Exhibit 10.6
RETENTION TRUST AGREEMENT
(a) This Agreement made this 13th day of May, 1998 by and between RJR
Nabisco, Inc. ("RJRN") and Wachovia Bank, N.A. ("Trustee");
(b) Whereas the Boards of Directors of RJRN and RJR Nabisco Holdings Corp.
(the "Board") have determined that it is desirable and appropriate for
RJRN to establish and maintain a program to retain certain key
personnel of RJRN and certain of its subsidiaries;
(c) WHEREAS, in furtherance of the foregoing, the Board has authorized RJRN
to establish a trust (hereinafter called "Trust") and to contribute to
the Trust assets that shall be held therein, until paid to employees of
RJRN, R.J. Reynolds Tobacco Company ("RJR") and/or their subsidiaries
in such manner and at such times as specified in Appendix A (such
payments, the "Payments" and such employees (or the personal
representatives of their estates), the "Trust beneficiaries");
(d) WHEREAS, it is the intention of RJRN to make contributions to the Trust
to provide a source of funds from which the Payments will be made;
NOW, THEREFORE, the parties do hereby establish the Trust and agree that the
Trust shall be comprised, held and disposed of as follows:
Section 1. Establishment of Trust.
(a) RJRN hereby deposits with Trustee in trust one-hundred dollars and zero
cents ($100.00), which shall become the principal of the Trust to be
held, administered and disposed of by Trustee as provided in this Trust
Agreement.
(b) The Trust hereby established by RJRN is irrevocable.
(c) The principal of the Trust and any earnings thereon shall be used
exclusively for the Payments as herein provided and for the payment of
such other amounts as are expressly provided herein.
(d) RJRN and any of its parent or subsidiaries, in its or their sole
discretion, may at any time, or from time to time, make additional
deposits of cash or other property acceptable to Trustee in the Trust
to augment the principal to be held, administered and disposed of by
Trustee as provided in this Trust Agreement. Neither Trustee nor any
Trust beneficiary shall have any right to compel additional deposits.
1
Section 2. Payments from the Trust.
(a) Payments to Trust Beneficiaries.
(1) Attached hereto as Appendix B is a schedule (the
"Payment Schedule") that indicates the amounts
payable as Payments in respect of each Trust
beneficiary, that provides a formula or other
instructions acceptable to Trustee for determining
the amounts so payable, the form in which such amount
is to be paid, and the time of Payment. As and to the
extent indicated in Appendix A, RJRN may deliver to
Trustee updated Payment Schedules from time to time.
Except as otherwise provided herein, Trustee shall
make Payments to the Trust beneficiaries in
accordance with the most recently dated Payment
Schedule in the possession of Trustee. Trustee shall
be entitled to rely conclusively upon such Payment
Schedule. Based on information provided to Trustee by
RJRN, RJR or a subsidiary, as appropriate, Trustee
shall make provision for the reporting and
withholding of any federal, state or local taxes that
may be required to be withheld with respect to the
Payments and shall pay amounts withheld to the
appropriate taxing authorities or determine that such
amounts have been reported, withheld and paid by
RJRN, RJR or any of their subsidiaries.
Notwithstanding any other provisions, Trustee may
deliver to RJRN, RJR or any of its subsidiaries the
amount of any federal, state or local tax withholding
for payment directly to the taxing authorities.
(2) RJRN shall make the initial
determination of Payments due to Trust beneficiaries;
provided, however, following this initial
determination, a Trust beneficiary may make
application to Trustee for an independent decision as
to the entitlement of the Trust beneficiary to a
Payment (including, but not limited to the amount,
form or timing of such a Payment). In the event of
such an application, Trustee shall, in each such
case, reach its own independent determination, in its
absolute and sole discretion, as to the Trust
beneficiary's entitlement to a Payment hereunder. In
making its determination, Trustee may consult with
and make such inquiries of such persons, including
the Trust beneficiary, RJRN, RJR, legal counsel or
other experts, as Trustee may reasonably deem
necessary. Any reasonable costs incurred by Trustee
in arriving at its determination shall be reimbursed
by RJRN and, to the extent not paid by RJRN within a
reasonable time, shall be charged to the Trust. RJRN
waives any right to contest any amount paid over by
Trustee hereunder pursuant to a determination made by
Trustee, notwithstanding any claim by or on behalf of
RJRN or RJR that such Payment should not be made.
