Exhibit 10.48

 

 

 

 

SUPPLEMENTAL PENSION PLAN

FOR EXECUTIVES OF

BROWN & WILLIAMSON TOBACCO CORPORATION

 

(Restated as of January 1, 2012)

 

 

 

 

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SUPPLEMENTAL PENSION PLAN

FOR EXECUTIVES OF

BROWN & WILLIAMSON TOBACCO CORPORATION

(RESTATED AS OF JANUARY 1, 2012)

TABLE OF CONTENTS

 

          Page   ARTICLE 1.          DEFINITIONS      1                 1.01   
Actuarial Basis      1                 1.02    Basic Plan      2   
             1.03    Company      2                 1.04    PIP; PIP Award     
2                 1.05    Employer      2                 1.06    ERISA Excess
Plan      3                 1.07    Interest      3                 1.08   
Participant      3                 1.09    Plan      3                 1.10   
Supplemental Benefit      3                 1.11    Supplemental Salary      3
   ARTICLE 2.          PARTICIPATION      5                 2.01   
Participation      5                 2.02    SERP Trust Individuals      6   
ARTICLE 3.          BENEFITS      6                 3.01    Eligibility      6
                3.02    Amount of Supplemental Benefit      7   
             3.03    Dependents’ Benefits      9    ARTICLE 4.          METHOD
OF PAYMENT      10                 4.01    Payments On or After July 1, 1990   
  10                 4.02    Plan Unfunded      10                 4.03    Delay
in Payment      10                 4.04    Withholding      11    ARTICLE 5.   
      AMENDMENT AND TERMINATION      11                 5.01    Right to Amend
or Terminate Reserved      11                 5.02    Action to Bind Employers
     11                 5.03    Change in Basic Plan      11    ARTICLE 6.   
      ADMINISTRATION      11                 6.01    Administration      11   

 

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TABLE OF CONTENTS

(continued)

 

          Page   ARTICLE 7.          MISCELLANEOUS      11                 7.01
   Payment to Incompetent      11                 7.02    Spendthrift Clause   
  12                 7.03    Usage      12                 7.04    Data      12
                7.05    Separability      12                 7.06    Captions   
  12                 7.07    Right of Discharge Reserved      12   
             7.08    Other Benefits Unaffected      12    ARTICLE 8.   
      EFFECTIVE DATE, ETC      12                 8.01    Effective Date      12
  

 

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SUPPLEMENTAL PENSION PLAN

FOR EXECUTIVES OF

BROWN & WILLIAMSON TOBACCO CORPORATION

(Restated as of January 1, 2012)

PREAMBLE

Effective January 1, 1991, Brown & Williamson Tobacco Corporation assumed all
liabilities for the Supplemental Pension Plan for Executives of Brown &
Williamson Tobacco Corporation (formerly the Supplemental Pension Plan for
Executives of BATUS Inc. and Brown & Williamson Tobacco Corporation), and
simultaneously restated the Plan to incorporate certain amendments approved by
the Company.

Effective generally as of January 1, 2012, the Plan is restated in its entirety
as set forth herein to incorporate the changes made by the prior Amendments to
the Plan.

Notwithstanding the foregoing, the right to and amount of any pension payable to
a Participant or beneficiary shall in all events be determined in accordance
with the terms of the Plan as in effect at the time of termination of
employment.

ARTICLE 1.

DEFINITIONS

The following terms when used in this Plan shall have the designated meaning
unless a different meaning is clearly required by the context. Defined terms in
the Basic Plan which are used in this Plan (including, without limitation,
spouse and child) shall have the meanings given to them in the Basic Plan unless
a different meaning is given below or is clearly required by the context.

 

1.01 Actuarial Basis.

 

(a) The term “Actuarial Basis” means a benefit computed on the basis of the
actuarial principles adopted by the Company, subject to subsection (b) below.

 

(b) For purposes of determining the present value of the amount payable under
Section 3.02, the following assumptions shall be used effective October 1, 1995:

 

  (1) Interest:

 

  (2) with respect to any portion (or all) of the accrued amount for which the
Company has not provided an external source of payment prior to the time actual
payment becomes due under Article 3, the lower of (i) the average of the monthly
interest rates used to determine the commuted value of pensions under the Basic
Plan for the 36 month period immediately preceding the Participant’s termination
of employment, or (ii) the interest rate used to determine the commuted value of
pensions under the Basic Plan for the month immediately preceding the
Participant’s termination of employment.

