Document:

Exhibit 10.24

Exhibit 10.24

Restricted Stock Unit Agreement

Granted Under IDEXX Laboratories, Inc. 2009 Stock Incentive Plan

1. Grant of Restricted Stock.

IDEXX Laboratories, Inc., a Delaware corporation (the “Company”), hereby grants to the
Participant a Restricted Stock Unit Award consisting of the number of Restricted Stock Units
(“RSUs”) stated on the reverse side of this Agreement. Each RSU represents the right to receive
one share of common stock, $.01 par value, of the Company (individually a “Share” and collectively
the “Shares”). The Company will record on its books the grant of the RSUs to the Participant and
will issue Shares upon vesting of the RSUs as provided below. This award of RSUs is

subject to the terms and conditions set forth in this Agreement, the Company’s 2009 Stock
Incentive Plan (the “Plan”), and the description of the Plan set forth in the Plan Prospectus.
The Plan and Plan Prospectus are provided to the Participant with this Agreement. Defined terms
not otherwise defined in this Agreement shall have the meanings set forth in the Plan or the
Prospectus.

2. Vesting and Forfeiture.

(a) Vesting. Subject to Section 3(b), the RSUs shall vest and become nonforfeitable in
accordance with the vesting schedule set forth on the reverse side of this Agreement.

(b) Forfeiture. Except as otherwise provided in this Section 3, in the event that the
Participant ceases to be employed by the Company or a member of the Board of Directors of the
Company (an “Eligible Grantee”) for any reason or no reason, with or without cause, the balance of
RSUs that have not vested as of the date of such cessation will be forfeited and the Participant
will have no future rights with respect to any such unvested RSUs. For all purposes of this
Agreement, (i) “employment” shall be defined in accordance with the provisions of Section
1.421-7(h) of the Income Tax Regulations or any successor regulations, and (ii) if this Agreement
shall be assumed or a new Agreement substituted therefor in a transaction to which Section 425(a)
of the Code applies, employment by such assuming or substituting corporation shall be considered
for all purposes of this Agreement to be employment by the Company. If the Participant is employed
by a parent or subsidiary of the Company, any references in this Agreement to employment with the
Company or termination of employment by or with the Company shall instead be deemed to refer to
such parent or subsidiary.

3. Restrictions on Tranfer.

The Participant may not sell, assign, transfer, pledge, hypothecate or otherwise dispose of by
operation of law or otherwise, any RSUs, or any interest therein, except by will or the laws of
descent and distribution.

4. Rights as Stockholder.

Neither the Participant, nor any person claiming through the Participant, will have any of the
rights or privileges of a stockholder of the Company with respect to the RSUs unless and until
Shares have been issued, recorded on the records of the Company or its transfer agent, and
delivered to the Participant upon vesting of the RSUs. No adjustment shall be made for dividends or
distributions or other rights for which the record date is prior to the date such Shares are
issued. After such issuance, recordation and delivery, the Participant will have all the rights of
a stockholder of the Company with respect to the Shares.

5. Delivery of Shares; Compliance with Securities Laws, Etc.

(a) General. The Company shall, upon vesting of RSUs hereunder, make prompt delivery of
vested Shares to the Participant, provided that if any law or regulation requires the Company to
take any action with respect to such Shares before the issuance thereof, then the date of delivery
of such Shares shall be extended for the period necessary to complete such action.

(b) Listing, Qualification, Etc. This Agreement shall be subject to the requirement that if,
at any time, counsel to the Company shall determine that the listing, registration or qualification
of Shares subject hereto upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body, or that the disclosure of non-public
information or the satisfaction of any other condition is necessary as a condition of, or in
connection with, the issuance of Shares hereunder, then such issuance shall be deferred until such
listing, registration, qualification, consent or approval, disclosure or satisfaction of such other
condition shall have been effected or obtained on terms acceptable to the Board of Directors.
Nothing herein shall be deemed to require the Company to apply for, effect disclosure, or to
satisfy such other condition.

6. No Special Employment Rights.

Nothing contained in the Plan, the Prospectus or this Agreement shall be construed or deemed
to constitute an employment or service contract or confer or be deemed to confer on the Participant
any right to continue in the employ or service of, or to continue any other relationship with, the
Company or limit in any way the right of the Company to terminate the Participant’s employment or
service or other relationship at any time, with or without cause.

 

 

 

7. Withholding Taxes; Section 83(b) election.

(a) No Shares will be delivered pursuant to the vesting of an RSU unless and until the
Participant satisfies any federal, state or local withholding tax obligation required by law to be
withheld in respect of this award. The Participant acknowledges and agrees that to satisfy any
such tax obligation, the Company may deduct and retain from the Shares to be distributed upon
vesting of RSUs such number of Shares as is equal in value to the Company’s minimum statutory
withholding obligations with respect to the income recognized by the Participant upon such vesting
(based on minimum statutory withholding rates for federal and state tax purposes, including payroll
taxes, that are applicable to such income), based on the closing price of the Company’s common
stock on the date of vesting.

(b) The Participant acknowledges that no election under Section 83(b) of the Internal Revenue
Code of 1986 may be filed with respect to this award.

8. Data Privacy.

By entering into this Agreement, the Participant: (i) authorizes the Company and its
Subsidiaries, and any agent of the Company and its Subsidiaries administering the Plan or providing
Plan recordkeeping services, to disclose to the Company or any of its Subsidiaries such information
and data as the Company or any such Subsidiary shall request in order to facilitate administration
of the Plan; (ii) waives any data privacy rights he or she may have with respect to such information; and
(iii) authorizes the Company and its Subsidiaries to store and transmit such information in
electronic form.

9. Miscellaneous.

(a) Except as provided herein, this Agreement may not be amended or otherwise modified unless
evidenced in writing and signed by the Company and the Participant. Any provision for the benefit
of the Company contained in this Agreement may be waived, either generally or in any particular
instance, by the Board of Directors of the Company. The Board of Directors may amend, alter,
suspend, discontinue or terminate the Plan, or any portion thereof, at any time, subject to the
requirements for certain amendments or alterations set forth in the Plan.

(b) All notices under this award shall be mailed or delivered by hand to the parties at their
respective addresses set forth on the opposite side of this Agreement or at such other address as
may be designated in writing by either of the parties to one another.

(c) This Agreement and the Plan constitute the entire agreement between the parties, and
supersedes all prior agreements and understandings, relating to the subject matter of this
Agreement. The invalidity or unenforceability of any provision of this Agreement shall not affect
the validity or enforceability of any other provision of this Agreement, and each other provision
of this Agreement shall be severable and enforceable to the extent permitted by law.

(d) This Agreement shall be binding upon and inure to the benefit of the Company and the
Participant and their respective heirs, executors, administrators, representatives, successors and
assigns, subject to the restrictions on transfer set forth in Section 3 hereof.

(e) The right of the Participant to receive Shares pursuant to this award is an unfunded and
unsecured obligation of the Company. The Participant shall have no rights under this award other
than those of an unsecured general creditor of the Company.

(f) This award shall be governed by and construed in accordance with the laws of the State of
Delaware and applicable federal law, without regard to applicable conflicts of laws.exv4w5

Exhibit 4.5

RAI 401K SAVINGS PLAN

Amended and Restated as of January 31, 2010

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	PAGE
	INTRODUCTION	 	 	3	 
	 	 	 
	 	 	 	 
	ARTICLE 1
	 	DEFINITIONS

	 	 	6	 
	 	 	 
	 	 	 	 
	ARTICLE 2
	 	PARTICIPATION

	 	 	16	 
	 	 	 
	 	 	 	 
	ARTICLE 3
	 	CONTRIBUTIONS

	 	 	18	 
	 	 	 
	 	 	 	 
	ARTICLE 4
	 	TRUST FUND AND INVESTMENT FUNDS

	 	 	35	 
	 	 	 
	 	 	 	 
	ARTICLE 5
	 	ACCOUNT STATEMENTS AND VALUATION

	 	 	39	 
	 	 	 
	 	 	 	 
	ARTICLE 6
	 	VESTING AND FORFEITURES

	 	 	40	 
	 	 	 
	 	 	 	 
	ARTICLE 7
	 	DISTRIBUTIONS

	 	 	42	 
	 	 	 
	 	 	 	 
	ARTICLE 8
	 	WITHDRAWAL PRIOR TO TERMINATION OF EMPLOYMENT
AND SPECIAL PRE-TAX CONTRIBUTION RULES

	 	 	51	 
	 	 	 
	 	 	 	 
	ARTICLE 9
	 	LOANS

	 	 	56	 
	 	 	 
	 	 	 	 
	ARTICLE 10
	 	ADMINISTRATION OF THE PLAN

	 	 	58	 
	 	 	 
	 	 	 	 
	ARTICLE 11
	 	AMENDMENTS, TERMINATION, PERMANENT DISCONTINUANCE
OF CONTRIBUTIONS, MERGER OR CONSOLIDATION

	 	 	63	 
	 	 	 
	 	 	 	 
	ARTICLE 12
	 	MISCELLANEOUS

	 	 	65	 
	 	 	 
	 	 	 	 
	ARTICLE 13
	 	CLAIMS PROCEDURE

	 	 	70	 
	 	 	 
	 	 	 	 
	ARTICLE 14
	 	LIMITATION ON BENEFITS

	 	 	72	 
	 	 	 
	 	 	 	 
	ARTICLE 15
	 	ADOPTION AND WITHDRAWAL FROM PLAN BY AFFILIATED
COMPANY

	 	 	77	 
	 	 	 
	 	 	 	 
	SCHEDULE A — COMPENSATION	 	 	 	 
	 	 	 
	 	 	 	 
	SCHEDULE B — PARTICIPATING COMPANIES	 	 	 	 

2

 

RAI 401K SAVINGS PLAN

INTRODUCTION

The RJR Nabisco Capital Accumulation Plan was originally established effective October 1, 1987 to
cover employees of RJR Nabisco, Inc. and certain of its subsidiaries whose employees primarily
performed corporate “headquarters” functions. At that time, the major U.S. operating companies
maintained separate savings plans.

Effective March 15, 1991, the Nabisco Brands Capital Accumulation Plan, the Planters Lifesavers
Company Capital Accumulation Plan, and the RJR Employees’ Savings and Investment Plan were merged
into the RJR Nabisco Capital Accumulation Plan. At the same time, an employee stock ownership
program was established and made a part of the merged plan. The merged plan, named the RJR Nabisco
Capital Accumulation Plan (the “Plan”), was initially comprised of five underlying programs: the
RJR Nabisco Capital Accumulation Program, the Nabisco Brands Capital Accumulation Program, the
Planters Lifesavers Company Capital Accumulation Program, the RJR Employees’ Savings and Investment
Program, and the RJR Nabisco Employee Stock Ownership Program, jointly the “Programs”). Between
March 15, 1991 and December 31, 1991, each Program maintained a separate written document.

Effective January 1, 1992, the RJR Nabisco Capital Accumulation Plan was restated in its entirety
and the four underlying savings programs were combined in a single plan document renamed the RJR
Nabisco Capital Investment Plan. The ESOP portion was maintained, as Schedule C of this document.

Effective January 1, 1994, the Plan was renamed the RJR Nabisco Capital Investment Plan and was
restated in its entirety to reflect a number of Plan changes and amendments, including the
introduction of daily accounting. The Plan, as restated, is a profit sharing plan that is intended
to continue to comply with Sections 401(a), 401(k), and 401(m) of the Code.

Effective as of December 31, 1996, the Stella D’oro Biscuit Co., Inc. 401(k) Profit Sharing Plan
and the Stella D’oro Biscuit Co., Inc. Profit Sharing Plan were merged into this Plan.

Effective as of July 1, 1998, the assets attributable to the salaried employees of the Cornnuts,
Inc. Profit Sharing and Retirement Plan were spun-off and transferred into this Plan.

Effective June 10, 1999, the ESOP portion of the Plan ceased to exist. In connection with such
cessation, all shares of convertible Preferred Stock of RJR Nabisco Holdings Corp. (“RJR Nabisco
Stock”) held under the ESOP were redeemed by RJR Nabisco Holdings Corp. Any amounts attributable to
unallocated RJR Nabisco Stock held under the ESOP immediately prior to the redemption are held in
the Suspense Account to be used to reduce Company Contributions otherwise payable under the Plan.

Effective June 14, 1999, RJR Nabisco Holdings Corp., the parent company of RJR Nabisco, Inc.,
spun-off its tobacco related operations by distributing to its shareholders all of the outstanding
shares of the common stock of RJR Nabisco, Inc. As a result of the spin-off, Nabisco Holdings Corp.
(formerly a subsidiary of RJR Nabisco, Inc.) is no longer an affiliate of RJR Nabisco, Inc.
RJR Nabisco, Inc. was renamed R.J. Reynolds Tobacco Holdings, Inc. and RJR Nabisco

3

 

Holdings Corp.
was renamed Nabisco Group Holdings Corp. In connection with the spin-off, the employees of Nabisco,
Inc. and its affiliates, who were participating in the Plan, ceased to be eligible to participate
in the Plan. R.J. Reynolds Tobacco Holdings, Inc. (“RJRTH”) has assumed sponsorship of the Plan
and continues to maintain the Plan for the benefit of its eligible employees and the eligible
employees of its affiliates. The Plan was renamed the R. J. Reynolds Capital Investment Plan and
was amended and restated effective June 14, 1999.

The Plan was amended and restated effective as of December 31, 2000 to, among other respects,
incorporate prior plan amendments and the pension plan changes provided by the Uruguay Round
Agreements Act of 1994, the Uniformed Services Employment and Reemployment Rights Act of 1994, the
Small Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997, the Internal Revenue
Restructuring and Reform Act of 1998, and the Community Renewal Tax Relief Act of 2000
(collectively referred to as GUST). The Effective Date of the Plan is generally December 31, 2000
except that the changes made to comply with GUST are the applicable GUST effective date(s) (which
may be before or after the Plan’s Effective Date), unless otherwise specifically provided in this
Plan.

Effective generally as of December 31, 2002, the Plan was amended to reflect certain provisions of
the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). This amendment was
intended as good faith compliance with the requirements of EGTRRA and is to be construed in
accordance with EGTRRA and guidance issued thereunder. This amendment shall supersede the
provisions of the Plan to the extent those provisions are inconsistent with the provisions of
EGTRRA and this amendment.

The Plan was amended and restated effective as of July 30, 2004 to incorporate prior plan
amendments and to reflect the closing (the “Closing”) of the transactions contemplated by the
business combination agreement dated as of October 27, 2003 between Brown & Williamson Tobacco
Corporation and RJRTH (the “Business Combination Agreement”). Pursuant to the Business Combination
Agreement, RJRTH and Brown & Williamson Tobacco Corporation agreed to form a new corporation,
Reynolds American Inc. In connection with the Closing and to simplify the administration of the
Plan, effective as of the Closing, RJRTH transferred sponsorship of the Plan to Reynolds American
Inc., and the Plan was renamed the Reynolds American Capital Investment Plan.

The Plan was amended and restated effective as of November 1, 2005 to incorporate prior plan
amendments and to reflect the merger of the Fighting For Growth Plan for Employees of Brown &
Williamson Tobacco Corporation (the “FFG Plan”) with and into the Plan.

Effective March 31, 2006, the portion of the Plan comprising the RAI Common Stock Fund was
designated as a stock bonus plan and a non-leveraged employee stock ownership plan satisfying the
applicable requirements of Section 401(a), Section 409, and Section 4975(e) of the Internal Revenue
Code of 1986, as amended (the “Code”). The RAI Common Stock Fund is designed to be invested
exclusively in “employer securities” within the meaning of Section 409(l) of the Code. Article 4
of the Plan contains provisions that apply to the RAI Common Stock Fund.

The Plan was amended and restated effective as of April 24, 2006 to (i) incorporate prior plan
amendments, (ii) comply with the final regulations interpreting Code Sections 401(k) and

4

 

401(m),
(iii) provide for the addition of Roth Contributions and (iv) provide for the cessation of the
Profit Sharing Contribution for Plan Years after 2006.

Effective as of the close of business on January 31, 2010, (i) the 401(k) Retirement Savings Plan
for the Employees of Lane Limited (the “Lane Plan”) was merged with and into this Plan, (ii) The
Conwood Employee Thrift Plan (the “Conwood Plan”) was merged with and into this Plan and (iii) the
SFNTC Savings Investment and Retirement Plan (the “Santa Fe Plan”) was merged with and into this
Plan.

The Plan is hereby amended and restated as set forth herein effective as of January 31, 2010 to (i)
incorporate prior plan amendments, (ii) reflect the merger of the Lane Plan, the Conwood Plan and
the Santa Fe Plan with and into the Plan, (iii) rename the Plan the “RAI 401k Savings Plan,” and
(iv) make other changes to the Plan.

5

 

RAI 401K SAVINGS PLAN

ARTICLE 1

DEFINITIONS

	1.01	 	Accounts, unless otherwise indicated, means a Participant’s Pre-Tax, After-Tax, and
Company Contribution Accounts and any subaccounts thereunder. Some Participants may also have
Rollover Contribution Accounts and Roth Contribution Accounts.
	 
	1.02	 	Administration Committee means the Administration Committee(s) that is appointed by
the Committee to handle the day-to-day administration of the Plan. (See Section 10.03).
	 
	1.03	 	Affiliated Company means the Company and any corporation which is a member of a
controlled group of corporations (as defined in Section 414(b) of the Code) which includes the
Company; any trade or business (whether or not incorporated) which is under control (as
defined in Section 414(c) of the Code) with the Company; any organization (whether or not
incorporated) which is a member of an affiliated service group (as defined in Section 414(m)
of the Code) which includes the Company; and any other entity required to be aggregated with
the Company pursuant to regulations under Section 414(o) of the Code. For purposes of Article
14, the definition of Affiliated Company shall be modified in accordance with Code Section
415(h).
	 
	1.04	 	Affiliated Plan means a defined contribution plan sponsored by an Affiliated Company.
	 
	1.05	 	After-Tax Contributions means the contributions which a Participant elects to make to
the Plan in accordance with Section 3.02.
	 
	1.06	 	After-Tax Contribution Account means that portion of the Trust Fund which, with
respect to any Participant, is attributable to his own After-Tax Contributions and any
investment earnings or losses thereon.
	 
	1.07	 	ASC means the American Snuff Company, LLC, a Delaware limited liability company.
Prior to January 1, 2010, ASC was known as Conwood Company, LLC.
	 
	1.08	 	ASC Employee means an Eligible Employee who is employed by ASC; provided,
however, that an “ASC Employee” shall not include any Eligible Employee who was
transferred or hired into the ASC Executive Department (f/k/a the Conwood Executive
Department) on or after January 1, 2007 and who is paid on a monthly payroll.
	 
	1.09	 	Beneficiary means the beneficiary designated by the Participant under the Company’s
group term life insurance plan, unless the Participant has designated any other person or
persons (who may be designated contingently or successively and which may be an entity other
than a natural person) on a form supplied by the Administration Committee to receive benefits
payable in the event of the death of the Participant; provided, however, that if the
Participant is married at the date of his death, the Beneficiary shall be the Participant’s
Surviving Spouse, and any Beneficiary designation that does not
name the Participant’s Surviving Spouse as the Beneficiary shall be void unless it has

6

 

	 	 	
been consented thereto on a form supplied by the Administration Committee in writing by
the Participant’s Surviving Spouse and such consent (i) designated the alternative
Beneficiary and/or form of benefit which may not be changed without spousal consent, (ii)
acknowledges the effect of such election, and (iii) is witnessed by a notary public. The
consent of the Participant’s Spouse is not required if the Participant establishes to the
satisfaction of the Committee that such written consent cannot be obtained because (i)
there is no Spouse or that such Spouse cannot be located, or for such other circumstances
as may be provided in regulations promulgated by the Secretary of Treasury, or (ii) the
Participant is legally separated (within the meaning of local law) from the Spouse and the
Participant has a court order to that effect. The Participant may, however, revoke his
alternate Beneficiary at any time, thereby reinstating his Surviving Spouse as sole
Beneficiary. In the event of the Participant’s death without an effective Beneficiary
designation, any Plan benefits payable shall be paid, in equal parts, to the Participant’s
surviving children or, if the Participant has no surviving children, to the Participant’s
surviving parents or, if the Participant has no surviving parents, to the Participant’s
surviving siblings or, if the Participant has no surviving siblings, to the Participant’s
estate. Section 9.01(a) should be referred to in the event of the death of a Participant
with an outstanding loan balance, Section 12.05 should be referred to in the event of a
Qualified Domestic Relations Order and Section 12.12 should be referred to for payment in
the event of incompetence of a Beneficiary. Notwithstanding the foregoing, any
Beneficiary, prior to accepting any benefit under the Plan, may disclaim his designation
as Beneficiary under the Plan, by executing and delivering to the Administration Committee
an irrevocable waiver in the form and manner prescribed by the Administration Committee,
at any time. In the event a Beneficiary so disclaims his interest hereunder, Plan
benefits will be paid as if the Participant died without an effective Beneficiary
designation. For purposes of this definition, the term “Spouse” shall mean the
Participant’s spouse as defined under the federal Defense of Marriage Act.
	 
	1.10	 	Board of Directors means the Board of Directors of RAI and any committee authorized
by the Board of Directors or a committee thereof to act in its behalf with reference to the
Plan.
	 
	1.11	 	Break in Service means any twelve-consecutive-month period beginning on a Severance
Date during which an Employee does not complete an Hour of Service.
	 
	1.12	 	Business Combination means the transaction contemplated by the Business Combination
Agreement dated as of October 27, 2003 between Brown & Williamson Tobacco Corporation and R.
J. Reynolds Tobacco Holdings, Inc.
	 
	1.13	 	Catch-Up Contributions means the Pre-Tax Contributions and/or the Roth Contributions
made by a Participant who has attained age 50 before the end of a calendar year in accordance
with Code Section 414(v) (the “Catch-Up Pre-Tax Contributions” and “Catch-Up Roth
Contributions” referred to herein collectively as “Catch-Up Contributions”). Catch-Up
Contributions shall be made through payroll deductions. To the extent the amount of the
Catch-Up Contribution does not exceed the
amount permitted as an additional elective deferral under Code Section 414(v), such
Catch-Up Contributions shall not be taken into account for purposes of the required

7

 

	 	 	
limitations of Code Sections 402(g) and 415, and the Plan shall not be treated as failing
to satisfy the provisions of the Plan implementing the requirements of Code Sections
401(a)(4), 401(k)(3), 401(k)(11), 401(k)(12), 410(b) or 416, as applicable, by reason of
the making of such Catch-Up Contributions. In furtherance of, but without limiting the
foregoing, (a) the percentage limits described in Section 3.01 of the Plan shall not apply
to Catch-Up Contributions; (b) Pre-Tax Contributions and/or Roth Contributions for a Plan
Year which exceed (i) the percentage limits described in Section 3.01, (ii) the statutory
limits described in Section 3.07(a) or Section 14.01(b)(i) or (iii) the limits specified
by the Committee under Section 3.08(b) for the Plan Year, shall be treated as Catch-Up
Contributions; and (c) Catch-Up Contributions shall be permitted to be made on a
payroll-by-payroll basis; provided, however, that a Pre-Tax Contribution or a Roth
Contribution may only be characterized as a Catch-Up Contribution on a Plan Year basis.
Finally, except as specifically provided in the Plan, the term “Pre-Tax Contributions”
when used herein shall include all Catch-Up Pre-Tax Contributions and the term “Roth
Contributions” when used herein shall include all Catch-Up Roth Contributions. In
addition, a Participant who is eligible to make Catch-Up Contributions shall designate
whether his Catch-Up Contributions shall be considered Pre-Tax Contributions or Roth
Contributions. In the event a Participant does not designate whether the Catch-Up
Contributions to be made are to be Pre-Tax Contributions or Roth Contributions, all
Catch-Up Contributions shall be deemed for all purposes of the Plan to be Pre-Tax
Contributions.
	 
