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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
June 14, 1999
Date of Report (Date of earliest event reported)
NABISCO GROUP HOLDINGS CORP.
(Exact name of registrant as specified in its charter)
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Delaware 1-10215 13-349-0602
(State of other jurisdiction (Commission (IRS employer
of incorporation) file no.) identification no.)
1301 Avenue of the Americas
New York, New York 10019
(Address of principal executive offices) (Zip code)
(212) 258-5600
Registrant's telephone number,
including area code
Last reported on Form 8-K as
RJR Nabisco Holdings Corp.
(Former name or address, if changed since last report)
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Page 1 of 3
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Item 2. Acquisition or Disposition of Assets.
On June 14, 1999, RJR Nabisco Holdings Corp. changed its name to Nabisco
Group Holdings Corp. and completed the distribution of 100% of the common
stock of its former subsidiary R.J. Reynolds Tobacco Holdings, Inc. to record
holders of the common stock of RJR Nabisco Holdings Corp. as of May 27, 1999,
the record date for the distribution. This document refers to Nabisco Group
Holdings Corp. as NGH. As a result of the distribution, NGH's sole asset
(besides cash on hand) will be 100% of the outstanding Class B Common Stock of
Nabisco Holdings Corp.. The Class B Common Stock currently represents
approximately 80.5% of the economic interest and approximately 97.7% of the
voting interest in Nabisco Holdings Corp.
NGH issued a press release on June 15, 1999 which is attached as Exhibit
99.1 to this document and incorporated into this document by reference. The
press release announced this NGH name change and the completion of the
distribution.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Pro Forma Financial Information
See the pro forma financial information of NGH disclosed in Item 7(b) of
the Report on Form 8-K of NGH filed on May 27, 1999 which are incorporated
into this document by reference.
(c) Exhibits
Exhibit
No. Description
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2.1 Certificate and Plan of Merger dated as of June 14, 1999 between
RJR Nabisco Holdings Corp. and Nabisco Group Holdings Corp.
10.1 Tax Sharing Agreement dated as of June 14, 1999 among RJR Nabisco
Holdings Corp., R.J. Reynolds Tobacco Holdings, Inc., R.J.
Reynolds Tobacco Company and Nabisco Holdings Corp.
10.2 Corporate Agreement dated as of June 14, 1999 among RJR Nabisco
Holdings Corp., Nabisco Holdings Corp. and R.J. Reynolds Tobacco
Holdings, Inc.
10.3 Intercompany Services Agreement dated as of June 14, 1999 among
RJR Nabisco Holdings Corp., Nabisco Holdings Corp. and R.J.
Reynolds Tobacco Holdings, Inc.
10.4 Third Supplemental Indenture and Waiver dated as of May 18, 1999
between RJR Nabisco Holdings Corp. and The Bank of New York, to
the Indenture dated as of September 21, 1995 between RJR Nabisco
Holdings Corp. and The Bank of New York, as supplemented by the
First Supplemental Indenture thereto dated as of September 21,
1995 and the Second Supplemental Indenture thereto dated as of
September 16, 1998.
21.1 Subsidiaries of the registrant.
99.1 Press Release dated June 14, 1999
Page 2 of 3
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NABISCO GROUP HOLDINGS CORP.
By: /s/ H. Colin McBride
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Name: H. Colin McBride
Title: Senior Vice President,
Associate General Counsel
and Corporate Secretary
June 15, 1999
Page 3 of 3
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CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
NABISCO GROUP HOLDINGS CORP.
INTO
RJR NABISCO HOLDINGS CORP.
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Pursuant to Section 253 of the
General Corporation Law of the State of Delaware
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RJR Nabisco Holdings Corp. ("Parent"), a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"General Corporation Law"), does hereby certify that:
FIRST: Parent was incorporated on October 25, 1988 pursuant to the
General Corporation Law and is existing thereunder.
SECOND: Nabisco Group Holdings Corp. (the "Subsidiary") was
incorporated on May 12, 1999 pursuant to the General Corporation Law and is
existing thereunder.
THIRD: Parent owns of record 100% of the outstanding shares of Common
Stock (the "Shares") of the Subsidiary, the Shares being the only stock of the
Subsidiary outstanding.
FOURTH: The board of directors of Parent adopted the following
resolutions providing for the merger (the "Merger") of Subsidiary into Parent,
which resolutions have not been amended or rescinded and are in full force and
effect:
RESOLVED, that the Plan of Merger in the form of Exhibit A
hereto (the "Plan of Merger") dated as of June 14, 1999 between
Nabisco Group Holdings Corp. (the "Subsidiary") and RJR Nabisco
Holdings Corp. (the "Parent"), pursuant to which the Subsidiary
agreed to be merged with and into the Parent (the "Merger"), at which
time the separate existence of the Subsidiary shall cease, with the
Parent as the
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surviving corporation (the "Surviving Corporation"), and the
transactions contemplated by that Plan of Merger, are hereby
approved, and pursuant to the Plan of Merger, the Merger shall become
effective as of the date of the filing with the Secretary of State of
the State of Delaware of the Certificate of Merger thereto (the
"Effective Date") and such Certificate of Merger shall be filed with
the Secretary of the State of Delaware.
RESOLVED, that, pursuant to the Plan of Merger, the Merger
is hereby approved pursuant to the provisions of Section 253 of the
General Corporation Law of the State of Delaware.
