREAS, Fortune desires to establish a single trust to hold all of the
assets of the Plan and such other tax-qualified defined contribution plans
maintained by Fortune, or any of its subsidiaries or affiliates, as elect to
participate therein; and
WHEREAS, the Trustee shall maintain a separate account reflecting the
equitable share of each Plan in the Trust and in all investments, receipts,
disbursements and other transactions hereunder, and shall report the value of
such equitable share at such times as may be mutually agreed upon by the Trustee
and Fortune. Such equitable share shall be used solely for the payment of
benefits, expenses and other charges properly allocable to each such Plan and
shall not be used for the payment of benefits, expenses or other charges
properly allocable to any other Plan; and
WHEREAS, the Trustee is willing to hold and invest the aforesaid plan
assets in trust pursuant to the provisions of this Trust Agreement, which trust
shall constitute a continuation, by means of an amendment and restatement, of
each of the prior trusts from which plan assets are transferred to the Trustee;
and
WHEREAS, The Trustee is willing to hold and invest the aforesaid plan
assets in trust among several investment options selected by Fortune; and
WHEREAS, the Trustee is willing to perform recordkeeping and
administrative services for the Plan if the services are ministerial in nature
and are provided within a framework of plan provisions, guidelines and
interpretations conveyed in writing to the Trustee by Fortune.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements set forth below, Fortune and the Trustee agree
as follows:
Section 1. Definitions. The following terms as used in this Trust Agreement
have the meaning indicated unless the context clearly requires otherwise:
(a) "Administrator" shall mean, with respect to the Plan, the person or
entity which is the "administrator" of such Plan within the meaning of
section 3(16)(A) of ERISA.
(b) "Agreement" shall mean this Trust Agreement, as the same may be amended
and in effect from time to time.
(c) "Code" shall mean the Internal Revenue Code of 1986, as it has been or
may be amended from time to time.
(d) "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as it has been or may be amended from time to time.
(e) "Fidelity Mutual Fund" shall mean any investment company advised by
Fidelity Management & Research Company or any of its affiliates.
(f) "Fortune" shall mean Fortune Brands, Inc., a Delaware corporation, or
any successor to all or substantially all of its businesses which, by
agreement, operation of law or otherwise, assumes the responsibility of
Fortune Brands, Inc. under this Agreement.
(f) "Fortune Common Stock" shall mean the common stock of Fortune or such
other publicly-traded stock of Fortune, or such other publicly-traded
stock of Fortune's affiliates as meets the requirements of section
407(d)(5) of ERISA with respect to the Plan.
(g) "Fortune Stock Fund" shall mean the fund through which Trust
investments in Fortune Common Stock are made.
(h) "Gallaher ADRs" shall mean American Depository Receipts of Gallaher
Group Plc, a public limited company incorporated under the laws of
England and Wales and a former affiliate of Fortune.
(i) "Gallaher Fund" shall mean the fund through which Trust investments in
Gallaher ADRs are held.
(j) "Mutual Fund" shall refer both to Fidelity Mutual Funds and
Non-Fidelity Mutual Funds.
(k) "Named Fiduciary" shall mean, with respect to the application of any
provision of this Agreement to any Plan, the person or entity which is
the relevant fiduciary under such Plan with respect to such matter
(within the meaning of section 402(a) of the Employee Retirement Income
Security Act of 1974, as amended).
(l) "Non-Fidelity Mutual Fund" shall mean certain investment companies not
advised by Fidelity Management & Research Company or any of its
affiliates.
(m) "Participant" shall mean, with respect to the Plan, any employee (or
former employee) with an account under the Plan, which has not yet been
fully distributed and/or forfeited, and shall include the designated
beneficiary(ies) with respect to the account of any deceased employee
(or deceased former employee) until such account has been fully
distributed and/or forfeited.
(n) "Participant Recordkeeping Reconciliation Period" shall mean the period
beginning on the date of the initial transfer of assets to the Trust
and ending on the date of the completion of the reconciliation of
Participant records.
(o) "Plan" shall mean the Fortune Brands Retirement Savings Plan and the
Fortune Brands Hourly Employee Retirement Savings Plan and such other
tax-qualified defined contribution plans which are maintained by
Fortune or any of its subsidiaries or affiliates that elect to
participate in the Trust established hereunder for the benefit of their
eligible employees and which are designated by Fortune in writing to
the Trustee as a Plan hereunder, such writing to be in the form of the
Plan Designation Form provided by the Trustee and signed by Fortune.
Each reference to "a Plan" or "the Plan" in this Agreement shall mean
and include the Plan or Plans to which the particular provision of this
Agreement is being applied or all Plans, as the context may require.
(p) "Reporting Date" shall mean the last day of each calendar quarter, the
date as of which the Trustee resigns or is removed pursuant to Section
13 hereof and the date as of which this Agreement terminates pursuant
to Section 15 hereof.
(q) "Trust" shall mean the Fortune Brands, Inc. Savings Plans Master Trust,
being the trust established by Fortune and the Trustee pursuant to the
provisions of this Agreement.
(r) "Trustee" shall mean Fidelity Management Trust Company, a Massachusetts
trust company and any successor to all or substantially all of its
trust business as described in Section 14(c). The term Trustee shall
also include any successor trustee appointed pursuant to Section 14 to
the extent such successor agrees to serve as Trustee under this
Agreement.
Section 2. Trust. Fortune hereby establishes the Fortune Brands, Inc. Savings
Plans Master Trust with the Trustee. The Trust shall consist of an initial
contribution of money or other property acceptable to the Trustee in its sole
discretion, made by Fortune or transferred from a previous trustee under the
Plan, such additional sums of money and Fortune Common Stock as shall from time
to time be delivered to the Trustee under a Plan, all investments made therewith
and proceeds thereof, and all earnings and profits thereon, less the payments
that are made by the Trustee as provided herein, without distinction between
principal and income. The Trustee hereby accepts the Trust on the terms and
conditions set forth in this Agreement. In accepting this Trust, the Trustee
shall be accountable for the assets received by it, subject to the terms and
conditions of this Agreement.
Section 3. Exclusive Benefit and Reversion of Contributions.
(a) Except as provided in paragraphs (b), (c) and (d) of this Section,
no part of the Trust may be used for, or diverted to, purposes other than the
exclusive benefit of the Participants in the Plan or their beneficiaries prior
to the satisfaction of all liabilities with respect to the Participants and
their beneficiaries.
(b) In the case of contributions made by the Plan Sponsor prior to the
receipt of an initial favorable determination letter from the Internal Revenue
Service ("IRS") with respect to the Plan, the Plan Sponsor may direct the
Trustee to return to the Plan Sponsor those contributions and all earnings
thereon within one year after the IRS refuses in writing to issue such a letter.
(c) In the case of any portion of a contribution made by the Plan
Sponsor by mistake of fact, the Plan Sponsor may direct the Trustee to return to
the Plan Sponsor that portion of the contribution within one year after the
payment of that portion of the contribution.
(d) In the case of any portion of a contribution made by the Plan
Sponsor and disallowed by the IRS as a deduction under section 404 of the Code,
the Plan Sponsor may direct the Trustee to return to the Plan Sponsor that
portion of the contribution within one year after the IRS disallows the
deduction in writing.
(e) Earnings attributable to the contributions returnable under
paragraph (c) or (d) shall not be returned to the Plan Sponsor, and any losses
attributable to those contributions shall reduce the amount returned.
Section 4. Disbursements.
(a) Administrator Directed Disbursements. The Trustee shall make
disbursements in the amounts and in the manner that the Administrator directs
from time to time in writing. The Trustee shall have no responsibility to
ascertain such direction's compliance with the terms of the Plan (except to the
extent the terms of the Plan have been communicated to the Trustee in writing)
or of any applicable law or the direction's effect for tax purposes or
otherwise; nor shall the Trustee have any responsibility to see to the
application of any disbursement.
(b) Participant Withdrawal Requests. Fortune hereby directs that,
pursuant to the Plan, a Participant withdrawal request (in-service or full
withdrawal) may be made by the Participant by telephone or such other electronic
means as may be mutually agreed upon by Fortune and Trustee, and the Trustee
shall process such request only after the identity of the Participant is
verified by use of a personal identification number ("PIN") and social security
number. The Trustee shall process such withdrawal in accordance with written
guidelines provided by Fortune and documented in the Plan Administrative Manual.
In the case of a hardship withdrawal request, the Trustee shall forward the
withdrawal document to the Participant for execution and submission for approval
to the Administrator. The Administrator shall have the responsibility for
approving the withdrawal and instructing the Trustee to send the proceeds to the
Administrator or to the Participant if so directed by the Administrator.
(c) Limitations. The Trustee shall not be required to make any
disbursement in excess of the net realizable value of the assets of the Trust at
the time of the disbursement. The Trustee shall be required to make all
disbursements in cash in accordance with the hierarchy of investments to be
converted to cash as detailed in the Plan Administrative Manual unless the
Administrator has provided written directions to the contrary.
Section 5. Investment of Trust.
(a) Selection of Investment Options. The Trustee shall have no
responsibility for the selection of investment options under the Trust and shall
not render investment advice to any person in connection with the selection of
such options.
(b) Available Investment Options. The Named Fiduciary with respect to a
Plan shall direct the Trustee as to the investment options in which the Trust
shall be invested during the Participant Recordkeeping Reconciliation Period,
and the investment options in which Plan Participants may invest, subject to the
following limitations. The Named Fiduciary may determine to offer as investment
options only (i) Mutual Funds, (ii) Fortune Common Stock, (iii) Gallaher ADRs,
(iv) notes evidencing loans to Participants in accordance with the terms of the
Plan, and (v) portfolios of assets managed by a third party investment manager
as defined in section 402(c)(3) of ERISA not affiliated with the Trustee.
The investment options initially selected by the Named Fiduciary are
identified on a Schedule of Administrative Services and a Schedule of Investment
Options provided by the Trustee and signed by Fortune. The Named Fiduciary may
add additional investment options with the consent of the Trustee and upon
mutual amendment of this Agreement and/or Schedules, as applicable, to reflect
such additions.
