EXHIBIT 10n1
FORTUNE BRANDS, INC.
COMPENSATION AGREEMENTS
TRUST AGREEMENT
THIS AGREEMENT, made as of the day of , , among FORTUNE
BRANDS, INC., a Delaware corporation (the "Company"), THE NORTHERN TRUST
COMPANY, an Illinois corporation (the "Trustee") and XXXXXX ASSOCIATES LLC, a
limited liability company formed under the laws of Illinois (the
"Recordkeeper").
W I T N E S S E T H :
WHEREAS, the Company has entered into agreements ("Compensation
Agreements") with certain executives (individually, an "Executive") to provide
benefits in the event of the termination of employment under certain
circumstances following a change in control of the Company; and
WHEREAS, the Company desires to provide additional assurance to such
Executives and their surviving spouses, if any, beneficiaries or estates
(collectively, the "Beneficiaries") that their unfunded benefits under the
Compensation Agreements (other than the additional pension benefits) will in the
future be met or substantially met by application of the procedures set forth
herein;
WHEREAS, the Company wishes to establish \a trust with\ separate accounts
(the "Accounts") with respect to the Executives in order to provide a source of
payments as such payments are required under the terms of the Compensation
Agreements;
WHEREAS, amounts transferred to each separate Account and the earnings
thereon shall be used solely in satisfaction of the liabilities of the Company
under the Compensation Agreement with respect to the Executive for whom such
separate Account has been established and expenses as provided herein and such
utilization shall be in accordance with the procedures set forth herein;
WHEREAS, upon satisfaction of all liabilities of the Company under the
Compensation Agreement with respect to the Executive in respect of whom a
separate Account has been established, the balance, if any, remaining in such
Account shall be allocated to the Accounts of other Executives for whom such
accounts have been established in accordance with the procedures set forth
herein;
WHEREAS, upon satisfaction of all liabilities of the Company under the
Compensation Agreements with respect to all the Executives in respect of whom
separate Accounts have been established, the balance, if any, remaining in such
Accounts shall revert to the Company, except that all amounts in all such
Accounts shall at all times be subject under this Agreement to the claims of the
Company's creditors as hereinafter provided;
NOW, THEREFORE, in consideration of the premises and mutual and independent
promises herein, the parties hereto covenant and agree as follows:
ARTICLE I
1.1 The Company hereby establishes with the Trustee a Trust consisting of
such sums of money and such property acceptable to the Trustee as shall from
time to time be paid or delivered to the Trustee and the earnings and profits
thereon. All such money and property, all
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investments made therewith and proceeds thereof, less the payments or other
distributions which, at the time of reference, shall have been made by the
Trustee, as authorized herein, are referred to herein as the "Fund" and shall be
held by the Trustee, IN TRUST, in accordance with the provisions of this
Agreement.
1.2 The Trustee shall hold, manage, invest and otherwise administer the
Fund pursuant to the terms of this Agreement. The Trustee shall be responsible
only for contributions actually received by it hereunder and shall have no
responsibility for the correctness of the amount thereof. Upon a Change of
Control of the Company (as defined below), and from time to time thereafter, the
Company shall contribute to the Trust such amount in cash as the Company shall
determine to be appropriate to provide a source of the payments required under
the terms of the Compensation Agreements. It is contemplated that the initial
contribution by the Company shall be in an amount not less than the amount to
which the Executive or his Beneficiaries would be entitled under Section 2 of
the Compensation Agreement (other than Sections 2(c) and (f) thereof). It is
further contemplated that the Company will make additional contributions to the
Trust upon the furnishing to the Recordkeeper of the annual updated benefit
information specified in Section 3.3 in amounts such that the amount of each
Account at such time is not less than the amounts set forth in the preceding
sentence. The Company may also make contributions prior to a Change of Control
provided that the amounts and timing of all such contributions shall be at the
discretion of the Company, and the Company shall have no obligation to make
contributions prior to a Change of Control in any specific amount or at any
specific time.
