<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
-------------------
NABISCO HOLDINGS CORP.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1-13556 13-3077142
(State or other (Commission file (I.R.S. Employer
jurisdiction of number) Identification No.)
incorporation or
organization)
</TABLE>
NABISCO, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
NEW JERSEY 1-1021 13-1841519
(State or other (Commission file (I.R.S. Employer Identification
jurisdiction of number) No.)
incorporation or
organization)
</TABLE>
7 CAMPUS DRIVE
PARSIPPANY, NEW JERSEY 07054
(973) 682-5000
(Address, including zip code, and telephone number, including area code,
of the principal executive offices of Nabisco Holdings Corp. and Nabisco, Inc.)
------------------------
INDICATE BY CHECK MARK WHETHER THE REGISTRANTS (1) HAVE FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANTS WERE REQUIRED TO FILE SUCH REPORTS), AND (2) HAVE BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO __
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANTS'
CLASSES OF COMMON STOCK AS OF THE LATEST PRACTICABLE DATE: APRIL 30, 1998:
<TABLE>
<C> <S>
NABISCO HOLDINGS CORP.: 51,353,004 SHARES OF CLASS A COMMON STOCK, PAR VALUE $.01 PER
SHARE
213,250,000 SHARES OF CLASS B COMMON STOCK, PAR VALUE $.01 PER
SHARE
NABISCO, INC.: 100 SHARES OF COMMON STOCK, PAR VALUE $2.50 PER SHARE
</TABLE>
-------------------
NABISCO, INC. MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(A)
AND (B) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INDEX
<TABLE>
<CAPTION>
PAGE
---------
<S> <C> <C>
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Income--Three Months Ended
March 31, 1998 and 1997..................................................................... 1
Consolidated Condensed Statements of Cash Flows--Three Months Ended March 31, 1998 and 1997... 2
Consolidated Condensed Balance Sheets--March 31, 1998 and
December 31, 1997........................................................................... 3
Notes to Consolidated Condensed Financial Statements.......................................... 4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations....................................................................... 5-7
PART II-- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders........................................... 8
Item 6. Exhibits and Reports on Form 8-K.............................................................. 8
Signatures............................................................................................... 9
</TABLE>
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
NABISCO HOLDINGS CORP.
NABISCO, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1998 MARCH 31, 1997
----------------------- -----------------------
NABISCO NABISCO
HOLDINGS NABISCO HOLDINGS NABISCO
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
NET SALES................................................................... $ 1,962 $ 1,962 $ 1,905 $ 1,905
---------- ----------- ---------- -----------
Costs and expenses:
Cost of products sold..................................................... 1,125 1,125 1,109 1,109
Selling, advertising, administrative and general expenses................. 599 599 543 543
Amortization of trademarks and goodwill................................... 56 56 57 57
---------- ----------- ---------- -----------
OPERATING INCOME...................................................... 182 182 196 196
Interest and debt expense................................................... (80) (80) (81) (81)
Other income (expense), net................................................. (9) (9) (8) (8)
---------- ----------- ---------- -----------
Income before income taxes............................................ 93 93 107 107
Provision for income taxes.................................................. 38 38 43 43
---------- ----------- ---------- -----------
NET INCOME............................................................ $ 55 $ 55 $ 64 $ 64
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
NET INCOME PER COMMON SHARE................................................. $ .21 $ .24
---------- ----------
---------- ----------
NET INCOME PER COMMON SHARE ASSUMING DILUTION............................... $ .21 $ .24
---------- ----------
---------- ----------
Dividends declared per common share......................................... $ .175 $ .155
---------- ----------
---------- ----------
Average number of common shares outstanding (in thousands).................. 264,266 265,070
---------- ----------
---------- ----------
Average number of common shares outstanding assuming dilution (in
thousands)................................................................ 267,263 267,192
---------- ----------
---------- ----------
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
1
<PAGE>
NABISCO HOLDINGS CORP.
NABISCO, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1998 MARCH 31, 1997
------------------------ ------------------------
<S> <C> <C> <C> <C>
NABISCO NABISCO
HOLDINGS NABISCO HOLDINGS NABISCO
----------- ----------- ----------- -----------
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net income............................................................. $ 55 $ 55 $ 64 $ 64
Adjustments to reconcile net income to net cash flows from operating
activities:
Depreciation of property, plant and equipment...................... 68 68 70 70
Amortization of intangibles........................................ 56 56 57 57
Deferred income tax provision...................................... 22 22 21 21
Changes in working capital items, net.............................. (339) (352) (380) (380)
Other, net......................................................... (4) (4) 2 2
----- ----- ----- -----
Net cash flows (used in) operating activities........................ (142) (155) (166) (166)
----- ----- ----- -----
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Capital expenditures................................................... (78) (78) (61) (61)
Other, net............................................................. 3 3 2 2
----- ----- ----- -----
Net cash flows (used in) investing activities........................ (75) (75) (59) (59)
----- ----- ----- -----
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Proceeds from the issuance of long-term debt........................... 999 999 207 207
Proceeds from the sale of call options on long-term debt............... 41 41 -- --
Repayments of long-term debt........................................... (804) (804) (10) (10)
Increase in notes payable.............................................. 44 44 47 47
Dividends paid on common stock......................................... (46) (46) (41) (41)
Repurchases of Class A common stock.................................... (26) -- -- --
Proceeds from exercise of Class A common stock options................. 15 -- -- --
----- ----- ----- -----
Net cash flows from financing activities............................. 223 234 203 203
----- ----- ----- -----
Effect of exchange rate changes on cash and cash equivalents............. (4) (4) (2) (2)
----- ----- ----- -----
Net change in cash and cash equivalents.............................. 2 -- (24) (24)
Cash and cash equivalents at beginning of period......................... 127 127 93 93
----- ----- ----- -----
Cash and cash equivalents at end of period............................... $ 129 $ 127 $ 69 $ 69
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
2
<PAGE>
NABISCO HOLDINGS CORP.
NABISCO, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
MARCH 31, 1998 DECEMBER 31, 1997
---------------------- ----------------------
<S> <C> <C> <C> <C>
NABISCO NABISCO
HOLDINGS NABISCO HOLDINGS NABISCO
----------- --------- ----------- ---------
ASSETS
Current assets:
Cash and cash equivalents.......................................... $ 129 $ 127 $ 127 $ 127
Accounts and notes receivable, net................................. 492 492 521 521
Intercompany receivable from Nabisco Holdings...................... -- 44 -- --
Deferred income taxes.............................................. 6 6 27 27
Inventories........................................................ 880 880 865 865
Prepaid expenses................................................... 76 76 59 59
----------- --------- ----------- ---------
TOTAL CURRENT ASSETS........................................... 1,583 1,625 1,599 1,599
----------- --------- ----------- ---------
Property, plant and equipment, net................................... 3,333 3,333 3,327 3,327
Trademarks, net...................................................... 3,709 3,709 3,725 3,725
Goodwill, net........................................................ 3,337 3,337 3,343 3,343
Other assets and deferred charges.................................... 101 101 133 133
----------- --------- ----------- ---------
$ 12,063 $ 12,105 $ 12,127 $ 12,127
----------- --------- ----------- ---------
----------- --------- ----------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable...................................................... $ 219 $ 219 $ 180 $ 180
Accounts payable and accrued liabilities........................... 1,022 1,021 1,318 1,263
Intercompany payable to Nabisco Holdings........................... -- -- -- 13
Current maturities of long-term debt............................... 15 15 21 21
Income taxes accrued............................................... 132 132 131 131
----------- --------- ----------- ---------
TOTAL CURRENT LIABILITIES...................................... 1,388 1,387 1,650 1,608
----------- --------- ----------- ---------
Long-term debt (less current maturities)............................. 4,530 4,530 4,334 4,334
Other noncurrent liabilities......................................... 698 698 646 646
Deferred income taxes................................................ 1,246 1,246 1,293 1,293
Stockholders' equity:................................................
Class A common stock (51,819,653 shares issued).................... 1 -- 1 --
Class B common stock (213,250,000 shares issued
and outstanding)................................................. 2 -- 2 --
Paid-in capital.................................................... 4,089 4,141 4,087 4,141
Retained earnings.................................................. 267 234 268 225
Treasury stock, at cost............................................ (25) -- (32) --
Accumulated other comprehensive income............................. (131) (131) (120) (120)
Notes receivable on common stock purchases......................... (2) -- (2) --
----------- --------- ----------- ---------
TOTAL STOCKHOLDERS' EQUITY..................................... 4,201 4,244 4,204 4,246
----------- --------- ----------- ---------
$ 12,063 $ 12,105 $ 12,127 $ 12,127
----------- --------- ----------- ---------
----------- --------- ----------- ---------
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
3
<PAGE>
NABISCO HOLDINGS CORP.
NABISCO, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1--INTERIM REPORTING AND RESULTS OF OPERATIONS
For interim reporting purposes, certain costs and expenses are charged to
operations in proportion to the estimated total annual amount expected to be
incurred.
Certain prior year amounts have been reclassified to conform to the 1998
presentation.
In management's opinion, the accompanying unaudited consolidated condensed
financial statements (the "Consolidated Condensed Financial Statements") of
Nabisco Holdings Corp. ("Nabisco Holdings") and Nabisco, Inc. ("Nabisco" and
together with Nabisco Holdings, the "Registrants") contain all adjustments,
consisting only of normal recurring adjustments, necessary for a fair statement
of the results for the interim periods presented. The Consolidated Condensed
Financial Statements should be read in conjunction with the consolidated
financial statements and footnotes included in the Annual Report on Form 10-K of
Nabisco Holdings and Nabisco for the year ended December 31, 1997.
NOTE 2--INVENTORIES
The major classes of inventory are shown in the table below:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
----------- ---------------
<S> <C> <C>
Finished products........................................................... $ 523 $ 540
Raw materials............................................................... 208 182
Other....................................................................... 149 143
----- -----
$ 880 $ 865
----- -----
----- -----
</TABLE>
NOTE 3--COMPREHENSIVE INCOME
On January 1, 1998, Nabisco Holdings and Nabisco adopted Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income, which
established standards for reporting and display of comprehensive income and its
components in a full set of financial statements. Comprehensive income is
defined as the change in stockholders' equity during a period from transactions
from nonowner sources. Comprehensive income consists of net income and other
comprehensive income, which includes all other nonowner changes in stockholders'
equity. For Nabisco Holdings and Nabisco, other comprehensive income consists of
foreign currency translation adjustments that amounted to charges of $11 million
and $23 million for the three months ended March 31, 1998 and 1997,
respectively. The Cumulative Translation Adjustment amount previously reported
as a separate component of stockholders' equity is now included in Accumulated
Other Comprehensive Income in the Consolidated Condensed Balance Sheets.
Comprehensive income for the three months ended March 31, 1998 and 1997 amounted
to $44 million and $41 million, respectively.
NOTE 4--LONG-TERM DEBT
In January 1998, Nabisco issued $400 million of 6% notes due February 15,
2011 which are putable and callable on February 15, 2001; $300 million of 6 1/8%
notes due February 1, 2033 which are putable and callable on February 1, 2003;
and $300 million of 6 3/8% notes due February 1, 2035 which are putable and
callable on February 1, 2005. Unless the notes are put, the interest rates on
the 6% notes, the 6 1/8% notes and the 6 3/8% notes are reset on the applicable
put/call date at 5.75%, 6.07% and 6.07%, respectively, plus, in each case,
Nabisco's future credit spread on treasury notes of comparable maturities. The
$1,039 million proceeds from these notes, which includes $41 million as
compensation for the sale of the call options, were used to repay commercial
paper.
4
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis of Nabisco Holdings' financial
condition and results of operations should be read in conjunction with the
historical financial information included in the Consolidated Condensed
Financial Statements.
The food business is conducted by operating subsidiaries of Nabisco
Holdings. Nabisco's businesses in the United States are comprised of the Nabisco
Biscuit Company and the U.S. Foods Group (collectively, the "Domestic Food
Group"). The U.S. Foods Group is comprised of the Sales & Integrated Logistics
Group and the Specialty Products, LifeSavers, Planters, Tablespreads and Food
Service Companies. Nabisco's businesses outside the United States are conducted
by Nabisco Ltd and Nabisco International, Inc. ("Nabisco International" and
together with Nabisco Ltd, the "International Food Group").
RESULTS OF OPERATIONS
Summarized financial data for Nabisco Holdings is as follows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
---------------------------------
1998 1997 % CHANGE
--------- --------- -----------
<S> <C> <C> <C>
(Dollars in Millions)
Net Sales:
Biscuit........................................................................... $ 850 $ 801 6%
U.S. Foods Group.................................................................. 530 527 1%
--------- ---------
Domestic Food Group............................................................... 1,380 1,328 4%
International Food Group.......................................................... 582 577 1%
--------- ---------
Total Nabisco Holdings............................................................ $ 1,962 $ 1,905 3%
--------- ---------
--------- ---------
Operating Company Contribution(1):
Biscuit........................................................................... $ 143 $ 134 7%
U.S. Foods Group.................................................................. 63 65 (3%)
--------- ---------
Domestic Food Group............................................................... 206 199 4%
International Food Group.......................................................... 32 54 (41%)
--------- ---------
Total Nabisco Holdings............................................................ $ 238 $ 253 (6%)
--------- ---------
--------- ---------
Operating Income:
Domestic Food Group............................................................... $ 156 $ 148 5%
International Food Group.......................................................... 26 48 (46%)
--------- ---------
Total Nabisco Holdings............................................................ $ 182 $ 196 (7%)
--------- ---------
--------- ---------
</TABLE>
- ------------------------
(1) Operating income before amortization of trademarks and goodwill.