(c) Participant Direction. Each Participant shall direct the Trustee in
which investment option(s) to invest the assets in the Participant's individual
accounts. Such directions may be made by Participants by use of the telephone
exchange system, the internet, or in such other manner as may be agreed upon
from time to time by Fortune and the Trustee, maintained for such purposes by
the Trustee or its agent, in accordance with the written Schedule of Exchange
Guidelines provided by the Trustee and signed by Fortune. In the event that the
Trustee fails to receive a proper direction, the assets shall be invested in the
securities of the investment option set forth for such purpose on the Schedule
of Investment Options, until the Trustee receives a proper direction.
(d) Mutual Funds. Fortune hereby acknowledges that it has received from
the Trustee a copy of the prospectus for each Fidelity Mutual Fund selected by
the Named Fiduciary as a Plan investment option. All transactions involving
Non-Fidelity Mutual Funds shall be done in accordance with the Schedule of
Operational Guidelines for Non-Fidelity Mutual Funds provided by the Trustee and
signed by Fortune. Trust investments in Mutual Funds shall be subject to the
following limitations:
(i) Execution of Purchases and Sales. Purchases and sales of
Mutual Funds (other than for exchanges) shall be made on the date on which the
Trustee receives from Administrator in good order all information and
documentation necessary to accurately effect such purchases and sales (or in the
case of a purchase, the subsequent date on which the Trustee has received a wire
transfer of funds necessary to make such purchase). Exchanges of Mutual Funds
shall be made in accordance with the Schedule of Exchange Guidelines provided by
the Trustee and signed by Fortune.
(ii) Voting. At the time of mailing of notice of each annual or
special stockholders' meeting of any Mutual Fund, the Trustee shall send a copy
of the notice and all proxy solicitation materials to each Participant who has
shares of the Mutual Fund credited to the Participant's accounts, together with
a voting direction form for return to the Trustee or its designee. Fortune shall
have the right to direct the Trustee as to the manner in which the Trustee is to
vote the mutual fund shares held in any short-term investment fund or liquidity
reserve. The Participant shall have the right to direct the Trustee as to the
manner in which the Trustee is to vote the shares credited to the Participant's
accounts (both vested and unvested). The Trustee shall vote the shares as
directed by the Participant. The Trustee shall not vote shares for which it has
received no directions from the Participant. During the Participant
Recordkeeping Reconciliation Period, Fortune shall have the right to direct the
Trustee as to the manner in which the Trustee is to vote the shares of the
Mutual Funds in the Trust including Mutual Fund shares held in any short-term
investment fund for liquidity reserve. With respect to all rights other than the
right to vote, the Trustee shall follow the directions of the Participant and if
no such directions are received, the directions of the Named Fiduciary. The
Trustee shall have no duty to solicit directions from Participants or Fortune.
Section 6. Administration of Fortune Stock Fund.
(a) Investment in Fortune Common Stock. Trust investments in Fortune
Common Stock shall be made via the Fortune Stock Fund. Investments in the
Fortune Stock Fund shall consist primarily of shares of Fortune Common Stock. In
order to satisfy daily Participant exchange or withdrawal requests for transfers
and payments, the Fortune Stock Fund shall also include cash or short-term
liquid investments in accordance with this paragraph. Such holdings will include
Colchester Street Trust: Money Market Portfolio: Class I or such other Mutual
Fund commingled money market pool as agreed to by Fortune and Trustee. Fortune
shall, after consultation with the Trustee, establish and communicate to the
Trustee in writing a target percentage and drift allowance for such short-term
liquid investments. The Trustee shall be responsible for ensuring that the
actual cash held in the Fortune Stock Fund falls within the agreed upon range
over time. Each Participant's proportional interest in the Fortune Stock Fund
shall be measured in units of participation, rather than shares of Fortune
Common Stock. Such units shall represent a proportionate interest in all of the
assets of the Fortune Stock Fund, which includes shares of Fortune Common Stock,
short-term investments and at times, receivables for dividends and/or Fortune
Common Stock sold and payables for Fortune Common Stock purchased. The Trustee
shall determine a daily net asset value ("NAV") for each unit outstanding of the
Fortune Stock Fund. Valuation of the Fortune Stock Fund shall be based upon the
New York Stock Exchange ("NYSE") closing price of the stock, or if unavailable,
the latest available price as reported by the principal national securities
exchange on which the Fortune Common Stock is traded. The NAV shall be adjusted
by dividends paid on the shares of Fortune Common Stock held by the Fortune
Stock Fund, gains or losses realized on sales of Fortune Common Stock,
appreciation or depreciation in the market price of those shares owned, and
interest on the short-term investments held by the Fortune Stock Fund, expenses
that, pursuant to Fortune's direction, the Trustee accrues from the Fortune
Stock Fund, and commissions on purchases and sales of Fortune Common Stock.
Investments in Fortune Common Stock shall be subject to the following
limitations:
(i) Acquisition Limit. Pursuant to the Plan,
the Trust may be invested in Fortune Common Stock to the extent necessary to
comply with investment directions in accordance with this Agreement.
(ii) Fiduciary Duty. Fortune shall continually
monitor the suitability under the fiduciary duty rules of section 404(a)(1) of
ERISA (as modified by section 404(a)(2) of ERISA) of acquiring and holding
Fortune Common Stock. The Trustee shall not be liable for any loss, or by reason
of any breach, which arises from the directions of the Named Fiduciary with
respect to the acquisition and holding of Fortune Common Stock, unless it is
clear on their face that the actions to be taken under those directions would be
prohibited by the foregoing fiduciary duty rules or would be contrary to the
terms of this Agreement.
(iii) Each Participant with an interest in Fortune
Common Stock (or, in the event of the Participant's death, his beneficiary) is,
for the purposes of Section 6(a)(ii), hereby designated as a "named fiduciary"
(within the meaning of Section 403(a)(1) of ERISA), with respect to a pro rata
portion of (i) the shares of Fortune Common Stock held which are allocated to
other Participants' accounts but as to which directions are not timely received
by the Trustee, and (ii) the shares of Fortune Common Stock not allocated to
Participants' accounts, and (iii) allocated shares not purchased at the
direction of Participants, and such Participant (or beneficiary) shall have the
right to direct the Trustee in writing as to the manner in which the Trustee is
to vote such shares.
(iv) Purchase and sales of Fortune Common Stock shall
be made on the open market as necessary to maintain the target cash percentage
and drift allowance for the Fortune Stock Fund, provided that:
(A) If the Trustee is unable to purchase
or sell the total number of shares required to be purchased or sold on such day
as a result of market conditions; or
(B) If the Trustee is prohibited by the
Securities and Exchange Commission, the NYSE, or any other regulatory body from
purchasing or selling any or all of the shares required to be purchased or sold
on such day, then the Trustee shall purchase or sell such shares as soon as
possible thereafter. The Trustee may follow directions from Fortune to deviate
from the above purchase and sale procedures provided that such direction is made
in writing by Fortune.
(v) Execution of Purchases and Sales. (A) Purchases
and sales of units in the Fortune Stock Fund (other than for exchanges) shall be
made on the date on which the Trustee receives from Fortune in good order all
information, documentation, and wire transfers of funds (if applicable),
necessary to accurately effect such transactions. Exchanges of units in the
Fortune Stock Fund shall be made in accordance with the Schedule of Exchange
Guidelines provided by the Trustee and signed by Fortune. The Trustee may follow
directions from Fortune to deviate from the above purchase and sale procedures
provided that such direction is made in writing by Fortune.
(B) Purchases and Sales from or to Fortune.
If agreed to between Fortune and the Trustee in writing prior to the trading
date, the Trustee may purchase or sell Fortune Common Stock from or to Fortune
if the purchase or sale is for adequate consideration (within the meaning of
section 3(18) of ERISA) and no commission is charged. If employer contributions
or contributions made on behalf of the Participants (employee) under the Plans
are to be invested in Fortune Common Stock, Fortune may transfer Fortune Common
Stock in lieu of cash to the Trust. In either case, the number of shares to be
transferred will be determined by dividing the total amount of Fortune Common
Stock to be purchased or sold by the NYSE closing price of the Fortune Common
Stock on the trading date.
(C) Use of an Affiliated Broker. Fortune
hereby directs the Trustee to use Fidelity Capital Markets and its affiliates
("Capital Markets") to provide brokerage services in connection with any
purchase or sale of Fortune Common Stock in accordance with directions from Plan
Participants. Capital Markets shall execute such directions directly or through
its affiliate, National Financial Services Company ("NFSC"). The provision of
brokerage services shall be subject to the following:
(1) As consideration for such
brokerage services, Fortune agrees that Capital Markets shall be entitled to
remuneration under this direction provision in an amount of no more than three
and one-fifth cents ($.032) commission on each share of Fortune Common Stock.
Any change in such remuneration may be made only by a signed agreement between
Fortune and Trustee.
(2) The Trustee will provide Fortune
with a description of Capital Markets' brokerage placement practices and a form
by which Fortune may terminate this direction to use a broker affiliated with
the Trustee. The Trustee will provide Fortune with this termination form
annually, as well as quarterly and annual reports which summarize all securities
transaction-related charges incurred by the Plan.
(3) Any successor organization of
Capital Markets, through reorganization, consolidation, merger or similar
transactions, shall, upon consummation of such transaction, become the successor
broker in accordance with the terms of this direction provision.
(4) The Trustee and Capital Markets
shall continue to rely on this direction until notified to the contrary. Fortune
reserves the right to terminate this direction upon written notice to Capital
Markets (or its successor) and the Trustee, in accordance with Section 16 of
this Agreement.
(vi) Securities Law Reports. Fortune shall be
responsible for filing all reports required under Federal or state securities
laws with respect to the Trust's ownership of Fortune Common Stock, including,
without limitation, any reports required under section 13 or 16 of the
Securities Exchange Act of 1934, and shall immediately notify the Trustee in
writing of any requirement to stop purchases or sales of Fortune Common Stock
pending the filing of any report. The Trustee shall provide to Fortune such
information on the Trust's ownership of Fortune Common Stock as Fortune may
reasonably request in order to comply with Federal or state securities laws.
(b) Voting of Shares in Fortune Stock Fund.
(i) No Trustee Discretion. Notwithstanding any other
provision of the Plans or this Agreement, the Trustee shall have no discretion
or authority to exercise any voting rights with respect to the Fortune Common
Stock held in the Fortune Stock Fund except as provided in this Section 6.