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A Change of Control of the Company shall be deemed to have occurred if (i)
any person (as that term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on September
23, 2002), is or becomes the beneficial owner (as that term is used in Section
13(d) of the Exchange Act, and the rules and regulations promulgated thereunder,
as in effect on September 23, 2002) of 20% or more of the combined voting power
of the outstanding voting securities entitled to vote generally in the election
of directors ("Voting Securities") of the Company, excluding, however, (A) any
acquisition directly from the Company, other than an acquisition by virtue of
the exercise of a conversion privilege unless the security being so converted
was itself acquired directly from the Company; (B) any acquisition by an
employee benefit plan (or related trust) sponsored or maintained by the Company
or an entity controlled by the Company , or (C) any acquisition by the Company,
or (D) any acquisition pursuant to a transaction that complies with clauses (A),
(B) and (C) of clause (iii) below; (ii) more than 50% of the members of the
Board of Directors of the Company shall not be Continuing directors (which term,
as used herein, means the directors of the Company (A) who were members of the
Board of Directors of the Company on September 23, 2002 or (B) who subsequently
become directors of the Company and who were elected or designated to be
candidates for election as nominees of the Board of Directors, or whose election
or nomination for election by the Company's stockholders was otherwise approved,
by a vote of a majority of the Continuing Directors then on the Board of
Directors but shall not include, in any event, any individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14(a)-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a person other than the Board of
Directors); (iii) the Company shall
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be merged or consolidated with, or, in any transaction or series of
transactions, substantially all of the business or assets of the Company shall
be sold or otherwise acquired by, another corporation or entity unless, as a
result thereof, (A) the stockholders of the Company immediately prior thereto
shall beneficially own, directly or indirectly, at least 60% of the combined
Voting Securities of the surviving, resulting or transferee corporation or
entity (including, without limitation, a corporation that as a result of such
transaction owns the Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries)("Newco") immediately
thereafter in substantially the same proportions as their ownership immediately
prior to such corporate transaction, (B) no person beneficially owns (as such
terms are used in Section 13(d) of the Exchange Act, and the rules and
regulations promulgated thereunder (as in effect on September 23, 2002)),
directly or indirectly, 20% or more of the combined Voting Securities of Newco
immediately after such corporate transaction except to the extent that such
ownership of the Company existed prior to such corporate transaction and (C)
more than 50% of the members of the Board of Directors of Newco shall be
Continuing Directors: or (iv) the stockholders of the Company approve a complete
liquidation or dissolution of the Company. The Company shall immediately
notify the Trustee and the Recordkeeper of any Change of Control. The Trustee
may conclusively rely upon such notice and shall have no duty to determine
whether a Change of Control has occurred.
1.3 The Recordkeeper shall establish and maintain a separate Account for
each Executive in which it shall keep a separate record of the share of the
Executive in the Fund. Net investment gains and losses (I.E., appreciation or
depreciation in the value of assets, income and losses) shall be allocated by
the Recordkeeper proportionately among Executives' Accounts.
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The Company shall certify to the Recordkeeper and the Executive at the time of
each contribution to the Fund the amount of such contribution being made in
respect of the Executive. The Fund shall be revalued by the Trustee semiannually
as of the last business day of each June and December at current market values,
as determined by the Trustee, which shall promptly deliver a copy of such
semiannual valuation to the Recordkeeper. The Recordkeeper shall deliver to the
Company and the Executive or Beneficiary of the Executive for whom the Account
has been established the semiannual statement of the Account reflecting such
revised valuation.
ARTICLE II
2.1 Notwithstanding any provision in this Agreement to the contrary, if at
any time while the Trust is still in existence the Company becomes insolvent (as
defined herein), the Trustee shall upon receipt of written notice thereof
suspend the payment of all benefits from the Fund and shall thereafter hold the
Fund in suspense until it receives a court order directing the disposition of
the Fund; provided, however, the Trustee may deduct or continue to deduct its
fees and expenses and other expenses of the Trust, including taxes and the
Recordkeeper's fees and expenses, pending the receipt of such court order. The
Company shall be considered to be insolvent if (a) it is unable to pay its debts
as they fall due or (b) bankruptcy or insolvency proceedings are initiated by
its creditors or the Company or any third party under the Bankruptcy Act of the
United States or the bankruptcy laws of any state alleging that the Company is
insolvent or bankrupt. By its approval and execution of this Agreement, the
Company represents and agrees that its Board of Directors and Chief Executive
Officer, as from time to time acting, shall have the responsibility to give to
the Trustee prompt written notice of any event of the Company's insolvency and
the Trustee shall be entitled to rely thereon to the exclusion of all
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directions or claims to pay benefits thereafter made. Absent such notice, the
Trustee shall have no responsibility for determining whether the Company has
become insolvent. If after an event of insolvency, the Company later becomes
solvent without the entry of a court order concerning the disposition of the
Fund, the Company shall by written notice so inform the Trustee and the Trustee
shall thereupon resume all its duties and responsibilities under this Agreement
without regard to this Section 2.1 until and unless the Company again becomes
insolvent as such term is defined herein. If the Trustee has suspended payments
pursuant to this Section 2.1 and thereafter resumes payments pursuant to a court
order or notice from the Company as set forth in the preceding sentence, the
Recordkeeper shall direct the Trustee to pay any benefits payable with respect
to the Executive that have not been paid during the period of suspension which
shall then immediately be paid, together with interest thereon calculated by the
Recordkeeper on the basis of the return earned during such period of suspension
by the Diversified Assets Portfolio of The Northern Institutional Funds.