(3) Trustee agrees that it will not itself
institute any action at law or at equity, whether in
the nature of an accounting, interpleading action,
request for a declaratory judgment or otherwise,
requesting a
2
court or administrative or quasi-judicial body to
make the determination required to be made by Trustee
under this Section 2 in the place and stead of
Trustee.
(b) Payments to RJRN. On an annual basis, or more frequently
if required, RJRN shall be entitled to receive, and the
Trustee is directed to pay, such amounts out of principal as
shall be required to discharge RJRN's tax liability (whether
federal, state or otherwise) in respect of the ordinary income
of, and gains realized by, the Trust which are taxable to
RJRN, if any, and the Trustee shall be entitled to rely on a
certification by RJRN of the amount of such taxes, if any.
Trustee shall provide the necessary tax information and
accounting to RJRN in support of the determination of taxable
ordinary income or taxable gains.
(c) No Reversion. Except as provided in Section 2(a)(i) and
2(b), neither RJRN nor any of its parent or subsidiaries shall
have any power to direct Trustee to return or pay to any of
them any of the Trust assets nor (except as otherwise
expressly provided herein) shall any person (including but not
limited to Trustee) have any right of set-off or counter claim
with respect to Trust assets arising from any claim against
RJRN or any of its affiliates.
Section 3. Investment Authority.
(a) In no event may Trustee invest in securities (including
stock or rights to acquire stock) or obligations issued by
RJRN or any parent or subsidiary other than a de minimus
amount held in common investment vehicles in which Trustee
invests. Subject to Section 3(b), all rights associated with
assets of the Trust shall be exercised by Trustee or the
person designated by Trustee, and shall in no event be
exercisable by or rest with Trust beneficiaries.
(b) Trustee shall have the power in investing and reinvesting the
Trust in its sole discretion as follows:
(1) To invest and reinvest, directly or indirectly,
in cash equivalents including, but not limited to,
U.S. Treasury Securities or other U.S. Government
obligations, A-1/P-1 commercial paper (including
commercial paper available through Trustee's Trust
Department), certificates of deposit issued by
financial institutions with short-term individual
ratings of "B" or better by IBCA or BankWatch
(including certificates issued by Trustee in its
corporate capacity) and similar securities with a
maturity of less than one year issued by financial
institutions with short-term individual ratings of
"B" or better by IBCA or BankWatch; provided, that
(except for U.S. Government obligations) no more than
10% of the trust assets may be held in the securities
of any single issuer. The Trustee may invest in
common funds or mutual funds which meet the
requirements set forth above, including such funds
3
maintained by Trustee. Short-term investments may be
made in cash, sweep or mutual funds.
(2) To retain any property at any time received by
Trustee;
(3) 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;
(4) 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 such plan or any
action thereunder or any contract, lease, mortgage,
purchase, sale or other action by any person;
(5) To deposit any property held by it with any
protective, reorganization or similar committee of
the issuer of any investment, 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;
(6) To extend the time of payment of any obligation held
by it;
(7) To hold in short-term cash or money market
instruments or uninvested any moneys received by it,
without liability for interest thereon, but only in
anticipation of payments due for investments,
reinvestments, expenses or disbursements;
(8) To exercise all voting or other rights with
respect to any property held by it and to grant
proxies, discretionary or otherwise;
(9) For the purposes of the Trust, to borrow money
from others, to issue its promissory note or notes
therefor, and to secure the repayment thereof by
pledging any property held by it;
(10) To employ suitable contractors and counsel, who
may be counsel to RJRN or RJR or to Trustee, and to
pay their reasonable expenses and compensation from
the Trust to the extent not paid by RJRN or RJR;
(11) To register investments in its own name or in
the name of a nominee; to hold any investment in
bearer form; and to combine certificates representing
securities with certificates of the same issue held
by it in other fiduciary capacities or to deposit or
to arrange for the deposit of such securities with
any depository, even though, when so deposited, such
securities may be held in the name of the nominee of
such depository with other securities deposited
therewith by other persons, or to deposit or to
arrange for the deposit of any securities
4
issued or guaranteed by the United States government,
or any agency or instrumentality thereof, including
securities evidenced by book entries rather than by
certificates, with the United States Department of