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  (3) with respect to any portion (or all) of the accrued amount for which the
Company has provided an alternate source of payment (whether in trust or
otherwise) prior to the time actual payment becomes due under Article 3, the
monthly interest rate used shall be determined pursuant to paragraph (A) above
(but assuming the Participant had terminated employment as of the date of
determination). A separate calculation shall be made for each such payment, and
the interest rate applicable to each such calculation shall be established at
the time of payment, and shall not be subject to change in the future as it
relates to that payment.

 

  (4) Mortality: the mortality table used under the Basic Plan to determine the
commuted value of pensions at the time present value is determined.

 

1.02 Basic Plan. The term “Basic Plan” means the Retirement Plan for Salaried
Employees of Brown & Williamson Tobacco Corporation and Certain Affiliates, and,
as applicable, its predecessor plan.

 

1.03 Company. The word “Company” means, effective the date of closing (the
“Closing”) of the transactions contemplated by the Business Combination
Agreement dated October 27, 2003, between Brown & Williamson Tobacco Corporation
and R.J. Reynolds Tobacco Holdings, Inc. (the “Business Combination”), Reynolds
American Inc., and any successor thereto (“RAI”). Prior to Closing the word
“Company” means Brown & Williamson Tobacco Corporation, and any successor
thereto (“B&W”). Effective immediately prior to Closing, B&W shall be deemed to
have withdrawn from and shall no longer maintain the Plan for its employees.

 

1.04 PIP; PIP Award.

 

(a) Except as provided in subsection (b) below, effective January 1, 2002, the
Performance Incentive Plan (“PIP”) replaces and supersedes the Executive
Incentive Plan (“E1P”), the Management Incentive Plan (“MIP”) and the
Competitive Annual Bonus (“CAB”). A “PIP Award” is an award of incentive
compensation applicable to a Participant for a calendar year and may include a
pension-eligible component. Prior to the year 2002, the CAB award was not
pension eligible; consequently the CAB component of a PIP Award for and after
2002 is not pension-eligible. By way of example, but not exclusion, for calendar
years commencing on and after January 1, 2002, the sole annual incentive
compensation plan that may include a pension-eligible component is the PIP, and
for calendar years prior to 2002, plans that may include a pension-eligible
component include the EIP and MIP.

 

(b) The Performance Incentive Plan, described in subsection (a) above, does not
apply to Plan Participants seconded to an affiliate of the Company as of May 1,
2002. For such Participants, the Management Incentive Plan (“MIP”), as in effect
on December 31, 2001, shall continue to apply for purposes of calculating
Supplemental Salary.

 

1.05 Employer. The word “Employer” means Reynolds American Inc., and any
subsidiary or affiliate of the Employer which is approved for inclusion in the
Plan by the Company.

 

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1.06 ERISA Excess Plan. The term “ERISA Excess Plan” means the portion of this
Plan established by the Employer solely for the purpose of paying benefits based
on the provisions of the Basic Plan (or other applicable plan) for certain
employees in excess of the limitations on benefits imposed by Section 415 of the
Internal Revenue Code of 1986, as amended. That portion of the Plan maintained
for such purpose shall be treated as a separate plan which is an excess benefit
plan, as defined by ERISA Section (3)(36).

 

1.07 Interest. The word “Interest” means the rate of interest established from
time to time by the Company, in its discretion, for deferred PIP account
balances.

 

1.08 Participant. The word “Participant” means a participant in the Basic Plan
who satisfies the requirements for participation set out in Article 2 of the
Plan.

 

1.09 Plan. The word “Plan” means the Supplemental Pension Plan for Executives of
Brown & Williamson Tobacco Corporation, as in effect from time to time.