2.2 The Company represents and agrees that the Trust established under this
Agreement does not fund and is not intended to fund the Compensation Agreements,
or any other employee benefit plan or program of the Company. Such Trust is and
is intended to be a depository arrangement with the Trustee for the setting
aside of cash and other assets of the Company for the meeting of part or all of
its future obligations to the Executives and their Beneficiaries under the
Compensation Agreements. The purpose of this Trust is to provide a fund from
which retirement benefits may be payable under the Compensation Agreements and
as to which Executives with Accounts hereunder and their Beneficiaries may, by
exercising the procedures set forth herein, have access to some or all of their
benefits as such become due
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without having the payment of such benefits subject to the administrative
control of the Company unless the Company becomes insolvent as defined in
Section 2.1. The Company represents that the amounts to be contributed to this
Trust are not for the purpose of providing benefits under (i) a plan that is tax
qualified under Section 401 of the United States Internal Revenue Code or
subject to any of the Internal Revenue code requirements applicable to tax
qualified plans or (ii) a program subject to the Employee Retirement Income
Security Act.
ARTICLE III
3.1 Xxxxxx Associates LLC is hereby appointed as Recordkeeper under this
Agreement. It is herein recognized that said Recordkeeper is also acting as the
independent consulting actuary of the Company and that the Trustee shall have no
responsibility hereunder for the continued retention of Xxxxxx Associates LLC,
or any responsibility assigned to the Recordkeeper or its performance. In the
event the Company replaces or no longer uses said firm as its independent
consulting actuary, the Company in its sole discretion may, but need not,
designate a new Recordkeeper or may continue to use the same Recordkeeper; or in
the event said firm does not accept its designation as Recordkeeper or accepts
said designation and subsequently resigns, the Company shall designate a new
Recordkeeper; provided, however, any Recordkeeper shall be independent of the
Company. A Recordkeeper must be a national actuarial consulting firm or a "Big
5" accounting firm or other national accounting firm. In the event any such firm
refuses to act as the Recordkeeper, the Company shall appoint as the
Recordkeeper a law firm of at least 100 lawyers. The Company shall pay to the
Recordkeeper all fees and expenses of the Recordkeeper and shall indemnify and
hold the Trustee harmless for any actions or omissions of said Recordkeeper and
shall indemnify and hold the Recordkeeper
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harmless for any actions or omissions of the Trustee. Such fees and expenses
shall be a charge on the Fund and shall constitute a lien in favor of the
Recordkeeper until paid by the Company. The Recordkeeper shall be paid for its
services at rates comparable to the rates the Recordkeeper charges for
comparable services to its other clients.
3.2 Except for the records dealing solely with the Fund and its investment,
which shall be maintained by the Trustee, the Recordkeeper shall maintain all
the Executive's records contemplated by this Agreement, including the
maintenance of the separate Accounts of each Executive as contemplated by this
Agreement, records of the Executive's compensation and benefits, the amount of
his benefits accrued under the Compensation Agreement, the Executive's
Beneficiary designation, the Company's contributions to the Fund and such other
records as may be necessary for determining the amount payable to each Executive
or his Beneficiary under the Compensation Agreement. All such records shall be
made available promptly upon the request of the Trustee, the Executive or his
Beneficiary or the Company. The Recordkeeper shall also prepare and distribute
the Executive's annual estimated benefit statements specified in Section 3.3 and
shall be responsible for information with respect to payments to the Executives
and their Beneficiaries and shall perform such other duties and responsibilities
as the Company or the Trustee determines is necessary or advisable to achieve
the objectives of this Agreement.
3.3 Upon the establishment of this Trust or as soon thereafter as
practicable, the Company shall furnish to the Recordkeeper all the information
necessary in order for the Recordkeeper to determine the benefits payable to or
with respect to each Executive under the Compensation Agreements, including any
benefits payable after the Executive's death and the recipient of same and the
amount of any applicable federal, state or local withholding taxes with
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respect thereto. The Company shall regularly, at least annually by March 31 of
each year, furnish revised updated information to the Recordkeeper. Based on the
foregoing information the Recordkeeper shall prepare an annual estimated
statement in respect of each Executive and shall furnish a copy of same to the
Executive or his Beneficiary and to the Company by no later than May 15 of each
year. In the event the Company refuses or neglects to provide updated Executive
information, as contemplated herein, the Recordkeeper shall be entitled to rely
upon information furnished to it by the Executive.
