<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 12, 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, 2000
-------------------
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 Identification
jurisdiction of number) 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 07054-0311
(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, 2000:
<TABLE>
<C> <S>
NABISCO HOLDINGS 51,438,397 SHARES OF CLASS A COMMON STOCK, PAR VALUE $.01
CORP.: 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, 2000 and 1999............................. 1
Consolidated Condensed Statements of Comprehensive
Income--Three Months Ended March 31, 2000 and 1999........ 2
Consolidated Condensed Statements of Cash Flows--Three
Months Ended March 31, 2000 and 1999...................... 3
Consolidated Condensed Balance Sheets--March 31, 2000 and
December 31, 1999......................................... 4
Notes to Consolidated Condensed Financial Statements........ 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 9
Item 3. Quantitative and Qualitative Disclosures about Market
Risk...................................................... 13
PART II--OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders......... 14
Item 5. Other Information........................................... 15
Item 6. Exhibits and Reports on Form 8-K............................ 15
Signatures........................................................... 16
</TABLE>
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
NABISCO HOLDINGS CORP.
NABISCO, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 2000 MARCH 31, 1999
------------------- -------------------
NABISCO NABISCO
HOLDINGS NABISCO HOLDINGS NABISCO
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET SALES.................................................. $ 2,069 $2,069 $ 1,855 $1,855
-------- ------ -------- ------
Costs and expenses:
Cost of products sold.................................... 1,146 1,146 1,027 1,027
Selling, advertising, administrative and general
expenses............................................... 693 693 641 641
Amortization of trademarks and goodwill.................. 55 55 53 53
-------- ------ -------- ------
OPERATING INCOME..................................... 175 175 134 134
Interest and debt expense.................................. (70) (70) (65) (65)
Other income (expense), net................................ (6) (6) (10) (10)
-------- ------ -------- ------
INCOME BEFORE INCOME TAXES........................... 99 99 59 59
Provision for income taxes................................. 39 39 23 23
-------- ------ -------- ------
NET INCOME........................................... $ 60 $ 60 $ 36 $ 36
======== ====== ======== ======
NET INCOME PER COMMON SHARE--BASIC......................... $ .23 $ .14
======== ========
NET INCOME PER COMMON SHARE--DILUTED....................... $ .22 $ .13
======== ========
DIVIDENDS DECLARED PER COMMON SHARE........................ $ .1875 $ .1875
======== ========
Average number of common shares outstanding (in thousands):
Basic.................................................... 264,663 264,736
======== ========
Diluted.................................................. 266,633 267,042
======== ========
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
1
<PAGE>
NABISCO HOLDINGS CORP.
NABISCO, INC.
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 2000 MARCH 31, 1999
------------------- -------------------
NABISCO NABISCO
HOLDINGS NABISCO HOLDINGS NABISCO
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET INCOME.................................................. $ 60 $ 60 $ 36 $ 36
-------- ------ -------- ------
Other comprehensive income (loss):
Cumulative translation adjustment......................... 3 3 (135) (135)
Provision (benefit) for income taxes...................... -- -- -- --
-------- ------ -------- ------
OTHER COMPREHENSIVE INCOME (LOSS), NET OF INCOME TAX........ 3 3 (135) (135)
-------- ------ -------- ------
Comprehensive income (loss)................................. $ 63 $ 63 $ (99) $ (99)
======== ====== ======== ======
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
2
<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, 2000 MARCH 31, 1999
------------------- -------------------
<S> <C> <C> <C> <C>
NABISCO NABISCO
HOLDINGS NABISCO HOLDINGS NABISCO
----- ----- ----- -----
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net income............................................... $ 60 $ 60 $ 36 $ 36
Adjustments to reconcile net income to net cash flows
from (used in) operating activities:
Depreciation of property, plant and equipment........ 66 66 67 67
Amortization of intangibles.......................... 55 55 53 53
Deferred income tax provision........................ 21 21 16 16
Restructuring payments............................... (21) (21) (18) (18)
Accounts receivable, net............................. 130 130 (8) (8)
Inventories.......................................... (74) (74) (73) (73)
Prepaid expenses and other current assets............ (3) (3) (1) (1)
Accounts payable..................................... (248) (248) (172) (172)
Accrued liabilities.................................. (13) (13) (48) (46)
Income taxes accrued................................. 10 10 (4) (4)
Other, net........................................... (2) (2) 3 3
----- ----- ----- -----
Net cash flows (used in) operating activities.......... (19) (19) (149) (147)
----- ----- ----- -----
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Capital expenditures..................................... (39) (39) (47) (47)
Proceeds from sale of assets............................. 2 2 2 2
----- ----- ----- -----
Net cash flows (used in) investing activities.......... (37) (37) (45) (45)
----- ----- ----- -----
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Net proceeds from long-term debt......................... 57 57 226 226
Increase in notes payable................................ 33 33 5 5
Dividends paid on common stock........................... (50) (50) (46) (46)
Net proceeds from issuance of Class A common stock....... -- -- 2 --
----- ----- ----- -----
Net cash flows from financing activities............... 40 40 187 185
----- ----- ----- -----
Effect of exchange rate changes on cash and cash
equivalents.............................................. -- -- (6) (6)
----- ----- ----- -----
Net change in cash and cash equivalents................ (16) (16) (13) (13)
Cash and cash equivalents at beginning of period........... 110 110 111 111
----- ----- ----- -----
Cash and cash equivalents at end of period................. $ 94 $ 94 $ 98 $ 98
===== ===== ===== =====
Income taxes paid, net of refunds.......................... $ 8 $ 8 $ 11 $ 11
Interest paid.............................................. $ 77 $ 77 $ 72 $ 72
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
3
<PAGE>
NABISCO HOLDINGS CORP.
NABISCO, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
MARCH 31, 2000 DECEMBER 31, 1999
------------------- -------------------
<S> <C> <C> <C> <C>
NABISCO NABISCO
HOLDINGS NABISCO HOLDINGS NABISCO
------- ------- ------- -------
ASSETS
Current assets:
Cash and cash equivalents............................. $ 94 $ 94 $ 110 $ 110
Accounts receivable, net.............................. 553 553 681 681
Deferred income taxes................................. 100 100 116 116
Inventories........................................... 964 964 898 898
Prepaid expenses and other current assets............. 82 82 79 79
------- ------- ------- -------
TOTAL CURRENT ASSETS.............................. 1,793 1,793 1,884 1,884
------- ------- ------- -------
Property, plant and equipment--at cost.................. 5,087 5,087 5,053 5,053
Less accumulated depreciation........................... (2,030) (2,030) (1,966) (1,966)
------- ------- ------- -------
Net property, plant and equipment..................... 3,057 3,057 3,087 3,087
------- ------- ------- -------
Trademarks, net of accumulated amortization of $1,242
and $1,214, respectively.............................. 3,414 3,414 3,443 3,443
Goodwill, net of accumulated amortization of $1,032 and
$1,007, respectively.................................. 3,151 3,151 3,159 3,159
Other assets and deferred charges....................... 163 163 134 134
------- ------- ------- -------
$11,578 $11,578 $11,707 $11,707
======= ======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable......................................... $ 72 $ 72 $ 39 $ 39
Accounts payable...................................... 403 403 642 642
Accrued liabilities................................... 982 932 1,020 970
Intercompany payable to Nabisco Holdings.............. -- 7 -- 7
Current maturities of long-term debt.................. 11 11 158 158
Income taxes accrued.................................. 121 121 104 104
------- ------- ------- -------
TOTAL CURRENT LIABILITIES......................... 1,589 1,546 1,963 1,920
------- ------- ------- -------
Long-term debt (less current maturities)................ 4,094 4,094 3,892 3,892
Other noncurrent liabilities............................ 770 770 744 744
Deferred income taxes................................... 1,180 1,180 1,176 1,176
Stockholders' equity:
Class A common stock (51,412,707 shares issued and
outstanding at March 31, 2000 and December 31,
1999)............................................... 1 -- 1 --
Class B common stock (213,250,000 shares issued and
outstanding at March 31, 2000 and December 31,
1999)............................................... 2 -- 2 --
Paid-in capital....................................... 4,093 4,141 4,093 4,141
Retained earnings..................................... 158 137 148 127
Treasury stock, at cost............................... (17) -- (17) --
Accumulated other comprehensive income (loss)......... (290) (290) (293) (293)
Notes receivable on common stock purchases............ (2) -- (2) --
------- ------- ------- -------
TOTAL STOCKHOLDERS' EQUITY........................ 3,945 3,988 3,932 3,975
------- ------- ------- -------
$11,578 $11,578 $11,707 $11,707
======= ======= ======= =======
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
4
<PAGE>
NABISCO HOLDINGS CORP.
NABISCO, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1--INTERIM REPORTING AND RESULTS OF OPERATIONS
GENERAL
For interim reporting purposes, certain costs and expenses are charged to
operations in proportion to the estimated total annual amount expected to be
incurred. The results for the three months ended March 31, 2000 are not
necessarily indicative of the results to be expected for the year ended
December 31, 2000.
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"
together with Nabisco Holdings, the "Companies") 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, 1999.
Certain prior period amounts have been reclassified to conform to the
current period presentation.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
During the second quarter of 1998, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133,
Accounting for Derivative Instruments and Hedging Activities, which was required
to be adopted by January 1, 2000, with early adoption permitted. In June 1999,
the FASB issued SFAS No. 137, Accounting for Derivative Instruments and Hedging
Activities--Deferral of the Effective Date of SFAS No. 133, which amended SFAS
No. 133 to delay its effective date one year. SFAS No. 133 requires that all
derivative instruments be recorded on the consolidated balance sheet at their
fair value. Changes in the fair value of derivatives will be recorded each
period in earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if it is, the type
of hedge transaction. Nabisco Holdings and Nabisco have not yet determined the
impact, if any, that adoption or subsequent application of SFAS No. 133 will
have on its financial position or results of operations.
ACQUISITION GOODWILL ADJUSTMENT
In November 1999, Nabisco acquired certain assets and liabilities of
Favorite Brands International, Inc. As of March 31, 2000 the purchase price
allocation has not been fully completed, pending the completion of the
acquisition integration plan. However, additional goodwill of $24 million was
recognized during the first quarter of 2000 from the settlement of the purchase
price for working capital amounts, resulting in total goodwill of $92 million.
5
<PAGE>
NOTE 1--INTERIM REPORTING AND RESULTS OF OPERATIONS (CONTINUED)
1998 RESTRUCTURING CHARGES
In the second and fourth quarters of 1998, Nabisco recorded restructuring
charges of $406 million ($268 million after tax) and $124 million ($94 million
after tax), respectively, and in 1999, recorded a net restructuring credit of
$67 million ($48 million after tax), resulting in a total net charge for the
1998 restructuring programs of $463 million ($314 million after tax). These
restructuring programs were undertaken to streamline operations and improve
profitability and will result in a workforce reduction of approximately 6,900
employees of which 6,700 positions were eliminated as of March 31, 2000.
The June 1998 program was substantially completed in 1999 and the December
1998 program is expected to be substantially completed by mid-year 2000. The
restructuring programs when completed will require cash expenditures, net of
cash proceeds of approximately $140 million.
The key elements of the restructuring programs include:
<TABLE>
<CAPTION>
SEVERANCE CONTRACT ASSET OTHER EXIT
IN MILLIONS AND BENEFITS TERMINATIONS IMPAIRMENTS COSTS TOTAL
- ----------- ------------ ------------ ----------- ---------- --------
<S> <C> <C> <C> <C> <C>
Sales force reorganizations.............. $ 37 $ 3 $ -- $ -- $ 40
Distribution reorganizations............. 16 8 9 -- 33
Staff reductions......................... 83 -- 3 -- 86
Manufacturing costs reduction
initiatives............................ 22 -- 8 -- 30
Plant closures........................... 46 3 217 15 281
Product line rationalizations............ 4 4 20 32 60
----- ---- ----- ---- -----
Total 1998 restructuring reserves.... 208 18 257 47 530
1999 net restructuring credit............ (50) 1 (14) (4) (67)
----- ---- ----- ---- -----
158 19 243 43 463
----- ---- ----- ---- -----
Charges and Payments:
Cumulative through December 31, 1999..... (132) (14) (233) (35) (414)
Three months ended March 31, 2000........ (11) -- (4) (2) (17)
----- ---- ----- ---- -----
Total charges and payments, net of
cash proceeds...................... (143) (14) (237) (37) (431)
----- ---- ----- ---- -----
Reserve and valuation account balances as
of March 31, 2000...................... $ 15 $ 5 $ 6 $ 6 $ 32
===== ==== ===== ==== =====
</TABLE>
The key elements of the restructuring programs, after the restructuring
credit of $67 million include:
<TABLE>
<CAPTION>
SEVERANCE CONTRACT ASSET OTHER EXIT
IN MILLIONS AND BENEFITS TERMINATIONS IMPAIRMENTS COSTS TOTAL
- ----------- ------------ ------------ ----------- ---------- --------
<S> <C> <C> <C> <C> <C>
Sales force reorganizations.............. $ 16 $ 3 $ -- $-- $ 19
Distribution reorganizations............. 11 4 7 -- 22
Staff reductions......................... 59 1 4 -- 64
Manufacturing costs reduction
initiatives............................ 19 -- 8 -- 27
Plant closures........................... 51 6 203 15 275
Product line rationalizations............ 2 5 21 28 56
---- --- ---- --- ----
Total restructuring charges.......... $158 $19 $243 $43 $463
==== === ==== === ====
</TABLE>
Total charges and payments include cash expenditures, non-cash charges
primarily for asset impairments and committed severance and benefits to be paid.
The total cash payments, net of cash proceeds applied against the restructuring
reserves totaled $123 million, which is comprised of cumulative cash
expenditures of $145 million and cumulative cash proceeds of $22 million. For
the quarter ended March 31, 2000, cash payments, net of cash proceeds totaled
$20 million, which is comprised of $21 million
6
<PAGE>
NOTE 1--INTERIM REPORTING AND RESULTS OF OPERATIONS (CONTINUED)
of cash expenditures and $1 million of cash proceeds which were applied against
the restructuring reserves. Cash payments for the three months ended March 31,
2000 exceeded charges and payments, net of cash proceeds, for the three months
ended March 31, 2000 due to payments made to satisfy severance and benefit
obligations previously committed and charged against the reserves.
NOTE 2--INVENTORIES
The major classes of inventory are shown in the table below:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
IN MILLIONS 2000 1999
- ----------- --------- ------------
<S> <C> <C>
Finished products........................................... $576 $551
Raw materials............................................... 244 199
Work in process............................................. 42 45
Other....................................................... 102 103
---- ----
$964 $898
==== ====
</TABLE>
NOTE 3--SEGMENT INFORMATION
OPERATING SEGMENT DATA
Nabisco Holdings is a holding company whose subsidiaries are engaged in the
manufacture, distribution and sale of cookies, crackers and other food products.
Nabisco Holdings is organized and reports its results of operations in three
business segments: Nabisco Biscuit Company, the Nabisco Foods Company and the
International Food Group which are segregated by both product and geographic
area.
The Company evaluates performance and allocates resources based on operating
company contribution ("OCC") before restructuring-related expenses. OCC before
restructuring-related expenses for each reportable segment is operating income
before amortization of intangibles, restructuring charges and credits and
exclusive of restructuring-related expenses.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
---------------------
IN MILLIONS 2000 1999
- ----------- -------- ----------
<S> <C> <C>
Net sales from external customers:
Nabisco Biscuit Company................................... $ 881 $ 867
Nabisco Foods Company..................................... 631 435
International Food Group.................................. 557 553
------- -------
Total............................................... $ 2,069 $ 1,855
======= =======
Operating company contribution:
Nabisco Biscuit Company................................... $ 132 $ 121
Nabisco Foods Company..................................... 65 49
International Food Group.................................. 33 32
------- -------
Total segment operating company contribution................ 230 202
Restructuring-related expenses.............................. -- 15
Amortization of trademarks and goodwill..................... 55 53
------- -------
Consolidated operating income............................... 175 134
Interest and debt expense................................... 70 65
Other expense, net.......................................... 6 10
------- -------
Income before income taxes.................................. $ 99 $ 59
======= =======
</TABLE>
7
<PAGE>
NOTE 4--SUBSEQUENT EVENT
On May 5, 2000, the European Commission gave clearance to Nabisco's
previously announced intention of joining a consortium of investors, Finalrealm
Limited ("Finalrealm"), that has acquired the equity of United Biscuits
(Holdings) plc ("UB"), a United Kingdom company, for cash of 265 pence per UB
share. Pursuant to the definitive agreements and subject to completion:
(i) Nabisco will contribute approximately $45 million in cash and its operations
in Spain, Portugal and the Middle East (in 1999, these operations had net sales
of approximately $290 million) to an associate of Finalrealm and in exchange
receive dual convertible discounted preferred securities; (ii) Finalrealm has
agreed to procure the sale to Nabisco of UB's operations in China, Hong Kong and
Taiwan (in 1999, these operations had net sales of approximately $66 million).
It is expected that Nabisco will have: (i) an economic interest of 26.5% in
the consortium which will be comprised of UB's businesses in the United Kingdom,
France, the Benelux countries and Nabisco's operations named above; and
(ii) ownership of UB's Asian businesses cited above.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following is a discussion and analysis of Nabisco Holdings' financial
condition and results of operations. The discussion and analysis of the results
of operations is divided into separate sections for sales, operating company
contribution and operating income. The sales section includes information as
reported in the historical financial statements followed by management's
discussion and analysis of these results. The operating company contribution and
operating income sections include information as reported in the historical
financial statements, followed by special items that management believes impact
the comparability of historical results, results excluding special items and
management's discussion and analysis of results excluding special items. Results
excluding special items are presented on a basis consistent with how the
businesses are managed. Special items include restructuring-related expenses
that management believes affect the comparability of the results of operations.
The results of operations excluding special items should not be viewed as a
substitute for the historical results of operations but as a tool to better
understand the underlying trends in the business. The discussion and analysis of
Nabisco Holdings' financial condition and results of operations should be read
in conjunction with the historical financial information and the related notes
thereto included in the Consolidated Condensed Financial Statements.
The food business is conducted by the operating subsidiaries of Nabisco
Holdings. Nabisco's businesses in the United States are comprised of Nabisco
Biscuit Company and the Nabisco Foods Company, formerly known as the U.S. Foods
Group. Nabisco's businesses outside the United States are conducted by Nabisco
Ltd and Nabisco International, Inc. ("Nabisco International" together with
Nabisco Ltd, the "International Food Group").
SALES
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
------------------------------
DOLLARS IN MILLIONS 2000 1999 % CHANGE
- ------------------- -------- -------- --------
<S> <C> <C> <C>
NET SALES:
Nabisco Biscuit Company................................... $ 881 $ 867 2%
Nabisco Foods Company..................................... 631 435 45%
International Food Group.................................. 557 553 1%
------ ------
Total..................................................... $2,069 $1,855 12%
====== ======
</TABLE>
<TABLE>
<C> <S>
- Nabisco Biscuit Company's net sales increased 2% versus the
prior year due to continued momentum in volume growth from
its core cookie and cracker brands as well as the impact of
several new products. Offsetting some of these gains were
several discontinued breakfast food and snack items.
- Nabisco Foods Company's net sales increased 45% to
$631 million. Excluding the impact on net sales resulting
from the November 1999 acquisition of the Favorite Brands'
business, net sales grew 14%, over the prior year, primarily
due to volume gains from nuts, confections and pet snacks.
- International's net sales increased 1% versus the prior year
to $557 million. Excluding the impact of unfavorable foreign
currency translations, International's net sales increased
2%. This increase is primarily due to volume gains in
Argentina, principally due to the impact of the Canale S.A.
acquisition, the Andean region and Asia as well as price
increases in Brazil, partially offset by volume declines in
Brazil, Mexico and Spain.
</TABLE>
9
<PAGE>
OPERATING COMPANY CONTRIBUTION
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
------------------------------
DOLLARS IN MILLIONS 2000 1999 % CHANGE
- ------------------- -------- -------- --------
<S> <C> <C> <C>
REPORTED OPERATING COMPANY CONTRIBUTION(1):
Nabisco Biscuit Company................................... $ 132 $ 108 22%
Nabisco Foods Company..................................... 65 48 35%
International Food Group.................................. 33 31 6%
------ ------
Total....................................................... 230 187 23%
------ ------
SPECIAL ITEMS:
Restructuring-related expenses:
Nabisco Biscuit Company................................. -- (13)
Nabisco Foods Company................................... -- (1)
International Food Group................................ -- (1)
------ ------
Total....................................................... -- (15)
------ ------
OPERATING COMPANY CONTRIBUTION EXCLUDING SPECIAL ITEMS:
Nabisco Biscuit Company................................... 132 121 9%
Nabisco Foods Company..................................... 65 49 33%
International Food Group.................................. 33 32 3%
------ ------
Total....................................................... $ 230 $ 202 14%
====== ======
</TABLE>
- ------------------------
(1) Operating company contribution represents operating income before
amortization of trademarks and goodwill and restructuring charges (credits).
THE FOLLOWING DISCUSSION AND ANALYSIS IS BASED ON OPERATING COMPANY CONTRIBUTION
EXCLUDING SPECIAL ITEMS:
<TABLE>
<C> <S>
- Nabisco Biscuit Company's operating company contribution
increased 9% versus the prior year. The increase reflects
the impact of ongoing productivity programs on manufacturing
costs and volume gains in its core cookie and cracker
brands. Increased marketing spending and lower breakfast
snack volumes partially offset these gains.
- Nabisco Foods Company's operating company contribution
increased 33% versus the prior year. The results were
primarily due to strong volume gains from nuts, confections
and pet snacks partially offset by increased marketing
spending.
- International's operating company contribution increased 3%
versus the prior year. The increase was primarily due to
volume increases in Argentina, the Andean region and Asia.
Also contributing to the increase was the impact of
productivity programs on lowering costs in Canada and
Argentina. Partially offsetting this increase were volume
declines in Brazil, Mexico and Spain in addition to
increased marketing investments in Canada, Asia and Brazil.
</TABLE>
10
<PAGE>
OPERATING INCOME
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
------------------------------
DOLLARS IN MILLIONS 2000 1999 % CHANGE
- ------------------- -------- -------- --------
<S> <C> <C> <C>
REPORTED OPERATING INCOME................................. $ 175 $ 134 31%
------ ------
SPECIAL ITEMS:
Restructuring-related expenses.......................... -- (15)
------ ------
OPERATING INCOME EXCLUDING SPECIAL ITEMS.................. $ 175 $ 149 17%
====== ======
</TABLE>
THE FOLLOWING DISCUSSION AND ANALYSIS IS BASED ON OPERATING INCOME EXCLUDING
SPECIAL ITEMS:
<TABLE>
<C> <S>
- Nabisco Holdings' operating income was $175 million in the
first quarter of 2000, an increase of 17% from the first
quarter 1999 level of $149 million, primarily due to the
increase in operating company contribution discussed
previously.
</TABLE>
INTEREST AND DEBT EXPENSE
Consolidated interest and debt expense of $70 million in the first quarter
of 2000 increased 8% from the first quarter of 1999, due to higher average debt
levels and higher average interest rates.
OTHER INCOME (EXPENSE), NET
Other income (expense), net was $6 million expense in the first three months
of 2000 compared to $10 million expense in the first three months of 1999. The
first three months comparison primarily reflects foreign exchange gains in 2000
versus foreign exchange losses in 1999.
NET INCOME
Nabisco Holdings reported net income of $60 million in the first quarter of
2000, an increase of 67% when compared with net income of $36 million for the
first quarter of 1999. This increase resulted primarily from higher operating
income and lower other income (expense), net offset by higher interest and debt
expense and an increase in the provision for income taxes.
COMPREHENSIVE INCOME (LOSS)
Comprehensive income (loss) was $63 million income in the first quarter of
2000 versus a loss of $99 million in the first quarter of 1999. The
$162 million change reflects higher net income and foreign currency translation
gains in 2000 compared to foreign currency translation losses in 1999.
RESTRUCTURING
Savings objectives set in our 1998 restructuring programs are on target
despite lower than anticipated spending to date. The June 1998 program was
substantially completed in 1999 and the December 1998 program is expected to be
substantially completed by mid-year 2000. Pre-tax savings in 2000 are expected
to be approximately $140 million including cash savings of $133 million and,
after completion of the programs, are expected to be approximately $145 million
annually including cash savings of $135 million. In 1999, Nabisco recorded a net
restructuring credit of $67 million. This net credit reduced the restructuring
charges to $463 million. As the remaining projects from the December 1998
restructuring program are completed, we will continue to analyze the actual
spending and the estimated cost to complete the programs. The results of that
analysis will determine what further adjustments, if any, will be necessary.
Cumulative cash expenditures, net of cash proceeds to date have totaled
$123 million with $20 million expended in the first three months of 2000. The
cash component of the restructuring charge for the
11
<PAGE>
programs will be approximately $140 million including an estimated $37 million
expenditure in 2000. For a further discussion of the restructuring programs, see
Note 1 to the Consolidated Financial Statements.
LIQUIDITY AND FINANCIAL CONDITION
Net cash flows used in operating activities amounted to $19 million for the
first quarter of 2000 compared to $149 million for the first quarter of 1999.
The decrease in net cash flows used in operating activities primarily reflects
the 2000 increase in net income and lower working capital requirements.
Cash flows used in investing activities decreased $8 million in the first
quarter of 2000 to $37 million from the first quarter of 1999 primarily because
of lower capital expenditures.
Capital expenditures were $39 million in the first quarter of 2000.
Management expects that capital expenditures for 2000 will be approximately $250
million, which is 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
2000.
Cash flows from financing activities for the first quarter of 2000 decreased
$147 million to $40 million from the first quarter of 1999, principally due to
lower net proceeds from long-term debt partially offset by a higher increase in
notes payable.
As of March 31, 2000, the $1.5 billion revolving credit facility was
unutilized and available to support borrowings and the 364-day $1.1 billion
credit facility was unavailable as it supported outstanding commercial paper
borrowings.
The Nabisco Holdings' credit facilities restrict dividends and distributions
after January 1, 1999 by Nabisco Holdings to holders of its equity securities by
requiring a minimum net worth amount. As of March 31, 2000, actual net worth, as
defined, exceeded required net worth by approximately $810 million. Nabisco
Holdings does not believe that its credit arrangements will limit its ability to
pay dividends.
Nabisco's credit facilities limit the ability of Nabisco Holdings and its
subsidiaries to incur indebtedness, engage in transactions with stockholders and
affiliates, create liens, acquire, sell or dispose of certain assets and
securities and engage in certain mergers or consolidations. Nabisco Holdings and
Nabisco believe that they are currently in compliance with all covenants and
restrictions imposed by the terms of their indebtedness.
At March 31, 2000, 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 $4.2 billion and $8.1 billion,
respectively, of which total debt is higher by $88 million and total capital is
higher by $101 million than their respective balances at December 31, 1999.
Nabisco Holdings' ratios of total debt to total stockholders' equity and total
debt to total capital at March 31, 2000 were 1.1 to 1 and .51 to 1,
respectively.
Nabisco Holdings currently pays regular quarterly dividends on its common
stock at an annual rate of $.75 per share. At that rate, the aggregate amount of
dividends to be paid would be approximately $198 million during 2000. Nabisco
holdings believes that its internally generated cash and borrowings under its
bank credit agreement and any other lines of credit it may establish will
provide adequate funds for working capital, interest expense, capital
expenditures and payment of its anticipated quarterly dividends. Nabisco
Holdings expects to finance future acquisitions primarily from internally
generated cash or borrowings.
SUBSEQUENT EVENT
On May 5, 2000, the European Commission gave clearance to Nabisco's
previously announced intention of joining a consortium of investors, Finalrealm
Limited ("Finalrealm"), that has acquired the equity of United Biscuits
(Holdings) plc ("UB"), a United Kingdom company, for cash of 265 pence per
12
<PAGE>
UB share. Pursuant to the definitive agreements and subject to completion:
(i) Nabisco will contribute approximately $45 million in cash and its operations
in Spain, Portugal and the Middle East (in 1999, these operations had net sales
of approximately $290 million) to an associate of Finalrealm and in exchange
receive dual convertible discounted preferred securities; (ii) Finalrealm has
agreed to procure the sale to Nabisco of UB's operations in China, Hong Kong and
Taiwan (in 1999, these operations had net sales of approximately $66 million).
It is expected that Nabisco will have: (i) an economic interest of 26.5% in
the consortium which will be comprised of UB's businesses in the United Kingdom,
France, the Benelux countries and Nabisco's operations named above; and
(ii) ownership of UB's Asian businesses cited above.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE EXPOSURE
Nabisco is exposed to changes in interest rates primarily as a result of its
borrowing activities which include commercial paper, short-term borrowings and
long-term fixed rate debt used to maintain liquidity and fund its business
operations. Nabisco employs a variance/co-variance approach to its calculation
of Value at Risk ("VaR"), which is a statistical measure of potential loss in
terms of fair value, cash flows, or earnings of interest rate sensitive
financial instruments over a one year horizon using a 95% confidence interval
for changes in interest rates. The model assumes that financial returns are
normally distributed. For options and instruments with non-linear returns, the
model uses the delta/gamma method to approximate the financial return.
The VaR, which is the potential loss in fair value associated with Nabisco's
exposure to changing interest rates, was $226 million after tax at March 31,
2000, an increase of $5 million from the December 31, 1999 amount.
The VaR model is a risk analysis tool and does not purport to represent
actual losses in fair value that will be incurred by Nabisco, nor does it
consider the potential effect of favorable changes in market factors.
COMMODITY PRICE EXPOSURE
The VaR associated with Nabisco's derivative commodity instruments due to
reasonably possible near-term changes in commodity prices, based on historical
commodity price movements, would not result in a material effect on the future
earnings of Nabisco.
The VaR associated with Nabisco's net commodity exposure (anticipated future
purchases less derivatives, inventory and firm purchase commitments) would
result in a potential loss in pre-tax earnings of $40 million at March 31, 2000,
an increase of $10 million from the December 31, 1999 amount.
The VaR associated with either Nabisco's derivative commodity instruments or
its net commodity exposure would not have a material effect on the fair values
or cash flows of Nabisco.
------------------------
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 amount of savings from the
restructuring program, the level of future capital expenditures, and the level
of dividends. 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.
13
<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 May 8, 2000. At the meeting, 41,499,066 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 thirteen Directors
<TABLE>
<CAPTION>
NAME VOTES FOR VOTES WITHHELD
---- --------- --------------
<S> <C> <C>
Herman Cain................................ 2,173,893,881 105,187
John T. Chain, Jr.......................... 2,173,872,821 126,247
Julius L. Chambers......................... 2,173,859,228 139,840
John L. Clendenin.......................... 2,173,868,225 130,843
Steven F. Goldstone........................ 2,173,890,640 108,428
Ray J. Groves.............................. 2,173,869,013 130,055
David B. Jenkins........................... 2,173,868,539 130,529
Nancy Karch................................ 2,173,896,131 102,937
James M. Kilts............................. 2,173,891,046 108,022
Fred H. Langhammer......................... 2,173,893,931 105,137
H. Eugene Lockhart......................... 2,173,894,101 104,967
Theodore E. Martin......................... 2,173,869,491 129,577
Rozanne L. Ridgway......................... 2,173,870,245 128,823
</TABLE>
(b) Ratification of appointment of Deloitte & Touche LLP as independent
auditors.
<TABLE>
<S> <C> <C>
For........................................... 2,173,960,677
Against....................................... 22,019
Abstain....................................... 16,372
</TABLE>
14
<PAGE>
PART II
ITEM 5. OTHER INFORMATION
EXPLORATION OF ALTERNATIVES TO MAXIMIZE SHAREHOLDER VALUE
On April 3, 2000, the Board of Directors of Nabisco Group Holdings Corp.
("NGH") directed its management to explore all alternatives to maximize
shareholder value, including the sale of NGH or the sale of Nabisco Holdings. In
this connection, NGH engaged UBS Warburg LLC and Morgan Stanley & Co.
Incorporated as financial advisors.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<S> <C>
10.1 Nabisco Holdings Corp. 1994 Long Term Incentive Plan
(effective April 17, 1997 as amended and restated through
March 17, 2000).
10.2 Form of Restricted Stock Units Agreement between Nabisco
Holdings Corp. and the grantee named therein.
10.3 Form of Non-Qualified Stock Option Agreement between Nabisco
Holdings Corp. and optionee named therein (2000 grant).
10.4 Amended and Restated Employment Agreement by and among
Nabisco Holdings Corp., Nabisco, Inc., Nabisco Group
Holdings Corp. and James M. Kilts (effective April 1, 2000).
10.5 Employment Agreement (dated October 1, 1997) by and among
Nabisco, Inc., Nabisco Holdings Corp., Nabisco Group
Holdings Corp. and James E. Healey (as amended and restated
effective March 17, 2000).
10.6 Employment Agreement (dated October 12, 1988) by and among
Nabisco, Inc., Nabisco Holdings Corp., Nabisco Group
Holdings Corp. and C. Michael Sayeau (as amended and
restated effective March 17, 2000).
10.7 Employment Agreement (dated February 9, 1998) by and among
Nabisco, Inc., Nabisco Holdings Corp., Nabisco Group
Holdings Corp. and Richard H. Lenny (as amended and restated
effective March 17, 2000).
10.8 Employment Agreement (dated September 1, 1995) by and among
Nabisco, Inc., Nabisco Holdings Corp., Nabisco Group
Holdings Corp. and Douglas R. Conant (as amended and
restated effective March 17, 2000).
10.9 Nabisco Holdings Corp. Annual Incentive Award Plan
(effective January 1, 1995 as amended and restated as of
March 17, 2000).
10.10 Nabisco Holdings Corp. 1999 Retention Plan Guidelines
(effective July 1, 1999).
10.11 Nabisco Salary and Benefit Continuation Program (as amended
and restated effective January 1, 1997).
10.12 Nabisco Flexible Perquisite Program Guidelines (as updated
January 1, 2000).
12 Nabisco, Inc. Computation of Ratio of Earnings to Fixed
Charges for the three months ended March 31, 2000.
27.1 Nabisco Holdings Corp. Financial Data Schedule for the first
quarter of 2000.
27.2 Nabisco, Inc. Financial Data Schedule for the first quarter
of 2000.
</TABLE>
----------------------------
(b) Reports on Form 8-K
None.
15
<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 12, 2000 /s/ THOMAS J. PESCE
......................................
Thomas J. Pesce
Senior Vice President and Controller
</TABLE>
16
<PAGE>
EXH 10.1
PLAN DOCUMENT
NABISCO HOLDINGS CORP.
1994 LONG TERM INCENTIVE PLAN
(AS AMENDED AND RESTATED
THROUGH MARCH 17, 2000)
1. PURPOSE OF PLAN
The Nabisco Holdings Corp. 1994 Long Term Incentive Plan (the "Plan"), as
amended and restated effective April 17, 1997, subject to the approval of
Nabisco's shareholders (the "Plan"), is designed:
(a) to promote the long term financial interests and growth of Nabisco
Holdings Corp. and subsidiaries (the "Corporation") by attracting and retaining
management personnel with the training, experience and ability to enable them to
make a substantial contribution to the success of the Corporation's business;
(b) to motivate management personnel by means of growth-related
incentives to achieve long range goals; and
(c) to further the identity of interests of participants with those of
the stockholders of the Corporation through opportunities for increased stock,
or stock-based, ownership in the Corporation.
2. DEFINITIONS
As used in the Plan, the following words shall have the following
meanings:
(a) "Base Value" means not less than the Fair Market Value on the date a
Stock Appreciation Right is granted, or, in the case of a Stock Appreciation
Right granted retroactively in tandem with (or in replacement of) an outstanding
stock option, not less than the exercise price of such option;
(b) "Board of Directors" means the Board of Directors of Nabisco;
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(c) "Code" means the Internal Revenue Code of 1986, as amended;
(d) "Committee" means the Compensation Committee of the Board of
Directors;
(e) "Common Stock" or "Share" means Class A common stock of Nabisco which
may be authorized but unissued, or issued and reacquired;
(f) "Dividend Equivalent Rights" shall have the meaning set forth in
Section 5(f);
(g) "Effective Date" shall have the meaning set forth in Section 12;
(h) "Exchange Act" means the Securities Exchange Act of 1934, as amended;
(i) "Fair Market Value" means such value of a Share as reported for stock
exchange transactions and/or determined in accordance with any applicable
resolutions or regulations of the Committee in effect at the relevant time;
(j) "Grant" means an award made to a Participant pursuant to the Plan and
described in Paragraph 5, including, without limitation, an award of an
Incentive Stock Option, Stock Option, Stock Appreciation Right, Dividend
Equivalent Right, Restricted Stock, Purchase Stock, Performance Units,
Performance Shares or Other Stock-Based Grant, or any combination of the
foregoing;
(k) "Grant Agreement" means an agreement between Nabisco and a
Participant that sets forth the terms, conditions and limitations applicable to
a Grant;
(l) "Incentive Stock Options" shall have the meaning set for in Section
5(a);
(m) "Nabisco" means Nabisco Holdings Corp.;
(n) "NGH" means Nabisco Group Holdings Corp.;
(o) "Other Stock Based Grants" shall have the meaning set for in Section
5(i);
(p) "Other Stock Options" shall have meaning set forth in Section 5(b);
(q) "Participant" means an employee, or other person having a unique
relationship with Nabisco or one of its Subsidiaries, to whom Grants may be made
in accordance with Paragraph 4, or to whom one or more Grants have been made and
such Grants have not all been forfeited or terminated under the Plan; provided,
however, a non-employee director of NGH, Nabisco or one of its Subsidiaries may
not be a Participant;
(r) "Performance Units" shall have the meaning set forth in Section 5(g);
(s) "Performance Shares" shall have the meaning set forth in Section
5(h);
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<PAGE>
(t) "Purchase Stock" shall have the meaning set forth in Section 5(e);
(u) "Restricted Stock" shall have the meaning set forth in Section 5(d);
(v) "Stock Appreciation Rights" shall have the meaning set forth in
Section 5(c);
(w) "Subsidiary" means any corporation other than Nabisco in an unbroken
chain of corporations beginning with Nabisco if each of the corporations other
than the last corporation in the unbroken chain owns 50% or more of the voting
stock in one of the other corporations in such chain.
3. ADMINISTRATION OF PLAN
(a) The Plan shall be administered by the Committee or, in lieu of the
Committee, the Board of Directors. The Committee may adopt its own rules of
procedure, and the action of a majority of the Committee, taken at a meeting or
taken without a meeting by a writing signed by such majority, shall constitute
action by the Committee. The Committee shall have the power and authority to
administer, construe and interpret the Plan, to make rules for carrying it out
and to make changes in such rules. Any such interpretations, rules, and
administration shall be consistent with the basic purposes of the Plan.
(b) The Committee may delegate to the Chief Executive Officer and to
other senior officers of the Corporation its duties under the Plan subject to
such conditions and limitations as the Committee shall prescribe except that
only the Committee may designate and make Grants to Participants who are subject
to Section 16 of the Exchange Act.
(c) The Committee may employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, Nabisco, and the officers
and directors of Nabisco shall be entitled to rely upon the advise, opinions or
valuations of any such persons. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon all Participants, Nabisco 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 Grants, and
all members of the Committee shall be fully protected by Nabisco with respect to
any such action, determination or interpretation.
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<PAGE>
4. ELIGIBILITY
The Committee may from time to time make Grants under the Plan to such
employees, or other persons having a unique relationship with Nabisco or any of
its Subsidiaries, and in such form and having such terms, conditions and
limitations as the Committee may determine. No Grants may be made under this
Plan to non-employee directors of NGH, Nabisco or any of its Subsidiaries.
Grants may be granted singly, in combination or in tandem. The terms, conditions
and limitations of each Grant under the Plan shall be set forth in a Grant
Agreement, in a form approved by the Committee, consistent, however, with the
terms of the Plan; provided, however, such Grant Agreement shall contain
provisions dealing with the treatment of Grants in the event of the termination,
death or disability of a Participant, and may also include provisions concerning
the treatment of Grants in the event of a change of control of Nabisco.
5. GRANTS
From time to time, the Committee will determine the forms and amounts of
Grants for Participants. Such Grants may take the following forms in the
Committee's sole discretion:
(a) INCENTIVE STOCK OPTIONS - These are stock options within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended ("Code"), to
purchase Common Stock. In addition to other restrictions contained in the Plan,
an option granted under this Section 5(a), (i) may not be exercised more than 10
years after the date it is granted, (ii) may not have an option price less than
the Fair Market Value of Common Stock on the date the option is granted, (iii)
must otherwise comply with Code Section 422, and (iv) must be designated as an
"Incentive Stock Option" by the Committee. The maximum aggregate Fair Market
Value of Common Stock (determined at the time of each Grant) with respect to
which any Participant may first exercise Incentive Stock Options under this Plan
and any Incentive Stock Options granted to the Participant for such year under
any plans of NGH, Nabisco or any Subsidiary in any calendar year is $100,000.
Payment of the option price shall be made in cash or in shares of Common Stock,
or a combination thereof, in accordance with the terms of the Plan, the Grant
Agreement, and of any applicable guidelines of the Committee in effect at the
time. No Participant may
-4-
<PAGE>
receive Grants of Incentive Stock Options in any calendar year to purchase more
than one million shares.
(b) OTHER STOCK OPTIONS - These are options to purchase Common Stock
which are not designated by the Committee as "Incentive Stock Options". At the
time of the Grant the Committee shall determine, and shall have contained in the
Grant Agreement or other Plan rules, the option exercise period, the option
price, and such other conditions or restrictions on the grant or exercise of the
option as the Committee deems appropriate, which may include the requirement
that the grant of options is predicated on the acquisition of Purchase Stock
under Section 5(e) by the Optionee. In addition to other restrictions contained
in the Plan, an option granted under this Section 5(b), (i) may not be exercised
more than 15 years after the date it is granted and (ii) may not have an option
exercise price less than 50% of the Fair Market Value of Common Stock on the
date the option is granted. Payment of the option price shall be made in cash or
in shares of Common Stock, or a combination thereof, in accordance with the
terms of the Plan and of any applicable guidelines of the Committee in effect at
the time. Payment of the option price may also be made by tender of an amount
equal to the full exercise price which has been borrowed from Nabisco or one of
its Subsidiaries if the Participant also authorizes the concurrent sale of the
exercised Common Stock by a broker (through an arrangement established by
Nabisco, or one of its Subsidiaries, for Participants) and repays the borrowing,
all in accordance with any applicable guidelines of the Committee. No
participant may receive Grants of options in any calendar year to purchase more
than one million Shares.
(c) STOCK APPRECIATION RIGHTS - These are rights that on exercise entitle
the holder to receive the excess of (i) the Fair Market Value of a share of
Common Stock on the date of exercise over (ii) the Base Value multiplied by
(iii) the number of rights exercised in cash, stock or a combination thereof as
determined by the Committee. Stock Appreciation Rights granted under the Plan
may, but need not be, granted in conjunction with an option under Paragraphs
5(a) or 5(b). The Committee, in the Grant Agreement or by other Plan rules, may
impose such conditions or restrictions on the exercise of Stock Appreciation
Rights as it deems appropriate, and may terminate, amend, or suspend such Stock
Appreciation Rights at any time. No Stock Appreciation Right granted under this
Plan may be exercised more than 15 years after the date it
-5-
<PAGE>
is granted. To the extent that any Stock Appreciation Right that shall have
become exercisable, but shall not have been exercised or canceled or, by reason
of any termination of employment, shall have become non-exercisable, it shall be
deemed to have been exercised automatically, without any notice of exercise, on
the last day of which it is exercisable, provided that any conditions or
limitations on its exercise are satisfied (other than (i) notice of exercise and
(ii) exercise or election to exercise during the period prescribed) and the
Stock Appreciation Right shall then have value. Such exercise shall be deemed to
specify that, the holder elects to receive cash and that such exercise of a
Stock Appreciation Right shall be effective as of the time of automatic
exercise. Stock Appreciation Rights will be granted for no consideration. No
Participant may receive Grants of more than one million Stock Appreciation
Rights in any calendar year.