the Treasury or a Federal Reserve Bank, even though,
when so deposited, such securities may not be held
separate from securities deposited therein by other
persons; provided, however, that no securities held
in the Trust shall be deposited with the United
States Department of the Treasury or a Federal
Reserve Bank or other depository in the same account
as any individual property of the Trustee, and
provided, further, that the books and records of the
Trustee shall at all times show that all such
securities are part of the Trust;
(12) To settle, compromise or submit to arbitration
any investment-related claims, debts or damages due
or owing to or from the Trust, respectively, to
commence or defend such suits or legal proceedings to
protect any interest of the Trust, and to represent
the Trust in all such suits or legal proceedings in
any court or before any other body or tribunal;
provided, however, that Trustee shall not be required
to take any such action unless it shall have been
indemnified by RJRN to its reasonable satisfaction
against liability or expenses it might incur
therefrom;
(13) To hold and retain policies of life insurance,
annuity contracts, and other property of any kind
which policies are contributed to the Trust by RJRN
or any subsidiary of RJRN or are purchased by
Trustee;
(14) To hold any other class of assets which may be
contributed by RJRN or any subsidiary of RJRN and
that is deemed reasonable by the Trustee, unless
expressly prohibited herein;
(15) To loan any securities at any time held by it to
brokers or dealers upon such security as may be
deemed advisable, and during the terms of any such
loan to permit the loaned securities to be
transferred into the name of and voted by the
borrower or others; and
(16) Generally, to do all acts, whether or not
expressly authorized, that Trustee may deem necessary
or desirable for the protection of the Trust assets.
(c) Trustee shall have the sole and absolute discretion
in the management of the Trust assets and shall have all the
powers set forth under Section 3(b). In investing the Trust
assets, Trustee shall consider:
(1) the need for matching of the Trust assets with the
Payments; and
(2) the duty of Trustee to act solely in the best
interests of Trust beneficiaries.
5
(d) Trustee shall have the right, in its sole discretion,
to delegate its investment responsibility to an investment
manager who may be an affiliate of Trustee. In the event
Trustee shall exercise this right, Trustee shall remain, at
all times responsible for the acts of such investment manager.
Trustee shall have the right to purchase one or more insurance
policies or annuities to fund the Payments.
Section 4. Disposition of Income.
During the term of this Trust, all income received by the Trust, net of
expenses, taxes and Payments, shall be accumulated and reinvested and added to
principal whenever convenient.
Section 5. Accounting by Trustee.
Trustee shall keep accurate and detailed records of all investments, receipts,
disbursements, and all other transactions required to be made, including such
specific records as shall be agreed upon in writing between RJRN and Trustee.
Within forty-five (45) days following the close of each calendar year and within
forty-five (45) days after the removal or resignation of Trustee, Trustee shall
deliver to RJRN a written account of its administration of the Trust during such
year or during the period from the close of the last preceding year to the date
of such removal or resignation, setting forth all investments, receipts,
disbursements and other transactions effected by it, including a description of
all securities and investments purchased and sold with the cost or net
proceedings of such purchases or sales (accrued interest paid or receivable
being shown separately), and showing all cash, securities and other property
held in the Trust at the end of such year or as of the date of such removal or
resignation, as the case may be. RJRN may approve such account by an instrument
in writing delivered to Trustee. In the absence of RJRN's filing with Trustee
objections to any such account within ninety (90) days after its receipt, RJRN
shall be deemed to have so approved such account. In such case, or upon the
written approval by RJRN of any such account, Trustee shall, to the extent
permitted by law, be discharged from all liability to RJRN for its acts or
failures to act described by such account. The foregoing, however, shall not
preclude Trustee from having its accounting settled by a court of competent
jurisdiction.
Section 6. Responsibility of Trustee.
(a) Trustee shall act solely in the best interests of Trust
beneficiaries and shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a
prudent person acting in like capacity and familiar with such
matters would use in the conduct of an enterprise of a like
character and with like aims. Except as otherwise provided in
this Trust Agreement, in the event of a dispute involving the
Trust, Trustee may apply to a court of competent jurisdiction
to resolve the dispute.