Nabisco Holdings reported net sales of $1.96 billion in the first quarter of
1998, an increase of 3% from the first quarter 1997 level of $1.91 billion, with
the Domestic Food Group up 4% and the International Food Group up 1%. Within the
Domestic Food Group, Nabisco Biscuit net sales increased 6%, principally due to
the impact of four extra selling days in 1998. On a days-adjusted basis, 1998
net sales decreased by 1%. The 6% increase primarily reflects volume
improvements in core cookies and crackers, partially offset by volume declines
in SnackWell's and breakfast snacks. U.S. Foods Group net sales increased 1% due
to higher sales of nuts and condiments and the inclusion of Cornnuts snacks
acquired in December 1997, partially offset by lower confectionery sales. Sales
of confections were off versus last year due primarily to the "pipeline" impact
of last year's first quarter introduction of SnackWell's candy. The
International Food Group's 1% net sales increase reflects improved results in
Canada, Mexico and South Africa, partially offset by declines in Brazil due
principally to volume declines resulting from aggressive
5
<PAGE>
competitive activity in the biscuit and milk categories, and in Asia due to the
impact of the regional economic downturn.
Nabisco Holdings' operating company contribution was $238 million in the
first quarter of 1998, a decrease of 6% from the first quarter 1997 level of
$253 million, with the Domestic Food Group up 4% and the International Food
Group lower by 41%. The Domestic Food Group's operating company contribution
increase for the first quarter of 1998 was primarily due to improved operating
results at Nabisco Biscuit, resulting largely from higher sales and improved
margins, partially offset by higher consumer marketing expense. The U.S. Foods
Group's decrease in operating company contribution was primarily attributable to
higher marketing and promotion expense, partially offset by slightly higher net
sales and improved margins. The International Food Group's decrease in operating
company contribution for the first quarter of 1998 was principally due to lower
earnings in Brazil due to lower net sales and higher advertising expense, in
Asia due to lower net sales, in Argentina due to competitive pricing pressures,
and in Canada due to higher marketing expense, which more than offset small
profitability improvements in Mexico and South Africa.
Nabisco Holdings' operating income was $182 million in the first quarter of
1998, a decrease of 7% from the first quarter of 1997 level of $196 million, as
a result of the decrease in operating company contribution discussed above.
INTEREST AND DEBT EXPENSE
Consolidated interest expense of $80 million in the first quarter of 1998
decreased 1% from the first quarter of 1997, primarily as a result of replacing
fixed rate debt at lower rates, partially offset by a reduction in capitalized
interest in 1998.
NET INCOME
Nabisco Holdings reported net income of $55 million in the first quarter of
1998, a decrease of 14% when compared with net income of $64 million for the
first quarter of 1997. This decrease resulted primarily from lower operating
income.
COMPREHENSIVE INCOME
Comprehensive income of $44 million in the first quarter of 1998 increased
$3 million when compared to the $41 million for the first quarter of 1997. This
increase was due to lower foreign currency translation losses in 1998 of $12
million, partially offset by lower 1998 net income of $9 million.
IMPACT OF NEW ACCOUNTING PRONOUNCEMENT
On January 1, 1998, Nabisco Holdings and Nabisco adopted Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income. See Note
3 to the Consolidated Condensed Financial Statements.
LIQUIDITY AND FINANCIAL CONDITION
Net cash flows used in operating activities amounted to $142 million for the
first quarter of 1998 compared to $166 million for the first quarter of 1997.
The decrease in net cash flows used in operating activities primarily reflects
lower payments related to restructuring, partially offset by the 1998 decrease
in net income.
Cash flows used in investing activities increased $16 million in the first
quarter of 1998 to $75 million from the first quarter of 1997, primarily because
of higher capital expenditures.
Capital expenditures were $78 million in the first quarter of 1998.
Management expects that the current level of capital expenditures planned for
1998 will be approximately $350 million, which is
6
<PAGE>
sufficient to support the strategic and operating needs of Nabisco Holdings'
businesses. Management also expects that cash flow from operations will be
sufficient to support its planned capital expenditures in 1998.
Cash flows from financing activities for the first quarter of 1998 increased
$20 million to $223 million from the first quarter of 1997, principally due to
the 1998 proceeds from the sale of call options in the $1.0 billion of
putable/callable notes issued in January 1998. These proceeds were partially
offset by the previously announced open market purchases of Nabisco Holdings
Class A common stock.
As of March 31, 1998, the five-year $1.5 billion revolving credit facility
was unutilized and available to support borrowings. In addition, the 364-day
$1.381 billion credit facility was utilized to support outstanding commercial
paper borrowings of $1.245 billion, and accordingly, $136 million was available.
The Registrants believe that they are currently in compliance with all
covenants and restrictions imposed by the terms of their indebtedness.
At March 31, 1998, Nabisco Holdings' total debt (notes payable and long-term
debt, including current maturities) and total capital (total debt and total
stockholders' equity) amounted to approximately $4.8 billion and $9.0 billion,
respectively, of which total debt is higher by $229 million and total capital is
higher by $226 million than their respective balances at December 31, 1997.
Nabisco Holdings' ratios of total debt to total stockholders' equity and total
debt to total capital at March 31, 1998 were 1.1 to 1 and .53 to 1,
respectively.
Nabisco Holdings currently pays regular quarterly dividends on its common
stock at an annual rate of $.70 per share. At that rate, the aggregate amount of
dividends to be paid would be approximately $185 million during 1998.
------------------------
The foregoing discussion in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contains forward-looking
statements concerning, among other things, the level of future capital
expenditures. These statements reflect management's current views with respect
to future events and financial performance. These forward-looking statements are
based on many assumptions and factors including competitive pricing for
products, commodity prices, success of new product innovations and acquisitions,
economic conditions in countries where Nabisco Holdings' subsidiaries do
business, the effects of currency fluctuations and the effects of government
regulation. Any changes in such assumptions or factors could produce
significantly different results.
7
<PAGE>
PART II
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The matters below were voted upon at the annual meeting of stockholders of
Nabisco Holdings Corp. held on April 15, 1998. At the meeting, 45,291,081 shares
of Class A Common Stock and 213,250,000 shares of Class B Common Stock were
represented in person or by proxy. Class A Common Stock and Class B Common Stock
are entitled to one (1) vote and ten (10) votes per share, respectively, and
vote together as a single class.
(a) Election of six Directors.
<TABLE>
<CAPTION>
NAME VOTES FOR VOTES WITHHELD
- -------------------- -------------- --------------
<S> <C> <C>
Herman Cain 2,177,689,986 101,095
John T. Chain, Jr. 2,177,720,851 70,230
Steven F. Goldstone 2,177,721,875 69,206
David B. Jenkins 2,177,714,659 76,422
James M. Kilts 2,177,710,480 80,601
Kay Koplovitz 2,177,723,132 67,949
</TABLE>
(b) Ratification of appointment of Deloitte & Touche LLP as independent
auditors.
<TABLE>
<S> <C> <C>
For: 2,177,742,193
Against: 31,611
Abstain: 17,277
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<S> <C>
*10.1 Form of Performance Unit Agreement between Nabisco Holdings Corp. and the
Executive named therein (1998; one-year period) dated as of March 5, 1998.
*10.2 Non-Qualified Stock Option Agreement between RJR Nabisco Holdings Corp. and James
M. Kilts, dated as of January 2, 1998.
*10.3 Non-Qualified Stock Option Agreement between Nabisco Holdings Corp. and James M.
Kilts, dated as of January 2, 1998.
*10.4 Restricted Stock Equivalent Agreement between Nabisco Holdings Corp. and James M.
Kilts, dated as of January 2, 1998.
*10.5 Form of Non-Qualified Stock Option Agreement between Nabisco Holdings Corp. and
the optionee named therein (1998 grant).
*10.6 Letter Agreement by and among Nabisco Holdings Corp, Nabisco Inc., RJR Nabisco
Holdings Corp., RJR Nabisco, Inc. and H. John Greeniaus, dated as of January 21,
1998.
*10.7 Non-Qualified Stock Option Agreement between Nabisco Holdings Corp. and Steven F.
Goldstone, dated as of January 15, 1998.
*12 Nabisco, Inc. Computation of Ratio of Earnings to Fixed Charges for the three
months ended March 31, 1998.
*27.1 Nabisco Holdings Corp. Financial Data Schedule for the first quarter of 1998.
*27.2 Nabisco, Inc. Financial Data Schedule for the first quarter of 1998.
*27.3 Nabisco Holdings Corp. Financial Data Schedule with restated earnings per share
data for the six months ended June 30, 1997 and the nine months ended September
30, 1997.
</TABLE>
----------------------------
* Filed herewith.
(b) Reports on Form 8-K filed in the First Quarter of 1998
Report on Form 8-K dated January 15, 1998, filing notice of Nabisco,
Inc.'s agreement to sell an aggregate of $1,000,000,000 principal amount of
notes and related exhibit filings.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<S> <C>
NABISCO HOLDINGS CORP.
NABISCO, INC.
(Registrants)
/s/ JAMES E. HEALEY
......................................
James E. Healey
Executive Vice President and Chief
Financial Officer
Date: May 8, 1998 /s/ ROBERT A. SCHIFFNER
......................................
Robert A. Schiffner
Senior Vice President and Controller
</TABLE>
9
<PAGE>
Exhibit 10.1
NABISCO HOLDINGS CORP.
1994 LONG TERM INCENTIVE PLAN
GRANT AGREEMENT
DATE OF GRANT: MARCH 5, 1998
WITNESSETH:
1. GRANT. Pursuant to the 1994 Long Term Incentive Plan (the "Plan"),
Nabisco Holdings Corp. (the "Company") on the above date has granted to
JAMES M. KILTS (THE "GRANTEE"),
subject to the terms and conditions of this Agreement and the Plan,
918 PERFORMANCE UNITS
AND
3,326 RESTRICTED STOCK UNITS
A copy of the Plan is attached and constitutes an integral part of this
Agreement. All undefined capitalized terms in this Agreement have the same
meaning as in the Plan or, if not defined therein, the Annual Incentive Award
Plan (the "AIAP").
2. PERFORMANCE UNITS. Each Performance Unit has an initial value of
$1,000. The Committee will value each Performance Unit at the end of 1998 using
the performance measures set forth in the grid attached as Exhibit A, but the
Committee has the discretion to reduce the resulting valuation. You agree that
these Performance Units are in lieu of an award under the Annual Incentive Award
Plan for 1998.
3. RESTRICTED STOCK UNITS.
(a) The Restricted Stock Units ("RSUs") have a three year term commencing
January 1, 1998 and ending December 31, 2000 (the "Performance Period"). The
value of the RSUs as of January 1, 1998 is $46.00. Thereafter, the value of the
RSUs on any date will be equal to the average closing price of the Company's
Class A Common Stock for the 30 trading days immediately preceding such date.
The Committee has the discretion to reduce the resulting valuations and, on the
basis of the Company's performance in 1998, to cancel some or all of the RSUs.
<PAGE>
(b) In the event that participants in the AIAP are permitted to elect to
acquire additional RSUs ("Discount RSUs") in lieu of all or a portion of their
AIAP cash award for 1997, you will also be permitted to elect to acquire
Discount RSUs in lieu of all or a portion of the cash that you receive for your
Performance Units pursuant to Section 5 below, subject to such terms and
conditions as apply to participants in the AIAP generally.
4. VESTING.
(a) Performance Units vest on December 31, 1998 or, if earlier, your death,
Disability or Retirement. If your employment is involuntarily terminated
without Cause, your Performance Units will vest in proportion to the ratio of
(i) the number of partial or complete months of employment during 1998, to (ii)
12. If termination is voluntary or with Cause, the Performance Units will be
canceled immediately.
(b) RSUs granted pursuant to Section 1 vest on December 31, 2000 or, if
earlier, your death, Disability or Retirement. If your employment is
involuntarily terminated without Cause, these RSUs will vest in proportion to
the ratio of (i) the number of partial or complete months of employment between
January 1, 1999 and December 31, 2000, to (ii) 24. If termination is voluntary
or with Cause, these RSUs will be canceled immediately. Discount RSUs issued
pursuant to Section 3(b) will be fully vested upon acquisition.
5. PAYMENT OF AWARDS.
(a) Subject to Section 5(b), the Company will pay you the value of your
vested Performance Units and RSUs as soon as practicable after the end of 1998
and 2000, respectively.
(b) Subject to Section 5(c), if your employment terminates before you
receive payment for your vested RSUs, you will receive payment in an amount
equal to their value as of the date on which employment terminates. Payment
will be made as soon as practicable. Payment of Discount RSUs acquired pursuant
to Section 3(b) will be made on the same terms and conditions as apply to
participants in the AIAP generally.
(c) All payments will be in cash and in exchange for the Performance Units
and RSUs, as applicable. You may not obtain payment for them in Common Stock or
other Company securities, and they do not give you any rights as a holder of
such securities.
6. DEFERRAL.
(a) You may elect to defer payment of Performance Units as of December 31,
1998 and RSUs as of December 31, 2000. Your election must be in writing, signed
by you and delivered to the Company on or before the foregoing dates. Your
election will be irrevocable and must specify the percentage (from 5% to 100%,
in 5% increments) of
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the Performance Units and RSUs (collectively, the "Grants") which will be paid
(i) as soon as practicable after the year your death, Retirement, Disability or
other termination of employment occurs or (ii) in January of any designated
future year. If your employment with the Company and its subsidiaries
terminates before the designated year, your Grants will be paid as of January of
the year following termination. Common Stock credits will not be paid until at
least six months after the date of deferral. The Company will contribute an
additional 3% to the amount deferred on account of the 3% Company match that you
would have received under the Capital Investment Plan if you had not deferred
payment.
(b) You must specify, on the notice electing deferred payment pursuant to
Section 6(a)(i), whether payment of the Grants will be deferred by cash credit,
Common Stock credit, or a combination of the two. If you elect to defer payment
pursuant to Section 6(a)(ii) or fail to choose a mode of deferral, your deferral
will be by means of a cash credit. Cash credits and stock credits will be
recorded in accounts established in your name on the books of the Company. At
the direction of the Company, your accounts may be consolidated on the books of
the Company or any of its subsidiaries.