(d) RESTRICTED STOCK - Restricted Stock is a Grant of Common Stock or
stock units equivalent to Common Stock subject to such conditions and
restrictions as the Committee shall determine. Any rights to dividends or
dividend equivalents accruing due to a grant of Restricted Stock shall also be
determined by the Committee. The number of shares of Restricted Stock and the
restrictions or conditions on such shares shall be as the Committee determines,
in the Grant Agreement or by other Plan rules, and the certificate for the
Restricted Stock shall bear evidence of the restrictions or conditions. No
Participant may receive Grants of more than 100,000 shares of Restricted Stock
in any calendar year.
(e) PURCHASE STOCK - Purchase Stock are shares of Common Stock offered to
a Participant at such price as determined by the Committee, the acquisition of
which may make him eligible to receive other grants under the Plan, including,
but not limited to, Stock Options; provided, however, that the price of such
Purchase Shares may not be less than 50% of the Fair Market Value of the Common
Stock on the date such shares of Purchase Stock are offered. No Participant may
receive Grants of more than one million shares of Purchase Stock in any calendar
year.
(f) DIVIDEND EQUIVALENT RIGHTS - These are rights to receive cash
payments from Nabisco at the same time and in the same amount as any cash
dividends paid on an equal number of shares of Common Stock to shareholders of
record during the period such rights are effective.
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<PAGE>
The Committee, in the Grant Agreement or by other Plan rules, may impose such
restrictions and conditions on the Dividend Equivalent Rights, including the
date such rights will terminate, as it deems appropriate, and may terminate,
amend, or suspend such Dividend Equivalent Rights at any time. No Participant
may receive Grants of Dividend Equivalent Rights on the equivalent of more than
one million Shares in any calendar year.
(g) PERFORMANCE UNITS - These are rights to receive at a specified future
date, payment in cash or stock of an amount equal to all or a portion of the
value of a unit granted by the Committee. At the time of the Grant, in the Grant
Agreement or by other Plan rules, the Committee must determine the base value of
the unit, the performance factors applicable to the determination of the
ultimate payment value of the unit and the period over which Corporation
performance will be measured. The performance factors for any specific Grants
hereunder shall be determined in the discretion of the Committee, and may be
based on any of the following: price of Common Stock or the stock of any
affiliate, shareholder return; return on equity; return on investment; return on
capital; return on invested capital; economic profit; economic value added; net
income; cash net income; free cash flow; earnings per share; cash earnings per
share; operating company contribution or market share. These factors must
include a minimum performance standard for the Corporation below which no
payment will be made and may include a maximum performance level above which no
increased payment will be made. No Participant may receive Grants of Performance
Units in any calendar year with a maximum payment (if maximum performance level
is attained) in excess of $8 million. The term over which Corporation
performance will be measured shall not exceed ten years.
(h) PERFORMANCE SHARES - These are rights to receive at a specified
future date, payment in cash or Common Stock, as determined by the Committee, of
an amount equal to all or a portion of the Fair Market Value for all days that
the Common Stock is traded during the last forty-five (45) days of the specified
period of performance of a specified number of shares of Common Stock at the end
of a specified period based on Corporation performance during the period. At the
time of the Grant, the Committee, in the Grant Agreement or by Plan rules, will
determine the factors which will govern the portion of the rights so payable and
the period over which Corporation performance will be measured. The performance
factors for any specific Grants
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<PAGE>
hereunder shall be determined in the discretion of the Committee, and may be
based on any of the following: return on equity; net income; cash net income;
free cash flow; earnings per share; cash earnings per share; or operating
company contribution. The factors will be based on Corporation performance and
must include a minimum performance standard for the Corporation below which no
payment will be made and a maximum performance level above which no increased
payment will be made. No Participant may receive Grants of Performance Shares in
any calendar year with a maximum payment (if the maximum performance level is
attained) of more than 300,000 Shares (or its cash equivalent). The term over
which Corporation performance will be measured shall be not less than six
months. Performance Shares will be granted for no consideration.
(i) OTHER STOCK-BASED GRANTS - The Committee may make other Grants under
the Plan pursuant to which shares of Common Stock (which may, but need not, be
shares of Restricted Stock pursuant to Paragraph 5(d)), are or may in the future
be acquired, or Grants denominated in stock units, including ones valued using
measures other than market value. Other Stock-Based Grants may be granted with
or without consideration; provided, however, that the price of any such Grant
made for consideration that provides for the acquisition of shares of Common
Stock or other equity securities of the Corporation may not be less than 50% of
the Fair Market Value of the Common Stock or such other equity securities on the
date of grant of such Grant. Such Other Stock-Based Grants may be made alone, in
addition to or in tandem with any Grant of any type made under the Plan and must
be consistent with the purposes of the Plan. No Participant may receive Other
Stock-Based Grants of more than one million shares in any calendar year.
6. LIMITATIONS AND CONDITIONS
(a) The number of Shares available for Grants under this Plan shall be
28.3 million shares of the authorized Common Stock as of the effective date of
the Plan. The number of Shares subject to Grants under this Plan to any one
Participant during the term of this Plan shall not be more than 10 million
shares. No more than 1% of the authorized Common Stock as of the effective date
of the Plan may be granted as Incentive Stock Options as described in Paragraph
5(a). Shares related to Grants that are forfeited, terminated, canceled, expire
unexercised, settled
-8-
<PAGE>
in cash in lieu of stock or in such manner that all or some of the Shares
covered by a Grant are not issued to a Participant, shall immediately become
available for Grants; provided, however, that the number of Shares available for
Grants shall be limited to the extent necessary to satisfy Section 16 of the
Exchange Act. Subject to the overall limitation on the number of shares of
Common Stock that may be delivered under this Plan, the Committee may use
available shares of Common Stock as the form of payment for compensation, grants
or rights earned or due under any other compensation plans or arrangements of
Nabisco, including the plan of any entity acquired by Nabisco.
(b) No Grants shall be made under the Plan beyond ten years after the
effective date of the Plan, but the terms of Grants made on or before the
expiration thereof may extend beyond such expiration. At the time a Grant is
made or amended or the terms or conditions of a Grant are changed, the Committee
may provide for limitations or conditions on such Grant.
(c) Nothing contained herein shall affect the right of the Corporation to
terminate any Participant's employment at any time or for any reason.
(d) Deferrals of Grant payouts may be provided for, at the sole
discretion of the Committee, in the Grant Agreements.
(e) Except as otherwise prescribed by the Committee, the amounts of the
Grants for any employee of a Subsidiary, along with interest, dividend, and
other expenses accrued on deferred Grants shall be charged to the Participant's
employer during the period for which the Grant is made. If the Participant is
employed by more than one Subsidiary or by both Nabisco and a Subsidiary during
the period for which the Grant is made, the Participant's Grant and related
expenses will be allocated between the companies employing the Participant in a
manner prescribed by the Committee.
(f) No benefit under the Plan shall, prior to receipt thereof by the
Participant, be in any manner liable for or subject to the debts, contracts,
liabilities, engagements, or torts of the Participant.
(g) Except to the extent otherwise provided in any other retirement or
benefit plan, any grant under this Plan shall not be deemed compensation for
purposes of computing benefits or contributions under any retirement plan of
Nabisco or its Subsidiaries and shall not affect any
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<PAGE>
benefits under any other benefit plan of any kind or subsequently in effect
under which the availability or amount of benefits is related to level of
compensation. This Plan is not a "Retirement Plan" or "Welfare Plan" under the
Employee Retirement Income Security Act of 1974, as amended.
(h) Unless the Committee determines otherwise, no benefit or promise
under the Plan shall be secured by any specific assets of Nabisco or any of its
Subsidiaries, nor shall any assets of Nabisco or any of its Subsidiaries be
designated as attributable or allocated to the satisfaction of Nabisco's
obligations under the Plan.
(i) In the event of a Participant's death, the right to receive benefits
or exercise awards shall pass to the beneficiary designated by the Participant
for this purpose under the Plan. If the Participant has not designated a
beneficiary under the Plan, the right to receive benefits or exercise awards
shall pass to the Participant's spouse and, if the Participant does not have a
spouse at the date of death, to the Participant's designated beneficiary under
the Company's SELECT Core Life Insurance Plan.
7. TRANSFERS AND LEAVES OF ABSENCE
For purposes of the Plan: (a) a transfer of a Participant's employment
without an intervening period of separation from Nabisco to a Subsidiary or vice
versa, or from one Subsidiary to another, shall not be deemed a termination of
employment, and (b) a Participant who is granted in writing a leave of absence
shall be deemed to have remained in the employ of the Corporation during such
leave of absence.
8. ADJUSTMENTS
(a) In the event of any change in the outstanding Common Stock by reason
of a stock split, spin-off, stock dividend, stock combination or
reclassification, recapitalization or merger, or similar event, the Committee
may adjust appropriately the number of Shares subject to the Plan and available
for or covered by Grants and Share prices related to outstanding Grants and make
such other revisions to outstanding Grants as it deems are equitably required.
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<PAGE>
(b) In the event of a Change of Control (as defined in paragraph 8 (c)
hereof), except as otherwise set forth in the terms of a Grant:
(i) Stock options granted pursuant to paragraphs 5 (a) or 5 (b)
hereof shall become fully vested and exercisable (subject to
paragraph 5 (b) (iii)); provided; however, that the Committee
may elect to make a cash payment to Participants in lieu of the
delivery of shares upon exercise, 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 stock options
being exercised;
(ii) Stock Appreciation Rights granted pursuant to paragraph 5 (c)
hereof shall become fully vested and exercisable;
(iii) Performance Units granted pursuant to paragraph 5 (g) hereof
whose performance periods ends after the date of the Change of
Control shall become vested as to a percentage of performance
units granted equal to the number of months (including partial
months) in the performance period before the date of the Change
of Control, divided by the total number of months in the
performance period. The value of the performance units shall be
equal to the greater of the target value of the units or the
value derived from the actual performance as of the date of the
Change of Control; and
(iv) the Committee shall have authority to establish or revise the
terms of any other Grant as it, in it's discretion, deems
appropriate; provided; however, that the Committee may not make
revisions that are adverse to the Participant without the
Participant's consent unless such revision is provided for or
contemplated in the terms of the Grant.
(c) As used herein, a "Change of Control" shall occur on the date upon
which one of the following events occurs (except as otherwise provided in
paragraph (iii) below):
(i) Any individual, corporation, partnership, group, associate or
other entity or "person" as such term is defined in Section
14(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"), other than the Corporation, NGH or any of their
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<PAGE>
Subsidiaries, or any employee benefit plan(s) sponsored by the
Corporation, NGH or any of their subsidiaries, is or becomes
the "beneficial owner" (as defined in Rule 13D-3 under the
Exchange Act), directly or indirectly, of 30% or more of the
combined voting power of the Corporation or NGH outstanding
securities ordinarily having the right to vote at elections of
directors;
(ii) Individuals who constitute the Board of Directors of either the
Corporation or NGH on January 1, 2000 (each such Board the
"Incumbent Board") cease for any reason to constitute at least
a majority of the Board of the Corporation or NGH, as the case
may be, provided that any person becoming a director subsequent
to such date hereof whose election, or nomination for election
by the Corporation's or NGH's shareholders, as the case may be,
was approved by a vote of at least three-quarters of the
directors comprising that Incumbent Board (either by a specific
vote or by approval of the proxy statement of the Corporation
or NGH, as the case may be, in which such person is named a
nominee of the Corporation or NGH, as the case may be, but
excluding for this purpose any such individual whose initial
assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents
by or on behalf of an individual, corporation, partnership,
group, associate or other entity of "person" other than the
Corporation's or NGH's Board, as the case may be, shall be, for
purposes of this paragraph (ii), considered as though such
person were a member of the Incumbent Board.
(iii) The approval by the shareholders of the Corporation or NGH, as
the case may be, of a plan or agreement providing (A) for a
merger or consolidation of the Corporation or NGH, as the case
may be, other than with a wholly-owned subsidiary or with NGH,
the Corporation or any of their subsidiaries, and other than a
merger or consolidation that would result in the voting
securities of the
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<PAGE>
Corporation or NGH, as the case may be, outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of
the voting securities of the Corporation or NGH, as the case
may be, of such surviving entity outstanding immediately after
such merger or consolidation or (B) for a sale, exchange or
other disposition of all or substantially all of the assets of
the Corporation or NGH. If any of the events enumerated in this
paragraph (iii) occurs, the Corporation's Board of Directors
shall determine the effective date of the Change of Control
resulting therefrom.
For purposes hereof, "Subsidiary" of the Corporation or NGH means any
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by the
Corporation or NGH, as the case may be.
9. AMENDMENT AND TERMINATION
The Committee shall have the authority to make such amendments to any
terms and conditions applicable to outstanding Grants as are consistent with
this Plan provided that, except for adjustments under Paragraph 8 hereof, no
such action shall modify such Grant in a manner adverse to the Participant
without the Participant's consent except as such modification is provided for or
contemplated in the terms of the Grant.
The Board of Directors may amend, suspend or terminate the Plan.
10. FOREIGN OPTIONS AND RIGHTS
(a) The Committee may make Grants to employees who are subject to the tax
laws of nations other than the United States, which Grants may have terms and
conditions that differ from the terms thereof as provided elsewhere in the Plan
for the purpose of complying with the foreign tax laws. Grants of Options may
have terms and conditions that differ from Incentive Stock Options and Other
Stock Options for the purposes of complying with the foreign tax laws.
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<PAGE>
(b) The terms and conditions of Options granted under Paragraph 10(a) may
differ from the terms and conditions which the Plan would require to be imposed
upon Incentive Stock Options and Other Stock Options if the Committee determines
that the Grants are desirable to promote the purposes of the Plan for the
employees identified in Paragraph 10(a); provided that the Committee may not
grant such Options or Stock Appreciation Rights that do not comply with the
limitations of Paragraph 6.
11. WITHHOLDING TAXES
The Corporation shall have the right to deduct from any payment or
settlement made under the Plan any federal, state or local income or other taxes
required by law to be withheld with respect to such payment.
12. EFFECTIVE DATE AND TERMINATION DATES
The Plan shall be effective on and as of April 17, 1997, subject to
approval by the stockholders of Nabisco and shall terminate ten years later,
subject to earlier termination by the Board of Directors pursuant to Paragraph
9. The terms of Grants made on or before the expiration of the Plan shall extend
beyond such expiration. Grants made under the Plan prior to the Effective Date
shall be governed by the terms of the Plan as in effect on the date such Grant
was made.
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<PAGE>
EXH 10.2
1994 NABISCO HOLDINGS CORP.
LONG-TERM INCENTIVE PLAN
RESTRICTED STOCK PROGRAM
RESTRICTED STOCK UNITS AGREEMENT
-------------------------------------
W I T N E S S E T H
1. GRANT OF RESTRICTED STOCK UNITS. Pursuant to the provisions of the
1994 Long-Term Incentive Plan and the Restricted Stock Units Program
(collectively, the "Plan"), Nabisco Holdings Corp. (the "Company") on the above
date has granted to
((NAME)) (THE "GRANTEE")
subject to the terms and conditions which follow and the terms and conditions of
the Plan and this Agreement (the "Agreement"), a total of
((RSEG)) RESTRICTED STOCK UNITS
which entitle the Grantee to receive at the option of the Company (a) shares of
Common Stock of the Company ("Common Stock") equal to the number of Restricted
Stock Units granted, as of the dates the restrictions lapse; or (b) an amount in
cash equal to the fair market value of an equivalent number of shares of 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 UNITS. Subject to Section 4, the
Restricted Stock Units granted hereunder shall vest, and all restrictions
thereon shall lapse, on the first to occur of the dates as set forth below in
subsections (a) through (g), ("Vesting Date"):
(a) 33%, December 14, 2002,
33%, December 14, 2003, and
34%, December 14, 2004;
(b) the date of Grantee's death;
(c) the date Grantee shall be deemed to have a "Permanent
Disability" (as defined in the Nabisco, Inc. Long-Term Disability Plan,
applicable to senior executive officers as in effect on such dates hereof), or
if the Board of Directors or any committee thereof so determines;
(d) the date of Grantee's Retirement at age 65 or over;
<PAGE>
(e) the date of a Change of Control;
(f) the date Grantee's active employment with the Company is
terminated by the Company without Cause (excluding any termination to which
subsection (e) applies); or
(g) the date Grantee commences early retirement from the Company.
As used herein, early retirement means retirement between the ages of 55 through
64 with the approval of the Company, which approval specifically states that the
vesting of the Restricted Stock Units is accelerated and shall become fully
vested as to the number of units.
3. SETTLEMENT OF RESTRICTED STOCK UNITS.
(a) The Restricted Stock Units grant will be settled at the option
of the Company, in shares of Company Common Stock, or in cash, pursuant to
Section 3(b), as of the dates the restrictions lapse.
(b) Unless the Grantee has elected to defer receipt of payment in
accordance with Section 7 and subject to the provisions of subsection (c), the
Grantee will receive a payment in cash in respect of Restricted Stock Units
granted to the Grantee hereunder in an amount (the "Payment Amount") determined
by multiplying the number of such units by the closing price as listed on the
New York Stock Exchange (the "NYSE") of the Company's Common Stock on the
Vesting Date. The payment shall be made as soon as practicable following the
Vesting Date. In the event the Vesting Date falls on a date on which the NYSE is
closed, the aforesaid computation shall be based on the closing price of the
Company's Common Stock on the first trading day immediately preceding the
Vesting Date. If the Grantee has elected to defer receipt of such payment in
accordance with Section 7, the payment date will be the last day of the deferral
period and payment will be made as soon as practicable thereafter.
(c) In the event Grantee's Vesting Date arises pursuant to Section
2(f) or 2(g), shares of Company Common Stock or the Payment Amount shall be
adjusted by multiplying the number of shares of Company Common Stock or the
Payment Amount by a fraction the denominator of which is 1,095 and the numerator
of which is the number of days from the Date of Grant to the Vesting Date, and
Grantee shall receive shares of Company Common Stock or the Payment Amount as so
adjusted.
4. TERMINATION AND FORFEITURE OF THE RESTRICTED STOCK UNITS. The
Restricted Stock Units granted hereunder shall terminate and Grantee shall
immediately forfeit all rights to such Restricted Stock Units upon Grantee's
termination of active employment from the Company for Cause, Resignation or for
any other reason, excluding termination from active employment arising from the
events specifically enumerated in Section 2.
5. TERMINATION OF EMPLOYMENT.
Subject to Sections 2(f) and 2(g) and 4:
(a) Unless otherwise provided in a written employment or termination
agreement between the Grantee and the Company, the Restricted Stock Units shall
not become vested as to any additional units following the Termination of
Employment of the Grantee for any reason other than a Termination of Employment
because of death, Permanent Disability or Retirement of the Grantee. In the
event of Termination of Employment because of death, Permanent
<PAGE>
Disability or Retirement, the Restricted Stock Units shall immediately become
vested as to the number of units.
(b) TERMINATION FOR CAUSE. Unless otherwise defined in a written
employment or termination agreement between the Grantee and the Company,
termination for Cause shall mean termination by the Company where such
termination results from (i) criminal dishonesty, (ii) deliberate and continual
refusal to perform employment duties on substantially a full-time basis, (iii)
deliberate and continual refusal to act in accordance with any specific lawful
instructions of a majority of the Board of Directors of the Company, or (iv)
deliberate misconduct which could be materially damaging to the Company without
reasonable good faith belief by the Grantee that such conduct was in the best
interests of the Company.
(c) TERMINATION FOR GOOD REASON. Unless otherwise defined in a
written employment or termination agreement between the Grantee and the Company,
termination for Good Reason shall mean termination by Grantee where such
termination results from (i) the total amount of Grantee's base salary and
targeted awards under the Long-Term Incentive Plan and the Annual Incentive
Award Plan (or successors thereto) being reduced at any time without the
Grantee's consent, (ii) Grantee's job responsibilities being substantially
reduced in importance without the Grantee's consent, or (iii) Grantee being
required as a condition of continued employment to relocate more than 35 miles
from the Grantee's place of employment as of the date of a Change of Control
without the Grantee's consent.
(d) "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 the vesting of the Restricted Stock Units is
accelerated and shall become fully vested as to the number of units.
(e) "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.
(f) "Permanent Disability" as used herein means to have a
"Permanent Disability" as defined in the Nabisco, Inc. Long-Term Disability
Plan, applicable to senior executive officers as in effect on such dates hereof,
or if the Board of Directors or any committee thereof so determines;
6. DIVIDEND EQUIVALENT PAYMENTS. At all times prior to the date
restrictions lapses, 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.
7. DEFERRAL. If the Grantee is to receive a cash payment, the Grantee
may elect to defer payment of vested Restricted Stock Units in accordance with
procedures established by the Committee; provided, that the Grantee may not
defer payment in respect of Restricted Stock Units 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. The Payment
Amount will be based upon the fair market value of an equivalent number of
shares of Common Stock at the Vesting Date. During the period between the
Vesting Date and the actual payment date, such
<PAGE>
funds will be invested in accordance with the Grantee's investment elections
under the Nabisco Deferred Compensation Plan.
8. NO RIGHT TO EMPLOYMENT. The execution and delivery of this
Agreement and the granting of Restricted Stock Units 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.
9. 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.
10. 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 Units 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 Units 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.
(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 Units subject to this Agreement after such
an event, and in place of the Restricted Stock Units 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 Units 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.
11. TAXES. Any taxes required by federal, state or local laws to be
withheld by the Company on the Grant of Restricted Stock Units or delivery of
Common Stock or any other cash 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. Subject to Section 3, if settled in Common Stock, the
Grantee hereby authorizes the conversion to cash by the Company of a sufficient
amount of Common Stock to satisfy withholding prior to the delivery of Common
Stock; or if Restricted Stock Units are settled in cash, the Grantee hereby
authorizes the Company to withhold or offset a sufficient amount from any
payment hereunder to satisfy any such tax withholding obligation.
<PAGE>
12. 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 most recent address as shown on the
records of the Company.
13. 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 respect to the Plan or
the Agreement. The Committee may delegate its interpretive authority to an
officer or officers of the Company.
14. NON-COMPETITION.
Provided that the Grantee is not party to a written employment or
termination agreement with the Company containing restrictions on Grantee's
eligibility to compete with the Company following Grantee's Termination of
Employment, in consideration for the Restricted Stock Units Grantee agrees that:
(a) For the twelve (12) month period commencing on the date of
Grantee's Termination of Employment, Grantee shall not engage in Competitive
Employment. As used herein, "Competitive Employment" means providing any person,
company or other entity with any services, whether as a consultant, employee,
investor or otherwise, regarding any business, product, service or other matter
which: (i) is substantially similar to or competes with any business, product,
service or other matter regarding which Grantee worked for the Company, or any
of its affiliates, during the two (2) years prior to Grantee's Termination of
Employment; or (ii) concerns subject matters about which Grantee gained
proprietary information of the Company, or its affiliates, during the two (2)
year period prior to Grantee's Termination of Employment.
(b) If the Company reasonably determines that Grantee has
materially violated any of Grantee's obligations under subparagraph (a), above,
then, in addition to any other remedies at law or in equity it may have: (i) the
Company shall have the right to cease payment of any compensation, salary
continuation, benefits, perquisites and any other remuneration which is due or
may become due Grantee under any employment, salary continuation or similar
agreement between the Company, or any of its affiliates, and Grantee; and (ii)
all past, present and future stock option grants awarded Grantee under the Plan,
including grants which according to their terms are vested, shall terminate,
effective the date on which such violation began (the "Violation Date"). The
Company may demand the return of any gain realized by Grantee from the exercise
of any such grants by Grantee at any time on or after the date sixty (60) days
prior to the Violation Date. If after such demand Grantee fails to return said
amounts, Grantee acknowledges that the Company has the right to offset against
said amounts any amounts, including compensation, owed Grantee by the Company or
to commence judicial proceedings against Grantee to recover said amounts and any
attorneys' fees and costs.
<PAGE>
(c) Grantee acknowledges and agrees that: (i) the restrictions
contained in this Section 14 are necessary to protect the legitimate interests
of the Company and impose no undue hardship on Grantee; (ii) the violation or
threatened violation of this Section 14 will result in irreparable injury to the
Company and Grantee consents to the issuance of any restraining order,
preliminary restraining order or injunction, without bond, which arises from
conduct by Grantee in violation of this Section 14, and the existence of any
claim Grantee may have against the Company will not constitute a defense
thereto; (iii) if the Company prevails in any suit or proceeding to enforce its
rights under this Section 14, Grantee shall indemnify the Company for all
expenses incurred by the Company, including reasonable attorneys' fees; and (iv)
no one employed by or representing the Company has any authority to make oral
statements which modify, waive or discharge in any manner any provision of this
Section 14.
15. 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.
<PAGE>
EXH 10.3
NABISCO HOLDINGS CORP.
1994 LONG TERM INCENTIVE PLAN
STOCK OPTION AGREEMENT
______________________
DATE OF GRANT: _____________________
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 $________ 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 established by the
<PAGE>
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 in Section 2(a),
if more than 80% of the aggregate value of all classes of Company common stock
is owned, directly or indirectly, by Nabisco Group Holdings 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.
ANNUAL GRANT VESTS EACH JANUARY 1, FOLLOWING THE DATE OF GRANT AND THEREAFTER ON
EACH JANUARY 1:
(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;
(d) This Option shall not be exercised prior to 36 months after the
Date of Grant. NOTWITHSTANDING THE FOREGOING, IN THE EVENT THIS OPTION IS
SCHEDULED TO EXPIRE OR
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TERMINATE PURSUANT TO SECTION 4(b), THEN THE OPTIONEE SHALL HAVE THE RIGHT TO
EXERCISE THE OPTION (TO THE EXTENT THEN VESTED) AT ANY TIME PRIOR TO ITS
EXPIRATION.
OR FOR NEW HIRES, USE THIS SECTION INSTEAD:
VESTING SCHEDULE: VEST 33% ON EACH ANNIVERSARY FOLLOWING THE DATE OF GRANT:
(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 anniversary
of the Date of Grant for 33% of the number of shares of Common Stock subject to
this Option. Thereafter, on each anniversary of the Date of Grant 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. NOTWITHSTANDING THE FOREGOING, IN THE EVENT THIS OPTION IS
SCHEDULED TO EXPIRE OR TERMINATE PURSUANT TO SECTION 4(b), THEN THE OPTIONEE
SHALL HAVE THE RIGHT TO EXERCISE THE OPTION (TO THE EXTENT THEN VESTED) AT ANY
TIME PRIOR TO ITS EXPIRATION.
3. 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 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) Unless otherwise defined in a written employment or termination
agreement between the Optionee and the Company, Termination for Cause shall mean
Termination by the Company where such termination results from: (a) criminal
dishonesty, (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 a majority of the Board of
Directors of the Company, 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.
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(c) Unless otherwise defined in a written employment or termination
agreement between the Optionee and the Company, termination for Good Reason
shall mean termination by Optionee where such termination results from (i) the
total amount of Optionee's base salary and targeted awards under the Long-Term
Incentive Plan and the Annual Incentive Award Plan (or successors thereto) being
reduced at any time without the Optionee's consent, (ii) Optionee's job
responsibilities being substantially reduced in importance without the
Optionee's consent, or (iii) Optionee being required as a condition of continued
employment to relocate more than 35 miles from the Optionee's place of
employment as of the date of a Change of Control without the Optionee's consent.
(d) The Optionee shall be deemed to have a "Permanent Disability" if
the Optionee totally and permanently disabled (as defined in 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.
(e) "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 vested as to all
shares.
(f) "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) The first anniversary of the date of the Optionee's Termination of
Employment for any reason other than the Optionee's death, Permanent Disability,
Retirement, termination for Good Reason or involuntary Termination of Employment
by the Company without Cause; or
(c) Immediately upon the Optionee's Termination of Employment for
Cause.
5. TRANSFERABILITY. Other than as specifically provided in the Plan
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.
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6. NO RIGHT TO EMPLOYMENT. The execution and delivery of this
agreement and the granting of the Option 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 Optionee for any specific period
or in any particular capacity shall not prevent the Company or its subsidiaries
from terminating the Optionee's employment at any time with or without Cause.
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 most recent address as shown on the
records of the Company.
11. 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.
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12. NON-COMPETITION.
Provided that the Optionee is not party to a written employment or
termination agreement with the Company containing restrictions on Optionee's
eligibility to compete with the Company following Optionee's Termination of
Employment, in consideration for the Option Optionee agrees that:
(a) For the twelve (12) month period commencing on the date of
Optionee's Termination of Employment, Optionee shall not engage in Competitive
Employment. As used herein, "Competitive Employment" means providing any person,
company or other entity with any services, whether as a consultant, employee,
investor or otherwise, regarding any business, product, service or other matter
which: (i) is substantially similar to or competes with any business, product,
service or other matter regarding which Optionee worked for the Company, or any
of its affiliates, during the two (2) years prior to Optionee's Termination of
Employment; or (ii) concerns subject matters about which Optionee gained
proprietary information of the Company, or its affiliates, during the two (2)
year period prior to Optionee's Termination of Employment.
(b) If the Company reasonably determines that Optionee has
materially violated any of Optionee's obligations under subparagraph (a), above,
then, in addition to any other remedies at law or in equity it may have: (i) the
Company shall have the right to cease payment of any compensation, salary
continuation, benefits, perquisites and any other remuneration which is due or
may become due Optionee under any employment, salary continuation or similar
agreement between the Company, or any of its affiliates, and Optionee; and (ii)
all past, present and future stock option grants awarded Optionee under the
Plan, including grants which according to their terms are vested, shall
terminate, effective the date on which such violation began (the "Violation
Date"). The Company may demand the return of any gain realized by Optionee from
the exercise of any such grants by Optionee at any time on or after the date
sixty (60) days prior to the Violation Date. If after such demand Optionee fails
to return said amounts, Optionee acknowledges that the Company has the right to
offset against said amounts any amounts, including compensation, owed Optionee
by the Company or to commence judicial proceedings against Optionee to recover
said amounts and any attorneys' fees and costs.
(c) Optionee acknowledges and agrees that: (i) the restrictions
contained in this Section 12 are necessary to protect the legitimate interests
of the Company and impose no undue hardship on Optionee; (ii) the violation or
threatened violation of this Section 12 will result in irreparable injury to the
Company and Optionee consents to the issuance of any restraining order,
preliminary restraining order or injunction, without bond, which arises from
conduct by Optionee in violation of this Section 12, and the existence of any
claim Optionee may have against the Company will not constitute a defense
thereto; (iii) if the Company prevails in any suit or proceeding to enforce its
rights under this Section 12, Optionee shall indemnify the Company for all
expenses incurred by the Company, including reasonable attorneys' fees; and (iv)
no one employed by or representing the Company has any authority to make oral
statements which modify, waive or discharge in any manner any provision of this
Section 12.
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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:
______________________________________
______________________________________
______________________________________
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Exhibit 10.4
EMPLOYMENT AGREEMENT
(amended and restated as of April 1, 2000)
This Amended and Restated Employment Agreement by and among NABISCO
HOLDINGS CORP., a Delaware Corporation ("NHC"), NABISCO, INC., a New Jersey
Corporation ("NA", together with NHC, the "Company"), NABISCO GROUP HOLDINGS
CORP. ("NGH") and JAMES M. KILTS ("Executive"), is effective as of April 1,
2000.
RECITALS
WHEREAS, in order to induce Executive to continue to serve as President
and Chief Executive Officer of the Company and of NGH and as a member of the
Board of Directors of the Company and of NGH, the Company, NGH and Executive
agree that the Employment Agreement between the Company and Executive dated as
of November 20, 1997 (the "Prior Agreement") should be amended and restated.
NOW, THEREFORE, in consideration of mutual incentives, it is hereby agreed
by and between the Company, NGH and Executive to amend and restate the Prior
Agreement, effective on the date first above written, as follows:
1. EMPLOYMENT.
1.1. Subject to the terms and conditions of this Agreement, the Company
agrees to employ Executive during the Term of Employment, as defined in Section
2 below. It is also the intention of the parties that Executive shall serve as
President and Chief Executive Officer of the Company and of NGH, and as a member
of the Boards of Directors of the Company and of NGH throughout the Term of
Employment (for purposes of this Agreement, the positions and titles associated
with "the Company" shall mean the same position and titles at each of NHC and
NA). Executive's principal office shall be at the principal executive offices of
the Company in East Hanover and Parsippany, New Jersey. Executive shall perform
his duties hereunder subject only to the direction and control of the Board of
Directors of the Company and NGH and the Chairman of each of the Boards of
Directors of the Company and NGH (the "Chairman").
1.2. The Company shall, during the term of this Agreement, use its best
efforts to insure the election and retention of Executive as President and Chief
Executive Officer of the Company and of NGH and as a member of the Boards of
Directors of the Company and of NGH.
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1.3. Subject to the terms and conditions of this Agreement, Executive
hereby (i) agrees to continue employment with the Company and agrees to continue
to serve as President and Chief Executive Officer of the Company and of NGH and
shall devote his full working time and efforts to the best of his ability,
experience and talent, to the performance of the services, duties and
responsibilities in connection therewith; and (ii) agrees to continue to serve
as a member of the Boards of Directors of the Company and of NGH. Executive's
authority and duties shall include the exclusive right to hire, discharge and
fix the terms and conditions of employment of all employees of the Company and
its subsidiaries, subject only to the approval of the Chairman with respect to
senior level management employees. Nothing in this Agreement shall preclude
Executive from engaging, consistent with his duties and responsibilities
hereunder, in charitable and community affairs, from managing his personal
investments, from continuing to serve on the boards of directors of any
Affiliate (as hereinafter defined) of the Company or NGH or from serving,
subject to approval of the Board of Directors of the Company, as a member of
boards of directors of other companies.
1.4. For purposes of this Agreement, (a) "Affiliate" means, with respect
to the Company or NGH, any person or entity directly or indirectly controlling,
controlled by, or under common control with the Company or NGH, as the case may
be,
(b) "Subsidiary" of the Company or NGH means any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by the Company or NGH, as the case
may be, and
(c) the term "available to Senior Executive Officers" shall mean that
something is available to the senior executive officers of the Company or NGH or
generally available to all chief executive officers of the major operating
companies of the Company or NGH; PROVIDED, HOWEVER, such term shall not include
the Chairman of NGH or NHC.
2. TERM OF EMPLOYMENT.
Executive's term of employment under this Agreement shall continue in
accordance with the terms hereof until a termination of Executive's employment.
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3. COMPENSATION.
3.1. SALARY. The Company shall pay Executive a base salary ("Base
Salary") at the rate of $1,000,000 per annum. Base Salary shall be payable in
accordance with the ordinary payroll practices of the Company. Executive's rate
of Base Salary shall be reviewed for increase by the Chairman at least annually
and by the Boards of Directors of the Company and Holdings, if necessary, and if
any increases are approved, such higher amount shall constitute Executive's Base
Salary.
3.2. ANNUAL BONUS.
(a) In addition to his Base Salary, subject to Section 3.2(b) below,
Executive shall be entitled, while he remains employed hereunder, to receive an
annual bonus opportunity under NHC's Annual Incentive Award Plan or any
successor thereto (the "NHC AIAP"), in accordance with the terms thereof.
Executive's annual bonus will be determined in accordance with the NHC AIAP
available to Senior Executive Officers; the NHC AIAP, in any event, will provide
an annual target bonus opportunity to Executive no less favorable than one
hundred percent (100%) of his Base Salary, subject to the attainment of the
performance goals established from time to time under the NHC AIAP.
(b) Executive may be granted Performance Units under NHC's 1994 Long
Term Incentive Plan or any successor thereto (the "NHC LTIP") in lieu of all or
a portion of a cash bonus opportunity under the NHC AIAP pursuant to Section
3.2(a), provided that with respect to any year the aggregate annual target bonus
opportunity under the NHC AIAP and the "Initial Grant Value" of all such
Performance Units granted in such year shall not be less than the annual target
bonus opportunity under Section 3.2(a) (the aggregate annual target bonus
opportunity under Section 3.2(a) and/or 3.2(b), as applicable, is hereinafter
referred to as the "Target Bonus Opportunity"). The term "Initial Grant Value"
shall have the meaning customarily given to it in Performance Unit Agreements
awarded to Senior Executive Officers of the Company under the NHC LTIP prior to
the date hereof.
3.3. COMPENSATION PLANS AND PROGRAMS. Executive shall participate in
any compensation plan or program, whether annual or long term, maintained by the
Company or NGH on terms no less favorable than those available to Senior
Executive Officers eligible to participate therein.
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4. EMPLOYEE BENEFITS.
4.1. EMPLOYEE BENEFIT PROGRAMS, PLANS AND PRACTICES. The Company shall
provide Executive during the term of his employment hereunder with coverage
under the employee benefit programs, plans and practices (commensurate with his
position in the Company and to the extent possible under any employee benefit
plan), if any, in accordance with the terms thereof, which the Company makes
available to Senior Executive Officers from time to time.
4.2. VACATION AND FRINGE BENEFITS. Executive shall be entitled to the
number of vacation days customarily available to Senior Executive Officers. In
addition, Executive shall be entitled to the perquisites and fringe benefits
normally made available to Senior Executive Officers by the Company.
4.3. DIRECTORS AND OFFICERS LIABILITY COVERAGE, INDEMNIFICATION.
(a) Executive shall be entitled to the same level of coverage (as
determined from time to time by the Board of Directors of the Company) under
such directors' and officers' liability insurance policies, if any, or other
arrangements as are available to Senior Executive Officers and directors of the
Company, to the fullest extent permitted by the existing By-laws of the Company.
(b) The Company agrees that if Executive is made a party, or is
threatened to be made a party, to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of the
fact that he is or was a director, officer or employee of the Company or NGH or
is or was serving at the request of the Company or NGH as a director, officer,
member, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, Executive shall be indemnified and held harmless by the Company and NGH
to the fullest extent legally permitted or authorized by the Company's or NGH's
certificate of incorporation or bylaws or resolutions of the Company's or NGH's
Board of Directors, as the case may be, or, if greater, by the applicable state
laws, against all cost, expense, liability and loss (including, without
limitation, attorney's fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
the Executive in connection therewith, and such indemnification shall continue
as to Executive even if he has ceased to be a director, member, employee or
agent of the Company or NGH or other entity and shall inure to the benefit of
Executive's heirs, executors and administrators. The Company or NGH, as the case
may be, shall advance to Executive all reasonable costs and expenses incurred by
him in connection with a Proceeding within 20 days after receipt by the Company
or NGH, as the case may be, of a written request for such advance. Such request
shall include an
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undertaking by Executive to repay the amount of such advance if it shall
ultimately be determined that he is not entitled to be indemnified against such
costs and expenses.
(c) The Company also agrees that if Executive is made a party, or is
threatened to be made a party, to any action, suit or proceeding by reason of
the termination of his employment with his prior employer or his accepting
employment with the Company, he shall be indemnified and held harmless by the
Company against all costs, expenses, liabilities and losses (including, without
limitation, attorney's fees) reasonably incurred or suffered by Executive in
connection therewith provided; however, that Executive provides full and
substantial cooperation in the defense of any such action.
(d) The Company also agrees to indemnify Executive against any
liabilities, costs or expenses, including attorney's fees, if his prior employer
takes legal action against him in connection with his employment at the Company;
provided, however, that Executive provides full and substantial cooperation in
the defense of any such action. To the extent that Executive's prior employer
does not comply with its obligations to provide a SERP benefit of $300,000 per
year because of an assertion that Executive has violated a non-competition
covenant, the Company shall provide Executive with 90% of the equivalent
payments and benefits; provided, however, that Executive shall take any and all
necessary or appropriate action to recover such amounts and further provided
that Executive will fully cooperate with the Company in any action to recover
said amounts. This Section 4.3 shall survive the termination of the Agreement
for any reason.
4.4. LIFE INSURANCE. In addition to any life insurance coverage which
Executive has under programs of the Company, except to the extent superseded by
the Travelers Agreement and the Hancock Agreement (each as defined in Section 19
hereof) the Company shall, at Company cost, provide Executive with term life
insurance coverage in the amount of $5,000,000 on the Executive's life, and term
life insurance coverage in the amount of $5,000,000 on the life of the
Executive's spouse. The policies shall be owned by the Kilts DYN Preservation
Trust dated December 21, 1999 (the "Trust") and Bessemer Trust Company (the
"Owner"). The Company shall hold Executive harmless from taxes, if any, incurred
as a result of premiums paid on such life insurance. As long as Executive (i) is
actively employed by the Company, (ii) retires pursuant to Section 5(d) hereof,
(iii) is terminated by the Company other than for Cause (as defined in Section
6.4(a) hereof) or (iv) terminates for Good Reason (as defined in Section 6.1(b)
hereof), the Company shall pay all premiums due for such insurance until the
executive attains age 65.
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4.5. RETIREE MEDICAL. Upon retirement under Section 5 hereof on or
after age 55, Executive shall be eligible for retiree medical coverage based on
his actual number of years of service with a minimum of 10 years credited
service. The benefit provided hereunder shall be offset by any retiree medical
benefits provided to Executive by his prior employers.
5. SUPPLEMENTAL PENSION.
(a) Executive shall participate in (i) the Retirement Plan for
Employees of Nabisco Holdings Corp. ("PEP"), (ii) the Nabisco Holdings Corp.
Supplemental Benefits Plan ("SBP") and (iii) the Nabisco Holdings Corp.
Additional Benefits Plan ("ABP") (collectively, the "Plans") in accordance with
the terms of the Plans.
(b) Upon completion of five years of active service with the Company or
upon Executive's termination at any time other than (i) by the Company for Cause
or (ii) by Executive without Good Reason, Executive shall be entitled to a
minimum annual pension (the "Minimum Pension") equal to $200,000, (determined on
the basis of a single-life annuity beginning at age 60, determined using the
actuarial assumptions under the PEP). If and to the extent that the benefits
payable under the terms of the Plans are less than the Minimum Pension,
Executive, at the later of (i) Executive's Normal Retirement Age (as defined in
subsection (d) hereof) or (ii) termination of Executive's employment other than
for (A) by the Company for Cause or (B) by Executive without Good Reason, shall
receive a supplemental pension (the "Supplemental Pension") equal to the
difference between the Minimum Pension and the pension payable under the terms
of the Plans. The Supplemental Pension shall be paid from the general assets of
the Company (subject to Section 5(c) hereof) and shall be paid in the form of a
single life annuity. If Executive dies after completing five years of active
service with the Company, but prior to the commencement of his Supplemental
Pension payments, Executive's beneficiary (as defined in Section 6.3 hereof)
shall receive a benefit equal to the amount the beneficiary would have received
in respect of the Supplemental Pension had Executive retired and been entitled
to receive Supplemental Pension payments commencing immediately on the day prior
to his death and elected to receive the Supplemental Pension in the form of a
joint and 50% survivor annuity.
(c) The Supplemental Benefit will be pre-funded only if similar
retirement benefits provided to any other executives of the Company are
pre-funded.
(d) Executive's "Normal Retirement Age" shall be the first day of the
month next following Executive's 60th birthday, unless Executive is permitted to
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retire earlier with the consent of the Compensation Committee of the Board of
Directors of the Company; provided, however, Executive's Normal Retirement Age
shall in any event not occur until the end of any period of Compensation
Continuance. Notwithstanding the foregoing, if termination of Executive's
employment is other than for (i) by the Company for Cause or (ii) by Executive
without Good Reason and is following a Change of Control (as defined in Section
6.1(d) hereof), Executive's "Normal Retirement Age" shall be deemed to be the
date of such termination. Executive's voluntary termination of employment
without Good Reason on or after his Normal Retirement Age shall be a termination
of employment, but shall not be an "Involuntary Termination" (as defined in
Section 6.1 (a) hereof) entitling Executive to Compensation Continuance (as
defined in Section 6.1(a) hereof) under this Agreement.