(b) If Trustee undertakes or defends any litigation arising in
connection with this Trust, RJRN agrees to indemnify Trustee
against Trustee's costs and
6
expenses (including, without limitation, attorneys' fees and
expenses) relating thereto and to be primarily liable for such
payments. If RJRN does not pay such costs and expenses in a
reasonably timely manner, Trustee may obtain payment from the
Trust.
(c) Trustee may consult with legal counsel (who may also be
counsel for RJRN, RJR or Trustee) with respect to any of its
duties or obligations hereunder.
(d) Trustee may hire custodians, agents, accountants,
actuaries, investment advisors, financial consultants or other
professionals to assist it in performing any of its duties or
obligations hereunder and may reasonably rely on any
determinations made by such agents and information provided to
it by RJRN, RJR or their subsidiaries.
(e) Trustee shall have, without exclusion, all powers
conferred on trustees by applicable law, unless expressly
provided otherwise herein, provided, however, that if an
insurance policy is held as an asset of the Trust, Trustee
shall have no power to name a beneficiary of the policy other
than the Trust, to assign the policy (as distinct from
conversion of the policy to a different form) other than to a
successor Trustee, or to loan to any person the proceeds of
any borrowing against such policy.
(f) Notwithstanding any powers granted to Trustee pursuant to
this Trust Agreement or under applicable law, Trustee shall
not have any power that could give this Trust the objective of
carrying on a business and dividing the gains therefrom,
within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the
Internal Revenue Code.
(g) RJRN shall indemnify Trustee from and against any and all
claims, demands, losses, damages, expenses (including, by way
of illustration and not limitation, reasonable attorneys' fees
and other legal and litigation costs), judgments and
liabilities arising from, out of, or in connection with the
administration of the Trust, except when determined to be due
to Trustee's negligence or willful misconduct.
Section 7. Compensation and Expenses of Trustee.
Trustee's compensation is set forth on Appendix C to this Trust Agreement. RJRN
shall pay all administrative and Trustee's fees and expenses. If not so paid,
the fees and expenses shall be paid from the Trust.
Section 8. Resignation and Removal of Trustee.
(a) The trustee from time to time acting hereunder may only be
removed upon the written action of RJRN with the written
consent of a majority of Trust beneficiaries.
7
(b) If any trustee hereunder is removed, RJRN shall, prior to
the effective date of such removal and subject to the written
consent of a majority of Trust beneficiaries, apply to a court
of competent jurisdiction for the appointment of a bank or
trust company having trust powers or other party having
corporate trust powers under state law (a "Corporate
Successor") as successor trustee hereunder, who shall have all
of the rights and powers of the former trustee, including
ownership rights in the Trust assets and the right to
compensation as set forth in Appendix C.
(c) Any trustee hereunder may resign only after the effective
appointment of a successor Trustee. If any trustee hereunder resigns,
such trustee shall, prior to the effective date of such trustee's
resignation, appoint a Corporate Successor acceptable to a majority of
the Trust beneficiaries to replace such trustee upon such resignation.
The appointment shall be effective when accepted in writing by the
successor trustee, who shall have all of the rights and powers of the
former trustee, including ownership rights in the Trust assets and the
right to compensation as set forth in Appendix C. The former trustee
shall execute any instrument necessary or reasonably requested by the
successor trustee to evidence the transfer.
(d) Upon resignation or removal of any trustee hereunder and
appointment of a successor trustee, all assets shall subsequently be
transferred to the successor trustee. The transfer shall be completed
within sixty (60) days after the effective date of such resignation or
removal.
(e) A successor trustee need not examine the records and acts
of any prior trustee and may retain or dispose of existing
Trust assets, subject to Sections 5 and 6 hereof. A successor
trustee shall not be responsible for and RJRN shall indemnify
and defend the successor trustee from any claim or liability
resulting from any action or inaction of any prior trustee or
from any other past event, or any condition existing at the
time it becomes successor trustee.
(f) The compensation of any trustee from time to time acting
hereunder may be changed by mutual agreement of such trustee,
RJRN and a majority of the trust beneficiaries.
Section 9. Amendment or Termination.
(a) This Trust Agreement may not be amended except pursuant to
the unanimous written consent of RJRN and all Trust
beneficiaries; provided, however, that in no event may this
Trust Agreement be amended to provide for any payment to, or
for the benefit of, RJRN, its parent or any of its
subsidiaries.