	1.14	 	Closing Date means July 30, 2004, the date of the closing of the Business
Combination.
	 
	1.15	 	Code means the Internal Revenue Code of 1986 as amended from time to time. Reference
to any section or subsection of the Code includes reference to any comparable or succeeding
provisions of any legislation which amends, supplements or replaces such section or
subsection.
	 
	1.16	 	Committee means the RAI Employee Benefits Committee, which shall act as the Plan
Administrator for the Plan. The Committee shall have the duties and powers described in
Article 10.
	 
	1.17	 	Company means RAI and any other Participating Company with respect to its
Participating Unit.
	 
	1.18	 	Company Contributions means contributions made by the Company pursuant to Section
3.03 of the Plan.
	 
	1.19	 	Company Contribution Account means that portion of the Trust Fund which, with respect
to any Participant, is attributable to any Company Contributions made on his behalf, and any
investment earnings and gains or losses thereon.
	 
	1.20	 	Company Stock means the common stock of RAI.
	 
	1.21	 	Compensation means, with respect to any Plan Year, the basic compensation and such
other forms of compensation paid for employment as are listed in Schedule A hereto for the
calendar year beginning in such Plan Year. Compensation in excess of $200,000 in

8

 

	 	 	any Plan Year
(subject to adjustment as provided in Code Section 401(a)(17)), shall not count for purposes
of this Plan. Notwithstanding the foregoing, in determining the amount of contributions made
by or on behalf of a Participant under Section 3 of the Plan, Compensation shall include only
amounts received for the portion of the Plan Year during which he was a Participant.
	 
	1.22	 	Consolidated Net Sales means for each fiscal year, the combined gross sales resulting
from the operations of the businesses of ASC and Lane, less all returns, discounts and
allowances.
	 
	1.23	 	Consolidated Operating Income means for each fiscal year, the combined consolidated
operating income of ASC and Lane, determined under generally accepted accounting principles,
provided, however, that such combined consolidated operating income shall be adjusted to
include interest income and gain or loss from the sale of assets used in operations.
	 
	1.24	 	Continuous Service Date means a Participant’s “Continuous Service Date” shown on
Company personnel records for such Participant.
	 
	1.25	 	Conwood Plan means The Conwood Employee Thrift Plan, as amended through January 31,
2010.
	 
	1.26	 	Effective Date of this restatement means January 31, 2010. The original effective
date of the Plan is October 1, 1987.
	 
	1.27	 	Eligible Employee means any Employee of any Participating Unit, as more specifically
described on Schedule B, who is paid from a United States dollar payroll maintained in the
United States; provided, that except as the Board of Directors or the Committee, pursuant to
authority delegated to it by the Board of Directors, may otherwise provide on a basis
uniformly applicable to all persons similarly situated, no person shall be an “Eligible
Employee” for purposes of the Plan:

	 	(a)	 	who is excepted by the Board of Directors or the Committee,
	 
	 	(b)	 	whose terms and conditions of employment are determined by a collective
bargaining agreement with the Company or a Participating Company which does not make
this Plan applicable to him, provided that employee retirement benefits were
negotiated thereunder,
	 
	 	(c)	 	who is a “leased employee” as defined in Section 414(n) of the Code and who
is required by such Section to be considered an employee of the Company or an
Affiliated Company. Notwithstanding the foregoing, if a “leased employee” is
reclassified as an Employee, years of service as a “leased employee” of the
Company or an Affiliated Company shall be considered in computing Service for
vesting,
	 
	 	(d)	 	who is classified by the Company or a Participating Company as a summer
student employee, or

9

 

	 	(e)	 	who is classified by the Company or a Participating Company as an
independent contractor or a consultant, regardless of his classification by the
Internal Revenue Service for tax withholding purposes, or his classification by any
person for any purpose.

	1.28	 	Eligible Retirement Plan means an individual retirement account described in Section
408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code,
an annuity contract described in Section 403(b) of the Code, an annuity plan described in
Section 403(a) of the Code, a qualified trust described in Section 401(a) of the Code, a Roth
IRA described in Section 408A(b) of the Code or an eligible plan under Section 457(b) of the
Code which is maintained by a state, political subdivision of a state, or any agency or
instrumentality of a state or political subdivision of a state, and which agrees to separately
account for amounts transferred into such plan from this Plan. The definition of Eligible
Retirement Plan shall also apply in the case of a distribution to a Surviving Spouse, or to a
spouse or former spouse who is the alternate payee under a qualified domestic relation order,
as defined in Code Section 414(p). Notwithstanding the foregoing, effective for Plan Years
beginning on or after January 1, 2010, in the case of an Eligible Rollover Distribution to a
Beneficiary who is not a surviving spouse and who is eligible to elect a direct rollover as
provided in Section 7.04(g), an “Eligible Retirement Plan” shall mean only an individual
retirement account or an individual retirement annuity described in Section 408 of the Code.
	 
	1.29	 	Eligible Rollover Distribution means any distribution of all or any portion of the
balance to the credit of the distributee, except that an Eligible Rollover Distribution does
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 Section 401(a)(9) of the Code;
or (3) any Hardship withdrawal of Pre-Tax Contributions or Roth Contributions. A portion of a
distribution shall not fail to be an Eligible Rollover Distribution merely because the portion
consists of after-tax employee contributions or contributions made to a designated Roth
account (as defined in Section 402A of the Code), which are not includible in gross income.
Without limiting the generality of the foregoing, and except as provided above, an Eligible
Rollover Distribution shall include any amounts distributed from a designated Roth account (as
defined in Section 402A of the Code), but shall not include any amounts distributed from a
Roth IRA (as defined in Section 408A of the Code).
	 
	1.30	 	Employee means an individual employed by an Affiliated Company and, for purposes of
Code Section 410(b) coverage requirements, leased employees.
	 
	1.31	 	Entry Dates are the first business day of any calendar month.
	 
	1.32	 	ERISA means the Employee Retirement Income Security Act of 1974, and as is amended
from time to time.

10

 

	1.33	 	Independent Fiduciary means Evercore Trust Company, N.A., or such other fiduciary
appointed as such from time to time by the Compensation Committee of the Board of Directors,
as settlor. The Independent Fiduciary shall be the sole “investment manager” within the
meaning of Section 3(38) of ERISA and “named fiduciary” within the meaning of Section
402(a)(2) of ERISA with respect to the management and disposition of the RAI Common Stock
Fund, with the power and authority set forth in Section 10.08 of the Plan.
	 
	1.34	 	Investment Fund or Funds means, collectively or singly as the context requires, the
RAI Common Stock Fund, and the investment funds selected by the RAI Pension Investment
Committee in accordance with Article 4.
	 
	1.35	 	Job Elimination means the elimination of an existing position at the sole discretion
of the Company when, because of changing needs or circumstances, (i) the job is no longer
performed, or (ii) the job is still performed, but fewer employees are needed to perform it,
and resulting in the affected employee’s entitlement to benefits under a salary and benefits
continuation plan sponsored by an Affiliated Company (or provided under a contract).
	 
	1.36	 	Lane means Lane, Limited, a New York corporation.
	 
	1.37	 	Lane Employee means an Eligible Employee who is employed by Lane; provided,
however, that a “Lane Employee” shall not include any Eligible Employee who was
transferred or hired into the Lane Executive Department on or after January 1, 2008 and who is
paid on a monthly payroll.
	 
	1.38	 	Lane Plan means the 401(k) Retirement Savings Plan for the Employees of Lane
Limited, as amended through January 31, 2010.
	 
	1.39	 	Limitation Year means the calendar year.
	 
	1.40	 	Match-Eligible Contributions means the first 6% of Compensation (up to the Code
Section 402(g) limit in effect for the calendar year) that a Participant elects to contribute
to the Plan as Pre-Tax and/or Roth Contributions under Section 3.01.
	 
	1.41	 	Matching Contributions means the RAI Matching Contributions, the Lane/ASC Matching
Contributions and the Santa Fe Matching Contributions which are made to the Plan in accordance
with Section 3.03.
	 
	1.42	 	Nabisco Plan means the Nabisco, Inc. Capital Investment Plan.
	 
	1.43	 	Normal Retirement Age means age 65.
	 
	1.44	 	Participant means any person participating in the Plan as provided in Article 2.
Except for purposes of Sections 2.01, 2.02 and 6.02 and Article 3, an Eligible Employee who
has made a rollover or transfer to the Plan which meets the requirements of Section 3.08 and
for whom a Rollover Contribution Account is maintained shall be treated as a Participant and
such Eligible Employee shall become a Participant for all purposes after

11

 

	 	 	meeting the
requirements of Sections 2.01 and 2.02. In addition, in any Plan Year in which the Plan is
top-heavy (as defined in Section 14.02) and for purposes of Section 14.02(f), “Participant”
shall include an Eligible Employee not otherwise described in the preceding two sentences who
shall, pursuant to Treasury Regulation Section 1.416-1, Q&A M-10, receive the contribution
described in Section 14.02(f), and such Eligible Employee shall become a Participant for all
purposes after meeting the requirements of Sections 2.01 and 2.02.
	 
	1.45	 	Participating Company means an Affiliated Company that has adopted the Plan pursuant
to Section 15.01. The term shall not include any foreign corporations, or units thereof.
	 
	1.46	 	Participating Unit means those Employees of a Participating Company designated on
Schedule B as eligible to participate in the Plan.
	 
	1.47	 	Plan means the RAI 401k Savings Plan. Prior to January 31, 2010, the name of the
Plan was the Reynolds American Capital Investment Plan. Prior to the Closing Date, the name
of the Plan was the R. J. Reynolds Capital Investment Plan. Prior to June 14, 1999, the name
of the Plan was the RJR Nabisco Capital Investment Plan. Prior to January 1, 1992, the name
of the Plan was the RJR Nabisco Capital Accumulation Plan.
	 
	1.48	 	Plan Year means the calendar year.
	 
	1.49	 	Predecessor Plan(s) means the RJR Employees’ Savings and Investment Plan (“RJR SIP”),
the Planters Lifesavers Company Capital Accumulation Plan (“PLS CAP”), the Nabisco Brands
Capital Accumulation Plan (“NB CAP”), Stella D’oro Biscuit Co., Inc. 401(k) Profit Sharing
Plan, the Stella D’oro Biscuit Co. Profit Sharing Plan, the Fighting For Growth Plan for
Employees of Brown & Williamson Tobacco Corporation (“FFG Plan”), the Lane Plan, the Conwood
Plan and the Santa Fe Plan, which were merged into this Plan.
	 
	1.50	 	Pre-Tax Contributions means the contributions a Participant elects to make to the
Plan pursuant to a qualified cash or deferral arrangement, as defined in Code Section 401(k),
and which are credited to his Pre-Tax Contributions Account in accordance with Section 3.01.
	 
	1.51	 	Pre-Tax Contributions Account means that portion of the Trust Fund which, with
respect to any Participant, is attributable to his Pre-Tax Contributions and any investment
earnings or losses thereon, and excluding amounts, if any, distributed to the Participant in
accordance with Section 3.07(c).
	 
	1.52	 	RAI means Reynolds American Inc., a North Carolina corporation.
	 
	1.53	 	RAI Common Stock Fund means an Investment Fund the purpose of which is to invest
exclusively in Company Stock, subject to Section 4.03(d) of the Plan. The RAI Common Stock
Fund shall be a permanent feature of the Plan.

12

 

	1.54	 	RAI Employee means an Eligible Employee other than a Lane Employee, an ASC Employee
or a Santa Fe Employee.
	 
	1.55	 	Rollover Contributions means the amount contributed to the Plan as a rollover
contribution from an Eligible Retirement Plan in accordance with Section 3.09.
	 
	1.56	 	Rollover Contribution Account means that portion of the Trust Fund which, with
respect to any Eligible Employee, is attributable to his Rollover Contributions and any
investment earnings or losses thereon.
	 
	1.57	 	Roth Contributions means the contributions of a Participant which the Participant has
irrevocably designated as being contributed in lieu of all or a portion of the Pre-Tax
Contributions that the Participant is otherwise eligible to make under the Plan, as provided
in Section 3.01, and which are treated by the Company as includible in the Participant’s gross
income pursuant to Section 402A of the Code, at the time the Participant would have received
that amount in cash if the Participant had not made such election. Except as otherwise
specifically provided in the Plan, the term “Roth Contributions” shall include Catch-Up Roth
Contributions, as defined in Section 1.13.
	 
	1.58	 	Roth Contribution Account means that portion of the Trust Fund which, with respect to
any Participant, is attributable to his Roth Contributions, if any, and any investment
earnings or losses thereon, and excluding amounts, if any, distributed to the Participant in
accordance with Section 3.07(c).
	 
	1.59	 	Santa Fe means Santa Fe Natural Tobacco Company, Inc., a New Mexico corporation.
	 
	1.60	 	Santa Fe Employee means any Eligible Employee who is employed by Santa Fe;
provided, however, that a “Santa Fe Employee” shall not include any Eligible
Employee who is employed in the Santa Fe Executive Department and who is paid on a monthly
payroll.
	 
	1.61	 	Santa Fe Plan means the SFNTC Savings Investment and Retirement Plan, as amended
through January 31, 2010.
	 
	1.62	 	Service means all periods during which an Employee is employed by the Company, a
Participating Company or any Affiliated Company commencing with the first day of employment or
the first day of reemployment and ending with his Severance Date which next follows the first
day of employment or the first day of reemployment, as the case may be. The first day of
employment or the first day of reemployment shall be deemed to be the first day in which the
Employee performs an “Hour of Service” (as
defined in Department of Labor Reg. Section 2530.200b-2) as an Employee. Periods of
Service commencing on the first day of employment and ending on the first Severance Date
and commencing on each reemployment date and ending on the Severance Date which next
follows shall be aggregated on a day by day basis and 365 days of aggregate Service shall
constitute one year of Service. Service shall include any period of authorized part-time
employment, periods of authorized leave of absence up to a maximum of one year, periods of
absence due to service in the Armed Forces of the United States, as required, periods of
absence due to unpaid leave taken pursuant to the

13

 

	 	 	Family and Medical Leave Act of 1993 or
similar state laws (to the extent required by such laws, but only to the extent such leave
is not otherwise credited under this Section 1.62), and periods of absence due to illness
or disability up to a maximum of 12-consecutive months. Service shall include all Service
credited to an Eligible Employee under the Plan prior to the Effective Date. If an
individual who is a participant in the Nabisco Plan becomes an Eligible Employee on or
before June 14, 2000, Service shall also include all service credited to such Eligible
Employee under Section 1.33 of the Nabisco Plan. For the purposes of Section 6.02,
Service shall include the period between a Participant’s Severance Date and his
reemployment date if such reemployment date occurs within 12 months following the
Participant’s Severance Date. With respect to Employees whose employment was transferred
from Brown & Williamson Tobacco Corporation to an Affiliated Company in connection with
the Business Combination or whose employment with an Affiliated Company commenced within
twelve months after his layoff from Brown & Williamson Tobacco Corporation, Service shall
include service with Brown & Williamson Tobacco Corporation or its subsidiaries (and any
predecessor entities thereof).
	 
	1.63	 	Severance Date means the following:

	 	(a)	 	the date on which an Employee quits, retires, is discharged, dies or
terminates employment, which will not include a period of salary and benefit
continuation; or
	 
	 	(b)	 	the first anniversary of the first date of a period in which an Employee
remains absent from Service (with or without pay) with the Company or an Affiliated
Company for any reason other than quit, retirement, discharge, or death; provided,
however, the absence from Service of an Employee receiving benefits under one or more
long-term disability plans of the Company or an Affiliated Company is not a severance
until the earlier of Normal Retirement Age, the cessation of such disability payments
or two consecutive years on long-term disability; provided further that if such an
Employee in active employment after his Normal Retirement Age becomes disabled, his
Severance Date is the date such long-term disability plan benefits commence or would
commence.

	 	 	In the case of an Employee who is absent from work by virtue of (i) the Employee’s
pregnancy, (ii) birth of the Employee’s child, (iii) placement of a child with the
Employee by adoption, or (iv) caring for any such child for a period of up to a year
immediately following such birth or placement the Severance Date is the second anniversary
of the first day of absence from Service provided that the period between
the first and second anniversary of such first day of absence is neither counted as
Service nor a Break in Service.
	 
	1.64	 	Surviving Spouse means a person’s spouse, as defined under the federal Defense of
Marriage Act, at the time of the Participant’s death and to whom the benefits under the Plan
shall be payable in the event of the Participant’s death unless a valid Beneficiary
designation and consent thereto by the Participant’s spouse has been made and received by the
Committee, or unless such benefits are subject to a qualified domestic relations order as
defined in Section 414(p) of the Code.

14

 

	1.65	 	Termination of Employment means separation from the employment of the Company or an
Affiliated Company for any reason, including, but not limited to, death, disability,
resignation, dismissal or retirement; provided, however, that transfer in employment between
the Company and an Affiliated Company shall not be deemed to be a “Termination of Employment”
and provided further, that if an Employee is rehired by the Company or an Affiliated Company
within 30 days of his or her separation from the employment of the Company or an Affiliated
Company, such separation shall not be considered to be a “Termination of Employment.”
	 
	1.66	 	Transfer Contributions means the amount contributed to the Plan as transfer
contributions from a Predecessor Plan in accordance with Section 3.04.
	 
	1.67	 	Trustee means a trustee or trustees at any time acting as such under a trust
agreement or agreements established for purposes of this Plan.
	 
	1.68	 	Trust Fund means the cash and other properties arising from (i) contributions made by
Participants and by the Participating Companies in accordance with the provisions of this
Plan, (ii) funds transferred from Predecessor or Affiliated Plans, and (iii) any investment
earnings and gains or losses thereon. The Trust Fund is held and administered by the Trustee
pursuant to Article 4.
	 
	1.69	 	Valuation Date means each business day and any other date the Committee deems
desirable or necessary to value the Trust Fund in accordance with Article 5.
	 
	1.70	 	Year of Service means the twelve-consecutive-month period during which (a) a
part-time Lane or ASC Employee or (b) a Santa Fe Employee completes no less than 1,000 Hours
of Service beginning on the date on which such Employee first performs an Hour of Service upon
his employment or reemployment with Lane, ASC or Santa Fe, as applicable, or, in the event
such Employee fails to complete 1,000 Hours of Service in that twelve-consecutive-month
period, any Plan Year thereafter during which the Employee completes no less than 1,000 Hours
of Service, including the Plan Year which includes the first anniversary of the date the
Employee first performed an Hour of Service upon his employment or reemployment.

When used herein, the masculine shall include the feminine, and the singular shall include the
plural, unless the context clearly indicates a different meaning.

15

 

ARTICLE 2

PARTICIPATION

	2.01	 	Eligibility.

	 	(a)	 	General.

	 	(i)	 	Any Eligible Employee who is (i) a Participant in the Plan
on the Effective Date or (ii) a participant in the Lane Plan, Conwood Plan or
Santa Fe Plan immediately prior to the Effective Date, shall continue as a
Participant.
	 
	 	(ii)	 	Any RAI or Santa Fe Employee whose first date of employment
or most recent date of reemployment is on or after the Effective Date shall
be eligible to become a Participant in the Plan as of the first Entry Date
coincident with or next following the 30-day period commencing on his date of
employment or most recent date of reemployment, provided he is an Eligible
Employee on such Entry Date.

	 	(b)	 	Lane/ASC Employees.

	 	(i)	 	Any full-time Lane or ASC Employee whose first date of
employment or most recent date of reemployment is on or after January 2, 2009
but prior to December 2, 2009, and who is not a Participant in the Plan on
the Effective Date, shall be eligible to become a Participant as of the first
Entry Date coincident with or next following the Effective Date, provided he
is an Eligible Employee on such Entry Date.
	 
	 	(ii)	 	Any full-time Lane or ASC Employee whose first date of
employment or most recent date of reemployment is on or after December 2,
2009 shall be eligible to become a Participant as of the first Entry Date
coincident with or next following the 30-day period commencing on his date of
employment or most recent date of reemployment, provided he is an Eligible
Employee on such Entry Date.
	 
	 	(iii)	 	Any part-time Lane or ASC Employee shall be eligible to
become a Participant as of the first Entry Date coincident with or next
following the date he completes a Year of Service, provided he is an Eligible
Employee on such Entry Date.

	 	(c)	 	All Eligible Employees of a Participating Company who participate in this
Plan shall participate under the terms and conditions stated herein.

16

 

	2.02	 	Participation.

	 	(a)	 	An Eligible Employee shall become a Participant on the applicable Entry
Date. On or prior to the applicable Entry Date, each Participant shall make an
application in a manner prescribed by the Committee in which he:

	 	(i)	 	designates the percentage of Compensation to be contributed
as Pre-Tax and/or Roth Contributions in accordance with Section 3.01;
	 
	 	(ii)	 	designates the percentage of Compensation to be contributed
as After-Tax Contributions in accordance with Section 3.02;
	 
	 	(iii)	 	authorizes applicable payroll deductions; and
	 
	 	(iv)	 	chooses one or more Investment Fund(s).

	 	(b)	 	If the Eligible Employee does not make the application contemplated in
Section 2.02(a) prior to his applicable Entry Date, such Eligible Employee shall be
deemed to have (i) authorized payroll deductions for Pre-Tax Contributions in
accordance with Section 3.01 equal to 3% (2% with respect to any Santa Fe Employee
whose first date of employment or most recent date of reemployment is prior to the
Effective Date) of his Compensation, and (ii) elected to invest such contributions in
the Investment Fund designated by the RAI Pension Investment Committee for all such
contributions. Notwithstanding the foregoing, the Eligible Employee may at any time
elect a different contribution percentage (including 0%) in accordance with Section
3.05 and/or different Investment Funds in accordance with Section 4.05.

	2.03	 	Participant Status. An Eligible Employee who has become a Participant shall remain a
Participant in the Plan so long as an Account is held for his benefit; provided,
however, no further contributions will be made to the Plan by or for a Participant who
ceases to be an Eligible Employee with respect to the period after he ceases to be an Eligible
Employee. Notwithstanding the foregoing, a Participant shall cease to be a Participant in the
Plan, and all contributions to the Plan made by or for such Participant shall be immediately
suspended, as of the date such Participant’s Accounts are transferred to an Affiliated Plan
pursuant to Section 12.14.
	 
	2.04	 	Veterans Reemployment. Notwithstanding any provision of this Plan to the contrary,
contributions, benefits and service credit with respect to qualified military service will be
provided in accordance with Code Section 414(u).