(ii) Participant Direction. Each Participant in the
Plans shall be entitled to direct the Trustee in writing or by such other means
as agreed to by the Trustee and Fortune, and the Trustee shall solicit the
direction of such Participant, as to the manner in which any voting rights of
shares attributable to the Participant's proportional interest in the Fortune
Stock Fund (vested or unvested) are to be exercised with respect to any matter
on which holders of Fortune Common Stock are entitled to vote by proxy, consent
or otherwise, and the Trustee shall exercise the voting rights of such shares
with respect to such matter in accordance with the most recent timely direction
received by the Trustee from such Participant. With respect to the voting rights
of shares of Fortune Common Stock held in the Fortune Stock Fund as to which
timely directions have not been received by the Trustee as provided in the
preceding sentence and any shares of Fortune Common Stock representing the
proportional interest in the Fortune Stock Fund which are unallocated to
accounts of Participants, the Trustee shall exercise the voting rights of such
shares in the same manner and in the same proportion in which the voting rights
of shares as to which such directions were received by the Trustee are to be
exercised as provided in the preceding sentence. The Trustee shall combine
fractional interests of Participants in shares of Fortune Common Stock held in
the Fortune Stock Fund to the extent possible so that the voting rights with
respect to such matter are exercised in a manner which reflects as accurately as
possible the collective directions given by Participants. In giving directions
to the Trustee as provided herein, each Participant shall be acting as a named
fiduciary with respect to the exercise of voting rights of shares of Fortune
Common Stock in accordance with such directions.
(iii) Trustee to Communicate Voting Procedures. When
Fortune prepares for any annual or special meeting, Fortune shall notify the
Trustee at least thirty (30) days in advance of the intended record date and
shall cause a copy of all proxy solicitation materials to be sent to the
Trustee. If requested by the Trustee, Fortune shall certify to the Trustee that
the aforementioned materials represents the same information that is distributed
to shareholders of Fortune Common Stock. The Trustee will distribute or cause to
be distributed as promptly as possible to all Participants entitled to give
directions to the Trustee as to the exercise of voting rights with respect to
any matter all communications and other materials, if any, that the Trustee may
receive from any person or entity (including Fortune) that are being distributed
to the holders of Fortune Common Stock and either are directed generally to such
holders or relate to any matter on which holders of Fortune Common Stock are
entitled to vote by proxy, consent or otherwise, and Fortune will promptly
furnish to the Trustee all such communications and other materials, if any, as
are being distributed by or on behalf of Fortune. Fortune will provide the
Trustee with such information, documents and assistance as the Trustee may
reasonably request in connection with any communications or distributions to
Participants as aforesaid. This information will include the names and current
addresses of Participants and the number of shares of Fortune Common Stock
representing their proportional interest in the Fortune Stock Fund upon which
the Trustee may conclusively rely. Based on these materials, the Trustee shall
prepare a voting instruction form and will communicate or cause to be
communicated to all Participants the procedures regarding the exercise of voting
rights of shares of Fortune Common Stock held in the Fortune Stock Fund. The
form shall show the proportional interest in the number of full and fractional
shares of Fortune Common Stock credited to the Participant's accounts held in
the Fortune Stock Fund. Notwithstanding any other provision of this Section 6,
the Plan (as communicated to the Trustee by Fortune) or the Trust Agreement to
the contrary, unless Fortune or one of its affiliated organizations serves as
recordkeeper, to the extent necessary to provide Fortune or one of its
affiliated organizations as recordkeeper with information necessary accurately
to maintain records of the interest in the Plan of Participants, the Trustee
will use its best efforts (A) to keep confidential the direction (or the absence
thereof) from each Participant in connection with the exercise of voting rights
of shares of Fortune Common Stock held in the Fortune Stock Fund and the
identity of such Participant and (B) not to divulge such direction or identity
to any person or entity, including, without limitation, Fortune, its affiliated
organizations and any director, officer, employee or agent thereof. It is the
intent of this Section 6 that Fortune, its affiliated organizations and their
directors, officers, employees and agents not be able to ascertain the direction
given (or not given) by any Participant in connection with the exercise of
voting rights of such shares.
(iv) Invalidity. If a court of competent jurisdiction
issues an opinion, order or decree which, in the opinion of counsel to Fortune
or the Trustee, will, in all or any particular circumstances; (A) invalidate
under ERISA or otherwise any provision or provisions of the Plan or the Trust
Agreement with respect to the exercise of voting rights of shares of Fortune
Common Stock held in the Fortune Stock Fund; (B) cause any such provision or
provisions to conflict with ERISA, or (C) require the Trustee not to act or such
voting rights not to be exercised in accordance with such provision or
provisions, then, upon written notice thereof to the Trustee (in the case of an
opinion of counsel to Fortune) or to Fortune (in the case of an opinion of
counsel to the Trustee) such provision or provisions will be given no further
force or effect in such circumstances. Except to the extent otherwise specified
in such opinion, order or decree, the Trustee will have no discretion or
authority in such circumstances to exercise voting rights with respect to shares
of Fortune Common Stock held in the Fortune Stock Fund, but will exercise such
voting rights in accordance with the most recent timely directions received from
Participants, to the extent such directions have not been invalidated. To the
extent the Trustee, in order to comply with ERISA or other applicable law,
exercises any fiduciary responsibility it may have in any circumstances with
respect to any exercise of voting rights of shares of Fortune Common Stock held
in the Fortune Stock Fund, the Trustee in exercising its fiduciary
responsibility, unless pursuant to the requirements of ERISA or otherwise it is
unlawful to do so will take directions timely received from Participants as
being valid direction with respect to the exercise of such voting rights. In the
event that the Trustee, in its sole discretion, determines that in exercising
its fiduciary responsibility Under this Section 6(b)(iv) any relevant financial
factors bearing on the exercise of voting rights are equal or substantially
equal, the Trustee may take into account such non-financial factors as the
Trustee deems appropriate in its sole discretion.
<PAGE>
(c) Tender Offers.
(i) Tender by Trustee. Notwithstanding any other
provision of the Plan or the Trust Agreement to the contrary, the Trustee will
have no discretion or authority to tender, deposit, sell, exchange or transfer
any shares of Fortune Common Stock (which, for purposes of this Section 6, will
include any rights within the meaning of Section 6(d)) held in the Fortune Stock
Fund pursuant to any tender offer (as defined herein) except as provided in this
Section 6. For purposes of this Section 6, a "tender offer" will mean any tender
or exchange offer for or request or invitation for tenders or exchanges of
shares of Fortune Common Stock and will include, without limitation, any such
tender offer made by or on behalf of Fortune.
(ii) Participant Direction. Each Participant will be
entitled to direct the Trustee in writing or by such other means as agreed to by
the Trustee and Fortune, and the Trustee will solicit the direction of such
Participant as to the tendering, depositing, selling, exchanging or transferring
of shares of Fortune Common Stock attributable to his proportionate interest in
the Fortune Stock Fund pursuant to any tender offer, and the Trustee will
tender, deposit, sell, exchange or transfer such shares (or will not tender such
shares of Fortune Common Stock) pursuant to such tender offer in accordance with
the most recent timely direction received by the Trustee from such Participant.
With respect to shares of Fortune Common Stock held in the Fortune Stock Fund as
to which timely written directions have not been received by the Trustee from
Participants, such Participants will be deemed to have directed the Trustee that
such shares of Fortune Common Stock, subject to all provisions of the Plans, the
Trust Agreement, and applicable law, not be tendered, deposited, sold, exchanged
or transferred pursuant to such tender offer, and the Trustee will not tender,
deposit, sell, exchange or transfer any of such shares pursuant thereto. If,
under the terms of such tender offer or otherwise, any shares of Fortune Common
Stock tendered or deposited pursuant thereto may be withdrawn, the Trustee will
(A) use its best efforts to solicit the direction of each Participant, as to the
exercise of withdrawal rights with respect to shares of Fortune Common Stock
that have been tendered or deposited pursuant to this Section 6, and (B)
exercise (or refrain from exercising) such withdrawal rights in the same manner
as will reflect the most recent timely directions received with respect to the
exercise of such withdrawal rights. The Trustee will not withdraw shares except
pursuant to a timely direction of a Participant. The Trustee will combine
fractional interests of Participants in shares of Fortune Common Stock held in
the Fortune Stock Fund to the extent possible so that such shares are tendered,
deposited, sold, exchanged or transferred, and withdrawal rights with respect
thereto are exercised, in a manner which reflects as accurately as possible the
collective directions given or deemed to have been given by Participants in
accordance with this Section 6. In giving or being deemed to have given
directions to the Trustee as provided in this Section 6(c), each Participant
will be acting as a named fiduciary with respect to the tender, deposit, sale,
exchange or transfer of shares of Fortune Common Stock (or the retention of such
shares in the Fortune Stock Fund) in accordance with such directions pursuant to
this Section 6(c) and the exercise of (or the refraining from exercising)
withdrawal rights with respect to shares of Fortune Common Stock tendered or
deposited pursuant to the third sentence of this Section 6(c).