 

1.10 Supplemental Benefit. The term “Supplemental Benefit” means the benefit
described in Section 3.02 hereof.

 

1.11 Supplemental Salary.

 

(a) The term “Supplemental Salary” shall mean the sum of Paragraphs (1) through
and including (5) as follows:

 

  (1) Average PIP Award. Subject to subsections (b) through (e) below, a
Participant’s Average PIP Award shall be the greater of:

 

  (A) a Participant’s Average PIP Award (whether or not deferred) for the three
performance years immediately preceding the calendar year in which a
Supplemental Benefit becomes payable to the Participant (or if applicable his
spouse or dependents); provided that if any such Participant has not received a
PIP Award for one or more of such three years, his award for such year shall be
treated as zero dollars; or

 

  (B) the amount obtained by multiplying the Participant’s annual rate of salary
at the time a Supplemental Benefit becomes payable to the Participant (or if
applicable his spouse or dependents) by the EIP/MIP percentage that was, or
would have been, applicable to such Participant’s current position or level
(i.e. the Participant’s employment position or level at the time the
Supplemental Benefit becomes payable) at the “Commendable” level for the 2001
performance year.

Notwithstanding the foregoing, with respect to a Participant who enters into
regular employment (as defined in Section 2.01(b)(2)) with RAI after Closing (as
defined in Section 1.03), a Participant’s Average PIP Award shall be the greater
of (i) the amount calculated under paragraph (B) above, or (ii) an amount equal
to the Participant’s base annual compensation rate at the time of employment
termination with RAI (or an affiliate), multiplied by B&W’s average performance
rating percentage for 2001, 2002 and 2003 applicable to such Participant.

 

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  (2) Excess Pensionable Salary. The excess of the amount that would have been
the Participant’s pensionable salary under the Basic Plan, but for the
limitations of Section 401(a)(17) of the Internal Revenue Code of 1986 or any
similar provision of subsequent law, over the Participant’s actual pensionable
salary under the Basic Plan.

 

  (3) Deferred Compensation. All amounts that would have constituted pensionable
salary under the Basic Plan but for the fact that the receipt of these amounts
was deferred, including without limitation, amounts deferred under the Deferred
Compensation Plan for Executives of Brown & Williamson Tobacco Corporation, as
amended from time to time.

 

  (4) Special Contractual Arrangements. Effective for special contractual
arrangements entered into on or after January 1, 1993, and to the extent
provided in or required by any such arrangement, all amounts that would have
constituted pensionable salary under the Basic Plan, but for the limits of
Section 401(a)(17) of the Internal Revenue Code of 1986, or any similar
provision of subsequent law, over the sum of the Participant’s pensionable
salary determined under paragraphs (1), (2) and (3) above.

 

  (5) Deemed Separation Pay. With respect to a Participant’s period of
separation pay under the Reynolds American Salary and Benefit Continuation Plan,
the period of severance benefits under the Reynolds American Inc. Executive
Severance Plan or the period of severance under any individualized agreement
providing for severance (collectively the “Severance Period”), full compensation
(defined as the Participant’s base salary in effect at the time of the
Participant’s Separation from Service, as defined in Section 3.01) during the
Severance Period; provided, however, except for a Participant listed on Schedule
A (a “Scheduled Participant”), effective for Participants who receive a notice
of termination on or after January 1, 2010, this Section l.ll(a)(5) will no
longer apply and with respect to Scheduled Participants, beginning January 1,
2010, the period for which full compensation will be taken into account will be
three years following the Scheduled Participants Separation from Service, as
defined in Section 3.01.

 

(b) For purposes of subsection (a)(l) above, disability shall be deemed to occur
on the date the Participant first commences a period of absence that leads to a
determination of disability under the Basic Plan.

 

(c) Except as specifically provided by written agreement between the Company and
a Participant, Supplemental Salary shall include an Average PIP Award only for
Participants who were Participants in the Plan on December 31, 1990, and who
continue to be employed in an PIP-eligible position thereafter (or, in the event
the Company terminates or modifies the PIP or similar annual incentive or bonus
program in a manner described in subsection (e) below, were in eligible PIP
positions at the time of such termination or modification). Subject to any such
agreement, Supplemental Salary shall not include an Average PIP Award for a
Participant who:

 

  (1) was not a Participant in the Plan on December 31,1990; or

 

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  (2) becomes a Participant on or after January 1, 1991, whether as a result of
initial employment, reemployment following a termination of employment
(voluntary, involuntary, disability or otherwise), promotion, transfer or
otherwise.