(i) If your deferral is wholly or partly a cash credit, your cash credit
account will be credited, as of January 1 of the year that payment of
the Grants would have been made, with the dollar amount of the portion
of the Grants deferred by means of a cash credit. In addition, your
cash credit account will be credited as of the last day of each
calendar quarter with an interest equivalent in an amount determined
by applying to the current balance in the account an interest rate
equal to the average prime rate of Morgan Guaranty Trust Company of
New York during the quarter. Interest will be credited for the actual
number of days in the quarter using a 365-day year.
(ii) If the deferral is wholly or partly a Common Stock credit, your Common
Stock credit account will be credited, as of January 1 of the year
that payment of the Grants would have been made, with the Common Stock
equivalent of the number of shares of Common Stock (including
fractions of a share) that could have been purchased with the portion
of the Grants deferred by means of a Common Stock credit at the
closing price of the Common Stock on the date that payment of the
Grants would otherwise have been made. As of the date any dividend is
paid to shareholders of Common Stock, your Common Stock credit account
will also be credited with an additional Common Stock equivalent equal
to the number of shares of Common Stock (including fractions of a
share) that could have been purchased at the Closing Price on such
date with the dividend paid on the number of shares of Common Stock to
which your Common Stock credit account is then equivalent. If
dividends are paid in property, the dividend will
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<PAGE>
be deemed to be the fair market value of the property at the time of
distribution of the dividend, as determined by the Committee.
(c) Payment of deferred Grants will be made in a single cash payment;
provided, however, that if you elect in writing before December 31 of the year
your employment terminates due to Retirement or Disability, payment will be made
in substantially equal annual installments (not to exceed ten) commencing on the
January following the Retirement or Disability. Notwithstanding any election
under Section 6(b) to defer awards by means of a Common Stock credit, your
Common Stock credit account, if you elect to receive installment payments, will
be converted into a cash credit account as of January 1 of the year in which
such installment payments commence.
(d) At your one-time election in writing to the Committee, all or any
designated portion of your Common Stock credit account may be converted to, and
you will be credited with, a cash credit account as of the first business day of
the calendar quarter following the quarter in which the election is made. The
amount credited to the cash credit account will be determined by multiplying the
number of shares of Common Stock to which your Common Stock credit account is
then equivalent and as to which such election has been made by the Closing Price
on the first business day of the calendar quarter following the quarter in which
the election is made. Any Common Stock credits attributable to dividends paid
on Common Stock during the calendar quarter in which the election is made will
be credited before making the conversion. You may make this election at any
time prior to the end of the calendar year in which termination of employment
occurs. An election by you under this Section 6(d) will be irrevocable.
(e) If the number of outstanding shares of Common Stock is increased as
the result of any stock dividend, subdivision or reclassification of shares, the
number of shares of Common Stock to which your Common Stock credit account is
equivalent will be increased in proportion to the increase in the number of
outstanding shares of Common Stock. If the number of outstanding shares of
Common Stock is decreased as the result of any combination or reclassification
of shares, the number of shares of Common Stock to which your Common Stock
credit account is equivalent will be decreased in proportion to the decrease in
the number of outstanding shares of Common Stock. In the event the Company is
consolidated with or merged into any other corporation and holders of the
Company's Common Stock receive common shares of the resulting or surviving
corporation, your Common Stock credit account, in place of the shares then
credited thereto, will be credited with a stock equivalent determined by
multiplying the number of common shares of stock given in exchange for a share
of Common Stock upon such consolidation or merger, by the number of shares of
Common Stock to which your account is then equivalent. If in such a
consolidation or merger, holders of the Company's Common Stock receive any
consideration other than common shares of the resulting or surviving
corporation, the Committee will determine the appropriate change in your
account. In the event of any extraordinary dividend, including any spin-off,
the Committee will make appropriate adjustments to your Common Stock credit
account.
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<PAGE>
(f) If you die, whether before or after termination of employment, any
cash credit account and Common Stock credit account to which you are entitled,
including any award approved after your death as to which an election to defer
was made, will be distributed in cash (unless the Committee otherwise provides)
to your beneficiaries pursuant to Section 7.
7. BENEFICIARIES. If you die, the Company will make payments pursuant to
this Agreement to the beneficiary designated in writing by you specifically for
the Plan or, if there is no such designation or the named beneficiary is dead,
to the beneficiary most recently designated by you to receive the proceeds of
any Company-paid group life insurance coverage provided to you. Otherwise, the
distribution will be made to default beneficiaries as provided under the
Company-paid group life insurance plan. Only you may change or revoke your
designation.
8. TAX WITHHOLDING. The Company or one of its subsidiaries will deduct
any taxes required to be withheld by federal, state, local or foreign
governments from the awards that you receive pursuant to this Agreement.
9. TRANSFER. Except as set forth in this Agreement, you may not transfer,
pledge or encumber your Grants or any other benefits that you receive pursuant
to this Agreement. Except as required by law, creditors may not attach or seize
such Grants or benefits.
10. INTERPRETATION. The Committee has the power to interpret this
Agreement and complete discretion in making valuations and determinations and
taking other action pursuant to the Agreement. All interpretations,
determinations and actions by the Committee will be final and binding on all
parties. The Company, the Board of Directors, the Committee and the officers
and employees of the Company and its subsidiaries will not be liable for any
action taken in good faith in interpreting and performing this Agreement.
11. NO RIGHT TO EMPLOYMENT. The execution, delivery and performance of
this Agreement do not constitute an agreement or understanding, express or
implied, on the part of the Company or its subsidiaries to employ you for any
specific period or in any specific capacity and do not prevent the Company or
its subsidiaries from terminating your employment at any time with or without
Cause. "Termination of employment" under this Agreement means termination from
active employment; it does not mean the termination of pay and benefits at the
end of salary continuation or other forms of severance pay or pay in lieu of
salary.
12. NOTICES. Any notices to the Company pursuant to this Agreement should
be addressed to: The Secretary, Nabisco Holdings Corp., 7 Campus Drive,
Parsippany, NJ 07054. Any notice to you pursuant to this Agreement will be
sent to your address as shown on Company records.
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<PAGE>
13. CHANGE OF CONTROL. In the event of a Change of Control: (i) all
unvested RSUs and Performance Units issued to you will vest if you are
terminated without Cause within two years after the date of the Change of
Control, and (ii) the value of the RSUs will not be less than the Closing Price
of Class A Common Stock on the date of the Change of Control.
14. YOUR OBLIGATIONS.
(a) You agree that, until the third anniversary of (i) your last day of
employment with the Company or any of its subsidiaries, or (ii) the last date on
which you receive any payment pursuant to this Agreement, whichever is later:
(A) you will personally provide reasonable assistance and cooperation to the
Company or any of its subsidiaries in activities related to the prosecution or
defense of any pending or future lawsuits or claims involving the Company or any
of its subsidiaries; (B) you will promptly notify the Company upon receipt of
any requests from anyone other than an employee or agent of the Company for
information regarding the Company or any of its subsidiaries or if you become
aware of any potential claim or proposed litigation against the Company or any
of its subsidiaries; (C) you will refrain from providing any information related
to any claim or potential litigation against the Company or any of its
subsidiaries to any non-Company representatives unless you have the Company's
written permission or are required to provide information pursuant to legal
process; (D) you will not disclose or misuse any confidential information or
material concerning the Company or any of its subsidiaries; and (E) you will not
engage in any activity contrary or harmful to the interests of the Company or
any of its subsidiaries. You agree that if required by law to provide sworn
testimony regarding any matter relating to the Company or any of its
subsidiaries: you will consult with and have Company-designated legal counsel
present for such testimony (the Company will be responsible for the costs of
this counsel); you will confine your testimony to items about which you have
knowledge rather than speculation, unless otherwise directed by legal process;
and you will assist the efforts of the Company's attorneys to hold all
privileged attorney-client matters in strictest confidence, especially matters
you have been privy to.
(b) If the Company reasonably determines that you have materially violated
any of your obligations under this Agreement, then the Grants hereunder shall
terminate, effective no later than the date on which such violations began. In
that event, you agree to return to the Company on its demand any amounts paid to
you pursuant to this Agreement. If you fail to do so, the Company may deduct
from any amounts the Company owes to you (including, but not limited to, wages
or other compensation), or commence judicial proceedings against you, to recover
these amounts and related attorneys' fees and expenses. In addition, you agree
that the Company may pursue any other remedies available in law or at equity,
including injunctive relief, for any breach of this Section 14.
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<PAGE>
15. CHOICE OF LAW. This Agreement will be governed by the substantive law
of the State of New York. Any legal action or proceeding with respect to this
Agreement may be brought in the federal or state courts located in the Borough
of Manhattan in New York City.
IN WITNESS WHEREOF, the Company and you have executed this Agreement as of
the Date of Grant.
NABISCO HOLDINGS CORP.
By
-----------------------------
Authorized Signatory
- ------------------------------
GRANTEE
Grantee's Taxpayer Identification Number:
Grantee's Home Address:
Date:
---------------------------
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<PAGE>
Exhibit 10.2
RJR NABISCO HOLDINGS CORP.
1990 LONG TERM INCENTIVE PLAN
STOCK OPTION AGREEMENT
----------------------------
DATE OF GRANT: January 2, 1998
W I T N E S S E T H :
1. GRANT OF OPTION. Pursuant to the provisions of the 1990 Long Term
Incentive Plan (the "Plan"), RJR Nabisco Holdings Corp. (the "Company") on the
above date has granted to
JAMES M. KILTS (THE "OPTIONEE"),
subject to the terms and conditions which follow and the terms and conditions of
the Plan, the right and option to exercise from the Company a total of
250,000 SHARES
of Common Stock of the Company, at the exercise price of $37.375 per share (the
"Option"). A copy of the Plan is attached and made a part of this agreement
with the same effect as if set forth in the agreement itself. All capitalized
terms used herein shall have the meaning set forth in the Plan, unless the
context requires a different meaning.
2. EXERCISE OF OPTION.
(a) Shares may be purchased by giving the Corporate Secretary of the
Company written notice of exercise, on a form prescribed by the Company,
specifying the number of shares to be purchased. The notice of exercise shall
be accompanied by
(i) tender to the Company of cash for the full purchase price of the
shares with respect to which such Option or portion thereof is
exercised; OR
(ii) the unsecured, demand borrowing by the Optionee from the Company on an
open account maintained solely for this purpose in the amount of the
full exercise price together with the instruction from the Optionee to
sell the shares exercised on the open market through a duly registered
broker-dealer with which the Company makes an arrangement for the sale
of such
<PAGE>
shares under the Plan. This method is known as the "broker-dealer
exercise method" and is subject to the terms and conditions set forth
herein, in the Plan and in guidelines established by the Committee.
The Option shall be deemed to be exercised simultaneously with the
sale of the shares by the broker-dealer. If the shares purchased upon
the exercise of an Option or a portion thereof cannot be sold for a
price equal to or greater than the full exercise price plus direct
costs of the sales, then there is no exercise of the Option. Election
of this method authorizes the Company to deliver shares to the
broker-dealer and authorizes the broker-dealer to sell said shares on
the open market. The broker-dealer will remit proceeds of the sale to
the Company which will remit net proceeds to the Optionee after
repayment of the borrowing, deduction of costs, if any, and
withholding of taxes. The Optionee's borrowing from the Company on an
open account shall be a personal obligation of the Optionee which
shall bear interest at the published Applicable Federal Rate (AFR) for
short-term loans and shall be payable upon demand by the Company.
Such borrowing may be authorized by telephone or other
telecommunications acceptable to the Company. Upon such borrowing and
the exercise of the Option or portion thereof, title to the shares
shall pass to the Optionee whose election hereunder shall constitute
instruction to the Company to register the shares in the name of the
broker-dealer or its nominee. The Company reserves the right to
discontinue this broker-dealer exercise method at any time for any
reason whatsoever. The Optionee agrees that if this broker-dealer
exercise method under this paragraph is used, the Optionee promises
unconditionally to pay the Company the full balance in his open
account at any time upon demand. Optionee also agrees to pay interest
on the account balance at the AFR for short-term loans from and after
demand.
(b) Subject to Section 2(c), this Option shall be vested in three
installments. The first installment shall be vested on the first anniversary
following the Date of Grant for 33% of the number of shares of Common Stock
subject to this Option. Thereafter, on each subsequent anniversary date an
installment shall become vested for 33% and 34%, respectively, of the number of
shares subject to this Option until the Option has become fully vested. To the
extent that any of the above installments is not exercised when it becomes
vested, it shall not expire, but shall continue to be exercisable at any time
thereafter until this Option shall terminate, expire or be surrendered. An
exercise shall be for whole shares only.
(c) Except as provided in Section 3, this Option shall not be exercised
prior to 36 months after the Date of Grant.
3. TERMINATION OF EMPLOYMENT
(a) Except as may be otherwise provided in a written employment or
termination agreement between the Optionee and the Company, the Option shall not
become vested as to any additional shares following the Termination of
Employment of the
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Optionee for any reason other than a Termination of Employment because of death,
Permanent Disability, Retirement, termination of employment by the Optionee with
Good Reason or involuntary termination of the Optionee without Cause. In the
event of Termination of Employment because of death, Permanent Disability,
Retirement, termination of employment by the Optionalee with Good Reason or
involuntary termination without Cause, the Option shall immediately become
vested and exercisable as to all shares.
(b) The Optionee shall be deemed to have a "Permanent Disability" if he
becomes totally and permanently disabled (as defined in RJR Nabisco, Inc.'s Long
Term Disability Plan applicable to senior executive officers as in effect on the
date hereof), or if the Board of Directors or any committee thereof so
determines.
(c) "Retirement" as used herein means retirement at age 65 or over, early
retirement at age 55 or over with at least 10 years of service or early
retirement at age 55 or over with the approval of the Company, which approval
specifically states that the Option shall become fully exercisable as to all
Shares.
(d) "Termination of Employment" as used herein means termination from
active employment with the Company and any other entity which, as of the date of
this Agreement, is an affiliate of the Company.