6. TERMINATION OF EMPLOYMENT.
6.1. TERMINATION NOT FOR CAUSE OR FOR GOOD REASON. (a) The Company may
terminate Executive's employment at any time for any reason, and as provided in
Section 6.4, Executive may terminate his employment at any time for any reason.
If Executive's employment is terminated by the Company other than for Cause or
if Executive terminates his employment for Good Reason (collectively, an
"Involuntary Termination"), in either case prior to, or after the second
anniversary of, a Change of Control (hereafter, the 24-month period beginning on
a Change of Control, a "Window Period"), Executive shall, subject to Section
6.1(e) hereof and the execution of a letter containing a waiver and release, in
form and substance reasonably acceptable to Executive and the Company, releasing
the Company and NGH from all claims and liabilities relating to such Termination
and the Company's employment of Executive, become entitled to receive
compensation ("Compensation Continuance") as provided in this Section 6.1 from
the date of such Termination until the third anniversary (the "Compensation
Period") of the date of such Involuntary Termination, and in lieu of any other
severance, in an amount in cash equal to two (2) year's Full Pay, calculated as
described below, payable in equal monthly installments over the Compensation
Period, each installment representing 1/18th of one year's Full Pay (as defined
below). One year's "Full Pay" is the sum of (i) plus (ii), where (i) is the
Executive's highest annual rate of Base Salary in effect during the twelve (12)
month period prior to the Executive's Involuntary Termination and (ii) is the
Target Bonus Opportunity for the calendar year in which the Executive's
employment terminated, or, if greater, the amount of the actual award for the
calendar year immediately preceding the year of such Termination; provided,
however, in the event that Executive's termination of employment with the
Company occurs before he has foregone the entire $3,030,000 amount contemplated
in Sections 1a. and 1b. of the Amended Agreement to Forego Compensation,
effective as of April 6, 2000 between Executive and NA, as
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subsequently amended from time to time (the "Relinquishment Agreement"), each
monthly installment payable under this Section 6.1(a) shall be reduced by 1/36th
of the difference between (x) $3,030,000 and (y) the amount actually foregone by
the Executive under Sections 1a. and 1b. of the Relinquishment Agreement prior
to his termination of employment with the Company.
In addition, Executive shall be entitled to receive as Compensation
Continuance during the Compensation Period under this Section 6.1(a):
(iii) all unpaid amounts, as of the date of Executive's
Involuntary Termination, in respect of any bonus, for any fiscal year
ending before such termination which would have been payable had
Executive remained in employment until the date such amount would
otherwise have been paid, and an amount equal to the Vested Target
Bonus Opportunity (as defined in Exhibit A);
(iv) any payment deferred by Executive, together with any
applicable interest or other accruals thereon;
(v) full coverage under the Company's employee benefit
programs, plans and practices, including continued crediting of service
under the Company pension plans, described in Section 4.1 hereof (in
the case of any plan meeting the requirements of Section 401 (a) of the
Internal Revenue Code of 1986, as amended (the "Code"), only to the
extent consistent with such requirements) for the Compensation Period,
or the Company will provide for equivalent coverage (on an equivalent
tax basis); PROVIDED, HOWEVER, that if, in connection with an
Involuntary Termination outside a Window Period, Executive is provided
with benefit plan or executive perquisite program coverage other than
retirement plan coverage by an unaffiliated successor employer, any
such coverage by the Company shall be reduced, with respect to amounts
payable hereunder, by the benefits actually provided to Executive under
any similar plan or coverage by any unaffiliated successor employer;
(vi) full vesting of any outstanding stock options granted
pursuant to the Prior Agreement or otherwise outstanding under the NHC
LTIP or NGH's Long-Term Incentive Plan or successor thereto (the "NGH
LTIP", and together with the NHC LTIP, the "LTIPs"), with the continued
right to exercise such stock options for the remainder of their
respective terms;
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(vii) lapse of restrictions and deemed satisfaction of any
performance objectives on or applicable to any outstanding restricted
or contingent stock awards or units granted pursuant to the Prior
Agreement or the LTIPs;
(viii) such rights to payments under applicable plans or
programs as may be appropriate to the terms of such plans or programs;
(ix) for the first six (6) months after termination, the
reasonable cost of one secretary and a fully functional office, such
office location to be determined by Executive as long as the office is
not to be located on the premises of the Company; and
(x) outplacement counseling services at Company expense;
provided, however, this expense shall not exceed 18% of the amount of
Compensation Continuance for any calendar year. This counseling shall
include, but is not limited to, skill assessment, job market analysis,
resume preparation, interviewing skills, job search techniques and
negotiating.
If, subsequent to an Involuntary Termination, Executive shall die or
suffer Permanent Disability (as defined in Section 6.2 hereof), such death or
Permanent Disability shall not diminish the rights of Executive, his
beneficiaries or successors to the payments and benefits under this Section
6.1(a) or Section 6.5(a) hereof, less any amounts paid under 6.2 (other than as
required under any applicable subsections of this Section 6.1(a)).
(b) For purposes of this Agreement, "Good Reason" shall mean the
occurrence, without Executive's prior written consent, of one or more of the
following events:
(i) the aggregate amount of Executive's Base Salary from the
Company and ordinary course of business annual award opportunities
under the NHC AIAP or NGH's Annual Incentive Award Plan or any
successor thereto (the "NGH AIAP", and together with the NHC AIAP, the
"AIAPs") and/or either LTIP is at any time reduced without the
Executive's consent; provided, however, nothing herein shall be
construed to guarantee the Executive's targeted bonus or other awards
if performance is below target;
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(ii) the termination or material reduction of any employee
benefit or perquisite enjoyed by him (other than, outside a Window
Period, as part of an across-the-board reduction applicable to all
executive officers of the Company);
(iii) The failure to elect or reelect Executive to any of the
positions described in Section 1 above or removal of him from any such
position;
(iv) Subject to Section 6.1 (c) hereof, Executive's job
responsibilities as President and Chief Executive Officer of the
Company or NGH are substantially reduced in importance without the
Executive's consent or he is assigned duties which are materially
inconsistent with his duties or which materially impair his ability to
function as the President and Chief Executive Officer of the Company or
of NGH;
(v) The failure to continue Executive's participation in any
incentive compensation plan unless a plan providing a substantially
similar opportunity is substituted;
(vi) Executive, without his consent, is at any time required
as a condition of continued employment with the Company to relocate a
distance of more than 35 miles from the current headquarters;
(vii) Following a Change of Control or the divestiture of NHC
or NA by NGH or NHC, as the case may be, the Chairman of NHC is anyone
other than the Chairman of NGH (immediately prior to such Change of
Control or divestiture);
(viii) The failure of the Company to obtain the assumption in
writing or its obligation to perform this Agreement by any successor to
all or substantially all of the assets of the Company within 45 days
after a merger, consolidation, sale or similar transaction; or
(ix) Unilateral termination of the Agreement by the Company or
any material breach by the Company of any provision of this Agreement
or any agreements entered into pursuant thereto.
Unless the Executive provides written notification of his non-consent
to the Company to any of the events described above within 180 days after his
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learning of the occurrence of such event, the Executive shall be deemed to have
consented to the occurrence of such event, or events, and no "Good Reason" shall
continue to exist. If the Executive provides written notice of his non-consent
to any of the events above within 180 days after the occurrence of such event,
or events, and if the Company does not cure such event, or events, within 30
days of such written notice, he may thereupon terminate his employment for Good
Reason ninety (90) days after receipt of written notice of such termination by
the Company.
(c) In the event of Executive's promotion with his consent, no "Good
Reason" under Section 6.1(b) shall be deemed to have occurred, and the parties
to this Agreement agree to amend and restate the Agreement to reflect the change
in status resulting from the promotion. If, however, Executive refuses a
promotion, the provisions of Section 6.1 (b) shall continue to be applicable.
(d) As used herein, a "Change of Control" shall occur on the date upon
which one of the following events occurs (except as otherwise provided in
paragraph (iii) below):
(i) Any individual, corporation, partnership, group, associate
or other entity or "person" as such term is defined in Section 14(d) of
the Securities Exchange Act of 1934 (the "Exchange Act"), other than
NHC, NGH or any of their Subsidiaries, or any employee benefit plan(s)
sponsored by NHC, NGH or any of their Subsidiaries, is or becomes the
"beneficial owner" (as defined in Rule 13D-3 under the Exchange Act),
directly or indirectly, of 30% or more of the combined voting power of
NHC or NGH outstanding securities ordinarily having the right to vote
at elections of directors;
(ii) Individuals who constitute the Board of either NHC or NGH
on January 1, 2000 (each such Board the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board of NHC or
NGH, as the case may be, provided that any person becoming a director
subsequent to such date hereof whose election, or nomination for
election by NHC or NGH shareholders, as the case may be, was approved
by a vote of at least three-quarters of the directors comprising that
Incumbent Board (either by a specific vote or by approval of the proxy
statement of NHC or NGH, as the case may be, in which such person is
named a nominee of NHC or NGH, as the case may be, but excluding for
this purpose any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election contest
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(as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of an individual, corporation,
partnership, group, associate or other entity or "person" other than
the NHC or NGH Board, as the case may be, shall be, for purposes of
this paragraph (ii), considered as though such person were a member of
the Incumbent Board.
(iii) The approval by the shareholders of NHC or NGH, as the
case may be, of a plan or agreement providing (A) for a merger or
consolidation of NHC or NGH, as the case may be, other than with a
wholly-owned subsidiary or with NGH, NHC or any of their subsidiaries,
and other than a merger or consolidation that would result in the
voting securities of NHC or NGH, as the case may be, outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the
voting securities of NHC or NGH, as the case may be, of such surviving
entity outstanding immediately after such merger or consolidation or
(B) for a sale, exchange or other disposition of all or substantially
all of the assets of NHC or NGH. If any of the events enumerated in
this paragraph (iii) occurs, the NHC Board shall determine the
effective date of the Change of Control resulting therefrom.
(e)(i) During any Compensation Period beginning outside a Window
Period, the Executive shall provide consulting services to the Company on a
reasonable basis, subject to appropriate notice and reimbursement of all travel
and other expenses. During the first six (6) months of the Compensation Period
the Executive may be required by the Company to provide up to fifteen (15) days
of consultation during normal business hours and business days, subject to his
other reasonable business and personal commitments. When and if the Executive
becomes employed on a full-time basis, either with another company or on a
self-employed basis, his obligation to provide consulting services shall be
limited by the requirements of such employment, subject to his other reasonable
business and personal commitments, and under appropriate circumstances, may be
restricted to telephone conference. Continuing failure to provide such
consulting services shall result in the termination of Compensation Continuance.
(ii) If the Executive's Compensation Continuance is terminated pursuant
to this Section 6.1(e), he may, within fifteen (15) days after mailing of notice
thereof to him, submit to the Chairman a written objection to such termination.
In such event, the Compensation Committee of the Board of
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Directors of the Company at or before its next regularly scheduled meeting must
determine by majority vote that termination of Compensation Continuance was
appropriate or, failing that, Compensation Continuance must be reinstated with
full retroactive effect.
6.2. PERMANENT DISABILITY. The event of the Executive becoming eligible
for benefits under the Company's Long Term Disability Plan is not a termination
under Section 6.1(a) or Section 6.5(a) hereof entitling Executive to
Compensation Continuance under this Agreement. If, however, Executive becomes
eligible for benefits under the Company's Long Term Disability Plan during his
Compensation Period, the amount of Compensation Continuance shall be reduced
during the Compensation Period by the amount of disability benefits payable to
the Executive. All other provisions of this Agreement shall remain in effect
notwithstanding the Executive's disability.
6.3. DEATH. In the event of Executive's death while actively employed,
the Company's obligations under this Agreement shall cease except for the
obligations under any program of the Company providing for a death benefit. In
the event of Executive's death subsequent to commencement of his Compensation
Period hereunder, the balance of Compensation Continuance will be paid to his
beneficiary in a lump sum. "Beneficiary" shall mean the Executive's designated
beneficiary under his Executive Program life insurance.
6.4. VOLUNTARY RESIGNATION; DISCHARGE FOR CAUSE; NOTICE AND DATE OF
TERMINATION. (a) If Executive resigns voluntarily, other than for Good Reason or
Permanent Disability, or the Company terminates the employment of Executive at
any time for Cause, the Company's obligations under this Agreement to make any
further payments to Executive, including, but not limited to, the benefits under
Section 3 or Section 6.1(a), shall thereupon cease and terminate except with
respect to any previously deferred amounts, or accrued but unpaid salary.
"Cause" shall mean: (a) Executive is convicted of a felony involving moral
turpitude; or (b) Executive is guilty of willful gross neglect or willful gross
misconduct in carrying out his duties under this Agreement, which results, or
reasonably likely may result, in either case, in material economic harm to the
Company, unless Executive believed in good faith that such act or nonact was in
the best interests of the Company.
(b) For purposes of this Agreement, a "Notice of Termination for Cause"
shall mean delivery to Executive of a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the membership of the NHC
Board (or a committee thereof) (which, for these purposes, will be hereinafter
referred to as the "NHC Board") at a meeting thereof called and held for the
purpose (after reasonable notice to the Executive, "Preliminary Notice", and
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reasonable opportunity for Executive, together with the Executive's counsel, to
be heard before the Board prior to such vote), finding that in the good faith
opinion of the Board, Executive was guilty of conduct set forth in the second
sentence of this Section 6.4(a) and specifying the particulars thereof in
detail. Upon the receipt of the Preliminary Notice, Executive shall have 14 days
in which to appear with counsel or take such action as he desires on his behalf,
and such 14-day period is hereby agreed to by the parties as a reasonable
opportunity for Executive to be heard. The Board shall no later than 30 days
after the receipt of the Preliminary Notice by Executive communicate its
findings to Executive. A failure by the Board to make its finding of Cause or to
communicate its conclusions within such 30-day period (the "Determination
Period") shall be deemed to be a finding that Executive was not guilty of the
conduct described in the second sentence of this Section 6.4(b). Any termination
of Executive's employment by Executive outside a Window Period (other than by
death or Permanent Disability) within 30 days after the date that the
Preliminary Notice has been given to Executive shall be deemed to be a
termination for Cause for purposes of the Agreement.
(c) Except as provided in Section 6.4(b) above, (i) Any purported
termination of the Executive's employment by the Company or by the Executive
shall be communicated by written Notice of Termination to the other party hereto
in accordance with Section 10 hereof. For purposes of this Agreement, (A) during
a Window Period a "Notice of Termination" by the Company shall mean, and (B)
outside a Window Period a "Notice of Termination" by the Executive shall mean, a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated.
(ii) "Date of Termination" shall mean (i) if the Executive's
employment is terminated for Disability, thirty (30) days after Notice
of Termination is given (provided that the Executive shall not have
returned to the full-time performance of the Executive's duties during
such thirty (30) day period), (ii) if the Executive's employment is
terminated by reason of the Executive's death, the date of the
Executive's death, (iii) if the Executive's employment is terminated by
reason of the Executive's Retirement, for Cause, Involuntary
Termination or for any other reason (other than Disability or death),
the date specified in the Notice of Termination or Notice of
Termination for Cause, as the case may be, (which (A) in the case of a
Notice of Termination for Cause during a Window Period shall not be
less than thirty (30) nor more than sixty (60) days from the date, if
any, in the Determination Period that the Board notifies the Executive
of its finding of Cause and (B) in the case of the
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Executive's voluntary termination (other than Executive's termination
of employment for Good Reason) shall not be less than three (3) months
after the date such Notice of Termination is given).
6.5. TERMINATION FOLLOWING A CHANGE OF CONTROL. (a) Upon the
Executive's Involuntary Termination during a Window Period, in lieu of the
benefits provided by Section 6.1(a)(i) and (ii) hereof Executive shall be
entitled to a lump sum payment within fifteen (15) business days following the
date of such Termination equal to three hundred percent (300%) of the sum of
(i), (ii) and (iii), where (i) is the greater of the Executive's annual rate of
Base Salary as in effect immediately prior to such termination or immediately
prior to the Change of Control to which such Window Period relates, (ii) is the
greater of (1) the Executive's annual Target Bonus Opportunity immediately prior
to such termination or immediately prior to such Change of Control or (2) the
greater of the aggregate amount of such actual award for the calendar year
immediately preceding the year of such termination or immediately preceding the
year of such Change of Control and (iii) is the greater of the annual perquisite
allowance applicable to the Executive under the Nabisco Flexible Perquisites
Program as in effect immediately prior to such termination or immediately prior
to such Change of Control (such greater amount, the "Allowance"); provided,
however, in the event that Executive's termination of employment with the
Company occurs before he has foregone the entire $3,030,000 amount contemplated
in Sections 1a. and 1b. of the Relinquishment Agreement, the amount payable
under this Section 6.5(a) shall be reduced by the difference between (x)
$3,030,000 and (y) the amount actually foregone by the Executive under Sections
1a. and 1b. of the Relinquishment Agreement prior to his termination of
employment with the Company.
(b) In addition to the benefits provided by Section 6.5(a) above, upon
the Executive's Involuntary Termination during a Window Period, the Executive
shall be entitled to receive Compensation Continuance as set forth in Section
6.1(a)(iii)-(x) hereof until the third anniversary of such Involuntary
Termination.
(c) (i) Anything herein to the contrary notwithstanding, in the event
that it is determined that any payment or distribution by the Company to or for
the Executive's benefit, whether paid or payable or distributed or distributable
pursuant to the terms hereof, including but not limited to Section 7, or
otherwise, other than any payment pursuant to this Section 6.5(c), (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive, within fifteen (15) business days following the determination described
in Section 6.5(c)(ii) below, an additional
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payment ("Excise Tax Adjustment Payment") in an amount such that after payment
by the Executive of all applicable Federal, state and local taxes (computed at
the maximum marginal rates and including any interest or penalties imposed with
respect to such taxes), including any Excise Tax, imposed upon the Excise Tax
Adjustment Payment, the Executive shall retain an amount of the Excise Tax
Adjustment Payment equal to the Excise Tax imposed upon the Payments.
(ii) All determinations required to be made under this Section 6.5(b),
including whether Excise Tax Adjustment Payment is required and the amount of
such Excise Tax Adjustment Payment, shall be made by DELOITTE & TOUCHE LLP, or
such other accounting firm as the Company may designate prior to a Change of
Control, which shall provide to the Company and the Executive detailed
supporting calculations within fifteen (15) business days of the date of the
Executive's termination of employment. Except as hereinafter provided, any
determination by DELOITTE & TOUCHE LLP, or such other accounting firm as the
Company may designate prior to a Change of Control, shall be binding upon the
Company and the Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination hereunder, it
is possible that (A) Excise Tax Adjustment Payments which should have been made
will not have been made by the Company ("Underpayment"), or (B) certain Payments
will have been made which should not have been made ("Overpayment"), consistent
with the calculations required to be made hereunder. In the event of an
Underpayment, the Company shall promptly determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Company to or for the Executive's benefit. In the event that the
Executive discovers that an Overpayment shall have occurred, the amount thereof
shall be promptly repaid to the Company.
6.6. NO MITIGATION; NO OFFSET. In the event of any termination of
employment under this Section 6, Executive shall be under no obligation to seek
other employment and, except to the extent provided in Section 14(c) hereof,
there shall be no offset against amounts due Executive under this Agreement on
account of any remuneration attributable to any subsequent employment that he
may obtain.
7. CERTAIN AIAP PROVISIONS. In the event of a Change of Control, the
Executive will be paid within fifteen (15) business days following the date of
such Change of Control a lump sum cash payment equal to the Executive's Vested
Target Bonus Opportunity.
8. EXPENSES. Upon submission of proper vouchers therefor, the Company
will pay or reimburse Executive for all transportation, hotel and living
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expenses incurred by Executive on business trips outside New Jersey, and for all
other business and entertainment expenses reasonably incurred by him in
connection with the business of the Company and its Affiliates during the term
of his employment hereunder, at a standard commensurate with chief executive
officers of the Company and its significant subsidiaries.
9. LEGAL FEES AND EXPENSES. (a) The Company shall reimburse Executive
for reasonable legal fees incurred in connection with executing this Agreement
and shall pay all reasonable legal fees and expenses which Executive may incur
outside a Window Period in respect of obtaining any compensation or other
benefits to which he is entitled under this Agreement.
(b) The Company shall pay to the Executive as incurred all legal and
accounting fees and expenses incurred by the Executive as a result of the
Executive's Involuntary Termination on the date of a Change of Control or during
the resulting Window Period (including all such fees and expenses, if any, in
seeking to obtain or enforce any right or benefit provided by this Agreement or
any other compensation-related plan, agreement or arrangement of the Company)
unless the Executive's claim is found by an arbitral tribunal of competent
jurisdiction to have been frivolous.
(c) The Company shall pay to the Executive as incurred all legal and
accounting fees and expenses incurred by the Executive during a Window Period as
a result of both (i) the Executive's Involuntary Termination prior to the Change
of Control to which such Window Period relates and (ii) the Company's refusal
after such Change of Control to provide any right or benefit provided by this
Agreement or any other compensation-related plan, agreement or arrangement of
the Company in respect of such Termination, including all such fees and
expenses, if any, in seeking to obtain or enforce any such right or benefit
unless the Executive's claim is found by an arbitral tribunal or court of
competent jurisdiction to have been frivolous.
10. NOTICES. All notices or communications hereunder shall be in
writing, addressed as follows:
To the Company:
Steven F. Goldstone
Chairman
Nabisco, Inc.
7 Campus Drive
Parsippany, NJ 07054
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with a copy to:
Chief Legal Officer
Nabisco, Inc.
7 Campus Drive
Parsippany, NJ 07054
Any such notice or communication shall be sent certified or registered mail,
return receipt requested, postage prepaid, addressed as above (or to such other
address as such party may designate in a notice duly delivered as described
above), and three days after the actual date of mailing shall be deemed the time
at which notice was given.
11. LIMITED WAIVER/SEPARABILITY. The waiver by any party of a violation
by Executive of any of the provisions of this Agreement, whether expressed or
implied, shall not operate or be construed as a waiver of any subsequent
violation of any such provision. In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall remain in full force
and effect to the fullest extent permitted by law.
12. ASSIGNABILITY; BINDING NATURE. This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors,
heirs (in the case of the Executive) and assigns. No rights or obligations of
the Company or NGH under this Agreement may be assigned or transferred by the
Company or NGH, as the case may be, except that such rights or obligations may
be assigned or transferred pursuant to a merger or consolidation in which the
Company or NGH, as the case may be, is not the continuing entity, or the sale or
liquidation of all or substantially all of the assets of the Company or NGH, as
the case may be, provided that the assignee or transferee is the successor to
all or substantially all of the assets of the Company or NGH, as the case may
be, and such assignee or transferee assumes the liabilities, obligations and
duties of the Company or NGH, as the case may be, , as contained in this
Agreement, either contractually or as a matter of law. The Company or NGH, as
the case may be, further agree that, in the event of a sale of assets or
liquidation as described in the preceding sentence, they shall take whatever
action it legally can in order to cause such assignee or transferee to expressly
assume the liabilities, obligations and duties of the Company hereunder.
13. AMENDMENT. The Agreement may be amended at any time only by mutual
written agreement of the parties hereto.
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14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION; COOPERATION DURING THE
COMPENSATION PERIOD; NONCOMPETITION. (a) Executive shall not, without the prior
consent of the Company and/or NGH, 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 or NGH except (1) while
employed by the Company in the business of and for the benefit of the Company or
NGH or (2) while employed by the Company when required to do so by a court of
competent jurisdiction, by any governmental agency having supervisory authority
over the business of NGH or the Company, or by any administrative body or
legislative body (including a committee thereof) with jurisdiction to order
Executive to divulge, disclose or make accessible such information or (3) while
on Compensation Continuance when required to do so as provided in Section 14(b)
hereof. For purposes of this Section 14(a), "Confidential Information" shall
mean non-public information concerning the Company's or NGH'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 Executive knows have become publicly available through a breach
of fiduciary duty or any confidentiality agreement). During active employment or
during Compensation Continuance, in accordance with normal ethical and
professional standards, Executive will refrain from taking actions or making
statements, written or oral, which defame or denigrate the goodwill or
reputation of the Company and/or NGH, their properties, products, directors,
officers, executives and employees or which constitute willful conduct under
circumstances where it is reasonable for Executive to anticipate or to expect
that the natural consequences of such conduct by Executive will be to affect
adversely the morale of other employees.
(b) During the Compensation Period, Executive agrees that (1) subject
to reasonable scheduling requirements, he will personally provide reasonable
assistance and cooperation to the Company and/or NGH in activities related to
the prosecution or defense of any pending or future lawsuits or claims involving
the Company and/or NGH, (2) he will promptly notify the Company and/or NGH if he
receives any requests from anyone other than an employee or agent of the Company
and/or NGH for information regarding the Company and/or NGH or if he becomes
aware of any potential claim or proposed litigation against the Company and/or
NGH, (3) he will refrain from providing any information related to any claim or
potential litigation against the Company and/or NGH to any non-Company or
non-NGH representatives without either the Company's or NGHs' written permission
or being required to provide information pursuant to legal process, (4) if
required by law to provide sworn testimony regarding any Company or NGH-related
matter, he will consult with and have Company or NGH-designated legal counsel
present for such testimony, (5) the Company and/or NGH
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will be responsible for the costs of such designated counsel and he will bear no
cost for same, (6) he will confine his testimony to items about which he has
knowledge rather than speculation, unless otherwise directed by legal process
and (7) he will cooperate with the Company's and/or NGHs' attorneys to assist
their efforts, especially on matters he has 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 and/or NGH will reimburse
Executive for legal expenses if he is compelled to appear in a governmental or
judicial investigation.
(c) Any Compensation Period resulting from an Involuntary Termination
outside a Window Period shall be terminated if the Executive, without the
Company's written approval, accepts a substantially similar or higher executive
position, paying a substantially comparable or greater level of cash
compensation, with any other company conducting a business which is
substantially competitive with a business conducted by the Company or an
Affiliate. Alternatively, the Company may, in its discretion, appropriately
reduce the Executive's cash compensation and employee benefits coverage for the
balance of the Compensation Period.
(d) In the event that the Executive unreasonably refuses to provide
consulting services in accordance with Section 6.1(e) or materially violates the
terms and conditions of Sections 14(a) or 14(b) above, the Company may, at its
election upon ten (10) days notice, terminate the Compensation Period,
discontinue cash compensation payments and employee benefits coverage and cancel
any outstanding stock options or other LTIP awards. The Company may also
initiate any form of legal action it may deem appropriate seeking damages or
injunctive relief with respect to any material violations of Sections 14(a),
14(b) or 14(c) above.
15. BENEFICIARIES/REFERENCES. Executive shall be entitled to select
(and change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
Executive's death, and may change such election, in either case by giving the
Company written notice thereof. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative. Any reference to the masculine gender in this Agreement
shall include, where appropriate, the feminine.
16. SURVIVORSHIP. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this
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Section are in addition to the survivorship provisions of any other section of
this Agreement.
17. GOVERNING LAW. This Agreement shall be construed, interpreted, and
governed in accordance with the laws of New Jersey, without reference to rules
relating to conflicts of law.
18. WITHHOLDING & TAXES. The Company shall be entitled to withhold
from payment any amount of withholding required by law.
19. ENTIRE AGREEMENT.
(a) (i) Except as set forth in Subsection (ii) of this Section 19(a),
this Agreement sets forth the entire agreement and understanding of the parties
hereto with respect to the matters covered hereby and supersedes and replaces
any prior agreement with respect to employment, compensation continuation and
the matters contained in this Agreement which Executive may have had with the
Company or an Affiliate.
(ii) This Agreement does not supersede or replace the
Relinquishment Agreement, that certain Travelers Life Insurance Agreement
effective as of January 1, 2000 between NA, Executive, The Trust, the Owner and
all agreements, assignments and other documentation related thereto
(collectively, the "Travelers Agreements") or that certain John Hancock Life
Insurance Agreement between NA, Executive, the Trust and the Owner, effective as
of January 1, 2000 and all agreements, assignments and other documentation
related thereto (collectively, the "Hancock Agreements"), which Relinquishment
Agreement, Travelers Agreements and Hancock Agreements remain in full force and
effect according to their terms.
(b) This Agreement shall be binding upon and inure to the benefit of
Executive, the Company or Affiliates, and any successor organization or
organizations which shall succeed to substantially all of the business and
property of the Company, whether by means of merger, consolidation, acquisition
of substantially all of the assets of the Company or otherwise, including by
operation of law.
(c) Unless otherwise stated herein, no benefit or promise hereunder
shall be secured by any specific assets of the Company. Unless otherwise stated
herein, Executive shall have only the rights of an unsecured general creditor of
the Company in seeking satisfaction of such benefits or promises.
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20. LATE PAYMENTS. To the extent that any payments required to be made
hereunder following a Change of Control in connection with any Involuntary
Termination occurring prior to the second anniversary of such Change of Control
are not made within the period specified therefor, the Company shall be liable
for interest on such delayed payments at the rate of 150% of the prime rate
compounded monthly, as posted by the Morgan Guaranty Trust Company of New York,
from time to time.
21. ACTUARIAL CALCULATIONS. All required actuarial calculations of
payments to be made hereunder shall be made by WATSON WYATT WORLDWIDE, NEW
YORK, NEW YORK, or such other actuarial firm as the Company may designate prior
to a Change of Control.
22. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
23. PARAGRAPH HEADINGS. Paragraph headings are inserted for
convenience only and do not constitute a part and shall not affect the
interpretation of this Agreement.
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IN WITNESS WHEREOF. the parties have executed this Agreement as
of , 2000.
NABISCO HOLDINGS CORP.
/s/ James M. Kilts By: /s/ James A. Kirkman III
- ----------------------------- --------------------------------------
James M. Kilts James A. Kirkman III
Executive Vice President,
General Counsel & Secretary
NABISCO INC.
By: /s/ James A. Kirkman III
--------------------------------------
James A. Kirkman III
Executive Vice President,
General Counsel & Secretary
NABISCO GROUP HOLDINGS CORP.
By: /s/ James A. Kirkman III
--------------------------------------
James A. Kirkman III
Executive Vice President,
General Counsel & Secretary
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EXHIBIT A
DEFINITIONS
VESTED TARGET BONUS OPPORTUNITY means, as of a Change of Control or as of
a Termination Date, as the case may be, an amount equal to the value of the
Executive's target award or Target Bonus Opportunity, as the case may be, under
the relevant AIAP or LTIP, as the case may be, for the relevant performance
period in which the Change of Control or Involuntary Termination occurs, as the
case may be, multiplied by a fraction, the numerator of which is the number of
days in the period beginning on the first day of the relevant performance period
and ending on the Change of Control or such Termination Date, as the case may
be, and the denominator of which is 365; provided that in the event of an
Involuntary Termination following a Change of Control in the year in which a
Change of Control occurs, for purposes of computing the Vested Target Bonus
Opportunity as of the date of such Termination, the performance period shall be
deemed to begin on the first day following the Change of Control and the target
award or Target Bonus Opportunity, as the case may be, shall be that in effect
immediately preceding such Change of Control.
<PAGE>
Exhibit 10.5
EMPLOYMENT AGREEMENT
AMENDMENT AND RESTATEMENT, made effective as of this 17th day of March,
2000, of the EMPLOYMENT AGREEMENT dated October 1, 1997, as amended, by and
between NABISCO, INC., a New Jersey corporation (the "Company"), and James E.
Healey ("the Executive").
RECITALS
WHEREAS, the Executive and RJR Nabisco, Inc., a Delaware corporation
("RJRN"), entered into the Employment Agreement dated October 1, 1997; and
WHEREAS, the Executive, RJRN and the Company executed an Amendment to the
Employment Agreement as of May 1, 1999; and
WHEREAS, the Company and the Executive agree that the Employment Agreement
should be further amended and restated, in order to more effectively provide the
Executive continued incentives to remain in the service of the Company or its
subsidiaries or affiliates;
NOW, THEREFORE, in consideration of mutual incentives, it is hereby agreed
by and between the Company, Nabisco Holdings Corp. ("NHC") and Nabisco Group
Holdings Corp. ("NGH") and the Executive to amend and restate the Employment
Agreement, effective on the date first above written, as follows:
1. Employment. The Executive agrees to devote the Executive's working time
exclusively to the performance of such services for the Company or NHC or any of
their Subsidiaries or Affiliates (each, as defined below) as may be assigned to
the Executive from time to time and to perform such services faithfully and to
the best of the Executive's ability except as the provisions of subsections
4(b)(i) or 4(b)(ii) shall apply.
For purposes of this Agreement, (i) "Affiliate" means, with respect to the
Company, NHC or NGH, any person or entity directly or indirectly controlling,
controlled by, or under common control with the Company, NHC or NGH, as the case
may be, and (ii) "Subsidiary" of the Company, NHC or NGH means any entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the Company, NHC or
NGH, as the case may be.
<PAGE>
2. Term of Agreement. Subject to Section 7(e) hereof, this Agreement shall
commence on the date hereof and shall remain in effect so long as the Executive
remains employed by the Company or NHC or any of their subsidiaries or any
successor organizations.
3. Termination of Employment Without Compensation Continuance.
(a) Termination for Cause. This Agreement shall immediately be
terminated and neither party shall have any obligation hereunder if the
Executive's employment is terminated for Cause (as defined below).
(i) At any time before a Change of Control (as defined below)
or following the second anniversary of such Change of Control,
termination for "Cause" shall mean termination by the Company of the
Executive's employment resulting from the Executive's: (A) criminal
dishonesty; (B) deliberate and 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 a majority of the Board of Directors of NHC (the
"NHC Board"); or (D) deliberate misconduct which could be materially
damaging to the Company without reasonable good faith belief by the
Executive that such conduct was in the best interests of the
Company.
(ii) Any purported termination for Cause under Section 3(a)(i)
shall not be applicable unless (A) the Executive is advised in
writing that the Executive is being terminated for Cause and, (B) if
within fifteen (15) days thereafter the Executive submits to the
Chief Executive Officer of the Company a written objection to such a
determination, the Compensation Committee of the NHC Board at or
before its next regularly scheduled meeting determines by majority
vote that the Executive has been terminated for Cause.
(iii) During the two (2) year period beginning on a Change of
Control, termination for "Cause" shall mean termination by the
Company of the Executive's employment resulting from the
Executive's: (A) willful and continued failure substantially to
perform employment duties with the Company or any Subsidiary or
Affiliate (other than as a result of total or partial incapacity due
to physical or mental illness or as a result of a termination by the
Executive for Good Reason (as defined below)) after a written demand
for substantial performance is delivered to the Executive by the NHC
Board, which demand specifically identifies the manner in which the
NHC Board believes that the Executive has not substantially
performed the Executive's duties; (B) the willful engaging by the
Executive in conduct which is demonstrably and materially injurious
to NHC, NGH or the Company, monetarily or otherwise; or (C) the
Executive's conviction of a
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felony under the laws of the United States, any state or any other
country or political sub-division thereof involving moral turpitude.
For purposes of this paragraph (iii), no act or failure to act on
the Executive's part shall be deemed "willful" unless done or
omitted to be done by the Executive not in good faith and without
reasonable belief that the Executive's action or omission was in the
best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause
under this paragraph (iii) unless and until there shall have been
delivered to the Executive documentation of the affirmative vote
(which cannot be delegated) of not less than three-quarters (3/4) of
the entire membership of the NHC Board of Directors at a meeting of
the NHC Board called and held for such purpose (after reasonable
notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the NHC
Board), finding that in the good faith opinion of the NHC Board the
Executive was guilty of conduct set forth above in subclauses (A),
(B) or (C) above, specifying the particulars thereof in detail.
(b) Voluntary Termination of Employment by the Executive. The
Executive reserves the right to terminate voluntarily the Executive's
employment at any time for any reason. Upon such a termination other than
a termination pursuant to Section 4(b), all obligations of the Company
hereunder shall be cancelled automatically, and the Executive shall not be
entitled to any form of Compensation Continuance under this Agreement,
including that described in Section 5 below.
(c) Disability. The event of physical or mental disability of a
nature that entitles the Executive to benefits under the Company's
Long-Term Disability Plan is not a termination of employment under any
section of this Agreement. As such, disability shall not qualify the
Executive for the Compensation Continuance described herein unless the
Executive is terminated under Section 4(a) or Section 4(b)(i).
(d) Death. In the event of the Executive's death prior to
Involuntary Termination, this Agreement will be null and void.
4. Termination With Compensation Continuance.
(a) Involuntary Termination Without Cause by the Company.
(i) The Company reserves the right to terminate the employment
of the Executive at any time for any reason subject to providing the
compensation and benefits described herein. Except as provided in
Section 6, the Company will provide the Executive with the
Compensation Continuance described in Section 5 hereof if the
Executive is involuntarily separated from active employment without
Cause by the Company ("Involuntary Termination").
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(ii) The divestiture of the operating company employing the
Executive, and the assignment of the obligations of the Company
under this Agreement to such operating company, or its successor or
acquiror, in connection with the divestiture of either all, or
substantially all, the shares or assets of such operating company
shall not automatically be an Involuntary Termination unless such
divestiture and assignment would result in an Involuntary
Termination under Section 4(b) hereof.
(iii) The transfer of the Executive's employment to any
company that owns at least 50% of the voting power of the Company,
or any subsidiary of such company (an "Affiliated Company"), shall
not automatically be deemed an Involuntary Termination unless such
transfer would result in an Involuntary Termination under Section
4(b) hereof.
(b) Deemed Involuntary Termination Without Cause by the Company.
(i) At any time before a Change of Control or following the
second anniversary of a Change of Control, Involuntary Termination
shall be deemed to occur if the Executive voluntarily terminates
employment after: (A) the total amount of the Executive's base
salary, annual bonus and long term incentive opportunity under the
Annual Incentive Award Plans (or other annual incentive plans) of
NGH or NHC, as the case may be, (collectively, as in effect from
time to time, the "AIAPs") and Long Term Incentive Plans (or other
long term incentive plans) of NGH or NHC, as the case may be
(collectively, as in effect from time to time, the "LTIPs") is at
any time reduced by more than 20% without the Executive's consent,
provided, however, nothing herein shall be construed to guarantee
the Executive's target award if performance is below target; (B) the
Executive's job responsibilities are substantially reduced in
importance without the Executive's consent or the Company fails to
guarantee the obligations hereunder as required by Section 7(d); or
(C) the Executive, without the Executive's consent, is at any time
required as a condition of continued employment to relocate more
than thirty-five (35) miles from the Executive's then current place
of employment. Unless the Executive provides written notification of
the Executive's non-consent to an event in (A), (B) or (C) above
within ninety (90) days after the occurrence of such event, the
Executive shall be deemed to have consented to the occurrence of
such event and no deemed Involuntary Termination shall occur. If the
Executive provides written notice of the Executive's non-consent to
any of the events in (A), (B) or (C) above within ninety (90) days
after the occurrence of such event, the Executive shall be deemed to
have been Involuntarily Terminated ninety (90) days after receipt of
such written notice by the Company.
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(ii) At any time during the two (2) year period beginning on a
Change of Control, Involuntary Termination shall be deemed to occur
if the Executive voluntarily terminates employment after an event of
"Good Reason". For purposes of this Agreement "Good Reason" shall
mean, without the Executive's express written consent, any of the
following:
(A) Any reduction in the Executive's duties, any
diminution in the Executive's position or any adverse change
in the Executive's reporting relationship from those in effect
immediately prior to the Change of Control;
(B) Any reduction in the Executive's base salary, grade
or annual bonus or long term incentive opportunity as in
effect immediately prior to the Change of Control or as the
same may thereafter be increased from time to time during the
term of this Agreement;
(C) The failure to continue in effect any compensation
or benefit plan in which the Executive participates or is
entitled to participate in at the time of the Change of
Control, including but not limited to the relevant LTIP, the
relevant AIAP, any defined benefit or defined contribution
plan or related supplemental plans, or any substitute plans
adopted prior to the Change of Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative
plan providing the Executive with substantially similar
benefits) has been made with respect to such plan in
connection with the Change of Control, or the failure to
continue the Executive's participation therein on
substantially the same basis, both in terms of the amount of
the benefits provided and the level of the Executive's
participation relative to other participants, as existed at
the time of the Change of Control;
(D) The taking of any action which would directly or
indirectly reduce any of the benefits to be provided under
Section 5 or any benefits thereunder or any compensation or
benefit plan of the Company, NGH or NHC including, without
limitation the LTIPs, the AIAPs and the Company's Deferred
Compensation Plan or deprive the Executive of or reduce any
benefits or amounts with respect to any perquisite or any
material fringe benefit enjoyed by the Executive at the time
of the Change of Control, or the failure to provide the
Executive with the number of paid vacation days to which the
Executive is entitled on the basis of the Company's practice
with respect to the Executive as in effect at the time of the
Change of Control;
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(E) Any material breach by the Company, NGH or NHC of
any provision of this Agreement including, but not limited to
any provision of Section 5, any benefits thereunder or any
compensation, benefit or perquisite plan of the Company, NGH
or NHC including, without limitation the LTIPs, the AIAPs and
the Company's Deferred Compensation Plan, or any agreements
entered into pursuant thereto;
(F) Any purported termination of Executive's employment
which is not effected pursuant to a Notice of Termination
satisfying the requirements of subsection (c) below; provided
further that for purposes of this Agreement, no such purported
termination shall be effective; or
(G) Requiring the Executive to be based at any office or
location more than thirty-five (35) miles from the office or
location at which the Executive was based immediately prior to
such Change of Control, except for travel reasonably
consistent with the Executive's travel requirements prior to
such Change of Control;
If the Executive provides written notice of the
Executive's non-consent to any of the events in (A), (B), (C),
(D), (E), (F) or (G), above within 180 days after the
occurrence of any such event, the Executive shall be deemed to
have been Involuntarily Terminated upon the earlier of the
date set forth in Executive's Notice of Termination or 181
days after the occurrence of such event.
(iii) As used herein, a "Change of Control" shall occur on the
date upon which one of the following events occurs (except as
otherwise provided in paragraph (C) below):
(A) Any individual, corporation, partnership, group,
associate or other entity or "person" as such term is defined
in Section 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"), other than NHC, NGH or any of their
Subsidiaries, or any employee benefit plan(s) sponsored by
NHC, NGH or any of their Subsidiaries, is or becomes the
"beneficial owner" (as defined in Rule 13D-3 under the
Exchange Act), directly or indirectly, of 30% or more of the
combined voting power of NHC or NGH outstanding securities
ordinarily having the right to vote at elections of directors;
(B) Individuals who constitute the Board of either NHC
or NGH on January 1, 2000 (each such Board the "Incumbent
Board") cease for any reason to constitute at least a majority
of the Board of NHC or NGH, as the case may be, provided that
any person becoming a director subsequent to such date hereof
whose election, or nomination for election by NHC or NGH
shareholders, as the case may
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be, was approved by a vote of at least three-quarters of the
directors comprising that Incumbent Board (either by a
specific vote or by approval of the proxy statement of NHC or
NGH, as the case may be, in which such person is named a
nominee of NHC or NGH, as the case may be, but excluding for
this purpose any such individual whose initial assumption of
office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or
on behalf of an individual, corporation, partnership, group,
associate or other entity or "person" other than the NHC or
NGH Board, as the case may be, shall be, for purposes of this
paragraph (B), considered as though such person were a number
of the Incumbent Board.
(C) The approval by the shareholders of NHC or NGH, as
the case may be, of a plan or agreement providing (I) for a
merger or consolidation of NHC or NGH, as the case may be,
other than with a wholly-owned subsidiary or with NGH, NHC or
any of their subsidiaries, and other than a merger or
consolidation that would result in the voting securities of
NHC or NGH, as the case may be, outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting
power of the voting securities of NHC or NGH, as the case may
be, of such surviving entity outstanding immediately after
such merger or consolidation or (II) for a sale, exchange or
other disposition of all or substantially all of the assets of
NHC or NGH. If any of the events enumerated in this paragraph
(C) occurs, the NHC Board shall determine the effective date
of the Change of Control resulting therefrom.