(iii) Trustee to Communicate Tender Procedures. In
the event that Fortune receives notice of the commencement of a tender offer for
Fortune Common Stock as to which Participants are entitled to give directions as
provided in this Section 6, Fortune shall notify the Trustee as soon as
administratively possible and shall cause a copy of all materials available to
Fortune to be sent to the Trustee. If requested by the Trustee, Fortune shall
certify to the Trustee that the aforementioned materials represent the same
information available to Fortune. In the event of a tender offer, the Trustee
will distribute or cause to be distributed as promptly as possible to all
Participants entitled to give directions to the Trustee with respect to such
tender offer all communications and other materials, if any, that the Trustee
may receive from any person or entity (including Fortune) that are being
distributed to the holders of the securities to whom such tender offer is
directed and either are directed generally to such holders or relate to such
tender offer, and Fortune will promptly furnish to the Trustee all such
communications and other materials, if any, as are being distributed by or on
behalf of Fortune. Fortune will provide the Trustee with such information,
documents and assistance as the Trustee may reasonably request in connection
with any communications or distributions to Participants as aforesaid. This
information will include the names and current addresses of Participants and the
number of shares of Fortune Common Stock credited to the accounts of each of
them, upon which the Trustee may conclusively rely. Based on these materials and
after consultation with Fortune, the Trustee shall prepare a tender instruction
form to be sent to each Plan Participant with an interest in the Fortune Stock
Fund containing the procedures relating to their right to give directions as
named fiduciaries to the Trustee. The tender instruction form shall show the
number of full and fractional shares of Fortune Common Stock that reflect the
Participants' proportional interest in the Fortune Stock Fund. Notwithstanding
any other provision of this Section 6, the Plan (as communicated to the Trustee
by Fortune) or the Trust Agreement to the contrary, except if Fortune or one of
its affiliated organizations serves as recordkeeper, to the extent necessary to
provide Fortune or one of its affiliated organizations with information
necessary accurately to maintain records of the interest in the Plans of
Participants, the Trustee will use it best efforts (A) to keep confidential the
direction (or the absence thereof) from each Participant with respect to any
tender offer and the identity of such Participant and (B) not to divulge such
direction or identity to any person or entity, including, without limitation,
Fortune, its affiliated organizations and any director, officer, employee or
agent thereof. It is the intent of this Section 6(c) that Fortune, its
affiliated organizations and their directors, officers, employees and agents not
be able to ascertain the direction given (or not given) or deemed to have been
given by any Participant with respect to any tender offer.
(iv) Invalidity. If a court of competent jurisdiction
issues an opinion, order or decree which, in the opinion of counsel to Fortune
or the Trustee, will, in all or any particular circumstances; (A) invalidate
under ERISA or otherwise any provision or provisions of the Plan or the Trust
Agreement with respect to the tendering, depositing, sale, exchange or transfer
of shares of Fortune Common Stock held in the Fortune Stock Fund or the exercise
of any withdrawal rights with respect to shares tendered or deposited pursuant
to a tender offer; (B) cause any such provision or provisions to conflict with
ERISA; or (C) require the Trustee not to act or such shares not to be tendered,
deposited, sold, exchanged or transferred or such withdrawal rights not to be
exercised in accordance with such provision or provisions; then, upon written
notice thereof to the Trustee (in the case of an opinion of counsel to Fortune)
or to Fortune (in the case of an opinion of counsel to the Trustee) such
provision or provisions will be given no further force or effect in such
circumstances. Except to the extent otherwise specified in such opinion, order
or decree, the Trustee will have no discretion or authority in such
circumstances to tender, deposit, sell, transfer or exchange shares of Fortune
Common Stock held in the Fortune Stock Fund (or the retention of such shares in
the Fortune Stock Fund) pursuant to a tender offer or with respect to the
exercise of (or refraining from exercising) any withdrawal rights with respect
to shares tendered or deposited pursuant to a tender offer, but will act in
accordance with the most recent timely directions received from Participants to
the extent such directions have not been invalidated. To the extent the Trustee,
in order to comply with ERISA or other applicable law, exercises any fiduciary
responsibility it may have in any circumstances with respect to the tendering,
depositing, sale, exchange or transfer of shares of Fortune Common Stock held in
the Fortune Stock Fund or the exercise of any withdrawal rights with respect to
shares tendered or deposited pursuant to a tender offer, the Trustee in
exercising its fiduciary responsibility, unless pursuant to the requirements of
ERISA or otherwise it is unlawful to do so will take directions timely received
from Participants as being valid direction with respect to a tender offer. In
the event that the Trustee, in its sole discretion, determines that in
exercising its fiduciary responsibility under this Section 6(c)(iv) any relevant
financial factors bearing on the exercise of tender rights are equal or
substantially equal, the Trustee may take into account such non-financial
factors as the Trustee deems appropriate in its sole discretion.
(v) Proceeds of Tender. A direction by a Participant
to the Trustee to tender shares of Fortune Common Stock reflecting the
Participant's proportional interest in the Fortune Stock Fund shall not be
considered a written election under the Plan by the Participant to withdraw, or
have distributed, any or all of his withdrawable shares. The Trustee shall
credit to each proportional interest of the Participant from which the tendered
shares were taken the proceeds received by the Trustee in exchange for the
shares of Fortune Common Stock tendered from that interest. Pending receipt of
directions from the Participant or the Named Fiduciary, as provided in the Plan,
as to which of the remaining investment options the proceeds should be invested
in, the Trustee shall invest the proceeds in the investment option described the
Schedule of Investment Options provided by the Trustee and signed by Fortune and
the Trustee.
(d) Certain Rights Held in Fortune Stock Fund.
(i) Sale or Exchange of Preferred Share Purchase
Rights. If any Preferred Share Purchase Rights of Fortune (or any rights issued
by Fortune in substitution or replacement therefor) held in the Fortune Stock
Fund ("rights") become transferable separately from the shares of Fortune Common
Stock held in the Fortune Stock Fund as provided in the Plan or Trust Agreement,
Fortune agrees to purchase the rights from the Trustee as soon as practicable.
As soon as administratively feasible after the rights become separately
transferable from the shares of Fortune Common Stock, the Trustee shall, in its
sole discretion, appoint an independent financial advisor as specifically
permitted under Section 9 of this Trust Agreement. The independent financial
advisor shall be retained at the Fortune's expense for the purpose of
determining a price at which the rights shall be sold to Fortune by the Trustee.
Notwithstanding the foregoing, if prior to the sale of the rights by the Trustee
to Fortune, Fortune determines to exchange one right for a share of Fortune, the
Trustee will surrender each right that it holds in exchange for a share of
Fortune Common Stock.
(ii) Invalidity. If a court of competent
jurisdiction issues an opinion, order or decree which, in the opinion of counsel
to Fortune or the Trustee, will, in all or any particular circumstances, (A)
invalidate under ERISA or otherwise any provision or provisions of the Plans or
the Trust Agreement with respect to the sale of rights by the Trustee to Fortune
or the exchange of rights, (B) cause any such provision or provisions to
conflict with ERISA, or (C) require the Trustee not to sell to Fortune or
exchange the rights, then, upon written notice thereof to the Trustee (in the
case of an opinion of counsel to Fortune) or to Fortune (in the case of an
opinion of counsel to the Trustee) such provision or provisions will be given no
further force or effect in such circumstances. In the event such opinion, order
or decree invalidates the sale or exchange of rights to Fortune on the basis
that the price at which the rights are valued by the independent financial
advisor does not constitute adequate consideration under ERISA, Fortune shall
purchase the rights from the Trustee for adequate consideration as set forth in
or determined pursuant to such opinion, order or decree. In the event such
opinion, order or decree invalidates the sale or exchange of rights to Fortune
for any other reason, the Trustee shall sell the rights to a person or persons
not affiliated with Fortune. If the Trustee is unable to sell the rights to a
person or persons not affiliated with Fortune, the Trustee shall then follow the
directions of Fortune as Named Fiduciary with respect to the disposition of the
rights unless it is clear on the direction's face that the actions to be taken
under the direction would be prohibited by the fiduciary duty rules of section
404(a) of ERISA or would be contrary to the terms of the Plan (as communicated
by Fortune to the Trustee in writing) or this Agreement. It is agreed that the
Trustee shall in no way be required to retain the rights
(iii) Allocation of Proceeds. Pending receipt of
directions from the Named Fiduciary or the Participant as provided in the Plan,
as to which of the remaining investment options the proceeds of the rights
should be invested in, the Trustee shall invest the proceeds in the investment
option described in the Schedule of Investment Options provided by the Trustee
and signed by Fortune and the Trustee.
Section 7. Administration of Gallaher Fund.
(a) Investment in Gallaher ADRs. Trust investments in Gallaher ADRs
shall be made via the Gallaher Fund. In order to satisfy daily Participant
exchange or withdrawal requests for transfers and payments, the Gallaher Fund
shall also include cash or short-term liquid investments in accordance with this
paragraph. Such holdings will include Colchester Street Trust: Money Market
Portfolio: Class I or such other Mutual Fund or commingled money market pool as
agreed to by Fortune and Trustee. Fortune shall, after consultation with the
Trustee, establish and communicate to the Trustee in writing a target percentage
and drift allowance for such short-term liquid investments. The Trustee shall be
responsible for ensuring that the actual cash held in the Gallaher Fund falls
within the agreed upon range over time. Each Participant's proportional interest
in the Gallaher Fund shall be measured in units of participation, rather than
numbers of Gallaher ADRs. Such units shall represent a proportionate interest in
all of the assets of the Gallaher Fund, which includes Gallaher ADRs and
short-term investments. The Trustee shall determine the NAV for each unit
outstanding of the Gallaher Fund. Valuation of the Gallaher Fund shall be based
on the NYSE closing price of the Gallaher ADRs, or if unavailable, the latest
available price as reported by the principal national securities exchange on
which the Gallaher ADRs are traded. The NAV shall be adjusted by dividends paid
on the Gallaher ADRs held in the Gallaher Fund, gains or losses realized on
sales of Gallaher ADRs, appreciation or depreciation in the market price of
those shares owned, and interest on the short-term investments held by the
Gallaher Fund, expenses that, pursuant to Fortune's direction, the Trustee
accrues from the Gallaher Fund, and commissions on sales of Gallaher ADRs.
Investments in Gallaher ADRs shall be subject to the following limitations:
(i) Acquisition Limit. No further contributions
will be invested in the Gallaher Fund, nor may any exchanges be made to the
Gallaher Fund from any of the other investment options. The proceeds of any
distribution received by the Gallaher Fund with respect to Gallaher ADRs will be
invested as directed by Participants or the Named Fiduciary in accordance with
the Plan. Nothing in this Section 7(a)(i), however, restricts the Trustee's
ability to retain in the Gallaher Fund any additional Gallaher ADRs received as
a result of a stock dividend, stock split or similar transaction.
(ii) Sales of Gallaher ADRs. Sales of Gallaher ADRs
shall be made on the open market as necessary to maintain the target cash
percentage and drift allowance for the Gallaher Fund, provided that:
(A) If the Trustee is unable to sell the
total number of Gallaher ADRs to be sold on such day as a result of market
conditions; or
(B) If the Trustee is prohibited by the
Securities and Exchange Commission, NYSE, or any other regulatory body from
selling any or all of the Gallaher ADRs required to be sold on such day, then
the Trustee shall purchase or sell such Gallaher ADRs as soon as possible
thereafter. The Trustee may follow directions from Fortune to deviate from the
above sale procedures provided that such direction is made in writing by
Fortune.