17

 

ARTICLE 3

CONTRIBUTIONS

	3.01	 	Pre-Tax Contributions; Roth Contributions. Subject to the provisions of Section
3.07, each Participant may elect that the Participating Company contribute from 1% to 75% of
his Compensation to the Plan as Pre-Tax Contributions and/or Roth Contributions in lieu of an
equal amount being paid to him as current cash Compensation. Pre-Tax and/or Roth
Contributions are made through payroll deductions. In the event that a Participant does not
designate on his application whether the contributions elected to be made are Pre-Tax
Contributions or Roth Contributions, all contributions elected on such application shall be
deemed for all purposes of the Plan to be Pre-Tax Contributions.

	3.02	 	After-Tax Contributions. A Participant may make contributions to the Plan on an
after-tax basis, either in lieu of or in combination with Pre-Tax Contributions and/or Roth
Contributions by authorizing After-Tax Contributions of 1% to 75% of his Compensation;
provided that the combined percentage of Compensation for Pre-Tax, Roth and After-Tax
Contributions (i) is a minimum of 1% and a maximum of 75% and (ii) shall in no event exceed
the amount of a Participant’s after-tax Compensation. After-Tax Contributions are made
through payroll deductions.

	3.03	 	Company Contributions.

	 	(a)	 	General.

	 	(i)	 	All Company Contributions shall be made subject to the
terms and conditions of this Section 3.03.
	 
	 	(ii)	 	In any Plan Year in which the Plan is top-heavy (as
defined in Section 14.02) the Participating Companies shall make additional
Company Contributions to the extent necessary to comply with the minimum
top-heavy contribution requirement as set forth in Section 14.02(f).
	 
	 	(iii)	 	Each Company Contribution to the Plan is conditioned on
its deductibility. In the event that a Company Contribution to the Plan is
made by a mistake of fact or all or part of the Company’s deductions under
Section 404 of the Code for contributions to the Plan are disallowed by the
Internal Revenue Service, the portion of the contributions attributable to
such mistake of fact or to which such disallowance applies shall be
returned to the Company without interest. Any such return shall be made
within one year after the making of such contribution by mistake of fact or
disallowance of deductions, as the case may be.
	 
	 	(iv)	 	All Company Contributions will be reduced by the amount
of forfeitures available under Article 6, if any.

18

 

	 	(b)	 	RAI Employees.

	 	(i)	 	RAI Matching Contributions. For each Plan Year,
the applicable Participating Companies shall contribute an amount (the “RAI
Matching Contributions”) which shall produce an allocation to the Company
Contribution Account of each Participant who is an RAI Employee equal to:

	 	(A)	 	50% of such Participant’ Match-Eligible
Contributions for such Plan Year for each Participant who is accruing
a benefit under a defined benefit plan sponsored by RAI; or
	 
	 	(B)	 	100% of such Participant’s Match-Eligible
Contributions for such Plan Year for each Participant who is not
accruing a benefit under a defined benefit plan sponsored by RAI;

	 	(ii)	 	Retirement Enhancement Contributions. The
applicable Participating Companies shall contribute an additional amount
(the “Retirement Enhancement Contribution”) which shall produce an
allocation to the Company Contribution Account of certain eligible
Participants who are RAI Employees other than the “Excluded Participants”
(as defined below) which shall be determined as follows:

	 	(A)	 	The Retirement Enhancement Contribution shall
be equal to 3% of the Participant’s Compensation for each eligible
Participant who is an RAI Employee:

	 	(1)	 	whose first date of employment as
an Eligible Employee or most recent date of reemployment as an
Eligible Employee is on or after January 1, 2004, or
	 
	 	(2)	 	whose employment was transferred
from Brown & Williamson Tobacco Corporation to an Affiliated
Company in connection with the Business Combination or whose
employment with an Affiliated Company commenced within twelve
months after his layoff from Brown & Williamson Tobacco
Corporation, and whose first date of employment with Brown &
Williamson Tobacco Corporation or most recent date of reemployment
with Brown & Williamson Tobacco Corporation was on or after August
1, 1999;

	 	 	 	provided, however, that clause (ii)(A)(1) above shall not apply to
an eligible Participant (x) whose date of reemployment is after January
1, 2004 but whose Continuous Service Date is prior to January 1, 2004;
or (y) whose employment was transferred from R. J. Reynolds Tobacco
(CI) Co., and whose first date of employment with R. J. Reynolds
Tobacco (CI) Co. or most recent date of reemployment with R. J.
Reynolds Tobacco (CI) Co. is prior to January 1, 2004.

19

 

	 	(B)	 	The Retirement Enhancement Contribution for all
other eligible Participants who are RAI Employees shall be as
determined in accordance with the following chart:

	 	 	 
	Total of Age plus Years of Vested	 	Retirement Enhancement Contribution
	Service as of January 1, 2006	 	(as a % of Compensation)
	Less than 30
	 	3%
	30-39
	 	4%
	40-49
	 	5%
	50-59
	 	6%
	60-69
	 	7%
	70-79
	 	8%
	80 or more
	 	9%

	 	(iii)	 	Excluded Participant. For purposes of Section
3.03(b)(ii), the term “Excluded Participant” shall mean any Participant:

	 	(A)	 	who is either eligible to accrue a
“Grandfathered Benefit” or who has retired with a “Grandfathered
Benefit” under the Reynolds American Retirement Plan (as such term is
defined thereunder), and (1) whose first date of employment as an
Eligible Employee and most recent date of reemployment as an Eligible
Employee, if applicable, is prior to January 1, 2004, or (2) whose date
of reemployment is after January 1, 2004 but whose Continuous Service
Date is prior to January 1, 2004;
	 
	 	(B)	 	whose employment was transferred from Brown &
Williamson Tobacco Corporation to an Affiliated Company in connection
with the Business Combination or whose employment with an Affiliated
Company commenced within twelve months after his layoff from Brown &
Williamson Tobacco Corporation, and whose first date of employment with
Brown & Williamson Tobacco Corporation or most recent date of
reemployment with Brown & Williamson Tobacco Corporation was prior to
August 1, 1999;
	 
	 	(C)	 	who has transferred to an applicable
Participating Company from an Affiliated Company and is accruing a
benefit under a defined benefit pension plan sponsored by RAI.

	 	(c)	 	Lane/ASC Employees.

	 	(i)	 	Lane/ASC Contributions. For each Plan Year, (A)
Lane shall contribute an amount on behalf of each Participant who is a Lane
Employee and (B) ASC shall contribute an amount on behalf of each Participant
who is an ASC Employee (collectively, the “Lane/ASC Matching Contributions”),

20

 

	 	 	 	in the amount determined under the following schedule for each dollar of
Match-Eligible Contributions contributed by such Participant for the Plan
Year:

	 	 	 
	 	 	The Lane/ASC Matching Contribution
	 	 	for each dollar of the
	If Consolidated Operating Income,	 	Participant’s Match-Eligible
	stated as a percentage of	 	Contributions made during the Plan
	Consolidated Net Sales, was:	 	Year will be:
	Fewer than 8%
	 	$0.00
	8% but fewer than 10%
	 	$0.10
	10% but fewer than 12%
	 	$0.20
	12% but fewer than 14%
	 	$0.30
	14% but fewer than 15%
	 	$0.40
	15% but fewer than 16%
	 	$0.50
	16% but fewer than 17%
	 	$0.60
	17% but fewer than 18%
	 	$0.70
	18% but fewer than 19%
	 	$0.80
	19% but fewer than 20%
	 	$0.90
	20% or more
	 	$1.00

	 	 	 	For the purpose of determining the applicable percentage amount from the
foregoing table to be used in the calculation of the Lane/ASC Matching
Contributions (1) for the first quarter (January through March) of a
particular Plan Year, the amount of the Consolidated Operating Income and
the amount of the Consolidated Net Sales for the fiscal year ending two
years prior to the beginning of the Plan Year shall be used in making such
calculation and (2) for the second, third and fourth quarters (April
through December) of a particular Plan Year, the amount of the
Consolidated Operating Income and the amount of the Consolidated Net Sales
for the fiscal year ending immediately prior to the beginning of the Plan
Year shall be used in making such calculation.
	 
	 	 	 	Notwithstanding the foregoing, if the amount of the Consolidated Operating
Income for a fiscal year, exclusive of any accruals under any qualified
retirement savings plan for the Lane Employees and the ASC Employees for
such fiscal year, is less than ten million dollars ($10,000,000), then no
Lane/ASC Matching Contributions shall be made by Lane or ASC for the
relevant calendar quarters.

	 	(ii)	 	Profit Sharing Contributions.

	 	(A)	 	For each Plan Year, Lane shall contribute to
the Company Contribution Account of each Lane Employee (the “Lane
Profit Sharing Contribution”) (1) who has become a Participant as
provided in Section 2.02 (without regard to whether the Lane Employee
has made an election pursuant to Section 2.02(a)) and (2) whose first

21

 

	 	 	 	date of employment or most recent date of reemployment is on or after
January 1, 2008 and who is not, as of such date, accruing benefit
service under a defined benefit pension plan sponsored by RAI (a
“Post-2007 Lane Participant”); provided, however, that
a Lane Employee who has transferred to Lane from an Affiliate will not
receive a Profit Sharing Contribution allocation if he is eligible to
accrue benefit service under a defined benefit pension plan sponsored
by RAI. Any such Lane Profit Sharing Contributions shall be allocated
to the Company Contribution Account of the eligible Post-2007 Lane
Participant according to the following schedule:

	 	 	 
	 	 	The Lane Profit Sharing
	If Consolidated Operating Income,	 	Contribution as a percentage of
	stated as a percentage of	 	each such Post-2007 Lane
	Consolidated Net Sales, was:	 	Participant’s Compensation will be:
	Fewer than 8%
	 	0.0%
	8% but fewer than 10%
	 	0.3%
	10% but fewer than 12%
	 	0.6%
	12% but fewer than 14%
	 	0.9%
	14% but fewer than 15%
	 	1.2%
	15% but fewer than 16%
	 	1.5%
	16% but fewer than 17%
	 	1.8%
	17% but fewer than 18%
	 	2.1%
	18% but fewer than 19%
	 	2.4%
	19% but fewer than 20%
	 	2.7%
	20% or more
	 	3.0%

	 	(B)	 	For each Plan Year, ASC shall contribute to the
Company Contribution Account of each ASC Employee (the “ASC Profit
Sharing Contribution”) who (1) has become a Participant as provided in
Section 2.02 (without regard to whether the ASC Employee has made an
election pursuant to Section 2.02(a)) and (2) is employed as an ASC
Employee on the date as of which the contribution is made,
provided, however, that an ASC Employee who has
transferred to ASC from an Affiliate will not receive an ASC Profit
Sharing Contribution allocation if he is eligible to accrue benefit
service under a defined benefit pension plan sponsored by RAI. For
purposes of this Section, an ASC Employee shall be deemed to be employed
by ASC on the date as of which the contribution is made if he died or
retired since the preceding date on which such contribution was made. Any
such ASC Profit Sharing Contribution shall be allocated to the Company
Contribution Accounts of the eligible ASC Employees according to the
following schedule:

22

 

	 	 	 	 	 
	 	 	 	 	For ASC Employees
	 	 	For ASC Employees	 	hired or transferred
	 	 	hired prior to	 	to ASC on or after
	 	 	January 1, 2008, the	 	January 1, 2008, the
	If Consolidated	 	ASC Profit Sharing	 	ASC Profit Sharing
	Operating Income,	 	Contribution as a	 	Contribution as a
	stated as a percentage	 	percentage of each	 	percentage of each
	of Consolidated Net	 	such ASC Employee’s	 	such ASC Employee’s
	Sales, was:	 	Compensation will be:	 	Compensation will be:
	Fewer than 8%
	 	0.0%	 	0.0%
	8% but fewer than 10%
	 	0.6%	 	0.3%
	10% but fewer than 12%
	 	1.2%	 	0.6%
	12% but fewer than 14%
	 	1.8%	 	0.9%
	14% but fewer than 15%
	 	2.4%	 	1.2%
	15% but fewer than 16%
	 	3.0%	 	1.5%
	16% but fewer than 17%
	 	3.6%	 	1.8%
	17% but fewer than 18%
	 	4.2%	 	2.1%
	18% but fewer than 19%
	 	4.8%	 	2.4%
	19% but fewer than 20%
	 	5.4%	 	2.7%
	20% or more
	 	6.0%	 	3.0%

	 	(iii)	 	For the purpose of determining the applicable percentage
amount from the foregoing tables to be used in the calculation of the
Profit Sharing Contributions (A) for the first quarter (January through
March) of a particular Plan Year, the amount of the Consolidated Operating
Income and the amount of the Consolidated Net Sales for the fiscal year
ending two years prior to the beginning of the Plan Year shall be used in
making such calculation and (B) for the second, third and fourth quarters
(April through December) of a particular Plan Year, the amount of the
Consolidated Operating Income and the amount of the Consolidated Net Sales
for the fiscal year ending immediately prior to the beginning of the Plan
Year shall be used in making such calculation.
	 
	 	 	 	Notwithstanding the foregoing, if the amount of the Consolidated Operating
Income for a fiscal year, exclusive of any accruals under any qualified
retirement savings plan for the Lane Employees and the ASC Employees for
such fiscal year, is less than ten million dollars ($10,000,000), then no
Profit Sharing Contributions shall be made by Lane or ASC for the relevant
calendar quarters.

23

 

	 	(d)	 	Santa Fe Employees.

	 	(i)	 	Santa Fe Matching Contributions. For each Plan
Year, Santa Fe shall contribute an amount (the “Santa Fe Matching
Contributions”) which shall produce an allocation to the Company
Contribution Account of each Participant who is a Santa Fe Employee equal
to 50% of such Participant’s Match-Eligible Contributions for such Plan
Year.
	 
	 	(ii)	 	Santa Fe Profit Sharing Contributions. For each
Plan Year, Santa Fe may make a discretionary contribution (the “Santa Fe
Profit Sharing Contribution”) to the Company Contribution Account of each
Santa Fe Employee who (A) has completed a Year of Service and (B) has been
employed as a Santa Fe Employee during the Plan Year for which the Profit
Sharing Contribution is to be made and is employed by Santa Fe or an
Affiliated Employer on the last day of the Plan Year. For purposes of this
Section, a Santa Fe Employee shall be deemed to be employed by Santa Fe or
an Affiliated Employer on the last day of the Plan Year if he died, retired
or became disabled during such Plan Year. Any Santa Fe Profit Sharing
Contribution made for an “Allocation Group” (as set forth below) shall be
allocated to the Company Contribution Account of each eligible Santa Fe
Employee who is a member of that Allocation Group in the ratio that the
Compensation of each eligible Santa Fe Employee who is a member of that
Allocation Group bears to the total Compensation of all eligible Santa Fe
Employees who are members of that Allocation Group. The Allocation Groups
of eligible Santa Fe Employees to which Santa Fe Profit Sharing
Contributions shall be allocated are as follows:

	 	 	 
	Group 1

	 	Non-highly compensated salaried employees;
	Group 2

	 	Non-highly compensated officers;
	Group 3

	 	All other non-highly compensated employees; and
	Group 4

	 	All highly compensated employees.

	3.04	 	Transfer Contributions.

	 	(a)	 	With the approval of the Committee, in its sole and absolute discretion, there
shall be permitted a merger of a Predecessor Plan into the Plan; provided, however,
that such Predecessor Plan shall meet the qualification requirements of Code Section
401(a) and such other requirements established by the Committee.
	 
	 	(b)	 	Amounts transferred to the Plan pursuant to Subsection (a) above (the “Transfer
Contributions”) shall be subject to all terms and conditions of the Plan as in effect
from time to time, except to the extent provided on a Schedule to the Plan which may
contain additional terms and conditions governing the application of the Plan to the
Transfer Contributions. The terms of any such Schedule are hereby incorporated and
made part of the Plan and, in the event of any inconsistency between the terms of the
Plan and the terms of the Schedule the latter shall control with respect to the
Transfer Contributions covered by the

24

 

	 	 	 	Schedule; provided, however, that if such inconsistency results from changes made
to the Plan to comply with applicable law, then the provisions of the Plan shall
control.
	 
	 	(c)	 	To the extent applicable, any and all elections made under a Predecessor Plan
and/or other documents, relating to the Transfer Contributions under such Predecessor
Plan (including, without limitation, domestic relations orders and loans) shall remain
in effect under this Plan until superceded by another election (or deemed election).

	3.05	 	Change in Participant Contributions. Subject to the provisions of this Article, a
Participant may elect to change the percentage of his authorized payroll deduction and/or
elect to automatically increase the percentage of his authorized payroll deduction by giving
notice to the Committee in such manner as the Committee may prescribe. Such changed
percentage and/or automatic increase election shall become effective beginning with the first
payroll period commencing after processing such notice or, if later, on a future date
specified by the Participant and acceptable to the Company. If the Committee makes a
mistake-of-fact with regard to any contribution, it shall, depending on the mistake-of-fact,
either (i) cause said contribution to be returned to the Participant without restriction or
(ii) accept additional contributions for the affected period.
	 
	3.06	 	Suspension of Participant Contributions.

	 	(a)	 	A Participant may elect to suspend his Pre-Tax, Roth or After-Tax
Contributions by notifying the Committee in advance in the manner prescribed by the
Committee. The suspension shall become effective on the first day of the first
payroll period commencing on or after processing such request.
	 
	 	(b)	 	A Participant who has suspended his Pre-Tax, Roth or After-Tax
Contributions may elect to apply to the Committee to resume his contributions in the
manner prescribed by the Committee. The resumption shall become effective as of the
first payroll period commencing on or after processing his request.
	 
	 	(c)	 	No contributions may be made by a Participant for any period of unpaid
leave of absence. A Participant who has ceased to make contributions under the Plan
in accordance with this subsection (c) shall again be eligible to resume making
contributions on the date he returns to active service as an Eligible Employee.
	 
	 	(d)	 	A Participant who has ceased to make contributions under the Plan because
he has ceased to be an Eligible Employee but, nevertheless, continues to be an
Employee shall again be eligible to resume making contributions as of any business
day on which he is an Eligible Employee, if he enrolls as provided in Section
2.02(a). A former Participant who again becomes an Eligible Employee but does not
make a deferral election as provided in Section 2.02(a) shall be deemed to have
authorized payroll deductions for Pre-Tax Contributions as of his applicable Entry
Date, as provided in Section 2.02(b).

25

 

	3.07	 	Restrictions on Pre-Tax and Roth Contributions.

	 	(a)	 	In no event may the sum of Pre-Tax and/or Roth Contributions (but excluding
any Catch-Up Contributions) made by the Company on behalf of any Participant exceed
the applicable dollar limit as provided in Code Section 402(g) in a calendar year.
In the event the dollar limit for Pre-Tax Contributions and/or Roth Contributions is
reached with respect to a Participant during a calendar year, no additional Pre-Tax
Contributions or Roth Contributions, other than Catch-Up Contributions, shall be
permitted to be made to the Plan on behalf of the Participant for the remainder of
that calendar year.
	 
	 	(b)	 	The Committee shall have the right to establish rules with respect to the
making of elections of Pre-Tax Contributions and Roth Contributions, including,
without limitation, the right to require that any such election be made at such time
prior to its becoming effective as the Committee shall determine and the right to
restrict the Participant’s right to change such election. Such Pre-Tax Contributions
and Roth Contributions are intended to be treated as contributions made by the
Company under a qualified cash or deferred arrangement, as defined in Section 401(k)
of the Code, to the extent not includible in gross income for the taxable year under
Section 402(e)(3) of the Code or to the extent includible in gross income for the
taxable year under Section 402A of the Code, but shall be treated as if they were
contributions by a Participant for the purpose of the Plan except where the Plan
expressly indicates otherwise.
	 
	 	(c)	 	Notwithstanding any other provision of the Plan, Allocable Excess
Contributions, and income allocable thereto to the end of the calendar year for which
such Allocable Excess Contributions were made, shall be distributed no later than
April 15 to Participants who claim Allocable Excess Contributions for the preceding
calendar year. “Allocable Excess Contributions” shall mean the amount of Pre-Tax
Contributions or Roth Contributions (but excluding any Catch-Up Contributions) for a
calendar year that the Participant allocates to this Plan that exceed the limits of
Code Section 402(g).
	 
	 	(d)	 	The Participant’s claim shall be in writing, shall be submitted to the
Committee no later than March 1, shall specify the Participant’s Allocable Excess
Contributions for the preceding calendar year, and shall be accompanied by the
Participant’s written statement that if such amounts are not distributed, such
Allocable Excess Contributions, when added to amounts deferred under other plans or
arrangements described in Sections 401(k), 402(h), 408(k) or 403(b) of the Code,
exceed the limit imposed on the Participant by Section 402(g) of the Code for the
year in which the deferral occurred. A Participant is deemed to notify the Committee
of any Allocable Excess Contributions that arise by taking into account only those
amounts deferred pursuant to this Plan and any other Plans of a Participating
Company.
	 
	 	(e)	 	In the event that a Participant’s Allocable Excess Contributions include
both Pre-Tax Contributions and Roth Contributions, the Plan shall distribute Pre-Tax
Contributions first.

26

 

	 	(f)	 	The Allocable Excess Contributions distributed to a Participant with
respect to a calendar year shall be adjusted for income allocable thereto to the end
of the calendar year for which such Allocable Excess Contributions were made and, if
there is a loss allocable to the Allocable Excess Contributions, shall in no event be
less than the lesser of the Participant’s Accounts attributable to Pre-Tax
Contributions or Roth Contributions under the Plan or the Participant’s Pre-Tax
Contributions or Roth Contributions for the Plan Year.

	3.08	 	Code Section 401(k) and 401(m) Nondiscrimination Tests. The Plan is subject to the
following Nondiscrimination Tests.

	 	(a)	 	Definitions. For purposes of this Section, the following
additional definitions shall be used:

	 	(i)	 	Actual Contribution Percentage or ACP means
the ratio (expressed as a percentage calculated to two decimal points) of the
sum of the After-Tax Contributions and Matching Contributions under the Plan
on behalf of the Eligible Participant for the current Plan Year to the
Eligible Participant’s “Section 414(s) compensation” (as determined under
Code Section 414(s)) for the Plan Year. For this purpose, Section 414(s)
compensation shall mean W-2 compensation as described in Treasury Regulation
Sections 1.414(s)-1(d)(2) and 1.415(c)-2(d), and shall also include all
amounts currently not included in the Employee’s gross income by reason of
Code Sections 125, 402(e)(3) and 132(f). In the case of an Employee who
begins, resumes or ceases to be eligible to make After-Tax Contributions or
to have Matching Contributions made on his behalf during a Plan Year, the
amount of Section 414(s) compensation included in the ACP test is the amount
of Section 414(s) compensation received by the Employee during the entire
Plan Year.
	 
	 	(ii)	 	Actual Deferral Percentage or ADP means the
ratio (expressed as a percentage calculated to two decimal points) of Pre-Tax
Contributions, Roth Contributions, Qualified Matching Contributions, and
Qualified Nonelective Contributions on behalf of the Eligible Participant for
the current Plan Year to the Eligible Participant’s Section 414(s)
compensation for the Plan Year. For this purpose, Section 414(s) compensation
shall mean W-2 compensation as described in Treasury Regulation Sections
1.414(s)-1(d)(2) and 1.415(c)-2(d), and shall also include all amounts
currently not included in the Employee’s gross income by reason of Code
Sections 125, 402(e)(3) and 132(f). In the case of an Employee who begins,
resumes or ceases to be eligible to elect to have Pre-Tax Contributions or
Roth Contributions made on his behalf during a Plan Year, the amount of
Section 414(s) compensation included in the ADP test is the amount of Section
414(s) compensation received by the Employee during the entire Plan Year.