4. EXPIRATION OF OPTION. The Option shall expire or terminate and may not
be exercised to any extent by the Optionee after the first to occur of the
following events:
(a) The tenth anniversary of the Date of Grant, or such earlier time as
the Company may determine is necessary or appropriate in light of applicable
foreign tax laws; or
(b) Immediately upon the Optionee's Termination of Employment for Cause
(as defined in the Optionee's employment agreement).
5. TRANSFERABILITY. Other than as specifically provided with regard to
the death of the Optionee, this Option agreement and any benefit provided or
accruing hereunder shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or charge; and any
attempt to do so shall be void. No such benefit shall, prior to receipt thereof
by the Optionee, be in any manner liable for or subject to the debts, contracts,
liabilities, engagements or torts of the Optionee.
6. NO RIGHT TO EMPLOYMENT. Neither the execution and delivery of this
agreement nor the granting of the Option evidenced by this agreement shall
constitute or be evidence of any agreement or understanding, express or implied,
on the part of the Company or its subsidiaries to employ the Optionee for any
specific period or shall prevent the Company or its subsidiaries from
terminating the Optionee's employment at any time with or without "Cause" (as
defined in Section 11 herein).
3
<PAGE>
7. ADJUSTMENTS IN OPTION. In the event that the outstanding shares of the
Common Stock subject to the Option are, from time to time, changed into or
exchanged for a different number or kind of shares of the Company or other
securities by reason of a merger, consolidation, recapitalization,
reclassification, stock split, stock dividend, spinoff, combination of shares,
or otherwise, the Committee shall make an appropriate and equitable adjustment
in the number and kind of shares or other consideration as to which the Option,
or portions thereof then unexercised, shall be exercisable. Any adjustment made
by the Committee shall be final and binding upon the Optionee, the Company and
all other interested persons.
8. APPLICATION OF LAWS. The granting and the exercise of this Option and
the obligations of the Company to sell and deliver shares hereunder and to remit
cash under the broker-dealer exercise method shall be subject to all applicable
laws, rules, and regulations and to such approvals of any governmental agencies
as may be required.
9. TAXES. Any taxes required by federal, state, or local laws to be
withheld by the Company on exercise by the Optionee of the Option for Common
Stock shall be paid to the Company before delivery of the Common Stock is made
to the Optionee. When the Option is exercised under the broker-dealer exercise
method, the full amount of any taxes required to be withheld by the Company on
exercise of stock options shall be deducted by the Company from the proceeds.
10. NOTICES. Any notices required to be given hereunder to the Company
shall be addressed to The Secretary, RJR Nabisco Holdings Corp., 1301 Avenue of
the Americas, New York, NY 10019-6013, and any notice required to be given
hereunder to the Optionee shall be sent to the Optionee's address as shown on
the records of the Company.
11. TERMINATION FOR "CAUSE" OR WITH "GOOD REASON"."
(a) For purposes of this Agreement, the Optionee's employment shall be
deemed to have been terminated for "Cause" only as such term is defined in the
Optionee's employment agreement with Nabisco Holdings Corp. and Nabisco, Inc.
effective as of November 20, 1997 (the "Employment Agreement"). Any voluntary
termination by the Optionee in anticipation of an involuntary termination of the
Optionee's employment for Cause shall be deemed to be a termination of
Optionee's employment for Cause.
(b) For purposes of the Agreement, the Optionee's employment shall be
deemed to have been terminated for "Good Reason" only as such term is defined in
the Optionee's Employment Agreement.
12. ADMINISTRATION AND INTERPRETATION. In consideration of the grant, the
Optionee specifically agrees that the Committee shall have the exclusive power
to interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation and application of the Plan and Agreement as are
consistent therewith and to interpret or revoke any such rules. All actions
taken and all interpretations and determinations made by the Committee shall be
final, conclusive, and binding upon the Optionee, the
4
<PAGE>
Company and all other interested persons. No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Agreement. The Committee may delegate its
interpretive authority to an officer or officers of the Company.
13. OBLIGATIONS OF OPTIONEE
(a) In consideration of the grant, the Optionee, while both actively
employed and in the event of Optionee's Termination of Employment for any
reason, specifically agrees that within the term of this grant or within three
years following the payment of any amounts pursuant to the grant, if later: (i)
the Optionee will personally provide reasonable assistance and cooperation to
the Company in activities related to the prosecution or defense of any pending
or future lawsuits or claims involving the Company; (ii) the Optionee will
promptly notify the Company upon receipt of any requests from anyone other than
an employee or agent of the Company for information regarding the Company, or if
the Optionee becomes aware of any potential claim or proposed litigation against
the Company; (iii) the Optionee will refrain from providing any information
related to any claim or potential litigation against the Company to any
non-Company representatives without either the Company's written permission or
being required to provide information pursuant to legal process; (iv) the
Optionee will not misuse or, other than in the course of performing his duties,
disclose any confidential information or material concerning the Company; and
(v) the Optionee will not engage in any activity contrary or harmful to the
interests of the Company. In further consideration of the grant, the Optionee
specifically agrees that if required by law to provide sworn testimony regarding
any Company-related matter: the Optionee will consult with and have Company
designated legal counsel present for such testimony (the Company will be
responsible for the costs of such designated counsel); the Optionee will confine
his testimony to items about which he has knowledge rather than speculation,
unless otherwise directed by legal process; and the Optionee will cooperate with
the Company's attorneys to assist their efforts, especially on matters the
Optionee has been privy to, holding all privileged attorney-client matters in
strictest confidence.
(b) If the Company reasonably determines that the Optionee has
materially violated any of his obligations under this agreement, then this
Option shall terminate, effective the date on which such violation began (unless
otherwise terminated sooner) and the Company may demand the return of any gain
realized by the Optionee from the exercise of all or a portion of this Option
and the Optionee hereby agrees to return such amounts upon such demand. If
after such demand the Optionee fails to return said amounts, the Optionee
acknowledges that the Company has the right to deduct from any amounts the
Company owes to the Optionee (including, but not limited to, wages or other
compensation), or to commence judicial proceedings against the Optionee, to
recover said amounts and any and all of its attorney's fees and costs.
14. OTHER PROVISIONS.
(a) Titles are provided herein for convenience only and are not to
serve as a basis for interpretation of the Agreement.
5
<PAGE>
(b) This Agreement may be amended only by a writing executed by the
parties hereto which specifically states that it is amending this Agreement.
(c) In the event of a Change of Control, the Optionee shall receive
in cash in respect of the Option and in exchange for the cancellation of the
Option, the higher of (i) or (ii) where (i) is the excess, if any, of the Fair
Market Value over the exercise price of the Option, multiplied by the number of
Shares subject to the Option and (ii) is the value of the Option using the
Black-Scholes method of valuing the Option based on the following assumptions:
(A) Fair Market Value; (B) a term equal to the remaining life of the option; (C)
a risk-free factor equal to the average yield on zero-coupon U.S. government
issues, with a maturity coincident with the expiration of the remaining term of
the option, as reported in the Wall Street Journal for the day the Change of
Control is deemed to have occurred; (D) a dividend yield equal to the weighted
average annual dividend yield of Holdings for the time period since March 1995,
or the immediately preceding 60 months, whichever time period is less; and (E) a
volatility equal to the weighted average volatility for the immediately
preceding 60 months. The volatility shall be calculated for each year (12-month
periods counting back from the month prior to that in which the Change in
Control is deemed to have occurred) by using the month-end closing prices plus
dividends paid in that month. The dividend yield shall be calculated for each
year (12-month periods counting back from the month prior to that in which the
Change of Control is deemed to have occurred) by dividing the total dividends
(for which the ex-dividend dates occur within that 12-month period) by the
average month-end closing prices during that 12 month period. The weighted
average dividend yield is calculated by applying a weighting factor to each
annual yield where the highest factor is the number that equals the number of
full or partial years in the time period and is applied to the annual yield of
the most recent 12-month period, the second highest factor (highest factor minus
1) is applied to the annual yield of the second most recent 12-month period, the
third highest factor (highest factor minus 2) is applied to the annual yield of
the most recent 12-month period, and so forth, adding all of these products
together and dividing by a number that equals the sum of the weighting factors.
The weighted average volatility is calculated in the same manner as described
for dividend yield. Notwithstanding the foregoing, this Section 14(c) shall not
apply in the event of a Change of Control under Section 8(c)(iii) of the Plan
for which Holdings is using the "pooling of interest" method of accounting.
(d) THE LAWS OF THE STATE OF DELAWARE SHALL GOVERN THE
INTERPRETATION, VALIDITY AND PERFORMANCE OF THE TERMS OF THIS AGREEMENT
REGARDLESS OF THE LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICTS OF
LAWS.
6
<PAGE>
IN WITNESS WHEREOF, the Company, by its duly authorized officer, and the
Optionee have executed this Agreement as of the date of Grant first above
written.
RJR NABISCO HOLDINGS CORP.
By:
-----------------------------------
Authorized Signatory
- ---------------------------------
Optionee
Optionee's Taxpayer Identification Number:
- ---------------------------------
Optionee's Home Address:
- ---------------------------------
- ---------------------------------
- ---------------------------------
7
<PAGE>
Exhibit 10.3
NABISCO HOLDINGS CORP.
1994 LONG TERM INCENTIVE PLAN
STOCK OPTION AGREEMENT
---------------------------
DATE OF GRANT: January 2, 1998
W I T N E S S E T H :
1. GRANT OF OPTION. Subject to (i) the terms and conditions herein and
(ii) the provisions of the Nabisco Holdings Corp. 1994 Long Term Incentive Plan
(the "Plan"), Nabisco Holdings Corp. (the "Company") on the above date has
granted to
JAMES M. KILTS (THE "OPTIONEE"),
the right and option to exercise from the Company a total of
250,000 SHARES
of Class A Common Stock of the Company ("Common Stock"), at the exercise price
of $47.938 per share (the "Option"). A copy of the Plan is attached and made a
part of this agreement with same effect as if set forth in the agreement itself.
All capitalized terms used herein shall have the meaning set forth in the Plan,
unless the context requires a different meaning.
2. EXERCISE OF OPTION.
(a) Shares may be purchased by giving the Corporate Secretary of the
Company written notice of exercise, on a form prescribed by the Company,
specifying the number of shares to be purchased. The notice of exercise shall
be accompanied by
(i) tender to the Company of cash for the full purchase price of the
shares with respect to which such Option or portion thereof is
exercised; OR
(ii) the unsecured, demand borrowing by the Optionee from the Company on an
open account maintained solely for this purpose in the amount of the
full exercise price together with the instruction from the Optionee to
sell the shares exercised on the open market through a duly registered
broker-dealer with which the Company makes an arrangement for the sale
of such shares under the Plan.
<PAGE>
This method is known as the "broker-dealer exercise method" and is
subject to the terms and conditions set forth herein, in the Plan and
in guidelines established by the Committee. The Option shall be
deemed to be exercised simultaneously with the sale of the shares by
the broker-dealer. If the shares purchased upon the exercise of an
Option or a portion thereof cannot be sold for a price equal to or
greater than the full exercise price plus direct costs of the sales,
then there is no exercise of the Option. Election of this method
authorizes the Company to deliver shares to the broker-dealer and
authorizes the broker-dealer to sell said shares on the open market.
The broker-dealer will remit proceeds of the sale to the Company which
will remit net proceeds to the Optionee after repayment of the
borrowing, deduction of costs, if any, and withholding of taxes. The
Optionee's borrowing from the Company on an open account shall be a
personal obligation of the Optionee which shall bear interest at the
published Applicable Federal Rate (AFR) for short-term loans and shall
be payable upon demand by the Company. Such borrowing may be
authorized by telephone or other telecommunications acceptable to the
Company. Upon such borrowing and the exercise of the Option or
portion thereof, title to the shares shall pass to the Optionee whose
election hereunder shall constitute instruction to the Company to
register the shares in the name of the broker-dealer or its nominee.
The Company reserves the right to discontinue this broker-dealer
exercise method at any time for any reason whatsoever. The Optionee
agrees that if this broker-dealer exercise method under this paragraph
is used, the Optionee promises unconditionally to pay the Company the
full balance in his open account at any time upon demand. Optionee
also agrees to pay interest on the account balance at the AFR for
short-term loans from and after demand.
(b) Notwithstanding provisions for regular exercise, if more than 80% of
the aggregate value of all classes of Company common stock is owned, directly or
indirectly, by RJR Nabisco Holdings Corp. on the date of exercise then the
Company may, in its absolute discretion, make a cash payment to the Optionee,
net of taxes, equal to the product of (x) and (y), where (x) is the excess of
the fair market value of Common Stock on the date of exercise over the exercise
price, and (y) is the number of shares subject to the Option(s) being exercised.
Such cash payment shall be in lieu of delivery of shares.
(c) Subject to Sections 2(b), 2(d), and 4, this Option shall be vested in
three installments. The first installment shall be vested on the 1st of January
following Date of Grant for 33% of the number of shares of Common Stock subject
to this Option. Thereafter, on each subsequent January 1st an installment shall
become vested for 33% and 34%, respectively, of the number of shares subject to
this Option until the Option has become fully vested. To the extent that any
portion of the Option is not exercised, it shall not expire, but shall continue
to be vested at any time thereafter until this Option shall terminate, expire or
be surrendered. An exercise shall be for whole shares only.
(d) This Option shall not be exercised prior to 36 months after the Date
of Grant.
2
<PAGE>
3. RIGHTS IN EVENT OF TERMINATION OF EMPLOYMENT.
Subject to Sections 2(b), 2(d) and 4:
(a) Except as may be otherwise provided in a written employment or
termination agreement between the Optionee and the Company, the Option shall not
become vested as to any additional shares following the Termination of
Employment of the Optionee for any reason other than a Termination of Employment
because of death, Permanent Disability, Retirement, termination of employment by
the Optionee with Good Reason or involuntary termination of the Optionee without
Cause. In the event of Termination of Employment because of death, Permanent
Disability, Retirement, termination of employment by the Optionee with Good
Reason or involuntary termination without Cause, the Option shall immediately
become vested as to all shares.