(iii) Execution of Sales. (A) Sales of Gallaher
ADRs in the Gallaher Fund shall be made on the date on which the Trustee
receives from Fortune in good order all information and documentation necessary
to accurately effect such transactions. Exchange of units out of the Gallaher
Fund shall be made in accordance with the Schedule of Exchange Guidelines
provided by the Trustee and signed by Fortune and the Trustee. The Trustee may
follow directions from Fortune to deviate from the above sale procedures
provided that such direction is made in writing by Fortune.
(B) Use of an Affiliated Broker. Fortune
hereby directs the Trustee to use Capital Markets to provide brokerage services
in connection with any sale of Gallaher ADRs in accordance with directions from
Plan Participants. Capital Markets shall execute such directions directly or
through NFSC. The provision of brokerage services shall be subject to the
following:
(1) As consideration for such
brokerage services, Fortune agrees that Capital Markets shall be entitled to
remuneration under this direction provision in an amount of no more than three
and one-fifth cents ($.032) commission on each Gallaher ADR. Any change in such
remuneration may be made only by a signed agreement between Fortune and Trustee.
(2) The Trustee will provide Fortune
with a description of Capital Markets' brokerage placement practices and a form
by which Fortune may terminate this direction to use a broker affiliated with
the Trustee. The Trustee will provide Fortune with this termination form
annually, as well as quarterly and annual reports which summarize all securities
transaction-related charges incurred by the Plan.
(3) Any successor organization of
Capital Markets, through reorganization, consolidation, merger or similar
transactions, shall, upon the consummation of such transaction, become the
successor broker in accordance with the terms of this direction.
(4) The Trustee and Capital Markets
shall continue to rely on this direction provision until notified to the
contrary. Fortune reserves the right to terminate this direction upon written
notice to Capital Markets (or its successor) and the Trustee, in accordance with
Section 16 of this Agreement.
(b) Voting of Gallaher ADRs.
(i) No Trustee Discretion. Notwithstanding any
other provision of the Plans or the Trust Agreement to the contrary, the Trustee
will have no discretion or authority to provide any voting instructions with
respect to Gallaher ADRs held in the Gallaher Fund except as provided in this
Section 7.
(ii) Participant Direction. Each Participant will be
entitled to direct the Trustee in writing, or by such other means as agreed to
by Fortune and the Trustee, and the Trustee will solicit the direction of such
Participant as to the manner in which the Gallaher ADR depositary should be
instructed to vote the Gallaher shares underlying the Gallaher ADRs attributable
to his proportionate interest in the Gallaher Fund. The Trustee will instruct
the Gallaher ADR depositary that such Gallaher ADRs be voted with respect to any
matter in accordance with the most recent timely direction received by the
Trustee from such Participant. With respect to the voting of Gallaher ADRs held
in the Gallaher Fund as to which timely directions have not been received by the
Trustee, the Trustee will instruct the Gallaher ADR depositary to vote the
Gallaher shares underlying the Gallaher ADRs in the same manner and in the same
proportion in which the Gallaher ADRs as to which such directions were timely
received by the Trustee are to be voted. The Trustee will combine fractional
interests of Participants in Gallaher ADRs held in the Gallaher Fund to the
extent possible so that the voting instructions to the Gallaher ADR depositary
with respect to such matter are provided in a manner which reflects as
accurately as possible the collective directions given by Participants. In
giving directions to the Trustee as provided in this Section 6(b), each
Participant will be acting as a named fiduciary with respect to the voting
rights of Gallaher ADRs in accordance with such directions pursuant to this
Section 7(b).
(iii) Trustee to Communicate Voting Procedures. In
the event that Fortune receives notice of any annual or special meeting of the
issuer of Gallaher ADRs, Fortune shall notify the Trustee as soon as
administratively feasible of the intended record date and shall cause a copy of
all related materials obtained by Fortune to be sent to the Trustee. The Trustee
will distribute or cause to be distributed as promptly as possible to all
Participants entitled to give directions to the Trustee as to voting with
respect to any matter, all communications and other materials, if any, that the
Trustee may receive from any person or entity that are being distributed to the
holders of Gallaher ADRs and either are directed generally to such holders or
relate to any matter on which holders of Gallaher ADRs are entitled to provide
voting instructions by proxy, consent or otherwise, and Fortune will promptly
furnish to the Trustee all such communications and other materials, if any, that
it receives that are being distributed by or on behalf of Gallaher. Fortune will
use its reasonable best efforts to provide the Trustee with such information,
documents and assistance as the Trustee may reasonably request in connection
with any communications or distributions to Participants as aforesaid. This
information will include the names and current addresses of Participants and the
Gallaher ADRs representing their proportional interest in the Gallaher Fund,
upon which the Trustee may conclusively rely. Based on these materials, the
Trustee shall prepare a voting instruction form and will communicate or cause to
be communicated to all Participants the procedures regarding the exercise of
voting rights of Gallaher ADRs held in the Gallaher Fund. The form shall show
the proportional interest in the number of full and fractional shares of
Gallaher ADRs credited to the Participant's accounts held in the Gallaher Fund.
Notwithstanding any other provision of this Section 6, the Plans (as
communicated to the Trustee by Fortune) or the Trust Agreement to the contrary,
except if Fortune or one of its affiliated organizations serves as recordkeeper,
to the extent necessary to provide Fortune or one of its affiliated
organizations as recordkeeper with information necessary accurately to maintain
records of the interest in the Plans of Participants, the Trustee will use its
best efforts (A) to keep confidential the direction (or the absence thereof)
from each Participant in connection with the voting of Gallaher ADRs held in the
Gallaher Fund and the identity of such Participant, and (B) not to divulge such
direction or identity to any person or entity, including, without limitation,
Gallaher, Fortune, their affiliated organizations and any director, officer,
employee or agent thereof. It is the intention of this Section 7 that Gallaher,
Fortune, their affiliated organizations and their directors, officers, employees
and agents not be able to ascertain the direction given (or not given) by any
Participant in connection with the voting of Gallaher ADRs.
(iv) Invalidity. If a court of competent
jurisdiction issues an opinion, order or decree which, in the opinion of counsel
to Fortune or the Trustee, will, in all or any particular circumstances; (A)
invalidate under ERISA or otherwise any provision or provisions of the Plans or
the Trust Agreement with respect to the voting of Gallaher ADRs held in the
Gallaher Fund; (B) cause any such provision or provisions to conflict with
ERISA; or (C) require the Trustee not to act or such voting rights not to be
exercised in accordance with such provision or provisions; then, upon written
notice thereof to the Trustee (in the case of an opinion of counsel to Fortune)
or to Fortune (in the case of an opinion of counsel to the Trustee) such
provision or provisions will be given no further force or effect in such
circumstances. Except to the extent otherwise specified in such opinion, order
or decree, the Trustee will have no discretion or authority in such
circumstances to provide voting instructions with respect to Gallaher ADRs held
in the Gallaher Fund, but will exercise such voting rights in accordance with
the most recent timely directions received from Participants to the extent such
directions have not been invalidated. To the extent the Trustee, in order to
comply with ERISA or other applicable law, exercises any fiduciary
responsibility it may have in any circumstances with respect to providing voting
instructions regarding Gallaher ADRs held in the Gallaher Fund, the Trustee in
exercising its fiduciary responsibility, unless pursuant to the requirements of
ERISA or otherwise it is unlawful to do so, will take into account directions
timely received from Participants as being valid direction.
(c) Tendering of Gallaher ADRs.
(i) Tender by Trustee. Notwithstanding any other
provision of the Plans or the Trust Agreement to the contrary, the Trustee will
have no discretion or authority to tender, deposit, sell, exchange or transfer
any Gallaher ADRs representing the proportional interest in the Gallaher Fund
(or to give directions to the Gallaher ADR depositary with respect to securities
underlying the Gallaher ADRs) pursuant to any tender offer (as defined herein)
except as provided in this Section 7(c). For purposes of this Section 7(c), a
"tender offer" will mean any tender or exchange offer for or request or
invitation for tenders or exchanges of Gallaher ADRs (or securities underlying
the Gallaher ADRs) and will include, without limitation, any such tender offer
made by or on behalf of Gallaher Group Plc.
(ii) Participant Direction. Each Participant will be
entitled to direct the Trustee in writing, or by such other means as agreed to
by the Trustee and Fortune, and the Trustee will solicit the written direction
of such Participant as to the tendering, depositing, selling, exchanging or
transferring of Gallaher ADRs attributable to his proportionate interest in the
Gallaher Fund (or to provide instructions to the Gallaher ADR depositary with
respect to securities underlying the Gallaher ADRs) pursuant to any tender
offer, and the Trustee will tender, deposit, sell, exchange or transfer Gallaher
ADRs (or will not tender such Gallaher ADRs) (or will provide instructions to
the Gallaher ADR depositary with respect to securities underlying the Gallaher
ADRs) pursuant to such tender offer in accordance with the most recent timely
direction received by the Trustee from such Participant. With respect to
Gallaher ADRs held in the Gallaher Fund as to which timely directions have not
been received by the Trustee from Participants, such Participants will be deemed
to have directed the Trustee not to tender such Gallaher ADRs in the Gallaher
Fund (or to provide instructions to the Gallaher ADR depositary that securities
underlying the Gallaher ADRs not be tendered by the Gallaher ADR depositary)
subject to all provisions of the Plans, the Trust Agreement, and applicable law,
not be tendered, deposited, sold, exchanged or transferred pursuant to such
tender offer, and the Trustee will act in accordance therewith. In the event
that, under the terms of such tender offer or otherwise, any Gallaher ADRs (or
securities underlying Gallaher ADRs) tendered or deposited pursuant thereto may
be withdrawn, the Trustee will use its best efforts to solicit the direction of
each Participant as to the exercise of withdrawal rights with respect to
Gallaher ADRs (or securities underlying Gallaher ADRs) that have been tendered
or deposited pursuant to this Section 7(c), and the Trustee will exercise (or
refrain from exercising) (or instruct the Gallaher ADR depositary to exercise or
refrain from exercising) such withdrawal rights in the same manner as will
reflect the most recent timely directions received with respect thereto. The
Trustee will not withdraw Gallaher ADRs (or instruct the Gallaher ADR depositary
to withdraw securities underlying Gallaher ADRs) except pursuant to a timely
direction of a Participant. The Trustee will combine fractional interests of
Participants in Gallaher ADRs held in the Gallaher Fund to the extent possible
so that such Gallaher ADRs are tendered, deposited, sold, exchanged or
transferred, and withdrawal rights with respect thereto are exercised, in a
manner which reflects as accurately as possible the collective directions given
or deemed to have been given by Participants in accordance with this Section
7(c). In giving or being deemed to have given directions to the Trustee as
provided in this Section 7(c), each Participant will be acting as a named
fiduciary in accordance with such directions pursuant to this Section 7(c).