(c) (i) Any purported termination of the Executive's employment by
the Company or by the Executive shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 7(b)
hereof. For purposes of this Agreement, (A) during the twenty-four (24)
month period beginning on a Change of Control a "Notice of Termination" by
the Company shall mean, and (B) prior to, and following the second
anniversary of, a Change of Control a "Notice of Termination" by the
Executive shall mean, a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of Executive's employment under the provision so
indicated.
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(ii) "Date of Termination" shall mean (i) if the Executive's
employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that the Executive shall
not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), (ii) if the Executive's
employment is terminated by reason of the Executive's death, the
date of the Executive's death, (iii) if the Executive's employment
is terminated by reason of the Executive's Retirement, for Cause,
Involuntary Termination or for any other reason (other than
Disability or death), the date specified in the Notice of
Termination (which (A) in the case of a termination for Cause during
the two (2) year period beginning on a Change of Control shall not
be less than thirty (30) nor more than sixty (60) days from the date
such Notice of Termination is given and (B) in the case of the
Executive's voluntary termination (other than pursuant to Section
4(b) and other than during the two (2) year period beginning on a
Change of Control) shall not be less than three (3) months after the
date such Notice of Termination is given).
5. Compensation Continuance Under This Agreement.
(a) Compensation Period. If at any time during the term of this
Agreement the Executive has an Involuntary Termination pursuant to Section
4, subject to Section 6(g), if applicable, the Executive will be provided
with Compensation Continuance as provided in this Section 5.
(b) Cash Compensation.
(i)(A) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, the Executive will be
entitled to cash compensation equal to two (2) year's Full Pay,
calculated as described below, payable in equal monthly installments
over the Compensation Period (as defined below), each installment
representing 1/18th of one year's Full Pay (as defined below). One
year's "Full Pay" is the sum of (x) plus (y), where (x) is the
Executive's highest annual rate of base salary in effect during the
twelve (12) month period prior to the Executive's Involuntary
Termination and (y) is the annual target amount of the Executive's
annual bonus under the relevant AIAP and/or LTIP for the calendar
year in which the Executive's employment terminated (or, if greater,
the amount of such actual award for the next preceding calendar year
of full-time employment). For all purposes of this Agreement,
"Compensation Period" shall mean the three (3) year period
commencing on the Date of Termination.
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(B) Upon an Involuntary Termination during the two (2)
year period beginning on a Change of Control, the Executive will be
entitled to a lump sum payment within fifteen (15) business days
following the date of such Involuntary Termination equal to twice
the sum of (u), (v) and (w), where (u) is the greater of the
Executive's annual base salary as in effect immediately prior to
such Termination or immediately prior to such Change of Control
(such greater amount, the "Base Salary"), (v) is the greater of the
Executive's annual target bonus under the relevant AIAP and/or LTIP
immediately prior to such Termination or immediately prior to the
Change of Control or ("Target Amount") and (w) is 1.5 times the
greater of the annual perquisite allowance applicable to the
Executive under the Nabisco Flexible Perquisite Program (the
"Program") as in effect immediately prior to such Termination or
immediately prior to such Change of Control (such greater amount,
the "Allowance"). The sum of Base Salary, Target Amount and
Allowance are hereinafter referred to as "Base Cash". For purposes
of this Agreement, "Compensation Period" shall mean the three (3)
year period commencing on the Date of Termination.
(ii) Cash compensation paid pursuant to this Section 5(b)
shall be subject to all required payroll deductions.
(c) Annual Incentive and Retention Plan Awards.
(i) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, the Executive will be
paid at the time of such Involuntary Termination a portion of the
Executive's annual bonus under the relevant AIAP and/or LTIP, based
upon the target award for the year in which the Executive's
Involuntary Termination occurs, prorated for the Executive's active
employment during such year. Except as stated in the foregoing
sentence, all provisions of the relevant AIAP and/or LTIP shall be
applicable to the Executive.
(ii) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, all provisions of NHC's
1999 Retention Program (the "1999 Program") shall be applicable to
the Executive.
(iii) Upon an Involuntary Termination during the two (2) year
period beginning on a Change of Control, the Company shall pay to
the Executive, not later than fifteen (15) business days following
the Date of Termination, a lump sum cash payment equal to the sum of
(A) and (B), where (A) is Executive's AIAP Vested Amount for such
plan year and (B) is the sum of (x) and (y) where (x) is the
Executive's Vested 1999 Program Award Amount and (y) is the
Executive's Earned 1999 Program Amount (each as defined in Exhibit
A) as of the Date of Termination.
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(d) Long Term Incentive Plan Awards. The treatment of long term
incentive awards during the Compensation Period shall be determined
pursuant to the terms of the relevant LTIP and related award agreements;
provided, however, that for such purposes, the Compensation Period shall
be treated as a period of salary and benefit continuance.
(e) Welfare Benefits. During the Compensation Period the Executive
will be provided the welfare benefits and other fringe benefits afforded
by the employee benefit plans and programs maintained by the Company in
which the Executive participated immediately prior to Involuntary
Termination.
(f) Retirement and Savings Plans.
(i) If Executive was participating in any Retirement Plan or
Savings Plan (each as defined in Exhibit A) immediately prior to an
Involuntary Termination prior to, or after the second anniversary
of, a Change of Control, the Executive will continue to accrue or be
deemed to accrue benefits during the Compensation Period under such
Retirement Plans and Savings Plans for purposes of benefit accrual
and employer matching contributions, as applicable, based on the
same formula and matching amount as in effect immediately prior to
such Termination. If the Executive will have attained age 50 at the
end of the Compensation Period with 10 years of service (including
the Compensation Period), the Executive will, subject to the
conditions of Paragraph 6, be deemed retired with the consent of the
Company for the purposes of welfare and executive compensation plans
but not for the purposes of any Retirement or Savings Plan.
Notwithstanding any provision herein to the contrary, upon such a
Termination pension benefits under any Retirement Plan based on
"Average Final Compensation" will be calculated applying the rate of
one year's Full Pay and the Executive's Annual Flexible Perquisite
Allowance for each year in the Compensation Period.
(ii) If Executive was participating in any Retirement Plan
immediately prior to an Involuntary Termination during the two (2)
year period beginning on a Change of Control, the Executive will be
deemed to accrue benefits during the Compensation Period under such
Retirement Plans for purposes of benefit accrual based on the same
formula as in effect immediately prior to such Termination. If the
Executive will have attained age 50 at the end of the Compensation
Period with 10 years of service (including the Compensation Period),
the Executive will, subject to the conditions of Paragraph 6, be
deemed retired with the consent of the Company for the purposes of
welfare and executive compensation plans but not for the purposes of
any Retirement. Notwithstanding any provision herein to the
contrary, upon such a Termination pension benefits under any
Retirement Plan based on "Average Final Compensation" will be
calculated applying the rate of one year's Base Cash for each year
in the Compensation Period.
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(g) Flexible Perquisite Program. During the Compensation Period, the
Executive shall continue to receive benefits under the Program; provided,
further, that in the event of an Involuntary Termination during the two
(2) year period beginning on a Change of Control, ownership of the
automobile assigned to the Executive immediately prior to such Termination
shall be transferred to the Executive within fifteen (15) business days
after such Termination. At the time of such transfer, the Company shall
pay to the Executive such amount in cash that, after payment of all
applicable federal, state and local taxes thereon, computed at the maximum
marginal rates, is equal to all such taxes, so computed, imposed in
connection with such transfer.
(h) Outplacement. During the Compensation Period, Executive will be
provided with outplacement counseling services at Company expense;
provided, however, this expense shall not exceed 18% of the amount of one
year's Full Pay or Base Cash, as the case may be. This counseling shall
include, but is not limited to, skill assessment, job market analysis,
resume preparation, interviewing skills, job search techniques and
negotiating.
6. Conditions on Compensation Continuance.
(a) Availability and Consulting. Upon an Involuntary Termination
prior to, or after the second anniversary of, a Change of Control, during
the related Compensation Period the Executive shall provide consulting
services to the Company on a reasonable basis subject to appropriate
notice and reimbursement of all travel and other expenses. During the
first six (6) months of such Compensation Period, the Executive may be
required by the Company to provide up to fifteen (15) days of consultation
during normal business hours and business days. When and if the Executive
becomes employed on a full-time basis, either with another company or on a
self-employed basis, the Executive's obligation to provide consulting
services shall be limited by the requirements of such employment, and
under appropriate circumstances, may be restricted to telephone
conference.
(b) Confidentiality and Conduct. The Executive warrants that the
Executive will not disclose to any other person any confidential
information or trade secrets concerning the Company or any of its
subsidiaries at any time during or after the Compensation Period and upon
an Involuntary Termination prior to, or after the second anniversary of, a
Change of Control, the Executive will at all times refrain from taking any
action or making any statements, written or oral, which are intended to
and do disparage the goodwill or reputation of the Company, its directors,
officers or executives or which could adversely affect the morale of
Company employees.
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(c) Breach of Conditions. In the event that the Executive
unreasonably refuses to provide consulting services to the extent required
under paragraph (a) above or materially violates the terms and conditions
of paragraph (b) above, the Company may, at its election upon ten (10)
days notice, terminate any ongoing Compensation Period, discontinue cash
compensation payments and employee benefits coverage and cancel any
outstanding stock options or restricted stock. The Company may also
initiate any form of legal action it may deem appropriate seeking damages
or injunctive relief with respect to any material violations of paragraph
(b) above.
(d) Non-Competition. Any Compensation Period resulting from an
Involuntary Termination prior to, or after the second anniversary of, a
Change of Control shall be terminated if the Executive, without the
Company's written approval, accepts a substantially similar or higher
executive position, paying a substantially comparable or greater level of
cash compensation, with any company (other than an Affiliate of the
Company) conducting a business which is substantially competitive with a
business conducted by the Company. Alternatively, the Company may, in its
discretion, appropriately reduce the Executive's cash compensation and
employee benefits coverage for the balance of such Compensation Period.
(e) Employment With Another Employer During Compensation Period.
Except as otherwise provided in this Section 6, if the Executive commences
employment with another employer during a Compensation Period commencing
prior to, or after the second anniversary of, a Change of Control, the
Executive will continue to receive the compensation continuance provided
under Section 5 for the balance of such Compensation Period, except that,
unless otherwise required by law, benefits under the Company's Employee
Benefits Plans, including the Program, if applicable, shall be
appropriately terminated or offset to the extent the same are provided by
the other employer.
(f) Other Severance Benefits. The Executive is entitled to no form
of severance benefits, including benefits otherwise payable under any of
the Company's regular severance policies, other than those set forth or
made applicable by reference in this Agreement. Notwithstanding the
foregoing, the Executive will at the time of termination of employment be
eligible for any form of post-retirement benefit provided under the
Company's qualified Employee Benefits Plans, including retiree medical
benefits, as any other employee upon retirement with the same age and
service. Nothing contained in this Agreement shall adversely affect the
Executive's rights to accrued vested pension benefits or the Executive's
right to receive previously deferred awards or amounts under any of the
Company's short and long term incentive award programs or deferred
compensation plans or perquisite programs.
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(g) Release and Waiver of Claims. In consideration of the
compensation and benefits continuance available pursuant to this
Agreement, upon an Involuntary Termination prior to, or after the second
anniversary of, a Change of Control the Executive agrees to execute a
release, in form and substance reasonably acceptable to the Executive and
the Company, releasing the Company, NHC and NGH from all claims and
liabilities relating to such Termination and the Company's employment of
the Executive.
(h) Disability. In the event the Executive is eligible for benefits
under the Company's Short Term or Long Term Disability Plan during the
Executive's Compensation Period, any Compensation Continuance will be
suspended while disability benefits are paid from any Company plan and
resumed when such disability payments cease. All other provisions of this
Agreement shall remain in effect notwithstanding the Executive's
disability.
(i) Death. In the event of the Executive's death subsequent to
commencement of the Executive's Compensation Period hereunder, the balance
of Compensation Continuance will be paid to the Executive's beneficiary in
a lump sum. "Beneficiary" shall mean the Executive's designated
beneficiary under the Executive's Executive Program life insurance or, if
not so eligible, the Executive's core life insurance benefit under the
Company's plans.
(j) No Mitigations. Notwithstanding anything to the contrary in this
Agreement, the Executive shall not be required to mitigate the amount of
any payment provided for in Section 5 by seeking other employment or
otherwise, nor, except under coordination of benefit rules in connection
with certain welfare benefits under Section 5(e), shall the amount of any
payment or benefit provided for in Section 5 hereof be reduced by any
compensation earned by the Executive as the result of employment by
another employer or by retirement benefits after the Date of Termination
of employment, or otherwise.
7. General Provisions.
(a) Limited Right of Appeal. If the Executive's Compensation Period
is terminated pursuant to Section 6, the Executive may, within fifteen
(15) days after mailing of notice thereof to the Executive, submit to the
Chief Executive Officer of the Company a written objection to such
termination. In such event, the Compensation Committee of the NHC Board at
or before its next regularly scheduled meeting must determine by majority
vote that termination of the Compensation Period was appropriate or,
failing that, the Compensation Period must be reinstated with full
retroactive effect.
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(b) Notices. All notices hereunder shall be in writing and deemed
given if delivered by hand and receipted or if mailed by registered mail,
return receipt requested. Notices to the Company shall be directed to the
Corporate Secretary at the Company's headquarters offices. Notices to the
Executive shall be directed to the Executive's last known home address.
(c) Limited Waiver. The waiver by any party hereto of a violation of
any of the provisions of this Agreement, whether express or implied, shall
not operate or be construed as a waiver of any subsequent violation of any
such provision.
(d) No Assignment. Except as provided herein, no right, benefit,
obligation or interest hereunder shall be subject to assignment,
encumbrance, charge, pledge, hypothecation or set off by Executive or the
Company. The Company, however, may assign its obligations hereunder in the
event of the transfer of the Executive's employment to an Affiliated
Company or the divestiture (whether by the sale of shares or assets) of
the operating company employing the Executive. In the event the
obligations of the Company under this Agreement are assigned to an
employing Affiliated Company as contemplated by Section 4(a)(iii), the
Company agrees to guarantee to Executive the obligations of such
Affiliated Company under this Agreement. Except as provided in the
preceding sentence, upon any permitted assignment of the Company's
obligations hereunder, "Company" shall be deemed to refer to the assignee
as the context may require.
(e) Amendment. This Agreement may not be amended, modified or
cancelled except by written agreement of the parties.
(f) Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall remain in full
force and effect to the fullest extent permitted by law.
(g) Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Executive, the Company, its affiliates, and any
successor organization or organizations which shall succeed to
substantially all of the business and property of the Company, whether by
means of merger, consolidation, acquisition of substantially all of the
assets of the Company or otherwise, including by operation of law.
(h) Unsecured Promise. Unless otherwise stated herein, no benefit or
promise hereunder shall be secured by any specific assets of the Company.
Unless otherwise stated herein, the Executive shall have only the rights
of an unsecured general creditor of the Company in seeking satisfaction of
such benefits or promises. Notwithstanding the foregoing, the Company may
choose to maintain a rabbi trust or trusts for the purpose of paying
certain of the benefits hereunder or under other plans and programs of the
Company and, if so, the Executive shall be entitled to payments therefrom,
if any, as and to the extent provided in such rabbi trust or trusts.
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(i) Governing Law. This Agreement has been made in and shall be
governed and construed in accordance with the laws of the State of
Delaware.
(j) Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties hereto with respect to the matters
covered hereby. This Agreement supersedes and replaces any prior agreement
with respect to employment, compensation continuation and the matters
contained in this Agreement which the Executive may have had with the
Company or any affiliate.
(k) Legal Fees and Expenses.
(i) The Company shall pay to the Executive as incurred all
legal and accounting fees and expenses incurred by the Executive as
a result of the Executive's Involuntary Termination on or during the
two (2) year period beginning on a Change of Control (including all
such fees and expenses, if any, in seeking to obtain or enforce any
right or benefit provided by this Agreement or any other
compensation-related plan, agreement or arrangement of the Company)
unless the Executive's claim is found by an arbitral tribunal of
competent jurisdiction to have been frivolous.
(ii) The Company shall pay to the Executive as incurred all
legal and accounting fees and expenses incurred by the Executive
during the two (2) year period beginning on a Change of Control as a
result of both (A) the Executive's Involuntary Termination prior to
such Change of Control and (B) the Company's refusal after such
Change of Control to provide any right or benefit provided by this
Agreement or any other compensation-related plan, agreement or
arrangement of the Company in respect of such Termination, including
all such fees and expenses, if any, in seeking to obtain or enforce
any such right or benefit unless the Executive's claim is found by
an arbitral tribunal or court of competent jurisdiction to have been
frivolous.
(l) Certain AIAP and LTIP Change of Control Provisions.
(i) In the event of a Change of Control, the Executive will be
paid within fifteen (15) business days following the date of such
Change of Control a lump sum cash payment equal to the Executive's
AIAP Vested Amount.
(ii) Upon a Change of Control, all stock options, shares of
restricted stock, restricted stock units and restricted stock
equivalents then held by the Executive under either LTIP shall
become 100% vested and non-forfeitable on the date of such Change of
Control and any restrictions thereon shall immediately lapse on such
date.
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(m) Certain Payments.
(i) Anything herein to the contrary notwithstanding, in the
event that it is determined that any payment or distribution by the
Company to or for the Executive's benefit, whether paid or payable
or distributed or distributable pursuant to the terms hereof,
including but not limited to Section 7(l), or otherwise, other than
any payment pursuant to this Section 7(m), (a "Payment"), would be
subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive, within fifteen (15) business days
following the determination described in Section 7(m)(ii) below, an
additional payment ("Excise Tax Adjustment Payment") in an amount
such that after payment by the Executive of all applicable Federal,
state and local taxes (computed at the maximum marginal rates and
including any interest or penalties imposed with respect to such
taxes), including any Excise Tax, imposed upon the Excise Tax
Adjustment Payment, the Executive shall retain an amount of the
Excise Tax Adjustment Payment equal to the Excise Tax imposed upon
the Payments.
(ii) All determinations required to be made under this Section
7(m), including whether Excise Tax Adjustment Payment is required
and the amount of such Excise Tax Adjustment Payment, shall be made
by Deloitte & Touche LLP, or such other accounting firm as the
Company may designate prior to a Change of Control, which shall
provide to the Company and the Executive detailed supporting
calculations within fifteen (15) business days of the date of the
Executive's termination of employment. Except as hereinafter
provided, any determination by Deloitte & Touche LLP, or such other
accounting firm as the Company may designate prior to a Change of
Control, shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the
Code at the time of the initial determination hereunder, it is
possible that (x) Excise Tax Adjustment Payments which should have
been made will not have been made by the Company ("Underpayment"),
or (y) certain Payments will have been made which should not have
been made ("Overpayment"), consistent with the calculations required
to be made hereunder. In the event of an Underpayment, the Company
shall promptly determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the
Company to or for the Executive's benefit. In the event that the
Executive discovers that an Overpayment shall have occurred, the
amount thereof shall be promptly repaid to the Company.
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(n) Arbitration. Following a Change of Control, any dispute or
controversy arising under or in connection with this Agreement shall be
settled exclusively by arbitration in New York, New York in accordance
with the National Rules for the Resolution of Employment Disputes of the
American Arbitration Association then in effect. The determination of the
arbitral tribunal shall be conclusive and binding on the parties and
judgment may be entered on the arbitrator's award in any court having
jurisdiction.
(o) Unconditional Obligation. The Company's obligations to make all
payments and honor all commitments under this Agreement or otherwise
following a Change of Control or in connection with an Involuntary
Termination during the two (2) year period beginning on a Change of
Control shall be absolute and unconditional and shall not be affected by
any circumstances including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may
have against the Executive.
(p) Late Payments. To the extent that any payments required to be
made hereunder following a Change of Control in connection with any
Involuntary Termination occurring prior to the second anniversary of such
Change of Control are not made within the period specified therefor, the
Company shall be liable for interest on such delayed payments at the rate
of 150% of the prime rate compounded monthly, as posted by the Morgan
Guaranty Trust Company of New York, from time to time.
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(q) Actuarial Calculations. All required actuarial calculations of
payments to be made hereunder shall be made by Watson Wyatt Worldwide, New
York, New York, or such other actuarial firm as the Company may designate
prior to a Change of Control.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
NABISCO, INC.
By: /s/ C. Michael Sayeau
-------------------------------------
C. Michael Sayeau
Executive Vice President and
Chief Personnel Officer
NABISCO HOLDINGS CORP.
By: /s/ C. Michael Sayeau
-------------------------------------
C. Michael Sayeau
Executive Vice President and
Chief Personnel Officer
NABISCO GROUP HOLDINGS, INC.
By: /s/ James M. Kilts
-------------------------------------
James M. Kilts
President and Chief Executive Officer
THE EXECUTIVE
/s/ James E. Healey
- -------------------
James E. Healey
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EXHIBIT A
DEFINITIONS
AIAP Vested Amount means, as of a Change of Control or as of a Termination
Date during the two (2) year period beginning on a Change of Control, as the
case may be, an amount equal to the value of the Executive's target award under
the relevant AIAP for the relevant performance period in which the Change of
Control or such termination occurs, as the case may be, multiplied by a
fraction, the numerator of which is the number of months (including partial
months) in the period beginning on the first day of the relevant performance
period and ending on the Change of Control or such Termination Date, as the case
may be, and the denominator of which is the number of months in such performance
period; provided that in the event of a termination of employment following a
Change of Control in the year in which a Change of Control occurs, for purposes
of computing the AIAP Vested Amount as of the date of such termination, the
performance period shall be deemed to begin on the first day following the
Change of Control and the target award shall be that in effect immediately
preceding such Change of Control.
Earned 1999 Program Amount means, as of a Termination Date during the two
(2) year period beginning on a Change of Control, an amount equal to the
Executive's Retention Award or awards under the 1999 Program in respect of
calendar years ending prior to such Termination Date and not previously paid to
the Executive.
Vested 1999 Program Amount means, as of a Termination Date during the two
(2) year period beginning on a Change of Control, an amount equal to the value
of the Executive's Retention Award under the 1999 Program in respect of the year
in which such Termination Date occurs.
Retirement Plans means the Retirement Plan for Employees of Nabisco, Inc.,
the Additional Benefits Plan of Nabisco, Inc. and participating Companies, the
Supplemental Benefits Plan of Nabisco, Inc. and participating Companies and the
Supplemental Executive Retirement Plan of Nabisco, Inc. and participating
Companies, and such other plans as the Board may hereafter determine.
Savings Plans means the Capital Investment Plan of Nabisco, Inc., the
Additional Benefits Plan of Nabisco, Inc. and participating Companies and the
Supplemental Benefits Plan of Nabisco, Inc. and participating Companies, and
such other plans as the Board may hereafter determine.
<PAGE>
Exhibit 10.6
EMPLOYMENT AGREEMENT
AMENDMENT AND RESTATEMENT, made effective as of this 17th day of March,
2000, of the EMPLOYMENT AGREEMENT dated October 12, 1988, as amended, by and
between NABISCO, INC., a New Jersey corporation (the "Company"), and C. Michael
Sayeau ("the Executive").
RECITALS
WHEREAS, the Executive and RJR Nabisco, Inc., a Delaware corporation
("RJRN"), entered into the Employment Agreement dated October 12, 1988; and
WHEREAS, the Executive and RJRN executed a Special Addendum to the
Employment Agreement as of December 20, 1988; and
WHEREAS, the Executive, RJRN and the Company executed Amendments to the
Employment Agreement as of July 19, 1995 and May 1, 1999; and
WHEREAS, the Company and the Executive agree that the Employment Agreement
should be further amended and restated, in order to more effectively provide the
Executive continued incentives to remain in the service of the Company or its
subsidiaries or affiliates;
NOW, THEREFORE, in consideration of mutual incentives, it is hereby agreed
by and between the Company, Nabisco Holdings Corp. ("NHC") and Nabisco Group
Holdings Corp. ("NGH") and the Executive to amend and restate the Employment
Agreement, effective on the date first above written, as follows:
1. Employment. The Executive agrees to devote the Executive's working time
exclusively to the performance of such services for the Company or NHC or any of
their Subsidiaries or Affiliates (each, as defined below) as may be assigned to
the Executive from time to time and to perform such services faithfully and to
the best of the Executive's ability except as the provisions of subsections
4(b)(i) or 4(b)(ii) shall apply.
For purposes of this Agreement, (i) "Affiliate" means, with respect to the
Company, NHC or NGH, any person or entity directly or indirectly controlling,
controlled by, or under common control with the Company, NHC or NGH, as the case
may be, and (ii) "Subsidiary" of the Company, NHC or NGH means any entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the Company, NHC or
NGH, as the case may be.
<PAGE>
2. Term of Agreement. Subject to Section 7(e) hereof, this Agreement shall
commence on the date hereof and shall remain in effect so long as the Executive
remains employed by the Company or NHC or any of their subsidiaries or any
successor organizations.
3. Termination of Employment Without Compensation Continuance.
(a) Termination for Cause. This Agreement shall immediately be
terminated and neither party shall have any obligation hereunder if the
Executive's employment is terminated for Cause (as defined below).
(i) At any time before a Change of Control (as defined below)
or following the second anniversary of such Change of Control,
termination for "Cause" shall mean termination by the Company of the
Executive's employment resulting from the Executive's: (A) criminal
dishonesty; (B) deliberate and 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 a majority of the Board of Directors of NHC (the
"NHC Board"); or (D) deliberate misconduct which could be materially
damaging to the Company without reasonable good faith belief by the
Executive that such conduct was in the best interests of the
Company.
(ii) Any purported termination for Cause under Section 3(a)(i)
shall not be applicable unless (A) the Executive is advised in
writing that the Executive is being terminated for Cause and, (B) if
within fifteen (15) days thereafter the Executive submits to the
Chief Executive Officer of the Company a written objection to such a
determination, the Compensation Committee of the NHC Board at or
before its next regularly scheduled meeting determines by majority
vote that the Executive has been terminated for Cause.
(iii) During the two (2) year period beginning on a Change of
Control, termination for "Cause" shall mean termination by the
Company of the Executive's employment resulting from the
Executive's: (A) willful and continued failure substantially to
perform employment duties with the Company or any Subsidiary or
Affiliate (other than as a result of total or partial incapacity due
to physical or mental illness or as a result of a termination by the
Executive for Good Reason (as defined below)) after a written demand
for substantial performance is delivered to the Executive by the NHC
Board, which demand specifically identifies the manner in which the
NHC Board believes that the Executive has not substantially
performed the Executive's duties; (B) the willful engaging by the
Executive in conduct which is demonstrably and materially injurious
to NHC, NGH or the Company, monetarily or otherwise; or (C) the
Executive's conviction of a
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felony under the laws of the United States, any state or any other
country or political sub-division thereof involving moral turpitude.
For purposes of this paragraph (iii), no act or failure to act on
the Executive's part shall be deemed "willful" unless done or
omitted to be done by the Executive not in good faith and without
reasonable belief that the Executive's action or omission was in the
best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause
under this paragraph (iii) unless and until there shall have been
delivered to the Executive documentation of the affirmative vote
(which cannot be delegated) of not less than three-quarters (3/4) of
the entire membership of the NHC Board of Directors at a meeting of
the NHC Board called and held for such purpose (after reasonable
notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the NHC
Board), finding that in the good faith opinion of the NHC Board the
Executive was guilty of conduct set forth above in subclauses (A),
(B) or (C) above, specifying the particulars thereof in detail.
(b) Voluntary Termination of Employment by the Executive. The
Executive reserves the right to terminate voluntarily the Executive's
employment at any time for any reason. Upon such a termination other than
a termination pursuant to Section 4(b), all obligations of the Company
hereunder shall be cancelled automatically, and the Executive shall not be
entitled to any form of Compensation Continuance under this Agreement,
including that described in Section 5 below.
(c) Disability. The event of physical or mental disability of a
nature that entitles the Executive to benefits under the Company's
Long-Term Disability Plan is not a termination of employment under any
section of this Agreement. As such, disability shall not qualify the
Executive for the Compensation Continuance described herein unless the
Executive is terminated under Section 4(a) or Section 4(b)(i).
(d) Death. In the event of the Executive's death prior to
Involuntary Termination, this Agreement will be null and void.
4. Termination With Compensation Continuance.
(a) Involuntary Termination Without Cause by the Company.
(i) The Company reserves the right to terminate the employment
of the Executive at any time for any reason subject to providing the
compensation and benefits described herein. Except as provided in
Section 6, the Company will provide the Executive with the
Compensation Continuance described in Section 5 hereof if the
Executive is involuntarily separated from active employment without
Cause by the Company ("Involuntary Termination").
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(ii) The divestiture of the operating company employing the
Executive, and the assignment of the obligations of the Company
under this Agreement to such operating company, or its successor or
acquiror, in connection with the divestiture of either all, or
substantially all, the shares or assets of such operating company
shall not automatically be an Involuntary Termination unless such
divestiture and assignment would result in an Involuntary
Termination under Section 4(b) hereof.
(iii) The transfer of the Executive's employment to any
company that owns at least 50% of the voting power of the Company,
or any subsidiary of such company (an "Affiliated Company"), shall
not automatically be deemed an Involuntary Termination unless such
transfer would result in an Involuntary Termination under Section
4(b) hereof.
(b) Deemed Involuntary Termination Without Cause by the Company.
(i) At any time before a Change of Control or following the
second anniversary of a Change of Control, Involuntary Termination
shall be deemed to occur if the Executive voluntarily terminates
employment after: (A) the total amount of the Executive's base
salary, annual bonus and long term incentive opportunity under the
Annual Incentive Award Plans (or other annual incentive plans) of
NGH or NHC, as the case may be, (collectively, as in effect from
time to time, the "AIAPs") and Long Term Incentive Plans (or other
long term incentive plans) of NGH or NHC, as the case may be
(collectively, as in effect from time to time, the "LTIPs") is at
any time reduced by more than 20% without the Executive's consent,
provided, however, nothing herein shall be construed to guarantee
the Executive's target award if performance is below target; (B) the
Executive's job responsibilities are substantially reduced in
importance without the Executive's consent or the Company fails to
guarantee the obligations hereunder as required by Section 7(d); or
(C) the Executive, without the Executive's consent, is at any time
required as a condition of continued employment to relocate more
than thirty-five (35) miles from the Executive's then current place
of employment. Unless the Executive provides written notification of
the Executive's non-consent to an event in (A), (B) or (C) above
within ninety (90) days after the occurrence of such event, the
Executive shall be deemed to have consented to the occurrence of
such event and no deemed Involuntary Termination shall occur. If the
Executive provides written notice of the Executive's non-consent to
any of the events in (A), (B) or (C) above within ninety (90) days
after the occurrence of such event, the Executive shall be deemed to
have been Involuntarily Terminated ninety (90) days after receipt of
such written notice by the Company.
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(ii) At any time during the two (2) year period beginning on a
Change of Control, Involuntary Termination shall be deemed to occur
if the Executive voluntarily terminates employment after an event of
"Good Reason". For purposes of this Agreement "Good Reason" shall
mean, without the Executive's express written consent, any of the
following:
(A) Any reduction in the Executive's duties, any
diminution in the Executive's position or any adverse change
in the Executive's reporting relationship from those in effect
immediately prior to the Change of Control;
(B) Any reduction in the Executive's base salary, grade
or annual bonus or long term incentive opportunity as in
effect immediately prior to the Change of Control or as the
same may thereafter be increased from time to time during the
term of this Agreement;
(C) The failure to continue in effect any compensation
or benefit plan in which the Executive participates or is
entitled to participate in at the time of the Change of
Control, including but not limited to the relevant LTIP, the
relevant AIAP, any defined benefit or defined contribution
plan or related supplemental plans, or any substitute plans
adopted prior to the Change of Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative
plan providing the Executive with substantially similar
benefits) has been made with respect to such plan in
connection with the Change of Control, or the failure to
continue the Executive's participation therein on
substantially the same basis, both in terms of the amount of
the benefits provided and the level of the Executive's
participation relative to other participants, as existed at
the time of the Change of Control;
(D) The taking of any action which would directly or
indirectly reduce any of the benefits to be provided under
Section 5 or any benefits thereunder or any compensation or
benefit plan of the Company, NGH or NHC including, without
limitation the LTIPs, the AIAPs and the Company's Deferred
Compensation Plan or deprive the Executive of or reduce any
benefits or amounts with respect to any perquisite or any
material fringe benefit enjoyed by the Executive at the time
of the Change of Control, or the failure to provide the
Executive with the number of paid vacation days to which the
Executive is entitled on the basis of the Company's practice
with respect to the Executive as in effect at the time of the
Change of Control;
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(E) Any material breach by the Company, NGH or NHC of
any provision of this Agreement including, but not limited to
any provision of Section 5, any benefits thereunder or any
compensation, benefit or perquisite plan of the Company, NGH
or NHC including, without limitation the LTIPs, the AIAPs and
the Company's Deferred Compensation Plan, or any agreements
entered into pursuant thereto;
(F) Any purported termination of Executive's employment
which is not effected pursuant to a Notice of Termination
satisfying the requirements of subsection (c) below; provided
further that for purposes of this Agreement, no such purported
termination shall be effective; or
(G) Requiring the Executive to be based at any office or
location more than thirty-five (35) miles from the office or
location at which the Executive was based immediately prior to
such Change of Control, except for travel reasonably
consistent with the Executive's travel requirements prior to
such Change of Control;
If the Executive provides written notice of the
Executive's non-consent to any of the events in (A), (B), (C),
(D), (E), (F) or (G), above within 180 days after the
occurrence of any such event, the Executive shall be deemed to
have been Involuntarily Terminated upon the earlier of the
date set forth in Executive's Notice of Termination or 181
days after the occurrence of such event.
(iii) As used herein, a "Change of Control" shall occur on the
date upon which one of the following events occurs (except as
otherwise provided in paragraph (C) below):
(A) Any individual, corporation, partnership, group,
associate or other entity or "person" as such term is defined
in Section 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"), other than NHC, NGH or any of their
Subsidiaries, or any employee benefit plan(s) sponsored by
NHC, NGH or any of their Subsidiaries, is or becomes the
"beneficial owner" (as defined in Rule 13D-3 under the
Exchange Act), directly or indirectly, of 30% or more of the
combined voting power of NHC or NGH outstanding securities
ordinarily having the right to vote at elections of directors;
(B) Individuals who constitute the Board of either NHC
or NGH on January 1, 2000 (each such Board the "Incumbent
Board") cease for any reason to constitute at least a majority
of the Board of NHC or NGH, as the case may be, provided that
any person becoming a director subsequent to such date hereof
whose election, or nomination for election by NHC or NGH
shareholders, as the case may
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be, was approved by a vote of at least three-quarters of the
directors comprising that Incumbent Board (either by a
specific vote or by approval of the proxy statement of NHC or
NGH, as the case may be, in which such person is named a
nominee of NHC or NGH, as the case may be, but excluding for
this purpose any such individual whose initial assumption of
office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or
on behalf of an individual, corporation, partnership, group,
associate or other entity or "person" other than the NHC or
NGH Board, as the case may be, shall be, for purposes of this
paragraph (B), considered as though such person were a number
of the Incumbent Board.
(C) The approval by the shareholders of NHC or NGH, as
the case may be, of a plan or agreement providing (I) for a
merger or consolidation of NHC or NGH, as the case may be,
other than with a wholly-owned subsidiary or with NGH, NHC or
any of their subsidiaries, and other than a merger or
consolidation that would result in the voting securities of
NHC or NGH, as the case may be, outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting
power of the voting securities of NHC or NGH, as the case may
be, of such surviving entity outstanding immediately after
such merger or consolidation or (II) for a sale, exchange or
other disposition of all or substantially all of the assets of
NHC or NGH. If any of the events enumerated in this paragraph
(C) occurs, the NHC Board shall determine the effective date
of the Change of Control resulting therefrom.
(c) (i) Any purported termination of the Executive's employment by
the Company or by the Executive shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 7(b)
hereof. For purposes of this Agreement, (A) during the twenty-four (24)
month period beginning on a Change of Control a "Notice of Termination" by
the Company shall mean, and (B) prior to, and following the second
anniversary of, a Change of Control a "Notice of Termination" by the
Executive shall mean, a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of Executive's employment under the provision so
indicated.
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(ii) "Date of Termination" shall mean (i) if the Executive's
employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that the Executive shall
not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), (ii) if the Executive's
employment is terminated by reason of the Executive's death, the
date of the Executive's death, (iii) if the Executive's employment
is terminated by reason of the Executive's Retirement, for Cause,
Involuntary Termination or for any other reason (other than
Disability or death), the date specified in the Notice of
Termination (which (A) in the case of a termination for Cause during
the two (2) year period beginning on a Change of Control shall not
be less than thirty (30) nor more than sixty (60) days from the date
such Notice of Termination is given and (B) in the case of the
Executive's voluntary termination (other than pursuant to Section
4(b) and other than during the two (2) year period beginning on a
Change of Control) shall not be less than three (3) months after the
date such Notice of Termination is given).
5. Compensation Continuance Under This Agreement.
(a) Compensation Period. If at any time during the term of this
Agreement the Executive has an Involuntary Termination pursuant to Section
4, subject to Section 6(g), if applicable, the Executive will be provided
with Compensation Continuance as provided in this Section 5.
(b) Cash Compensation.
(i)(A) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, the Executive will be
entitled to cash compensation equal to two (2) year's Full Pay,
calculated as described below, payable in equal monthly installments
over the Compensation Period (as defined below), each installment
representing 1/18th of one year's Full Pay (as defined below). One
year's "Full Pay" is the sum of (x) plus (y), where (x) is the
Executive's highest annual rate of base salary in effect during the
twelve (12) month period prior to the Executive's Involuntary
Termination and (y) is the annual target amount of the Executive's
annual bonus under the relevant AIAP and/or LTIP for the calendar
year in which the Executive's employment terminated (or, if greater,
the amount of such actual award for the next preceding calendar year
of full-time employment). For all purposes of this Agreement,
"Compensation Period" shall mean the three (3) year period
commencing on the Date of Termination.
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(B) Upon an Involuntary Termination during the two (2)
year period beginning on a Change of Control, the Executive will be
entitled to a lump sum payment within fifteen (15) business days
following the date of such Involuntary Termination equal to twice
the sum of (u), (v) and (w), where (u) is the greater of the
Executive's annual base salary as in effect immediately prior to
such Termination or immediately prior to such Change of Control
(such greater amount, the "Base Salary"), (v) is the greater of (1)
the Executive's annual target bonus under the relevant AIAP and/or
LTIP immediately prior to such Termination or immediately prior to
the Change of Control or (2) the greater of the aggregate amount of
such actual award for the calendar year immediately prior to such
Termination or immediately prior to the Change of Control (the
greater of (1) and (2), the "Target Amount") and (w) is 1.5 times
the greater of the annual perquisite allowance applicable to the
Executive under the Nabisco Flexible Perquisite Program (the
"Program") as in effect immediately prior to such Termination or
immediately prior to such Change of Control (such greater amount,
the "Allowance"). The sum of Base Salary, Target Amount and
Allowance are hereinafter referred to as "Base Cash". For purposes
of this Agreement, "Compensation Period" shall mean the three (3)
year period commencing on the Date of Termination.
(ii) Cash compensation paid pursuant to this Section 5(b)
shall be subject to all required payroll deductions.
(c) Annual Incentive and Retention Plan Awards.
(i) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, the Executive will be
paid at the time of such Involuntary Termination a portion of the
Executive's annual bonus under the relevant AIAP and/or LTIP, based
upon the target award for the year in which the Executive's
Involuntary Termination occurs, prorated for the Executive's active
employment during such year. Except as stated in the foregoing
sentence, all provisions of the relevant AIAP and/or LTIP shall be
applicable to the Executive.
(ii) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, all provisions of NHC's
1999 Retention Program (the "1999 Program") shall be applicable to
the Executive.
(iii) Upon an Involuntary Termination during the two (2) year
period beginning on a Change of Control, the Company shall pay to
the Executive, not later than fifteen (15) business days following
the Date of Termination, a lump sum cash payment equal to the sum of
(A) and (B), where (A) is Executive's AIAP Vested Amount for such
plan year and (B) is the sum of (x) and (y) where (x) is the
Executive's Vested 1999 Program Award Amount and (y) is the
Executive's Earned 1999 Program Amount
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(each as defined in Exhibit A) as of the Date of Termination.
(d) Long Term Incentive Plan Awards. The treatment of long term
incentive awards during the Compensation Period shall be determined
pursuant to the terms of the relevant LTIP and related award agreements;
provided, however, that for such purposes, the Compensation Period shall
be treated as a period of salary and benefit continuance.
(e) Welfare Benefits. During the Compensation Period the Executive
will be provided the welfare benefits and other fringe benefits afforded
by the employee benefit plans and programs maintained by the Company in
which the Executive participated immediately prior to Involuntary
Termination.
(f) Retirement and Savings Plans.
(i) If Executive was participating in any Retirement Plan or
Savings Plan (each as defined in Exhibit A) immediately prior to an
Involuntary Termination prior to, or after the second anniversary
of, a Change of Control, the Executive will continue to accrue or be
deemed to accrue benefits during the Compensation Period under such
Retirement Plans and Savings Plans for purposes of benefit accrual
and employer matching contributions, as applicable, based on the
same formula and matching amount as in effect immediately prior to
such Termination. If the Executive will have attained age 50 at the
end of the Compensation Period with 10 years of service (including
the Compensation Period), the Executive will, subject to the
conditions of Paragraph 6, be deemed retired with the consent of the
Company for the purposes of welfare and executive compensation plans
but not for the purposes of any Retirement or Savings Plan.
Notwithstanding any provision herein to the contrary, upon such a
Termination pension benefits under any Retirement Plan based on
"Average Final Compensation" will be calculated applying the rate of
one year's Full Pay and the Executive's Annual Flexible Perquisite
Allowance for each year in the Compensation Period.
(ii) If Executive was participating in any Retirement Plan
immediately prior to an Involuntary Termination during the two (2)
year period beginning on a Change of Control, the Executive will be
deemed to accrue benefits during the Compensation Period under such
Retirement Plans for purposes of benefit accrual based on the same
formula as in effect immediately prior to such Termination. If the
Executive will have attained age 50 at the end of the Compensation
Period with 10 years of service (including the Compensation Period),
the Executive will, subject to the conditions of Paragraph 6, be
deemed retired with the consent of the Company for the purposes of
welfare and executive compensation plans but not for the purposes of
any Retirement. Notwithstanding any provision herein to the
contrary, upon such a Termination pension benefits under any
Retirement Plan
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based on "Average Final Compensation" will be calculated applying
the rate of one year's Base Cash for each year in the Compensation
Period.
(g) Flexible Perquisite Program. During the Compensation Period, the
Executive shall continue to receive benefits under the Program; provided,
further, that in the event of an Involuntary Termination during the two
(2) year period beginning on a Change of Control, ownership of the
automobile assigned to the Executive immediately prior to such Termination
shall be transferred to the Executive within fifteen (15) business days
after such Termination. At the time of such transfer, the Company shall
pay to the Executive such amount in cash that, after payment of all
applicable federal, state and local taxes thereon, computed at the maximum
marginal rates, is equal to all such taxes, so computed, imposed in
connection with such transfer.
(h) Outplacement. During the Compensation Period, Executive will be
provided with outplacement counseling services at Company expense;
provided, however, this expense shall not exceed 18% of the amount of one
year's Full Pay or Base Cash, as the case may be. This counseling shall
include, but is not limited to, skill assessment, job market analysis,
resume preparation, interviewing skills, job search techniques and
negotiating.
(i) Facilities. During the first six (6) months of the Compensation
Period, the Executive will, at the Executive's option, be provided with an
office and secretarial services during regular business hours at a Company
approved location. Except as may be specifically approved by the Company's
Chief Executive Officer, the Executive will not be provided with the use
of any other Company facility or services.