27

 

	 	(iii)	 	Average Actual Contribution Percentage or
Average ACP means the average (expressed as a percentage calculated
to two decimal points) of the Actual Contribution Percentages (“ACP”) of the
Eligible Participants in a group.
	 
	 	(iv)	 	Average Actual Deferral Percentage or Average
ADP means the average (expressed as a percentage calculated to two
decimal points) of the Actual Deferral Percentages (ADPs) of the Eligible
Participants in a group.
	 
	 	(v)	 	Eligible Participant means any Eligible Employee of
the Company who is authorized under the terms of the Plan to have Pre-Tax
and/or Roth Contributions, After-Tax Contributions, Nonelective
Contributions, or Matching Contributions allocated to his Account for the
Plan Year; regardless as to whether or not any such contributions are so
allocated.
	 
	 	(vi)	 	Highly Compensated Employee means any employee who:

	 	(A)	 	was a 5 percent owner, as defined in Code
Section 416(i)(1), at any time during the current or the preceding
Plan Year; or
	 
	 	(B)	 	For the preceding Plan Year:

	 	 	 	(1)An employee who receives “Section 414(q) compensation” (as
defined in Code Section 414(q)(4)) had compensation from the
Company in excess of $80,000 (as adjusted for changes in the
cost of living pursuant to Code Section 415(d), except that the
base period shall be the calendar quarter ending September 30,
1996) during the preceding Plan Year, and
	 
	 	 	 	(2)was in the Top Paid Group of Employees for such preceding Plan
Year.

	 	 	 	A former employee shall be treated as a Highly Compensated Employee if such
employee was a Highly Compensated Employee when such employee separated from
service, or if such employee was a Highly Compensated Employee at any time
after attaining age 55.
	 
	 	 	 	The determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of employees in the top-paid
group, will be made in accordance with Section 414(q) of the Code and the
regulations, temporary regulations and other guidance thereunder issued by
the Secretary of the Treasury.
	 
	 	 	 	For purposes of this subsection, the term “compensation” means compensation
within the meaning of Section 415(c)(3) of the Code, as amended.

28

 

	 	(viii)	 	Nonhighly Compensated Employee means an employee of the Company who
is not a Highly Compensated Employee.
	 
	 	(ix)	 	Nonelective Contributions means contributions made
by the Company other than matching contributions, Pre-Tax Contributions or
Roth Contributions and that the Participant cannot otherwise elect to receive
in cash.
	 
	 	(x)	 	Qualified Matching Contributions means Matching
Contributions that are 100% vested and nonforfeitable when made and that are
subject to the same distribution limitations as Pre-Tax Contributions and
Roth Contributions. Qualified Matching Contributions which are used to meet
the requirements of the ADP test are not to be taken into account for
purposes of the ACP test.
	 
	 	(xi)	 	Qualified Nonelective Contributions means those
Nonelective Contributions that are 100% vested and nonforfeitable when made
and that are subject to the same distribution limitations as Pre-Tax
Contributions (but are not eligible for withdrawal pursuant to Section 8.04).

	 	(b)	 	Average Actual Deferral Percentage Test (“ADP”).

	 	(i)	 	Notwithstanding anything in this Plan to the contrary,
contributions made under the Plan (and any other Plan that is aggregated with
the Plan in accordance with Code Section 401(k)(3) and regulations
thereunder) by or on behalf of a Participant shall be restricted so as to
comply with one of the following ADP tests.

	 	(A)	 	1.25 Test. The Average ADP for
Eligible Participants who are Highly Compensated Employees for the Plan
Year shall not exceed the Average ADP for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year multiplied by 1.25;
or,
	 
	 	(B)	 	2 Times/2% Test. The Average ADP for
Eligible Participants who are Highly Compensated Employees for the Plan
Year shall not exceed the Average ADP for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year multiplied by 2,
provided that the Average ADP for Eligible Participants who are Highly
Compensated Employees does not exceed the Average ADP for Eligible
Participants who are Nonhighly Compensated Employees by more than two
(2) percentage points or such lesser amount as the Secretary of
Treasury shall prescribe.

	 	The Committee shall have the right to limit Pre-Tax Contributions and/or
Roth Contributions of Highly Compensated Employees as, and to the extent
that it, in its discretion, deems necessary to comply with one of the above
tests.

29

 

	 	(ii)	 	Determination of ADP Excess Contributions. The
amount of excess contributions for a Highly Compensated Employee will be
determined in the following manner: First, the ADP of the Highly Compensated
Employee with the highest dollar amount of aggregate amounts used in
determining the ADP is reduced to the extent necessary to satisfy the ADP
test or cause such ratio to equal the ADP of the Highly Compensated Employee
with the next highest ADP. Second, this process is repeated until the ADP
test is satisfied. The amount of excess contributions for a Highly
Compensated Employee is then equal to the excess of the total contributions
taken into account for the ADP test minus the product of (1) the Employee’s
ADP following the reduction as determined above and (2) the Employee’s
Section 414(s) compensation. The amount of Matching Contributions
attributable to any portion of an Employee’s excess contributions shall be
distributed, if vested, or if not vested, forfeited and held in a suspense
account and used to reduce the Employer’s future Company Contributions.
	 
	 	 	 	Income on a Participant’s ADP Excess Contributions shall be determined by
multiplying the income allocated to his Pre-Tax Contribution and Roth
Contribution Accounts for the Plan Year in which such ADP Excess
Contribution was made by a fraction, the numerator of which is the ADP
Excess Contributions for such Participant for the Plan Year, and the
denominator of which is the total Pre-Tax Contribution and Roth Contribution
Accounts balance for such Participant as of the first day of the Plan Year,
plus the Pre-Tax Contributions and/or Roth Contributions made on behalf of
the Participant during the Plan Year.
	 
	 	 	 	In the event that a Participant’s ADP Excess Contributions include both
Pre-Tax Contributions and Roth Contributions, the Plan shall distribute
Pre-Tax Contributions first.

	 	(iii)	 	Special Rules.

	 	(A)	 	The Committee may, to the extent permitted
under Treasury Regulation Section 1.401(k)-2(b)(3), recharacterize as
After-Tax Contributions for such Plan Year all or a portion of the
Pre-Tax Contributions for Participants who are Highly Compensated
Employees to the extent necessary to comply with the applicable limit
set forth in this Section 3.08(b), using the leveling method described
in Section 3.08(b)(ii) above. Recharacterized amounts shall remain
nonforfeitable and subject to the same distribution requirements as
Pre-Tax Roth Contributions. Amounts may not be recharacterized with
respect to a Highly Compensated Employee to the extent that such
amount, in combination with other After-Tax Contributions made by such
Employee, would exceed the limitations under the Plan with respect to
After-Tax Contributions. Recharacterization shall occur no later than
2-1/2 months after the

30

 

	 	 	 	last day of the Plan Year in which such excess Pre-Tax Contributions
arose.
	 
	 	 	 	Notwithstanding any distributions or recharacterizations; pursuant to
the provisions of this Section 3.08(b), ADP Excess Contributions
shall be treated as Annual Additions for purposes of Section 14.01.
	 
	 	(B)	 	The determination and treatment of the Pre-Tax
Contributions, Roth Contributions, Qualified Nonelective Contributions,
Qualified Matching Contributions and ADP of any Participant shall
satisfy such other requirements as may be prescribed by the Secretary
of the Treasury, including the provisions of Treasury Regulation
Section 1.401(k) which is incorporated herein by reference.

	 	(c)	 	Average Actual Contribution Percentage Test (“ACP”).

	 	(i)	 	Notwithstanding anything in this Plan to the contrary,
contributions made under the Plan (and any other plan that is aggregated with
the Plan in accordance with Code Section 401(m)(2) and regulations
thereunder) by or on behalf of a Participant shall be restricted to comply
with one of the following ACP tests:

	 	(A)	 	1.25 Test. The Average ACP for
Eligible Participants who are Highly Compensated Employees for the Plan
Year shall not exceed the Average ACP for Eligible Participants who are
Nonhighly Compensated Employees for the Plan year multiplied by 1.25;
or
	 
	 	(B)	 	2 Times/2% Test. The Average ACP for
Eligible Participants who are Highly Compensated Employees for the Plan
Year shall not exceed the Average ACP for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year multiplied by 2,
provided that the Average ACP for Eligible Participants who are Highly
Compensated Employees does not exceed the ACP for Eligible Participants
who are Nonhighly Compensated Employees by more than two (2) percentage
points or such lesser amount as the Secretary of the Treasury shall
prescribe.
	 
	 	 	 	The Committee shall have the right to limit After-Tax Contributions
and Matching Contributions to the extent that it, in its discretion,
deems necessary to comply with one of the above tests.

	 	(ii)	 	Determination of ACP Excess Aggregate
Contributions. The amount of excess aggregate contributions for a Highly
Compensated Employee will be determined in the following manner: First, the
ACP of the Highly Compensated Employee with the highest dollar amount of
aggregate

31

 

	 	 	 	amounts used in determining the ACP is reduced to the extent necessary to
satisfy the ACP test or cause such ACP to equal the ACP of the Highly
Compensated Employee with the next highest ACP. Second, this process is
repeated until the ACP test is satisfied. The amount of excess aggregate
contributions for a Highly Compensated Employee is then equal to the excess
of the total of After-Tax, Company and other Contributions taken into
account for the ACP test minus the product of (1) the Employee’s ACP
following the reduction as determined above and the (2) Employee’s Section
414(s) compensation. The provisions of this paragraph (ii) shall be applied
after first determining the amount of ADP Excess Contributions to be
recharacterized under Sections 3.08(b)(iii)(A) and 3.08(d)(i). The amount
of Matching Contributions attributable to any portion of an Employee’s
excess aggregate contributions shall be distributed, if vested, or if not
vested, forfeited and held in a suspense account and used to reduce the
Employer’s future Matching Contributions.
	 
	 	 	 	Income on a Participant’s ACP Excess Aggregate Contributions shall be
determined by multiplying the income allocated to his After-Tax
Contributions and Matching Contributions Accounts for the Plan Year in which
such ACP Excess Aggregate Contribution was made by a fraction, the numerator
of which is the ACP Excess Aggregate Contributions for such Participant for
the Plan Year, and the denominator of which is the total After-Tax
Contributions and Matching Contributions Accounts balance for such
Participant as of the first day of the Plan Year, plus the After-Tax
Contributions and Matching Contributions made on behalf of the Participant
during the Plan Year.

	 	(iii)	 	Special Rules.

	 	(A)	 	In determining whether the requirements of this
Section 3.08(c) are satisfied, the Committee may in its discretion, in
accordance with regulations, take into account a Participant’s Pre-Tax
and/or Roth Contributions made to the Plan pursuant to Section 3.01;
provided that such contributions are not taken into account in order to
satisfy the requirements of Section 3.08(b).
	 
	 	 	 	Notwithstanding any distributions pursuant to the provisions of this
Section 3.08(c), excess After-Tax Contributions and Matching
Contributions shall be treated as Annual Additions for purposes of
Section 14.01.
	 
	 	(B)	 	The determination and treatment of the ACP of
any Participant shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury including the provisions of
Treasury Regulation Section 1.401(m) and any successor thereto, which
is incorporated herein by reference.

32

 

	 	(d)	 	Corrections of Excess Contributions.

	 	(i)	 	If the Committee shall determine that the Pre-Tax
Contributions or Roth Contributions on behalf of any Participant or group of
Participants might result in discrimination in favor of Employees who are
Highly Compensated Employees or might cause the Plan to violate the
requirements for cash or deferred arrangement under Code Section 401(k), the
Committee shall have the right to cause such adjustments to be made in the
past, current or future Pre-Tax Contributions or Roth Contributions on behalf
of such Participants and in the manner provided in Treas. Reg. 1.401(k)-2(b)
and as will, in the Committee’s opinion, avoid such discrimination and
satisfy the requirements of Code Section 401(k) and regulations promulgated
thereunder, including, without limitation, the right to recharacterize any
Pre-Tax Contributions or Roth Contributions on behalf of a Participant as
current Compensation of the Participant to either be distributed (along with
income allocable thereto, as determined pursuant to Section 3.08(b)(ii)) to
the Participant or contributed as a After-Tax Contribution and subject to
such terms and conditions as will cause the Plan to meet the requirements for
a qualified cash or deferred arrangement under Code Section 401(k) and
regulations promulgated thereunder. The decision of the Committee in this
regard shall be final and shall not be subject to question by the Trustee,
the Company or by any Participant or group of Participants.
	 
	 	(ii)	 	If the Committee shall determine that the After-Tax
Contributions of any Participant or group of Participants might result in
discrimination in favor of Employees who are Highly Compensated Employees, or
might cause the Plan to violate the requirements of Code Section 401(m), the
Committee shall have the right to cause such adjustments to be made in past,
current or future After-Tax Contributions of such Participants and in the
manner provided in Treas. Reg. 1.401(m)-2(b) as will, in the Committee’s
opinion, avoid such discrimination and satisfy the requirements of Code
Section 401(m) and regulations promulgated thereunder, including, without
limitation, the right to distribute such contributions (along with income
allocable thereto, as determined pursuant to Section 3.08(c)(ii)) to the
Participant and subject to such terms and conditions as will cause the Plan
to meet the requirements of Code Section 401(m) and regulations promulgated
thereunder. The decision of the Committee in this regard shall be final and
shall not be subject to question by the Trustee, the Company or by any
Participant or group of Participants.

	3.09	 	Rollover Contributions. This Plan will accept as a Rollover Contribution any
contribution that meets the following criteria:

	 	(a)	 	the contribution is made by, or on behalf of, an Eligible Employee or a
Participant;

33

 

	 	(b)	 	the contributed amounts were distributed from an Eligible Retirement Plan
as an Eligible Rollover Distribution;
	 
	 	(c)	 	the contribution is made either (a) as a direct rollover from the Eligible
Retirement Plan to this Plan, or (b) by the Eligible Employee or Participant, within
60 days after the date such distribution is received by the Eligible Employee or
Participant;
	 
	 	(d)	 	if applicable, the spousal consent requirements of Code Section 417(a)(2)
were complied with; and
	 
	 	(e)	 	such Rollover Contribution meets any other conditions as determined
necessary by the Trustee or Committee to comply with Code Section 408(d)(3).
	 

	 	 	Rollover Contributions shall be held in the Eligible Employee’s or Participant’s Rollover
Contribution Account; provided that to the extent the contributed amounts consist of the
portion of a distribution not includible in the gross income of the Eligible Employee or
the Participant, the Plan shall separately account for the portion of the distribution
that is includible in gross income and the portion of the distribution that is not so
includible; further provided, however, that any amount received as a Rollover Contribution
from a designated Roth account, as defined in Section 402A of the Code (and only to the
extent the rollover is permitted under the rules of Section 402(c) of the Code) will be
allocated to a separate subaccount within the Participant’s Rollover Contribution Account.
The Eligible Employee or Participant is at all times fully vested with respect to his
Rollover Contribution Account.
	 
	3.10	 	Crediting of Contributions. Pre-Tax Contributions, Roth Contributions, After-Tax
Contributions and loan repayments are credited to the Participant’s Account as of the earliest
date on which such contributions can reasonably be segregated from the Company’s general
assets.

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ARTICLE 4

TRUST FUND AND INVESTMENT FUNDS

	4.01	 	The Trust Agreement. The Company shall enter into a trust agreement which shall
contain such provisions as shall render it impossible for any part of the corpus of the Trust
or income therefrom to be at any time used for, or diverted to, purposes other than for the
exclusive benefit of participants. Any or all rights or benefits accruing to any person under
the Plan with respect to any Company Contributions deposited under the trust agreement shall
be subject to all the terms and provisions of the Trust which shall specifically incorporate
and be subject to the provisions of the Plan.
	 
	4.02	 	The Trustee. The Trustee shall be a corporate trustee appointed by the Committee to
serve at its pleasure.
	 
	4.03	 	Investment Funds.

	 	(a)	 	General. The Trustee shall maintain separate Investment Funds
within the Trust Fund in accordance with the terms of the Plan. The RAI Pension
Investment Committee shall have full authority and responsibility to designate such
Investment Funds, provided, however, that the RAI Pension Investment Committee shall
have no authority, responsibility or control with respect to the designation or
retention of the RAI Common Stock Fund as an investment option under the Plan or the
management or disposition of the RAI Common Stock Fund, which shall be subject at all
times to the sole authority, responsibility and control of the Independent Fiduciary
in accordance with Section 10.08 of the Plan. The RAI Pension Investment Committee
reserves the right to eliminate, add or modify any funds from time to time (other
than the RAI Common Stock Fund), including changes to comply with regulations and
interpretations that may be issued from time to time by the Department of Labor.
	 
	 	(b)	 	Brokerage Account. In addition to the Investment Funds, the Plan
may provide a Brokerage Account Investment Fund alternative within the Plan through
which a Participant may establish an individual brokerage account with a financial
services provider selected by the RAI Pension Investment Committee. The RAI Pension
Investment Committee shall establish rules and procedures relating to such Brokerage
Account Investment Fund, which rules and procedures may be changed from time to time
by the RAI Pension Investment Committee.
	 
	 	(c)	 	Limitations/Rules. Notwithstanding any provision of the Plan to
the contrary, (1) the RAI Pension Investment Committee may establish rules and
procedures relating to the investments in one or more of the Investment Funds (other
than the RAI Common Stock Fund), which rules and procedures may be changed from time
to time by the RAI Pension Investment Committee and (2) the Investment Funds shall be
subject to, and governed by, all applicable legal rules and restrictions and the
rules specified by the investment fund providers in the fund prospectus(es) or other
governing documents thereof (to the extent such rules and procedures are imposed and
enforced by the investment fund provider against the
Plan or a particular Participant). Such rules, procedures and restrictions may
limit 

35

 

	 	 	 	the ability of a Participant to make transfers into or out of a particular
Investment Fund and/or may result in additional transaction fees or other costs
relating to such transfers.
	 
	 	(d)	 	RAI Common Stock Fund. RAI, acting as plan sponsor, has
established the RAI Common Stock Fund for the purpose of supporting employee
ownership of Company Stock. The RAI Common Stock Fund shall be a permanent feature
of the Plan and shall be invested exclusively in Company Stock (except for cash or
cash equivalent investments required to facilitate Participant transactions into and
out of the RAI Common Stock Fund), without regard to the diversification of assets,
the risk profile of investments in Company Stock, the amount of income provided by
Company Stock, fluctuations in the fair market value of Company Stock, or the
investment return of the RAI Common Stock Fund in comparison to any other performance
measure that might be appropriate to investment options other than the RAI Common
Stock Fund, in view of the purpose of the RAI Common Stock Fund of supporting
employee ownership. Only the Compensation Committee of the Board of Directors,
acting as plan sponsor, shall have authority to change the design of the Plan with
respect to the RAI Common Stock Fund or alter the purpose of the RAI Common Stock
Fund. The RAI Pension Investment Committee shall have no authority to direct
the Trustee with respect to the management or disposition of the RAI Common Stock
Fund, which shall be subject at all times to the sole authority, responsibility and
control of the Independent Fiduciary in accordance with the terms of Section 10.08.
Company Stock may be acquired by the Trustee through purchases on the open market,
private purchases, purchases from the Company (including purchases from the Company
of treasury shares or authorized but unissued shares), contributions in kind by the
Company, or otherwise.

	4.04	 	Temporary Investment. Pending permanent investment of the assets of any Investment
Fund, the Trustee may temporarily hold cash or make short-term investments in obligations of
the United States Government, commercial paper, an interim investment fund for tax qualified
employee benefit plans established by the Trustee unless otherwise provided by applicable
law, or other investments of a short-term nature.
	 
	4.05	 	Investment of Contributions.

	 	(a)	 	Election. All Pre-Tax Contributions, Roth Contributions, After-Tax
Contributions, Rollover Contributions and Company Contributions will be invested at the
election of the Participant in multiples of 1% in any one or combination of the
Investment Funds under the Plan. A Participant may make or change an election on any
day by giving notice to the Committee in the prescribed manner. Any such election or
change of election shall be effective as of the first payroll period after it is
processed.
	 
	 	(b)	 	Reallocation of Investments. A Participant, or the Beneficiary of a
Participant following the Participant’s death, may elect on any day to reallocate the
investment of his Accounts to any one or combination of the Investment Funds in
multiples of 1% by giving notice to the Committee in such manner as the 

36

 

	 	 	 	Committee
may prescribe. The amounts reallocated will be based upon values as of the
Valuation Date applicable to the processing of the request.
	 
	 	(c)	 	Limitations/Rules. The provisions of this Section are subject to the
rules, procedures and restrictions described in Section 4.04(c) of the Plan. In
furtherance of, but without limiting the foregoing, the Trustee, the recordkeeper, the
RAI Pension Investment Committee, the Committee or an Investment Fund provider (or
their delegate, as applicable) may decline to implement any investment election or
instruction where it deems appropriate.

	4.06	 	Voting by Participants.

	 	(a)	 	Voting of Stock Generally. Each Participant shall have the right and
shall be afforded the opportunity to instruct the Trustee how to vote that
proportionate number of the total number of shares of stock held in the RAI Common
Stock Fund which is the same proportion that the value of his interest bears to the
total value of such Fund. Instructions by Participants to the Trustee shall be in
such form and pursuant to such regulations as the Committee may prescribe. Any such
instructions shall remain in the strict confidence of the Trustee. Any shares for
which no such instructions are received by the Trustee shall be voted by the Trustee
in the same proportion as the shares for which instructions are received.
	 
	 	(b)	 	Tender or Exchange Offers. In the event of a tender or exchange offer
for any or all shares of Stock, the Committee shall notify each Participant or
Beneficiary and utilize its best efforts to timely distribute or cause to be
distributed to him such information as will be distributed to other shareholders of
such Stock in connection with any such tender or exchange offer. Each Participant or
his Beneficiary shall have the right to instruct the Trustee in writing to tender or
exchange shares of Stock credited to his Account under the Trust Fund. Unless the
Trustee determines that ERISA requires it to act otherwise, the Trustee shall not
tender or exchange any shares of Stock credited to a Participant’s Account under the
Trust Fund unless specific instructions to tender or exchange such shares have been
received. For purposes of this Section 4.06(b), “Stock” shall mean the stock held in
the RAI Common Stock Fund.

	4.07	 	Investment Managers. The RAI Pension Investment Committee may enter into a written
agreement with or direct the Trustee to enter into an agreement with one or more investment
managers (other than the Independent Fiduciary) to manage the investments of one or more of
the Investment Funds (other than the RAI Common Stock Fund). The RAI Pension Investment
Committee may remove any such investment manager or any successor investment manager, or
direct the Trustee to do so, and any such investment manager may resign. The RAI Pension
Investment Committee may, upon removal or resignation of an investment manager, provide for
the appointment of a successor investment manager.
	 
	4.08	 	Participant Responsibility For Selection of Funds. Each Participant is solely
responsible for the selection of his Investment Funds from among those available for
investment under the Plan. Neither the Trustee, the Committee, any Administration

37

 

	 	 	Committee, the RAI Pension Investment Committee, the Independent Fiduciary, the Company nor
any of the directors, officers or employees of the Company or any Participating Company are
empowered to advise a Participant as to the manner in which his Accounts should be invested.
The fact that a security is available to Participants for investment under the Plan shall
not be construed as a recommendation for the purchase of that security, nor shall the
selection by a Participant of any Investment Fund impose any liability on the Company, any
Participating Company, their directors, officers or employees, the Trustee, the Committee,
any Administration Committee, or the RAI Pension Investment Committee or the Independent
Fiduciary.
	 