(b) The Optionee shall be deemed to have a "Permanent Disability" if he
becomes totally and permanently disabled (as defined in RJR Nabisco, Inc's Long
Term Disability Plan applicable to senior executive officers as in effect on the
date hereof), or if the Board of Directors or any committee thereof so
determines.
(c) "Retirement" as used herein means retirement at age 65 or over, or
early retirement at age 55 or over with the approval of the Company, which
approval specifically states that the Option shall become fully exercisable as
to all Shares.
(d) "Termination of Employment" as used herein means termination from
active employment with the Company; it does not mean termination of payment or
benefits at the end of salary continuation or other form of severance or pay in
lieu of salary.
4. EXPIRATION OF OPTION. The Option shall expire or terminate and may not
be exercised to any extent by the Optionee after the first to occur of the
following events:
(a) The tenth anniversary of the Date of Grant, or such earlier time as
the Company may determine is necessary or appropriate in light of applicable
foreign tax laws; or
(b) Immediately upon the Optionee's Termination of Employment for Cause
(as defined in Section 11 herein).
5. TRANSFERABILITY. Other than as specifically provided with regard to
the death of the Optionee, this Option agreement and any benefit provided or
accruing hereunder shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge,
3
<PAGE>
encumbrance, or charge; and any attempt to do so shall be void. No such benefit
shall, prior to receipt thereof by the Optionee, be in any manner liable for or
subject to the debts, contracts, liabilities, engagements or torts of the
Optionee.
6. NO RIGHT TO EMPLOYMENT. Neither the execution and delivery of this
agreement nor the granting of the Option evidenced by this agreement shall
constitute or be evidence of any agreement or understanding, express or implied,
on the part of the Company or its subsidiaries to employ the Optionee for any
specific period or shall prevent the Company or its subsidiaries from
terminating the Optionee's employment at any time with or without "Cause" (as
defined in Section 11 herein).
7. ADJUSTMENTS IN OPTION. In the event that the outstanding shares of the
Common Stock subject to the Option are, from time to time, changed into or
exchanged for a different number or kind of shares of the Company or other
securities by reason of a merger, consolidation, recapitalization,
reclassification, stock split, stock dividend, combination of shares, or
otherwise, the Committee may make an appropriate and equitable adjustment in the
number and kind of shares or other consideration as to which the Option, or
portions thereof then unexercised, shall be exercisable. Any adjustment made by
the Committee shall be final and binding upon the Optionee, the Company and all
other interested persons.
8. APPLICATION OF LAWS. The granting and the exercise of this Option and
the obligations of the Company to sell and deliver shares hereunder and to remit
cash under the broker-dealer exercise method shall be subject to all applicable
laws, rules, and regulations and to such approvals of any governmental agencies
as may be required.
9. TAXES. Any taxes required by federal, state, or local laws to be
withheld by the Company on exercise by the Optionee of the Option for Common
Stock shall be paid to the Company before delivery of the Common Stock is made
to the Optionee. When the Option is exercised under the broker-dealer exercise
method, the full amount of any taxes required to be withheld by the Company on
exercise of stock options shall be deducted by the Company from the proceeds.
10. NOTICES. Any notices required to be given hereunder to the Company
shall be addressed to The Secretary, Nabisco Holdings Corp., 7 Campus Drive,
Parsippany, New Jersey 07054, and any notice required to be given hereunder to
the Optionee shall be sent to the Optionee's address as shown on the records of
the Company.
11. TERMINATION FOR "CAUSE" OR WITH "GOOD REASON."
(a) For purposes of this Agreement, an Optionee's employment shall be
deemed to have been terminated for "Cause" only as such term is defined in the
Optionee's employment agreement with the Company effective as of November 20,
1997 (the "Employment Agreement"). Any voluntary termination by the Optionee in
anticipation of an involuntary termination of the Optionee's employment for
Cause shall be deemed to be a termination of Optionee's employment for Cause.
4
<PAGE>
(b) For purposes of the Agreement, the Optionee's employment shall be
deemed to have been terminated for "Good Reason" only as such term is defined in
the Optionee's Employment Agreement.
12. ADMINISTRATION AND INTERPRETATION. In consideration of the grant, the
Optionee specifically agrees that the Committee shall have the exclusive power
to interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation and application of the Plan and Agreement as are
consistent therewith and to interpret or revoke any such rules. All actions
taken and all interpretations and determinations made by the Committee shall be
final, conclusive, and binding upon the Optionee, the Company and all other
interested persons. No member of the Committee shall be personally liable for
any action, determination or interpretation made in good faith with respect to
the Plan or the Agreement. The Committee may delegate its interpretive
authority to an officer or officers of the Company.
5
<PAGE>
13. OTHER PROVISIONS.
(a) Titles are provided herein for convenience only and are not to
serve as a basis for interpretation of the Agreement.
(b) This Agreement may be amended only by a writing executed by the
parties hereto which specifically states that it is amending this Agreement.
(c) THE LAWS OF THE STATE OF DELAWARE SHALL GOVERN THE
INTERPRETATION, VALIDITY AND PERFORMANCE OF THE TERMS OF THIS AGREEMENT
REGARDLESS OF THE LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICTS OF
LAWS.
IN WITNESS WHEREOF, the Company, by its duly authorized officer, and the
Optionee have executed this Agreement as of the date of Grant first above
written.
NABISCO HOLDINGS CORP.
By
-------------------------------
Authorized Signatory
- ------------------------------
Optionee
Optionee's Social Security Number:
- ------------------------------
Optionee's Home Address:
- ------------------------------
- ------------------------------
- ------------------------------
6
<PAGE>
Exhibit 10.4
1994 NABISCO HOLDINGS CORP.
LONG-TERM INCENTIVE PLAN
RESTRICTED STOCK PROGRAM
RESTRICTED STOCK EQUIVALENT AGREEMENT
-----------------------------
DATE OF GRANT: January 2, 1998
W I T N E S S E T H
1. GRANT OF RESTRICTED STOCK EQUIVALENTS. Pursuant to the provisions of
its 1994 Long-Term Incentive Plan and the Restricted Stock Program
(collectively, the "Plan"), Nabisco Holdings Corp. (the "Company") on the above
date has granted to
JAMES M. KILTS (THE "GRANTEE")
subject to the terms and conditions of the Plan and this agreement (the
"Agreement"), a total of
50,000 RESTRICTED STOCK EQUIVALENTS
which entitle the Grantee to receive an amount in cash equal to the fair market
value of an equivalent number of shares of Class A Common Stock of the Company
("Common Stock") as of the Payment Date determined in Section 3.
A copy of the Plan is attached and made a part of this Agreement with the
same effect as if set forth in the Agreement itself. All capitalized terms used
below shall have the meaning set forth in the Plan, unless the context requires
a different meaning.
2. VESTING OF RESTRICTED STOCK EQUIVALENTS. The Restricted Stock
Equivalents granted hereunder shall vest on the earlierst of:
(i) January 2, 2003;
(ii) the date of the Grantee's involuntary termination of employment
without Cause;
(iii) the date of the Grantee's termination of employment with Good Reason;
or
<PAGE>
(iv) the date of a Change of Control.
In the event of the Grantee's death or disability (as defined in the
Company's long-term disability plan) the Grantee will be vested in a number of
Restricted Stock Equivalents which is equal to the product of (i) the total
number of Restricted Stock Equivalents granted to the Grantee pursuant to this
Agreement and (ii) a fraction, the numerator of which is number of whole or
partial months between the Date of Grant and the Grantee's last day of active
employment and the denominator of which is 60.
3. PAYMENT OF RESTRICTED STOCK EQUIVALENTS. Unless the Grantee has elected
to defer receipt of payment in accordance with Section 5, the Grantee will
receive a payment in cash in respect of Restricted Stock Equivalents granted to
him based upon the closing price of Nabisco Common Stock on the date of vesting
(the "Payment Date"). The payment shall be made as soon as practicable
following vesting of such Restricted Stock Equivalents. If the Grantee has
elected to defer receipt of such payment in accordance with Section 5, the
Payment Date will be the last day of the deferral period and payment will be
made as soon as practicable thereafter.
2
<PAGE>
4. DIVIDEND EQUIVALENT PAYMENTS. At all times prior to the Payment Date,
the Grantee shall receive cash payments at the same time and in the same amount
as any cash dividends paid on an equivalent number of shares of Common Stock.
5. DEFERRAL. The Grantee may elect to defer payment of vested Restricted
Stock Equivalents in accordance with procedures established by the Committee;
provided, that the Grantee may not defer payment in respect of Restricted Stock
Equivalents that vest in connection with the Grantee's termination of employment
for any reason and further, provided, that in no event may the period of
deferral extend beyond January of the year following the Grantee's termination
of employment for any reason. Deferred Restricted Stock Equivalents will
continue to have a value based on the fair market value of an equivalent number
of shares of Common Stock.
6. NO RIGHT TO EMPLOYMENT. The execution and delivery of this Agreement
and the granting of Restricted Stock Equivalents hereunder shall not constitute
or be evidence of any agreement or understanding, express or implied, on the
part of the Company or its subsidiaries to employ the Grantee for any specific
period or in any particular capacity and shall not prevent the Company or its
subsidiaries from terminating the Grantee's employment at any time with or
without Cause.
7. TRANSFERABILITY. Other than as specifically provided in the Plan with
regard to the death of the Grantee, this Agreement and any benefit provided or
accruing hereunder shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or charge; and any
attempt to do so shall be void. No such benefit shall, prior to receipt thereof
by the Grantee, be in any manner liable for or subject to the debts, contracts,
liabilities, engagements or torts of the Grantee.
8. CHANGE IN COMMON STOCK OR CORPORATE STRUCTURE.
a) If at any time the number or nature of outstanding shares of Common
Stock of the Company shall be increased or changed as the result of any stock
dividend, subdivision or reclassification of shares, the number or nature of
Restricted Stock Equivalents subject to this Agreement after such an event shall
be increased or changed in the same proportion or manner as the outstanding
shares of Common Stock are increased or changed, or if the number of outstanding
shares of Common Stock shall at any time be decreased as the result of any
combination or reclassification of shares, the number of Restricted Stock
Equivalents subject to this Agreement after such an event shall be decreased in
the same proportion as the outstanding number of shares of Common Stock is
decreased.
3
<PAGE>
b) In the event the Company shall at any time be consolidated with or
merged into any other corporation and holders of the Company's Common Stock
receive common shares of the resulting or surviving corporation, there shall be
an adjustment to the Restricted Stock Equivalents subject to this Agreement
after such an event, and in place of the Restricted Stock Equivalents so
subject, a stock equivalent shall be determined by multiplying the number of
common shares of stock delivered in exchange for a share of Common Stock upon
such consolidation or merger, by the number of Restricted Stock Equivalents
subject to this Agreement. If in such a consolidation or merger, holders of the
Company's Common Stock shall receive any consideration other than common shares
of the resulting or surviving corporation, the Committee shall determine the
appropriate adjustment to shares held pursuant to this Agreement after such an
event; provided, however, such adjustment shall not be to the detriment of the
Grantee.
9. TAXES. Any taxes required by federal, state or local laws to be withheld
by the Company on the Grant of Restricted Stock Equivalents or any other payment
or event hereunder shall be paid to the Company by the Grantee by the time such
taxes are required to be paid or deposited by the Company. The Grantee hereby
authorizes the Company to withhold or offset a sufficient amount from any
payment hereunder to satisfy any such tax withholding obligations.
10. NOTICES. Any notices required to be given hereunder to the Company
shall be addressed to The Secretary, Nabisco Holdings Corp., 7 Campus Drive,
Parsippany, NJ 07054, and any notice required to be given hereunder to the
Grantee shall be sent to the Grantee's address as shown on the records of the
Company.
11. TERMINATION FOR "CAUSE" OR WITH "GOOD REASON."
(a) For purposes of the Agreement, the Grantee's employment shall be
deemed to have been terminated for "Cause" only as such term is defined in the
Grantee's employment agreement with the Company effective as of November 20,
1997 (the "Employment Agreement"). Any voluntary termination by the Grantee's
in anticipation of an involuntary termination of the Grantee's employment for
Cause shall be deemed to be a termination of Grantee's employment for Cause.
(b) For purposes of the Agreement, the Grantee's employment shall be
deemed to have been terminated for "Good Reason" only as such term is defined in
the Grantee's Employment Agreement.
12. GRANTEE. In consideration of the grant, the Grantee specifically
agrees that the Committee shall have the exclusive power to interpret the Plan
and this Agreement and to adopt such rules for the administration,
interpretation and application of the Plan and Agreement as are consistent
therewith and to interpret or revoke any such rules. All actions taken and all
interpretation and determinations made by the Committee shall be final,
conclusive, and binding upon the Grantee, the Company and all other interested
persons. No member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with
4
<PAGE>
respect to the Plan or the Agreement. The Committee may delegate its
interpretive authority to an officer or officers of the Company.
13. OTHER PROVISIONS.
a) Titles are provided herein for convenience only and are not to
serve as a basis for interpretation of the Agreement.
b) The Agreement may be amended only by a writing executed by the
parties hereto which specifically states that it is amending this Agreement.
c) THE LAWS OF THE STATE OF DELAWARE SHALL GOVERN THE
INTERPRETATION, VALIDITY AND PERFORMANCE OF THE TERMS OF THIS AGREEMENT
REGARDLESS OF THE LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICTS OF
LAWS.
IN WITNESS WHEREOF, the Company, by its duly authorized officer, and the
Grantee have executed this Agreement as of the Date of Grant first above
written.
NABISCO HOLDINGS CORP.
By:
-------------------------------
Authorized Signatory
- -------------------------------
Grantee
Grantee's Social Security Number:
- -------------------------------
Grantee's Home Address:
- -------------------------------
- -------------------------------
5
<PAGE>
Exhibit 10.5
NABISCO HOLDINGS CORP.