6. Conditions on Compensation Continuance.
(a) Availability and Consulting. Upon an Involuntary Termination
prior to, or after the second anniversary of, a Change of Control, during
the related Compensation Period the Executive shall provide consulting
services to the Company on a reasonable basis subject to appropriate
notice and reimbursement of all travel and other expenses. During the
first six (6) months of such Compensation Period, the Executive may be
required by the Company to provide up to fifteen (15) days of consultation
during normal business hours and business days. When and if the Executive
becomes employed on a full-time basis, either with another company or on a
self-employed basis, the Executive's obligation to provide consulting
services shall be limited by the requirements of such employment, and
under appropriate circumstances, may be restricted to telephone
conference.
(b) Confidentiality and Conduct. The Executive warrants that the
Executive will not disclose to any other person any confidential
information or trade secrets concerning the Company or any of its
subsidiaries at any time during or after the Compensation Period and upon
an Involuntary Termination prior to, or after the
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second anniversary of, a Change of Control, the Executive will at all
times refrain from taking any action or making any statements, written or
oral, which are intended to and do disparage the goodwill or reputation of
the Company, its directors, officers or executives or which could
adversely affect the morale of Company employees.
(c) Breach of Conditions. In the event that the Executive
unreasonably refuses to provide consulting services to the extent required
under paragraph (a) above or materially violates the terms and conditions
of paragraph (b) above, the Company may, at its election upon ten (10)
days notice, terminate any ongoing Compensation Period, discontinue cash
compensation payments and employee benefits coverage and cancel any
outstanding stock options or restricted stock. The Company may also
initiate any form of legal action it may deem appropriate seeking damages
or injunctive relief with respect to any material violations of paragraph
(b) above.
(d) Non-Competition. Any Compensation Period resulting from an
Involuntary Termination prior to, or after the second anniversary of, a
Change of Control shall be terminated if the Executive, without the
Company's written approval, accepts a substantially similar or higher
executive position, paying a substantially comparable or greater level of
cash compensation, with any company (other than an Affiliate of the
Company) conducting a business which is substantially competitive with a
business conducted by the Company. Alternatively, the Company may, in its
discretion, appropriately reduce the Executive's cash compensation and
employee benefits coverage for the balance of such Compensation Period.
(e) Employment With Another Employer During Compensation Period.
Except as otherwise provided in this Section 6, if the Executive commences
employment with another employer during a Compensation Period commencing
prior to, or after the second anniversary of, a Change of Control, the
Executive will continue to receive the compensation continuance provided
under Section 5 for the balance of such Compensation Period, except that,
unless otherwise required by law, benefits under the Company's Employee
Benefits Plans, including the Program, if applicable, shall be
appropriately terminated or offset to the extent the same are provided by
the other employer.
(f) Other Severance Benefits. The Executive is entitled to no form
of severance benefits, including benefits otherwise payable under any of
the Company's regular severance policies, other than those set forth or
made applicable by reference in this Agreement. Notwithstanding the
foregoing, the Executive will at the time of termination of employment be
eligible for any form of post-retirement benefit provided under the
Company's qualified Employee Benefits Plans, including retiree medical
benefits, as any other employee upon retirement with the same age and
service. Nothing contained in this Agreement shall adversely affect the
Executive's rights to accrued vested pension benefits or the Executive's
right to receive previously deferred awards or amounts under any of the
Company's short and long term
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incentive award programs or deferred compensation plans or perquisite
programs.
(g) Release and Waiver of Claims. In consideration of the
compensation and benefits continuance available pursuant to this
Agreement, upon an Involuntary Termination prior to, or after the second
anniversary of, a Change of Control the Executive agrees to execute a
release, in form and substance reasonably acceptable to the Executive and
the Company, releasing the Company, NHC and NGH from all claims and
liabilities relating to such Termination and the Company's employment of
the Executive.
(h) Disability. In the event the Executive is eligible for benefits
under the Company's Short Term or Long Term Disability Plan during the
Executive's Compensation Period, any Compensation Continuance will be
suspended while disability benefits are paid from any Company plan and
resumed when such disability payments cease. All other provisions of this
Agreement shall remain in effect notwithstanding the Executive's
disability.
(i) Death. In the event of the Executive's death subsequent to
commencement of the Executive's Compensation Period hereunder, the balance
of Compensation Continuance will be paid to the Executive's beneficiary in
a lump sum. "Beneficiary" shall mean the Executive's designated
beneficiary under the Executive's Executive Program life insurance or, if
not so eligible, the Executive's core life insurance benefit under the
Company's plans.
(j) No Mitigations. Notwithstanding anything to the contrary in this
Agreement, the Executive shall not be required to mitigate the amount of
any payment provided for in Section 5 by seeking other employment or
otherwise, nor, except under coordination of benefit rules in connection
with certain welfare benefits under Section 5(e), shall the amount of any
payment or benefit provided for in Section 5 hereof be reduced by any
compensation earned by the Executive as the result of employment by
another employer or by retirement benefits after the Date of Termination
of employment, or otherwise.
7. General Provisions.
(a) Limited Right of Appeal. If the Executive's Compensation Period
is terminated pursuant to Section 6, the Executive may, within fifteen
(15) days after mailing of notice thereof to the Executive, submit to the
Chief Executive Officer of the Company a written objection to such
termination. In such event, the Compensation Committee of the NHC Board at
or before its next regularly scheduled meeting must determine by majority
vote that termination of the Compensation Period was appropriate or,
failing that, the Compensation Period must be reinstated with full
retroactive effect.
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(b) Notices. All notices hereunder shall be in writing and deemed
given if delivered by hand and receipted or if mailed by registered mail,
return receipt requested. Notices to the Company shall be directed to the
Corporate Secretary at the Company's headquarters offices. Notices to the
Executive shall be directed to the Executive's last known home address.
(c) Limited Waiver. The waiver by any party hereto of a violation of
any of the provisions of this Agreement, whether express or implied, shall
not operate or be construed as a waiver of any subsequent violation of any
such provision.
(d) No Assignment. Except as provided herein, no right, benefit,
obligation or interest hereunder shall be subject to assignment,
encumbrance, charge, pledge, hypothecation or set off by Executive or the
Company. The Company, however, may assign its obligations hereunder in the
event of the transfer of the Executive's employment to an Affiliated
Company or the divestiture (whether by the sale of shares or assets) of
the operating company employing the Executive. In the event the
obligations of the Company under this Agreement are assigned to an
employing Affiliated Company as contemplated by Section 4(a)(iii), the
Company agrees to guarantee to Executive the obligations of such
Affiliated Company under this Agreement. Except as provided in the
preceding sentence, upon any permitted assignment of the Company's
obligations hereunder, "Company" shall be deemed to refer to the assignee
as the context may require.
(e) Amendment. This Agreement may not be amended, modified or
cancelled except by written agreement of the parties.
(f) Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall remain in full
force and effect to the fullest extent permitted by law.
(g) Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Executive, the Company, its affiliates, and any
successor organization or organizations which shall succeed to
substantially all of the business and property of the Company, whether by
means of merger, consolidation, acquisition of substantially all of the
assets of the Company or otherwise, including by operation of law.
(h) Unsecured Promise. Unless otherwise stated herein, no benefit or
promise hereunder shall be secured by any specific assets of the Company.
Unless otherwise stated herein, the Executive shall have only the rights
of an unsecured general creditor of the Company in seeking satisfaction of
such benefits or promises. Notwithstanding the foregoing, the Company may
choose to maintain a rabbi trust or trusts for the purpose of paying
certain of the benefits hereunder or under other plans and programs of the
Company and, if so, the Executive shall be entitled to payments
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therefrom, if any, as and to the extent provided in such rabbi trust or
trusts.
(i) Governing Law. This Agreement has been made in and shall be
governed and construed in accordance with the laws of the State of
Delaware.
(j) Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties hereto with respect to the matters
covered hereby. This Agreement supersedes and replaces any prior agreement
with respect to employment, compensation continuation and the matters
contained in this Agreement which the Executive may have had with the
Company or any affiliate.
(k) Legal Fees and Expenses.
(i) The Company shall pay to the Executive as incurred all
legal and accounting fees and expenses incurred by the Executive as
a result of the Executive's Involuntary Termination on or during the
two (2) year period beginning on a Change of Control (including all
such fees and expenses, if any, in seeking to obtain or enforce any
right or benefit provided by this Agreement or any other
compensation-related plan, agreement or arrangement of the Company)
unless the Executive's claim is found by an arbitral tribunal of
competent jurisdiction to have been frivolous.
(ii) The Company shall pay to the Executive as incurred all
legal and accounting fees and expenses incurred by the Executive
during the two (2) year period beginning on a Change of Control as a
result of both (A) the Executive's Involuntary Termination prior to
such Change of Control and (B) the Company's refusal after such
Change of Control to provide any right or benefit provided by this
Agreement or any other compensation-related plan, agreement or
arrangement of the Company in respect of such Termination, including
all such fees and expenses, if any, in seeking to obtain or enforce
any such right or benefit unless the Executive's claim is found by
an arbitral tribunal or court of competent jurisdiction to have been
frivolous.
(l) Certain AIAP and LTIP Change of Control Provisions.
(i) In the event of a Change of Control, the Executive will be
paid within fifteen (15) business days following the date of such
Change of Control a lump sum cash payment equal to the Executive's
AIAP Vested Amount.
(ii) Upon a Change of Control, all stock options, shares of
restricted stock, restricted stock units and restricted stock
equivalents then held by the Executive under either LTIP shall
become 100% vested and non-forfeitable on the date of such Change of
Control and any restrictions thereon shall immediately lapse on such
date.
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(m) Certain Payments.
(i) Anything herein to the contrary notwithstanding, in the
event that it is determined that any payment or distribution by the
Company to or for the Executive's benefit, whether paid or payable
or distributed or distributable pursuant to the terms hereof,
including but not limited to Section 7(l), or otherwise, other than
any payment pursuant to this Section 7(m), (a "Payment"), would be
subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive, within fifteen (15) business days
following the determination described in Section 7(m)(ii) below, an
additional payment ("Excise Tax Adjustment Payment") in an amount
such that after payment by the Executive of all applicable Federal,
state and local taxes (computed at the maximum marginal rates and
including any interest or penalties imposed with respect to such
taxes), including any Excise Tax, imposed upon the Excise Tax
Adjustment Payment, the Executive shall retain an amount of the
Excise Tax Adjustment Payment equal to the Excise Tax imposed upon
the Payments.
(ii) All determinations required to be made under this Section
7(m), including whether Excise Tax Adjustment Payment is required
and the amount of such Excise Tax Adjustment Payment, shall be made
by Deloitte & Touche LLP, or such other accounting firm as the
Company may designate prior to a Change of Control, which shall
provide to the Company and the Executive detailed supporting
calculations within fifteen (15) business days of the date of the
Executive's termination of employment. Except as hereinafter
provided, any determination by Deloitte & Touche LLP, or such other
accounting firm as the Company may designate prior to a Change of
Control, shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the
Code at the time of the initial determination hereunder, it is
possible that (x) Excise Tax Adjustment Payments which should have
been made will not have been made by the Company ("Underpayment"),
or (y) certain Payments will have been made which should not have
been made ("Overpayment"), consistent with the calculations required
to be made hereunder. In the event of an Underpayment, the Company
shall promptly determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the
Company to or for the Executive's benefit. In the event that the
Executive discovers that an Overpayment shall have occurred, the
amount thereof shall be promptly repaid to the Company.
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(n) Arbitration. Following a Change of Control, any dispute or
controversy arising under or in connection with this Agreement shall be
settled exclusively by arbitration in New York, New York in accordance
with the National Rules for the Resolution of Employment Disputes of the
American Arbitration Association then in effect. The determination of the
arbitral tribunal shall be conclusive and binding on the parties and
judgment may be entered on the arbitrator's award in any court having
jurisdiction.
(o) Unconditional Obligation. The Company's obligations to make all
payments and honor all commitments under this Agreement or otherwise
following a Change of Control or in connection with an Involuntary
Termination during the two (2) year period beginning on a Change of
Control shall be absolute and unconditional and shall not be affected by
any circumstances including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may
have against the Executive.
(p) Late Payments. To the extent that any payments required to be
made hereunder following a Change of Control in connection with any
Involuntary Termination occurring prior to the second anniversary of such
Change of Control are not made within the period specified therefor, the
Company shall be liable for interest on such delayed payments at the rate
of 150% of the prime rate compounded monthly, as posted by the Morgan
Guaranty Trust Company of New York, from time to time.
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(q) Actuarial Calculations. All required actuarial calculations of
payments to be made hereunder shall be made by Watson Wyatt Worldwide, New
York, New York, or such other actuarial firm as the Company may designate
prior to a Change of Control.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
NABISCO, INC.
By: /s/ James M. Kilts
-------------------------------------
James M. Kilts
President and Chief Executive Officer
NABISCO HOLDINGS CORP.
By: /s/ James M. Kilts
-------------------------------------
James M. Kilts
President and Chief Executive Officer
NABISCO GROUP HOLDINGS, INC.
By: /s/ James M. Kilts
-------------------------------------
James M. Kilts
President and Chief Executive Officer
THE EXECUTIVE
/s/ C. Michael Sayeau
- ---------------------
C. Michael Sayeau
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EXHIBIT A
DEFINITIONS
AIAP Vested Amount means, as of a Change of Control or as of a Termination
Date during the two (2) year period beginning on a Change of Control, as the
case may be, an amount equal to the value of the Executive's target award under
the relevant AIAP for the relevant performance period in which the Change of
Control or such termination occurs, as the case may be, multiplied by a
fraction, the numerator of which is the number of months (including partial
months) in the period beginning on the first day of the relevant performance
period and ending on the Change of Control or such Termination Date, as the case
may be, and the denominator of which is the number of months in such performance
period; provided that in the event of a termination of employment following a
Change of Control in the year in which a Change of Control occurs, for purposes
of computing the AIAP Vested Amount as of the date of such termination, the
performance period shall be deemed to begin on the first day following the
Change of Control and the target award shall be that in effect immediately
preceding such Change of Control.
Earned 1999 Program Amount means, as of a Termination Date during the two
(2) year period beginning on a Change of Control, an amount equal to the
Executive's Retention Award or awards under the 1999 Program in respect of
calendar years ending prior to such Termination Date and not previously paid to
the Executive.
Vested 1999 Program Amount means, as of a Termination Date during the two
(2) year period beginning on a Change of Control, an amount equal to the value
of the Executive's Retention Award under the 1999 Program in respect of the year
in which such Termination Date occurs.
Retirement Plans means the Retirement Plan for Employees of Nabisco, Inc.,
the Additional Benefits Plan of Nabisco, Inc. and participating Companies, the
Supplemental Benefits Plan of Nabisco, Inc. and participating Companies and the
Supplemental Executive Retirement Plan of Nabisco, Inc. and participating
Companies, and such other plans as the Board may hereafter determine.
Savings Plans means the Capital Investment Plan of Nabisco, Inc., the
Additional Benefits Plan of Nabisco, Inc. and participating Companies and the
Supplemental Benefits Plan of Nabisco, Inc. and participating Companies, and
such other plans as the Board may hereafter determine.
<PAGE>
Exhibit 10.7
EMPLOYMENT AGREEMENT
AMENDMENT AND RESTATEMENT, made effective as of this 17th day of March,
2000, of the EMPLOYMENT AGREEMENT dated February 9, 1998, as amended, by and
between NABISCO, INC., a New Jersey corporation (the "Company"), and Richard H.
Lenny ("the Executive").
RECITALS
WHEREAS, the Executive and RJR Nabisco, Inc., a Delaware corporation
("RJRN"), entered into the Employment Agreement dated February 9, 1998; and
WHEREAS, the Executive, RJRN and the Company executed an Amendment to the
Employment Agreement as of May 1, 1999; and
WHEREAS, the Company and the Executive agree that the Employment Agreement
should be further amended and restated, in order to more effectively provide the
Executive continued incentives to remain in the service of the Company or its
subsidiaries or affiliates;
NOW, THEREFORE, in consideration of mutual incentives, it is hereby agreed
by and between the Company, Nabisco Holdings Corp. ("NHC") and Nabisco Group
Holdings Corp. ("NGH") and the Executive to amend and restate the Employment
Agreement, effective on the date first above written, as follows:
1. Employment. The Executive agrees to devote the Executive's working time
exclusively to the performance of such services for the Company or NHC or any of
their Subsidiaries or Affiliates (each, as defined below) as may be assigned to
the Executive from time to time and to perform such services faithfully and to
the best of the Executive's ability except as the provisions of subsections
4(b)(i) or 4(b)(ii) shall apply.
For purposes of this Agreement, (i) "Affiliate" means, with respect to the
Company, NHC or NGH, any person or entity directly or indirectly controlling,
controlled by, or under common control with the Company, NHC or NGH, as the case
may be, and (ii) "Subsidiary" of the Company, NHC or NGH means any entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the Company, NHC or
NGH, as the case may be.
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2. Term of Agreement. Subject to Section 7(e) hereof, this Agreement shall
commence on the date hereof and shall remain in effect so long as the Executive
remains employed by the Company or NHC or any of their subsidiaries or any
successor organizations.
3. Termination of Employment Without Compensation Continuance.
(a) Termination for Cause. This Agreement shall immediately be
terminated and neither party shall have any obligation hereunder if the
Executive's employment is terminated for Cause (as defined below).
(i) At any time before a Change of Control (as defined below)
or following the second anniversary of such Change of Control,
termination for "Cause" shall mean termination by the Company of the
Executive's employment resulting from the Executive's: (A) criminal
dishonesty; (B) deliberate and 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 a majority of the Board of Directors of NHC (the
"NHC Board"); or (D) deliberate misconduct which could be materially
damaging to the Company without reasonable good faith belief by the
Executive that such conduct was in the best interests of the
Company.
(ii) Any purported termination for Cause under Section 3(a)(i)
shall not be applicable unless (A) the Executive is advised in
writing that the Executive is being terminated for Cause and, (B) if
within fifteen (15) days thereafter the Executive submits to the
Chief Executive Officer of the Company a written objection to such a
determination, the Compensation Committee of the NHC Board at or
before its next regularly scheduled meeting determines by majority
vote that the Executive has been terminated for Cause.
(iii) During the two (2) year period beginning on a Change of
Control, termination for "Cause" shall mean termination by the
Company of the Executive's employment resulting from the
Executive's: (A) willful and continued failure substantially to
perform employment duties with the Company or any Subsidiary or
Affiliate (other than as a result of total or partial incapacity due
to physical or mental illness or as a result of a termination by the
Executive for Good Reason (as defined below)) after a written demand
for substantial performance is delivered to the Executive by the NHC
Board, which demand specifically identifies the manner in which the
NHC Board believes that the Executive has not substantially
performed the Executive's duties; (B) the willful engaging by the
Executive in conduct which is demonstrably and materially injurious
to NHC, NGH or the Company, monetarily or otherwise; or (C) the
Executive's conviction of a
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felony under the laws of the United States, any state or any other
country or political sub-division thereof involving moral turpitude.
For purposes of this paragraph (iii), no act or failure to act on
the Executive's part shall be deemed "willful" unless done or
omitted to be done by the Executive not in good faith and without
reasonable belief that the Executive's action or omission was in the
best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause
under this paragraph (iii) unless and until there shall have been
delivered to the Executive documentation of the affirmative vote
(which cannot be delegated) of not less than three-quarters (3/4) of
the entire membership of the NHC Board of Directors at a meeting of
the NHC Board called and held for such purpose (after reasonable
notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the NHC
Board), finding that in the good faith opinion of the NHC Board the
Executive was guilty of conduct set forth above in subclauses (A),
(B) or (C) above, specifying the particulars thereof in detail.
(b) Voluntary Termination of Employment by the Executive. The
Executive reserves the right to terminate voluntarily the Executive's
employment at any time for any reason. Upon such a termination other than
a termination pursuant to Section 4(b), all obligations of the Company
hereunder shall be cancelled automatically, and the Executive shall not be
entitled to any form of Compensation Continuance under this Agreement,
including that described in Section 5 below.
(c) Disability. The event of physical or mental disability of a
nature that entitles the Executive to benefits under the Company's
Long-Term Disability Plan is not a termination of employment under any
section of this Agreement. As such, disability shall not qualify the
Executive for the Compensation Continuance described herein unless the
Executive is terminated under Section 4(a) or Section 4(b)(i).
(d) Death. In the event of the Executive's death prior to
Involuntary Termination, this Agreement will be null and void.
4. Termination With Compensation Continuance.
(a) Involuntary Termination Without Cause by the Company.
(i) The Company reserves the right to terminate the employment
of the Executive at any time for any reason subject to providing the
compensation and benefits described herein. Except as provided in
Section 6, the Company will provide the Executive with the
Compensation Continuance described in Section 5 hereof if the
Executive is involuntarily separated from active employment without
Cause by the Company ("Involuntary Termination").
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(ii) The divestiture of the operating company employing the
Executive, and the assignment of the obligations of the Company
under this Agreement to such operating company, or its successor or
acquiror, in connection with the divestiture of either all, or
substantially all, the shares or assets of such operating company
shall not automatically be an Involuntary Termination unless such
divestiture and assignment would result in an Involuntary
Termination under Section 4(b) hereof.
(iii) The transfer of the Executive's employment to any
company that owns at least 50% of the voting power of the Company,
or any subsidiary of such company (an "Affiliated Company"), shall
not automatically be deemed an Involuntary Termination unless such
transfer would result in an Involuntary Termination under Section
4(b) hereof.
(b) Deemed Involuntary Termination Without Cause by the Company.
(i) At any time before a Change of Control or following the
second anniversary of a Change of Control, Involuntary Termination
shall be deemed to occur if the Executive voluntarily terminates
employment after: (A) the total amount of the Executive's base
salary, annual bonus and long term incentive opportunity under the
Annual Incentive Award Plans (or other annual incentive plans) of
NGH or NHC, as the case may be, (collectively, as in effect from
time to time, the "AIAPs") and Long Term Incentive Plans (or other
long term incentive plans) of NGH or NHC, as the case may be
(collectively, as in effect from time to time, the "LTIPs") is at
any time reduced by more than 20% without the Executive's consent,
provided, however, nothing herein shall be construed to guarantee
the Executive's target award if performance is below target; (B) the
Executive's job responsibilities are substantially reduced in
importance without the Executive's consent or the Company fails to
guarantee the obligations hereunder as required by Section 7(d); or
(C) the Executive, without the Executive's consent, is at any time
required as a condition of continued employment to relocate more
than thirty-five (35) miles from the Executive's then current place
of employment. Unless the Executive provides written notification of
the Executive's non-consent to an event in (A), (B) or (C) above
within ninety (90) days after the occurrence of such event, the
Executive shall be deemed to have consented to the occurrence of
such event and no deemed Involuntary Termination shall occur. If the
Executive provides written notice of the Executive's non-consent to
any of the events in (A), (B) or (C) above within ninety (90) days
after the occurrence of such event, the Executive shall be deemed to
have been Involuntarily Terminated ninety (90) days after receipt of
such written notice by the Company.
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(ii) At any time during the two (2) year period beginning on a
Change of Control, Involuntary Termination shall be deemed to occur
if the Executive voluntarily terminates employment after an event of
"Good Reason". For purposes of this Agreement "Good Reason" shall
mean, without the Executive's express written consent, any of the
following:
(A) Any reduction in the Executive's duties, any
diminution in the Executive's position or any adverse change
in the Executive's reporting relationship from those in effect
immediately prior to the Change of Control;
(B) Any reduction in the Executive's base salary, grade
or annual bonus or long term incentive opportunity as in
effect immediately prior to the Change of Control or as the
same may thereafter be increased from time to time during the
term of this Agreement;
(C) The failure to continue in effect any compensation
or benefit plan in which the Executive participates or is
entitled to participate in at the time of the Change of
Control, including but not limited to the relevant LTIP, the
relevant AIAP, any defined benefit or defined contribution
plan or related supplemental plans, or any substitute plans
adopted prior to the Change of Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative
plan providing the Executive with substantially similar
benefits) has been made with respect to such plan in
connection with the Change of Control, or the failure to
continue the Executive's participation therein on
substantially the same basis, both in terms of the amount of
the benefits provided and the level of the Executive's
participation relative to other participants, as existed at
the time of the Change of Control;
(D) The taking of any action which would directly or
indirectly reduce any of the benefits to be provided under
Section 5 or any benefits thereunder or any compensation or
benefit plan of the Company, NGH or NHC including, without
limitation the LTIPs, the AIAPs and the Company's Deferred
Compensation Plan or deprive the Executive of or reduce any
benefits or amounts with respect to any perquisite or any
material fringe benefit enjoyed by the Executive at the time
of the Change of Control, or the failure to provide the
Executive with the number of paid vacation days to which the
Executive is entitled on the basis of the Company's practice
with respect to the Executive as in effect at the time of the
Change of Control;
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(E) Any material breach by the Company, NGH or NHC of
any provision of this Agreement including, but not limited to
any provision of Section 5, any benefits thereunder or any
compensation, benefit or perquisite plan of the Company, NGH
or NHC including, without limitation the LTIPs, the AIAPs and
the Company's Deferred Compensation Plan, or any agreements
entered into pursuant thereto;
(F) Any purported termination of Executive's employment
which is not effected pursuant to a Notice of Termination
satisfying the requirements of subsection (c) below; provided
further that for purposes of this Agreement, no such purported
termination shall be effective; or
(G) Requiring the Executive to be based at any office or
location more than thirty-five (35) miles from the office or
location at which the Executive was based immediately prior to
such Change of Control, except for travel reasonably
consistent with the Executive's travel requirements prior to
such Change of Control;
If the Executive provides written notice of the
Executive's non-consent to any of the events in (A), (B), (C),
(D), (E), (F) or (G), above within 180 days after the
occurrence of any such event, the Executive shall be deemed to
have been Involuntarily Terminated upon the earlier of the
date set forth in Executive's Notice of Termination or 181
days after the occurrence of such event.
(iii) As used herein, a "Change of Control" shall occur on the
date upon which one of the following events occurs (except as
otherwise provided in paragraph (C) below):
(A) Any individual, corporation, partnership, group,
associate or other entity or "person" as such term is defined
in Section 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"), other than NHC, NGH or any of their
Subsidiaries, or any employee benefit plan(s) sponsored by
NHC, NGH or any of their Subsidiaries, is or becomes the
"beneficial owner" (as defined in Rule 13D-3 under the
Exchange Act), directly or indirectly, of 30% or more of the
combined voting power of NHC or NGH outstanding securities
ordinarily having the right to vote at elections of directors;
(B) Individuals who constitute the Board of either NHC
or NGH on January 1, 2000 (each such Board the "Incumbent
Board") cease for any reason to constitute at least a majority
of the Board of NHC or NGH, as the case may be, provided that
any person becoming a director subsequent to such date hereof
whose election, or nomination for election by NHC or NGH
shareholders, as the case may
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be, was approved by a vote of at least three-quarters of the
directors comprising that Incumbent Board (either by a
specific vote or by approval of the proxy statement of NHC or
NGH, as the case may be, in which such person is named a
nominee of NHC or NGH, as the case may be, but excluding for
this purpose any such individual whose initial assumption of
office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or
on behalf of an individual, corporation, partnership, group,
associate or other entity or "person" other than the NHC or
NGH Board, as the case may be, shall be, for purposes of this
paragraph (B), considered as though such person were a number
of the Incumbent Board.
(C) The approval by the shareholders of NHC or NGH, as
the case may be, of a plan or agreement providing (I) for a
merger or consolidation of NHC or NGH, as the case may be,
other than with a wholly-owned subsidiary or with NGH, NHC or
any of their subsidiaries, and other than a merger or
consolidation that would result in the voting securities of
NHC or NGH, as the case may be, outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting
power of the voting securities of NHC or NGH, as the case may
be, of such surviving entity outstanding immediately after
such merger or consolidation or (II) for a sale, exchange or
other disposition of all or substantially all of the assets of
NHC or NGH. If any of the events enumerated in this paragraph
(C) occurs, the NHC Board shall determine the effective date
of the Change of Control resulting therefrom.
(c) (i) Any purported termination of the Executive's employment by
the Company or by the Executive shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 7(b)
hereof. For purposes of this Agreement, (A) during the twenty-four (24)
month period beginning on a Change of Control a "Notice of Termination" by
the Company shall mean, and (B) prior to, and following the second
anniversary of, a Change of Control a "Notice of Termination" by the
Executive shall mean, a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of Executive's employment under the provision so
indicated.
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(ii) "Date of Termination" shall mean (i) if the Executive's
employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that the Executive shall
not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), (ii) if the Executive's
employment is terminated by reason of the Executive's death, the
date of the Executive's death, (iii) if the Executive's employment
is terminated by reason of the Executive's Retirement, for Cause,
Involuntary Termination or for any other reason (other than
Disability or death), the date specified in the Notice of
Termination (which (A) in the case of a termination for Cause during
the two (2) year period beginning on a Change of Control shall not
be less than thirty (30) nor more than sixty (60) days from the date
such Notice of Termination is given and (B) in the case of the
Executive's voluntary termination (other than pursuant to Section
4(b) and other than during the two (2) year period beginning on a
Change of Control) shall not be less than three (3) months after the
date such Notice of Termination is given).
5. Compensation Continuance Under This Agreement.
(a) Compensation Period. If at any time during the term of this
Agreement the Executive has an Involuntary Termination pursuant to Section
4, subject to Section 6(g), if applicable, the Executive will be provided
with Compensation Continuance as provided in this Section 5.
(b) Cash Compensation.
(i)(A) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, the Executive will be
entitled to cash compensation equal to two (2) year's Full Pay,
calculated as described below, payable in equal monthly installments
over the Compensation Period (as defined below), each installment
representing 1/18th of one year's Full Pay (as defined below). One
year's "Full Pay" is the sum of (x) plus (y), where (x) is the
Executive's highest annual rate of base salary in effect during the
twelve (12) month period prior to the Executive's Involuntary
Termination and (y) is the annual target amount of the Executive's
annual bonus under the relevant AIAP and/or LTIP for the calendar
year in which the Executive's employment terminated (or, if greater,
the amount of such actual award for the next preceding calendar year
of full-time employment). For all purposes of this Agreement,
"Compensation Period" shall mean the three (3) year period
commencing on the Date of Termination.
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(B) Upon an Involuntary Termination during the two (2)
year period beginning on a Change of Control, the Executive will be
entitled to a lump sum payment within fifteen (15) business days
following the date of such Involuntary Termination equal to twice
the sum of (u), (v) and (w), where (u) is the greater of the
Executive's annual base salary as in effect immediately prior to
such Termination or immediately prior to such Change of Control
(such greater amount, the "Base Salary"), (v) is the greater of the
Executive's annual target bonus under the relevant AIAP and/or LTIP
immediately prior to such Termination or immediately prior to the
Change of Control or ("Target Amount") and (w) is 1.5 times the
greater of the annual perquisite allowance applicable to the
Executive under the Nabisco Flexible Perquisite Program (the
"Program") as in effect immediately prior to such Termination or
immediately prior to such Change of Control (such greater amount,
the "Allowance"). The sum of Base Salary, Target Amount and
Allowance are hereinafter referred to as "Base Cash". For purposes
of this Agreement, "Compensation Period" shall mean the three (3)
year period commencing on the Date of Termination.
(ii) Cash compensation paid pursuant to this Section 5(b)
shall be subject to all required payroll deductions.
(c) Annual Incentive and Retention Plan Awards.
(i) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, the Executive will be
paid at the time of such Involuntary Termination a portion of the
Executive's annual bonus under the relevant AIAP and/or LTIP, based
upon the target award for the year in which the Executive's
Involuntary Termination occurs, prorated for the Executive's active
employment during such year. Except as stated in the foregoing
sentence, all provisions of the relevant AIAP and/or LTIP shall be
applicable to the Executive.
(ii) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, all provisions of NHC's
1999 Retention Program (the "1999 Program") shall be applicable to
the Executive.
(iii) Upon an Involuntary Termination during the two (2) year
period beginning on a Change of Control, the Company shall pay to
the Executive, not later than fifteen (15) business days following
the Date of Termination, a lump sum cash payment equal to the sum of
(A) and (B), where (A) is Executive's AIAP Vested Amount for such
plan year and (B) is the sum of (x) and (y) where (x) is the
Executive's Vested 1999 Program Award Amount and (y) is the
Executive's Earned 1999 Program Amount (each as defined in Exhibit
A) as of the Date of Termination.
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(d) Long Term Incentive Plan Awards. The treatment of long term
incentive awards during the Compensation Period shall be determined
pursuant to the terms of the relevant LTIP and related award agreements;
provided, however, that for such purposes, the Compensation Period shall
be treated as a period of salary and benefit continuance.
(e) Welfare Benefits. During the Compensation Period the Executive
will be provided the welfare benefits and other fringe benefits afforded
by the employee benefit plans and programs maintained by the Company in
which the Executive participated immediately prior to Involuntary
Termination.
(f) Retirement and Savings Plans.
(i) If Executive was participating in any Retirement Plan or
Savings Plan (each as defined in Exhibit A) immediately prior to an
Involuntary Termination prior to, or after the second anniversary
of, a Change of Control, the Executive will continue to accrue or be
deemed to accrue benefits during the Compensation Period under such
Retirement Plans and Savings Plans for purposes of benefit accrual
and employer matching contributions, as applicable, based on the
same formula and matching amount as in effect immediately prior to
such Termination. If the Executive will have attained age 50 at the
end of the Compensation Period with 10 years of service (including
the Compensation Period), the Executive will, subject to the
conditions of Paragraph 6, be deemed retired with the consent of the
Company for the purposes of welfare and executive compensation plans
but not for the purposes of any Retirement or Savings Plan.
Notwithstanding any provision herein to the contrary, upon such a
Termination pension benefits under any Retirement Plan based on
"Average Final Compensation" will be calculated applying the rate of
one year's Full Pay and the Executive's Annual Flexible Perquisite
Allowance for each year in the Compensation Period.
(ii) If Executive was participating in any Retirement Plan
immediately prior to an Involuntary Termination during the two (2)
year period beginning on a Change of Control, the Executive will be
deemed to accrue benefits during the Compensation Period under such
Retirement Plans for purposes of benefit accrual based on the same
formula as in effect immediately prior to such Termination. If the
Executive will have attained age 50 at the end of the Compensation
Period with 10 years of service (including the Compensation Period),
the Executive will, subject to the conditions of Paragraph 6, be
deemed retired with the consent of the Company for the purposes of
welfare and executive compensation plans but not for the purposes of
any Retirement. Notwithstanding any provision herein to the
contrary, upon such a Termination pension benefits under any
Retirement Plan based on "Average Final Compensation" will be
calculated applying the rate of one year's Base Cash for each year
in the Compensation Period.
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(g) Flexible Perquisite Program. During the Compensation Period, the
Executive shall continue to receive benefits under the Program; provided,
further, that in the event of an Involuntary Termination during the two
(2) year period beginning on a Change of Control, ownership of the
automobile assigned to the Executive immediately prior to such Termination
shall be transferred to the Executive within fifteen (15) business days
after such Termination. At the time of such transfer, the Company shall
pay to the Executive such amount in cash that, after payment of all
applicable federal, state and local taxes thereon, computed at the maximum
marginal rates, is equal to all such taxes, so computed, imposed in
connection with such transfer.
(h) Outplacement. During the Compensation Period, Executive will be
provided with outplacement counseling services at Company expense;
provided, however, this expense shall not exceed 18% of the amount of one
year's Full Pay or Base Cash, as the case may be. This counseling shall
include, but is not limited to, skill assessment, job market analysis,
resume preparation, interviewing skills, job search techniques and
negotiating.
6. Conditions on Compensation Continuance.
(a) Availability and Consulting. Upon an Involuntary Termination
prior to, or after the second anniversary of, a Change of Control, during
the related Compensation Period the Executive shall provide consulting
services to the Company on a reasonable basis subject to appropriate
notice and reimbursement of all travel and other expenses. During the
first six (6) months of such Compensation Period, the Executive may be
required by the Company to provide up to fifteen (15) days of consultation
during normal business hours and business days. When and if the Executive
becomes employed on a full-time basis, either with another company or on a
self-employed basis, the Executive's obligation to provide consulting
services shall be limited by the requirements of such employment, and
under appropriate circumstances, may be restricted to telephone
conference.
(b) Confidentiality and Conduct. The Executive warrants that the
Executive will not disclose to any other person any confidential
information or trade secrets concerning the Company or any of its
subsidiaries at any time during or after the Compensation Period and upon
an Involuntary Termination prior to, or after the second anniversary of, a
Change of Control, the Executive will at all times refrain from taking any
action or making any statements, written or oral, which are intended to
and do disparage the goodwill or reputation of the Company, its directors,
officers or executives or which could adversely affect the morale of
Company employees.
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(c) Breach of Conditions. In the event that the Executive
unreasonably refuses to provide consulting services to the extent required
under paragraph (a) above or materially violates the terms and conditions
of paragraph (b) above, the Company may, at its election upon ten (10)
days notice, terminate any ongoing Compensation Period, discontinue cash
compensation payments and employee benefits coverage and cancel any
outstanding stock options or restricted stock. The Company may also
initiate any form of legal action it may deem appropriate seeking damages
or injunctive relief with respect to any material violations of paragraph
(b) above.
(d) Non-Competition. Any Compensation Period resulting from an
Involuntary Termination prior to, or after the second anniversary of, a
Change of Control shall be terminated if the Executive, without the
Company's written approval, accepts a substantially similar or higher
executive position, paying a substantially comparable or greater level of
cash compensation, with any company (other than an Affiliate of the
Company) conducting a business which is substantially competitive with a
business conducted by the Company. Alternatively, the Company may, in its
discretion, appropriately reduce the Executive's cash compensation and
employee benefits coverage for the balance of such Compensation Period.
(e) Employment With Another Employer During Compensation Period.
Except as otherwise provided in this Section 6, if the Executive commences
employment with another employer during a Compensation Period commencing
prior to, or after the second anniversary of, a Change of Control, the
Executive will continue to receive the compensation continuance provided
under Section 5 for the balance of such Compensation Period, except that,
unless otherwise required by law, benefits under the Company's Employee
Benefits Plans, including the Program, if applicable, shall be
appropriately terminated or offset to the extent the same are provided by
the other employer.
(f) Other Severance Benefits. The Executive is entitled to no form
of severance benefits, including benefits otherwise payable under any of
the Company's regular severance policies, other than those set forth or
made applicable by reference in this Agreement. Notwithstanding the
foregoing, the Executive will at the time of termination of employment be
eligible for any form of post-retirement benefit provided under the
Company's qualified Employee Benefits Plans, including retiree medical
benefits, as any other employee upon retirement with the same age and
service. Nothing contained in this Agreement shall adversely affect the
Executive's rights to accrued vested pension benefits or the Executive's
right to receive previously deferred awards or amounts under any of the
Company's short and long term incentive award programs or deferred
compensation plans or perquisite programs.
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(g) Release and Waiver of Claims. In consideration of the
compensation and benefits continuance available pursuant to this
Agreement, upon an Involuntary Termination prior to, or after the second
anniversary of, a Change of Control the Executive agrees to execute a
release, in form and substance reasonably acceptable to the Executive and
the Company, releasing the Company, NHC and NGH from all claims and
liabilities relating to such Termination and the Company's employment of
the Executive.
(h) Disability. In the event the Executive is eligible for benefits
under the Company's Short Term or Long Term Disability Plan during the
Executive's Compensation Period, any Compensation Continuance will be
suspended while disability benefits are paid from any Company plan and
resumed when such disability payments cease. All other provisions of this
Agreement shall remain in effect notwithstanding the Executive's
disability.
(i) Death. In the event of the Executive's death subsequent to
commencement of the Executive's Compensation Period hereunder, the balance
of Compensation Continuance will be paid to the Executive's beneficiary in
a lump sum. "Beneficiary" shall mean the Executive's designated
beneficiary under the Executive's Executive Program life insurance or, if
not so eligible, the Executive's core life insurance benefit under the
Company's plans.
(j) No Mitigations. Notwithstanding anything to the contrary in this
Agreement, the Executive shall not be required to mitigate the amount of
any payment provided for in Section 5 by seeking other employment or
otherwise, nor, except under coordination of benefit rules in connection
with certain welfare benefits under Section 5(e), shall the amount of any
payment or benefit provided for in Section 5 hereof be reduced by any
compensation earned by the Executive as the result of employment by
another employer or by retirement benefits after the Date of Termination
of employment, or otherwise.
7. General Provisions.
(a) Limited Right of Appeal. If the Executive's Compensation Period
is terminated pursuant to Section 6, the Executive may, within fifteen
(15) days after mailing of notice thereof to the Executive, submit to the
Chief Executive Officer of the Company a written objection to such
termination. In such event, the Compensation Committee of the NHC Board at
or before its next regularly scheduled meeting must determine by majority
vote that termination of the Compensation Period was appropriate or,
failing that, the Compensation Period must be reinstated with full
retroactive effect.
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(b) Notices. All notices hereunder shall be in writing and deemed
given if delivered by hand and receipted or if mailed by registered mail,
return receipt requested. Notices to the Company shall be directed to the
Corporate Secretary at the Company's headquarters offices. Notices to the
Executive shall be directed to the Executive's last known home address.
(c) Limited Waiver. The waiver by any party hereto of a violation of
any of the provisions of this Agreement, whether express or implied, shall
not operate or be construed as a waiver of any subsequent violation of any
such provision.
(d) No Assignment. Except as provided herein, no right, benefit,
obligation or interest hereunder shall be subject to assignment,
encumbrance, charge, pledge, hypothecation or set off by Executive or the
Company. The Company, however, may assign its obligations hereunder in the
event of the transfer of the Executive's employment to an Affiliated
Company or the divestiture (whether by the sale of shares or assets) of
the operating company employing the Executive. In the event the
obligations of the Company under this Agreement are assigned to an
employing Affiliated Company as contemplated by Section 4(a)(iii), the
Company agrees to guarantee to Executive the obligations of such
Affiliated Company under this Agreement. Except as provided in the
preceding sentence, upon any permitted assignment of the Company's
obligations hereunder, "Company" shall be deemed to refer to the assignee
as the context may require.
(e) Amendment. This Agreement may not be amended, modified or
cancelled except by written agreement of the parties.
(f) Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall remain in full
force and effect to the fullest extent permitted by law.
(g) Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Executive, the Company, its affiliates, and any
successor organization or organizations which shall succeed to
substantially all of the business and property of the Company, whether by
means of merger, consolidation, acquisition of substantially all of the
assets of the Company or otherwise, including by operation of law.
(h) Unsecured Promise. Unless otherwise stated herein, no benefit or
promise hereunder shall be secured by any specific assets of the Company.
Unless otherwise stated herein, the Executive shall have only the rights
of an unsecured general creditor of the Company in seeking satisfaction of
such benefits or promises. Notwithstanding the foregoing, the Company may
choose to maintain a rabbi trust or trusts for the purpose of paying
certain of the benefits hereunder or under other plans and programs of the
Company and, if so, the Executive shall be entitled to payments therefrom,
if any, as and to the extent provided in such rabbi trust or trusts.
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(i) Governing Law. This Agreement has been made in and shall be
governed and construed in accordance with the laws of the State of
Delaware.
(j) Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties hereto with respect to the matters
covered hereby. This Agreement supersedes and replaces any prior agreement
with respect to employment, compensation continuation and the matters
contained in this Agreement which the Executive may have had with the
Company or any affiliate.
(k) Legal Fees and Expenses.
(i) The Company shall pay to the Executive as incurred all
legal and accounting fees and expenses incurred by the Executive as
a result of the Executive's Involuntary Termination on or during the
two (2) year period beginning on a Change of Control (including all
such fees and expenses, if any, in seeking to obtain or enforce any
right or benefit provided by this Agreement or any other
compensation-related plan, agreement or arrangement of the Company)
unless the Executive's claim is found by an arbitral tribunal of
competent jurisdiction to have been frivolous.