	4.09	 	Changes in Investment Funds or Elections, Conversions. Notwithstanding any
provision of the Plan to the contrary:

	 	(a)	 	The Committee, in its sole and absolute discretion, may temporarily suspend, in
whole or in part, certain Plan transactions, including, without limitation, the right
to change or suspend contributions, and/or the right to receive a distribution, loan or
withdrawal from an Account in the event of any conversion, change in recordkeeper
and/or Plan merger or spinoff.
	 
	 	(b)	 	The RAI Pension Investment Committee, in its sole and absolute discretion, may
suspend, in whole or in part, temporarily or permanently, Plan transactions dealing
with investments, including without limitation, the right of a Participant to change
investment elections or reallocate Account balances in the event of any conversion,
change in recordkeeper, change in Investment Funds and/or Plan merger or spinoff;
provided, however, that the RAI Pension Investment Committee shall have no authority to
suspend any transaction with respect to the RAI Common Stock Fund, other than a
temporary suspension related to a conversion, change in recordkeeper, or similar
administrative or ministerial purpose.
	 
	 	(c)	 	The Committee, the RAI Pension Investment Committee, the Trustee, recordkeeper
or an Investment Fund provider (or their delegate, as applicable) may decline to
implement any investment election or instruction where it deems appropriate in order to
comply with the rules, procedures and restrictions described in Section 4.03(c) of the
Plan.
	 
	 	(d)	 	In the event of a change in Investment Funds and/or a Plan merger or spinoff,
the RAI Pension Investment Committee, in its sole and absolute discretion, may decide
to map investments from a Participant’s prior investment fund elections to the then
available Investment Funds under the Plan; provided, however, that no prior investment
fund elections shall be mapped to the RAI Common Stock Fund. In the event that
investments are mapped in this manner, the Participant shall be permitted to reallocate
funds among the Investment Funds (in accordance with the terms of the Plan and any
relevant rules and procedures adopted for this purpose) after the suspension period
described in Paragraph (a) of this Section (if any) is lifted.

38

 

ARTICLE 5

ACCOUNT STATEMENTS AND VALUATION

	5.01	 	Valuation of Accounts. As of each Valuation Date, the Accounts of each Participant
shall be adjusted to reflect any appreciation or depreciation in the fair market value and any
income earned by each Investment Fund in which the Participant’s Accounts have been invested
since the prior Valuation Date. Such fair market value shall be the aggregate fair market
value of all securities or other property held for each Investment Fund, plus cash and accrued
earnings, less accrued expenses and proper charges against each Investment Fund.
	 
	 	 	When determining the value of Participant Accounts, any deposits due which have not been
deposited in the Trust Fund on behalf of the Participant shall be added to his Accounts.
Similarly, adjustments of Accounts for appreciation or depreciation of an Investment Fund
shall be deemed to have been made as of the Valuation Date to which the adjustment
relates, even though they are actually made at a later date.
	 
	5.02	 	Valuation Upon Transfer, Withdrawal or Distribution. The valuation of Accounts for
purposes of an in-service withdrawal, a transfer of Accounts to another Investment Fund, or a
cash distribution shall be as described in Section 5.01.
	 
	5.03	 	Statement of Accounts. Each Participant shall be furnished at least annually a
statement setting forth the value of his Accounts.
	 
	5.04	 	Role of Trustee. The Trust Fund shall be valued by the Trustee at fair market value
as of the close of business on each Valuation Date, in accordance with the terms of the trust
agreement.

39

 

ARTICLE 6

VESTING AND FORFEITURES

	6.01	 	Vesting of Participant’s Contributions. Each Participant’s Pre-Tax Contribution
Account, After-Tax Contribution Account, Roth Contribution Account and Rollover Contribution
Account shall at all times be fully vested.
	 
	6.02	 	Vesting of Company Contributions. Subject to Section 6.06, a Participant shall
become fully vested in his Company Contribution Account upon the earlier of (i) 24 months of
Service, or (ii) the occurrence of any one of the following:

	 	(a)	 	attainment of age 65 while an Employee,
	 
	 	(b)	 	termination of employment due to disability, as determined
by qualification for benefits under the Company’s long term disability plan,
	 
	 	(c)	 	death while an Employee,
	 
	 	(d)	 	termination of employment as a result of Job Elimination,
	 
	 	(e)	 	termination of the Plan, or
	 
	 	(f)	 	complete discontinuance of Company Contributions.

	6.03	 	Forfeiture on Termination of Employment. If a Participant’s employment is terminated
prior to attainment of age 65 for reasons other than disability (as described in Section
6.02), death, or Job Elimination, the portion, if any, of his Company Contribution Account in
which he is not vested shall be forfeited upon the earlier of (i) the accrual of five
consecutive Breaks in Service, or (ii) the receipt of a cash-out and, under circumstances
where all Participant Contributions were distributed prior to Termination of Employment or
there are no Participant Contributions, a cash-out will be deemed to have been made on the
date the Termination of Employment occurred. All forfeitures pursuant to (ii) above are
subject to the provisions of Section 6.05.
	 
	6.04	 	Disposition of Forfeitures. All forfeitures shall be used to reduce Company
Contributions otherwise payable to the Plan.
	 
	6.05	 	Restoration of Forfeitures. Any amount forfeited pursuant to the provisions of
clause (ii) of Section 6.03 shall be restored to the Account of a Participant if the
Participant is re-employed before he incurs five consecutive Breaks in Service. The
restoration will occur without the requirement that the Participant repay to the Plan any
amounts previously distributed to him.
	 
	6.06	 	Special Vesting. Notwithstanding anything in this Article 6 to the contrary:

	 	(a)	 	Each Participant who is a Lane Employee or ASC Employee, and whose first
date of employment is prior to January 31, 2010, shall be fully vested in his Company
Contribution Account at all times.

40

 

	 	(b)	 	A Participant who is a Santa Fe Employee shall become fully vested in his
Company Contribution Account upon the earlier of (i) the occurrence of one of the
events set forth in Section 6.02(a), (e) or (f) or (ii) in accordance with the
following vesting schedule:

	 	 	 
	Years of Service 	 	Vested Percentage 
	Less than 1
	 	0%
	1
	 	10%
	2
	 	30%
	3
	 	60%
	4 or more
	 	100%

	 	(c)	 	Each Participant who (i) was transferred to a Participating Company in
connection with the Business Combination and was employed within the B&W Division of
such Participating Company for a limited period of time following the Closing Date
and (ii) received a Profit-Sharing Contribution for Plan Years prior to January 1,
2007, shall at all times be fully vested in such Profit Sharing Contribution.
	 
	 	(d)	 	Each Participant terminated on or after April 30, 2005, as a direct result
of the transaction contemplated by the Asset Purchase Agreement dated as of May 2,
2005 by and among R. J. Reynolds Tobacco Company, RJR Packaging, LLC and Oracle
Flexible Packaging, Inc., shall become fully vested in his Company Contribution
Account as of his Termination of Employment.
	 
	 	(e)	 	Each Participant terminated on or after June 30, 2005, as a direct result
of the transaction contemplated by the Amended and Restated Memorandum of
Understanding and Agreement dated June 30, 2005 by and between R.J. Reynolds Tobacco
Company and Allegacy Federal Credit Union, shall become fully vested in his Company
Contribution Account as of his Termination of Employment.

41

 

ARTICLE 7

DISTRIBUTIONS

	7.01	 	General.

	 	(a)	 	Upon a Participant’s Termination of Employment, the vested portion of the
Participant’s Accounts will be distributed to the Participant (or his Beneficiary in
the case of death) in accordance with this Article 7. A Participant or Beneficiary
who is eligible to receive a distribution under this Article 7 shall file an
application with the Committee (or its delegate), furnishing such information as may
reasonably be required, including satisfactory proof of age and any authority in
writing (or otherwise) that may be requested authorizing the Committee to obtain
pertinent information, certificates, transcripts and/or other records from any public
office.
	 
	 	(b)	 	The Committee (or its delegate) shall provide the Participant or
Beneficiary with the application form (which shall contain a general description of
the optional forms of benefit available under the Plan) and such other information
required to be provided under Section 402(f) of the Code no less than 30 days and no
more than 90 days before a distribution is to be made. Notwithstanding the
foregoing, such distribution or withdrawal may commence less than 30 days after such
form and information are provided to the Participant or Beneficiary, provided that:
(i) the form clearly states that the recipient has the right to a period of at least
30 days after receiving the information to consider whether or not to elect a
distribution, and (ii) the recipient, after receiving the information, affirmatively
elects the distribution.
	 
	 	(c)	 	Except as provided in the next sentence, all distributions from the Plan
shall be paid in cash. A Participant or his Beneficiary may elect that the
distribution from the RAI Common Stock Fund be in the form of cash or shares of stock
held under such Fund except that any fractional portion of a share shall be paid in
cash. If a Participant does not make an election in connection with the
distribution, the distribution from the RAI Common Stock Fund shall be paid in cash.
	 
	 	(d)	 	The Committee has prescribed forms/procedures providing notice to it in
order for a distribution to be made under the Plan. In the event a Participant or
Beneficiary does not comply with such procedures before the date a distribution must
commence under Section 7.07 of the Plan, distribution from such Participant or
Beneficiary’s Accounts may, at the option of the Committee (taking into account
Section 12.12), be mailed to the Address of Record as provided in Section 12.09.
	 
	 	(e)	(i)	 The provisions of Article 4 shall continue to apply to the Accounts of
inactive Participants, including Participants who have elected a partial distribution
as provided in Section 7.04(a)(iii) or the installment option as provided in Section
7.04(a)(ii).

42

 

	 	(ii)	 	A Participant is not entitled to any interest, dividends or any
other form of investment proceeds on his Accounts for the period between the
Valuation Date on which his Account is valued for payment and the date payment
is made.

	7.02	 	Distribution on Termination of Employment. A Participant who has a Termination of
Employment for any reason other than death shall be entitled to receive the value of his
vested Accounts in the Trust Fund. Distribution shall be made as soon as administratively
feasible following the Trustee’s receipt of the Participant’s application for distribution.
If the Committee has not received an application for distribution by the time specified in
Section 7.07, a distribution shall automatically be made at such time.
	 
	7.03	 	Distribution on Death.

	 	(a)	 	If a Participant dies (i) while employed by an Affiliated Company, or (ii)
after Termination of Employment but before lump sum or installment payment of his
Accounts commence, the value of his vested Accounts in the Trust Fund shall be paid
or commence to be paid to the Participant’s Beneficiary under one of the methods
described in Section 7.04, as elected by the Beneficiary. If the Committee has not
received an application for distribution by the time specified in Section 7.07 by
which post-death distribution must commence, the distribution shall automatically be
made at such time.
	 
	 	(b)	 	If a Participant dies after the commencement of installment payment of his
Accounts to him but before his Accounts have been completely distributed, the
undistributed portion of his Accounts shall continue to be paid to his Beneficiary on
the same schedule as originally elected by the Participant; provided, however, that
the Beneficiary may elect, on an application acceptable to and filed with the
Committee, to receive such undistributed portion of the Accounts in the form of a
lump sum payment.
	 
	 	(c)	 	Notwithstanding the preceding Subsections of this Section 7.03, if a
Beneficiary of a deceased Participant dies before the payment of all of the
Participant’s Accounts to him, such remaining portion of the Accounts shall be paid
to the Beneficiary’s estate in the form of a lump sum payment as soon as practicable.
	 
	 	(d)	 	The Committee may require and rely upon such proof of death and such
evidence of the right of any Beneficiary to receive the undistributed value of the
Accounts of a deceased Participant as the Committee may deem proper, and its
determination of death and of the right of such Beneficiary or other person to
receive payments shall be conclusive.

	7.04	 	Form of Payment.

	 	(a)	 	Optional Forms of Payment. Benefits shall be paid to a Participant
or Beneficiary under one of the following options, as elected by the Participant or
Beneficiary in the application filed pursuant to Section 7.01(a):

	 	(i)	 	such amount shall be paid in a lump sum;

43

 

	 	(ii)	 	such amount shall be paid in installments, as provided in
Sections 7.04(b) and (c); or
	 
	 	(iii)	 	such amount shall be paid as partial distributions, as
provided in Section 7.04(d).

	 	 	 	In no event shall any payment to a Participant or Beneficiary be made in the form
of an annuity. If the Participant or Beneficiary has not filed the application
for distribution by the time distributions are required to commence under Section
7.07, then distribution shall be made in the form of a lump sum at the time
specified in Section 7.07.

	 	(b)	 	Installment Option. A Participant may elect to receive the cash
portion of his distribution by payment in monthly installments over a period not to
exceed the Participant’s life expectancy as follows: the amount of each installment
to be paid to a Participant shall be based on the value of his Accounts as of the
last Valuation Date of the month coinciding with or next following the date of
receipt of the Participant’s election and monthly thereafter, and shall be determined
by multiplying each such value by a fraction, the numerator of which shall be one and
the denominator of which shall be the number of unpaid installments. Life expectancy
shall be computed by the use of the return multiple contained in Treasury Regulation
Section 1.72-9. Installment distributions shall also be available to the Beneficiary
of a Participant who, at the time of his death, has not begun to receive installment
distributions under the Plan. Such installment distributions to the Beneficiary
shall be calculated in the same manner but the maximum period shall be based on the
Beneficiary’s life expectancy. In the event the Committee determines that any
installment payment(s) represents an amount less than the minimum required payment
pursuant to Code Section 401(a)(9), it shall correct the payment(s). Notwithstanding
the foregoing, (i) any Participant who has commenced receiving payment of his Account
under the FFG Plan in installments as of November 1, 2005 shall continue to receive
such installment payments on a monthly, quarterly or annual basis as previously
elected under the terms of the FFG Plan and (ii) any Participant who has commenced
receiving payment of his Account under the Conwood Plan in installments as of the
Effective Date shall continue to receive such installment payments on an annual basis
as previously elected under the terms of the Conwood Plan.
	 
	 	(c)	 	Lump Sum Commutation. A Participant or Beneficiary who is
receiving the installment form of payment may elect, as of any future Valuation Date,
to receive the remaining value of the Participant’s Accounts in a single lump sum
payment. The lump sum payment shall be made as of the next practicable monthly
payment date.
	 
	 	(d)	 	Partial Distribution. A Participant or Beneficiary who has not
elected the installment payment option may elect to receive one or more partial
distributions of the value of his vested Accounts; provided, that (i) the minimum
amount of any partial distribution shall be $100 or, if less, the entire vested
Account balance of the Accounts, and (ii) no more than one partial distribution

44

 

	 	 	 	may be made by a Participant or Beneficiary during any three-month period. Such
three-month limitation shall be waived for a Participant if the partial
distribution qualifies as a hardship withdrawal pursuant to Section 8.04. Partial
distributions will be taken pro-rata from the Accounts investment funds. Shares
of Company stock are not available for partial distributions. A Participant may
specifically designate whether a partial distribution to be made from Pre-Tax
Contributions or Roth Contributions. In the event the Committee determines that
any partial payment(s) represents an amount less than the minimum required payment
pursuant to Code Section 401(a)(9), it shall correct the payment(s).
	 
	 	(e)	 	Reemployment of Terminated Participant. If a Participant who has a
Termination of Employment should again become an Employee before completion of the
distribution of his Accounts, such distribution shall cease until the Participant
again has a Termination of Employment.
	 
	 	(f)	 	Small Lump Sum Cash-Outs. The foregoing notwithstanding, if the
value of the Participant’s vested Account does not exceed $1,000, a distribution
shall be made to the Participant as soon as administratively feasible after a written
application for distribution has been received by the Committee, valued as soon as
administratively feasible after receipt of such application; provided; however, that
if the Committee does not receive a written application for distribution within 90
days after the Participant’s Termination of Employment, the Account shall be valued
and distribution shall be made as soon as administratively feasible after the
expiration of such 90-day period. For purposes of determining whether the value of a
Participant’s vested Account does not exceed $1,000, the value of such Participant’s
Rollover Contribution Account shall be taken into account.
	 
	 	(g)	 	Direct Rollover.

	 	(i)	 	Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a distributee’s election under this Article, a
distributee may elect, at the time and in the manner prescribed by the
Committee, to have any portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan specified by the distributee in a
direct rollover. For purposes of this Section 7.04(g), a distributee includes
an Employee or former Employee, or the Employee’s or former Employee’s
Surviving Spouse; in addition, the employee’s or former employee’s spouse or
former spouse who is the alternate payee under a qualified domestic relations
order, as defined in Section 414(p) of the Code, are distributees with regard
to the interest of the spouse or former spouse. Effective for Plan Years
beginning on or after January 1, 2010, a distributee shall also include the
Beneficiary of an Employee or former Employee, provided such Beneficiary is a
designated beneficiary within the meaning of Section 401(a)(9)(E) of the Code.
	 
	 	(ii)	 	Notwithstanding the foregoing, an Eligible Rollover
Distribution from a Roth Contribution Account will only be made to another
designated Roth

45

 

	 	 	 	account (as defined in Section 402A of the Code) under an applicable
retirement plan described in Section 402A(e)(1) of the Code or to a Roth
IRA described in Section 408A of the Code, and only to the extent the
rollover is permitted under the rules of Section 402(c) of the Code.

	7.05	 	Distributions Pursuant to a QDRO. If a qualified domestic relations order (as
described in Section 12.05) so provides, the portion of a Participant’s vested interest
payable to the alternate payee(s) may be distributed to the alternate payee(s) at the time
specified in such order, regardless of whether the Participant is entitled to a distribution
from the Plan at such time. The portion of the vested interest so payable shall be valued as
of the Valuation Date specified in such order. In no event shall the recognition of an
alternate payee’s rights in accordance with this Section 7.05 be deemed to include the right
to make a withdrawal pursuant to the provisions of Article 8 or to receive any benefits in the
form of a partial distribution pursuant to Section 7.04(a)(iii).
	 
	7.06	 	Latest Time of Distribution. Distributions under the Plan shall occur or begin as
provided in the preceding Sections of this Article, but in no event later than 60 days after
the close of the Plan Year in which the latest of the following events occur: (a) the date on
which the Participant attains age 65, (b) the 10th anniversary of the year in which
the Participant commenced participation in the Plan, or (c) the Participant’s Termination of
Employment, provided that, except as provided in Section 7.07 or Section 7.04(f), no
distribution shall be required to occur or begin until the Participant files his application
pursuant to Section 7.01.
	 
	7.07	 	Code Section 401(a)(9) Requirements.

	 	(a)	 	Definitions. For the purposes of this Section, the following
terms, when used with initial capital letters, shall have the following respective
meanings:

	 	(i)	 	Designated Beneficiary: The person who is designated as the
Beneficiary as defined in Section 1.09 of the Plan and is the designated
beneficiary under Section 401(a)(9) of the Code and Treasury Regulation
Section 1.401(a)(9)-4, Q&A-1.
	 
	 	(ii)	 	Distribution Calendar Year: A calendar year for which a
minimum distribution is required. For distributions beginning before the
Participant’s death, the first Distribution Calendar Year is the calendar year
immediately preceding the calendar year which contains the Participant’s
Required Beginning Date. For distributions beginning after the Participant’s
death, the first Distribution Calendar Year is the calendar year in which
distributions are required to begin under Section 7.07(c)(ii) of the Plan.
The required minimum distribution for the Participant’s first Distribution
Calendar Year will be made on or before the Participant’s Required Beginning
Date. The required minimum distribution for other Distribution Calendar
Years, including the required minimum distribution for the Distribution
Calendar Year in which the Participant’s Required Beginning Date occurs, will
be made on or before December 31 of that Distribution Calendar Year.

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	 	(iii)	 	Life Expectancy: Life expectancy as computed by use of the
Single Life Table in Treasury Regulation Section 1.401(a)(9)-9.
	 
	 	(iv)	 	Participant’s Account Balance: The Account balance as of the
last Valuation Date in the calendar year immediately preceding the
distribution calendar year (the “Valuation Calendar Year”) increased by the
amount of any contributions made and allocated or forfeitures allocated to the
Account balance as of dates in the valuation calendar year after the Valuation
Date and decreased by distributions made in the Valuation Calendar Year after
the Valuation Date. The Account balance for the Valuation Calendar Year
includes any amounts rolled over or transferred to the Plan either in the
Valuation Calendar Year or in the Distribution Calendar Year if distributed or
transferred in the Valuation Calendar Year.
	 
	 	(v)	 	Required Beginning Date: The applicable date specified in
Subsection (c) below.

	 	(b)	 	General Rules. Notwithstanding any provision of the Plan to the
contrary, all distributions required under this Section will be determined and made
in accordance with the Treasury Regulations under Section 401(a)(9) of the Code,
provided that the only permissible distribution options are those specified in
Article 7 and minimum monthly distributions calculated in accordance with the
following rules.
	 
	 	(c)	 	Time of Distribution.

	 	(i)	 	The Participant’s entire vested interest will be distributed,
or begin to be distributed, to the Participant no later than the Participant’s
Required Beginning Date. Except as described in (ii) below, the Required
Beginning Date of a Participant who is a 5% owner (as defined in Section 416
of the Code) shall be the April 1 of the calendar year following the calendar
year he attains age 70 1/2 and the Required Beginning Date of any other
Participant shall be the April 1 of the calendar year following the later of
(i) the calendar year he terminates employment or (ii) the calendar year he
attains age 70 1/2.
	 
	 	(ii)	 	If the Participant dies before distributions begin, the
Participant’s entire vested interest will be distributed, or begin to be
distributed, no later than as follows:

	 	(A)	 	If the Participant’s Surviving Spouse is the
Participant’s sole Designated Beneficiary, then, unless the election
described in (iv) below is made, distributions to the Surviving Spouse
will begin by December 31 of the calendar year immediately following
the calendar year in which the Participant died, or by December 31 of
the calendar year in which the Participant would have attained age 70
1/2, if later.

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	 	(B)	 	If the Participant’s Surviving Spouse is not
the Participant’s sole Designated Beneficiary, then, unless the
election described in (iv) below is made, distributions to the
Designated Beneficiary will begin by December 31 of the calendar year
immediately following the calendar year in which the Participant died.
	 
	 	(C)	 	If there is no Designated Beneficiary as of
September 30 of the year following the year of the Participant’s death,
the Participant’s entire vested interest will be distributed by
December 31 of the calendar year containing the fifth anniversary of
the Participant’s death.
	 
	 	(D)	 	If the Participant’s Surviving Spouse is the
Participant’s sole Designated Beneficiary and the Surviving Spouse dies
after the Participant but before distributions to the Surviving Spouse
begin, this Subsection (ii), other than Subsection (ii)(A), will apply
as if the Surviving Spouse were the Participant.

	 	(iii)	 	For purposes of this Section, unless Subsection (ii)(D)
applies, distributions are considered to begin on the Participant’s Required
Beginning Date. If Subsection (ii)(D) applies, distributions are considered
to begin on the date distributions are required to begin to the Surviving
Spouse under Subsection (ii)(A).
	 