1994 LONG TERM INCENTIVE PLAN
STOCK OPTION AGREEMENT
---------------------------
DATE OF GRANT: February 5, 1998
W I T N E S S E T H :
1. Grant of Option. Subject to (i) the terms and conditions herein and
(ii) the provisions of the Nabisco Holdings Corp. 1994 Long Term Incentive Plan
(the "Plan"), Nabisco Holdings Corp. (the "Company") on the above date has
granted to
(the "Optionee"),
-----------------
the right and option to exercise from the Company a total of
shares
----------
of Class A Common Stock of the Company ("Common Stock"), at the exercise
price of $45.063 per share (the "Option"). A copy of the Plan is attached and
made a part of this agreement with same effect as if set forth in the
agreement itself. All capitalized terms used herein shall have the meaning
set forth in the Plan, unless the context requires a different meaning.
2. Exercise of Option.
(a) Shares may be purchased by giving the Corporate Secretary of the
Company written notice of exercise, on a form prescribed by the Company,
specifying the number of shares to be purchased. The notice of exercise shall be
accompanied by
(i) tender to the Company of cash for the full purchase price of
the shares with respect to which such Option or portion
thereof is exercised; or
(ii) the unsecured, demand borrowing by the Optionee from the
Company on an open account maintained solely for this purpose
in the amount of the full exercise price together with the
instruction from the Optionee to sell the shares exercised on
the open market through a duly registered broker-dealer with
which the Company makes an arrangement for the sale of such
shares under the Plan. This method is known as the
"broker-dealer exercise method" and is subject to the terms
and conditions set forth herein, in the Plan and in guidelines
<PAGE>
established by the Committee. The Option shall be deemed to be
exercised simultaneously with the sale of the shares by the
broker-dealer. If the shares purchased upon the exercise of an
Option or a portion thereof cannot be sold for a price equal
to or greater than the full exercise price plus direct costs
of the sales, then there is no exercise of the Option.
Election of this method authorizes the Company to deliver
shares to the broker-dealer and authorizes the broker-dealer
to sell said shares on the open market. The broker-dealer will
remit proceeds of the sale to the Company which will remit net
proceeds to the Optionee after repayment of the borrowing,
deduction of costs, if any, and withholding of taxes. The
Optionee's borrowing from the Company on an open account shall
be a personal obligation of the Optionee which shall bear
interest at the published Applicable Federal Rate (AFR) for
short-term loans and shall be payable upon demand by the
Company. Such borrowing may be authorized by telephone or
other telecommunications acceptable to the Company. Upon such
borrowing and the exercise of the Option or portion thereof,
title to the shares shall pass to the Optionee whose election
hereunder shall constitute instruction to the Company to
register the shares in the name of the broker-dealer or its
nominee. The Company reserves the right to discontinue this
broker-dealer exercise method at any time for any reason
whatsoever. The Optionee agrees that if this broker-dealer
exercise method under this paragraph is used, the Optionee
promises unconditionally to pay the Company the full balance
in his open account at any time upon demand. Optionee also
agrees to pay interest on the account balance at the AFR for
short-term loans from and after demand.
(b) Notwithstanding provisions for regular exercise, if more than 80%
of the aggregate value of all classes of Company common stock is owned, directly
or indirectly, by RJR Nabisco Holdings Corp. on the date of exercise then the
Company may, in its absolute discretion, make a cash payment to the Optionee,
net of taxes, equal to the product of (x) and (y), where (x) is the excess of
the fair market value of Common Stock on the date of exercise over the exercise
price, and (y) is the number of shares subject to the Option(s) being exercised.
Such cash payment shall be in lieu of delivery of shares.
(c) Subject to Sections 2(b), 2(d), and 4, this Option shall be vested
in three installments. The first installment shall be vested on the 1st of
January following Date of Grant for 33% of the number of shares of Common Stock
subject to this Option. Thereafter, on each subsequent January 1st an
installment shall become vested for 33% and 34%, respectively, of the number of
shares subject to this Option until the Option has become fully vested. To the
extent that any portion of the Option is not exercised, it shall not expire, but
shall continue to be vested at any time thereafter until this Option shall
terminate, expire or be surrendered. An exercise shall be for whole shares only.
(d) This Option shall not be exercised prior to 36 months after the
Date of Grant.
3. Rights in Event of Termination of Employment.
Subject to Sections 2(b), 2(d) and 4:
2
<PAGE>
(a) Unless otherwise provided in a written employment or termination
agreement between the Optionee and the Company, the Option shall not become
vested as to any additional shares following the Termination of Employment of
the Optionee for any reason other than a Termination of Employment because of
death, Permanent Disability or Retirement of the Optionee. In the event of
Termination of Employment because of death, Permanent Disability or Retirement,
the Option shall immediately become vested as to all shares.
(b) The Optionee shall be deemed to have a "Permanent Disability" if he
becomes totally and permanently disabled (as defined in RJR Nabisco, Inc's Long
Term Disability Plan applicable to senior executive officers as in effect on the
date hereof), or if the Board of Directors or any committee thereof so
determines.
(c) "Retirement" as used herein means retirement at age 65 or over, or
early retirement at age 55 or over with the approval of the Company, which
approval specifically states that the Option shall become fully exercisable as
to all Shares.
(d) "Termination of Employment" as used herein means termination from
active employment; it does not mean termination of payment or benefits at the
end of salary continuation or other form of severance or pay in lieu of salary.
4. Expiration of Option. The Option shall expire or terminate and may
not be exercised to any extent by the Optionee after the first to occur of the
following events:
(a) The tenth anniversary of the Date of Grant, or such earlier time as
the Company may determine is necessary or appropriate in light of applicable
foreign tax laws; or
(b) Immediately upon the Optionee's Termination of Employment for Cause
(as defined in Section 11 herein).
5. Transferability. Other than as specifically provided with regard to
the death of the Optionee, this Option agreement and any benefit provided or
accruing hereunder shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or charge; and any
attempt to do so shall be void. No such benefit shall, prior to receipt thereof
by the Optionee, be in any manner liable for or subject to the debts, contracts,
liabilities, engagements or torts of the Optionee.
6. No Right to Employment. Neither the execution and delivery of this
agreement nor the granting of the Option evidenced by this agreement shall
constitute or be evidence of any agreement or understanding, express or implied,
on the part of the Company or its subsidiaries to employ the Optionee for any
specific period or shall prevent the Company or its subsidiaries from
terminating the Optionee's employment at any time with or without "Cause" (as
defined in Section 11 herein).
7. Adjustments in Option. In the event that the outstanding shares of
the Common Stock subject to the Option are, from time to time, changed into or
exchanged for a different
3
<PAGE>
number or kind of shares of the Company or other securities by reason of a
merger, consolidation, recapitalization, reclassification, stock split, stock
dividend, combination of shares, or otherwise, the Committee may make an
appropriate and equitable adjustment in the number and kind of shares or other
consideration as to which the Option, or portions thereof then unexercised,
shall be exercisable. Any adjustment made by the Committee shall be final and
binding upon the Optionee, the Company and all other interested persons.
8. Application of Laws. The granting and the exercise of this Option
and the obligations of the Company to sell and deliver shares hereunder and to
remit cash under the broker-dealer exercise method shall be subject to all
applicable laws, rules, and regulations and to such approvals of any
governmental agencies as may be required.
9. Taxes. Any taxes required by federal, state, or local laws to be
withheld by the Company on exercise by the Optionee of the Option for Common
Stock shall be paid to the Company before delivery of the Common Stock is made
to the Optionee. When the Option is exercised under the broker-dealer exercise
method, the full amount of any taxes required to be withheld by the Company on
exercise of stock options shall be deducted by the Company from the proceeds.
10. Notices. Any notices required to be given hereunder to the Company
shall be addressed to The Secretary, Nabisco Holdings Corp., 7 Campus Drive,
Parsippany, New Jersey 07054, and any notice required to be given hereunder to
the Optionee shall be sent to the Optionee's address as shown on the records of
the Company.
11. Termination For "Cause." If the Optionee has an employment or
severance agreement, employment shall be deemed to have been terminated for
"Cause" only as such terms is defined in the employment or severance agreement.
If the Optionee does not have an employment or severance agreement that defines
the term "Cause", an Optionee's employment shall be deemed to have been
terminated for "Cause" if the termination results from the Optionee's: (a)
criminal conduct, (b) deliberate continual refusal to perform employment duties
on substantially a full time basis, (c) deliberate and continual refusal to act
in accordance with any specific lawful instructions of an authorized officer or
employee more senior than the Optionee, or (d) deliberate misconduct which could
be materially damaging to the Company or any of its business operations without
a reasonable good faith belief by the Optionee that such conduct was in the best
interests of the Company. A termination of Optionee's employment shall not be
deemed for Cause hereunder unless the senior personnel executive of the Company
shall confirm that any such termination is for Cause as defined hereunder. Any
voluntary termination by the Optionee in anticipation of an involuntary
termination of the Optionee's employment for Cause shall be deemed to be a
termination of Optionee's employment for Cause.
12. Administration and Interpretation. In consideration of the grant,
the Optionee specifically agrees that the Committee shall have the exclusive
power to interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation and application of the Plan and Agreement as are
consistent therewith and to interpret or revoke any such rules. All actions
taken and all interpretations and determinations made by the Committee shall be
4
<PAGE>
final, conclusive, and binding upon the Optionee, the Company and all other
interested persons. No member of the Committee shall be personally liable for
any action, determination or interpretation made in good faith with respect to
the Plan or the Agreement. The Committee may delegate its interpretive authority
to an officer or officers of the Company.
13. Other Provisions.
a) Titles are provided herein for convenience only and are not
to serve as a basis for interpretation of the Agreement.
b) This Agreement may be amended only by a writing executed by
the parties hereto which specifically states that it is amending this Agreement.
c) THE LAWS OF THE STATE OF DELAWARE SHALL GOVERN THE
INTERPRETATION, VALIDITY AND PERFORMANCE OF THE TERMS OF THIS AGREEMENT
REGARDLESS OF THE LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICTS OF
LAWS.
IN WITNESS WHEREOF, the Company, by its duly authorized officer, and
the Optionee have executed this Agreement as of the date of Grant first above
written.
NABISCO HOLDINGS CORP.
By
------------------------------
Authorized Signatory
- ------------------------------------
Optionee
Optionee's Social Security Number:
- ------------------------------------
Optionee's Home Address:
- ------------------------------------
- ------------------------------------
- ------------------------------------
5
<PAGE>
Exhibit 10.6
January 21, 1998
H. John Greeniaus
Dear John:
This letter agreement (the "Agreement") by and among RJR Nabisco Holdings Corp.,
RJR Nabisco, Inc. (collectively, "RJR Nabisco"), Nabisco Holdings Corp.,
Nabisco, Inc. (collectively, "Nabisco"), (RJR Nabisco and Nabisco are
collectively referred herein as the "Company"), their successors, affiliates
and/or assigns, and you, describes the termination of your employment
relationship with the Company, and the Company's obligations to you under your
Amended and Restated Employment Agreement dated December 14, 1995, with the
Company (the "Employment Agreement"). Except as otherwise defined herein,
capitalized terms herein shall be defined as in the Employment Agreement.
1. a) Effective January 1, 1998, you will cease to be actively employed by
the Company and you will no longer serve as Chairman, President and
Chief Executive Officer of Nabisco.
b) In accordance with the letter provided by your doctor on November 3,
1997, and subject to the provisions of this Agreement, the Company and
you agree that your termination of employment is a result of your
disability.
2. The Company will make a lump-sum payment to you in January 1998, in
satisfaction of the Company's obligation with respect to your unused and
accrued vacation days. No further vacation will accrue after December 31,
1997.
3. You will receive benefits under the Company's short-term disability plan
(the "STD Plan") from January 1, 1998 until June 30, 1998. STD Plan
payments to you will be equal to 100% of your base salary as in effect on
December 31, 1997 (your "Base Salary") for the first 22 weeks of short-term
disability and two-thirds of your Base Salary thereafter. Except as
otherwise provided in this Agreement, you will continue to participate in
the Company's employee benefit programs as an active employee in accordance
with the terms of the short-term disability program.
<PAGE>
4. You will receive benefits under the Company's long-term disability
plan (the "LTD Plan") from July 1, 1998 until December 31, 2000 (your
"Retirement Date"). Payments to you under the LTD Plan will be equal
to 60% of your Base Salary.
Except as otherwise provided in this Agreement, you will continue to
participate in the Company's employee benefit programs as an active
employee until December 31, 2000 and you will be retired on January 1,
2001.
5. a) Provided you make any required employee contributions in a timely
manner, full coverage (or equivalent coverage to that provided)
in the SELECT Omnibus Welfare Benefit and Insurance Plans as well
as the Executive Medical Plan (the "Welfare Plans") will continue
in accordance with the terms of the Welfare Plans, until the end
of the month in which your Retirement Date occurs. You will be
required to re-enroll each year in the same manner as active
employees. Should you become employed by an employer not
affiliated with the Company, health and dental care coverage
provided by your new employer will be coordinated with health and
dental care benefits under the Welfare Plans.
b) If, on and after your Retirement Date, the Company provides
retiree medical, dental and life insurance coverage for its
retirees, you shall be eligible for such coverage at the Company
and retiree contribution rate for a retiree with your years of
service as of your Retirement Date. New Welfare Plans which
replace or supersede current programs will apply to you unless
the Company chooses to continue the current program for you.
6. You are fully vested in your account under the RJR Nabisco Capital
Investment Plan ("CIP"). During your period of short-term disability, you
may continue to make contributions to your CIP account. After June 30,
1998, you may not contribute to your CIP account and you will not accrue
any benefits under the deferred contribution portion of SUPP or ABP (each
as defined in Section 8(a)).
7. You are fully vested in the tax-qualified Retirement Plan for Employees of
RJR Nabisco, Inc., (the "PEP"). You will receive credited service until
June 30, 2000 under the PEP.