(ii) The Company shall pay to the Executive as incurred all
legal and accounting fees and expenses incurred by the Executive
during the two (2) year period beginning on a Change of Control as a
result of both (A) the Executive's Involuntary Termination prior to
such Change of Control and (B) the Company's refusal after such
Change of Control to provide any right or benefit provided by this
Agreement or any other compensation-related plan, agreement or
arrangement of the Company in respect of such Termination, including
all such fees and expenses, if any, in seeking to obtain or enforce
any such right or benefit unless the Executive's claim is found by
an arbitral tribunal or court of competent jurisdiction to have been
frivolous.
(l) Certain AIAP and LTIP Change of Control Provisions.
(i) In the event of a Change of Control, the Executive will be
paid within fifteen (15) business days following the date of such
Change of Control a lump sum cash payment equal to the Executive's
AIAP Vested Amount.
(ii) Upon a Change of Control, all stock options, shares of
restricted stock, restricted stock units and restricted stock
equivalents then held by the Executive under either LTIP shall
become 100% vested and non-forfeitable on the date of such Change of
Control and any restrictions thereon shall immediately lapse on such
date.
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(m) Certain Payments.
(i) Anything herein to the contrary notwithstanding, in the
event that it is determined that any payment or distribution by the
Company to or for the Executive's benefit, whether paid or payable
or distributed or distributable pursuant to the terms hereof,
including but not limited to Section 7(l), or otherwise, other than
any payment pursuant to this Section 7(m), (a "Payment"), would be
subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive, within fifteen (15) business days
following the determination described in Section 7(m)(ii) below, an
additional payment ("Excise Tax Adjustment Payment") in an amount
such that after payment by the Executive of all applicable Federal,
state and local taxes (computed at the maximum marginal rates and
including any interest or penalties imposed with respect to such
taxes), including any Excise Tax, imposed upon the Excise Tax
Adjustment Payment, the Executive shall retain an amount of the
Excise Tax Adjustment Payment equal to the Excise Tax imposed upon
the Payments.
(ii) All determinations required to be made under this Section
7(m), including whether Excise Tax Adjustment Payment is required
and the amount of such Excise Tax Adjustment Payment, shall be made
by Deloitte & Touche LLP, or such other accounting firm as the
Company may designate prior to a Change of Control, which shall
provide to the Company and the Executive detailed supporting
calculations within fifteen (15) business days of the date of the
Executive's termination of employment. Except as hereinafter
provided, any determination by Deloitte & Touche LLP, or such other
accounting firm as the Company may designate prior to a Change of
Control, shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the
Code at the time of the initial determination hereunder, it is
possible that (x) Excise Tax Adjustment Payments which should have
been made will not have been made by the Company ("Underpayment"),
or (y) certain Payments will have been made which should not have
been made ("Overpayment"), consistent with the calculations required
to be made hereunder. In the event of an Underpayment, the Company
shall promptly determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the
Company to or for the Executive's benefit. In the event that the
Executive discovers that an Overpayment shall have occurred, the
amount thereof shall be promptly repaid to the Company.
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(n) Arbitration. Following a Change of Control, any dispute or
controversy arising under or in connection with this Agreement shall be
settled exclusively by arbitration in New York, New York in accordance
with the National Rules for the Resolution of Employment Disputes of the
American Arbitration Association then in effect. The determination of the
arbitral tribunal shall be conclusive and binding on the parties and
judgment may be entered on the arbitrator's award in any court having
jurisdiction.
(o) Unconditional Obligation. The Company's obligations to make all
payments and honor all commitments under this Agreement or otherwise
following a Change of Control or in connection with an Involuntary
Termination during the two (2) year period beginning on a Change of
Control shall be absolute and unconditional and shall not be affected by
any circumstances including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may
have against the Executive.
(p) Late Payments. To the extent that any payments required to be
made hereunder following a Change of Control in connection with any
Involuntary Termination occurring prior to the second anniversary of such
Change of Control are not made within the period specified therefor, the
Company shall be liable for interest on such delayed payments at the rate
of 150% of the prime rate compounded monthly, as posted by the Morgan
Guaranty Trust Company of New York, from time to time.
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(q) Actuarial Calculations. All required actuarial calculations of
payments to be made hereunder shall be made by Watson Wyatt Worldwide, New
York, New York, or such other actuarial firm as the Company may designate
prior to a Change of Control.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
NABISCO, INC.
By: /s/ C. Michael Sayeau
------------------------------------
C. Michael Sayeau
Executive Vice President and
Chief Personnel Officer
NABISCO HOLDINGS CORP.
By: /s/ C. Michael Sayeau
------------------------------------
C. Michael Sayeau
Executive Vice President and
Chief Personnel Officer
NABISCO GROUP HOLDINGS, INC.
By: /s/ James M. Kilts
------------------------------------
James M. Kilts
President and Chief Executive Officer
THE EXECUTIVE
/s/ Richard H. Lenny
- --------------------
Richard H. Lenny
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EXHIBIT A
DEFINITIONS
AIAP Vested Amount means, as of a Change of Control or as of a Termination
Date during the two (2) year period beginning on a Change of Control, as the
case may be, an amount equal to the value of the Executive's target award under
the relevant AIAP for the relevant performance period in which the Change of
Control or such termination occurs, as the case may be, multiplied by a
fraction, the numerator of which is the number of months (including partial
months) in the period beginning on the first day of the relevant performance
period and ending on the Change of Control or such Termination Date, as the case
may be, and the denominator of which is the number of months in such performance
period; provided that in the event of a termination of employment following a
Change of Control in the year in which a Change of Control occurs, for purposes
of computing the AIAP Vested Amount as of the date of such termination, the
performance period shall be deemed to begin on the first day following the
Change of Control and the target award shall be that in effect immediately
preceding such Change of Control.
Earned 1999 Program Amount means, as of a Termination Date during the two
(2) year period beginning on a Change of Control, an amount equal to the
Executive's Retention Award or awards under the 1999 Program in respect of
calendar years ending prior to such Termination Date and not previously paid to
the Executive.
Vested 1999 Program Amount means, as of a Termination Date during the two
(2) year period beginning on a Change of Control, an amount equal to the value
of the Executive's Retention Award under the 1999 Program in respect of the year
in which such Termination Date occurs.
Retirement Plans means the Retirement Plan for Employees of Nabisco, Inc.,
the Additional Benefits Plan of Nabisco, Inc. and participating Companies, the
Supplemental Benefits Plan of Nabisco, Inc. and participating Companies and the
Supplemental Executive Retirement Plan of Nabisco, Inc. and participating
Companies, and such other plans as the Board may hereafter determine.
Savings Plans means the Capital Investment Plan of Nabisco, Inc., the
Additional Benefits Plan of Nabisco, Inc. and participating Companies and the
Supplemental Benefits Plan of Nabisco, Inc. and participating Companies, and
such other plans as the Board may hereafter determine.
<PAGE>
Exhibit 10.8
EMPLOYMENT AGREEMENT
AMENDMENT AND RESTATEMENT, made effective as of this 17th day of March,
2000, of the EMPLOYMENT AGREEMENT dated September 1, 1995, as amended, by and
between NABISCO, INC., a New Jersey corporation (the "Company"), and Douglas R.
Conant ("the Executive").
RECITALS
WHEREAS, the Executive and RJR Nabisco, Inc., a Delaware corporation
("RJRN"), entered into the Employment Agreement dated September 1, 1995; and
WHEREAS, the Executive, RJRN and the Company executed an Amendment to the
Employment Agreement as of May 1, 1999; and
WHEREAS, the Company and the Executive agree that the Employment Agreement
should be further amended and restated, in order to more effectively provide the
Executive continued incentives to remain in the service of the Company or its
subsidiaries or affiliates;
NOW, THEREFORE, in consideration of mutual incentives, it is hereby agreed
by and between the Company, Nabisco Holdings Corp. ("NHC") and Nabisco Group
Holdings Corp. ("NGH") and the Executive to amend and restate the Employment
Agreement, effective on the date first above written, as follows:
1. Employment. The Executive agrees to devote the Executive's working time
exclusively to the performance of such services for the Company or NHC or any of
their Subsidiaries or Affiliates (each, as defined below) as may be assigned to
the Executive from time to time and to perform such services faithfully and to
the best of the Executive's ability except as the provisions of subsections
4(b)(i) or 4(b)(ii) shall apply.
For purposes of this Agreement, (i) "Affiliate" means, with respect to the
Company, NHC or NGH, any person or entity directly or indirectly controlling,
controlled by, or under common control with the Company, NHC or NGH, as the case
may be, and (ii) "Subsidiary" of the Company, NHC or NGH means any entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the Company, NHC or
NGH, as the case may be.
<PAGE>
2. Term of Agreement. Subject to Section 7(e) hereof, this Agreement shall
commence on the date hereof and shall remain in effect so long as the Executive
remains employed by the Company or NHC or any of their subsidiaries or any
successor organizations.
3. Termination of Employment Without Compensation Continuance.
(a) Termination for Cause. This Agreement shall immediately be
terminated and neither party shall have any obligation hereunder if the
Executive's employment is terminated for Cause (as defined below).
(i) At any time before a Change of Control (as defined below)
or following the second anniversary of such Change of Control,
termination for "Cause" shall mean termination by the Company of the
Executive's employment resulting from the Executive's: (A) criminal
dishonesty; (B) deliberate and 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 a majority of the Board of Directors of NHC (the
"NHC Board"); or (D) deliberate misconduct which could be materially
damaging to the Company without reasonable good faith belief by the
Executive that such conduct was in the best interests of the
Company.
(ii) Any purported termination for Cause under Section 3(a)(i)
shall not be applicable unless (A) the Executive is advised in
writing that the Executive is being terminated for Cause and, (B) if
within fifteen (15) days thereafter the Executive submits to the
Chief Executive Officer of the Company a written objection to such a
determination, the Compensation Committee of the NHC Board at or
before its next regularly scheduled meeting determines by majority
vote that the Executive has been terminated for Cause.
(iii) During the two (2) year period beginning on a Change of
Control, termination for "Cause" shall mean termination by the
Company of the Executive's employment resulting from the
Executive's: (A) willful and continued failure substantially to
perform employment duties with the Company or any Subsidiary or
Affiliate (other than as a result of total or partial incapacity due
to physical or mental illness or as a result of a termination by the
Executive for Good Reason (as defined below)) after a written demand
for substantial performance is delivered to the Executive by the NHC
Board, which demand specifically identifies the manner in which the
NHC Board believes that the Executive has not substantially
performed the Executive's duties; (B) the willful engaging by the
Executive in conduct which is demonstrably and materially injurious
to NHC, NGH or the Company, monetarily or otherwise; or (C) the
Executive's conviction of a
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felony under the laws of the United States, any state or any other
country or political sub-division thereof involving moral turpitude.
For purposes of this paragraph (iii), no act or failure to act on
the Executive's part shall be deemed "willful" unless done or
omitted to be done by the Executive not in good faith and without
reasonable belief that the Executive's action or omission was in the
best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause
under this paragraph (iii) unless and until there shall have been
delivered to the Executive documentation of the affirmative vote
(which cannot be delegated) of not less than three-quarters (3/4) of
the entire membership of the NHC Board of Directors at a meeting of
the NHC Board called and held for such purpose (after reasonable
notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the NHC
Board), finding that in the good faith opinion of the NHC Board the
Executive was guilty of conduct set forth above in subclauses (A),
(B) or (C) above, specifying the particulars thereof in detail.
(b) Voluntary Termination of Employment by the Executive. The
Executive reserves the right to terminate voluntarily the Executive's
employment at any time for any reason. Upon such a termination other than
a termination pursuant to Section 4(b), all obligations of the Company
hereunder shall be cancelled automatically, and the Executive shall not be
entitled to any form of Compensation Continuance under this Agreement,
including that described in Section 5 below.
(c) Disability. The event of physical or mental disability of a
nature that entitles the Executive to benefits under the Company's
Long-Term Disability Plan is not a termination of employment under any
section of this Agreement. As such, disability shall not qualify the
Executive for the Compensation Continuance described herein unless the
Executive is terminated under Section 4(a) or Section 4(b)(i).
(d) Death. In the event of the Executive's death prior to
Involuntary Termination, this Agreement will be null and void.
4. Termination With Compensation Continuance.
(a) Involuntary Termination Without Cause by the Company.
(i) The Company reserves the right to terminate the employment
of the Executive at any time for any reason subject to providing the
compensation and benefits described herein. Except as provided in
Section 6, the Company will provide the Executive with the
Compensation Continuance described in Section 5 hereof if the
Executive is involuntarily separated from active employment without
Cause by the Company ("Involuntary Termination").
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(ii) The divestiture of the operating company employing the
Executive, and the assignment of the obligations of the Company
under this Agreement to such operating company, or its successor or
acquiror, in connection with the divestiture of either all, or
substantially all, the shares or assets of such operating company
shall not automatically be an Involuntary Termination unless such
divestiture and assignment would result in an Involuntary
Termination under Section 4(b) hereof.
(iii) The transfer of the Executive's employment to any
company that owns at least 50% of the voting power of the Company,
or any subsidiary of such company (an "Affiliated Company"), shall
not automatically be deemed an Involuntary Termination unless such
transfer would result in an Involuntary Termination under Section
4(b) hereof.
(b) Deemed Involuntary Termination Without Cause by the Company.
(i) At any time before a Change of Control or following the
second anniversary of a Change of Control, Involuntary Termination
shall be deemed to occur if the Executive voluntarily terminates
employment after: (A) the total amount of the Executive's base
salary, annual bonus and long term incentive opportunity under the
Annual Incentive Award Plans (or other annual incentive plans) of
NGH or NHC, as the case may be, (collectively, as in effect from
time to time, the "AIAPs") and Long Term Incentive Plans (or other
long term incentive plans) of NGH or NHC, as the case may be
(collectively, as in effect from time to time, the "LTIPs") is at
any time reduced by more than 20% without the Executive's consent,
provided, however, nothing herein shall be construed to guarantee
the Executive's target award if performance is below target; (B) the
Executive's job responsibilities are substantially reduced in
importance without the Executive's consent or the Company fails to
guarantee the obligations hereunder as required by Section 7(d); or
(C) the Executive, without the Executive's consent, is at any time
required as a condition of continued employment to relocate more
than thirty-five (35) miles from the Executive's then current place
of employment. Unless the Executive provides written notification of
the Executive's non-consent to an event in (A), (B) or (C) above
within ninety (90) days after the occurrence of such event, the
Executive shall be deemed to have consented to the occurrence of
such event and no deemed Involuntary Termination shall occur. If the
Executive provides written notice of the Executive's non-consent to
any of the events in (A), (B) or (C) above within ninety (90) days
after the occurrence of such event, the Executive shall be deemed to
have been Involuntarily Terminated ninety (90) days after receipt of
such written notice by the Company.
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(ii) At any time during the two (2) year period beginning on a
Change of Control, Involuntary Termination shall be deemed to occur
if the Executive voluntarily terminates employment after an event of
"Good Reason". For purposes of this Agreement "Good Reason" shall
mean, without the Executive's express written consent, any of the
following:
(A) Any reduction in the Executive's duties, any
diminution in the Executive's position or any adverse change
in the Executive's reporting relationship from those in effect
immediately prior to the Change of Control;
(B) Any reduction in the Executive's base salary, grade
or annual bonus or long term incentive opportunity as in
effect immediately prior to the Change of Control or as the
same may thereafter be increased from time to time during the
term of this Agreement;
(C) The failure to continue in effect any compensation
or benefit plan in which the Executive participates or is
entitled to participate in at the time of the Change of
Control, including but not limited to the relevant LTIP, the
relevant AIAP, any defined benefit or defined contribution
plan or related supplemental plans, or any substitute plans
adopted prior to the Change of Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative
plan providing the Executive with substantially similar
benefits) has been made with respect to such plan in
connection with the Change of Control, or the failure to
continue the Executive's participation therein on
substantially the same basis, both in terms of the amount of
the benefits provided and the level of the Executive's
participation relative to other participants, as existed at
the time of the Change of Control;
(D) The taking of any action which would directly or
indirectly reduce any of the benefits to be provided under
Section 5 or any benefits thereunder or any compensation or
benefit plan of the Company, NGH or NHC including, without
limitation the LTIPs, the AIAPs and the Company's Deferred
Compensation Plan or deprive the Executive of or reduce any
benefits or amounts with respect to any perquisite or any
material fringe benefit enjoyed by the Executive at the time
of the Change of Control, or the failure to provide the
Executive with the number of paid vacation days to which the
Executive is entitled on the basis of the Company's practice
with respect to the Executive as in effect at the time of the
Change of Control;
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(E) Any material breach by the Company, NGH or NHC of
any provision of this Agreement including, but not limited to
any provision of Section 5, any benefits thereunder or any
compensation, benefit or perquisite plan of the Company, NGH
or NHC including, without limitation the LTIPs, the AIAPs and
the Company's Deferred Compensation Plan, or any agreements
entered into pursuant thereto;
(F) Any purported termination of Executive's employment
which is not effected pursuant to a Notice of Termination
satisfying the requirements of subsection (c) below; provided
further that for purposes of this Agreement, no such purported
termination shall be effective; or
(G) Requiring the Executive to be based at any office or
location more than thirty-five (35) miles from the office or
location at which the Executive was based immediately prior to
such Change of Control, except for travel reasonably
consistent with the Executive's travel requirements prior to
such Change of Control;
If the Executive provides written notice of the
Executive's non-consent to any of the events in (A), (B), (C),
(D), (E), (F) or (G), above within 180 days after the
occurrence of any such event, the Executive shall be deemed to
have been Involuntarily Terminated upon the earlier of the
date set forth in Executive's Notice of Termination or 181
days after the occurrence of such event.
(iii) As used herein, a "Change of Control" shall occur on the
date upon which one of the following events occurs (except as
otherwise provided in paragraph (C) below):
(A) Any individual, corporation, partnership, group,
associate or other entity or "person" as such term is defined
in Section 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"), other than NHC, NGH or any of their
Subsidiaries, or any employee benefit plan(s) sponsored by
NHC, NGH or any of their Subsidiaries, is or becomes the
"beneficial owner" (as defined in Rule 13D-3 under the
Exchange Act), directly or indirectly, of 30% or more of the
combined voting power of NHC or NGH outstanding securities
ordinarily having the right to vote at elections of directors;
(B) Individuals who constitute the Board of either NHC
or NGH on January 1, 2000 (each such Board the "Incumbent
Board") cease for any reason to constitute at least a majority
of the Board of NHC or NGH, as the case may be, provided that
any person becoming a director subsequent to such date hereof
whose election, or nomination for election by NHC or NGH
shareholders, as the case may
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be, was approved by a vote of at least three-quarters of the
directors comprising that Incumbent Board (either by a
specific vote or by approval of the proxy statement of NHC or
NGH, as the case may be, in which such person is named a
nominee of NHC or NGH, as the case may be, but excluding for
this purpose any such individual whose initial assumption of
office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or
on behalf of an individual, corporation, partnership, group,
associate or other entity or "person" other than the NHC or
NGH Board, as the case may be, shall be, for purposes of this
paragraph (B), considered as though such person were a number
of the Incumbent Board.
(C) The approval by the shareholders of NHC or NGH, as
the case may be, of a plan or agreement providing (I) for a
merger or consolidation of NHC or NGH, as the case may be,
other than with a wholly-owned subsidiary or with NGH, NHC or
any of their subsidiaries, and other than a merger or
consolidation that would result in the voting securities of
NHC or NGH, as the case may be, outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting
power of the voting securities of NHC or NGH, as the case may
be, of such surviving entity outstanding immediately after
such merger or consolidation or (II) for a sale, exchange or
other disposition of all or substantially all of the assets of
NHC or NGH. If any of the events enumerated in this paragraph
(C) occurs, the NHC Board shall determine the effective date
of the Change of Control resulting therefrom.
(c) (i) Any purported termination of the Executive's employment by
the Company or by the Executive shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 7(b)
hereof. For purposes of this Agreement, (A) during the twenty-four (24)
month period beginning on a Change of Control a "Notice of Termination" by
the Company shall mean, and (B) prior to, and following the second
anniversary of, a Change of Control a "Notice of Termination" by the
Executive shall mean, a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of Executive's employment under the provision so
indicated.
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(ii) "Date of Termination" shall mean (i) if the Executive's
employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that the Executive shall
not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), (ii) if the Executive's
employment is terminated by reason of the Executive's death, the
date of the Executive's death, (iii) if the Executive's employment
is terminated by reason of the Executive's Retirement, for Cause,
Involuntary Termination or for any other reason (other than
Disability or death), the date specified in the Notice of
Termination (which (A) in the case of a termination for Cause during
the two (2) year period beginning on a Change of Control shall not
be less than thirty (30) nor more than sixty (60) days from the date
such Notice of Termination is given and (B) in the case of the
Executive's voluntary termination (other than pursuant to Section
4(b) and other than during the two (2) year period beginning on a
Change of Control) shall not be less than three (3) months after the
date such Notice of Termination is given).
5. Compensation Continuance Under This Agreement.
(a) Compensation Period. If at any time during the term of this
Agreement the Executive has an Involuntary Termination pursuant to Section
4, subject to Section 6(g), if applicable, the Executive will be provided
with Compensation Continuance as provided in this Section 5.
(b) Cash Compensation.
(i)(A) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, the Executive will be
entitled to cash compensation equal to two (2) year's Full Pay,
calculated as described below, payable in equal monthly installments
over the Compensation Period (as defined below), each installment
representing 1/18th of one year's Full Pay (as defined below). One
year's "Full Pay" is the sum of (x) plus (y), where (x) is the
Executive's highest annual rate of base salary in effect during the
twelve (12) month period prior to the Executive's Involuntary
Termination and (y) is the annual target amount of the Executive's
annual bonus under the relevant AIAP and/or LTIP for the calendar
year in which the Executive's employment terminated (or, if greater,
the amount of such actual award for the next preceding calendar year
of full-time employment). For all purposes of this Agreement,
"Compensation Period" shall mean the three (3) year period
commencing on the Date of Termination.
8
<PAGE>
(B) Upon an Involuntary Termination during the two (2)
year period beginning on a Change of Control, the Executive will be
entitled to a lump sum payment within fifteen (15) business days
following the date of such Involuntary Termination equal to twice
the sum of (u), (v) and (w), where (u) is the greater of the
Executive's annual base salary as in effect immediately prior to
such Termination or immediately prior to such Change of Control
(such greater amount, the "Base Salary"), (v) is the greater of the
Executive's annual target bonus under the relevant AIAP and/or LTIP
immediately prior to such Termination or immediately prior to the
Change of Control or ("Target Amount") and (w) is 1.5 times the
greater of the annual perquisite allowance applicable to the
Executive under the Nabisco Flexible Perquisite Program (the
"Program") as in effect immediately prior to such Termination or
immediately prior to such Change of Control (such greater amount,
the "Allowance"). The sum of Base Salary, Target Amount and
Allowance are hereinafter referred to as "Base Cash". For purposes
of this Agreement, "Compensation Period" shall mean the three (3)
year period commencing on the Date of Termination.
(ii) Cash compensation paid pursuant to this Section 5(b)
shall be subject to all required payroll deductions.
(c) Annual Incentive and Retention Plan Awards.
(i) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, the Executive will be
paid at the time of such Involuntary Termination a portion of the
Executive's annual bonus under the relevant AIAP and/or LTIP, based
upon the target award for the year in which the Executive's
Involuntary Termination occurs, prorated for the Executive's active
employment during such year. Except as stated in the foregoing
sentence, all provisions of the relevant AIAP and/or LTIP shall be
applicable to the Executive.
(ii) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, all provisions of NHC's
1999 Retention Program (the "1999 Program") shall be applicable to
the Executive.
(iii) Upon an Involuntary Termination during the two (2) year
period beginning on a Change of Control, the Company shall pay to
the Executive, not later than fifteen (15) business days following
the Date of Termination, a lump sum cash payment equal to the sum of
(A) and (B), where (A) is Executive's AIAP Vested Amount for such
plan year and (B) is the sum of (x) and (y) where (x) is the
Executive's Vested 1999 Program Award Amount and (y) is the
Executive's Earned 1999 Program Amount (each as defined in Exhibit
A) as of the Date of Termination.
9
<PAGE>
(d) Long Term Incentive Plan Awards. The treatment of long term
incentive awards during the Compensation Period shall be determined
pursuant to the terms of the relevant LTIP and related award agreements;
provided, however, that for such purposes, the Compensation Period shall
be treated as a period of salary and benefit continuance.
(e) Welfare Benefits. During the Compensation Period the Executive
will be provided the welfare benefits and other fringe benefits afforded
by the employee benefit plans and programs maintained by the Company in
which the Executive participated immediately prior to Involuntary
Termination.
(f) Retirement and Savings Plans.
(i) If Executive was participating in any Retirement Plan or
Savings Plan (each as defined in Exhibit A) immediately prior to an
Involuntary Termination prior to, or after the second anniversary
of, a Change of Control, the Executive will continue to accrue or be
deemed to accrue benefits during the Compensation Period under such
Retirement Plans and Savings Plans for purposes of benefit accrual
and employer matching contributions, as applicable, based on the
same formula and matching amount as in effect immediately prior to
such Termination. If the Executive will have attained age 50 at the
end of the Compensation Period with 10 years of service (including
the Compensation Period), the Executive will, subject to the
conditions of Paragraph 6, be deemed retired with the consent of the
Company for the purposes of welfare and executive compensation plans
but not for the purposes of any Retirement or Savings Plan.
Notwithstanding any provision herein to the contrary, upon such a
Termination pension benefits under any Retirement Plan based on
"Average Final Compensation" will be calculated applying the rate of
one year's Full Pay and the Executive's Annual Flexible Perquisite
Allowance for each year in the Compensation Period.
(ii) If Executive was participating in any Retirement Plan
immediately prior to an Involuntary Termination during the two (2)
year period beginning on a Change of Control, the Executive will be
deemed to accrue benefits during the Compensation Period under such
Retirement Plans for purposes of benefit accrual based on the same
formula as in effect immediately prior to such Termination. If the
Executive will have attained age 50 at the end of the Compensation
Period with 10 years of service (including the Compensation Period),
the Executive will, subject to the conditions of Paragraph 6, be
deemed retired with the consent of the Company for the purposes of
welfare and executive compensation plans but not for the purposes of
any Retirement. Notwithstanding any provision herein to the
contrary, upon such a Termination pension benefits under any
Retirement Plan based on "Average Final Compensation" will be
calculated applying the rate of one year's Base Cash for each year
in the Compensation Period.
10
<PAGE>
(g) Flexible Perquisite Program. During the Compensation Period, the
Executive shall continue to receive benefits under the Program; provided,
further, that in the event of an Involuntary Termination during the two
(2) year period beginning on a Change of Control, ownership of the
automobile assigned to the Executive immediately prior to such Termination
shall be transferred to the Executive within fifteen (15) business days
after such Termination. At the time of such transfer, the Company shall
pay to the Executive such amount in cash that, after payment of all
applicable federal, state and local taxes thereon, computed at the maximum
marginal rates, is equal to all such taxes, so computed, imposed in
connection with such transfer.
(h) Outplacement. During the Compensation Period, Executive will be
provided with outplacement counseling services at Company expense;
provided, however, this expense shall not exceed 18% of the amount of one
year's Full Pay or Base Cash, as the case may be. This counseling shall
include, but is not limited to, skill assessment, job market analysis,
resume preparation, interviewing skills, job search techniques and
negotiating.
6. Conditions on Compensation Continuance.
(a) Availability and Consulting. Upon an Involuntary Termination
prior to, or after the second anniversary of, a Change of Control, during
the related Compensation Period the Executive shall provide consulting
services to the Company on a reasonable basis subject to appropriate
notice and reimbursement of all travel and other expenses. During the
first six (6) months of such Compensation Period, the Executive may be
required by the Company to provide up to fifteen (15) days of consultation
during normal business hours and business days. When and if the Executive
becomes employed on a full-time basis, either with another company or on a
self-employed basis, the Executive's obligation to provide consulting
services shall be limited by the requirements of such employment, and
under appropriate circumstances, may be restricted to telephone
conference.
(b) Confidentiality and Conduct. The Executive warrants that the
Executive will not disclose to any other person any confidential
information or trade secrets concerning the Company or any of its
subsidiaries at any time during or after the Compensation Period and upon
an Involuntary Termination prior to, or after the second anniversary of, a
Change of Control, the Executive will at all times refrain from taking any
action or making any statements, written or oral, which are intended to
and do disparage the goodwill or reputation of the Company, its directors,
officers or executives or which could adversely affect the morale of
Company employees.
11
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(c) Breach of Conditions. In the event that the Executive
unreasonably refuses to provide consulting services to the extent required
under paragraph (a) above or materially violates the terms and conditions
of paragraph (b) above, the Company may, at its election upon ten (10)
days notice, terminate any ongoing Compensation Period, discontinue cash
compensation payments and employee benefits coverage and cancel any
outstanding stock options or restricted stock. The Company may also
initiate any form of legal action it may deem appropriate seeking damages
or injunctive relief with respect to any material violations of paragraph
(b) above.
(d) Non-Competition. Any Compensation Period resulting from an
Involuntary Termination prior to, or after the second anniversary of, a
Change of Control shall be terminated if the Executive, without the
Company's written approval, accepts a substantially similar or higher
executive position, paying a substantially comparable or greater level of
cash compensation, with any company (other than an Affiliate of the
Company) conducting a business which is substantially competitive with a
business conducted by the Company. Alternatively, the Company may, in its
discretion, appropriately reduce the Executive's cash compensation and
employee benefits coverage for the balance of such Compensation Period.
(e) Employment With Another Employer During Compensation Period.
Except as otherwise provided in this Section 6, if the Executive commences
employment with another employer during a Compensation Period commencing
prior to, or after the second anniversary of, a Change of Control, the
Executive will continue to receive the compensation continuance provided
under Section 5 for the balance of such Compensation Period, except that,
unless otherwise required by law, benefits under the Company's Employee
Benefits Plans, including the Program, if applicable, shall be
appropriately terminated or offset to the extent the same are provided by
the other employer.
(f) Other Severance Benefits. The Executive is entitled to no form
of severance benefits, including benefits otherwise payable under any of
the Company's regular severance policies, other than those set forth or
made applicable by reference in this Agreement. Notwithstanding the
foregoing, the Executive will at the time of termination of employment be
eligible for any form of post-retirement benefit provided under the
Company's qualified Employee Benefits Plans, including retiree medical
benefits, as any other employee upon retirement with the same age and
service. Nothing contained in this Agreement shall adversely affect the
Executive's rights to accrued vested pension benefits or the Executive's
right to receive previously deferred awards or amounts under any of the
Company's short and long term incentive award programs or deferred
compensation plans or perquisite programs.
12
<PAGE>
(g) Release and Waiver of Claims. In consideration of the
compensation and benefits continuance available pursuant to this
Agreement, upon an Involuntary Termination prior to, or after the second
anniversary of, a Change of Control the Executive agrees to execute a
release, in form and substance reasonably acceptable to the Executive and
the Company, releasing the Company, NHC and NGH from all claims and
liabilities relating to such Termination and the Company's employment of
the Executive.
(h) Disability. In the event the Executive is eligible for benefits
under the Company's Short Term or Long Term Disability Plan during the
Executive's Compensation Period, any Compensation Continuance will be
suspended while disability benefits are paid from any Company plan and
resumed when such disability payments cease. All other provisions of this
Agreement shall remain in effect notwithstanding the Executive's
disability.
(i) Death. In the event of the Executive's death subsequent to
commencement of the Executive's Compensation Period hereunder, the balance
of Compensation Continuance will be paid to the Executive's beneficiary in
a lump sum. "Beneficiary" shall mean the Executive's designated
beneficiary under the Executive's Executive Program life insurance or, if
not so eligible, the Executive's core life insurance benefit under the
Company's plans.
(j) No Mitigations. Notwithstanding anything to the contrary in this
Agreement, the Executive shall not be required to mitigate the amount of
any payment provided for in Section 5 by seeking other employment or
otherwise, nor, except under coordination of benefit rules in connection
with certain welfare benefits under Section 5(e), shall the amount of any
payment or benefit provided for in Section 5 hereof be reduced by any
compensation earned by the Executive as the result of employment by
another employer or by retirement benefits after the Date of Termination
of employment, or otherwise.
7. General Provisions.
(a) Limited Right of Appeal. If the Executive's Compensation Period
is terminated pursuant to Section 6, the Executive may, within fifteen
(15) days after mailing of notice thereof to the Executive, submit to the
Chief Executive Officer of the Company a written objection to such
termination. In such event, the Compensation Committee of the NHC Board at
or before its next regularly scheduled meeting must determine by majority
vote that termination of the Compensation Period was appropriate or,
failing that, the Compensation Period must be reinstated with full
retroactive effect.
13
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(b) Notices. All notices hereunder shall be in writing and deemed
given if delivered by hand and receipted or if mailed by registered mail,
return receipt requested. Notices to the Company shall be directed to the
Corporate Secretary at the Company's headquarters offices. Notices to the
Executive shall be directed to the Executive's last known home address.
(c) Limited Waiver. The waiver by any party hereto of a violation of
any of the provisions of this Agreement, whether express or implied, shall
not operate or be construed as a waiver of any subsequent violation of any
such provision.
(d) No Assignment. Except as provided herein, no right, benefit,
obligation or interest hereunder shall be subject to assignment,
encumbrance, charge, pledge, hypothecation or set off by Executive or the
Company. The Company, however, may assign its obligations hereunder in the
event of the transfer of the Executive's employment to an Affiliated
Company or the divestiture (whether by the sale of shares or assets) of
the operating company employing the Executive. In the event the
obligations of the Company under this Agreement are assigned to an
employing Affiliated Company as contemplated by Section 4(a)(iii), the
Company agrees to guarantee to Executive the obligations of such
Affiliated Company under this Agreement. Except as provided in the
preceding sentence, upon any permitted assignment of the Company's
obligations hereunder, "Company" shall be deemed to refer to the assignee
as the context may require.
(e) Amendment. This Agreement may not be amended, modified or
cancelled except by written agreement of the parties.
(f) Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall remain in full
force and effect to the fullest extent permitted by law.
(g) Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Executive, the Company, its affiliates, and any
successor organization or organizations which shall succeed to
substantially all of the business and property of the Company, whether by
means of merger, consolidation, acquisition of substantially all of the
assets of the Company or otherwise, including by operation of law.
(h) Unsecured Promise. Unless otherwise stated herein, no benefit or
promise hereunder shall be secured by any specific assets of the Company.
Unless otherwise stated herein, the Executive shall have only the rights
of an unsecured general creditor of the Company in seeking satisfaction of
such benefits or promises. Notwithstanding the foregoing, the Company may
choose to maintain a rabbi trust or trusts for the purpose of paying
certain of the benefits hereunder or under other plans and programs of the
Company and, if so, the Executive shall be entitled to payments therefrom,
if any, as and to the extent provided in such rabbi trust or trusts.
14
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(i) Governing Law. This Agreement has been made in and shall be
governed and construed in accordance with the laws of the State of
Delaware.
(j) Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties hereto with respect to the matters
covered hereby. This Agreement supersedes and replaces any prior agreement
with respect to employment, compensation continuation and the matters
contained in this Agreement which the Executive may have had with the
Company or any affiliate.
(k) Legal Fees and Expenses.
(i) The Company shall pay to the Executive as incurred all
legal and accounting fees and expenses incurred by the Executive as
a result of the Executive's Involuntary Termination on or during the
two (2) year period beginning on a Change of Control (including all
such fees and expenses, if any, in seeking to obtain or enforce any
right or benefit provided by this Agreement or any other
compensation-related plan, agreement or arrangement of the Company)
unless the Executive's claim is found by an arbitral tribunal of
competent jurisdiction to have been frivolous.
(ii) The Company shall pay to the Executive as incurred all
legal and accounting fees and expenses incurred by the Executive
during the two (2) year period beginning on a Change of Control as a
result of both (A) the Executive's Involuntary Termination prior to
such Change of Control and (B) the Company's refusal after such
Change of Control to provide any right or benefit provided by this
Agreement or any other compensation-related plan, agreement or
arrangement of the Company in respect of such Termination, including
all such fees and expenses, if any, in seeking to obtain or enforce
any such right or benefit unless the Executive's claim is found by
an arbitral tribunal or court of competent jurisdiction to have been
frivolous.
(l) Certain AIAP and LTIP Change of Control Provisions.
(i) In the event of a Change of Control, the Executive will be
paid within fifteen (15) business days following the date of such
Change of Control a lump sum cash payment equal to the Executive's
AIAP Vested Amount.
(ii) Upon a Change of Control, all stock options, shares of
restricted stock, restricted stock units and restricted stock
equivalents then held by the Executive under either LTIP shall
become 100% vested and non-forfeitable on the date of such Change of
Control and any restrictions thereon shall immediately lapse on such
date.
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(m) Certain Payments.
(i) Anything herein to the contrary notwithstanding, in the
event that it is determined that any payment or distribution by the
Company to or for the Executive's benefit, whether paid or payable
or distributed or distributable pursuant to the terms hereof,
including but not limited to Section 7(l), or otherwise, other than
any payment pursuant to this Section 7(m), (a "Payment"), would be
subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive, within fifteen (15) business days
following the determination described in Section 7(m)(ii) below, an
additional payment ("Excise Tax Adjustment Payment") in an amount
such that after payment by the Executive of all applicable Federal,
state and local taxes (computed at the maximum marginal rates and
including any interest or penalties imposed with respect to such
taxes), including any Excise Tax, imposed upon the Excise Tax
Adjustment Payment, the Executive shall retain an amount of the
Excise Tax Adjustment Payment equal to the Excise Tax imposed upon
the Payments.
(ii) All determinations required to be made under this Section
7(m), including whether Excise Tax Adjustment Payment is required
and the amount of such Excise Tax Adjustment Payment, shall be made
by Deloitte & Touche LLP, or such other accounting firm as the
Company may designate prior to a Change of Control, which shall
provide to the Company and the Executive detailed supporting
calculations within fifteen (15) business days of the date of the
Executive's termination of employment. Except as hereinafter
provided, any determination by Deloitte & Touche LLP, or such other
accounting firm as the Company may designate prior to a Change of
Control, shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the
Code at the time of the initial determination hereunder, it is
possible that (x) Excise Tax Adjustment Payments which should have
been made will not have been made by the Company ("Underpayment"),
or (y) certain Payments will have been made which should not have
been made ("Overpayment"), consistent with the calculations required
to be made hereunder. In the event of an Underpayment, the Company
shall promptly determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the
Company to or for the Executive's benefit. In the event that the
Executive discovers that an Overpayment shall have occurred, the
amount thereof shall be promptly repaid to the Company.
16
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(n) Arbitration. Following a Change of Control, any dispute or
controversy arising under or in connection with this Agreement shall be
settled exclusively by arbitration in New York, New York in accordance
with the National Rules for the Resolution of Employment Disputes of the
American Arbitration Association then in effect. The determination of the
arbitral tribunal shall be conclusive and binding on the parties and
judgment may be entered on the arbitrator's award in any court having
jurisdiction.
(o) Unconditional Obligation. The Company's obligations to make all
payments and honor all commitments under this Agreement or otherwise
following a Change of Control or in connection with an Involuntary
Termination during the two (2) year period beginning on a Change of
Control shall be absolute and unconditional and shall not be affected by
any circumstances including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may
have against the Executive.
(p) Late Payments. To the extent that any payments required to be
made hereunder following a Change of Control in connection with any
Involuntary Termination occurring prior to the second anniversary of such
Change of Control are not made within the period specified therefor, the
Company shall be liable for interest on such delayed payments at the rate
of 150% of the prime rate compounded monthly, as posted by the Morgan
Guaranty Trust Company of New York, from time to time.
17
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(q) Actuarial Calculations. All required actuarial calculations of
payments to be made hereunder shall be made by Watson Wyatt Worldwide, New
York, New York, or such other actuarial firm as the Company may designate
prior to a Change of Control.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
NABISCO, INC.
By: /s/ C. Michael Sayeau
------------------------------------
C. Michael Sayeau
Executive Vice President and
Chief Personnel Officer
NABISCO HOLDINGS CORP.
By: /s/ C. Michael Sayeau
------------------------------------
C. Michael Sayeau
Executive Vice President and
Chief Personnel Officer
NABISCO GROUP HOLDINGS, INC.
By: /s/ James M. Kilts
------------------------------------
James M. Kilts
President and Chief Executive Officer
THE EXECUTIVE
/s/ Douglas R. Conant
- ---------------------
Douglas R. Conant
18
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EXHIBIT A
DEFINITIONS
AIAP Vested Amount means, as of a Change of Control or as of a Termination
Date during the two (2) year period beginning on a Change of Control, as the
case may be, an amount equal to the value of the Executive's target award under
the relevant AIAP for the relevant performance period in which the Change of
Control or such termination occurs, as the case may be, multiplied by a
fraction, the numerator of which is the number of months (including partial
months) in the period beginning on the first day of the relevant performance
period and ending on the Change of Control or such Termination Date, as the case
may be, and the denominator of which is the number of months in such performance
period; provided that in the event of a termination of employment following a
Change of Control in the year in which a Change of Control occurs, for purposes
of computing the AIAP Vested Amount as of the date of such termination, the
performance period shall be deemed to begin on the first day following the
Change of Control and the target award shall be that in effect immediately
preceding such Change of Control.
Earned 1999 Program Amount means, as of a Termination Date during the two
(2) year period beginning on a Change of Control, an amount equal to the
Executive's Retention Award or awards under the 1999 Program in respect of
calendar years ending prior to such Termination Date and not previously paid to
the Executive.
Vested 1999 Program Amount means, as of a Termination Date during the two
(2) year period beginning on a Change of Control, an amount equal to the value
of the Executive's Retention Award under the 1999 Program in respect of the year
in which such Termination Date occurs.
Retirement Plans means the Retirement Plan for Employees of Nabisco, Inc.,
the Additional Benefits Plan of Nabisco, Inc. and participating Companies, the
Supplemental Benefits Plan of Nabisco, Inc. and participating Companies and the
Supplemental Executive Retirement Plan of Nabisco, Inc. and participating
Companies, and such other plans as the Board may hereafter determine.
Savings Plans means the Capital Investment Plan of Nabisco, Inc., the
Additional Benefits Plan of Nabisco, Inc. and participating Companies and the
Supplemental Benefits Plan of Nabisco, Inc. and participating Companies, and
such other plans as the Board may hereafter determine.
<PAGE>
EXHIBIT 10.9
NABISCO HOLDINGS CORP.
ANNUAL INCENTIVE AWARD PLAN
Effective January 1, 1995
(Amended and Restated as of March 17, 2000)
<PAGE>
NABISCO HOLDINGS CORP.
ANNUAL INCENTIVE AWARD PLAN
Effective January 1, 1995
(Amended and Restated as of March 17, 2000)
I N D E X
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
1. Purpose............................................................................... 1
2. Definitions........................................................................... 1
3. Eligibility........................................................................... 3
4. Performance Objectives................................................................ 3
5. Determination of Performance Targets.................................................. 3
6. Determination of Performance Awards................................................... 4
7. Payment of Awards..................................................................... 5
8. Miscellaneous......................................................................... 5
9. Finality of Determination............................................................. 7
10. Change of Control..................................................................... 7
11. Effective Date........................................................................ 8
</TABLE>
<PAGE>
NABISCO HOLDINGS CORP.
ANNUAL INCENTIVE AWARD PLAN
Effective January 1, 1995
(Amended & Restated on 3/17/00)
1. PURPOSE
The Nabisco Holdings Corp. Annual Incentive Award Plan is established
to provide managers with a management system to link corporate and business
priorities with individual and group performance objectives for the leadership
group of employees of NHC and its designated companies.
2. DEFINITIONS
For purposes of the Plan, the following terms shall have the meanings
set forth below:
(a) AWARD. Annual cash payments made to Participants pursuant to the
Plan.