 

(d) The Average PIP Award for a Participant who becomes ineligible to
participate in PIP for any reason prior to termination of employment, disability
or death (other than by reason of the termination of the Plan or modification of
the PIP or similar annual incentive or bonus program in a manner described in
subsection (e) below) shall be calculated pursuant to subsection (a) above, by
assuming the Supplemental Benefit of such Participant is or becomes payable in
the year in which such Participant first becomes ineligible to so participate.

 

(e) If the EIP/MIP percentages in effect for the 2001 performance year are
amended, terminated or replaced by a plan or program that has lower payout
targets or opportunities than the EIP/MIP in effect as of January 1, 2001, e.g.
if, with respect to a performance year subsequent to 2001, the percentage award
applicable to the “Commendable” level for a Participant is lowered by the
Company below the percentage award applicable to such Participant at the
“Commendable” level for 2001, such Participant’s Average PIP Award (or, if
applicable, Average EIP/MIP Award), shall be determined and paid out at the time
of such amendment, termination or replacement, and shall be the greater of
(i) the amount determined under subsection (a)(l)(A) above, or (ii) the amount
obtained by multiplying the Participant’s rate of salary at the time of such
amendment, termination or replacement by the EIP/MIP percentage applicable to
such Participant at the “Commendable” level for the 2001 performance year.

ARTICLE 2.

PARTICIPATION

 

2.01 Participation.

 

(a) Any participant in the Basic Plan who (1) is eligible to participate in the
PIP (prior to January 1, 1991), (2) is eligible to and elects to defer
pensionable salary under the Deferred Compensation Plan for Executives of Brown
& Williamson Tobacco Corporation, (3) receives compensation that would be
included in the Participant’s pensionable salary under the Basic Plan but for
the limitations of Section 401(a)(17) of the Internal Revenue Code of 1986 or
any similar provision of subsequent law, or (4) would be eligible for an
additional benefit under the Basic Plan but for the limitations of Section 415
of the Internal Revenue Code of 1986 or any similar provision of subsequent law,
shall automatically become a Participant in this Plan.

 

(b) Effective as of Closing (as defined in Section 1.03), the following classes
of employees shall be excluded from eligibility to participate in the Plan:

 

  (1) any individual who was not an employee of the Company (as defined in
Section 1.03) immediately prior to Closing; and

 

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  (2) any individual who was not a participant in (or an Eligible Employee with
respect to and as defined in) the Basic Plan at the time he or she entered into
“regular employment” with RAI at and after Closing. For this purpose, the term
“regular employment” means full- or part-time ongoing employment with RAI that
is not classified by RAI as transitional employment. An employee is considered
to be in “transitional employment” if his or her employment is transferred to
RAI in connection with the Business Combination and the employee is employed
within the B&W Division of RAI for a limited period of time (a “transition
period”).

 

2.02 SERP Trust Individuals.

 

(a) Pursuant to the Business Combination Agreement dated October 27, 2003,
between Brown & Williamson Tobacco Corporation and R.J. Reynolds Tobacco
Holdings, Inc. (the “BCA”), (i) Liabilities (as defined in the formation
agreement under the BCA (the “Formation Agreement”)) under the Plan were
retained by B&W (or an affiliate) to the extent they pertain or relate to the
service and/or accrued benefits of the SERP Trust Individuals (as defined in
Section 1.01 of the Formation Agreement and listed on Schedule 1.01(b) thereto
as R. Baker, C.D. Brown, W. Carpenter, C. Dawson, M. DiCio, J. Eckmann, H.
Frick, J. Graas, S. Ivey, M. Kovatch, R. Lewis, M. McGraw, R. Miller, C.
Schoenbachler, D. Snyder, R. Stowe, R. Van Hess, and P. Wessel) prior to the
Employment Transfer Time (as defined in the Formation Agreement), calculated on
the assumption that each SERP’ Trust Individual’s employment terminated
immediately prior to the Employment Transfer Time, and (ii) rights in the assets
of the trusts established pursuant to the Secular Trust Agreements with the SERP
Trust Individuals (as defined in Section 1.01 of the Formation Agreement and
listed on Schedule 1.01(b) thereto) were retained by B&W to the extent such
assets were held in an account thereunder for the purpose of providing a fund to
pay benefits under the Plan (defined in the Secular Trust Agreement as the “SERP
Account”).