8. a) Pursuant to Section 5 of the Employment Agreement, you participate in
(i) the RJR Nabisco, Inc. Supplemental Executive Retirement Plan
2
<PAGE>
("SERP"), (ii) the RJR Nabisco, Inc. Supplemental Benefits Plan
("SUPP") and (iii) the RJR Nabisco, Inc. Additional Benefits Plan
("ABP") (collectively, the "Plans"). Annuities have been purchased
for your benefit and are held in the Excess Benefit Master Trust dated
February 5, 1988, as amended through January 27, 1989 (the "Secular
Trust"), representing the after-tax cash lump sum value of your
accrued benefit as of December 31, 1994 under the SERP, SUPP and ABP.
The annuities are to be delivered on your Retirement Date subject to
the terms of Section 5 of the Employment Agreement.
b) The Company agrees to contribute such funds to the Secular Trust in
1998 as shall be necessary to fully fund additional supplemental
pension accruals under the Plans for the period January 1, 1995 until
your Retirement Date (the "Supplemental Accruals"), subject to the
execution by you of acknowledgment waivers requested by the Company.
The amount to be funded in 1998 will be the discounted present value
of the Supplemental Accruals using factors reflecting the interest
rate to be credited under annuities purchased in 1998 to fund the
Supplemental Accruals. The funds will be delivered on an after-tax
basis based on tax rates applicable to you at the time of funding.
c) The Company agrees that you will continue to accrue credited service
under the Plans until your Retirement Date. The Company agrees to
consent to your retirement on December 31, 2000 and to authorize
payment of your benefits under the Plans as of January 1, 2001.
9. In addition to annuities purchased for retirement benefits as referred to
in Section 8(a), in 1989, an annuity was purchased for you from Pacific
Mutual Life Insurance Company representing the value of compensation
continuance payments calculated at that time. The annuity was placed in
the Secular Trust, to be paid to you following your termination of
employment. The Company agrees to cause the annuity to be paid to you in a
single lump-sum as soon as practicable in 1998. This payment will not
affect the amount of, or entitlement to, any other benefits contemplated in
this Agreement.
10. The Company will continue to provide you with $3,000,000 of life insurance
as provided in Section 4.4 of the Employment Agreement. The premium on
this policy shall continue to be paid by the Company on a taxed grossed-up
basis as provided in Section 4.4 of the Employment Agreement.
3
<PAGE>
11. a) Except as indicated below, you will continue to receive the benefits
of the Flexible Perquisite Program until your Retirement Date. Your
perquisite allowances for calendar years 1998, 1999 and 2000 shall be
as follows, less applicable withholding taxes:
1998 $54,750
1999 $54,750
2000 $54,750
b) Current car lease arrangements provided by the Company will continue
until your Retirement Date. No new car or lease will be provided, but
you shall have the right to buy the car currently leased for you by
the Company on your Retirement Date for its then "blue book" wholesale
value.
12. Your 1997 annual performance unit award will be paid to you in 1998, in
accordance with the terms of your grant dated February 26, 1997.
13. Prior to February 15, 1998, you are expected to submit Expense Reports for
all outstanding travel, entertainment and other business expenses cash
advances. In addition, prior to your Retirement Date you must return all
Company equipment such as personal computers and mobile telephones.
14. Because your termination of employment is due to disability, all
outstanding stock options granted to you under the Nabisco Holdings Corp.
1994 Long-Term Incentive Plan (the "Nabisco LTIP") and under the RJR
Nabisco Holdings Corp., 1990 Long-Term Incentive Plan (the "RN LTIP") will
be fully vested on January 1, 1998, in accordance with Section 3(a) of the
agreements evidencing such grants. All other provisions of the stock
option agreements, including provisions governing the exercise of your
stock options, remain in effect.
15. a) Your have outstanding indebtedness to Nabisco Holdings Corp. under
secured Promisory Notes as follows:
INITIAL INDEBTEDNESS NHC STOCK
DATE INDEBTEDNESS ON 1/1/98 HELD AS SECURITY
---- ------------ ------------ ----------------
February 26, 1996 $348,750 $389,023.52 10,000
February 28, 1996 $341,250 $380,534.40 10,000
March 11, 1996 $692,500 $770,464.41 20,000
4
<PAGE>
Total $1,382,500 $1,540,022.33 40,000
The indebtedness becomes due and payable on your Retirement Date and, at
your election, may be satisfied by either (i) a cash payment by you to
Nabisco Holdings Corp. or (ii) the sale of collateralized stock and use of
the proceeds to repay the indebtedness. If, and to the extent that, the
indebtedness exceeds the sale proceeds you will be responsible to repay the
remaining indebtedness in accordance with the terms of the appropriate
Promissory Notes.
b) You have outstanding indebtedness to RJR Nabisco Holdings Corp. under
a secured promisory note dated April 15, 1991. As of January 1, 1998,
the outstanding indebtedness is $1,176,584.38, which is secured by
36,000 shares of RJR Nabisco Holdings Corp. common stock. The
indebtedness becomes due and payable on your Retirement Date and, at
your election, may be satisfied by either (i) a cash payment by you to
RJR Nabisco Holdings Corp. or (ii) the sale of collateralized stock
and use of the proceeds to repay the indebtedness. If, and to the
extent that, the indebtedness exceeds the sale proceeds you will be
responsible to repay the remaining indebtedness in accordance with the
terms of the appropriate Promissory Notes. You understand and agree
that RJR Nabisco Holdings Corp. has no further obligation to you under
your Executive Equity Program agreement dated July 1, 1993, as
modified on July 11, 1995..
16. a) You agree that until your Retirement Date you will provide consulting
services on a reasonable basis (i) to help in the transition to your
successor and (ii) with respect to any other matters concerning the
Company (past or present) about which you are knowledgeable, subject
to appropriate notice and reimbursement of all travel and other
expenses. Nothing in this Section 16(a) will require you to take any
action which you reasonably believe may be injurious to your
disability.
b) You acknowledge that as of January 1, 1998, your active employment
with the Company will end irrevocably and will not be resumed again at
any time in the future, except upon mutual agreement of the parties
hereto.
17. In the event of your death prior to your Retirement Date: (i) benefits
under the STD Plan and the LTD Plan shall cease; (ii) continued spousal
coverage is
5
<PAGE>
available under the Welfare Plans and retiree welfare plans in accordance
with the terms of the plans; (iii) your CIP account may be distributed to
your designated beneficiary under CIP; (iv) your retirement plan benefits
(including SERP) may be distributed to your designated beneficiary based on
the form of payment that you elect; (v) your benefits under the Perquisite
Program (including your entitlement to a company car) will cease; (vi)
outstanding stock option grants will remain in effect and may be exercised
in accordance with the appropriate stock option agreements; and (vii)
outstanding indebtedness will become due and payable.
18. a) Your will not, without the prior written consent of the Company,
divulge, disclose or make accessible to any other person, firm,
partnership or corporation or other entity any Confidential
Information pertaining to the business of the Company except when
required to do so by a court of competent jurisdiction, by any
governmental agency having supervisory authority over the business of
the Company, or by any administrative body or legislative body
(including a committee thereof) with jurisdiction to order you to
divulge, disclose or make accessible such information. For purposes
of this Section Agreement, "Confidential Information" means non-public
information concerning the Company's financial data, strategic
business plans, product development (or other proprietary product
data), customer lists, marketing plans and other proprietary
information, except for specific items which have become publicly
available information (other than such items which you know have
become publicly available through a breach of fiduciary duty or any
confidentiality agreement). In accordance with normal ethical and
professional standards, you agree to refrain from taking actions or
making statements, written or oral, which defame or denigrate the
goodwill or reputation of the Company, their properties, products,
directors, officers, executives and employees or which constitute
willful conduct under circumstances where it is reasonable for you to
anticipate or to expect that the natural consequences of such conduct
will be to affect adversely the morale of other employees.
b) Subject to the final sentence of this paragraph (b), during the period
ending on your Retirement Date, you agree that (1) you will personally
provide reasonable assistance and cooperation to the Company in
activities related to the prosecution or defense of any pending or
future lawsuits or claims involving the Company, (2) you will promptly
notify the Company if you receive any requests from anyone other than
an employee or agent of the Company for information regarding the
Company or if you become aware
6
<PAGE>
of any potential claim or proposed litigation against the Company, (3)
you will refrain from providing any information related to any claim
or potential litigation against the Company to any non-Company
representatives without either the Company's written permission or
being required to provide information pursuant to legal process, (4)
if required by law to provide sworn testimony regarding any
Company-related matter, you will consult with and have Company
designated legal counsel present for such testimony, (5) the Company
will be responsible for the costs of such designated counsel and you
will bear no cost for same, (6) you will confine his testimony to
items about which you have knowledge rather than speculation, unless
otherwise directed by legal process and (7) you will cooperate with
the Company's attorneys to assist their efforts, especially on matters
you have been privy to, holding all privileged attorney-client matters
in strictest confidence. Nothing in the foregoing clauses 2-7 is
intended to apply to governmental or judicial investigations;
provided, however, the Company will reimburse you for legal expenses
if you are compelled to appear in a governmental judicial
investigation. Nothing in this Section 18(b) will require you to take
any action which you reasonably believe may be injurious to your
disability.
c) You agree that until your Retirement Date, you will not, without the
written approval of the Chairman of Nabisco (and the Chairman of any
majority shareholder of Nabisco), accept employment or act as a
director, consultant or advisor to, or with, any other company
conducting a business which is substantially competitive with a
business conducted by the Company or any affiliate. You also agree
that until your Retirement Date you will not solicit or encourage any
incumbent employee of the Company or an affiliate to leave the employ
of the Company or an affiliate and will ask written approval from the
Chairman of Nabisco (and the Chairman of any majority shareholder of
Nabisco) to discuss employment offers with incumbent employee of the
Company or an affiliate.
d) In the event that the Company determines that you materially violate
the terms and conditions of Sections 18(a),(b) or (c) above, the
Company may, at its election upon ten (10) days notice, take such
action as it deems appropriate, including terminating the disability
period, discontinuing cash compensation payments and employee benefits
coverage, canceling any outstanding stock options or other Long Term
Incentive Plan awards and recovering amounts previously paid to, or
gain realized by, you. The Company may also initiate any form of
legal action it may deem
7
<PAGE>
appropriate seeking damages or injunctive relief with respect to any
material violations of Sections 18(a),(b) or (c) above.
19. IN CONSIDERATION OF THE COMPENSATION AND BENEFITS SET FORTH IN THIS
AGREEMENT AND EXCEPT FOR THE COMPANY'S OBLIGATIONS HEREUNDER YOU
VOLUNTARILY, KNOWINGLY AND WILLINGLY RELEASE AND FOREVER DISCHARGE THE
COMPANY, ITS PARENTS, SUBSIDIARIES AND AFFILIATES, TOGETHER WITH THEIR
RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS, AND
EACH OF THEIR PREDECESSORS, SUCCESSORS AND ASSIGNS, FROM ANY AND ALL
CHARGES, COMPLAINTS, CLAIMS, PROMISES, AGREEMENTS, CONTROVERSIES, CAUSES OF
ACTION AND DEMANDS OF ANY NATURE WHATSOEVER WHICH AGAINST THEM YOU OR YOUR
EXECUTORS, ADMINISTRATORS, SUCCESSORS OR ASSIGNS EVER HAD, NOW HAVE OR
HEREAFTER CAN, SHALL OR MAY HAVE BY REASON OF ANY MATTER, CAUSE OR THING
WHATSOEVER ARISING TO THE EFFECTIVE DATE OF THIS AGREEMENT. YOU FURTHER
AGREE THAT, EXCEPT IN CONNECTION WITH THE ENFORCEMENT OF YOUR RIGHTS
HEREUNDER, YOU WILL NOT SEEK OR BE ENTITLED TO ANY AWARD OF EQUITABLE OR
MONETARY RELIEF IN ANY PROCEEDING OF ANY NATURE BROUGHT ON YOUR BEHALF
ARISING OUT OF ANY OF THE MATTERS RELEASED BY THIS PARAGRAPH. THIS RELEASE
INCLUDES, BUT IS NOT LIMITED TO, ANY RIGHTS OR CLAIMS RELATING IN ANY WAY
TO YOUR EMPLOYMENT RELATIONSHIP WITH THE COMPANY, OR THE TERMINATION
THEREOF, OR UNDER ANY STATUTE, INCLUDING THE AGE DISCRIMINATION IN
EMPLOYMENT ACT, TITLE VII OF THE CIVIL RIGHTS ACT, THE AMERICANS WITH
DISABILITIES ACT, OR ANY OTHER FEDERAL, STATE OR LOCAL LAW.
20. The Company advises you that you may wish to consult with an attorney of
your choosing prior to signing this Agreement. You understand and agree
that you have the right and have been given the opportunity to review this
Agreement and, specifically, the release in paragraph 19, with an attorney
of your choice should you so desire. You also understand and agree that
you are under no obligation to consent to the release set forth in
paragraph 19 and that you have entered into this Agreement freely,
knowingly and voluntarily.
8
<PAGE>
21. This Agreement contains our entire understanding with respect to the
subject matter hereof. There are no restrictions, agreements, promises,
warranties, covenants, representations or undertakings between the parties
with respect to the subject matter hereof other than those expressly set
forth herein.
22. You hereby acknowledge that you have consulted with, and relied on your own
advisors with respect to the amounts of the payments the Company will make
pursuant hereto or has heretofore made to you, and you further acknowledge
that in signing this Agreement you are not relying on any statements or
representations made by the Company or its agents concerning the
calculation of such amounts.
23. You have at least twenty-one (21) days to consider the terms of this
Agreement, although you may sign and return it sooner if you wish. This
Agreement may be revoked by you for a period of seven (7) consecutive
calendar days after you have signed and dated it, and after such seven (7)
days, it becomes final ("Effective Date").
Please indicate your acceptance of the terms of this Agreement by signing this
letter and the attached duplicate and returning one signed original to me.
Sincerely,
RJR NABISCO HOLDINGS CORP.
RJR NABISCO, INC.
By:
-----------------------------
Steven F. Goldstone
Chairman & Chief Executive Officer
NABISCO HOLDINGS CORP.
NABISCO, INC.
By:
------------------------------
9
<PAGE>
Steven F. Goldstone
Chairman
Understood and Agreed:
- ------------------------------
H. John Greeniaus
Date:
-------------------------
10
<PAGE>
Exhibit 10.7
NABISCO HOLDINGS CORP.