(b) BOARD OF DIRECTORS. The Board of Directors of Nabisco Holdings
Corp.
(c) CAUSE. Termination resulting from: (a) criminal conduct; (b)
deliberate continual refusal to perform employment duties on a substantially
full-time basis; (c) deliberate and continual refusal to act in accordance with
any specific lawful instructions of a more senior officer or employee; or (d)
deliberate misconduct which could be materially damaging to a Company's
operations without a reasonable good faith belief that such conduct is in the
best interests of the Company. A termination of employment shall not be deemed
for Cause unless confirmed by the Chief Personnel Officer. Any voluntary
termination in anticipation of an involuntary termination of employment for
Cause shall be deemed a termination of employment for Cause.
(d) CHIEF EXECUTIVE OFFICER. For employees of NHC and the Chief
Executive Officers of the Operating Companies, the Chief Executive Officer of
NHC. For the other employees of each Operating Company and its subsidiaries, the
Chief Executive Officer of the Operating Company primarily responsible for their
performance.
(e) CHIEF PERSONNEL OFFICER. For employees of NHC and the Chief
Executive Officers of the Operating Companies, the Chief Personnel Officer of
NHC. For the other
<PAGE>
employees of each Operating Company and its subsidiaries, the Chief Personnel
Officer of the Operating Company primarily responsible for their performance.
(f) COMMITTEE. The Compensation Committee of the Board of Directors,
no member of which is an officer or in the salaried employ of the Company, an
Operating Company or other subsidiary of the Company.
(g) COMPANY(IES). NHC and its Operating Companies.
(h) DISABILITY. Being totally and permanently disabled as currently
defined in the Company's Short-Term Disability and Long-Term Disability Plans.
(i) FMLA. Family, parental, medical leave of absence as defined in the
Company's FMLA Policy.
(j) LONG-TERM DISABILITY. Being totally and permanently disabled as
defined in the Company's Long-Term Disability Plan.
(k) NHC. Nabisco Holdings Corp.
(l) OPERATING COMPANY(IES). Operating Companies of NHC: Nabisco
Biscuit Company; Nabisco International Company and Nabisco Foods Company
(Planters/Specialty Products Company; Food Service Company; Lifesavers Company;
Sales and Integrated Logistics; Nabisco Limited).
(m) PARTICIPANT. For any Plan Year, an employee who is eligible for an
Award under the Plan. An eligible employee shall be a Participant only with
respect to the Company for which he or she works most directly and for whom
performance objectives have been established for any given Plan Year.
(n) PERFORMANCE PERIOD. The Plan Year or the portion of the Plan Year
during which the employee is eligible to participate in the Plan.
(o) PLAN. Nabisco Holdings Corp. Annual Incentive Award Plan.
(p) PLAN YEAR. The one-year period beginning January 1 and ending
December 31 of the same calander year.
(q) RETIREMENT. Normal Retirement (age 65) with eligibility for
retiree medical benefits.
(R) SBC PROGRAM. The Company's Salary and Benefits Continuation
Program or other program maintained by the Company for the purpose of providing
severance-type benefits to employees whose employment is involuntarily
terminated.
2
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(S) SHORT-TERM DISABILITY. Being disabled for a short-term period as
defined in the Company's Short-Term Disability Plan.
3. ELIGIBILITY
To be eligible to participate in the Plan and to receive an Award, an
employee of the Company or its Operating Companies must:
(a) be employed by a Company on or before October 1 of the Performance
Period in a position which is at a salary grade at least equal to or higher than
the minimum participant salary grade designated by the Chief Executive Officer
for that Plan Year;
(b) not be a participant in the Company's Sales Incentive Plan or any
other Company bonus plan designated by the Committee;
(c) be approved by the Committee or its designee; and
(d) except as otherwise provided herein provided in Sections 6(f),
6(i) or 8(c), be actively employed by a Company on the last day of the Plan
Year.
4. PERFORMANCE OBJECTIVES (FINANCIAL AND ANNUAL)
(a) For each Plan Year, the Chief Executive Officer shall establish
specific financial and individual annual objectives for the Company headed by
such Chief Executive Officer.
(b) For each Performance Period, the Participant and the manager to
whom that Participant reports (the "Reviewing Manager") will develop specific,
individual annual performance objectives for that Participant, which must be
approved by the next higher level of management as contributing to the
objectives established by the Chief Executive Officer.
(c) The Chief Executive Officer (subject to the approval of the
Committee) will assign each aspect of the Company's financial and individual
annual objectives a weighting, expressed as a percentage, such that the total
weighting will equal 100%. The Chief Executive Officer may increase or reduce
the weighting of any financial and individual annual objectives for certain
positions so long as the total of all weightings equals 100%.
(d) From time to time during the Performance Period, a Participant's
individual annual objectives may be reviewed by the Reviewing Manager and the
Participant. If needed, individual annual objectives may be revised subject to
approval in the same manner as the objectives were originally approved prior to
the beginning of the Performance Period.
5. DETERMINATION OF PERFORMANCE TARGETS
3
<PAGE>
(a) A target percent Award for each Plan Year, expressed as a
percentage of base salary, shall be established by the Committee for each
eligible salary grade.
(b) If a Participant changes salary grade during the Performance
Period, the Participant's target Award level range will be based upon the
highest target Award level range for which the Participant was eligible for
three months or more during the Performance Period.
6. DETERMINATION OF PERFORMANCE AWARDS
(a) At the end of the Plan Year, each category objective (i.e,
financial/individual objectives) will be assigned a rating between 0% and 200%.
(b) At the end of the Plan Year, the Chief Executive Officer of the
Company will review with the Committee the financial and non-financial
performance of the Company and each Operating Company. The Committee will
establish a financial rating for the Company and each Operating Company which
will be the rating for the financial performance objectives for each Participant
for that Plan Year.
(c) At the end of the Plan Year, the Participant and the Reviewing
Manager shall review the performance of the Participant based on the
Participant's individual annual objectives. The Reviewing Manager shall assign a
rating to the individual annual objectives.
(d) A Participant's Award under the Plan shall be determined by
multiplying the weight assigned to each performance category under Section 4(c)
by the performance rating assigned under Sections 6(b) and (c), respectively.
The sum of such weighted performance ratings is then multiplied by the target
Award level determined under Section 5 and by the highest annual rate of base
salary in effect for at least three months during the Performance Period. The
product may be rounded at the discretion of the Chief Executive Officer.
(e) The Committee shall review and approve all Awards for Participants
at Salary Grade B or higher, making such changes therein as the Committee deems
appropriate. The Chief Executive Officer shall review and approve all Awards for
Participants at Salary Grade C and/or below, making such changes therein as the
Chief Executive Officer deems appropriate. Information regarding Awards for
Participants at Salary Grades C or below shall be made available to the
Committee.
(f) Awards shall be paid as soon as practicable after the foregoing
process is completed.
(g) In the event of the Participant's termination of employment as a
result of death, Long-Term Disability or Retirement (with the consent of the
Company) during the Performance Period, Awards, if approved pursuant to Section
6(e), will be determined by multiplying the target Award level by the annual
rate of base salary in effect immediately prior to the Participant's death,
Long-Term Disability or Retirement, prorated for the number of
4
<PAGE>
months of employment during the Performance Period. In the event a termination
of a Participant's employment during the Performance Period, other than as
provided above or in Section 6(b), the Committee, in its discretion, may order
payment of all or any portion of the Award held by such Participant.
(h) When a Participant holds more than one eligible position during a
Plan Year, the weighted performance rating under Section 6(d) will be the sum of
the weighted performance ratings for each position after each rating is
multiplied by a fraction, the numerator of which is the number of months in such
position and the denominator of which is twelve.
(i) When a Participant is newly hired or promoted into an eligible
position, the Participant's Award described in Section 6(d) shall be calculated
using the highest annual rate of base salary in effect for at least three months
since the date of hire or promotion, as applicable, and prorated for the number
of months of employment during the Performance Period since the date of hire or
promotion, as applicable. Notwithstanding the foregoing, no Award shall be
payable unless the Participant was employed in an eligible position on or before
October 1 of the Performance Period.
(j) A Participant whose employment is involuntarily terminated and who
receives benefits under the SBC Program will, if approved by the Executive Vice
President and Chief Personnel Officer, be Awarded a lump-sum payment equal to
the financial rating of the Operating Company employing the Participant,
weighted 100%, multiplied by the highest annual rate of base salary in effect at
the time of SBC, prorated for the number of months of employment during the
Performance Period and paid at the same time as other Plan Participants. In
addition, if approved by the Executive Vice President and Chief Personnel
Officer of the Company or Operating Company employing the Participant, the
Participant may, for each pay period during salary continuation, under the SBC
be paid an Award equal to the target Award prorated for the period on SBC for
the last year of active employment divided by the number of pay periods in a
calendar year.
(k) In the event a Participant is on Short-Term Disability or FMLA,
the Participant's Award described in Section 6(d) shall be calculated using the
Participant's aggregate base salary in effect during the Performance Period.
(l) In the event of a Change of Control (as described in Section 10),
the Participant's Award shall be calculated by multiplying the Target Award
level by the annual rate of base salary in effect immediately prior to the date
of the Change of Control, and prorated for the number of months during the
Performance Period prior to the Change of Control.
7. PAYMENT OF AWARDS
5
<PAGE>
(a) Unless deferred by a participant, Awards approved for a Plan Year
will be paid to each Participant in cash on or before March 1 following the Plan
Year, except as otherwise provided pursuant to Section 6(i); provided, however,
Awards under Section 6(f) made in the event of death, Long-Term Disability or
Retirement during the Plan Year shall be paid as soon as practicable after such
event.
8. MISCELLANEOUS
(a) Except as approved by the Committee, pursuant to Section 6(e), or
the Chief Executive Officer, no person shall have any right to receive an Award.
(b) The Company, the Board of Directors, the Committee, the officers
and other employees of the Company or its Operating Companies shall not be
liable for any action taken in good faith in interpreting or administering the
Plan.
(c) For purposes of the Plan, a Participant on leave of absence
approved by the Company employing such person, and any person employed, with the
consent of the Company, by a subsidiary of the Company that is not an Operating
Company, will be considered as being in the employ of the Company or an
Operating Company. Except as otherwise provided in Section 6(i), a Participant
on salary continuation under a plan or agreement of severance will not be
considered as being in the employ of the Company or an Operating Company but
will be deemed to be retired as of the later of such Participant's last day of
active employment release date. A Participant's absence by reason of Disability
on December 31 of a Plan Year is deemed to be actively employed by the Company
or an Operating Company during a Performance Period if such Participant was
actively employed at any time during such Performance Period.
(d) The Company or Operating Company employing the Participant shall
deduct from all payments and distributions under the Plan any taxes required to
be withheld by federal, state or local law.
(e) The amounts of any Award and related expenses for any Participant
shall be charged to the Company employing the Participant during the Plan Year
for which the Award was made. If the Participant is employed by more than one
Company during the Plan Year, the Participant's Award and related expenses shall
be allocated between the Companies employing the Participant in a manner
prescribed by the Committee.
(f) The establishment of the Plan shall not be construed as conferring
on any Participant any right to continued employment or employment in any
position. The employment of any Participant may be terminated by the Company or
Operating Company employing the Participant, or by the Participant, without
regard to the effect which such action might have upon the Participant as a
Participant in the Plan.
(g) No benefit under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge; and any attempt to do
6
<PAGE>
so shall be void. No such benefit shall, prior to receipt thereof by the
Participant, be in any manner liable for or subject to the debts, contracts,
liabilities, engagements or torts of the Participant.
(h) No benefit or promise hereunder shall be secured by any specific
assets of the Company or any Operating Company, nor shall any assets of the
Company or any Operating Company be designated as attributable or allocated to
the satisfaction of the Company's or any Operating Company's obligations under
the Plan.
(i) The Committee at any time may terminate and in any respect, amend
or modify the Plan so long as such amendment does not reduce the amount of any
Award granted, or the earnings credited, prior to such amendment.
(j) The Plan shall be governed by and subject to the laws of the State
of Delaware.
9. FINALITY OF DETERMINATION
The Committee shall have the power to interpret the Plan and all
interpretations, determinations and actions by the Committee shall be final,
conclusive and binding upon all parties. Subject to the preceding sentence, the
Chief Executive Officer of the Company shall administer the Plan and shall
resolve all administrative questions and interpretations. The Committee and the
Chief Executive Officer may delegate any of their authority under the Plan to
any other person or persons. In such event, references in the Plan to the
Committee or to the Chief Executive Officer shall, when appropriate, refer to
the persons so delegated.
10. CHANGE OF CONTROL
(a) As used herein, a "Change of Control" shall occur on the date upon
which one of the following events occurs (except as otherwise provided in
paragraph (iii) below):
(i) Any individual, corporation, partnership, group,
associate or other entity or "person" as such term is defined in Section 14(d)
of the Securities Exchange Act of 1934 (the "Exchange Act"), other than Nabisco
Holding Corp. ("NHC"), Nabisco Group Holdings Corp. ("NGH") or any of their
Subsidiaries, or any employee benefit plan(s) sponsored by NHC, NGH or any of
their subsidiaries, is or becomes the "beneficial owner" (as defined in Rule
13D-3 under the Exchange Act), directly or indirectly, of 30% or more of the
combined voting power of NHC or NGH outstanding securities ordinarily having the
right to vote at elections of directors;
(ii) Individuals who constitute the Board of Directors of
either NHC or NGH on January 1, 2000 (each such Board the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board of NHC or
NGH, as the case may be, provided that any person becoming a director subsequent
to such date hereof whose election, or nomination for election by NHC or NGH
shareholders, as the case may be, was approved by a vote of at least
three-quarters of the directors comprising that Incumbent Board (either by a
specific vote or by approval of the
7
<PAGE>
proxy statement of NHC or NGH, as the case may be, in which such person is named
a nominee of NHC or NGH, as the case may be, but excluding for this purpose any
such individual whose initial assumption of office occurs as a result of either
an actual or threatened election contest (as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of an individual,
corporation, partnership, group, associate or other entity of "person" other
than the NHC or NGH Board, as the case may be, shall be, for purposes of this
paragraph (ii), considered as though such person were a member of the Incumbent
Board.
(iii) The approval by the shareholders of NHC or NGH, as the
case may be, of a plan or agreement providing (A) for a merger or consolidation
of NHC or NGH, as the case may be, other than with a wholly-owned subsidiary or
with NGH, NHC or any of their subsidiaries, and other than a merger or
consolidation that would result in the voting securities of NHC or NGH, as the
case may be, outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting power of the voting
securities of NHC or NGH, as the case may be, of such surviving entity
outstanding immediately after such merger or consolidation or (B) for a sale,
exchange or other disposition of all or substantially all of the assets of NHC
or NGH. If any of the events enumerated in this paragraph (iii) occurs, the NHC
Board shall determine the effective date of the Change of Control resulting
therefrom.
For purposes hereof, "Subsidiary" of NHC or NGH means any entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by NHC or NGH, as the
case may be.
11. EFFECTIVE DATE
The Plan is effective as of January 1, 1995, and amended and restated
effective as of January 1, 1999 and March 17, 2000.
8
<PAGE>
<TABLE>
<CAPTION>
2000 ANNUAL OBJECTIVES
- ----------------------------------------------------------------------------------------------
MANAGER: DATE: APPROVAL:
- ----------------------------------------------------------------------------------------------
RATING
---------------
RELATIVE STANDARD OF WGT.
ACCOUNTABILITY OBJECTIVES PRIORITY PERFORMANCE RATING RATING RATING
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- - People
- - Business
Effectiveness
- ----------------------------------------------------------------------------------------------
- - People
- - Business
Effectiveness
- ----------------------------------------------------------------------------------------------
- - People
- - Business
Effectiveness
- ----------------------------------------------------------------------------------------------
</TABLE>
- ------------------------- ------------------------- -------------------------
Employee Signature Date Manager's Signature Date Additional Approval Date
9
<PAGE>
Exhibit 10.10
NABISCO HOLDINGS COMPANY
1999 RETENTION PLAN GUIDELINES
PURPOSE: To provide a monetary incentive to support the
retention of key executives and grant a one-time,
performance-based long-term cash incentive award.
APPROVAL: Compensation Committee approved in April, 1999.
ELIGIBILITY: Grades A - D and selected Grade E executives
EFFECTIVE DATE: July 1, 1999
PERIOD TENURE: July 1, 1999 - June 30, 2002 (36 months):
- July 1, 1999 - June 30, 2000
- July 1, 2000 - June 30, 2001
- July 1, 2001 - June 30, 2002
AWARD: Equivalent of 1999, 2000 and 2001 actual AIAP awards
VESTING: The award shall vest on the first to occur of the dates
as set forth below in Sections (a) - (f).
(a) June 30, 2002;
(b) the date of the executive's death; [SEE EXHIBIT C]
(c) the date the executive shall be deemed to have a
"Permanent Disability" (as defined in the Nabisco,
Inc. Long-Term Disability Plan applicable to
senior executive officers as in effect on such
dates hereof) or if the Board of Directors or any
Committee thereof so determines; [SEE EXHIBIT C]
(d) the date of the executive's retirement at age 65
or greater; [SEE EXHIBIT C]
(e) the date the executive commences early retirement
from the Company. As used herein, early retirement
means retirement between the ages of 55 and 64
with the approval of the Company; or [SEE
EXHIBIT C]
(f) Involuntary Termination without cause. [SEE
EXHIBITS A (DURING THE TWO- YEAR PERIOD BEGINNING
ON A CHANGE OF CONTROL) AND B (PRIOR TO OR AFTER
SECOND ANNIVERSARY OF A CHANGE OF CONTROL)].
<PAGE>
FORFEITURES: If the executive RESIGNS OR IS INVOLUNTARILY TERMINATED
FROM ACTIVE EMPLOYMENT WITH CAUSE, the executive shall
immediately forfeit all rights to such award.
"DISCRETIONARY When the amount of each segment of the award is known,
COMPANY the Company will fund the monies through the
CONTRIBUTION": Company-owned Rabbi Trust under the Deferred
Compensation Plan. The award is not vested until June
30, 2002; therefore, any funded monies will be
designated as `Discretionary Company Contributions'
under the Deferred Compensation Plan. The executive
will be able to direct the investment of the `unvested'
monies; however, the account will be `restricted' until
the vest date of June 30, 2002.
PAYABLE DATE: July, 2002 or the first date to occur as stated above
in Sections (b) - (f).
DEFERRED COMPENSATION: While actively employed, the executive may defer up
to 100% of the entire award. Deferral Elections must
be made at least 6 months in advance of the payment
date (i.e., November, 2001).
NOTE: THE DESCRIPTIONS/DEFINITIONS OUTLINED ABOVE ARE TO PROVIDE AN OVERVIEW OF
HOW THE 1999 RETENTION PLAN WILL BE ADMINISTERED. FINAL INTERPRETATION OF THE
PLAN WILL BE THE SOLE RESPONSIBILITY OF THE NABISCO HOLDINGS CORP. COMPENSATION
COMMITTEE.
<PAGE>
EXHIBIT A
1999 RETENTION PLAN CALCULATION
INVOLUNTARY TERMINATION DURING THE 2-YEAR PERIOD
BEGINNING ON A CHANGE OF CONTROL
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------
ASSUMPTION: IF CHANGE OF CONTROL OCCURS ON SEPTEMBER 1, 2000...
- -----------------------------------------------------------------
- ------------------------------------------------------
INVOLUNTARY TERMINATION W/O CAUSE: NOVEMBER 1, 2000
- ------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
AWARD
SEGMENT PERIOD ACTUAL TARGET GRANTED/PAID MONTHS
- -------------- ------------------------------ -------------- ------------- ------------------ -----------
<S> <C> <C> <C> <C> <C>
1 7/1/1999 - 6/30/2000 $ 120.0 $ 100.0 $ 120.0 12
2 7/1/2000 - 6/30/2001 -- $ 100.0 $ 100.0 12
3 7/1/2001 - 6/30/2002 -- -- -- --
TOTAL PAYOUT $ 220.0
- -------------- ------------------------------ -------------- ------------- ------------------ -----------
</TABLE>
- ----------------------------------------------------
INVOLUNTARY TERMINATION W/O CAUSE: DECEMBER 1, 2001
- ----------------------------------------------------
<TABLE>
<CAPTION>
- --------------- --------------------------- ------------- ------------- ----------------- -----------
AWARD
SEGMENT PERIOD ACTUAL TARGET GRANTED/PAID MONTHS
- --------------- --------------------------- ------------- ------------- ----------------- -----------
<S> <C> <C> <C> <C> <C>
1 7/1/1999 - 6/30/2000 $ 120.0 $ 100.0 $ 120.0 12
2 7/1/2000 - 6/30/2001 $ 135.0 $ 100.0 $ 135.0 12
3 7/1/2001 - 6/30/2002 -- $ 100.0 $ 100.0 12
TOTAL PAYOUT $ 355.0
- --------------- --------------------------- ------------- ------------- ----------------- -----------
</TABLE>
- -------------------------------------------------------
INVOLUNTARY TERMINATION W/O CAUSE: JANUARY 1, 2002
- -------------------------------------------------------
<TABLE>
<CAPTION>
- -------------- -------------------------- --------------- ------------- ------------------ -----------
AWARD
SEGMENT PERIOD ACTUAL TARGET GRANTED/PAID MONTHS
- -------------- -------------------------- --------------- ------------- ------------------ -----------
<S> <C> <C> <C> <C> <C>
1 7/1/1999 - 6/30/2000 $ 120.0 $ 100.0 $ 120.0 12
2 7/1/2000 - 6/30/2001 $ 135.0 $ 100.0 $ 135.0 12
3 7/1/2001 - 6/30/2002 $ 110.0 $ 100.0 $ 110.0 12
TOTAL PAYOUT $ 365.0
- -------------- -------------------------- --------------- ------------- ------------------ -----------
</TABLE>
If active on July 1 of Plan segment, the executive will receive 100% of actual
and/or target award.
<PAGE>
EXHIBIT B
1999 RETENTION PLAN CALCULATION
INVOLUNTARY TERMINATION WITHOUT CAUSE
[PRIOR TO OR AFTER THE SECOND ANNIVERSARY OF A CHANGE OF CONTROL]
- --------------------------------------------------------------------------------
ASSUMPTION: IF CHANGE OF CONTROL OCCURS ON SEPTEMBER, 2000
- ---------------------------
IF LDW: APRIL 30, 2000
- ---------------------------
<TABLE>
<CAPTION>
- ------------ ------------------------------ ------------ ------------ ----------------- -----------
AWARD
SEGMENT PERIOD ACTUAL TARGET GRANTED/PAID MONTHS
- ------------ ------------------------------ ------------ ------------ ----------------- -----------
<S> <C> <C> <C> <C> <C>
1 7/1/1999 - 6/30/2000 $65,000 $60,550 $54,167 10
2 7/1/2000 - 6/30/2001 -- -- -- --
3 7/1/2001 - 6/30/2002 -- -- -- --
TOTAL PAYOUT $54,167
- ------------ ------------------------------ ------------ ------------ ----------------- -----------
</TABLE>
NOTES:
- - Payment (pro rata/full) based on active months of service for each
segment of the retention period in which executive is an active
employee. Each segment is based on a 12-month period.
- - Target award is calculated based on the executives' base salary and
target percent as in effect on the LDW.
- - Payout will be made as soon as administratively possible.
<PAGE>
EXHIBIT C
1999 RETENTION PLAN CALCULATION
- --------------------------------------------------------------------------------
TERMINATION DUE TO:
- DEATH
- LONG-TERM DISABILITY (LTD)
- RETIREMENT (AGE 65)
- EARLY RETIREMENT (AGE 55-64) WITH CEO APPROVAL
- ---------------------------
IF LDW: APRIL 1, 2001 (SAME CALCULATION AS INVOLUNTARY TERM W/O CAUSE)
- ---------------------------
<TABLE>
<CAPTION>
- ------------ ------------------------ ---------- ------------ ----------------- -----------
AWARD
SEGMENT PERIOD ACTUAL TARGET GRANTED/PAID MONTHS
- ------------ ------------------------ ---------- ------------ ----------------- -----------
<S> <C> <C> <C> <C> <C>
1 7/1/1999 - 6/30/2000 $ 120.0 $ 100.0 $ 120.0 12
2 7/1/2000 - 6/30/2001 $ 135.0 $ 100.0 $ 101.3 9
3 7/1/2001 - 6/30/2002 -- -- -- --
TOTAL PAYOUT $ 221.3
- ------------ ------------------------ ---------- ------------ ----------------- -----------
</TABLE>
NOTES:
- - Payment (pro rata/full) based on active months of service for each segment
of the retention period in which an executive is "actively" employed. Each
segment is based on a 12-month period.
- - Target award is calculated based on the executives' base salary and target
percent as in effect on the LDW.
- - Payout will be made as soon as administratively possible.
<PAGE>
Exhibit 10.11
NABISCO
SALARY AND BENEFIT CONTINUATION PROGRAM
(AS OF JANUARY 1, 1997)
GENERAL
The Nabisco Salary and Benefit Continuation Program (the "Plan")
assists Employees after involuntary separation of employment from the Company
when that separation results from certain "specified separation conditions that
make an Employee eligible for payment" that are detailed in the Section entitled
"Separation Conditions." As a precondition of these Salary Continuation
benefits, each eligible Employee signs an agreement between the Company and the
Employee which sets forth the specific terms and conditions of that Employee's
Salary Continuation and which contains a release of claims against the Company.
EFFECTIVE DATE
The effective date of this amendment and restatement is January 1,
1997, unless otherwise noted. The Salary and Benefit Continuation Program was
effective January 1, 1988.
DEFINITIONS OF IMPORTANT TERMS
AFFILIATED COMPANY means any company, more than 50% of the voting stock
of which is owned directly or indirectly by Nabisco Holdings Corp. ("Holdings")
or any successor, and each trade or business (whether or not incorporated)
controlled by Holdings or with which Holdings is under common control.
BASE PAY means:
(i) for Salaried Employees, 1/52 of the annualized rate of pay in
effect on the day prior to the last day of active employment excluding amounts
for overtime or bonuses, rounded to the nearest dollar; and
(ii) for Salaried Part-Time Employees, 1/52 of the annualized salary in
effect on the last day of active employment based on his or her regularly
scheduled hours.
CODE means the Internal Revenue Code of 1986, as amended from time to
time. Reference to any Section or Subsection of the Code includes reference to
any comparable or succeeding provisions of any legislation which amends,
supplements or replaces such Section or Subsection.
COMPANY means Nabisco, Inc., Nabisco International, Inc. and any
successor thereto.
EFFECTIVE DATE means January 1, 1988.
EMPLOYEE means a salaried individual who is employed on a U.S. dollar
payroll by the Company or an Affiliated Company which has adopted the Plan and
who is not in a unit of
-1-
<PAGE>
employees covered by a collective bargaining agreement, unless such collective
bargaining agreement provides for the application of the Plan to such employees.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
JOB ELIMINATION means the elimination of an existing position at the
sole discretion of the Company when, because of changing needs or circumstances,
(1) the job is no longer performed, or (2) the job is still performed, but fewer
employees are needed to perform it.
PLAN means the Nabisco Salary and Benefit Continuation Program as
described herein.
PLAN ADMINISTRATOR means the RJR Employee Benefits Committee which
administers the Plan.
PLAN YEAR means the calendar year.
SALARIED EMPLOYEES means Employees of the Company who are scheduled to
work a certain number of hours per week, but not less than thirty (30) hours,
with full compensation, benefits coverage and vacation/holidays.
SALARIED PART-TIME EMPLOYEES means Employees of the Company who are
scheduled to work a certain number of hours per week, but less than thirty (30)
hours, with compensation, benefits coverage and vacation/holidays based on the
number of hours he or she is scheduled to work weekly.
SALARY CONTINUATION means continuation of an eligible Employee's
current Base Pay for that period of time determined under the terms of this Plan
during which such Employee is placed on inactive payroll after involuntary
separation from employment due to certain specified conditions.
YEAR OF SERVICE means each completed year of employment with the
Company beginning on the Employee's date of hire and ending on the successive
anniversaries thereof. No pro rata Years of Service will be given for partial
years worked.
ELIGIBILITY
All salaried Employees, except for those specified below, may be
considered for participation in this Plan from the date they begin active work.
The following Employees are not eligible to participate in this Plan:
(a) hourly Employees, non-regular Employees and seasonal Employees
(which includes temporary Employees);
-2-
<PAGE>
(b) regular part-time salaried Employees who are scheduled to work
less than half the regular work week and are not eligible for
pension and benefits;
(c) any Employee whose terms and conditions of employment are
determined by a collective bargaining agreement with the Company;
(d) any individual who is employed by a leasing, temporary employment,
consulting or other organization not a part of the Company who is
a "leased employee" as defined in Section 414(n) of the Code and
who may be required by such Section to be considered an Employee
of the Company for certain benefits and other circumstances;
(e) any Employee who is disabled and qualified to receive benefits
under a short term or long term disability policy or plan of the
Company prior to onset of any separation which would, but for
disability, make such Employee eligible for payment of salary and
benefit continuance as set forth below; however, if the Employee
is eligible to return to work at a later date, salary and benefit
continuation will be provided as of the date the Employee could
return to work;
(f) any Employee who is eligible for a separation or termination
benefit under any other separation policy or plan of the Company
or an Affiliated Company; or
(g) any Employee who has an employment agreement that specifically
provides for compensation in the event of separation from
employment.
BENEFITS
1. All eligible non-exempt Salaried Employees and non-exempt Salaried
Part-Time Employees who qualify will continue to receive salary at separation
from active employment as set forth below:
a. - an amount equal to two weeks Base Pay plus:
i. one week of Base Pay for each Year of Service NOT IN EXCESS of
fifteen (15) years; and
ii. two weeks of Base Pay for each Year of Service IN EXCESS of
fifteen (15) years.
The minimum pay period shall be one month and the maximum shall not exceed
twenty-four (24) months.
2. All eligible exempt Salaried Employees and exempt Salaried Part-Time
Employees who qualify will continue to receive salary at separation from active
employment as set forth below:
a. - an amount equal to two months of Base Pay plus:
i. one week of Base Pay for each Year of Service NOT IN EXCESS of
fifteen (15) years; and
-3-
<PAGE>
ii. two weeks of Base Pay for each Year of Service IN EXCESS of
fifteen (15) years.
The minimum pay period shall be three months and the maximum shall not exceed
twenty-four (24) months.
3. All eligible exempt Salaried Employees and exempt Salaried Part-Time
Employees, whose Job Level equals or exceeds Job Level H, or participants in the
Sales Incentive Plans, whose Job Level equals or exceeds Job Level SA 13 with a
minimum Incentive Target of 20% or Job Level SL 12 with a minimum Incentive
Target of 23%, who qualify will continue to receive salary at separation from
active employment as set forth below:
(i) an amount equal to two months of Base Pay, plus two weeks of Base
Pay for each Year of Service.
The minimum pay period shall be four months and the maximum shall not exceed
twenty-four (24) months.
In no event will any period of Salary Continuation exceed twenty-four
(24) months, and total payments cannot exceed two times the Employee's
compensation for his/her final year of active employment.
The amount of Salary Continuation payable to the Employee shall be
offset by: (i) amounts that the Participant owes to the Company as of the date
of his/her separation of employment; (ii) any foreign statutory or mandatory
termination pay, including, but not limited to, mandatory severance entitlement,
compensation in lieu of notification pay, and termination indemnities; and (iii)
any foreign statutory or mandatory retirement benefits paid by the Company to
the Participant or on the Participant's behalf, to the extent that such benefits
relate to periods for which benefits are provided to the Participant pursuant to
any retirement plan sponsored, or contributed to, by the Company or any of its
affiliates.
Salary Continuation will be payable at the same frequency as normal
salary payments until the specified duration of Salary Continuation is complete.
Where Salary Continuation calculated in accordance with the formula above would
not conclude at the end of a pay period, full Salary Continuation will be
continued until the end of such final pay period or, if the Employee is eligible
to retire under a retirement plan of the Company or an Affiliated Company at the
end of Salary Continuation, Salary Continuation will be continued through the
end of the month preceding the Employee's retirement date. A lump sum payment
will ONLY be made in the event of death during Salary Continuation, in which
case the balance will be paid in a lump sum to the Employee's beneficiary
designated under the Employee's core or basic group life insurance. Payments
will be subject to normal deductions for taxes and other legally required
withholding. Payments will not cease when the individual finds new employment
during Salary Continuation with an employer which is not an Affiliated Company;
however, payments will cease if the individual is reemployed by any Affiliated
Company on a regular full-time basis at any time prior to the end of Salary
Continuation.
-4-
<PAGE>
SEPARATION CONDITIONS
THAT MAKE AN EMPLOYEE ELIGIBLE FOR PAYMENT
Payment will be made under the Plan if involuntary separation of
employment is due to any of the following specified conditions:
a. restructuring of organizations or consolidation of operations
resulting in loss of employment;
b. elimination of a position with no other position available
commensurate with the Employee's qualifications;
c. completion of an assignment with no other position available
commensurate with the Employee's qualifications;
d. failure to consistently perform at a level that meets the minimum
acceptable requirements for the position in situations where the Company
determines that the Employee has made a bona fide effort to achieve or maintain
such acceptable level of job performance; or
e. refusal of transfer or assignment within the Company and its
Affiliated Companies to a position that (i) requires relocation equal to or
greater than the mileage threshold required by the IRS for a moving expense
deduction or (ii) is more than two salary grade levels below current job or
(iii) is below current salary grade level with a reduction in Base Pay; provided
that Employee must provide written notice to the Company of refusal or
non-consent within 90 days after the offer of transfer or assignment or the
Employee will be deemed to have accepted or consented and shall be eligible for
payment under this Plan. If the Employee provides such written notice, it shall
be deemed a claim under the Claims Procedure of this Plan.
THAT MAKE AN EMPLOYEE INELIGIBLE FOR PAYMENT
No payment will be made under the Program if separation of employment
is due to any of the following specified conditions:
a. temporary layoffs or voluntary resignations and retirements or
separations resulting from disability which are not a part of conditions under
(a) to (e) above;
b. refusal of transfer or assignment within the Company (including
transfer or assignment between Affiliated Companies) to a position that (i) is
not more than two salary grade levels below the current job or (ii) is not below
current salary grade level with a reduction in Base Pay or (iii) does not
require relocation equal to or greater than the mileage threshold required by
the IRS for a moving expense deduction;
c. termination for violation of Company rules, policies, guides, or
standards of conduct except for conditions under (d) above; or
-5-
<PAGE>
d. termination directly resulting from a sale or other divestiture
(which includes the Employee's work unit) where the Employee is offered
continued employment with a successor employer, except as may be otherwise
specifically provided in the sale or divestiture agreement.
If (i) the Employee violates condition (c) above during salary
continuation or, (ii) if the Company determines that the Employee should have
been terminated under condition (c) above instead of a condition eligible for
payment, all payments shall immediately cease and the Employee shall return all
payments made to date.
IMPACT ON OTHER BENEFIT PLANS
Except as otherwise stated herein or as may be governed by the terms of
individual programs, the Employee receiving Salary Continuation will continue to
participate in the benefit programs, contributory and non-contributory, in which
such Employee participated as though still an active Employee. Changes in
benefit programs after Salary Continuation has begun will apply, unless
otherwise required by law. New benefit programs which replace or supersede
existing programs will also apply after Salary Continuation begins unless the
Company chooses to continue the former programs for participants of this Plan.
Upon commencement of Salary Continuation, a Participant who is terminated due to
Job Elimination will become 100% vested in his/her accrued benefits under the
defined benefit and defined contribution plans of the Company in which he
participates.
An employee receiving Salary Continuation will not be eligible for
either Short or Long Term Disability benefits. During the period of Salary
Continuation, the Employee will continue to be covered by the contributory
benefit plans in which the Employee was a participant as of such Employee's last
day of active employment only if the Employee remits or authorizes payroll
deduction for normally required contributions. However, if the Employee is
employed by a non-affiliated employer during Salary Continuation, and the new
employer provides life, accident, health and/or other welfare benefits prior to
the end of Salary Continuation, benefit continuation shall be subject to
applicable coordination of benefits rules, with the new employer's plan deemed
primary coverage. Employees will be eligible to continue to participate fully in
the RJR Nabisco Capital Investment Plan except that no loan applications will be
approved during Salary Continuation.
The Employee receiving Salary Continuation will be covered by the
Company's SELECT Flexible Benefits Program. Coverage under SELECT ceases at the
end of the month in which Salary Continuation ends. Continuation coverage as
required under the Consolidated Omnibus Budget Reconciliation Act of 1985
(COBRA) will be offered. Effective July 1, 1997, if elected by the Employee, the
monthly premium for COBRA continuation coverage will be 102% of actual plan
cost. Employees who are eligible to retire with medical coverage under a retiree
medical plan of the Company or Affiliated Company at the end of Salary
Continuation are not eligible for COBRA continuation coverage but may elect
retiree medical, dental and life insurance coverage under the Company's retiree
plans.
If an Employee receiving Salary Continuation is a participant in the
Company's Annual Incentive Award Plan or any other incentive award plan, has
stock option awards outstanding, or
-6-
<PAGE>
shares of restricted stock, the operation of each of the aforementioned shall be
governed by the terms of applicable plans or agreements.
VACATION PAYMENTS
An Employee will be paid for any unused vacation that is attributable
to the year in which the Employee's last day of active employment occurs. In
addition, an Employee whose last day of active employment occurs on December 31
will be paid for vacation days attributable to the NEXT calendar year. Such
vacation payment will be made in a Lump Sum at the end of Salary Continuation
based on the Employee's Base Pay.
The period of Salary Continuation shall not be counted in determining an
Employee's vacation.
Effective January 1, 1996, pursuant to the salaried Vacation Policy, eligible
vacation not used in a calendar year will be forfeited and may not be carried
over into the next year. If an employee had carryover days accumulated from
years PRIOR to 1996, notification would have been due to his/her manager to
confirm the number of days. An employee will be compensated for any of these
unused days as of the last day of active employment.
AMENDMENT AND TERMINATION
The Company reserves the right to terminate this Plan or to modify,
amend or change the provisions, terms and conditions of this Plan at any time.
Nothing herein creates a vested right. All Salary Continuation payments shall be
made out of the general assets of the Company and shall not be funded.
Other benefits referred to herein may be funded or unfunded as provided for in
the individual plans.
PROGRAM INTERPRETATION
The Plan Administrator or the designated representative thereof shall
have exclusive authority to interpret the Plan. The decision of the Plan
Administrator with respect to any question arising as to the Employees selected
to participate in the Plan, the amount, term, form and time of payment of
benefits under the Plan or any other matter concerning the Plan shall be final,
conclusive and binding on both the Company and the participants.
CLAIMS PROCEDURES
All decisions by the Company regarding an Employee's selection for
separation from employment and eligibility for coverage hereunder shall be final
and conclusive. Prior to an Employee executing the agreement referred to in the
section entitled "General", all disputes concerning the calculation of the
amount of benefits provided hereunder shall have been resolved in accordance
with this paragraph.
The Plan Administrator or designated representative shall mail or
deliver to each individual who has filed an effective claim for a benefit a
written statement of the amount of the individual's benefit or a notice of
denial of such individual's claim on or before the 90th day
-7-
<PAGE>
following receipt of such claim. If special circumstances require additional
time for processing the claim, the Plan Administrator or designated
representative may delay issuing its statement or notice for an additional 90
days provided that the individual is notified of the circumstances
necessitating the delay. Each notice of whole or partial denial of claimed
benefits shall set forth the specific reasons for the denial, the time within
which an appeal must be made by the individual or the individual's duly
authorized representative, and shall contain such other information as may be
required by applicable law. If a statement or notice is not issued within the
prescribed period, the claim shall be deemed denied.
Each Employee whose claim for benefits has been wholly or partially
denied shall have such rights to review documents and submit comments as
applicable law and regulations and rules of the Plan Administrator may provide,
and shall also have the right to request the Plan Administrator to review such
denial, such request to be made on forms prescribed by the Plan Administrator. A
request for review shall be made by the Employee or the Employee's duly
authorized representative on or before the 60th day following the earlier of the
Employee's receipt of notice of denial of such claim or the expiration of the
prescribed period for issuing a statement of benefits or notice of denial. The
Plan Administrator or its designee shall issue a written statement on or before
the 60th day following the receipt of such request stating the decision on
review and the reasons therefore, including specific references to pertinent
Plan provisions on which the decision is based, and any other information
required by applicable law. If special circumstances require additional time for
processing such review, the Plan Administrator or its designee may delay issuing
its decision for an additional 60 days provided that the Employee is notified of
such circumstances and the date the Plan Administrator or its designee expects
to render its final decision. If the decision is not issue within the prescribed
period, the appeal shall be deemed denied.
ERISA INFORMATION
GENERAL
All benefits under the Plan are unfunded, paid out of the general
assets of the Company and may not be assigned in any way.
<TABLE>
<CAPTION>
PLAN INFORMATION
----------------
<S> <C>
Name of Plan: Nabisco Salary and Benefit
Continuation Program
Plan Number: 533
Plan Sponsor: Nabisco, Inc.
100 DeForest Avenue
East Hanover, NJ 07936
(201) 503-2000
EIN: 13-1851519
Plan Year End: December 31
Type of Plan: Welfare Benefit
Type of Administration: Employer Self-Administered
</TABLE>
-8-
<PAGE>
The Plan is administered on behalf of the Company by the RJR Employee
Benefits Committee, which is the Plan Administrator for ERISA purposes. This
Committee has general authority to interpret and administer the Plan.
ERISA Plan Administrator: RJR Employee Benefits Committee
c/o RJR Nabisco, Inc.
1301 Avenue of the Americas
New York, New York 10019-6013
(212) 258-5600
The RJR Employee Benefits Committee has delegated some of its authority
for the day-to-day administration of the Plan to local Benefits Administration
Committees to handle Plan transactions as well as to assist participants with
their Plan questions. You should therefore, direct your calls and questions as
follows:
Benefits Administration Committee: Nabisco Benefits Administration
Committee
Nabisco, Inc.
100 DeForest Avenue
East Hanover, NJ 07936
Tel. No.: (201) 503-2000
Funding: No contributions are made-benefits
are paid from the general assets of
the employer.
Agent for Service of Legal Process: Corporate Secretary
RJR Nabisco, Inc.
1301 Avenue of the Americas
New York, NY 10019
(212) 258-5600
STATEMENT OF ERISA RIGHTS
As a participant in the above-mentioned Plan you are entitled to
certain rights and protections under the Employee Retirement Income Security Act
of 1974. ERISA provides that all Plan participants shall be entitled to:
- Examine, without charge, at the Plan Administrator's office, all
Plan documents, including insurance contracts, and copies of all
documents filed by the Plan with the U.S. Department of Labor,
such as annual reports and Plan descriptions.
- Obtain copies of all Plan documents and other Plan information
upon written request to the Plan Administrator.
-9-
<PAGE>
- Receive a summary of the Plan's annual financial report, if it
files an annual report. The Plan Administrator is required by law
to furnish each participant with a copy of this summary financial
report.
In addition to creating rights for Plan participants, ERISA imposes
duties upon the people who are responsible for the operation of the employee
benefit plan. The people who operate your plan, called "fiduciaries" of the
plan, have a duty to do so prudently and in the interest of you and other plan
participants and beneficiaries.
No one, including your employer or any other person, may fire you or
otherwise discriminate against you in any way to prevent you from obtaining a
benefit or exercising your rights under ERISA. If your claim for a benefit is
denied in whole or in part you must receive a written explanation of the reason
for the denial. You have the right to have the plan review and reconsider your
claim.
Under ERISA, there are steps you can take to enforce the above rights.
For instance, if you request materials from the plan and do not receive them
within 30 days, you may file suit in a federal court. In such a case, the court
may require the Plan Administrator to provide the materials and pay you up to
$100 a day until you receive the materials, unless the materials were not sent
because of reasons beyond the control of the Plan Administrator. If you have a
claim for benefits which is denied or ignored in whole or in part, you may file
suit in a state or federal court.