(iii) Trustee to Communicate Tender Procedures. In
the event that Fortune receives notice of the commencement of a tender offer as
to which Participants are entitled to give directions as provided in this
Section 7(c), Fortune shall notify the Trustee as soon as administratively
feasible of the intended record date and shall cause a copy of all related
materials obtained by Fortune to be sent to the Trustee. In the event of such a
tender offer, the Trustee will distribute or cause to be distributed as promptly
as possible to all Participants entitled to give directions to the Trustee with
respect to such tender offer all communications and other materials, if any,
that the Trustee may receive from any person or entity that are being
distributed to the holders of the securities to whom such tender offer is
directed and either are directed generally to such holders or relate to such
tender offer. Fortune will use its reasonable best efforts to provide the
Trustee with such information, documents and assistance as the Trustee may
reasonably request in connection with any communications or distributions to
Participants, as aforesaid. This information will include the names and current
addresses of Participants and the Gallaher ADRs or securities underlying such
Gallaher ADRs representing their proportionate interests in the Gallaher Fund,
upon which the Trustee may conclusively rely. Based on these materials and after
consultation with Fortune, the Trustee shall prepare a tender instruction form
to be sent to each Plan Participant with an interest in the Gallaher Fund
containing the procedures relating to their right to give directions as named
fiduciaries to the Trustee. The tender instruction form shall show the number of
full and fractional Gallaher ADRs that reflect the Participants proportional
interest in the Gallaher Fund. Notwithstanding any other provision of this
Section 7(c), the Plans (as communicated to the Trustee by Fortune) or the Trust
Agreement to the contrary, except if Fortune or one of its affiliated
organizations serves as recordkeeper, to the extent necessary to provide Fortune
or one of its affiliated organizations as recordkeeper with information
necessary accurately to maintain records of the proportional interest in the
Plan of Participants, the Trustee will use its best efforts (A) to keep
confidential the direction (or the absence thereof) from each Participant with
respect to any tender offer and the identity of such Participant, and (B) not to
divulge such direction or identity to any person or entity, including, without
limitation, Gallaher, Fortune, their affiliated organizations and any director,
officer, employee or agent thereof. It is the intent of this Section 7 that
Gallaher, Fortune, their affiliated organizations and their directors, officers,
employees and agents not be able to ascertain the direction given (or not given)
or deemed to have been given by any Participant with respect to any tender
offer.
(iv) Invalidity. If a court of competent
jurisdiction issues an opinion, order or decree which, in the opinion of counsel
to Fortune or the Trustee, will, in all or any particular circumstances; (A)
invalidate under ERISA or otherwise any provision or provisions of the Plans or
the Trust Agreement with respect to the tendering, depositing, sale, exchange or
transfer of Gallaher ADRs (or securities underlying Gallaher ADRs) held in the
Gallaher Fund or the exercise of any withdrawal rights with respect to Gallaher
ADRs (or securities underlying Gallaher ADRs) tendered or deposited pursuant to
a tender offer; (B) cause any such provision or provisions to conflict with
ERISA; or (C) require the Trustee not to act or such Gallaher ADRs (or
securities underlying Gallaher ADRs) not to be tendered, deposited, sold,
exchanged or transferred or such withdrawal rights not to be exercised in
accordance with such provision or provisions; then, upon written notice thereof
to the Trustee (in the case of an opinion of counsel to Fortune) or to Fortune
(in the case of an opinion of counsel to the Trustee) such provision or
provisions will be given no further force or effect in such circumstances.
Except to the extent otherwise specified in such opinion, order or decree, the
Trustee will have no discretion or authority in such circumstances to tender,
deposit, sell, transfer or exchange Gallaher ADRs held in the Gallaher Fund (or
the retention of such shares in the Gallaher Fund), or to give instructions to
the Gallaher ADR depositary with respect to securities underlying Gallaher ADRs,
pursuant to a tender offer or with respect to the exercise of (or refraining
from exercising) any withdrawal rights with respect thereto, but will act in
accordance with the most recent timely directions received from Participants to
the extent such directions have not been invalidated. To the extent the Trustee,
in order to comply with ERISA or other applicable law, exercises any fiduciary
responsibility it may have in any circumstances with respect to the tendering,
depositing, sale, exchange or transfer of Gallaher ADRs held in the Gallaher
Fund, or giving instructions to the Gallaher ADR depositary with respect to
securities underlying Gallaher ADRs, or the exercise of any withdrawal rights
with respect thereto, the Trustee in exercising its fiduciary responsibility,
unless pursuant to the requirements of ERISA or otherwise it is unlawful to do
so, will take into account directions timely received from Participants as being
valid direction.
(v) Proceeds of Tender. The proceeds of any sale,
exchange or transfer of Gallaher ADRs (or securities underlying Gallaher ADRs)
will be allocated pursuant to the direction of a Participant; provided, however,
that the proceeds thereof will not be held in the Gallaher Fund.
Section 8. Investment Options.
(a) Participant Loans. (i) General Purpose Loans. The Administrator
shall act as the Trustee's agent for Participant loan notes and as such shall
(i) separately account for repayments of such loans and clearly identify such
assets as Plan assets and (ii) collect and remit all principal and interest
payments to the Trustee. To originate a Participant loan, the Plan Participant
shall direct the Trustee as to the term and amount of the loan to be made from
the Participant's individual account. Such directions shall be made by Plan
Participants by use of the exchange system maintained for such purpose by the
Trustee or its agent. The Trustee shall determine, based on the current value of
the Participant's account on the date of the request and any guidelines provided
by Fortune, the amount available for the loan. Based on the interest rate
supplied by Fortune in accordance with the terms of the Plan, the Trustee shall
advise the Participant of such interest rate, as well as the installment payment
amounts. The Trustee shall distribute the loan agreement and truth-in-lending
disclosure with the proceeds check to the Participant. To facilitate
recordkeeping, the Trustee may destroy the original of any proceeds check made
in connection with a loan to a Participant under the Plan, provided that the
Trustee or its agent first creates a duplicate by a photographic or optical
scanning or other process yielding a reasonable facsimile of the promissory note
and the Plan Participant's signature thereon, which duplicate may be reduced or
enlarged in size from the actual size of the original promissory note.
(ii) Loans for the Purchase of a Primary
Residence. The Administrator shall act as the Trustee's agent for the purpose of
holding all trust investments in Participant loan notes and related
documentation and as such shall (i) hold physical custody of and keep safe the
notes and other loan documents, (ii) separately account for repayments of such
loans and clearly identify such assets as Plan assets, (iii) collect and remit
all principal and interest payments to the Trustee, and (iv) cancel and
surrender the notes and other loan documentation when a loan has been paid in
full. To originate a Participant loan, the Plan Participant shall direct the
Trustee as to the type of loan to be made from the Participant's individual
account. Such directions shall be made by Plan Participants by use of the
exchange system maintained for such purpose by the Trustee or its agent. The
Trustee shall determine, based on the current value of the Participant's
account, the amount available for the loan. Based on the interest rate supplied
by Fortune in accordance with the terms of the Plan, the Trustee shall advise
the Participant of such interest rate, as well as the installment payment
amounts. The Trustee shall forward the loan document to the Participant for
execution and submission for approval to the Administrator. The Administrator
shall have the responsibility for approving the loan and instructing the Trustee
to send the loan proceeds to the Administrator or to the Participant if so
directed by the Administrator. In the event that approval or disapproval by the
Administrator is not made within thirty (30) days of the Participant's initial
request (the origination date), the loan shall be deemed disapproved.
(b) Outside Managed Separate Investment Funds. This Paragraph is
intended to authorize appointment of an investment manager as contemplated in
Section 402(c)(3) of ERISA.
Fortune may appoint an investment manager with respect to some or all
of the assets of the Plan. The appointment of the investment manager shall be
made by an officer of Fortune or other named fiduciary authorized by a
resolution of Fortune's Board of Directors to make such appointments. The
authority of the investment manager shall not begin until Trustee receives from
Fortune notice satisfactory to Trustee that the investment manager has been
appointed and that the investment manager has acknowledged in writing that with
respect to the relevant assets of the Fund he or she or it is a fiduciary with
respect to the Plan within the meaning of ERISA. The investment manager's
authority shall continue until Trustee receives similar notice that the
appointment has been rescinded. By notifying Trustee of the appointment of an
investment manager, Fortune shall be deemed to warrant that such investment
manager meets the requirements of Section 3(38) of ERISA, but Trustee may demand
independent evidence that any investment manager meets those requirements.
The assets with respect to which a particular investment manager has
been appointed shall be segregated from all other assets held by Trustee under
this Agreement and the investment manager shall have the duty and power to
direct Trustee in every aspect of their investment. The Trustee shall follow the
directions of an investment manager regarding the investment and reinvestment of
the Trust, or such portion thereof as shall be under management by the
investment manager, and shall be under no duty or obligation to review any
investment to be acquired, held or disposed of pursuant to such directions nor
make any recommendations with respect to the disposition or continued retention
of any such investment. The Trustee shall have no liability or responsibility
for acting without question on the direction of, or failing to act in the
absence of any direction from an investment manager, unless the trustee has
knowledge that by such action or failure to act it will be participating in or
undertaking to conceal a breach of fiduciary duty by that investment manager.
Upon request, Trustee shall execute appropriate powers of attorney authorizing
an investment manager appointed hereunder to exercise the powers and duties of
the investment manager.
Trustee may rely upon any order, certificate, notice, direction or
other documentary confirmation purporting to have been issued or given by an
investment manager which Trustee believes to be genuine and to have been issued
or given by such investment manager.