3.4 Upon the direction of the Company or upon the application of the
Executive or Beneficiary of a deceased Executive by submission of a Payment
Demand Notice in the form attached hereto as Exhibit A, a copy of which shall be
delivered by the Recordkeeper to the Company, the Recordkeeper shall prepare and
deliver to the Trustee within thirty days of receipt of such direction or
application a certification to the Trustee that the Executive's benefits under
the Compensation Agreement have become payable, and shall deliver a copy of such
certification to the Company and to the Executive or Beneficiary. In preparing
such certification, the Recordkeeper shall obtain updated information from the
Company for calculating benefits under the Compensation Agreement. In the event
the Company refuses or neglects to provide updated information, the Recordkeeper
shall be entitled to rely upon information furnished to it by the Executive.
Such certification shall include the amount of such payments to be made under
the Compensation Agreement, the manner of payment and the name, address and
social security number of the recipient. No later than five days after the
receipt of such certification from the Recordkeeper and appropriate federal,
state and local tax withholding information provided by the Company, the Trustee
shall commence cash distributions from the Fund in
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accordance therewith to the person or persons so indicated and shall distribute
to the Company for remittance to the appropriate taxing authority the amounts of
any taxes directed to be withheld, and the Recordkeeper shall charge the
Executive's Account established hereunder. The Company shall have sole
responsibility for any tax withholdings, filings and reports, and the Trustee
shall withhold such amounts from distributions as the Company shall direct. The
Company shall have full responsibility for the proper remittance of all
withholding taxes to the appropriate taxing authority and shall furnish each
Executive or Beneficiary, the Recordkeeper and the Trustee with the appropriate
tax information form reporting the amounts of such distributions and any
withholding taxes. The certification by the Recordkeeper shall also be updated
annually upon receipt by the Recordkeeper of updated compensation and service
information from the Company (or the Executive in the event of the failure of
the Company to provide such information) and the annual updated certification
shall be delivered to the Company and the Executive or his Beneficiary. The
amounts payable in respect of the updated certificate shall be adjusted to the
extent, if any, set forth in the certificate.
3.5 The Recordkeeper shall charge all benefits payable from the Fund to an
Executive or Beneficiary solely to the Account of such Executive. Upon the
payment of all Company liabilities under the Compensation Agreement to an
Executive or Beneficiary for whom an Account has been established hereunder, the
Recordkeeper shall prepare a certification to the Trustee, the Executive or his
Beneficiary and to the Company showing the balance, if any, remaining in such
Executive's Account. Such balance shall thereupon be reallocated ratably by the
Recordkeeper to the Accounts of Executives continuing to be covered by a
Compensation Agreement and their Beneficiaries (including Accounts which may
have previously been reduced
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to a zero balance) in the ratio that liabilities in respect of each such
Executive and Beneficiary under the Compensation Agreements bear to the total
liabilities to all such Executives and Beneficiaries under the Compensation
Agreements. Upon the payment of all liabilities of the Company under the
Compensation Agreements to Executives and Beneficiaries for whom Accounts have
been established hereunder, the Recordkeeper shall prepare a certification to
the Trustee and to the Company, and the Trustee shall thereupon hold or
distribute the Fund in accordance with the written instructions of the Company.
At no time prior to the Company's insolvency, as defined in Section 2.1, or the
payment of all liabilities of the Company under the Compensation Agreements in
respect of all the Executives and Beneficiaries shall any part of the Fund
revert to the Company nor shall any portion of an Executive's Account be used
for a purpose other than providing the Executive's benefits under the
Compensation Agreement. The Trustee and the Recordkeeper shall have no
responsibility for determining whether any Executive or Beneficiary has died and
shall be entitled to rely upon information furnished by the Company or, in the
absence of such information from the Company, from the Beneficiary.
3.6 Nothing provided in this Agreement shall relieve the Company of its
liabilities to pay the benefits provided under the Compensation Agreement except
to the extent such liabilities are met by application of Fund assets. It is the
intent of the Company to have each Account established hereunder treated as a
separate account designed to satisfy in whole or in part the Company's legal
liability under the Compensation Agreements in respect of the Executive for whom
such Account has been established. The Company, therefore, agrees that all
income, deductions and credits of each such Account belong to it as owner for
income tax purposes and will be included on the Company's income tax returns.
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ARTICLE IV
4.1 The Company shall provide the Recordkeeper with a complete copy of the
Compensation Agreements and all amendments thereto and of the resolutions of the
Board of Directors of the Company or its Compensation and Stock Option Committee
approving the Compensation Agreements and all amendments thereto, promptly upon
their adoption. After the execution of this Agreement, the Company shall
promptly file with the Trustee and the Recordkeeper a certified list of the
names of the officers of the Company and any delegate authorized to act for it.