1994 LONG TERM INCENTIVE PLAN
STOCK OPTION AGREEMENT
--------------------------
DATE OF GRANT: January 15, 1998
W I T N E S S E T H :
1. GRANT OF OPTION. Subject to (i) the terms and conditions herein and
(ii) the provisions of the Nabisco Holdings Corp. 1994 Long Term Incentive Plan
(the "Plan"), Nabisco Holdings Corp. (the "Company") on the above date has
granted to
STEVEN F. GOLDSTONE (THE "OPTIONEE"),
the right and option to exercise from the Company a total of
100,000 SHARES
of Class A Common Stock of the Company ("Common Stock"), at the exercise price
of $47.625 per share (the "Option"). A copy of the Plan is attached and made a
part of this agreement with same effect as if set forth in the agreement itself.
All capitalized terms used herein shall have the meaning set forth in the Plan,
unless the context requires a different meaning.
2. EXERCISE OF OPTION.
(a) Shares may be purchased by giving the Corporate Secretary of the
Company written notice of exercise, on a form prescribed by the Company,
specifying the number of shares to be purchased. The notice of exercise shall
be accompanied by
(i) tender to the Company of cash for the full purchase price of the
shares with respect to which such Option or portion thereof is
exercised; OR
(ii) the unsecured, demand borrowing by the Optionee from the Company on an
open account maintained solely for this purpose in the amount of the
full exercise price together with the instruction from the Optionee to
sell the shares exercised on the open market through a duly registered
broker-dealer with which the Company makes an arrangement for the sale
of such
<PAGE>
shares under the Plan. This method is known as the "broker-dealer
exercise method" and is subject to the terms and conditions set forth
herein, in the Plan and in guidelines established by the Committee.
The Option shall be deemed to be exercised simultaneously with the
sale of the shares by the broker-dealer. If the shares purchased upon
the exercise of an Option or a portion thereof cannot be sold for a
price equal to or greater than the full exercise price plus direct
costs of the sales, then there is no exercise of the Option. Election
of this method authorizes the Company to deliver shares to the
broker-dealer and authorizes the broker-dealer to sell said shares on
the open market. The broker-dealer will remit proceeds of the sale to
the Company which will remit net proceeds to the Optionee after
repayment of the borrowing, deduction of costs, if any, and
withholding of taxes. The Optionee's borrowing from the Company on an
open account shall be a personal obligation of the Optionee which
shall bear interest at the published Applicable Federal Rate (AFR) for
short-term loans and shall be payable upon demand by the Company.
Such borrowing may be authorized by telephone or other
telecommunications acceptable to the Company. Upon such borrowing and
the exercise of the Option or portion thereof, title to the shares
shall pass to the Optionee whose election hereunder shall constitute
instruction to the Company to register the shares in the name of the
broker-dealer or its nominee. The Company reserves the right to
discontinue this broker-dealer exercise method at any time for any
reason whatsoever. The Optionee agrees that if this broker-dealer
exercise method under this paragraph is used, the Optionee promises
unconditionally to pay the Company the full balance in his open
account at any time upon demand. Optionee also agrees to pay interest
on the account balance at the AFR for short-term loans from and after
demand.
(b) Notwithstanding provisions for regular exercise, if more than 80% of
the aggregate value of all classes of Company common stock is owned, directly or
indirectly, by RJR Nabisco Holdings Corp. on the date of exercise then the
Company may, in its absolute discretion, make a cash payment to the Optionee,
net of taxes, equal to the product of (x) and (y), where (x) is the excess of
the fair market value of Common Stock on the date of exercise over the exercise
price, and (y) is the number of shares subject to the Option(s) being exercised.
Such cash payment shall be in lieu of delivery of shares.
(c) Subject to Sections 2(b), 2(d), and 4, this Option shall be vested in
three installments. The first installment shall be vested on the 1st of January
following the Date of Grant for 33% of the number of shares of Common Stock
subject to this Option. Thereafter, on each subsequent January 1st an
installment shall become vested for 33% and 34%, respectively, of the number of
shares subject to this Option until the Option has become fully vested. To the
extent that any portion of the Option is not exercised, it shall not expire, but
shall continue to be vested at any time thereafter until this Option shall
terminate, expire or be surrendered. An exercise shall be for whole shares
only.
2
<PAGE>
(d) This Option shall not be exercised prior to 36 months after the Date
of Grant.
3. RIGHTS IN EVENT OF TERMINATION OF EMPLOYMENT.
Subject to Sections 2(b), 2(d) and 4:
(a) Unless otherwise provided in a written employment or termination
agreement between the Optionee and the Company, the Option shall not become
vested as to any additional shares following the Termination of Employment of
the Optionee for any reason other than a Termination of Employment because of
death, Permanent Disability, Retirement, Termination of Employment by the
Optionee with Good Reason or involuntary Termination of Employment of the
Optionee without Cause. In the event of the Optionee's Termination of
Employment because of any of the foregoing reasons, the Option shall immediately
become vested as to all shares.
(b) The Optionee shall be deemed to have a "Permanent Disability" if he
becomes totally and permanently disabled (as defined in RJR Nabisco, Inc's Long
Term Disability Plan applicable to senior executive officers as in effect on the
date hereof), or if the Board of Directors or any committee thereof so
determines.
(c) "Retirement" as used herein means retirement at age 65 or over, or
early retirement at age 55 or over with the approval of the Company, which
approval specifically states that the Option shall become fully exercisable as
to all Shares.
(d) "Termination of Employment" as used herein means termination from
active employment with the Company and any other entity which, as of the date of
this Agreement, is an affiliate of the Company.
4. EXPIRATION OF OPTION. The Option shall expire or terminate and may not
be exercised to any extent by the Optionee after the first to occur of the
following events:
(a) The tenth anniversary of the Date of Grant, or such earlier time as
the Company may determine is necessary or appropriate in light of applicable
foreign tax laws; or
(b) Immediately upon the Optionee's Termination of Employment for Cause
(as defined in Section 11 herein).
5. TRANSFERABILITY. Other than as specifically provided with regard to
the death of the Optionee, this Option agreement and any benefit provided or
accruing hereunder shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or charge; and any
attempt to do so shall be void. No such benefit shall,
3
<PAGE>
prior to receipt thereof by the Optionee, be in any manner liable for or subject
to the debts, contracts, liabilities, engagements or torts of the Optionee.
6. NO RIGHT TO EMPLOYMENT. Neither the execution and delivery of this
agreement nor the granting of the Option evidenced by this agreement shall
constitute or be evidence of any agreement or understanding, express or implied,
on the part of the Company or its subsidiaries to employ the Optionee for any
specific period or shall prevent the Company or its subsidiaries from
terminating the Optionee's employment at any time with or without "Cause" (as
defined in Section 11 herein).
7. ADJUSTMENTS IN OPTION. In the event that the outstanding shares of the
Common Stock subject to the Option are, from time to time, changed into or
exchanged for a different number or kind of shares of the Company or other
securities by reason of a merger, consolidation, recapitalization,
reclassification, stock split, stock dividend, combination of shares, or
otherwise, the Committee may make an appropriate and equitable adjustment in the
number and kind of shares or other consideration as to which the Option, or
portions thereof then unexercised, shall be exercisable. Any adjustment made by
the Committee shall be final and binding upon the Optionee, the Company and all
other interested persons.
8. APPLICATION OF LAWS. The granting and the exercise of this Option and
the obligations of the Company to sell and deliver shares hereunder and to remit
cash under the broker-dealer exercise method shall be subject to all applicable
laws, rules, and regulations and to such approvals of any governmental agencies
as may be required.
9. TAXES. Any taxes required by federal, state, or local laws to be
withheld by the Company (i) on exercise by the Optionee of the Option for Common
Stock, or (ii) at the time an election, if any, is made by the Optionee pursuant
to Section 83(b) of the Internal Revenue Code, as amended, shall be paid to the
Company before delivery of the Common Stock is made to the Optionee. When the
Option is exercised under the broker-dealer exercise method, the full amount of
any taxes required to be withheld by the Company on exercise of stock options
shall be deducted by the Company from the proceeds.
10. NOTICES. Any notices required to be given hereunder to the Company
shall be addressed to The Secretary, Nabisco Holdings Corp., 7 Campus Drive,
Parsippany, New Jersey 07054, and any notice required to be given hereunder to
the Optionee shall be sent to the Optionee's address as shown on the records of
the Company.
<PAGE>
11. TERMINATION FOR "CAUSE" OR WITH "GOOD REASON". For purposes of this
Agreement, the Optionee's employment shall be deemed to have been terminated for
"Cause" or with "Good Reason" only as such terms are defined and applied in the
Optionee's employment agreement with the Company. Any voluntary termination by
the Optionee in anticipation of an involuntary termination of the Optionee's
employment for Cause shall be deemed to be a termination of Optionee's
employment for Cause.
12. ADMINISTRATION AND INTERPRETATION. In consideration of the grant, the
Optionee specifically agrees that the Committee shall have the exclusive power
to interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation and application of the Plan and Agreement as are
consistent therewith and to interpret or revoke any such rules. All actions
taken and all interpretations and determinations made by the Committee shall be
final, conclusive, and binding upon the Optionee, the Company and all other
interested persons. No member of the Committee shall be personally liable for
any action, determination or interpretation made in good faith with respect to
the Plan or the Agreement. The Committee may delegate its interpretive
authority to an officer or officers of the Company.
13. OTHER PROVISIONS.
a) Titles are provided herein for convenience only and are not to
serve as a basis for interpretation of the Agreement.
b) This Agreement may be amended only by a writing executed by the
parties hereto which specifically states that it is amending this Agreement.
c) THE LAWS OF THE STATE OF DELAWARE SHALL GOVERN THE
INTERPRETATION, VALIDITY AND PERFORMANCE OF THE TERMS OF THIS AGREEMENT
REGARDLESS OF THE LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICTS OF
LAWS.
IN WITNESS WHEREOF, the Company, by its duly authorized officer, and the
Optionee have executed this Agreement as of the date of Grant first above
written.
NABISCO HOLDINGS CORP.
By
------------------------------
5
<PAGE>
Authorized Signatory
- -----------------------------
Optionee
Optionee's Taxpayer Identification Number:
- -----------------------------
Optionee's Home Address:
- -----------------------------
- -----------------------------
- -----------------------------
6
<PAGE>
EXHIBIT 12
NABISCO, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, 1998
-----------------
<S> <C>
Earnings before fixed charges:
Net income...................................................................................... $ 55
Provision for income taxes...................................................................... 38
-----
Income before income taxes...................................................................... 93
Interest and debt expense....................................................................... 80
Interest portion of rental expense.............................................................. 7
-----
Earnings before fixed charges..................................................................... $ 180
-----
-----
Fixed charges:
Interest and debt expense....................................................................... $ 80
Interest portion of rental expense.............................................................. 7
Capitalized interest............................................................................ 1
-----
Total fixed charges........................................................................... $ 88
-----
-----
Ratio of earnings to fixed charges................................................................ 2.0
-----
-----
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF NABISCO HOLDINGS CORP., WHICH
WERE FILED WITH SEC FORM 10-Q, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000932130
<NAME> NABISCO HOLDINGS CORP.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 129
<SECURITIES> 0
<RECEIVABLES> 492
<ALLOWANCES> 0
<INVENTORY> 880
<CURRENT-ASSETS> 1,583
<PP&E> 3,333
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,063
<CURRENT-LIABILITIES> 1,388
<BONDS> 4,530
0
0
<COMMON> 3
<OTHER-SE> 4,198
<TOTAL-LIABILITY-AND-EQUITY> 12,063
<SALES> 1,962
<TOTAL-REVENUES> 1,962
<CGS> 1,125
<TOTAL-COSTS> 1,125
<OTHER-EXPENSES> 56
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 80
<INCOME-PRETAX> 93
<INCOME-TAX> 38
<INCOME-CONTINUING> 55
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 55
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF NABISCO, INC. WHICH WERE FILED
WITH SEC FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000069526
<NAME> NABISCO, INC.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 127
<SECURITIES> 0
<RECEIVABLES> 492
<ALLOWANCES> 0
<INVENTORY> 880
<CURRENT-ASSETS> 1,625
<PP&E> 3,333
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,105
<CURRENT-LIABILITIES> 1,387
<BONDS> 4,530
0
0
<COMMON> 0
<OTHER-SE> 4,244
<TOTAL-LIABILITY-AND-EQUITY> 12,105
<SALES> 1,962
<TOTAL-REVENUES> 1,962
<CGS> 1,125
<TOTAL-COSTS> 1,125
<OTHER-EXPENSES> 56
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 80
<INCOME-PRETAX> 93
<INCOME-TAX> 38
<INCOME-CONTINUING> 55
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 55
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<CIK> 0000732130
<NAME> NABISCO HOLDINGS CORP.
<MULTIPLIER> 1,000,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-END> JUN-30-1997 SEP-30-1997
<CASH> 76 102
<SECURITIES> 0 0
<RECEIVABLES> 562 547
<ALLOWANCES> 0 0
<INVENTORY> 912 956
<CURRENT-ASSETS> 1,661 1,696
<PP&E> 3,246 3,261
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 12,157 12,153
<CURRENT-LIABILITIES> 1,741 1,667
<BONDS> 4,283 4,344
0 0
0 0
<COMMON> 3 3
<OTHER-SE> 4,127 4,163
<TOTAL-LIABILITY-AND-EQUITY> 12,157 12,153
<SALES> 4,096 6,299
<TOTAL-REVENUES> 4,096 6,299
<CGS> 2,348 3,597
<TOTAL-COSTS> 2,348 3,597
<OTHER-EXPENSES> 113 170
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 163 245
<INCOME-PRETAX> 281 436
<INCOME-TAX> 114 177
<INCOME-CONTINUING> 167 259
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 167 259
<EPS-PRIMARY> .63 .98
<EPS-DILUTED> .63 .97
</TABLE>