 

(b) Notwithstanding any provision of the Plan to the contrary, effective as of
the Employment Transfer Time the Plan (and the Company) shall have no liability
for any Liability described above (nor shall the Company or the Plan have a
claim to any Assets related thereto). To the extent a benefit is payable under
the Plan to any SERP Trust Individual for periods of service performed for the
Company after the Employment Transfer Time, such benefit shall take into account
and be reduced by the liability retained by B&W referred to in subsection
(a) above to the extent necessary to prevent a duplication of benefit payments.

ARTICLE 3.

BENEFITS

 

3.01

Eligibility. A Participant shall be entitled to receive a Supplemental Benefit
under this Plan only upon (a) Separation from Service with a vested benefit
under the Basic Plan, or (b) death. A “Separation from Service” shall be deemed
to have occurred on the date on

 

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  which the level of bona fide services reasonably anticipated to be performed
by the Participant for the Company and all affiliated companies is forty-five
percent or less of the average level of bona fide services performed by the
Participant during the immediately preceding thirty-six month period (or full
period of service if the Participant has been providing services for less than
thirty-six months).

 

3.02 Amount of Supplemental Benefit.

 

(a) The amount of a Participant’s Supplemental Benefit shall be equal to the
actuarial value of the benefit to which the Participant would be entitled under
the Basic Plan (without regard to Section 3.03 thereof) and the ERISA Excess
Plan in the aggregate (determined after applying Section 3.03 of the Basic
Plan), with the following adjustments:

 

  (1) the Participant’s Supplemental Salary were included in his or her
pensionable salary under the Basic Plan;

 

  (2) any additional pensionable and qualifying service granted under any
special contractual arrangement entered into on or after January 1, 1993, were
included in his or her pensionable and qualifying service under the Basic Plan;

 

  (3) any incremental benefit granted pursuant to subsection (e) of this
Section 3.02;

 

  (4) the Participant’s Basic Plan Qualifying Service will be deemed to include
service during the Severance Period, provided, however, except for a Scheduled
Participant, effective for Participants who receive a notice of termination on
or after January 1, 2010, this Section 3.02(a)(4) will no longer apply and with
respect to Scheduled Participants, beginning January 1, 2010, the Severance
Period will be deemed to be three years following the Scheduled Participant’s
Separation from Service, as defined in Section 3.01; and

 

  (5) for purposes of determining any early retirement reductions and actuarial
values, a Participant’s age will be deemed to be no less than his age at the end
of the Severance Period,

offset by the actuarial value of the benefit payable under the Basic Plan, and
subject to Section 2.02(b).

 

(b) Notwithstanding subsection (a) above, if a Participant becomes ineligible to
participate in PIP for any reason after having become a Participant hereunder,
that portion of such a Participant’s Supplemental Benefit which is based on an
Average PIP Award (if any) shall be calculated by disregarding pensionable
service (as defined in the Basic Plan) earned during and after the year such
Participant first became ineligible to participate in PIP.

 

(c)

If the Company provides an alternate source of payment for all or any portion of
a Participant’s accrued or projected Supplemental Benefit at any time before or
on (or as of) the date the Participant becomes entitled thereto under
Section 3.01, and payment to such alternate source results in the immediate
taxation thereof, such accrued or projected

 

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  Supplemental Benefit shall be reduced by the estimated tax liability
attributable thereto (the tax rate to be used for this calculation shall be an
assumed retiree tax rate for the Participant, as determined by the Company in
its sole discretion) (the “after-tax benefit”), and such estimated after-tax
benefit shall be increased by the tax paid with respect thereto; provided that
in no event shall such prior payment or payments be deemed to be a discharge of
the Company’s obligation for all or any part of the Supplemental Benefit due
under this Article 3 prior to the time the Participant becomes entitled to the
payment thereof under Section 3.01. The amount of Supplemental Benefit due under
this subsection (c) shall be paid as provided in Section 4.01(b).