(b) This Trust shall not terminate until the date on which all
Trust assets have been applied to the Payments, provided,
however, that:
(i) if at any time all Payments reflected on the then
current Payment Schedule have been made and the aggregate
principal of the Trust together with any accrued income on
hand is less than one hundred thousand dollars and zero
8
cents ($100,000.00), this Trust shall terminate and the Trust
assets, net of any fees and expenses in connection with such
termination, shall be distributed to the RJR Nabisco
Foundation; or
(ii) if this Trust shall be in existence on the date
which is twenty-one (21) years after the death of the last to
die of the descendents of Joseph P. Kennedy who are living on
the date hereof, then this Trust shall then terminate and all
unpaid Payment amounts shown on the then current Payment
Schedule (whether or not payment is then due) shall be paid to
the designated Trust beneficiaries thereof who are then active
employees of RJRN or its subsidiaries and, after such
payments, the Trust assets (net of any fees and expenses in
connection with such termination) shall be distributed to the
RJR Nabisco Foundation.
Section 10. Miscellaneous.
(a) Any provision of this Trust Agreement prohibited by law
shall be ineffective to the extent of such prohibition,
without invalidating the remaining provisions hereof.
(b) Payments to be recovered under this Trust Agreement may
not be anticipated, assigned (either at law or in equity),
alienated, pledged, encumbered or subjected to attachment,
garnishment, levy, execution or other legal or equitable
process.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of North Carolina.
IN WITNESS WHEREOF, this Trust Agreement has been executed on behalf of
the parties hereto on the day and year first above written.
RJR Nabisco, Inc.
By:________________________
Wachovia Bank, N.A.
By:________________________
9
APPENDIX A
PAYMENTS
Section 1. Introduction. This Appendix A to the Trust Agreement is
intended to set forth the terms and conditions governing the Payments identified
in the Payment Schedule included as Appendix B to the Trust Agreement. Appendix
B identifies each employee Trust beneficiary ("Employee") and indicates the
amounts payable as Payments in respect of each Employee.
Section 2. Conditions for Payment.
(a) Except as otherwise provided in this Section 2, payment will be made to an
Employee (or to the personal representative of such Employee's estate) on the
Payment Date identified for such Employee on the Payment Schedule (the "Payment
Date") in the amount identified for such Employee on the Payment Schedule,
provided that the Employee remains actively employed by RJRN, RJR or any of
their subsidiaries (the "Employer") until the Payment Date.
(b) If, prior to an Employee's Payment Date, such Employee's employment is
terminated as a result of death or permanent disability (as defined in RJRN's
long-term disability plan for salaried employees), Payment shall be made to or
in respect of such Employee as soon as practicable following such termination.
In such event, the Payment will be equal to the Payment amount set forth on the
Payment Schedule for such Employee.
(c) If, prior to an Employee's Payment Date, such Employee's employment is
involuntarily terminated by the Employer without Cause (as defined below), a
pro-rata Payment shall be made to or in respect of such Employee as soon as
practicable following such termination. In such event, the pro-rata Payment will
be equal to the product of (i) the Payment amount set forth on the Payment
Schedule for such Employee and (ii) a fraction, the numerator of which is number
of days between the beginning of the Retention Period identified for such
Employee on the Payment Schedule and the Employee's Severance Date (as defined
below) and the denominator of which is the number of days in such Retention
Period. Notwithstanding the foregoing, in the event that such involuntary
termination occurs following a Change of Control (as defined below) the Payment
will be equal to the full Payment amount set forth on the Payment Schedule for
such Employee.
(d) If the Employee's employment is terminated for any other reason, the Payment
for such Employee shall be forfeited.
(e) For purposes of this Appendix A, the following terms shall have the meanings
set forth below:
(i) "Cause" shall be defined as such term is defined in the Employee's
employment or severance agreement. Copies of such Employee's employment or
service
agreements shall be provided to the Trustee upon reasonable request. If the
Employee does not have an employment or severance agreement which defines the
term "Cause", employment shall be deemed to have been terminated for "Cause" if
the termination results from the Employee's (a) criminal conduct, (b) deliberate
continual refusal to perform employment duties on substantially a full time
basis, (c) deliberate and continued refusal to act in accordance with any
specific lawful instructions of an authorized officer or more senior employee,
or (d) deliberate misconduct which could be materially damaging to the Employer
or any of its business operations without a reasonable good faith belief by the
Employee that such conduct was in the best interests of the Employer. A
termination of employment shall not be deemed for Cause hereunder unless the
senior personnel executive of the Employer shall confirm that any such
termination is for Cause as defined hereunder. Any voluntary termination by the
Employee in anticipation of an involuntary termination of employment for Cause,
shall be deemed to be a termination of employment for Cause. In addition, for an
Employee in Grade Level "E" or higher, a termination with Good Reason (as
defined below) shall be deemed to be a termination without Cause.