An investment manager shall certify, at the request of the Trustee, the
value of any securities or other property held in any fund managed by such
investment manager, and such certification shall be regarded as a direction with
regard to such valuation. The Trustee shall be entitled to conclusively rely
upon such valuation.
Any oral direction shall be followed by a written confirmation as soon
as practical. Trustee shall follow the procedures established by Fortune to
validate such oral directions.
(c) Reliance of Trustee on Directions.
(i) The Trustee shall not be liable for any loss, or expense
which arises from any Participant's exercise or non-exercise of rights under
this Section 8 over the assets in the Participant's accounts.
(ii) The Trustee shall not be liable for any loss or expense which
arises from the Named Fiduciary's exercise or non-exercise of rights under this
Section 8, unless it was clear on their face that the actions to be taken under
the Named Fiduciary's directions were prohibited by the fiduciary duty rules of
Section 404(a) of ERISA or were contrary to the terms of the Plan as
communicated in writing to the Trustee.
Section 9. Trustee Powers. The Trustee shall have the following powers and
authority:
(a) Subject to the provisions of this Trust Agreement, to sell,
exchange, convey, transfer, or otherwise dispose of any property held in the
Trust, by private contract or at public auction. No person dealing with the
Trustee shall be bound to see to the application of the purchase money or other
property delivered to the Trustee or to inquire into the validity, expediency,
or propriety of any such sale or other disposition.
(b) To cause any securities or other property held as part of the
Trust to be registered in the Trustee's own name, in the name of one or more of
its nominees, or in the Trustee's account with the Depository Trust Company of
New York and to hold any investments in bearer form, but the books and records
of the Trustee shall at all times show that all such investments are part of the
Trust.
(c) To keep that portion of the Trust in cash or cash balances as
Fortune may, from time to time, deem to be in the best interest of the Trust.
(d) To make, execute, acknowledge, and deliver any and all
documents of transfer or conveyance and to carry out the powers herein granted.
(e) To borrow funds from a bank not affiliated with the Trustee
in order to provide sufficient liquidity to process Plan transactions in a
timely fashion, provided that the cost of borrowing shall be allocated in a
reasonable fashion to the investment fund(s) in need of liquidity.
(f) To settle, compromise, or submit to arbitration any claims,
debts, or damages due to or arising from the Trust; to commence or defend suits
or legal or administrative proceedings; to represent the Trust in all suits and
legal and administrative hearings; and to pay all reasonable expenses arising
from any such action, from the Trust if not paid by Fortune.
(g) To employ legal, accounting, clerical, and other assistance
as may be required in carrying out the provisions of this Agreement and to pay
their reasonable expenses and compensation from the Trust if not paid by
Fortune.
(h) To invest all of any part of the assets of the Trust in
guaranteed interest contracts and short-term investments (including interest
bearing accounts with the Trustee of money market mutual funds advised by
affiliates of the Trustee) and in any collective investment trust or group
trust, including any collective investment trust or group trust maintained by
the Trustee, which then provides for the pooling of the assets of plans
described in Section 401(a) and exempt from tax under Section 501(a) of the
Code, or any comparable provisions of any future legislation that amends,
supplements, or supersedes those sections, provided that such collective
investment trust or group trust is exempt from tax under the Code or regulations
or rulings issued by the Internal Revenue Service; the provisions of the
document governing such collective investment trusts or group trusts, as it may
be amended from time to time, shall govern any investment therein and are hereby
made a part of this Trust Agreement.
(i) To do all other acts although not specifically mentioned
herein, as the Trustee may deem necessary to carry out any of the foregoing
powers and the purposes of the Trust.
Section 10. Recordkeeping and Administrative Services to Be Performed.
(a) General. The Trustee shall perform those recordkeeping and
administrative functions described in the Schedule of Administrative Services
provided by the Trustee and signed by Fortune. These recordkeeping and
administrative functions shall be performed within the framework of Fortune's
written directions regarding the Plan's provisions, guidelines and
interpretations.
(b) Accounts. The Trustee shall keep accurate accounts of all
investments, receipts, disbursements, and other transactions hereunder, and
shall report the value of the assets held in the Trust as of each Reporting
Date. Within thirty (30) days following each Reporting Date or within sixty (60)
days in the case of a Reporting Date caused by the resignation or removal of the
Trustee, or the termination of this Agreement, the Trustee shall file with
Fortune a written account setting forth all investments, receipts,
disbursements, and other transactions effected by the Trustee between the
Reporting Date and the prior Reporting Date, and setting forth the value of the
Trust as of the Reporting Date. Except as otherwise required under ERISA, upon
the expiration of six (6) months from the date of filing such account, the
Trustee shall have no liability or further accountability with respect to the
propriety of its acts or transactions shown in such account, except with respect
to such acts or transactions as to which a written objection shall have been
filed with the Trustee within such six (6) month period.
(c) Inspection and Audit. All records generated by the Trustee in
accordance with paragraphs (a) and (b) shall be open to inspection and audit,
during the Trustee's regular business hours prior to the termination of this
Agreement, by Fortune or any person designated by Fortune. Upon the resignation
or removal of the Trustee or the termination of this Agreement, the Trustee
shall provide to Fortune, at no expense to Fortune, in the format regularly
provided to Fortune, a statement of each Participant's accounts as of the
resignation, removal, or termination, and the Trustee shall provide to Fortune
or the Plan's new recordkeeper such further records as are reasonable, at
Fortune's expense.
(d) Effect of Plan Amendment. Fortune has delivered to the Trustee
confirmation that the Plans are tax qualified under the Code. The Trustee's
provision of the recordkeeping and administrative services set forth in this
Section 10 shall be conditioned on Fortune delivering to the Trustee a copy of
any amendment to the Plan as soon as administratively feasible following the
amendment's adoption, with, if requested, an IRS determination letter or an
opinion of counsel covering such amendment, and on Fortune providing the Trustee
on a timely basis with all the information Fortune deems necessary for the
Trustee to perform the recordkeeping and administrative services and such other
information as the Trustee may reasonably request.
(e) Returns, Reports and Information. Except as set forth on the
Schedule of Administrative Services and in this Agreement, Fortune shall be
responsible for the preparation and filing of all returns, reports, and
information required of the Trust or Plan by law. The Trustee shall provide
Fortune with such information as Fortune may reasonably request to make these
filings. Fortune shall also be responsible for making any disclosures to
Participants required by law, except such disclosure as may be required under
federal or state truth-in-lending laws with regard to Participant loans, which
shall be provided by the Trustee.
(f) Allocation of Plan Interests. All transfers to, withdrawals from,
or other transactions regarding the Trust shall be conducted in such a way that
the proportionate interest in the Trust of each Plan and the fair market value
of that interest may be determined at any time. Whenever the assets of more than
one Plan are commingled in the Trust or in any investment option, the undivided
interest therein of each such Plan shall be debited or credited (as the case may
be) (i) for the entire amount of every contribution received on behalf of such
Plan, every benefit payment, or other expense attributable solely to such Plan,
and every other transaction relating only to such Plan; and (ii) for its
proportionate share of every item of collected or accrued income, gain or loss,
and general expense, and of any other transactions attributable to the Trust or
that investment option as a whole.
Section 11. Compensation and Expenses. All reasonable expenses of plan
administration as shown on the Schedule of Fees provided by the Trustee and
signed by Fortune, as amended from time to time, shall be a charge against and
paid from the appropriate Plan Participants' accounts, except to the extent such
amounts are paid by Fortune in a timely manner.
All expenses of the Trustee relating directly to the acquisition and
disposition of investments constituting part of the Trust, and all taxes of any
kind whatsoever that may be levied or assessed under existing or future laws
upon or in respect of the Trust or the income thereof, shall be a charge against
and paid from the appropriate Participants' accounts.
Section 12. Directions and Indemnification.
(a) Identity of Administrator and Named Fiduciaries. The Trustee shall
be fully protected in relying on the fact that the Administrator and the Named
Fiduciaries under a Plan are the individuals or persons named as such on the
Authorization Letters signed by Fortune or on a Plan Designation Form provided
by the Trustee and signed by Fortune or such other individuals or persons as
Fortune may notify the Trustee in writing.
(b) Directions from Fortune or Administrator. Whenever Fortune or the
Administrator provides a direction to the Trustee, the Trustee shall not be
liable for any loss or expense arising from the direction if the direction is
contained in a writing (or is oral and immediately confirmed in a writing)
signed by any individual whose name and signature have been submitted (and not
withdrawn) in writing to the Trustee by Fortune provided the Trustee reasonably
believes the signature of the individual to be genuine unless it is clear on the
direction's face that the actions to be taken under the direction would be
prohibited by the fiduciary duty rules of section 404(a) of ERISA or would be
contrary to the terms of this Agreement. Such direction may also be made via
Electronic Data Transfer ("EDT") in accordance with procedures agreed to by
Fortune and the Trustee; provided, however, that the Trustee shall be fully
protected in relying on such direction as if it were a direction made in writing
by Fortune. The Trustee shall have no responsibility to ascertain any
direction's (i) accuracy, (ii) compliance with the terms of the Plan or any
applicable law, or (iii) effect for tax purposes or otherwise.
(c) Directions from Named Fiduciary. Whenever Fortune or the Named
Fiduciary provides a direction to the Trustee, the Trustee shall not be liable
for any loss or expense arising from the direction (i) if the direction is
contained in a writing (or is oral and immediately confirmed in a writing)
signed by any individual whose name and signature have been submitted (and not
withdrawn) in writing to the Trustee by the Named Fiduciary and (ii) if the
Trustee reasonably believes the signature of the individual to be genuine,
unless it is clear on the direction's face that the actions to be taken under
the direction would be prohibited by the fiduciary duty rules of section 404(a)
of ERISA or would be contrary to the terms of the Plan (as communicated by
Fortune to the Trustee in writing) or this Agreement. For purposes of this
Section, such direction may also be made via electronic data transfer (EDT) or
other electronic means in accordance with procedures agreed to by the Named
Fiduciary and the Trustee; provided, however, that the Trustee shall be fully
protected in relying on such direction as if it were a direction made in writing
by the Named Fiduciary.