The Company shall promptly notify the Trustee and the Recordkeeper of the
addition or deletion of any person's name to or from such list, respectively.
Until receipt by the Trustee or the Recordkeeper of notice that any person is no
longer authorized so to act, the Trustee or the Recordkeeper may continue to
rely on the authority of the person. All certifications, notices and directions
by any such person or persons to the Trustee or the Recordkeeper shall be in
writing signed by such person or persons. The Trustee and the Recordkeeper may
rely on any such certification, notice or direction purporting to have been
signed by or on behalf of such person or persons that the Trustee or the
Recordkeeper believes to have been signed thereby. The Trustee and the
Recordkeeper may rely on any certification, notice or direction of the Company
that the Trustee or the Recordkeeper believes to have been signed by a duly
authorized officer or agent of the Company. The Trustee and the Recordkeeper
shall have no responsibility for acting or not acting in reliance upon any
notification believed by the Trustee or the Recordkeeper to have been so signed
by a duly authorized officer or agent of the Company. The Company shall be
responsible for keeping accurate books and records with respect to each
Executive, his compensation and his rights and interests in the Fund under the
Compensation Agreement.
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4.2 The Company (which has the authority to do so under the laws of its
state of incorporation) shall indemnify The Northern Trust Company, and defend
it and hold it harmless from and against any and all liabilities, losses,
claims, suits or expenses (including reasonable attorneys' fees) of whatsoever
kind and nature which may be imposed upon, asserted against or incurred by The
Northern Trust Company at any time (i) by reason of its carrying out its
responsibilities or providing services under this Trust Agreement, or its status
as Trustee, or by reason of any act or failure to act under the Trust Agreement,
except to the extent that any such liability, loss, claim, suit or expense
arises directly from Trustee's negligence or willful misconduct in the
performance of responsibilities specifically allocated to it under this Trust
Agreement, or (ii) by reason of the Compensation Agreement's or Trust's being
subject to the requirements of the Employee Retirement Income Security Act.
This paragraph shall survive the termination of this Trust Agreement.
4.3 The Company shall indemnify and hold harmless the Recordkeeper for any
liability or expenses, including without limitation advances for or prompt
reimbursement of reasonable fees and expenses of counsel and other agents
retained by it, incurred by the Recordkeeper with respect to keeping the records
for the Executive's Accounts, reporting thereon to Executives, certifying
benefit information to the Trustee, determining the status of Accounts and
benefits hereunder and otherwise carrying out its obligations under this
Agreement, other than those resulting from the Recordkeeper's negligence or
willful misconduct. This paragraph shall survive the termination of this Trust
Agreement.
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ARTICLE V
5.1 The Trustee shall not be liable in discharging its duties hereunder,
including without limitation its duty to invest and reinvest the Fund, if it
acts in good faith and in accordance with the terms of this Agreement.
5.2 The Trustee shall invest the assets of the Fund solely in the Northern
Trust Institutional Funds Intermediate Bond Portfolio to the extent such fund is
available and otherwise in the Northern Trust Institutional Funds Diversified
Asset Portfolio to the extent such fund is available; provided that if neither
fund is available, the Trustee shall notify the Company in writing, in which
case the Company shall direct the Trustee in writing to invest the assets of the
Fund in another money market fund managed by the Trustee or an affiliated
entity. Subject to such investment restrictions, the Trustee shall have the
power and right:
(a) To receive and hold all contributions made to it by the Company;
(b) To participate in and use a book-entry system for the deposit and
transfer of securities;
(c) To sell or exchange any property held by it at public or
private sale, for cash or on credit, to grant and exercise options for the
purchase or exchange thereof, to exercise all conversion or subscription rights
pertaining to any such property and to enter into any covenant or agreement to
purchase any property in the future;
(d) To participate in any plan of reorganization, consolidation,
merger, combination, liquidation or other similar plan relating to property held
by it and to consent to or oppose any
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such plan or any action thereunder or any contract, lease, mortgage, purchase,
sale or other action by any person;
(e) To deposit any property held by it with any protective,
reorganization or similar committee, to delegate discretionary power thereto,
and to pay part of the expenses and compensation thereof and any assessments
levied with respect to any such property so deposited;
(f) To extend the time of payment of any obligation held by it;
(g) To hold uninvested any moneys received by it, without
liability for interest thereon, until such moneys shall be invested, reinvested
or disbursed;
(h) To exercise all voting or other rights with respect to any
property held by it and to grant proxies, discretionary or otherwise;
(i) For the purposes of the Trust, to borrow money from others,
including The Northern Trust Company, to issue its promissory note or notes
therefor, and to secure the repayment thereof by pledging any property held by
it;
(j) To furnish the Company, the Recordkeeper and the Executives or
their Beneficiaries with such information as may be needed for tax or other
purposes;
(k) To employ suitable agents and counsel, who may be counsel to