If it should happen that plan fiduciaries misuse the plan's money or if
you are discriminated against for asserting your rights, you may seek assistance
from the U.S. Department of Labor, or you may file suit in a federal court. The
court will decide who should pay your costs and legal fees. If you are
successful, the court may order the person you sued to pay these costs and fees.
If you lose, the court may order you to pay these costs and fees, for example,
if it finds your claim is frivolous.
If you have any questions about your plan, you should contact the Plan
Administrator. If you have any questions about this statement or about your
rights under ERISA, you should contact the nearest Area Office of the U.S.
Department of Labor-Management Services Administration, Department of Labor.
-10-
<PAGE>
EXHIBIT 10.12
[GRAPHIC OMITTED]
FLEXIBLE PERQUISITE PROGRAM GUIDELINES
UPDATED: JANUARY 1, 2000
REVISED: OCTOBER, 1996
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
<S> <C>
CONTACT LIST.................................................................5
FLEXIBLE PERQUISITE PROGRAM GUIDELINES.......................................6
OBJECTIVE.................................................................6
OVERVIEW.....................................................................7
CORE PERQUISITES..........................................................7
ADDITIONAL FLEXIBLE PERQUISITES...........................................7
SPECIAL BENEFITS..........................................................8
TAX IMPLICATION...........................................................8
EFFECTIVE DATE OF PROGRAM.................................................8
ELIGIBILITY...............................................................8
ELIGIBILITY AFTER JANUARY 1 OF PROGRAM YEAR...............................9
ELIGIBILITY CHANGES.......................................................9
JOB LEVEL ASSIGNMENT...................................................9
DISABILITY............................................................10
RETIREMENT............................................................10
DEATH.................................................................10
TERMINATION FOR OTHER REASONS.........................................11
COMPENSATION CONTINUANCE/SALARY & BENEFIT CONTINUATION................11
FLEXIBLE PERQUISITE ALLOWANCE............................................12
COMPENSATION CONTINUANCE/SALARY & BENEFIT CONTINUATION................12
CORE PERQUISITES............................................................13
COMPANY CAR..............................................................13
SELECTION OF CAR......................................................13
MAINTENANCE...........................................................13
INSURANCE.............................................................13
RETENTION.............................................................13
COMPANY-CAR UPGRADE......................................................14
UPGRADE APPROVAL......................................................14
COMPANY-CAR TAX IMPLICATION...........................................15
ANNUAL-LEASE VALUE IMPUTATION.........................................15
COMPANY-CAR UPGRADE IMPUTATION........................................16
CHANGE IN JOB LEVEL...................................................16
COMPENSATION CONTINUANCE/SALARY & BENEFIT CONTINUATION................16
EXECUTIVE MEDICAL/DENTAL.................................................17
TAX IMPLICATION.......................................................17
ENROLLMENT............................................................17
ELIGIBLE DEPENDENTS...................................................17
COMPENSATION CONTINUANCE/SALARY & BENEFIT CONTINUATION................17
BUSINESS TRAVEL ACCIDENT INSURANCE.......................................18
TAX IMPLICATION.......................................................18
ENROLLMENT............................................................18
BENEFICIARY...........................................................18
COMPENSATION CONTINUANCE/SALARY & BENEFIT CONTINUATION................18
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
EXECUTIVE LIFE INSURANCE.................................................20
ENROLLMENT/CANCELLATION...............................................20
COMPENSATION CONTINUANCE/SALARY & BENEFIT CONTINUATION................21
EXECUTIVE PERSONAL AUTO INSURANCE ..................................23
ELIGIBLE DEPENDENTS...................................................23
ENROLLMENT/CANCELLATION...............................................24
IMPUTED INCOME........................................................24
COMPENSATION CONTINUANCE/SALARY & BENEFIT CONTINUATION................24
EXECUTIVE EXCESS LIABILITY INSURANCE.....................................25
ENROLLMENT/CANCELLATION...............................................26
COMPENSATION CONTINUANCE/SALARY & BENEFIT CONTINUATION................27
CLUB INITIATION FEES........................................................28
DISCLOSURE..................................................................28
</TABLE>
3
<PAGE>
The Program described in this booklet does not create or give any contractual
rights to any employee nor is it evidence of any contract or covenant of
employment. Nabisco reserves the right to modify, revoke, suspend or change any
program or service that is described. This booklet is the property of Nabisco
and may not be reproduced or distributed outside the Company without the
permission of the Executive Vice President and Chief Personnel Officer.
4
<PAGE>
NABISCO, INC. -- CONTACT LIST
-----------------------------
EXECUTIVE COMPENSATION
----------------------
MICHELLE PEDULLA SUSAN REUTER
(973) 503-3094 (973) 503-3881
Nabisco, Inc.
100 DeForest Avenue
East Hanover, NJ 07936
Fax: (973) 503-3223
PLEASE NOTE: ALL ENROLLMENT AND CANCELLATION FORMS SHOULD BE MAILED DIRECTLY TO
MICHELLE PEDULLA.
- --------------------------------------------------------------------------------
MEDICAL
-------
MARY MAYERL
Executive Claim
Aetna Life & Casualty
P.O. Box 31450
Tampa, FL 33631-3450
(813) 775-0138
- --------------------------------------------------------------------------------
DENTAL
------
DON HICKEY WENDY GUILLERMAIN
(973) 285-4086 (973) 285-4207
Delta Dental
1639 Route 10
Parsippany, NJ 07054
- --------------------------------------------------------------------------------
FLEET
-----
BILL KIDDLE ALICE GREENE
(973) 503-2767 (973) 503-2773
Nabisco, Inc.
100 DeForest Avenue
East Hanover, NJ 07936
- --------------------------------------------------------------------------------
RISK MANAGEMENT
---------------
PAMELA PLAZA
Nabisco, Inc.
7 Campus Drive
Parsippany, NJ 07054
(973) 682-7310
5
<PAGE>
FLEXIBLE PERQUISITE PROGRAM GUIDELINES
--------------------------------------
OBJECTIVE
The Flexible Perquisite Program has been designed to offer executive perquisites
which consider executives' personal needs by providing "choice" in selecting
perquisites and perquisite providers. The Program enables executives to avail
themselves of those perquisites most suitable to his/her individual needs
utilizing a flexible perquisite allowance. The Program is based upon the results
of a competitive total compensation analysis and will be reviewed annually to
ensure its continued competitiveness.
6
<PAGE>
OVERVIEW
--------
The Flexible Perquisite Program allows eligible executives to make independent
decisions, which provide them with lifestyle-sensitive enhancements.
- --------------------------------------------------------------------------------
This Program consists of a Flexible Perquisite Allowance and Core Perquisites,
as follows:
- - FLEXIBLE PERQUISITE ALLOWANCE
A flexible perquisite allowance will be granted based on the executive's
Job Level at the beginning of each Program year. The perquisite allowance
will be paid to the executive in four quarterly payments. At the end of
each quarter, a payment less appropriate taxes will be issued, via direct
deposit or check, whichever is applicable.
An executive, who is actively employed by the Company, will have an
opportunity to participate in the Nabisco Deferred Compensation Plan and
defer up to 100% of his/her allowance. However, no deferral election shall
reduce his/her compensation below the amount necessary to satisfy
applicable employment taxes (e.g., FICA/Medicare), Company-sponsored
insurance and/or Company-car upgrade amounts purchased under the Flexible
Perquisite Program.
CORE PERQUISITES
- Company car
- Executive Medical/Dental Insurance
- Business Travel Accident Insurance
- Club initiation fee
ADDITIONAL FLEXIBLE PERQUISITES
An executive may purchase Company-sponsored Insurance programs and
Individual Selection, as follows:
- Company-car upgrade
- Company-Sponsored Insurance:
>> EXECUTIVE LIFE INSURANCE
>> EXECUTIVE PERSONAL AUTO INSURANCE
>> EXECUTIVE EXCESS LIABILITY INSURANCE
7
<PAGE>
SPECIAL BENEFITS
Upon eligibility to the Flexible Perquisite Program, an executive will also
receive the following special benefits:
- First Class Travel
- Reserved Parking Space
- Corporate Executive Credit Card
TAX IMPLICATION
- - FLEXIBLE PERQUISITES: The flexible perquisite allowance is taxable and
Federal tax will be withheld at the rate of 28
8
<PAGE>
minimum rate.
- - CORE PERQUISITES: Business Travel Accident Insurance is non-taxable to the
executive. The entire Annual Lease Value (ALV) of an executive's Company
car is taxable income and imputed to his/her income each pay period during
the Program year. Such amount will be reduced based on the ratio of
business to personal miles in December of the Program year (refer to
Company car section for further details).
- - ADDITIONAL PERQUISITES: An executive's income will be imputed based on the
value of insurance benefit(s) purchased, i.e., life insurance, personal
auto insurance and excess liability premiums in December of the Program
year. The Company-car upgrade imputation will occur each pay period during
the Program year (refer to Company car section for further details).
EFFECTIVE DATE OF PROGRAM
January 1, 1991
PROGRAM YEAR
January 1 - December 31
ELIGIBILITY
Participation in the Flexible Perquisite Program is limited to executives whose
Job Levels are included in the Executive Salary Structure. Each executive's
flexible perquisite allowance is determined by his/her Job Level within the
Executive Salary Structure.
<PAGE>
ELIGIBILITY AFTER JANUARY 1 OF PROGRAM YEAR
If eligibility occurs after January 1 of a Program year, the executive will be
eligible for Core Perquisites and a prorata perquisite allowance for his/her Job
Level.
ELIGIBILITY CHANGES
JOB LEVEL ASSIGNMENT
If an executive is PROMOTED TO A HIGHER JOB LEVEL, the adjusted perquisite
allowance balance will be based on the prorata allowance variance between the
allowance designated for the CURRENT JOB LEVEL and the NEW JOB LEVEL. Such
amount will be ADDED to the current balance. The proration will be effective as
of the date of promotion.
Example:
On January 1, a Grade D executive is granted a $25,000 flexible perquisite
allowance. The executive utilizes $10,000 between January 1 and June 30. On July
1, the executive is promoted to Grade C and is entitled to a flexible allowance
of $32,500. The difference between the two Job Levels is $7,500. This variance
is prorated based on the number of months in the new Job Level during the
Program year, namely, six (6) months and is equal to $3,750.
Therefore, the executive has an adjusted allowance balance on July 1 of $18,750,
as follows:
<TABLE>
<CAPTION>
ALLOWANCES
<S> <C>
Job Level D-January 1 Allowance $25,000
January 1-June 30 Allowance Used (10,000)
--------
Balance 15,000
Promotion to Job Level C 3,750 prorata
-----
July 1 Adjusted Allowance Balance $18,750
</TABLE>
If an executive is ASSIGNED TO A LOWER-GRADED JOB LEVEL THAT IS STILL ELIGIBLE
FOR THE PROGRAM, the executive will maintain the flexible perquisite allowance
granted on January 1 for the balance of the Program year, as well as Core
Perquisites. The allowance will then be adjusted for the appropriate level
commencing the following January 1.
If an executive REQUESTS A TRANSFER TO A LOWER-GRADED JOB LEVEL THAT IS STILL
ELIGIBLE FOR THE PROGRAM, the adjusted allowance balance will be based on the
prorata allowance variance between the allowance designated for the CURRENT JOB
LEVEL and the NEW JOB LEVEL. Such amount will be SUBTRACTED from the current
balance (the resultant minimum allowance balance is zero). The proration will be
effective as of the date of event. If the executive REQUESTS A TRANSFER TO A
LOWER-GRADED JOB LEVEL THAT IS NO LONGER ELIGIBLE FOR THE PROGRAM, the remaining
9
<PAGE>
flexible perquisite allowance and Core Perquisites will cease immediately.
However, the executive may purchase his Company car.
If an executive is ASSIGNED TO A JOB LEVEL THAT IS NO LONGER ELIGIBLE FOR THE
PROGRAM, the executive will remain in the Program for six (6) months or the
remainder of the Program year, whichever is longer. If participation extends
into the next Program year, the flexible perquisite allowance granted in the
year of loss of eligibility will be "frozen" and prorated. Core Perquisites will
be retained. The executive will be paid the prorated perquisite allowance on the
next scheduled quarterly payout, via direct deposit or check, whichever is
applicable. Federal Income Tax will be withheld at the 28% minimum rate.
DISABILITY
If an executive is placed on SHORT-TERM DISABILITY (STD), the executive will
remain in the Program during such period.
If an executive is placed on LONG-TERM DISABILITY (LTD), the executive will
continue in the Program. However, the executive's status as an eligible
participant will be reviewed annually. The flexible perquisite allowance granted
in the year LTD begins will be "frozen" and no new leased-Company car may be
selected.
RETIREMENT
If an executive RETIRES, all benefits of the Program will cease immediately,
except for Personal Auto Insurance and Excess Liability Insurance which may be
continued for three (3) months. Effective with the executive's retirement date,
the allowance granted on January 1 of the Program year will be prorated based on
the executive's active service in such year. The executive will be paid, via
direct deposit or check, whichever is applicable, the prorated perquisite
allowance on the next scheduled quarterly payout. Federal Income Tax will be
withheld at the 28% minimum rate.
DEATH
If the executive DIES, all benefits of the Program will cease three (3) calendar
months from the month death occurs. The flexible perquisite allowance granted on
January 1 of the Program year will be prorated based on the executive's active
service in such Program year plus three (3) additional calendar months after the
month of death. Any allowance used year-to-date will be deducted from such
adjusted flexible perquisite allowance. If the three-month period extends into
the next Program year, the flexible perquisite allowance granted in the year of
death will be "frozen" and prorated. At the end of the three-month period, a
check representing the unused flexible perquisite allowance balance, if any,
will be issued to the executive's spouse. If the executive does not have a
spouse, a check will be issued to the executive's beneficiary under SELECT Core
Life Insurance.
10
<PAGE>
The title of the Company car will be transferred to the executive's spouse at no
cost. If the executive does not have a spouse, the executive's beneficiary under
SELECT Core Life Insurance will have this vehicle transfer option.
TERMINATION FOR OTHER REASONS
If the executive VOLUNTARILY RESIGNS or is TERMINATED FOR CAUSE, all benefits of
the Program will cease as of the resignation/termination date. The executive
WILL NOT have the option to purchase the Company car.
COMPENSATION CONTINUANCE/SALARY & BENEFIT CONTINUATION
If an executive is involuntarily terminated without cause and placed on
severance under the terms of an Employment Agreement or the Salary & Benefits
Continuation Program, the executive shall continue to receive benefits under the
Flexible Perquisite Program for the period of such severance, except for
Business Travel Accident Insurance. The perquisite allowance will be "frozen"
based on the executive's current job level at the time the executive begins
Compensation Continuance/Salary & Benefits Continuation. Except as noted below,
the executive shall have an opportunity to purchase his/her Company car at the
Company determined price.
However, in the event of an involuntary termination without cause during the
two-year period beginning on a Change of Control, as defined by the Company,
ownership of the Company car assigned to the executive immediately prior to such
involuntary termination without cause shall be transferred to the executive
within 15 business days from the end of the Compensation Continuance/Salary &
Benefits Continuation period. At the time of such automobile transfer, the
Company shall pay to the executive such amount in cash that, after payment of
all applicable federal, state and local taxes thereon, computed at the maximum
marginal rates, is equal to all such taxes, so computed imposed in connection
with such transfer.
11
<PAGE>
FLEXIBLE PERQUISITE ALLOWANCE
A flexible perquisite allowance will be granted annually based on the
executive's Job Level at the beginning of each Program year. A prorata
adjustment to such allowance will be made upon promotion to a higher Job Level
during the Program year. The executive may purchase Company-sponsored
Insurance(s) and a Company-car upgrade.
An executive, who is actively employed by the Company, will have an opportunity
to participate in the Nabisco Deferred Compensation Plan and defer up to 100% of
his/her perquisite allowance each Program year. However, no deferral election
shall reduce his/her compensation below the amount necessary to satisfy
applicable employment taxes (e.g., FICA/Medicare), Company-sponsored insurance
and/or Company-car upgrade amounts purchased under the Flexible Perquisite
Program.
Enrollment will occur in November prior to each Program year. For additional
details, please refer to the Nabisco Deferred Compensation Plan Booklet or
contact Executive Compensation (see Contact List located in Appendix).
COMPENSATION CONTINUANCE/SALARY & BENEFIT CONTINUATION
If an executive is placed on Compensation Continuance/Salary & Benefit
Continuance, the flexible perquisite allowance will be "frozen", based on the
executive's current job level at the time the executive begins Compensation
Continuance/Salary & Benefit Continuation. Such flexible perquisite allowance
will continue until the end of Compensation Continuance/Salary & Benefit
Continuation.
12
<PAGE>
CORE PERQUISITES
----------------
COMPANY CAR
SELECTION OF CAR
Each executive may select a Company car of his/her choice subject to the
following limitations. The cost to the Company shall not exceed the allowable
Fair-Market Value (FMV) amount determined by Management. The maximum allowable
FMV will increase incrementally by Job Level. For the purpose of this Program,
only new cars may be selected by the executive.
An executive who wishes to obtain a car should contact the Fleet Department (see
Contact List located in the Appendix) who will provide additional information.
MAINTENANCE
Receipts covering fuel, oil, tires and other normal maintenance costs of the
vehicle (including car washes) are reimbursable when submitted on approved
expense reports.
INSURANCE
Company car insurance is administered by Risk Management. Therefore, the
executive is not required to obtain auto insurance.
RETENTION
Company car will be retained for 50-months or 60,000 miles, whichever occurs
first. The executive may purchase his/her Company car at the end of the 50-month
lease period or prior to the end of the 50-month lease period due to 60,000
miles, involuntary termination without cause, overseas assignment or Long-Term
Disability.
If the executive dies, the title of the car will be transferred to the
beneficiary at no cost to the beneficiary. For tax purposes, the executive's
income will be grossed up by the amount of the FMV of the car at the time of
transfer. Upon a domestic relocation, the executive will retain his/her Company
car at the new location.
13
<PAGE>
COMPANY-CAR UPGRADE
An executive may select a Company car with a higher FMV than his/her maximum
allowable FMV. However, the DIFFERENCE BETWEEN THE ALLOWABLE ANNUAL LEASE VALUE
(ALV) AND THE ACTUAL ALV WILL BE DEDUCTED FROM THE EXECUTIVE'S ALLOWANCE at the
beginning of each Program year during the 50-month lease period or 60,000 miles,
whichever occurs first, and will be prorated for partial-year leases, i.e. lease
inception/termination, whichever occurs first.
The executive may use all of his/her available perquisite allowance in addition
to his/her FMV level amount (ALV) to lease a car.
Example:
The executive is entitled to a Company car with a FMV of $29,999 for which the
ALV is $7,750. The executive advises the Fleet Department of the car the
executive wants to lease. The Fleet Department is able to obtain the car for
$31,999 (excludes tax, title, and registration fee). The ALV is $8,250.
Therefore, $500 allowance will be deducted from the executive's account at the
beginning of each Program year during the 50-month lease period or 60,000 miles,
whichever occurs first. If the lease begins or expires during the Program year,
the cost will be prorated. This is based on the ALV Table variance of the
maximum FMV versus the upgraded FMV (See IRS Annual Lease Value table located in
the Appendix), as follows:
<TABLE>
<CAPTION>
Allowance
FMV ALV TABLE REQUIRED
--- --------- --------
<S> <C> <C> <C>
Company car $29,999 $7,750
Upgrade $31,999 $8,250 $500
</TABLE>
UPGRADE APPROVAL
If an executive wishes to upgrade the FMV of his/her Company car, prior approval
by Executive Compensation is required to determine available perquisite
allowance dollars in such year. If the Company car the executive has selected
exceeds the executive's maximum allowable FMV, the FLEET DEPARTMENT SHOULD:
1. Contact Executive Compensation to obtain verbal approval.
2. Complete their portion of the "Company-car Upgrade" form (FP-8) and send it
to Executive Compensation.
14
<PAGE>
COMPANY-CAR TAX IMPLICATION
ANNUAL-LEASE VALUE IMPUTATION
If the Company car is driven solely for personal use during the 12-month period
ending October 31 of each year, the entire ALV will be taxable income. If it is
used partially for business purposes, the taxable amount will be reduced by the
percentage of the car's substantiated business mileage versus total mileage
during that period. IRS regulations require imputation of a fuel charge for all
personal usage. The present fuel charge imputation is 5.5 cents per mile for
personal use.
Commuting between the executive's home and regular office is considered a
personal trip, not business. As of October 31 of each year, each executive will
receive a Business/Personal Mileage Statement and will be responsible for
providing the percentage of personal versus business mileage. Therefore, it is
required that the executive maintain a log of miles driven for business/personal
usage.
BUSINESS USAGE of personal cars is not reimbursable on a Company expense report,
except in an extraordinary situation. (See "Maintenance").
EXAMPLE OF THE BUSINESS/PERSONAL USAGE CALCULATION:
Period: November 1 through October 31
<TABLE>
<CAPTION>
APPROVED ACTUAL # MONTHS
-------- ------ --------
<S> <C> <C> <C>
Fair-Market Value: $29,999 $31,999 12
Annual Lease Value: $ 7,750 $ 8,250
Taxable Income: $ 7,750 Taxable Income equals the lesser of the approved or actual ALV.
COMPANY-CAR BUSINESS/PERSONAL MILE USAGES
Personal miles driven 11/1 through 10/31: 12,000
Business miles driven 11/1 through 10/31: 3,000
-----
Total Miles: 15,000
Personal miles as a percent of total miles: 80.0% 12,000 personal miles divided by 15,000 total miles
Annual Taxable Income: $6,200.00 $7,750 ALV times 80.0%
Personal miles driven times 5.5 cents per mile: $660.00 12,000 personal miles times 5.5 cents
--------
Imputed Income: $6,860.00
Less Payroll YTD Offset: ($7,104.17) [AS OF 11/30]
-----------
Total Actual Imputed Income: ($244.17) imputed imputed over 12/15 and 12/30 payroll periods. i.e.,
($122.08) per payroll
</TABLE>
15
<PAGE>
COMPANY-CAR UPGRADE IMPUTATION
An executive's income will be imputed for the Company-car upgrade during the
Program year, if applicable.
CHANGE IN JOB LEVEL
- - PROMOTION - If an executive is promoted to a higher Job Level and has a
Company-car upgrade, the upgrade cost will be recalculated based on the
allowance for the new Job Level.
- - DEMOTION - If an executive's Job Level is reduced at the Company's request
and the executive is still eligible for participation in the Program, the
executive may retain the use of the CURRENT Company car through the end of
the lease period or 60,000 miles, whichever occurs first. A new car may
then be selected based on the allowable FMV of the executive's new Job
Level.
COMPENSATION CONTINUANCE/SALARY & BENEFIT CONTINUATION
If an executive is involuntarily terminated without cause and placed on
severance under the terms of an Employment Agreement or the Salary & Benefit
Continuation Program, the executive shall continue to receive benefits under the
Flexible Perquisite Program for the period of such severance, except for
Business Travel Accident Insurance. Except as noted below, the executive shall
have an opportunity to purchase his/her Company car at the Company determined
price. If a lease expires prior to the completion of Compensation
Continuance/Salary & Benefit Continuation, the current lease will be extended.
However, effective on that date, the imputed income will be based on the then
current FMV of the leased-Company car versus the original lease cost of the car.
A new car or lease will not be provided during this period.
However, in the event of an involuntary termination without cause during the
two-year period beginning on a Change of Control, as defined by the Company,
ownership of the Company car assigned to the executive immediately prior to such
involuntary termination without cause shall be transferred to the executive
within 15 business days from the end of the Compensation Continuance/Salary &
Benefits Continuation period. At the time of such automobile transfer, the
Company shall pay to the executive such amount in cash that, after payment of
all applicable federal, state and local taxes thereon, computed at the maximum
marginal rates, is equal to all such taxes, so computed imposed in connection
with such transfer.
16
<PAGE>
CORE PERQUISITES
----------------
EXECUTIVE MEDICAL/DENTAL
The executive is reimbursed for any eligible medical and/or dental expenses
which the executive or eligible dependents incur. There is no lifetime maximum
eligible for medical and dental expenses. Eligible expenditures are medical and
dental expenses, as covered by Section 213 of the Internal Revenue Code.
TAX IMPLICATION
The benefit is non-taxable.
ENROLLMENT
Executives will automatically be enrolled in Executive Medical and Dental Plan.
The executive is not eligible to participate in the Health Care Spending
Account.
Executives should submit all medical and/or dental bills to the insurance
carrier (see Contact List located in the Appendix).
ELIGIBLE DEPENDENTS
- - executive's spouse (including a legally separated but not a divorced
spouse) and
- - unmarried children, stepchildren, or legally adopted children who reside
with the executive and rely on the executive for support and who are:
- UNDER AGE 19 or
- OVER AGE 18 BUT YOUNGER THAN AGE 25 and registered as FULL-TIME STUDENT
in an accredited secondary school, college, university or school of
nursing.
COMPENSATION CONTINUANCE/SALARY & BENEFIT CONTINUATION
If an executive is placed on Compensation Continuance/Salary & Benefit
Continuation, the executive may retain the Executive Medical and Dental benefit
during such period, even if the executive becomes employed by a new employer.
If the executive commences employment with another employer during Compensation
Continuance/Salary & Benefit Continuation, the coordination of benefits
provisions of the new employer's plan and the executive's medical and dental
plan will determine which plan provides primary coverage and which is secondary.
Benefits will be payable under the Executive Medical and Dental Plan only after
expenses have been considered by the new employer's plan.
17
<PAGE>
CORE PERQUISITES
----------------
BUSINESS TRAVEL ACCIDENT INSURANCE
The amount of special Business Travel Accident Insurance in the event of death
occurring while on Company business is equal to 2.5 TIMES CURRENT BASE SALARY UP
TO A LIMIT OF $1.5 MILLION. This coverage is in addition to the basic coverage
provided under the executive's Company-sponsored benefit program.
TAX IMPLICATION
This benefit is non-taxable.
ENROLLMENT
Executives will automatically be enrolled.
BENEFICIARY
This benefit will be paid to the beneficiary designated for SELECT Core Life
Insurance. If an executive wishes to designate a different beneficiary for
Business Travel Accident Insurance, a beneficiary form may be obtained from
Executive Compensation (see Contract list located in the Appendix).
COMPENSATION CONTINUANCE/SALARY & BENEFIT CONTINUATION
If the executive is placed on Compensation Continuance/Salary & Benefit
Continuation, this coverage will no longer be applicable as it is contingent on
death while on Company business. Generally, individuals will not be asked to
travel on Company business during Compensation Continuance/Salary & Benefit
Continuation. Activities in search of new employment are not considered to be
"on Company business".
If you have any questions, please contact Risk Management (see Contact List
located in the Appendix).
18
<PAGE>
ADDITIONAL FLEXIBLE PERQUISITE
------------------------------
COMPANY-SPONSORED INSURANCE
There are three (3) Company-sponsored Insurance available for selection, as
follows:
- - Executive Life Insurance
- - Executive Personal Auto Insurance
- - Executive Excess Liability Insurance
Enrollment will be effective January 1 of the Program year or on the date the
executive specifies on the enrollment form, except for life insurance coverage.
If an executive selects life insurance after January 1, evidence of insurability
may be required by the insurance carrier.
Upon enrollment, allowance representing the year's premium (full year or
prorata) will be deducted from the executive's flexible perquisite allowance. An
allowance adjustment will be made if the executive cancels such perquisite or if
there is a change in the amount of coverage.
Imputation of income will occur at year end. The amount imputed will equal the
allowance used.
19
<PAGE>
EXECUTIVE LIFE INSURANCE
An executive may select Executive Life Insurance for two (2) times current base
salary. The executive's coverage is a universal life insurance plan provided by
Paragon Life Insurance Company up to a certain maximum and depending on certain
underwriting requirements.
ENROLLMENT/CANCELLATION
INITIAL ENROLLMENT - Upon employment or promotion to a Job Level eligible for
the Perquisite Program, the executive will receive a complete enrollment package
from Paragon. The enrollment package describes the Paragon program in detail.
ANNUAL RE-ENROLLMENT - Annually, executives with less than the maximum amount of
Paragon Insurance will receive a form asking if they want to increase coverage
or enroll in the Paragon program. If the executive does not want to make any
changes, no action is required. If the executive does want a change, the form
should be completed and sent to Executive Compensation. This is the annual
opportunity to apply for or increase coverage. Executives can decrease coverage
at any time.
Upon enrollment, the allowance representing the year's premium will be deducted
from the executive's flexible perquisite allowance. If there is a change in the
executive's base salary during the Program year, the insurance coverage will
change and an allowance adjustment will be effected. Policy coverage is
determined on executive's date of birth. An allowance adjustment will be made at
that time in the year.
If the executive requests cancellation and/or decrease coverage of this
insurance during the Program year, the executive must submit a Change Form to
Executive Compensation who will forward to Paragon Life Insurance Company. An
allowance adjustment will be effected the first of the month following notice of
cancellation and/or decrease of coverage.
The executive's income will be imputed at year end for the months coverage is in
effect.
A Service Request Form must be completed and mailed directly to Paragon Life
Insurance for purposes of changing a beneficiary, address change notification,
transfer of ownership, etc.
20
<PAGE>
NOTE: IF AN EXECUTIVE, WHO HAS PREVIOUSLY ASSIGNED SUCH BENEFIT, HAS THE
OPPORTUNITY TO CONTINUE OR CHANGE SUCH BENEFIT, IT IS THE ASSIGNEE WHO MUST MAKE
THE CHOICE EVEN IF THE CHOICE IS "NO CHANGE."
THE ASSIGNEE MUST EXECUTE THE ENROLLMENT/BENEFICIARY AND CANCELLATION FORMS IF
SUCH INSURANCE HAS BEEN ASSIGNED.
CALCULATION
The monthly premium calculation is based on the executive's base salary times a
salary factor of two (2) times the Internal Revenue Code (IRC) Section 79
Monthly Income Factor Table I Rate "X" per $1,000 of insurance (see appendix for
Table I). A change in coverage may only occur on the first of the month.
The age-related premium is based on when the executive's birth date falls during
the year.
Example: The executive's base salary on the January 1 enrollment date is
$110,000 a year. The executive is 44 years old and will turn 45 and receives a
salary increase to $130,000 on March 1. The following is an example of the
Executive Life Insurance calculation:
<TABLE>
<CAPTION>
IRC Monthly Monthly Period 1
Income Factor Premium Premium
Table I (Age) $ Period Allowance Allowance
------------- - ------ --------- ---------
<S> <C> <C> <C> <C> <C>
PERIOD 1 $.17 $220,000 Jan 1-Feb 28 $37.40 74.80
PERIOD 2 $.29 $260,000 Mar 1-Dec 31 $75.40 $754.00
</TABLE>
COMPENSATION CONTINUANCE/SALARY & BENEFIT CONTINUATION
If the executive is placed on Compensation Continuance/Salary & Benefit
Continuation, the executive may retain the Executive Life Insurance benefit
during such period. The Executive Life Insurance benefit calculation will be
based on the executive's last base salary prior to the commencement of
Compensation Continuance/Salary and Benefits Compensation. Since Paragon
insurance is portable, the executive can maintain his/her Paragon policy after
termination of employment. Paragon will bill the executive directly after
termination.
21
<PAGE>
TO DETERMINE WHAT, IF ANY, COVERAGE IS TERMINATED UNDER THIS PROGRAM BECAUSE OF
COVERAGE BY A NEW EMPLOYER, THE TOTAL AMOUNT OF LIFE INSURANCE PROVIDED BY THE
NEW EMPLOYER ON A NON-CONTRIBUTORY BASIS IS COMPARED TO THE AMOUNT PROVIDED
UNDER THE EXECUTIVE LIFE INSURANCE PROGRAM. ANY DUPLICATE COVERAGE WILL OFFSET
DOLLAR FOR DOLLAR THE COVERAGE UNDER THE FLEXIBLE PERQUISITE PROGRAM.
SELECT CORE LIFE INSURANCE UNDER THE COMPANY-SPONSORED BENEFIT PROGRAM IS NOT
INCLUDED IN THIS COMPARISON. ALTHOUGH IT IS NON-CONTRIBUTORY, IT WILL NOT BE
CANCELED OR REDUCED DURING COMPENSATION CONTINUANCE/SALARY & BENEFIT
CONTINUATION. THE OFFSETS FOR LIFE INSURANCE WILL BE MADE ONCE WHEN THE
EXECUTIVE COMMENCES EMPLOYMENT WITH A NEW EMPLOYER; NO ADJUSTMENTS WILL BE MADE
FOR SALARY INCREASES IN THE NEW JOB.
All enrollment and cancellation forms should be submitted directly to Executive
Compensation (see Contact List located in the Appendix).
22
<PAGE>
FLEXIBLE PERQUISITE
-------------------
COMPANY-SPONSORED INSURANCE
EXECUTIVE PERSONAL AUTO INSURANCE (Premium = $150 or $978 per vehicle annually)
Executive Personal Auto Insurance provides eligible executives with Automobile
Liability and Physical Damage insurance on his/her personal automobiles. This
coverage applies to vehicle(s) registered in the executive's name, in an
eligible dependent's name or held jointly with an eligible dependent. Vehicle(s)
may be driven by the executive and/or their eligible dependents.
ELIGIBLE DEPENDENTS
- - executive's spouse (including a legally separated but not a divorced
spouse) and
- - unmarried children, stepchildren, or legally adopted children who reside
with the executive and rely on the executive for support and who are:
- UNDER AGE 19 or
- OVER AGE 18 BUT YOUNGER THAN AGE 25 and registered as FULL-TIME STUDENT
in an accredited secondary school, college, university or school of
nursing.
The Program provides a primary automobile liability insurance limit of
$1,000,000 for Bodily Injury and Property Damage Liability. Additional coverage
of up to $10,000,000 for Bodily Injury and Property Damage Liability is
available under the Executive Excess Liability Insurance Program. Accordingly, a
total limit of $11,000,000 bodily injury/property damage liability is available
under the combined programs. The primary liability policy also includes:
<TABLE>
<S> <C>
Medical Payments $ 10,000
Uninsured Motorist $250,000
</TABLE>
The Physical Damage coverage includes Comprehensive (such as fire and theft) and
Collision insurance. A comprehensive and/or collision deductible is $250 per
occurrence.
If an executive gives VERBAL approval to a licensed driver who is a TEMPORARY
VISITOR for OCCASIONAL use (1 or 2 times per year) of such a car, auto insurance
coverage will continue to be effective on such insured car. Additionally, any
household employee, including a Nanny or Au pair, is covered under the Executive
Personal Auto Insurance Program, however, they must have a U.S. driver's
license.
The Executive Personal Auto Insurance Program has a standard "business pursuits"
clause which excludes coverage for any liability arising from business activity.
Employment-related activity on behalf of the Company is covered under separate
Company-maintained insurance coverages. Any non-Company related business
activity should be covered by the executive under separate insurance placement.
23
<PAGE>
ENROLLMENT/CANCELLATION
To enroll, an Executive Personal Auto Insurance Application form should be
completed and sent to Executive Compensation (see Contact List located in the
Appendix). Enrollment will be effective January 1 or the date the executive
specifies on the Application form. Upon enrollment, the allowance representing
the year's premium (full year or prorata) will be deducted. Deductions will be
based on the FMV cost of such insurance Program, as determined by Risk
Management in concert with Executive Compensation. Each executive may enroll up
to three (3) personal cars under the Executive Personal Auto Insurance at the
Company cost of the benefit. Additional automobiles may be insured, however, at
the FMV of such insurance program.
If the executive requests cancellation of this insurance during the Program
year, the executive must submit an Executive Personal Auto Insurance
Cancellation form which provides written notification of cancellation to
Executive Compensation. An allowance adjustment will be effected following
Executive Compensation's receipt of such written notice of cancellation.
If the executive RETIRES, the executive may remain in the Personal Auto
Insurance Program for three (3) months from such date unless the executive was
on Salary & Benefit Continuation immediately prior to retirement. However, if
the three (3) months of insurance coverage extends into the next Program year, a
check for the full-year premium or prorata amount will be requested, and the
variance between the FMV and the actual cost will be reported for tax purposes
as additional income. Risk Management should be contacted to obtain such
coverage (see Contact List located in the Appendix).
IMPUTED INCOME
The Company designated Personal Auto Insurance cost (full or prorata) will be
deducted from the perquisite allowance.
The executive's income will be imputed based on the Personal Auto Insurance FMV
of the benefit to the executive at year end. The variance will be prorated if
the personal auto is not covered for a full year.
COMPENSATION CONTINUANCE/SALARY & BENEFIT CONTINUATION
If the executive is placed on Compensation Continuance/Salary & Benefit
Continuation, the executive may retain the Executive Personal Auto Insurance
benefit during such period. To the extent coverage is provided by a new
employer, such employer-provided coverage will be considered primary and the
Company coverage as excess. Specific coverage determination may be obtained from
Risk Management. Questions should be directed to Risk Management (see Contact
List located in the Appendix). However, all enrollment and cancellation forms
should be submitted directly to Executive Compensation (see Contact List located
in the Appendix).
24
<PAGE>
FLEXIBLE PERQUISITE
-------------------
COMPANY-SPONSORED INSURANCE
EXECUTIVE EXCESS LIABILITY INSURANCE (Premium = $225 per $1,000,000 coverage
annually)
Executive Excess Liability Insurance provides to each eligible executive Excess
Liability Insurance coverage with a combined limit of $10,000,000 bodily injury
and property damage liability for each occurrence/annual aggregate for personal
and automobile liability. Eligible executives may purchase such insurance in
increments of $1,000,000 up to a maximum limit of $10,000,000.
This insurance provides coverage above a limit of $1,000,000 bodily injury and
property damage for automobile liability on personal automobiles that are
eligible for coverage under the Executive Personal Auto Insurance Program. The
combined programs provide a maximum coverage limit of $11,000,000 bodily
injury/property damage for automobile liability insurance.
If an eligible executive does not elect Executive Automobile Insurance, the
executive is still eligible for the $10,000,000 Excess Liability Insurance
Coverage provided the EXECUTIVE MAINTAINS A MINIMUM LIMIT OF $1,000,000 UNDER
THE EXECUTIVE'S OWN PRIMARY AUTO POLICY. Risk Management must be notified of
such coverage on the enrollment form.
Each eligible executive SHOULD MAINTAIN A LIMIT OF AT LEAST $500,000 PERSONAL
LIABILITY (BODILY INJURY/PROPERTY DAMAGE) UNDER HIS/HER PERSONAL HOMEOWNER OR
TENANT LIABILITY INSURANCE POLICY. Executives employing domestics should
maintain Workers' Compensation with statutory limits and Employer's Liability
Coverage of $500,000 either under his/her homeowner or separate workers'
compensation policy. If the executive does not carry the $500,000 limit under an
insurance policy, the executive will be responsible for the first $500,000 in
the event of an accident.
The Executive Excess Liability Insurance Program then provides an additional
limit of $10,000,000 bodily injury/property damage for personal liability.
Excess coverage is also provided within the $10,000,000 liability limit on
pleasure-use watercraft, not more than 50 feet in length, subject to an
underlying bodily injury and property damage liability insurance limit of
$500,000 maintained by the covered executive.
The Executive Excess Liability Insurance Program has a standard "business
pursuits" clause which excludes coverage for any liability arising from business
activity. Employment-related activity on behalf of the Company is covered under
separate Company-maintained insurance coverages. Any non-Company related
business activity should be covered by the executive under separate insurance
placement.
25
<PAGE>
<TABLE>
<S> <C>
Boats: No limits on number of boats. To be covered under Excess
Liability insurance, the boat(s) must be covered under the
executive's homeowner's policy or yacht insurance.
Snowmobiles: No limit on the number of snowmobiles. However, they must be
covered under homeowner's policy for at least the minimum
personal liability limit of $500,000 (personal injury/property
damage) in order to qualify for Excess Liability Insurance
coverage.
Motorcycles: Not covered.
Airplanes: Not covered.
Jet Skis: Not covered
</TABLE>
ENROLLMENT/CANCELLATION
To enroll, an Executive Excess Liability Insurance Enrollment form should be
completed and sent to Executive Compensation (see Contact List located in the
Appendix). Enrollment will be effective January 1 of the Program year or the
date the executive specifies on the Enrollment form. Upon enrollment, the
allowance representing the year's premium (full year or prorata) will be
deducted. Deductions will be based on the FMV cost of such insurance program, as
determined by Risk Management. The executive's income will be imputed at year
end.
If the executive requests cancellation of this insurance during the Program
year, the executive must submit an Executive Excess Liability Insurance
Cancellation form which provides written notification of cancellation to
Executive Compensation. An allowance adjustment will be effected following
Executive Compensation's receipt of such written notice of cancellation.
If the executive RETIRES, the executive may remain in the Excess Liability
Insurance Program for three (3) months from such date unless the executive was
on Salary & Benefit Continuation prior to retirement. However, if the three (3)
months of insurance coverage extends into the next Program year, a check for the
full-year premium or prorata amount will be requested. Risk Management should be
contacted to obtain such coverage (see Contact List located in the Appendix).
26
<PAGE>
COMPENSATION CONTINUANCE/SALARY & BENEFIT CONTINUATION
If the executive is placed on Compensation Continuance/Salary & Benefit
Continuation, the executive may retain the Executive Excess Liability Insurance
benefit during such period. To the extent coverage is provided by a new
employer, such employer-provided coverage will be considered primary and the
Company coverage as excess. Specific coverage determination will be obtained
from Risk Management.
Questions should be directed to Risk Management (see Contact List located in the
Appendix). However, all enrollment and cancellation forms should be submitted
directly to Executive Compensation (see Contact List located in the Appendix).
27
<PAGE>
EXHIBIT 12
NABISCO, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, 2000
--------------
<S> <C>
Earnings before fixed charges:
Net income................................................ $ 60
Provision for income taxes................................ 39
----
Income before income taxes................................ 99
Interest and debt expense................................. 70
Interest portion of rental expense........................ 8
----
Earnings before fixed charges............................... $177
====
Fixed charges:
Interest and debt expense................................. $ 70
Interest portion of rental expense........................ 8
Capitalized interest...................................... 1
----
Total fixed charges..................................... $ 79
====
Ratio of earnings to fixed charges.......................... 2.2
====
</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-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 94
<SECURITIES> 0
<RECEIVABLES> 553
<ALLOWANCES> 0
<INVENTORY> 964
<CURRENT-ASSETS> 1,793
<PP&E> 3,057
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,578
<CURRENT-LIABILITIES> 1,589
<BONDS> 4,094
0
0
<COMMON> 3
<OTHER-SE> 3,942
<TOTAL-LIABILITY-AND-EQUITY> 11,578
<SALES> 2,069
<TOTAL-REVENUES> 2,069
<CGS> 1,146
<TOTAL-COSTS> 1,146
<OTHER-EXPENSES> 55
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 70
<INCOME-PRETAX> 99
<INCOME-TAX> 39
<INCOME-CONTINUING> 60
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 60
<EPS-BASIC> .23
<EPS-DILUTED> .22
</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-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 94
<SECURITIES> 0
<RECEIVABLES> 553
<ALLOWANCES> 0
<INVENTORY> 964
<CURRENT-ASSETS> 1,793
<PP&E> 3,057
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,578
<CURRENT-LIABILITIES> 1,546
<BONDS> 4,094
0
0
<COMMON> 0
<OTHER-SE> 3,988
<TOTAL-LIABILITY-AND-EQUITY> 11,578
<SALES> 2,069
<TOTAL-REVENUES> 2,069
<CGS> 1,146
<TOTAL-COSTS> 1,146
<OTHER-EXPENSES> 55
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 70
<INCOME-PRETAX> 99
<INCOME-TAX> 39
<INCOME-CONTINUING> 60
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 60
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