	 	(iv)	 	Notwithstanding the foregoing, if a Participant dies before
distributions begin and there is a Designated Beneficiary, distribution to the
Designated Beneficiary is not required to begin by the Required Beginning Date
specified above if the Participant or the Beneficiary elects, on an individual
basis, that the Participant’s entire vested interest will be distributed to
the Designated Beneficiary by December 31 of the calendar year containing the
fifth anniversary of the Participant’s death; provided, however, that if the
Participant’s Surviving Spouse is the Participant’s sole Designated
Beneficiary and the Surviving Spouse dies after the Participant but before
distributions to either the Participant of the Surviving Spouse begin, this
election will apply as if the Surviving Spouse were the Participant. The
election provided in this Subsection (c)(iv) must be made no later than the
earlier of September 30 of the calendar year in which distribution would be
required to begin, or by September 30 of the calendar year which contains the
fifth anniversary of the Participant’s (or, if applicable, Surviving Spouse’s)
death.

	 	(d)	 	Required Minimum Distributions During Participant’s Lifetime.

	 	(i)	 	During the Participant’s lifetime, the minimum amount that
will be distributed for each Distribution Calendar Year is the lesser of:

	 	(A)	 	the quotient obtained by dividing the
Participant’s Account balance by the distribution period in the Uniform
Lifetime Table set forth in Treasury Regulation Section 1.401(a)(9)-9,
using the

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	 	 	 	Participant’s age as of the Participant’s birthday in the
Distribution Calendar Year; or
	 
	 	(B)	 	if the Participant’s sole Designated
Beneficiary for the Distribution Calendar Year is the Participant’s
spouse, the quotient obtained by dividing the Participant’s Account
balance by the number in the Joint and Last Survivor Table set forth in
Treasury Regulation Section 1.401(a)(9)-9, using the Participant’s and
spouse’s attained ages as of the Participant’s and spouse’s birthdays
in the Distribution Calendar Year.

	 	(ii)	 	Required minimum distributions will be determined under this
Subsection (d) beginning with the first Distribution Calendar Year and up to
and including the Distribution Calendar Year that includes the Participant’s
date of death.

	 	(e)	 	Required Minimum Distributions After Participant’s Death.

	 	(i)	 	Death on or after date distributions begin:

	 	(A)	 	If the Participant dies on or after the date
distributions begin and there is a Designated Beneficiary, the minimum
amount that will be distributed for each Distribution Calendar Year
after the year of the Participant’s death is the quotient obtained by
dividing the Participant’s Account balance by the longer of the
remaining Life Expectancy of the Participant or the remaining Life
Expectancy of the Participant’s Designated Beneficiary, determined as
follows:

	 	1)	 	The Participant’s remaining Life
Expectancy is calculated using the age of the Participant in the
year of death, reduced by one for each subsequent year.
	 
	 	2)	 	If the Participant’s Surviving
Spouse is the Participant’s sole Designated Beneficiary, the
remaining Life Expectancy of the Surviving Spouse is calculated
for each Distribution Calendar Year after the year of the
Participant’s death using the Surviving Spouse’s age as of the
spouse’s birthday in that year. For Distribution Calendar Years
after the year of the Surviving Spouse’s death, the remaining
Life Expectancy of the Surviving Spouse is calculated using the
age of the Surviving Spouse as of the spouse’s birthday in the
calendar year of the spouse’s death, reduced by one for each
subsequent calendar year.
	 
	 	3)	 	If the Participant’s Surviving
Spouse is not the Participant’s sole Designated Beneficiary, the
Designated Beneficiary’s remaining Life Expectancy is calculated
using the age of the Beneficiary in the year following the year
of the Participant’s death, reduced by one for each subsequent
year.

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	 	(B)	 	If the Participant dies on or after the date
distributions begin and there is no Designated Beneficiary as of
September 30 of the year after the year of the Participant’s death, the
minimum amount that will be distributed for each Distribution Calendar
Year after the year of the Participant’s death is the quotient obtained
by dividing the Participant’s Account balance by the Participant’s
remaining Life Expectancy calculated using the age of the Participant
in the year of death, reduced by one for each subsequent year.

	 	(ii)	 	Death before date distributions begin:

	 	(A)	 	If the Participant dies before the date
distributions begin and there is a Designated Beneficiary, then, unless
the election described in Subsection (c)(iv) above is made, the minimum
amount that will be distributed for each Distribution Calendar Year
after the year of the Participant’s death is the quotient obtained by
dividing the Participant’s Account balance by the remaining Life
Expectancy of the Participant’s Designated Beneficiary, determined as
provided in Subsection (d)(i) above.
	 
	 	(B)	 	If the Participant dies before the date
distributions begin and there is no Designated Beneficiary as of
September 30 of the year following the year of the Participant’s death,
distribution of the Participant’s entire vested interest will be
completed by December 31 of the calendar year containing the fifth
anniversary of the Participant’s death.
	 
	 	(C)	 	If the Participant dies before the date
distributions begin, the Participant’s Surviving Spouse is the
Participant’s sole Designated Beneficiary, and the Surviving Spouse
dies before distributions are required to begin to the Surviving Spouse
under Subsection (c)(ii)(A), this Section will apply as if the
Surviving Spouse were the Participant.

	7.08	 	Whereabouts of Participants and Beneficiaries. If the Committee is unable after
diligent attempts to locate a Participant or Beneficiary who is entitled to a benefit under
the Plan, the benefit otherwise payable to such Participant or Beneficiary shall be forfeited
as provided in Section 6.04. If a benefit is forfeited because the Committee determines that
the Participant or Beneficiary cannot be found, such benefit shall be reinstated by the
Participating Company if a claim is filed by the Participant or Beneficiary with the Committee
and the Committee confirms the claim to the Participating Company. Notwithstanding the above,
forfeiture of a Participant’s or Beneficiary’s benefit may occur only if a distribution could
be made to the Participant or Beneficiary without obtaining the Participant’s or Beneficiary’s
consent in accordance with the requirements of Treasury Regulation Section 1.411(a)-11.

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ARTICLE 8

WITHDRAWAL PRIOR TO TERMINATION OF EMPLOYMENT

AND SPECIAL PRE-TAX CONTRIBUTION RULES

	8.01	 	Election to Withdraw from Accounts. As of any Valuation Date and subject to Sections
8.02, 8.03 and 8.04, a Participant may elect to withdraw, in cash only and in a stated amount,
all or a portion of the value of vested amounts in his Accounts from which withdrawals are
allowed.
	 
	8.02	 	Withdrawal of After-Tax and Company Contributions. Withdrawals as described in
Section 8.01 and subject to the rules of Section 8.03 shall be applied by the Committee
against a Participant’s Accounts in the order and classification as follows:
	 
	 	 	Tax-Free Withdrawal: If applicable, the amount in his After-Tax Contribution
Account that may be withdrawn on a tax-free basis.
	 
	 	 	Regular Withdrawal: The remaining value in his After-Tax Contribution Account,
the value in his Rollover Contribution Account and the vested value in his Company
Contribution Account.
	 
	 	 	Participants with less than 60 months of Plan participation (including participation in
the FFG Plan prior to November 1, 2005 and participation in the Lane Plan, Conwood Plan or
Santa Fe Plan prior to the Effective Date) may not withdraw Company Contributions that
have been in the Plan (including the FFG Plan prior to November 1, 2005 and the Lane Plan,
Conwood Plan or Santa Fe Plan prior to the Effective Date) for less than 24 months.
	 
	 	 	Hardship Withdrawal: A Participant who qualifies for a financial hardship as
defined in Section 8.04 may withdraw up to 100% of the amount available under a Regular
Withdrawal, the remaining vested value of his Company Contribution Account (other than
Qualified Matching Contributions and Qualified Nonelective Contributions), and any dollar
amount from his Pre-Tax and Roth Contribution Accounts, excluding earnings credited after
December 31, 1988 to Pre-Tax Contributions and Roth Contributions.
	 
	 	 	Withdrawal Upon Attainment of Age 59-1/2 or Disability: A Participant who has
attained age 59-1/2 or is totally disabled, as defined in the Code, may withdraw the
maximum available under a Regular Withdrawal plus any dollar amount up to the remaining
vested value of his After-Tax Contribution Account, Company Contributions Account and his
Pre-Tax and Roth Contribution Accounts.
	 
	8.03	 	Rules Applicable to Withdrawals Prior to Termination of Employment. The following
rules shall, except as noted in Section 8.04, apply to withdrawals under this Article 8:

	 	(a)	 	Withdrawals may only be made by prior notice to the Committee in the manner
prescribed by the Committee.

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	 	(b)	 	Excluding Hardship withdrawals, no more than one withdrawal may be made in
any six-month period.
	 
	 	(c)	 	Excluding Hardship withdrawals, in no event may a Participant make a
withdrawal in an amount less than $100, or the maximum amount available for
withdrawal as a Tax-Free Withdrawal or a Regular Withdrawal, if less. Any Hardship
withdrawal for a Santa Fe Employee shall be at least $500.
	 
	 	(d)	 	In no event may a Participant elect an order of withdrawal other than set
forth in Section 8.02, nor may a Participant select the classification or Investment
Fund from which his stated amount of withdrawal will be withdrawn; provided,
however, that a Participant who elects to receive an Age 59-1/2 or Disability
Withdrawal may specifically designate whether such withdrawal is to be made from
Pre-Tax Contributions or Roth Contributions.
	 
	 	(e)	 	Payments of withdrawal amounts will be made as soon as practicable after a
Participant’s election to withdraw.
	 
	 	(f)	 	Amounts received from any Prior, Affiliated or Predecessor Plan in a
trust-to-trust transfer which were subject to Code Section 401(k) under such Plan
shall be subject to Code Section 401(k) requirements under this Plan.
	 
	 	(g)	 	Notwithstanding any provision of this Section 8.03 to the contrary, a
Participant who (i) has vested amounts held in the Schwab Personal Choice Retirement
Account® (PCRA) previously available under the Plan that are not able to
be transferred in-kind and invested in the Brokerage Account Investment Fund
currently offered under the Plan and (ii) is otherwise eligible to receive an
in-service withdrawal of vested amounts held in his Accounts under the provisions of
this Article 8, may elect to receive an in-kind withdrawal of such amounts directly
from the PCRA.

	8.04	 	Hardship Withdrawals.

	 	(a)	 	General. A Participant shall qualify for a financial hardship for
purposes of Section 8.02 of the Plan if the Participant has an immediate and heavy
financial need as described in Section 8.04(b), and the Hardship withdrawal is
necessary to satisfy that financial need, as described in Section 8.04(c).
	 
	 	(b)	 	Immediate and Heavy Financial Need. A Participant shall be
considered to have an immediate and heavy financial need for the following expenses:

	 	(i)	 	Expenses for (or necessary to obtain) medical care that
would be deductible under Code Section 213(d) (determined without regard to
whether the expenses exceed 7.5% of adjusted gross income) previously
incurred by the Participant, the Participant’s spouse, any dependents (as
defined in Code Section 152, and without regard to Code Section 152(b)(1),
(b)(2) or (d)(1)(B)) of the Participant or any other Beneficiary

52

 

	 	 	 	who is a “primary beneficiary” under the Plan as defined in Internal
Revenue Service regulations or other published guidance;
	 
	 	(ii)	 	Costs directly related to the purchase (excluding mortgage
payments) of a principal residence for the Participant;
	 
	 	(iii)	 	Payment of tuition and related educational fees for the
next twelve months of post-secondary education for the Participant or the
Participant’s spouse, children, dependents (as defined in Code Section 152,
and without regard to Code Section 152(b)(1), (b)(2) or (d)(1)(B)) or any
other Beneficiary who is a “primary beneficiary” under the Plan as defined in
Internal Revenue Service regulations or other published guidance;
	 
	 	(iv)	 	Payments necessary to prevent the eviction of the
Participant from his principal residence or foreclosure on the mortgage on
the Participant’s principal residence;
	 
	 	(v)	 	Payments for burial or funeral expenses for the
Participant’s deceased parent, spouse, children, dependents (as defined in
Code Section 152, and without regard to Code Section 152(b)(1), (b)(2) or
(d)(1)(B)) or any other Beneficiary who is a “primary beneficiary” under the
Plan as defined in Internal Revenue Service regulations or other published
guidance;
	 
	 	(vi)	 	Expenses for the repair of damage to the Participant’s
principal residence that would qualify for the casualty deduction under Code
Section 165 (determined without regard to whether the loss exceeds 10% of
adjusted gross income); or
	 
	 	(vii)	 	Any other financial need which the Commissioner of
Internal Revenue, through the publication of revenue rulings, notices and
other documents of general applicability, may from time to time designate as
a deemed immediate and heavy financial need.

	 	 	 	Notwithstanding anything in this Section 8.04(b) to the contrary, the Committee
may, under rules established by it which are uniformly applicable to all similarly
situated Participants who are RAI Employees, determine other circumstances where a
Participant who is an RAI Employee has a heavy financial need and the decision of
the Committee as to whether such Participant satisfies the immediate and heavy
financial need requirement shall be conclusive, unless otherwise governed by law
or regulation.
	 
	 	(c)	 	Necessary to Satisfy Financial Need. A Hardship withdrawal will be
considered to be necessary to satisfy the financial need if it satisfies the
requirements of Section 8.04(c)(i) for Participants who are RAI Employees or the
requirements of Section 8.04(c)(ii) for Participants who are Lane, ASC or Santa Fe
Employees.

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	 	(i)	 	Any Hardship withdrawal pursuant to Section 8.02 to a
Participant who is an RAI Employee cannot exceed the sum of (A) the amount
required to meet such need and (B) any amounts necessary to pay any federal,
state or local income taxes or penalties reasonably anticipated as a result
of the distribution. No withdrawal shall be permitted unless the hardship
cannot reasonably be relieved from other withdrawals or distributions
(including distributions of ESOP dividends under Code Section 404(k) but not
hardship distributions) and nontaxable loans available under this Plan or any
other Affiliated Plan (including, without limitation, any qualified and
non-qualified deferred compensation plan and any cash or deferred arrangement
that is part of a cafeteria plan (other than mandatory employee contributions
under a welfare plan or pension plan)), through reimbursement or compensation
by insurance or otherwise, by liquidation of assets to the extent such
liquidation would not itself cause an immediate and heavy financial need, by
cessation of all Pre-Tax, Roth or After-Tax Contributions under the Plan, or
by borrowing from commercial sources on reasonable commercial terms.
	 
	 	(ii)	 	Any Hardship withdrawal pursuant to Section 8.02 to a
Participant who is a Lane, ASC or Santa Fe Employee cannot exceed the sum of
(A) the amount required to meet such need and (B) any amounts necessary to
pay any federal, state or local income taxes or penalties reasonably
anticipated as a result of the distribution. In addition, any Hardship
withdrawal pursuant to Section 8.02 to a Participant who is a Lane, ASC or
Santa Fe Employee must satisfy the following requirements:

	 	(1)	 	The Participant who is a Lane, ASC or Santa
Fe Employee must have obtained all other currently available
distributions (including distribution of ESOP dividends under Code
Section 404(k), but not hardship distributions) and nontaxable loans
available under this Plan or any other Affiliated Plan (including,
without limitation, any qualified and non-qualified deferred
compensation plan and any cash or deferred arrangement that is part of
a cafeteria plan (other than mandatory employee contributions under a
welfare plan or pension plan)); and
	 
	 	(2)	 	The Participant who is a Lane, ASC or Santa
Fe Employee is prohibited from making Pre-Tax, After-Tax or Roth
Contributions to the Plan (or any comparable contributions to any
other plan maintained by the Company, including, without limitation,
any non-qualified deferred compensation plan, any cash or deferred
arrangement that is part of a cafeteria plan (other than mandatory
employee contributions under a welfare plan or pension plan) and any
stock option, stock purchase or similar plan) for a period of six (6)
months after the Participant receives the Hardship withdrawal pursuant
to Section 8.02.

54

 

	8.05	 	Restrictions on Pre-Tax and/or Roth Contribution Distributions. Notwithstanding any
other provision in this Plan to the contrary, a Participant’s Pre-Tax and/or Roth
Contributions may not be distributed earlier than upon one of the following events:

	 	(a)	 	The Participant’s death, disability (as defined in the Code) or Termination
of Employment;
	 
	 	(b)	 	The termination of the Plan without the establishment of a successor plan;
	 
	 	(c)	 	A Participant’s attainment of age 591/2;
	 
	 	(d)	 	A Participant’s financial hardship, restricted as set forth in Section
8.04;
	 
	 	(e)	 	The sale or other disposition of the Company or any Affiliated Company to
an unrelated corporation, which does not maintain the Plan, of substantially all of
the assets used in a trade or business, but only with respect to Employees who
continue with the acquiring corporation; or
	 
	 	(f)	 	The sale or disposition by the Company or any Affiliated Company of its
interest in a subsidiary to an unrelated entity which does not maintain the Plan, but
only with respect to Employees who continue employment with the subsidiary.

	 	 	This Section is intended to comply with the earliest distribution requirements of Treasury
Regulation Section 1.401(k)-1(d) and is not intended to add any forms of distribution not
otherwise allowed under the Plan nor to restrict any distribution otherwise permitted by
law.
	 
	8.06	 	Dividend Payout Option. Notwithstanding any other provision of the Plan, cash
dividends paid on shares of Company Stock in which a Participant has a vested interest that
are held in the RAI Common Stock Fund as of the record date of such dividend shall be, at the
election of the Participant or his Beneficiary, either:

	 	(a)	 	paid to the Plan and held in such cash equivalent investments as the Committee
shall designate until distribution in cash to the Participant or Beneficiary during the
fourth quarter of the Plan Year in which the dividends are paid to the Plan; or
	 
	 	(b)	 	paid to the Plan and reinvested in the RAI Common Stock Fund as soon as
practicable after receipt of such dividends.

	 	 	In the absence of an effective election under this Section 8.06, quarterly dividends on
Company Stock shall be paid to the Plan and reinvested in the RAI Common Stock Fund. The
Committee shall determine the scope, manner and timing of the elections described herein in
any manner that is consistent with Section 404(k) of the Code and applicable provisions of
the Plan.

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ARTICLE 9

LOANS

	9.01	 	Loan Provisions. An active Participant may make application to the Committee to
borrow from the Trust Fund and the Committee may permit such a loan upon the conditions
hereinafter specified and any other rules promulgated by the Committee.

	 	(a)	 	Loans shall be made available to all eligible Participants on a reasonably
equivalent basis and (i) shall not be made available to highly compensated employees
(as defined in Section 414(q) of the Code) in an amount greater than the amount made
available to other Participants, and (ii) shall not be permitted for purchasing
securities or in any way financing a securities investment.
	 
	 	(b)	 	The maximum amount of a loan to a Participant shall not exceed the least of
(i) 50% of the vested interest in his Account, (ii) $50,000, reduced by the highest
outstanding loan balance during the preceding twelve months or (iii) solely with
respect to any Participants who are Lane Employees or ASC Employees, such amount as
will result in a maximum monthly repayment of three hundred fifty dollars ($350.00),
subject to Code Section 72(p). The minimum loan amount is $1,000. Notwithstanding
the foregoing, no amount of a Participant’s Account shall be considered available for
a loan if it is subject to a qualified domestic relations order as such term is
defined under Section 414(p)(1)(A) of the Code.
	 
	 	(c)	 	A note (with a maturity of not more than 60 months) shall be signed by the
Participant with adequate security (including up to one half of the Participant’s
vested interest in his Account) designated as collateral for guaranteeing the note.
The Committee shall have complete discretion in determining lien priorities among the
various investments in the Account. The Committee shall determine the interest rate
for each loan, consistent with the rate being charged by other lending institutions
for a similar loan to an unrelated borrower on the same date. A loan shall be deemed
to be an investment of a Participant’s individual Account and all interest payments
and repayments of principal shall be credited to the Account of the Participant.
Notwithstanding the foregoing, Participants who are (i) RAI Employees shall be
permitted to take a loan for the purchase of a principal residence with a term of
repayment of not more than 180 months, (ii) Santa Fe Employees shall be permitted to
take a loan for the purchase of a principal residence with a term of repayment of not
more than 120 months and (iii) Lane and ASC Employees shall be permitted to take a
loan for the purchase of a principal residence with a term of repayment of not more
than 180 months.
	 
	 	(d)	 	The Participant shall be required to authorize payroll deductions from his
Compensation in an amount sufficient to repay the loan over its term;
provided, however, that the Participant may revoke his authorization
to have loan repayments made via payroll deduction at any time by signing a written
acknowledgement of the potential tax consequences of such revocation, in a manner
prescribed by the Committee.

56

 

	 	 	 	In the event of default before the loan is repaid in full, the unpaid balance
thereof, shall become due and payable and, to the extent that the outstanding
amount is not repaid within 60 days after demand for payment is sent, such amount
shall be deemed to have been distributed and the Trustee shall first satisfy the
indebtedness from the amount payable to the Participant before making any payment
to the Participant. In the event of a Participant’s death before the loan is
repaid in full, the Participant’s estate shall be the Beneficiary with respect to
the outstanding loan notwithstanding any other deemed or actual Beneficiary
designation and the unpaid loan balance shall be deemed to have been distributed
to the Participant’s estate. In the event of the Termination of Employment of the
Participant before the loan is repaid in full, the Participant may continue to
make loan repayments via check using payment coupons in order to prevent a
default.
	 
	 	(e)	 	During the repayment period for the loan, the Participant shall be
permitted to fully participate in the Plan.
	 
	 	(f)	 	The Participant shall execute such other documents as the Committee shall
request.
	 
	 	(g)	 	Only one loan for each Participant may be outstanding at one time.
	 
	 	(h)	 	The Committee may make additional rules for loans under the Plan, provided
that such rules are administered in a nondiscriminatory manner.
	 
	 	(i)	 	Notwithstanding anything in this Section 9.01 to the contrary, any loan
outstanding from the FFG Plan, Lane Plan, Conwood Plan or Santa Fe Plan shall
continue in effect until paid off or defaulted under the terms of the loan
instruments.

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ARTICLE 10

ADMINISTRATION OF THE PLAN

	10.01	 	RAI Employee Benefits Committee.

	 	(a)	 	The Committee shall have control of and manage the operation and
administration of the Plan. Except as provided in Section 11.07 or where amendment
authority is otherwise reserved to the Board of Directors or a committee thereof
pursuant to the Plan, the Committee shall have the authority to make amendments to
the Plan to ensure compliance with ERISA and to make other amendments to the Plan
provided that no such amendments cause a material increase in cost to the Company.
The effective date of any amendment to the Plan shall be the date of the meeting at
which the Committee approved such amendment or, if such amendment is approved by
written consent as described in Section 10.01(e) hereof, the date as of which a
majority of the members of the Committee have signed the written consent. The
Committee shall also have the authority to appoint and remove trustees for the Plan
and to establish and amend trust agreements. The Committee shall have the sole
discretion to make decisions and take actions with respect to questions arising in
connection with the Plan, including but not limited to the determination of questions
of eligibility and participation, the amount, manner and timing of benefits, the
construction, interpretation and application of the Plan and Trust Agreement and the
application thereof to relevant facts, as determined by the Committee. Any such
decision or action shall be final and binding upon all Participants and
Beneficiaries.
	 