the Company or the Trustee, including, without limitation, Xxxxxx Associates LLC
and PricewaterhouseCoopers LLP, and to pay their reasonable expenses and
compensation from the Fund to the extent not paid by the Company;
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(l) To cause any property held by it to be registered and held in
the name of one or more nominees, with or without the addition of words
indicating that such securities are held in a fiduciary capacity, and to hold
securities in bearer form;
(m) To settle, compromise or submit to arbitration any claims,
debts or damages due or owing to or from the Trust, respectively, to commence or
defend suits or legal proceedings to protect any interest of the Trust, and to
represent the Trust in all suits or legal proceedings in any court or before any
other body or tribunal; provided, however, that the Trustee shall not be
required to take any such action unless it shall have been indemnified by the
Company to its full satisfaction against liability or expenses it might incur
therefrom;
(n) To organize under the laws of any state a corporation or trust
for the purpose of acquiring and holding title to any property which it is
authorized to acquire hereunder and to exercise with respect thereto any or all
of the powers set forth herein; and
(o) Generally, to do all acts, whether or not expressly
authorized, that the Trustee may deem necessary or desirable for the protection
of the Fund.
5.3 No person dealing with the Trustee shall be under any obligation to see
to the proper application of any money paid or property delivered to the Trustee
or to inquire into the Trustee's authority as to any transaction. The
Recordkeeper's obligations are limited solely to those explicitly set forth
herein and the Recordkeeper shall have no responsibility, authority or control,
direct or indirect, over the maintenance or investment of the Fund and shall
have no obligation in respect of the Trustee or the Trustee's compliance with
the Recordkeeper's certifications to the Trustee.
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5.4 The Trustee shall distribute cash from the Fund in accordance with
Article III hereof.
The Trustee may make any distribution required hereunder by mailing its
check for the specified amount to the person to whom such distribution or
payment is to be made, at such address as may have been last furnished to the
Trustee, or if no such address shall have been so furnished, to such person in
care of the Company, or (if so directed by the Company) by crediting the account
of such person or by transferring funds to such person's account by bank or wire
transfer.
5.5 If at any time there is no person authorized to act under this
Agreement on behalf of the Company, the Board of Directors or the Compensation
and Stock Option Committee of the Company shall have the authority to act
hereunder.
ARTICLE VI
6.1 The Company shall pay any federal, state or local taxes on the Fund, or
any part thereof, and on the income therefrom.
6.2 The Company shall pay to the Trustee its reasonable expenses for the
management and administration of the Fund, including without limitation advances
for or prompt reimbursement of reasonable expenses of counsel and other agents
employed by the Trustee, and reasonable compensation for its services as Trustee
hereunder, the amount of which shall be agreed upon from time to time by the
Company and the Trustee in writing; provided, however, that if the Trustee
forwards an amended fee schedule to the Company requesting its agreement thereto
and the Company fails to object thereto within thirty (30) days of its receipt,
the amended
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fee schedule shall be deemed to be agreed upon by the Company and the Trustee.
Such expenses and compensation shall be paid from the Fund unless paid by the
Company. Any such expenses and compensation of the Trustee, and any fees and
expenses of the Recordkeeper, as provided in Section 3.1, under this Trust shall
be satisfied from the assets of each Account in proportion to the assets of each
Account.
ARTICLE VII
7.1 The Trustee shall maintain records with respect to the Fund that show
all its receipts and disbursements hereunder. The records of the Trustee with
respect to the Fund shall be open to inspection by the Company or its
representatives, and the Recordkeeper, at all reasonable times during normal
business hours of the Trustee and may be audited not more frequently than once
each fiscal year by an independent certified public accountant engaged by the
Company; provided, however, the Trustee shall be entitled to additional
compensation from the Company in respect of audits or auditors' requests which
the Trustee determines to exceed the ordinary course of the usual scope of such
examinations of its records.
7.2 Within a reasonable time after the close of each fiscal year of the
Company (or, in the Trustee's discretion, at more frequent intervals), or of any
termination of the duties of the Trustee hereunder, the Trustee shall prepare
and deliver to the Company and the Recordkeeper a statement of transactions
reflecting its acts and transactions as Trustee during such fiscal year, portion
thereof or during such period from the close of the last fiscal year or last
statement period to the termination of the Trustee's duties, respectively,
including a statement of the then current
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value of the Fund. Any such statement shall be deemed an account stated and
accepted and approved by the Company, and the Trustee shall be relieved and
discharged, as if such account had been settled and allowed by a judgment or
decree of a court of competent jurisdiction, unless protested by written notice
to the Trustee within sixty (60) days of receipt thereof by the Company. The
Recordkeeper shall also prepare and furnish to the Company a statement of the
then current value of each Account.