 

(d) A Participant who (i) is a corporate Vice President on, or as of, July 15,
1997, (ii) is or becomes entitled to payment of a Supplemental Benefit under
Section 3.01, and (iii) whose benefit is provided (in part or entirely) through
an alternate source of payment as described in subsection (c) above, shall, at
the time such Supplemental Benefit first becomes payable under the Plan, be
entitled to an additional cash amount calculated as follows: the ratio of the
“Projected Installment Sum” over the “Projected Employee Grantor Trust Sum”,
expressed as a percentage, minus one (1), with the resulting percentage
multiplied by the Supplemental Benefit (after adjustment to an after-tax value
at the time the benefit first becomes payable). Such additional cash amount
shall, at the time of payment, be increased by an amount sufficient to pay
income taxes thereon (inclusive of taxes on the increase). For purposes of this
subsection (d), the following terms have the following meanings:

 

  (1) “Projected Installment Sum” means the sum of the after-tax present value
of each projected installment payment of the Supplemental Benefit, assuming that
the Supplemental Benefit is paid in 10 annual installments, the first being paid
on the first anniversary of the Participant’s termination of employment. The
amount of each projected annual installment shall be determined by multiplying
the Account balance (including principal and accumulated notional earnings) as
of the date the installment payment is due by a fraction, the numerator of which
is one (1) and the denominator of which is the number of annual payments
(including the payment then due) remaining to be paid; and by then reducing such
amount by the projected tax effect related to such payment (State and local tax
rates shall be taken into account only to the extent the State or locality of
the Participant’s residence, at the time the Participant first becomes entitled
to payment under Section 3.01, imposes taxes on such payments). Notional
earnings shall apply monthly to the unpaid Account balance as follows: the
monthly rate of return shall be the greater of (i) the monthly equivalent of the
annual yield on 10 year Treasury constant maturities as quoted in the Federal
Reserve Statistical Release, as of the date of Supplemental Benefit entitlement
(as set forth in Section 3.01) or (ii) the average of such monthly rates for the
36 month period ending with the month immediately preceding the month of such
Supplemental Benefit entitlement.

 

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  (2) “Projected Employee Grantor Trust Sum” means the sum of the present value
of each projected installment payment of the Supplemental Benefit (after
adjustment of the said Supplemental Benefit to an after-tax value at the time
the benefit first becomes payable), assuming that the said adjusted Supplemental
Benefit is paid in 10 annual installments in the manner described in paragraph
(1) above (except that notional earnings on the unpaid balance shall be applied
after adjustment for taxes).

Such amount shall be paid as provided in Section 4.01(b) as soon as after the
Participant becomes entitled a Supplemental Benefit under Section 3.01 above.

 

(e) A Participant who is eligible to participate in the Plan by virtue of his or
her eligibility to participate in the PIP prior to January 1, 1991, or whose
employment classification is at the AVP (or equivalent) level or above, shall,
unless otherwise specifically excluded from eligibility for the benefit
described in this subsection (e) through a separate written agreement between
the Company and the Participant, be entitled to elect to receive an incremental
Supplemental Benefit equal to the incremental benefit provided under
Section 4.04 of the Basic Plan and adjusted using the same methodology described
in subsection (c) (except that the Participant’s current tax rate shall be used
to calculate the amount of after-tax benefit attributable to such incremental
benefit), subject in all events to the same terms, conditions and exclusions of
said Basic Plan Section 4.04 that apply to participants therein (including
without limitation age and service requirements and the exclusions listed in
items (1) through (5) of subsection (a) thereof). The incremental Supplemental
Benefit payable under this subsection (e) shall be paid as provided in
Section 4.01(b).