(d) Co-Fiduciary Liability. In any other case, the Trustee shall not be
liable for any loss, or by reason of any breach, arising from any act or
omission of another fiduciary under the Plan except as provided in section
405(a) of ERISA. Without limiting the foregoing, the Trustee shall have no
liability for the acts or omissions of any predecessor or successor trustee.
(e) Indemnification. Fortune shall indemnify the Trustee against, and
hold the Trustee harmless from, any and all loss, damage, penalty, liability,
cost, and expense, including without limitation, reasonable attorneys' fees and
disbursements, that may be incurred by, imposed upon, or asserted against the
Trustee by reason of any claim, regulatory proceeding, or litigation arising
from any act done or omitted to be done by any individual or person with respect
to the Plan or Trust, excepting only any and all loss arising solely from the
Trustee's negligence or bad faith.
The Trustee shall indemnify Fortune against and hold Fortune
harmless from any and all such loss, damage, penalty, liability, cost, and
expense, including without limitation, reasonable attorney's fees and
disbursements, that may be incurred by, imposed upon, or asserted against
Fortune solely as a result of (i) any defects in the investment methodology
embodied in the target asset allocation or model portfolio provided through
Fidelity Portfolio PlannerSM, except to the extent that any such loss, damage,
penalty, liability, cost or expense arises from information provided by the
Participant, Fortune or third parties; or (ii) any prohibited transactions
resulting from the provision by the Trustee of Fidelity PortfolioPlanner.
(f) Survival. The provisions of this Section 12 shall survive the
termination of this Agreement.
Section 13. Resignation or Removal of Trustee.
(a) Resignation. The Trustee may resign at any time upon sixty (60)
days' notice in writing to Fortune, unless a shorter period of notice is agreed
upon by Fortune.
(b) Removal. Fortune may remove the Trustee at any time upon sixty (60)
days' notice in writing to the Trustee, unless a shorter period of notice is
agreed upon by the Trustee.
Section 14. Successor Trustee.
(a) Appointment. If the office of Trustee becomes vacant for any
reason, Fortune may in writing appoint a successor trustee under this Agreement.
The successor trustee shall have all of the rights, powers, privileges,
obligations, duties, liabilities, and immunities granted to the Trustee under
this Agreement. The successor trustee and predecessor trustee shall not be
liable for the acts or omissions of the other with respect to the Trust.
(b) Acceptance. When the successor trustee accepts its appointment
under this Agreement, title to and possession of the Trust assets shall
immediately vest in the successor trustee without any further action on the part
of the predecessor trustee. The predecessor trustee shall execute all
instruments and do all acts that reasonably may be necessary or reasonably may
be requested in writing by Fortune or the successor trustee to vest title to all
Trust assets in the successor trustee or to deliver all Trust assets to the
successor trustee.
(c) Corporate Action. Any successor of the Trustee or successor
trustee, through sale or transfer of the business or trust department of the
Trustee or successor trustee, or through reorganization, consolidation, or
merger, or any similar transaction, shall, upon consummation of the transaction,
become the successor trustee under this Agreement.
Section 15. Termination. This Agreement may be terminated at any time by Fortune
upon sixty (60) days' notice in writing to the Trustee. On the date of the
termination of this Agreement, the Trustee shall forthwith transfer and deliver
to such individual or entity as Fortune shall designate, all cash and assets
then constituting the Trust. If, by the termination date, Fortune has not
notified the Trustee in writing as to whom the assets and cash are to be
transferred and delivered, the Trustee may bring an appropriate action or
proceeding for leave to deposit the assets and cash in a court of competent
jurisdiction. The Trustee shall be reimbursed by Fortune for all costs and
expenses of the action or proceeding including, without limitation, reasonable
attorneys' fees and disbursements.
Section 16. Resignation, Removal, and Termination Notices. All notices of
resignation, removal, or termination under this Agreement must be in writing and
mailed to the party to which the notice is being given by certified or
registered mail, return receipt requested, to Fortune c/o Director, Corporate
Employee Benefits, 1700 East Putnam Avenue, Old Greenwich, Connecticut 06870,
and to the Trustee c/o Legal Department, ERISA Group, Fidelity Investments, 82
Devonshire Street, Boston, Massachusetts 02109, or to such other addresses as
the parties have notified each other of in the foregoing manner.
Section 17. Duration. This Trust shall continue in effect without limit as to
time, subject, however, to the provisions of this Agreement relating to
amendment, modification, and termination thereof.
Section 18. Amendment or Modification. This Agreement may be amended or modified
at any time and from time to time only by an instrument executed by both Fortune
and the Trustee. Notwithstanding the foregoing, to reflect increased operating
costs the Trustee may once each calendar year amend the Schedule of Fees without
Fortune's consent upon seventy-five (75) days written notice to Fortune.
Section 19. Electronic Services.
(a) The Trustee may provide communications and services via electronic
medium ("Electronic Services"), including, but not limited to, Fidelity Plan
Sponsor WebStation, Client Intranet, Client e-mail, interactive software
products or any other information provided in an electronic format. Fortune, its
agents and employees agree to keep confidential and not publish, copy,
broadcast, retransmit, reproduce, commercially exploit or otherwise
redisseminate the data, information, software or services without the Trustee's
written consent.
(b) Fortune shall be responsible for installing and maintaining all
Electronic Services on its computer network and/or Intranet upon receipt in a
manner so that the information provided via the Electronic Services will appear
in the same form and content as it appears on the form of delivery, and for any
programming required to accomplish the installation. Materials provided for Plan
Sponsor's intranet web sites shall be installed by Fortune and shall be clearly
identified as originating from Fidelity. Fortune shall promptly remove
Electronic Services from its computer network and/or Intranet, or replace the
Electronic Services with an updated service provided by the Trustee, upon
written notification (including written notification via facsimile) by the
Trustee.
(c) All Electronic Services shall be provided to Fortune without any
express or implied legal warranties or acceptance of legal liability by the
Trustee relative to the use of material or Electronic Services by Fortune. No
rights are conveyed to any property, intellectual or tangible, associated with
the contents of the Electronic Services and related material.
(d) To the extent that any Electronic Services utilize Internet
services to transport data or communications, the Trustee will take, and Fortune
agrees to follow, reasonable security precautions; however, the Trustee
disclaims any liability for interception of any such data or communications. The
Trustee shall not be responsible for, and makes no warranties regarding access,
speed or availability of Internet or network services. The Trustee shall not be
responsible for any loss or damage related to or resulting from any changes or
modifications to the electronic material after delivering it to Fortune.
Section 20. General.
(a) Performance by Trustee, its Agents or Affiliates. Fortune
acknowledges and authorizes that the services to be provided under this
Agreement shall be provided by the Trustee, its agents or affiliates, including
Fidelity Investments Institutional Operations Company or its successor, and that
certain of such services may be provided pursuant to one or more other
contractual agreements or relationships.
(b) Delegation by Employer. By authorizing the assets of any Plan as to
which it is an employer to be deposited in the Trust, each employer, other than
Fortune, hereby irrevocably delegates and grants to Fortune full and exclusive
power and authority to exercise all of the powers conferred upon Fortune and
each employer by the terms of this Agreement, and to take or refrain from taking
any and all action which such employer might otherwise take or refrain from
taking with respect to this Agreement, including the sole and exclusive power to
exercise, enforce or waive any rights whatsoever which such employer might
otherwise have with respect to the Trust, and irrevocably appoints Fortune as
its agent for all purposes under this Agreement. The Trustee shall have no
obligation to account to any such employer or to follow the instructions of or
otherwise deal with any such employer, the intention being that the Trustee
shall deal solely with Fortune.
(c) Entire Agreement. This Agreement, including the Schedules referred
to herein which are incorporated herein by reference, contains all of the terms
agreed upon between the parties with respect to the subject matter hereof.
(d) Waiver. No waiver by either party of any failure or refusal to
comply with an obligation hereunder shall be deemed a waiver of any other or
subsequent failure or refusal to so comply.
(e) Successors and Assigns. The stipulations in this Agreement shall
inure to the benefit of, and shall bind, the successors and assigns of the
respective parties.
(f) Partial Invalidity. If any term or provision of this Agreement or
the application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
(g) Section Headings. The headings of the various sections and
subsections of this Agreement have been inserted only for the purposes of
convenience and are not part of this Agreement and shall not be deemed in any
manner to modify, explain, expand or restrict any of the provisions of this
Agreement.
Section 21. Governing Law.
(a) Massachusetts Law Controls. This Agreement is being made in the
Commonwealth of Massachusetts, and the Trust shall be administered as a
Massachusetts trust. The validity, construction, effect, and administration of
this Agreement shall be governed by and interpreted in accordance with the laws
of the Commonwealth of Massachusetts, except to the extent those laws are
superseded under section 514 of ERISA.
(b) Trust Agreement Controls. The Trustee is not a party to the Plan,
and in the event of any conflict between the provisions of the Plan and the
provisions of this Agreement, the provisions of this Agreement shall control.
Section 22. Plan Qualification. Fortune shall be responsible for verifying that
while any assets of a particular Plan are held in the Trust, the Plan (i) is
qualified within the meaning of section 401(a) of the Code; (ii) is permitted by
existing or future rulings of the United States Treasury Department to pool its
funds in a group trust; and (iii) permits its assets to be commingled for
investment purposes with the assets of other such plans by investing such assets
in this Trust. If any Plan ceases to be qualified within the meaning of section
401(a) of the Code, Fortune shall notify the Trustee as promptly as is
reasonable. Upon receipt of such notice, the Trustee shall promptly segregate
and withdraw from the Trust, the assets which are allocable to such disqualified
Plan, and shall dispose of such assets in the manner directed by Fortune.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
FORTUNE BRANDS, INC.
Attest: Mark S. Lyon By: /s/ Gilbert L. Klemann, II
--------------- -----------------------------------------
Secretary
Name: Gilbert L. Klemann, II
--------------------------------------
Title: Executive Vice President - Corporate
--------------------------------------
Date: September 30, 1999
--------------------------------------
FIDELITY MANAGEMENT TRUST
COMPANY
Attest: Douglas O. Kant
------------------ By: /s/ Carolyn Redden
Secretary ------------------------------------------
Name: Carolyn Redden
---------------------------------------
Title: Vice President
---------------------------------------
Date: October 7, 1999
---------------------------------------