The Trustee shall have the right to apply at any time to a court of
competent jurisdiction for judicial settlement of any account of the Trustee not
previously settled as herein provided or for the determination of any question
of construction or for instructions. In any such action or proceeding it shall
be necessary to join as parties only the Trustee and the Company (although the
Trustee may also join such other parties as it may deem appropriate), and any
judgment or decree entered therein shall be conclusive.
ARTICLE VIII
8.1 The Trustee may resign at any time by delivering written notice thereof
to the Company; provided, however, that no such resignation shall take effect
until the earlier of (i) sixty (60) days from the date of delivery of such
notice to the Company or (ii) the appointment of a successor trustee.
8.2 The Trustee may be removed at any time by the Company, pursuant to a
resolution of the Board of Directors of the Company or its Compensation and
Stock Option Committee, upon delivery to the Trustee of a certified copy of such
resolution and sixty (60)
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days' written notice of (i) such removal and (ii) the appointment of a successor
trustee, unless such notice period is waived in whole or in part by the Trustee.
8.3 Upon the resignation or removal of the Trustee, a successor trustee
shall be appointed by the Company. Such successor trustee shall be a bank or
trust company established under the laws of the United States or a state within
the United States and having either total assets of at least $15 billion or
trust assets of at least $25 billion. Such appointment shall take effect upon
the delivery to the Trustee of (a) a written appointment of such successor
trustee, duly executed by the Company and (b) a written acceptance by such
successor trustee, duly executed thereby. Any successor trustee shall have all
the rights, powers and duties granted the Trustee hereunder.
8.4 If, within sixty (60) days of the delivery of the Trustee's written
notice of resignation, a successor trustee shall not have been appointed, the
Trustee shall apply to any court of competent jurisdiction for the appointment
of a successor trustee. All expenses of the Trustee in connection with the
proceeding shall be allowed as administrative expenses of the Trust.
8.5 Upon the resignation or removal of the Trustee and the appointment of a
successor trustee, and after the acceptance and approval of its account, the
Trustee shall transfer and deliver the Fund to such successor trustee. The
Trustee shall not transfer or deliver the Fund to any successor trustee unless
and until such successor trustee provides the Trustee with a written
certification that it is a bank or trust company having either total assets of
at least $15 billion or trust assets of at least $25 billion. The Trustee may
conclusively rely on such written
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certification from the successor trustee that it meets the criteria specified in
the immediately preceding sentence.
ARTICLE IX
9.1 The Trust established pursuant to this Agreement may not be terminated
by the Company prior to the payment of all liabilities with respect to all
Executives and their Beneficiaries. Upon receipt by the Company of a written
certification from the Recordkeeper that all liabilities have been paid with
respect to all Executives and their Beneficiaries under the Compensation
Agreements, the Company pursuant to a resolution of its Board of Directors or
Compensation and Stock Option Committee may terminate the Trust upon delivery to
the Trustee of (a) a certified copy of such resolution, (b) an original
certification of the Recordkeeper that all such liabilities have been paid and
(c) a written instrument of termination duly executed and acknowledged in the
same form as this Agreement. Notwithstanding the above, the Trust shall
terminate on the date on which there are no longer any assets held in the Trust.
9.2 Upon the termination of the Trust in accordance with Section 9.1, the
Trustee shall, after the acceptance and approval of its account, distribute any
remaining portion of the Fund to the Company. Upon completing such distribution
or when there are no assets remaining in the Trust, the Trustee shall be
relieved and discharged. The powers of the Trustee shall continue as long as any
part of the Fund remains in its possession.
ARTICLE X
10.1 This Agreement may be amended, in whole or in part, at any time and
from time to time, by the Company pursuant to a resolution of the Board of
Directors or Compensation and
22
Stock Option Committee thereof, a certified copy of which shall be delivered to
the Trustee, and by a written instrument duly executed by the Company, the
Trustee and the Recordkeeper in the same form as this Agreement; provided,
however, that no amendment shall be effective that provides for using the assets
of the Trust or any Account for a purpose other than set forth in this Agreement
unless and until all liabilities to Executives and Beneficiaries under the
Compensation Agreements have been satisfied, as certified to in writing by the
Company (upon which certification the Trustee may conclusively rely without
further inquiry); and provided further that the investments that the Trustee is
required to make pursuant to the second sentence of Section 5.2 may not be
changed subsequent to a Change of Control.