 

(f) This subsection (f) shall apply only to Participants who are entitled to a
Supplemental Benefit by virtue of participation in SERIB (as such acronym is
defined in Section 2.01(b)) and whose Release Date thereunder is August 1, 2001
or later. The cash value of a Supplemental Benefit to which any such Participant
is entitled shall be calculated as of February 1, 2001, and at the Participant’s
employment termination date on or after August 1, 2001. The Participant shall be
entitled to the greater of the two calculations. Such amount shall be paid as
follows:

 

  (1) Payments to Participants whose benefit is paid to an alternate source of
payment (as described in Section 3.02(c)) shall be made directly to such
alternate source of payment. An initial deposit of the benefit due shall be made
concurrent with other payments to such alternate source in January, 2001, based
on the Participant’s projected Release Date on or after August 1, 2001. If
required, any additional amounts due will be paid upon actual termination of
employment.

 

  (2) Payments to all other Participants may be made as soon as practicable
after July 1, 2001, based on the value of the Supplemental Benefit as of
February 1, 2001, irrespective of whether the Participant has actually
terminated employment (subject to any election by a Participant to defer
payment). If required, any additional amounts due will be paid upon actual
termination of employment.

 

3.03 Dependents’ Benefits.

 

(a)

If dependents’ benefits are payable under Article 8 of the Basic Plan to the
surviving spouse or child of a retired Participant who had not yet received
payment of benefits

 

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  under Section 4.01, or of a Participant who died during employment (but not a
Participant who terminated employment prior to retirement with vested rights,
whether or not payment of such Participant’s pension had begun), such spouse or
child shall be entitled to a Supplemental Benefit equal to the additional
benefit to which he would be entitled under the Basic Plan and the ERISA Excess
Plan in the aggregate if the Participant’s Supplemental Salary were included in
his pensionable salary as defined in the Basic Plan (subject to the restrictions
on pensionable service set forth in Section 3.02(b) hereof, if applicable to the
Participant).

 

(b) A Supplemental Benefit payable under subsection (a) above shall be paid in a
single cash payment, determined on an Actuarial Basis, commencing on the first
day of the month following the Participant’s death.

ARTICLE 4.

METHOD OF PAYMENT

 

4.01 Payments On or After July 1, 1990.

 

(a) Subject to Section 4.01(b), the aggregate benefits to which a Participant is
entitled under this Plan shall be paid in a single cash payment, determined on
an Actuarial Basis, and such payment shall be made on the first day of the month
following the Participant’s Separation from Service.

 

(b) Notwithstanding anything in this Plan to the contrary, in the event that the
Participant is deemed to be a “specified employee,” determined pursuant to
procedures adopted by the Company in compliance with Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), on the date of the
Participant’s Separation from Service, then to the extent necessary to comply
with Code Section 409A, the amount that would otherwise be payable pursuant to
this Plan during the six-month period immediately following the date of the
Participant’s Separation from Service (the “Delay Period”) will instead be paid
or made available on the earlier of (i) the last business day of the seventh
month after the date of the Participant’s Separation from Service, or (ii) the
Participant’s death (the “Initial Payment Date”). Any payment that, but for the
requirements of this Section 4.01(b), would be paid during the Delay Period
shall be paid on the Initial Payment Date, together with interest thereon
calculated at the applicable rate specified in the Basic Plan for calculating
lump sum benefits.

 

4.02 Plan Unfunded. All benefit payments under the Plan shall be made directly
by the Employer out of its general assets.

 

4.03 Delay in Payment. If payment of benefits under the Basic Plan in respect of
a Participant or his spouse or child begins prior to determination of the PIP
award for the previous calendar year, payment of his Supplemental Benefit (if
any) shall be delayed until the amount of such prior year’s PIP award is
determined. Upon such a determination, the Supplemental Benefit shall be paid in
an amount retroactive to the date that payment of benefits under the Basic Plan
began. Interest shall not accrue, nor be or become payable, with respect to such
retroactive payments.

 

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4.04 Withholding. All payments under the Plan shall be subject to any applicable
withholding requirements imposed by any tax or other law.

ARTICLE 5.

AMENDMENT AND TERMINATION

 

5.01 Right to Amend or Terminate Reserved. The Company may at any time amend the
Plan in any respect or terminate the Plan. However, no such amendment or
termination shall deprive any Participant of any accrued benefit to which such
Participant has a nonforfeitable right (determined in accordance with the rules
of the Plan in effect immediately prior to the date of such amendment or
termination), other than for the purpose of providing an offset for additional
governmental benefits or for additional benefits provided by an Employer.