	 	(b)	 	The Committee shall consist of not less than three (3) persons appointed
from time to time by the Compensation Committee of the Board of Directors to serve at
the pleasure of the Compensation Committee of the Board of Directors; provided, that
the Chief Executive Officer of RAI may from time to time replace any member and/or
may add one or more members to the Committee. Any member of the Committee may resign
by delivering a written resignation to the Secretary of the Committee and such
resignation shall be effective upon the date specified therein. A Committee member
shall be deemed to have resigned from the Committee if he terminates active
employment with all members of the RAI controlled group of corporations.
	 
	 	(c)	 	The Committee shall elect from its members a Chairman, and shall also elect
a Secretary who may be but need not be one of the members of the Committee. The
Committee may appoint from its members such committees with such powers as it shall
determine, and may authorize one or more of its members, or any agent, to execute or
deliver any instrument or make any payment in its behalf.
	 
	 	(d)	 	The Committee shall hold meetings in person or telephonically upon such
notice, at such place or places, and at such time or times as it may from time to
time determine.

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	 	(e)	 	A majority of the members of the Committee at the time in office shall
constitute a quorum for the transaction of business. All resolutions or other action
taken by the Committee shall be by the vote of a majority of the members of the
Committee present at any meeting or without a meeting by an instrument in writing
signed by a majority of the members of the Committee.
	 
	 	(f)	 	No member of the Committee shall receive any compensation for his service
as such, and, except as may be required by applicable law, no bond or other security
is required of him in such capacity in any jurisdiction.

	10.02	 	RAI Pension Investment Committee.

	 	(a)	 	The RAI Pension Investment Committee is a committee whose members are
appointed by the Audit and Finance Committee of the Board of Directors to serve at
the pleasure of the Audit and Finance Committee of the Board of Directors. Prior to
July 1, 2008, the members of the Investment Committee were appointed by the
Compensation Committee of the Board of Directors.
	 
	 	(b)	 	The RAI Pension Investment Committee is charged with the specific powers,
duties and authorities set forth in its charter, as amended from time to time,
including, but not limited to, the appointment and removal of investment managers.
	 
	 	(c)	 	The RAI Pension Investment Committee shall have the authority to establish
rules and procedures governing investment elections and directions of Participants
under the Plan, as specified in Section 4.03(c) of the Plan.

	10.03	 	Administration Committee.

	 	(a)	 	The Committee, in its discretion, may delegate its administrative duties
and responsibilities to one or more Administration Committees each consisting of
three or more persons, who shall be appointed by and serve at the pleasure of the
Committee and one or more of whom may also be members of the Committee. Vacancies in
the Administration Committee shall be filled by the Committee but the Administration
Committee may act, notwithstanding any vacancies, so long as there are at least two
members of such Administration Committee. The members of an Administration Committee
shall serve without compensation for their services as such, but shall be reimbursed
by the Company for all necessary expenses incurred in the discharge of their duties.
	 
	 	(b)	 	Subject to restrictions imposed by the Committee, an Administration
Committee’s powers shall include the following powers:

	 	(1)	 	to interpret Plan provisions with respect to eligibility,
service, vesting and determination of benefits,

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	 	(2)	 	to calculate benefits and authorize the payment of benefits
by the Plan trustees through disbursement accounts as directed by the
Administration Committee,
	 
	 	(3)	 	to authorize the payment of routine plan expenses exclusive
of trustee, investment manager, or actuary fees,
	 
	 	(4)	 	to prepare and/or approve the filing of required
governmental reports,
	 
	 	(5)	 	to maintain Plan records, and
	 
	 	(6)	 	to prepare employee announcements, forms and procedures.

	 	 	 	An Administration Committee, at its discretion, may delegate to assistants,
including employees in the Company’s Employee Benefits Department, ministerial and
clerical duties.

	10.04	 	Indemnification by Company. To the extent not insured against by any insurance
company pursuant to the provisions of any applicable insurance policy, the Company shall
indemnify and hold harmless the members of the Committee, the members of the RAI Pension
Investment Committee, the members of any Administration Committee and their assistants from
any and all claims, demands, lawsuits, or proceedings in connection with the Plan, including
the expenses of defense, provided, that such indemnification shall not apply to any person for
such person’s act of willful misconduct.
	 
	10.05	 	Plan Expenses. The expenses of administering the Plan, including, without
limitation, reasonable fees and expenses of the trustee, certified public accountants, legal
counsel, record-keepers, auditors, investment managers and investment advisors, shall be paid
from the trust established in accordance with Section 4.01 unless paid directly by the Company
at its election. The Committee will allocate among the Company and all Participating
Companies the appropriate share of expenses paid by the Company. The Committee shall
determine the manner in which fees described in this Section 10.05 shall be charged against
the Accounts or Investment Funds held in the Trust.
	 
	10.06	 	Plan Administrator. The Plan Administrator shall be the RAI Employee Benefits
Committee and it shall be responsible for the performance of all reporting and disclosure
obligations under ERISA and regulations promulgated by any federal, state and local agency;
provided that the Committee may delegate under Section 10.03 some or all of such duties as
Plan Administrator.
	 
	10.07	 	Named Fiduciaries.

	 	(a)	 	The Committee, the RAI Pension Investment Committee, the Independent
Fiduciary, and any Administration Committee, if delegated power in accordance with
Section 10.03, shall each constitute named fiduciaries as such term is defined in
ERISA.

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	 	(b)	 	By resolution or by an appropriate instrument executed by a duly authorized
officer of the Company, the Company may appoint one or more other persons or
committees as a named fiduciary in respect of the duties delegated to him or it in
such resolution or instrument.
	 
	 	(c)	 	Any named fiduciary designated herein or appointed as provided herein,
unless precluded from doing so by the terms of such appointment, may by appropriate
instrument designate any person (including any firm or corporation) to carry out part
or all of such fiduciary’s responsibilities and upon such designation the named
fiduciary shall have no liability, except as imposed by applicable law, for any act
or omission of such person. The foregoing does not preclude any other fiduciary to
the extent allowed by ERISA and the terms of his appointment from delegating part or
all of such fiduciary’s responsibilities with respect to the Plan.
	 
	 	(d)	 	Any fiduciary may serve in more than one fiduciary capacity with respect to
the Plan.

	10.08	 	Powers of the Independent Fiduciary. The Independent Fiduciary shall have the
exclusive authority, responsibility and control with respect to the management and disposition
of the RAI Common Stock Fund, and shall have no authority, responsibility or control with
respect to the administration of the Plan or the management of any Investment Fund other than
the RAI Common Stock Fund. The Independent Fiduciary may communicate with
Participants with respect to the RAI Common Stock Fund from time to time, and may instruct the
Trustee regarding the RAI Common Stock Fund with respect to matters within the authority of
the Independent Fiduciary.
	 
	 	 	In exercising any authority with respect to the RAI Common Stock Fund, the
Independent Fiduciary shall take into account the purpose of the RAI Common Stock Fund and
the other considerations set forth in Section 4.03(d) of the Plan to the fullest extent
permitted by ERISA. In that regard, it is the plan sponsor’s expectation that the
Independent Fiduciary will maintain the RAI Common Stock Fund on a permanent basis, and
that the RAI Common Stock Fund will continue to be invested exclusively in Company Stock
unless the Independent Fiduciary determines that it is required by applicable law to
disregard the terms of the Plan, such as in the case of RAI’s imminent collapse or other
dire circumstance affecting RAI. Subject to and on the basis set forth in this paragraph,
the Independent Fiduciary shall at all times have the following powers with respect to the
RAI Common Stock Fund:

	 	(a)	 	To restrict the investment of new participant or employer contributions in the
RAI Common Stock Fund;
	 
	 	(b)	 	To restrict the transfer of participant account balances into the RAI Common
Stock Fund;
	 
	 	(c)	 	To prohibit further investment in Company Stock and in connection with any such
prohibition to sell or otherwise dispose of all of the Company Stock held in the RAI
Common Stock Fund;

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	 	(d)	 	To restrict the transfer of participant account balances out of the RAI Common
Stock Fund during any period in which the Independent Fiduciary is directing the sale
or other disposition of the Company Stock in the RAI Common Stock Fund;;
	 
	 	(e)	 	To designate an alternative investment available under the Plan for the
temporary investment of any proceeds from any sale or other disposition of Company
Stock pending Participant directions to the Trustee with respect to the investment of
such proceeds; and
	 
	 	(f)	 	Such other duties as may be assigned to the Independent Fiduciary from time to
time by the Compensation Committee of the Board of Directors, as plan sponsor, and
agreed to by the Independent Fiduciary.

	 	 	Any exercise of the powers granted to the Independent Fiduciary pursuant to the Plan shall
not require an amendment of the Plan prior to the initiation of the exercise of any such
duty. The most senior person in the RAI Law Department who is not a member of the RAI
Pension Investment Committee or the RAI Employee Benefit Committee shall monitor the
Independent Fiduciary to assure that it continues to have the qualifications, capacity and
personnel to discharge its obligations under the Plan and shall report from time to time to
the Compensation Committee of the Board of Directors. The Independent Fiduciary may be
removed or replaced solely by an amendment to the Plan adopted by the Compensation Committee
of the Board of Directors pursuant to Section 11.07 of the Plan.

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ARTICLE 11

AMENDMENTS, TERMINATION, PERMANENT DISCONTINUANCE

OF CONTRIBUTIONS, MERGER OR CONSOLIDATION

     11.01 Amendment of the Plan. Except as provided in Section 11.07 or where amendment
authority is otherwise reserved to the Board of Directors or a committee thereof pursuant to the
Plan, the Committee shall have the right to amend or modify the Plan, in whole or in part, at any
time, in accordance with the procedure described in Section 10.01, subject to the following:

	 	(a)	 	No amendment or modification may be made which has the effect of decreasing
retroactively the Accounts of any Participant or of reducing the nonforfeitable
percentage of the Company Contribution Account of a Participant below the
nonforfeitable percentage thereof computed under the Plan as in effect on the later
of the date on which the amendment is adopted or becomes effective;
	 
	 	(b)	 	Except to the extent permitted by law and Section 11.02, no amendment or
modification may be made to cause any part of the assets of the Plan to be used for,
or diverted to, purposes other than for the exclusive benefit of Participants,
including retired Participants, Surviving Spouses or Beneficiaries, and the payment
of expenses of the Plan prior to the satisfaction of all liabilities for benefits
under the Plan;
	 
	 	(c)	 	If an individual is not a Participant or is a retired Participant on or
after the effective date of any amendment or modification to the Plan, the amendment
or modification shall not affect such individual’s benefit unless the Committee or
the Board of Directors specifically provides otherwise;
	 
	 	(d)	 	To the extent permitted by law, any modification or amendment of the Plan
may be made retroactively, if the Committee (or the Board of Directors) shall deem
retroactive application thereof to be necessary or appropriate, either to comply with
any law or regulation, or otherwise.

	11.02	 	Amendment to Vesting Provisions. If the vesting provisions set forth in Article 6
are amended, (a) any Participant who, as of the effective date of the amendment, had been
credited with a Period of Service of at least three years may irrevocably elect to have his
nonforfeitable interest computed without regard to the amendment and (b) a Participant’s
nonforfeitable interest shall not be less than his nonforfeitable percentage computed under
the Plan without regard to such amendment. Notice of the amendment and the availability of
the election shall be given to each such Participant, and the election may be exercised by the
Participant by notice to the Committee within 60 days after the later of (a) the Participant’s
receipt of the notice, (b) the day the amendment is adopted or (c) the effective date of the
amendment.
	 
	11.03	 	Amendment to Maintain Qualified Status. Notwithstanding anything to the
contrary in Section 11.01, the Committee, in its discretion, may make any modifications or
amendments to the Plan, retroactively or prospectively, which it deems appropriate to
establish or maintain the Plan and the Trust Agreement as a qualified employees’ plan and
trust under Sections 401 and 501 of the Code.

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	11.04	 	Termination or Permanent Discontinuance of Contributions. RAI may by action of the
Committee terminate the Plan with respect to all Participating Companies or any of them or
direct complete discontinuance of contributions hereunder by all or any of the Participating
Companies for any reason at any time. In case of such termination or complete discontinuance
of contributions hereunder, there shall automatically vest in the appropriate Participants
nonforfeitable rights to the Company Contributions credited to their Accounts, and the total
amount in each Participant’s Accounts shall be distributed, as the Committee shall direct, to
him or for his benefit, provided, however, that Pre-Tax Contributions and/or
Roth Contributions may only be distributed upon termination of the Plan if RAI (and any
related employer, as defined in Treasury Regulation Section 1.401(k)-6) does not establish or
maintain another defined contribution plan (other than an employee stock ownership plan as
defined in sections 4975(e)(7) or 409(e) of the Code, a simplified employee pension plan under
section 408(k) of the Code, a SIMPLE IRA under section 408(p) of the Code or a plan or program
described in sections 403(b), 457(b) or 457(f) of the Code) within the period prohibited by
Treasury Regulation Section 1.401(k)-1(d)(4). In the event of a partial termination of the
Plan, the provisions of this Section 11.04 shall be applicable only to the Participants
affected by such partial termination.
	 
	11.05	 	Committee and Trustee. If the Plan is terminated, the Committee shall continue to
function and may fill any vacancies which may occur in its own membership (if the Board of
Directors fails to do so) until the Trustee has rendered its final account and that account
has been approved (in the manner provided in the Trust Agreement).
	 
	11.06	 	Merger of the Plan. The Plan shall not merge or consolidate with, or transfer its
assets or liabilities to any other plan unless each Participant (including each retired
Participant, Spouse or other beneficiary and each former Participant who is entitled to a
deferred vested benefit under the Plan) would receive a benefit immediately after the merger,
consolidation, or transfer (if the Plan then terminated) which is equal to or greater than the
benefit he would have been entitled to receive immediately before the merger, consolidation,
or transfer (if the Plan had then terminated).
	 
	11.07	 	Amendments Relating to Reynolds American Stock. The Compensation Committee of the
Board of Directors, acting on behalf of RAI as settlor, shall have the exclusive right to
amend or modify the Plan with respect to (i) the appointment of any fiduciary as “investment
manager” within the meaning of Section 3(38) of ERISA or “named fiduciary” within the meaning
of Section 402(a)(2) of ERISA for the management and disposition of any Investment Fund
designed to invest primarily or exclusively in common stock of RAI, (ii) the authority of such
investment manager or named fiduciary, or any modification to such authority, (iii) the
removal of any such investment manager or named fiduciary, or the appointment of any
successor, (iv) the allocation of authority among (or removal of authority from) such
investment manager or named fiduciary, the Committee, the RAI Pension Investment Committee,
any Administration Committee or any other Plan fiduciary with respect to such Investment Fund,
(v) the establishment, termination or purpose of any such Investment Fund, and (vi) any matter
related to the foregoing.

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ARTICLE 12

MISCELLANEOUS

	12.01	 	Benefits Payable from Trust Fund. All persons with any interest in the Trust Fund
shall look solely to the Trust Fund for any payments with respect to such interest.
	 
	12.02	 	Elections. Elections for benefits or Beneficiaries hereunder shall be made by a
Participant in the manner prescribed by the Committee for such purposes, within the prescribed
time limits.
	 
	12.03	 	No Right to Continued Employment. Neither the establishment of the Plan nor the
payment of any benefits thereunder nor any action of the Company, the Board of Directors, the
Committee, the RAI Pension Investment Committee or the Trustee shall be held or construed to
confer upon any person any legal right to be continued in the employ of the Company.
	 
	12.04	 	Inalienability of Benefits and Interests. No benefit payable under the Plan or
interest in the Trust Fund shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, and any such attempted action shall be
void and no such benefit or interest shall be in any manner liable for or subject to debts,
contracts, liabilities, engagements or torts of any Participant, Surviving Spouse or
Beneficiary. Notwithstanding any provision of the Plan to the contrary, the Plan shall honor
a judgment, order, decree or settlement providing for the offset of all or a part of a
Participant’s benefit under the Plan, to the extent permitted under Code Section
401(a)(13)(C); provided that the requirements of Code Section 401(a)(13)(C)(iii) relating to
the protection of the Participant’s spouse (if any) are satisfied.
	 
	12.05	 	Qualified Domestic Relations Orders.

	 	(a)	 	The provisions in Section 12.04 shall also apply to the creation,
assignment or recognition of a right to any benefit payable with respect to a
Participant pursuant to a domestic relations order, unless such order: (i) is
determined to be a qualified domestic relations order, as defined in Section 414(p)
of the Code, or (ii) was entered before January 1, 1985.
	 
	 	(b)	 	If the Committee is in receipt of a domestic relations order, or the
Committee is otherwise aware that a qualified domestic relations order affecting a
Participant’s account is being sought, the Committee may take such action as
necessary (including, without limitation, restricting the participant’s ability to
withdraw or borrow funds in his or her Accounts) in order to administer the Plan
consistently with the terms of any such qualified domestic relations order.

	12.06	 	Payments for Exclusive Benefit of Participants. Payments of benefits in respect of
the interest of a Participant under the Plan to any person other than such Participant in
accordance with the provisions of the Plan shall be deemed to be for the exclusive benefit of
such Participant.

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	12.07	 	North Carolina Law to Govern. All questions pertaining to the construction,
regulation, validity and effect of the provisions of the Plan shall be determined in
accordance with the laws of the State of North Carolina, except to the extent such laws are
pre-empted by ERISA.
	 
	12.08	 	No Guarantee. Neither the Company nor the Trustee guarantee the Trust Fund in any
manner against loss or depreciation.
	 
	12.09	 	Address of Record. Each individual or entity with an actual or potential interest
in the Plan shall file and maintain a current record address with the Plan. Communications
mailed by the Company, Trustee, or Committee to such record address fulfills all obligations
to provide required information to Participants, including former employees, Surviving Spouses
and Beneficiaries, in regard to the Plan. If no record address is filed, it may be presumed
that the address used by the Company in forwarding statements of a Participant’s Account is
the record address.
	 
	12.10	 	Unlocated Spouse. Notwithstanding the consent requirement in Section 1.09, if the
Participant establishes to the satisfaction of the Committee that such written consent cannot
be obtained because there is no spouse or the spouse cannot be located, a waiver shall be
deemed to be valid. Any consent necessary under Section 1.09 will be valid only with respect
to the spouse who signs the consent, or in the event of a deemed election, the designated
spouse.
	 
	12.11	 	Agent for Process. The Secretary of RAI shall be the designated agent for the
service of legal process.
	 
	12.12	 	Payments in the Event of Incompetency. If the Committee finds that a Participant or
other person entitled to a benefit is unable to care for his affairs because of illness or
accident or is a minor, the Committee may direct that any benefit payment due the Participant,
unless claim shall have been made therefor by a duly appointed legal representative, be paid
to his spouse, a child, or a parent for the benefit of such Participant, and any such payment
so made shall be a complete discharge of the liabilities of the Plan therefor.
	 
	12.13	 	Transfer of Accounts to This Plan.

	 	(a)	 	Affiliated and Predecessor Plans. If a participant of a U.S.
qualified Affiliated Plan becomes eligible to be a Participant of this Plan before
receiving a distribution from the Affiliated Plan, his Account under the Affiliated
Plan shall be transferred to this Plan by way of a trustee-to-trustee transfer. This
Plan shall be considered as a successor plan with regard to such employee and all
Affiliated Plan contributions transferred shall be treated as though they were made
under this Plan for purposes of vesting, withdrawals and distributions. In the
absence of an applicable Participant election, assets transferred from an Affiliated
or Predecessor Plan shall be invested in the equivalent investment funds under this
Plan or, if an equivalent investment fund does not exist, then the assets from the
Affiliated Plan shall be invested in the Investment Fund(s) designated by the RAI
Pension Investment Committee; and the accounts of

66

 

	 	 	 	participants and beneficiaries under the Affiliated or Predecessor Plan will
become their Accounts as Participants and Beneficiaries under this Plan, effective
as of the transfer date. Once a Participant has received a distribution from the
Affiliated Plan, it shall be treated as an Eligible Retirement Plan for purposes
of this Section 12.13.
	 
	 	(b)	 	Nabisco Plan. If an individual who is a participant in the Nabisco
Plan becomes an Eligible Employee and elects to transfer amounts from the Nabisco
Plan to this Plan, this Plan shall accept a transfer of such Eligible Employee’s
accounts (including any, outstanding participant loans) under the Nabisco Plan by way
of a trustee-to-trustee transfer.

	12.14	 	Transfer of Accounts from this Plan to an Affiliated Plan. If a Participant
transfers employment from the Company to an Affiliated Company and thereafter becomes eligible
to participate in an Affiliated Plan, the assets in his Accounts in the Plan shall be
transferred to such Affiliated Plan in accordance with the terms thereof.
	 
	12.15	 	Transfer of Accounts to the Nabisco, Inc. Capital Investment Plan. In connection
with the spin-off of RJR Nabisco, Inc. by RJR Nabisco Holdings Corp. effective as of June 14,
1999, certain individuals who were participating in the Plan immediately prior to the
spin-off, ceased to participate in the Plan effective as of such date and as of such date,
commenced participation in the Nabisco Plan (such individuals being hereinafter referred to as
“Nabisco Employees”). In connection with such commencement of participation in the Nabisco
Plan, the assets in the Accounts of Nabisco Employees under the Plan (including any
outstanding Participant loans) shall be transferred to the corresponding accounts under the
Nabisco Plan in accordance with the terms thereof. In addition, the Accounts and any unused
forfeiture amounts that are attributable to the Accounts of any individual who terminated
employment with Nabisco, Inc. or any of its affiliates (other than a Participating Company)
prior to June 14, 1999 shall be transferred to the Nabisco Plan in accordance with the terms
thereof. The assets in the Accounts (including any outstanding Participant loans) of any
individual who terminates employment with the Company or an Affiliated Company after June 14,
1999 and commences employment with Nabisco, Inc. (or its affiliates) may (upon the election of
such individual) be transferred to the corresponding accounts under the Nabisco Plan in
accordance with the terms thereof.
	 
	12.16	 	Headings. Headings of Articles and Sections of the Plan are inserted for
convenience of reference. They constitute no part of the Plan.
	 
	12.17	 	Transfer of Accounts to the Targacept Retirement Savings Plan. In
connection with the spin-off of Targacept, Inc. by R. J. Reynolds Tobacco Company
effective as of August 24, 2000, certain individuals who were participating in the
Plan immediately prior to the spin-off ceased to participate in the Plan effective as
of such date and, as of such date, commenced participation in the Targacept Retirement
Savings Plan (the “Targacept Plan”) (such individuals being hereinafter referred to as
“Targacept Employees”). In connection with such commencement of participation in the
Targacept Plan, the assets in the Accounts of Targacept Employees under the Plan
(including any outstanding

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	 	 	Participant loans) shall be transferred to the corresponding accounts under the
Targacept Plan on December 1, 2000, or as soon as administratively feasible
thereafter, in accordance with the terms of the Targacept Plan.
	 
	12.18	 	Transfer of Accounts to the Pharmachem Laboratories, Inc. Retirement Savings
Plan. In connection with the sale by R. J. Reynolds Tobacco Company of its Avoca
Farms agricultural-based production and processing business, pursuant to a Purchase
Agreement dated March 26, 2003, certain individuals who were participating in the Plan
immediately prior to the sale ceased to participate in the Plan effective as of the
sale date and, as of such date, commenced participation in the Pharmachem
Laboratories, Inc. Retirement Savings Plan (the “Pharmachem Plan”) (such individuals
being hereinafter referred to as “Pharmachem Employees”). In connection with such
commencement of participation in the Pharmachem Plan, the assets in the Accounts of
Pharmachem Employees under the Plan (including any outstanding Participant loans)
shall be transferred to the corresponding accounts under the Pharmachem Plan on June
5, 2003, or as soon as administratively feasible thereafter, in accordance with the
terms of the Pharmachem Plan.
	 