(ii) "Change of Control" shall be defined as such term is defined in
the RJR Nabisco Holdings Corp. 1990 Long Term Incentive Plan as in effect on the
date hereof, except that for purposes of this Appendix A, the term "RJRN" (as
used in such definition) shall include RJR Nabisco Holdings Corp., RJR Nabisco
Inc. and R.J. Reynolds Tobacco Company. A copy of this definition shall be
provided to the Trustee upon execution of the Trust Agreement.
"Good Reason" shall be defined as such term is defined in the Employee's
employment or severance agreement. Copies of such Employee's employment or
service agreements shall be provided to the Trustee upon reasonable request. If
the Employee does not have an employment or severance agreement which defines
the term ""Good Reason", employment shall be deemed to have been terminated with
Good Reason if the termination results from any of the following:
(A) A material reduction in the Employee's duties, a material
diminution in the Employee's position or a material adverse change in the
Employee's reporting relationship;
(B) A material reduction in the Employee's pay, grade or bonus
opportunity as in effect from time to time during the term of this Agreement;
(C) The failure to continue in effect the RJR Nabisco Holdings
Corp. 1990 Long Term Incentive Plan ("LTIP"), unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan providing the Employee
with substantially similar benefits) has been made with respect to such plan, or
the failure to continue the Employee's participation therein on substantially
the same basis, both in terms of the amount of benefits provided and the level
of participation relative to other participants, as exists on the date hereof;
or
(D) Requiring the Employee to be based at any office or
location more than 50 miles from the office or location at which the Employee is
based on the date hereof, except
for travel reasonably consistent with the Employee's travel requirements as of
the date hereof.
(iv) "Severance Date" means termination from active employment; it does not mean
the termination of pay and benefits at the end of a period of salary
continuation (or other form of severance pay or pay in lieu of salary).
Section 3. Payment.
(a) On each Payment Date, Trust assets shall be applied to satisfy fully
Payments payable on such Payment Date to or in respect of Employees.
(b) If, on any Payment Date, the assets of the Trust are insufficient to satisfy
fully Payments payable to Employees on such Payment Date, then the assets of the
Trust shall be paid to or in respect of such Employees in proportion to the
Payment amounts payable on such Payment Date. Upon making such partial Payments,
the obligation to pay the balance of such Payments to Employees on such Payment
Date and the obligation to pay the entire amount due Employees on subsequent
Payment Dates shall lapse.
(c) No Payment shall be made until all Payments having an earlier
Payment Date have been paid in full.
Section 4. Modifications to Payment Schedule.
As contemplated by Section 2(a) of the Trust Agreement, RJRN may deliver to
Trustee updated Payment Schedules from time to time; provided, however, that
modifications may be made only to provide for new Payments for existing or new
Trust beneficiaries, in either case having a Payment Date later than the latest
Payment Date on the existing Payment Schedule. In no event may a Payment
Schedule be modified to eliminate a Trust beneficiary or to change the amount
of, or postpone, a Payment for any Trust beneficiary.
APPENDIX C
SCHEDULE OF FEES PAYABLE PURSUANT TO SECTION 7
Market Value Rate per $1,000
------------ ---------------
Ad Valorem Charges First $ 500,000 $ 5.00
except as noted below
Next 1,500,000 2.60
Next 8,000,000 1.40
Next 40,000,000 .50
Next 50,000,000 .40
Over 100,000,000 .30
Consideration will be given for other trusts established by RJRN, its parent and
subsidiaries. Additional fees are charged for tax reporting, tax preparation,
wire transfers and payments. As provided in Section 7, expenses, including but
not limited to custodian fees and attorney fees, will be recovered in addition
to the fees quoted above. Fees charges for investment of assets are separate
from the above fees and shall be changed in accordance with the current schedule
of fees in place for such investment.