 

5.02 Action to Bind Employers. By adoption of the Plan, each corporation
included with the Employer designates the Company as its agent to administer the
Plan in accordance with Article 6 hereof. The Company shall have the further
right to amend or terminate the Plan and furnish written notice of such action
and a copy of any such amendment to any such corporation, whereupon such
amendment or termination shall become binding upon such corporation.

 

5.03 Change in Basic Plan. If the Basic Plan and ERISA Excess Plan shall be
amended to change in any way the benefits applicable to any Participant, spouse,
or child, or shall be replaced in whole or in part by any successor plan, the
provisions of the Plan shall apply based on the provisions of the Basic Plan
and/or ERISA Excess Plan as so amended, or such successor plan, which are
applicable to such Participant, spouse or child unless otherwise provided by the
Company.

ARTICLE 6.

ADMINISTRATION

 

6.01 Administration. The Company, through its duly designated agents, shall make
all determinations required of it by the terms of the Plan, and its
constructions and interpretations of the Plan, as well as its determinations as
to rights and obligations under the Plan, shall be final and binding upon all
persons.

ARTICLE 7.

MISCELLANEOUS

 

7.01 Payment to Incompetent. If any person entitled to benefits under this Plan
shall be a child or shall be either physically or mentally incompetent in the
judgment of the Company, such benefits may be paid to the person to whom the
corresponding benefits under the Basic Plan are paid under Section 8.06(d) or
14.06 thereof, whichever is applicable.

 

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7.02 Spendthrift Clause. No benefit, distribution or payment under the Plan may
be anticipated, assigned (either at law or in equity), alienated or subject to
attachment, garnishment, levy, execution or other legal or equitable process.

 

7.03 Usage. Whenever applicable, the masculine gender, when used in the Plan,
will include the feminine gender, and the singular will include the plural.

 

7.04 Data. Any Participant entitled to benefits under the Plan must furnish to
the Company such documents, evidence or information as the Company considers
necessary or desirable for the purpose of administering the Plan, or to protect
the Company; and it is a condition of the Plan that each such Participant must
furnish promptly true and complete data, evidence or information and sign such
documents as the Company may require before any benefits become payable under
the Plan.

 

7.05 Separability. If any provision of the Plan is held invalid or
unenforceable, its invalidity or unenforceability will not affect any other
provisions of the Plan, and the Plan will be construed and enforced as if such
provision had not been included therein.

 

7.06 Captions. The captions contained herein and the table of contents prefixed
hereto are inserted only as a matter of convenience and for reference and in no
way define, limit, enlarge or describe the scope or intent of the Plan nor
shall, in any way, affect the Plan or the construction of any provision thereof.

 

7.07 Right of Discharge Reserved. The establishment of the Plan shall not be
construed to confer upon an employee or Participant any legal right to be
retained in the employ of the Employer or give any employee or any other person
any right to benefits, except to the extent expressly provided for hereunder.
All employees will remain subject to discharge to the same extent as if the Plan
had never been adopted, and may be treated without regard to the effect such
treatment might have upon them under the Plan.

 

7.08 Other Benefits Unaffected. Nothing in this Plan shall be construed to
require that a Participant’s Supplemental Salary or PIP awards be taken into
account in determining his benefits under the Employer’s life insurance plan,
profit-sharing plans, death-in-service payments (including payments under
Section 9 of the Basic Plan), or any other benefit program.

ARTICLE 8.

EFFECTIVE DATE, ETC.

 

8.01 Effective Date. This Restatement shall be effective as of January 1, 2012,
except as otherwise specifically provided herein. The original effective date of
the Plan was January 1, 1981. No benefits shall be payable under the Plan in
respect of employees who retired, terminated employment or died prior to such
date, or to their spouses or children.

 

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IN WITNESS WHEREOF, the Company has caused this restatement to be executed as of
the day and year first above written.

 

REYNOLDS AMERICAN INC.

By:

 

LOGO [g268047g15o07.jpg]

Title:

 

Senior vice President, Deputy General

 

Counsel and Secretary

 

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