ARTICLE XI
11.1 This Agreement shall be construed and interpreted under, and the Trust
hereby created shall be governed by, the laws of the State of Illinois. All
contributions to the Trustee shall be deemed to take place under the laws of the
State of Illinois.
11.2 Neither the gender nor the number (singular or plural) of any word
shall be construed to exclude another gender or number when a different gender
or number would be appropriate.
11.3 No right or interest of any Executive or Beneficiary under the Plan or
in the Fund shall be transferable or assignable or shall be subject to
alienation, anticipation or encumbrance, and no right or interest of any
Executive or Beneficiary in the Fund shall be subject to any garnishment,
attachment or execution. Notwithstanding the foregoing, the Fund
23
shall at all times remain subject to claims of creditors of the Company in the
event the Company becomes insolvent as provided in Section 2.1.
11.4 The Company agrees that by the establishment of this Trust it hereby
foregoes any judicial review of certifications by the Recordkeeper as to the
benefits payable to any persons hereunder. If a dispute arises as to the amounts
or timing of any such benefits or the persons entitled thereto under this
Agreement, the Company agrees that such dispute shall be resolved by binding
arbitration proceedings initiated in accordance with the rules of the American
Arbitration Association and that the results of such proceedings shall be
conclusive and shall not be subject to judicial review. It is expressly
understood that pending the resolution of any such dispute, payment of benefits
shall be made and continued by the Trustee in accordance with the certification
of the Recordkeeper and that the Trustee and the Recordkeeper shall have no
liability with respect to such payments. The Company also agrees to pay the
entire cost of any arbitration or legal proceeding with respect to any dispute
regarding the amounts or timing of benefits or the persons entitled thereto
initiated by the Company, the Trustee or any Executive or Beneficiary in the
event the Executive is deceased, including the legal fees of the Trustee or the
Executive or Beneficiary, regardless of the outcome of such proceeding and until
so paid the expenses thereof shall be a charge on and lien against the Fund. The
foregoing in no way limits the Trustee's right to proceed in a court of law with
respect to any dispute affecting its rights, duties and responsibilities.
11.5 This Agreement shall be binding upon and inure to the benefit of any
successor to the Company or its business as the result of merger, consolidation,
reorganization, transfer of assets or otherwise and any subsequent successor
thereto. In the event of any such merger,
24
consolidation, reorganization, transfer of assets or other similar transaction,
the successor to the Company or its business or any subsequent successor thereto
shall promptly notify the Trustee in writing of its successorship and furnish
the Trustee and the Recordkeeper with the information specified in Section 4.1
of this Agreement. In no event shall any such transaction described herein
suspend or delay the rights of the Executives or the Beneficiaries of deceased
Executives to receive benefits hereunder.
11.6 This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all of which shall together
constitute only one Agreement.
11.7 All notices and other communications provided for in this Agreement
shall be in writing and shall be deemed to have been duly given when actually
delivered to the respective addresses set forth below:
Company: FORTUNE BRANDS, INC.
000 Xxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Corporate Secretary
Trustee: The Northern Trust Company
Attn: Xxxxxx Xxxxxxxx (or current RM for Fortune Brands)
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Recordkeeper: Xxxxxx Associates LLC
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxx Xxxx Xxxxxxx
or at such other address as such person may specify in writing by notice as set
forth above to the
25
other persons listed above. Notices to an Executive or Beneficiary shall be sent
to the most current address of the Executive or Beneficiary set forth on the
records of the Company.
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed as of the day of , .
Attest: FORTUNE BRANDS, INC.
By:___________________________________
Print Name:___________________________
Title:________________________________
Attest: THE NORTHERN TRUST COMPANY
By:___________________________________
Print Name:___________________________
Title:________________________________
Witness: XXXXXX ASSOCIATES LLC
By:___________________________________
Print Name:___________________________
Title:________________________________
26
EXHIBIT A
XXXXXX ASSOCIATES LLC
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn:
FORM OF PAYMENT DEMAND NOTICE
NAME OF PARTICIPANT:
ADDRESS:
PHONE:
SSN OF PARTICIPANT:
The undersigned hereby demands payment of the amount to which he is entitled
under the Compensation Agreement dated ______________________________ pursuant
to the Fortune Brands, Inc. Compensation Agreement Trust Agreement dated as
of , among FORTUNE BRANDS, INC., THE NORTHERN TRUST COMPANY and
XXXXXX ASSOCIATES LLC.
________________________________________________
[NAME OF PARTICIPANT]