	12.19	 	Transfer of Accounts to the Allegacy Retirement Savings Plan. In connection
with the transaction contemplated by the Amended and Restated Memorandum of
Understanding and Agreement dated June 30, 2005, certain individuals who were
participating in the Plan immediately prior to the transaction ceased to participate
in the Plan effective as of July 11, 2005 and, as of such date, commenced
participation in the Allegacy Retirement Savings Plan (the “Allegacy Plan”) (such
individuals being hereinafter referred to as “Allegacy Employees”). In connection
with such commencement of participation in the Allegacy Plan, the assets in the
Accounts of Allegacy Employees under the Plan (including any outstanding Participant
loans) shall be transferred to the corresponding accounts under the Allegacy Plan on
July 11, 2005, or as soon as administratively feasible thereafter, in accordance with
the terms of the Allegacy Plan.
	 
	12.20	 	Transfers Between Participating Companies. The transfer of employment of an
Eligible Employee from one Participating Unit (the “Transferor Unit”) to another
Participating Unit (the “Transferee Unit”) will have the following consequences:

	 	(a)	 	Except as provided in this Section 12.20, the Eligible Employee
will cease to be governed by the portions of the Plan applicable to the
Transferor Unit and will commence to be governed by the portions of the Plan
applicable to the Transferee Unit effective as of the date the Eligible
Employee’s employment transfers.
	 
	 	(b)	 	A Participant will continue to participate in the Plan after the
transfer regardless of whether he would have been eligible to participate in
the Plan under the rules of the portions of the Plan applicable to the
Transferee Unit at the time of the transfer. Upon a transfer of

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	 	 	 	employment, an Eligible Employee will become eligible to participate in
the Plan on the later of (i) the date of transfer or (ii) the date on
which he would become eligible to participate in the Plan under the
portions of the Plan applicable to the Transferee Unit.
	 
	 	(c)	 	The rate at which the Participant makes Pre-Tax Contributions, Roth
Contributions and After-Tax Contributions will not be affected by any
transfer.
	 
	 	(d)	 	Except as provided in Section 12.20(e), Company Contributions under
the rules applicable to the Transferor Unit will cease effective as of the
transfer and will continue under the rules applicable to the Transferee Unit
thereafter.
	 
	 	(e)	 	Notwithstanding Section 12.20(d), the Santa Fe Profit Sharing
Contribution described in Section 3.03(d)(ii) of the Plan allocated to the
Company Contribution Account of a Participant who is a Santa Fe Employee for
less than an entire Plan Year will be equal to the product of (i) the Santa
Fe Profit Sharing Contribution that would have been allocated to such
Participant if he had been a Santa Fe Employee for the entire Plan Year and
(ii) a fraction the numerator of which is the number of days of the Plan Year
that the Participant was a Santa Fe Employee and the denominator of which is
365.
	 
	 	(f)	 	A Participant will vest in the portion of his Company Contribution
Account attributable to employment with the Transferor Unit under the portion
of the Plan applicable to the Transferor Unit and will vest in the portion of
his Company Contribution Account attributable to employment with the
Transferee Unit under the portion of the Plan applicable to the Transferee
Unit.
	 
	 	(g)	 	Any loan outstanding as of the date the Participant’s employment
transfers will continue to be governed by the Transferor Unit’s rules for
loans.

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ARTICLE 13

CLAIMS PROCEDURE

	13.01	 	Initial Determination. The initial determination of a Participant’s, Surviving
Spouse’s or Beneficiary’s (collectively hereinafter, a “claimant”) eligibility for, and the
amount of, a benefit shall be made by the Administration Committee, or in its absence, the
Committee, which shall mail or deliver to each covered individual who has filed an effective
claim for a benefit a written statement of the amount of his benefit or a notice of denial of
his claim on or before the 90th day following the Committee’s receipt of such
claim. If special circumstances require additional time for processing the claim, the
Administration Committee, or in its absence, the Committee, may delay issuing its statement or
notice for an additional 90 days provided that the claimant is notified of the circumstances
necessitating the delay and the date the Administration Committee expects to render its
decision within the initial 90-day period. A claim for benefits is not effective unless filed
in the manner prescribed by the Committee. A notice of denial shall be written in a manner
calculated to be understood by the claimant and shall include (a) one or more specific reasons
for the denial of the claim, (b) specific reference(s) to provisions of the Plan and/or Trust
Agreement on which the denial of the claim is based, (c) a description of any additional
material or information necessary for the claimant to perfect the claim, and an explanation of
why such material or information is necessary, and (d) an explanation of the Plan’s review
procedures and the time limits applicable to such procedures, including a statement of the
claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse
benefit determination on review.
	 
	13.02	 	Review. If a claim is denied and the claimant wishes to appeal the denial, the
claimant or his duly authorized representative must, within 60 days after the receipt by the
claimant of a written notice of denial of the claim, file a written request with the Committee
that it review the denial of the claim for benefits. If the claimant does not file such a
request within such 60-day period, the claimant shall be conclusively presumed to have
accepted as final and binding the initial decision of the Administration Committee on his
claim. If such an appeal is so filed within such 60-day period, the Committee shall conduct a
full and fair review of such claim. During such full review, the claimant (or his duly
authorized representative) shall be provided with the opportunity to submit written comments,
documents, records, and other information relating to the claim for benefits and reasonable
access to and copies of, upon request and free of charge, all documents, records, and other
information relevant to the claimant’s claim for benefits. In addition, such full and fair
review shall take into account all comments, documents, records, and other information
submitted by the claimant relating to the claim, without regard to whether such information
was submitted or considered in the initial benefit determination.
	 
	 	 	After the completion of such full review, the Committee shall mail or deliver to the
claimant a written decision on the matter, within a reasonable time, but in no event later
than 60 days after receipt of the request for review unless special circumstances require
an extension of time for processing. If the Committee determines that an extension of
time for processing is required, written notice of the extension shall be furnished to the

70

 

	 	 	claimant who filed the appeal setting forth the special circumstances requiring an
extension of time and the date by which the Committee expects to render a decision on
review, and shall be furnished prior to the termination of the initial 60-day period. In
no event shall such extension exceed a period of 60 days from the end of the initial
60-day period. In the case of an adverse benefit determination on review, the notice of
the determination shall be written in a manner calculated to be understood by the
claimant and shall include (a) one or more specific reasons for the decision, (b) specific
reference(s) to the provisions of the Plan and/or Trust Agreement on which the decision
was based, and (c) shall, to the extent not prohibited by applicable law, be final and
binding on all interested persons. In addition, the notice of adverse determination shall
also (x) include a statement that the claimant is entitled to receive, upon request and
free of charge, reasonable access to, and copies of, all documents, records and other
information relevant to the claimant’s claim for benefits and (y) describe any voluntary
appeal procedures offered by the Plan and the claimant’s right to obtain information about
such procedures and a statement of the claimant’s right to bring an action under Section
502(a) of ERISA.

71

 

ARTICLE 14

LIMITATION ON BENEFITS

	14.01	 	Code Section 415 Limits.

	 	(a)	 	The following definitions shall be applied in construing this Section.

	 	(1)	 	Controlled Group shall be construed in the light of
Sections 414(b) and 414(c) of the Code, as modified by Section 415(h) of the
Code.
	 
	 	(2)	 	Defined Contribution Plan means any defined
contribution plan, as defined in Section 415(k) of the Code.
	 
	 	(3)	 	Total Compensation means all remuneration paid to
an Employee by any Affiliated Company, as determined pursuant to the
provisions of Treasury Regulation Section 1.415(c)-2(d)(4), taking into
account the timing rules specified in Treasury Regulation Section
1.415(c)-2(e), but shall not include any amount in excess of the limitation
under Section 401(a)(17) of the Code in effect for the year. The term
“Total Compensation” as defined in the preceding sentence shall include any
payments made to a Participant by the later of (A) two and one-half (2-1/2)
months after the date of the Participant’s severance from employment with the
Controlled Group or (B) the end of the Limitation Year that includes the date
of the Participant’s severance from employment with the Controlled Group,
provided that, absent a severance from employment, such payments would have
been paid to the Participant while the Participant continued in employment
with the Controlled Group and are regular compensation for services performed
during the Participant’s regular working hours, compensation for services
outside the Participant’s regular working hours (such as overtime or shift
differential pay), commissions, bonuses or other similar compensation.
	 
	 	(4)	 	Annual Addition means the sum of the following
amounts credited to a Participant’s account for the Limitation Year:

	 	(A)	 	employer contributions;
	 
	 	(B)	 	employee contributions;
	 
	 	(C)	 	forfeitures; and
	 
	 	(D)	 	amounts allocated to an individual medical
account, as defined in Section 415(1)(2) of the Code, which is part
of a pension or annuity plan maintained by the employer and amounts
derived from contributions paid or accrued after December 31, 1985,
in taxable years ending after such date, which are attributable to
post-

72

 

	 	 	 	retirement medical benefits allocated to the separate account of a
key employee, as defined in Section 419A(d)(3) of the Code, under a
welfare benefit fund, as defined in Section 419(e) of the Code,
maintained by the employer.

	 	(b)	 	Limitations Applicable to Participants in Defined Contribution Plans

	 	(i)	 	The Annual Addition credited to a Participant under the
Plan or any Related Plan for any Limitation Year must not exceed the lesser
of (1) $40,000 or (2) 100% of the Participant’s Total Compensation for such
Limitation Year. The compensation limit referred to in (2) shall not apply
to any contribution for medical benefits after separation from service
(within the meaning of Code Sections 401(h) or 419A(f)(2)) which is otherwise
treated as an annual addition.

	 	(c)	 	In addition to other limitations set forth in the Plan and notwithstanding
any other provisions of the Plan, contributions (and contributions to all other
Defined Contribution Plans required to be aggregated under this Plan under the
provisions of Section 415 of the Code), shall not be made in an amount in excess of
the amount permitted under Section 415 of the Code.

	14.02	 	Code Section 416 Limits. This Section is intended to ensure the Plan’s compliance
with Section 416 of the Code. It shall be applicable to Participants for any Plan Year with
respect to which the Plan is top-heavy.

	 	(a)	 	Definitions. The following definitions shall be applied in
construing this Section.

	 	(i)	 	Top-Heavy Plan means any plan maintained by the
Company or an Affiliated Company if, as of the Determination Date, the
Top-Heavy Ratio for the plan and all other plans in the Aggregation Group
exceeds 60%. The plan will be deemed a “super top-heavy plan” if, as of the
Determination Date, the Plan would meet the test specified above for being a
Top-Heavy Plan if 90% were substituted for 60% in each place it appears in
this subsection(i).
	 
	 	(ii)	 	Determination Date means the last day of the
preceding Plan Year (or, in the case of the first plan year of a plan, the
last day of such Plan Year). when plan aggregation is required, calculation
of accrued benefits as of the determination dated which fall within the same
calendar year will be used.
	 
	 	(iii)	 	Valuation Date means the same date as the
Determination Date.
	 
	 	(iv)	 	Key Employee means each Employee or former Employee
(including any deceased employee) who, at any time during the Plan Year that
includes the Determination Date, was any one or more of the following:

73

 

	 	(A)	 	An officer of the Company or an Affiliated
Company having an annual compensation greater than $130,000 (as
adjusted under Code Section 416(i)(1) for Plan Years beginning after
December 31, 2002);
	 
	 	(B)	 	Any person owning (or considered as owning
within the meaning of Code Section 318) more than 5% of the
outstanding stock of the Company (or stock having more than 5% of the
total combined voting power of all stock of the Company); or
	 
	 	(C)	 	Any person who has annual compensation of
more than $150,000 and would be described in subsection (B) above, if
“1%” was substituted for “5%”.
	 
	 	For purposes of determining whether a person is a Key Employee, annual
compensation means compensation within the meaning of Code Section
415(c)(3). The determination of who is a Key Employee will be made in
accordance with Code Section 416(a)(1) and the applicable regulations and
other guidance issued thereunder.

	 	(v)	 	Non-Key Employee means any Participant in the Plan
(including a beneficiary of such Participant) who is not a Key Employee.
	 
	 	(vi)	 	Aggregation Group means all plans that are subject
to Required Aggregation (in accordance with subsection 14.02(b)). The
Aggregation Group may also include plans subject to Permissive Aggregation
(in accordance with subsection 14.02(c)), if such aggregation would eliminate
the status of plans in the Aggregation Group as Top-Heavy Plans.

	 	(b)	 	Required Aggregation. This Plan and all other qualified plans,
including any terminated plans, maintained by the Company or an Affiliated Company
which include a Key Employee must be aggregated to determine if the group as a whole
is top-heavy. In addition, each other qualified plan maintained by the Company or an
Affiliated Company which enables any plan in which a Key Employee is a Participant to
meet the requirements of Sections 410(a)(4) and 410 of the Code must be aggregated.
	 
	 	(c)	 	Permissive Aggregation. The Company may include other plans
maintained by the Company or an Affiliated Company which when considered as a group
with the required aggregation group, would continue to satisfy the requirements of
Sections 401(a)(4) and 410 of the Code, to determine if the group as a whole is
top-heavy, provided such plans are comparable in benefits or contributions.
	 
	 	(d)	 	Top-Heavy Ratio.

	 	(i)	 	The top-heavy ratio is a fraction, the numerator of which
is the sum of account balances under the defined contribution plans in the

74

 

	 	 	 	Aggregation Group for all Key Employees and the present value of accrued
benefits under the defined benefit plans for all Key Employees, and the
denominator of which is the sum of the account balances under the defined
contribution plans in the Aggregation Group for all Participants and the
present value of accrued benefits under the defined benefit plans in the
Aggregation Group for all Participants. Both the numerator and
denominator are adjusted to include any distributions made in the one-year
period ending on the “Determination Date” and any contributions due but
unpaid as of the Determination Date. The preceding sentence shall also
apply to distributions under a terminated plan which, had it not been
terminated, would have been aggregated with the Plan under Code Section
416(g)(2)(a)(i). In the case of a distribution made for a reason other
than separation from service, death, or disability, this provision shall
be applied by substituting ‘five-year period’ for ‘one-year period.’
	 
	 	(ii)	 	The value of account balances and the present value of
accrued benefits will be determined as of the most recent Valuation Date.
The account balances and accrued benefits of a Participant who is not a Key
Employee but who was a Key Employee in a prior year will be disregarded. 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 Section 416 of the Code and the regulations thereunder.
	 
	 	(iii)	 	If any Participant has not performed an Hour of Service
for the Company at any time during the one-year period ending on the
Determination Date, the account of such Participant shall not be taken into
account.

	 	(e)	 	Minimum Vesting. For any Plan Year in which the Plan is a
top-heavy plan as determined pursuant to Section 416 of the Code, a Participant will
have a nonforfeitable right to a percentage of the Participant’s Accounts derived
from Company Contributions as set forth below if such schedule is more favorable to
the Participant than the vesting schedule under Section 7.02.

	 	 	 	 	 
	Years of Service Completed	 	 
	For Vesting Purposes	 	Vested Interest
	Less than two
	 	 	0	%
	Two but less than three
	 	 	20	%
	Three but less than four
	 	 	40	%
	Four but less than five
	 	 	60	%
	Five or more
	 	 	100	%

	 	 	 	The above vesting schedule applies to all benefits the meaning of Section
411(a)(7) of the Code, including benefits accrued before the effective date of
Section 416 of the Code and benefits accrued before the Plan became top-heavy.

75

 

	 	 	 	However, any Participants who have completed at least three (3) years of service
for vesting purposes as of the last day of the last Plan Year (a) before the Plan
became top-heavy or (b) in which the Plan is top-heavy, shall have the right to
elect to continue to have the vesting schedule in effect on the last day of such
Plan Year applied to all of his benefits under the Plan. Further, no reduction in
vested benefits may occur in the event the Plan’s status as top-heavy changes for
any Plan Year.
	 
	 	(f)	 	Minimum Required Contribution. It is intended that the Company or
an Affiliated Company will meet the minimum contribution requirements of Section
416(c) of the Code by providing a minimum contribution (which may include forfeitures
otherwise allocable) without regard to any Social Security contributions for such
Plan Year for each Participant who is a non-key employee in an amount equal to at
least 3% of such Participant’s compensation (as defined in Treasury Regulation
Section 1.415-2(d)) for such Plan Year. The minimum contribution required shall be
made to any non-key employee who is still employed on the last day of the plan year
regardless as to the number of hours of Service performed during the year and
regardless of the employee’s level of compensation.
	 
	 	 	 	A Non-Key Employee who is also covered under a defined benefit plan that is part
of the same Aggregation Group shall receive his minimum benefit under the defined
benefit plan, offset by the actuarially determined value of the minimum
contribution made under this Plan.
	 
	 	 	 	If for the Plan Year the Plan becomes a super top-heavy plan, then the denominator
of both the defined contribution plan fraction and the defined benefit plan
fraction shall be calculated as set forth in Section 14.01(b) for the limitation
year ending in such Plan Year by substituting “1.0” for “1.25” in each place such
figure appears.
	 
	 	 	 	The percentage minimum contribution required hereunder shall in no event exceed
the percentage contribution made for the Key Employee for whom such percentage is
the highest for the Plan Year after taking into account contributions or benefits
under other qualified plans in this Plan’s aggregation group providing no other
defined benefit plan uses the defined contribution plan to satisfy Code Section
401(a) as provided in Section 416(c)(2)(B)(ii) of the Code.

76

 

ARTICLE 15

ADOPTION AND WITHDRAWAL FROM PLAN BY AFFILIATED COMPANY

	15.01	 	Adoption by Affiliated Company. Any Affiliated Company, whether or not presently
existing, may, with the approval of the Committee, adopt this Plan with respect to its
Participating Unit and thereby become a Participating Company hereunder by executing an
instrument evidencing such adoption on the order of its governing body (or its delegate) and
filing a copy thereof with the Committee and the Trustee. Such adoption may be subject to
such terms and conditions as the Committee requires or approves. By their adoption of the
Plan, Participating Companies other than RAI shall be deemed to consent to actions taken by
RAI or its designated subsidiary in entering into the Trust Agreement and any other
arrangements for the purpose of providing benefits under the Plan, and to authorize RAI to
take any actions within the authority of RAI under the terms of the Plan and the Trust
Agreement. Notwithstanding any provision of the Plan to the contrary, the amount to be
contributed to the Plan by each such Participating Company shall be conditioned upon the
qualification of the Plan as to it under Code Section 401(a). In addition, RAI retains the
sole and absolute right to determine funding and expense allocations under the Plan.
	 
	15.02	 	Withdrawal. Any Participating Company may at any time withdraw its Participating
Unit from the Plan upon giving the Committee notice of its intention to withdraw. The
Committee in its discretion may direct that any Participating Company or Participating Unit
withdraw from the Plan.

******

77

 

     IN WITNESS WHEREOF, the undersigned member of the Committee has executed this Amendment
and Restatement of the RAI 401k Savings Plan on January 11, 2010.

	 	 	 	 	 
	 	RAI Employee Benefits Committee

 	 
	 	By:  	/s/
McDara P. Folan, III 	 

78

 

SCHEDULE A

COMPENSATION

	I.	 	The following payments are included as Compensation:

	 	 	Basic Salary.

	 	 	Overtime.

	 	 	Shift Premium Pay.

	 	 	Commissions.

	 	 	Sales incentive payments paid in cash.

	 	 	Vacation Pay (except as noted in Part II below).

Annual Incentive Award Plan bonus or any similar management bonus if (i) payment is made on a
non-deferred basis and (ii) the total aggregate amount of such bonuses does not exceed the
regular AIAP award for the plan year and/or the maximum award payable under the AIAP.
Notwithstanding the above, Performance Notes and/or Restricted Stock Units issued as part
of a regular grant under an AIAP plan (other than discounted purchased Notes or Units)
shall be included in Compensation.

Compensation deferred pursuant to salary reduction arrangement under Code Sections 401(k) or 125
to which the Company makes contributions.

Lump Sum payments in lieu of an increase in basic salary (except for Transitional
Employees).

Cash denominated awards under the LTIP which are granted in lieu of regular AIAP awards or
on a contractually required annual basis.

	 	 	Salary continuation payments prior to the Severance Date.

	 	 	All U.S. based payroll amounts whether or not the employee is U.S. based.

	II.	 	The following payments are not included as Compensation:

	 	 	Vacation Pay taken in lieu of vacation.

	 	 	Moving expenses.

	 	 	Housing differential.

	 	 	Bonus or other award payment which have been previously deferred.

	 	 	Change of control bonus.

	 	 	Stay-on/completion bonus.

Special incentive or bonus payments paid on an irregular or one-time basis unless designated for
inclusion by the CEO.

Company contributions under any employee benefit plan (except contributions on account of
employee elections to defer salary under Code Sections 401(k), 125 or 132(f)).

	 	 	Any other form of compensation not listed in Part I.

	 	 	Salary continuation or separation pay payments made after the Severance Date.

Schedule A

Page 1 of 1

 

 

SCHEDULE B

PARTICIPATING UNITS

	 	 	 
	Participating Company	 	Participating Unit
	R. J. Reynolds Tobacco Company

	 	All Employees
	 
	 	 
	R. J. Reynolds Global Products, Inc.

	 	All Employees
	 
	 	 
	Reynolds American Inc.

	 	All Employees
	 
	 	 
	Reynolds Finance Company

	 	All Employees
	 
	 	 
	Santa Fe Natural Tobacco Company, Inc.

	 	All Employees, excluding
Employees in the Santa Fe
Executive Department who are
paid on a monthly payroll
	 
	 	 
	 

	 	* All Employees in the Santa
Fe Executive Department who
are paid on a monthly
payroll
	 
	 	 
	American Snuff Company, LLC (f/k/a Conwood Company, LLC)

	 	All Employees, excluding
Employees of the Scott
Tobacco division and
Employees transferred to or
hired into the ASC Executive
Department (f/k/a the
Conwood Executive
Department) on or after
January 1, 2007 who are paid
on a monthly payroll
	 
	 	 
	 

	 	* All Employees transferred
to or hired into the ASC
Executive Department (f/k/a
the Conwood Executive
Department) on or after
January 1, 2007 who are paid
on a monthly payroll
	 
	 	 
	RAI International, Inc.

	 	All Employees
	 
	 	 
	Lane, Limited

	 	All Employees, excluding
Employees transferred to or
hired into the Lane
Executive Department on or
after January 1, 2008 who
are paid on a monthly
payroll
	 
	 	 
	 

	 	* All Employees transferred
to or hired into the Lane
Executive Department on or
after January 1, 2008 who
are paid on a monthly
payroll
	 
	 	 
	Reynolds Innovations Inc.

	 	All Employees
	 
	 	 
	RAI Services Company

	 	All Employees

-i-

 

	 	 	 
	Participating Company	 	Participating Unit
	Niconovum USA, Inc.

	 	All Employees

 

			
	*	 	The above-marked Employee groups will be collectively referred to as the
“Affiliate Executive Department” for all purposes under the Plan, and the Affiliate
Executive Department shall be considered a Participating Unit for purposes of the Plan.

-ii-

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