RESOLVED, that, pursuant to the Plan of Merger, at the
Effective Date, the currently issued and outstanding shares of stock
of Subsidiary, all of which are owned by Parent, shall be surrendered
and canceled. No shares of stock of the Parent or other consideration
shall be issued in exchange therefor.
RESOLVED, that, pursuant to the Plan of Merger, from and
after the Effective Date, the name of the Surviving Corporation shall
be "Nabisco Group Holdings Corp.".
RESOLVED, that, pursuant to the Plan of Merger, from and
after the Effective Date, the bylaws and certificate of incorporation
of the Parent shall be the bylaws and certificate of incorporation of
the Surviving Corporation.
RESOLVED, that the officers of the Subsidiary are authorized
on behalf of the Subsidiary to take any and all actions, to execute,
deliver and file any and all documents, agreements and instruments
and to take any and all steps deemed by any such officer to be
necessary or appropriate to carry out the purpose and intent of each
of the foregoing resolutions, and all actions heretofore taken by any
of them in furtherance thereof are hereby ratified and confirmed in
all respects.
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IN WITNESS WHEREOF, the Parent has caused this Certificate of
Ownership and Merger to be executed in its corporate name by its duly
authorized officer the 14th day of June, 1999.
RJR NABISCO HOLDINGS CORP.
By: /s/ H. Colin McBride
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Name: H. Colin McBride
Title: Senior Vice President, Secretary
and Associate General Counsel
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EXHIBIT A
PLAN OF MERGER
FIRST: NABISCO GROUP HOLDINGS CORP., a corporation organized under the laws
of the State of Delaware ("Subsidiary"), shall merge with and into
RJR NABISCO HOLDINGS CORP., a corporation organized under the laws
of the State of Delaware ("Parent"). RJR NABISCO HOLDINGS CORP.,
the surviving corporation, shall be changed herewith to NABISCO
GROUP HOLDINGS CORP.
SECOND: The currently issued and outstanding shares of stock of Subsidiary,
all of which are owned by Parent, shall be surrendered and
canceled. No shares of stock of the Parent or other consideration
shall be issued in exchange therefore.
THIRD: The name of the Corporation surviving the merger shall be "Nabisco
Group Holdings Corp."
FOURTH: The certificate of incorporation of Parent shall be the certificate
of incorporation of the corporation surviving the merger.
FIFTH: The bylaws of Parent shall be the bylaws of the corporation
surviving the merger.
SIXTH: The directors and officers of Parent shall be the directors and
officers of the corporation surviving the merger and shall serve
until their successors are selected.
SEVENTH: The officers of each corporation party to the merger shall be and
hereby are authorized to do all acts and things necessary and
proper to effect the merger.
EIGHTH: The merger shall be effective on the date of the filing with the
Secretary of State of the State of Delaware of the Certificate of
Merger relating thereto.
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EXHIBIT 10.1
TAX SHARING AGREEMENT
dated as of June 14, 1999
among
RJR NABISCO HOLDINGS CORP.
(to be renamed "Nabisco Group Holdings Corp.")
R.J. REYNOLDS TOBACCO HOLDINGS, INC.
(formerly named "RJR Nabisco, Inc.")
NABISCO HOLDINGS CORP.
and
R. J. REYNOLDS TOBACCO COMPANY
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TAX SHARING AGREEMENT
TAX SHARING AGREEMENT dated as of June 14, 1999 among RJR Nabisco
Holdings Corp. (to be renamed "Nabisco Group Holdings Corp."), a Delaware
corporation (together with its successors, "Holdings"), R.J. Reynolds Tobacco
Holdings, Inc. (formerly named "RJR Nabisco, Inc."), a Delaware corporation
(together with its successors, "RJRN"), Nabisco Holdings Corp., a Delaware
corporation (together with its successors, "Nabisco"), and R. J. Reynolds
Tobacco Company, a New Jersey corporation (together with its successors,
"RJRT").
RECITALS
WHEREAS, pursuant to the tax laws of various jurisdictions, Holdings,
certain members of the RJRN Tax Group and certain members of the Nabisco Tax
Group, as defined below, file certain tax returns on an affiliated,
consolidated, combined, unitary or other group basis (including as permitted
by Section 1501 of the Internal Revenue Code of 1986, as amended (the "Code"))
(each such group, a "Consolidated Group");
WHEREAS, the Board of Directors of Holdings has determined that it is
in the best interests of Holdings and its stockholders to cause all of the
outstanding shares of the Class B common stock of Nabisco to be directly held
by Holdings (the "Internal Distribution") and to distribute all of the
outstanding shares of the common stock of RJRN to the holders of the common
stock of Holdings on a pro rata basis (the "Distribution");
WHEREAS, in this Agreement, the parties have set forth certain
representations and covenants that support the treatment of each of the
Distribution and the Internal Distribution as a transaction described in
Section 355(a)(1) of the Code;
WHEREAS, in this Agreement, the parties have set forth the rights and
obligations of Nabisco and the other members of the Nabisco Tax Group, RJRN
and the other members of the RJRN Tax Group, and Holdings with respect to the
handling and allocation of certain federal, state, local and other taxes
incurred in Taxable periods beginning prior to the Distribution Date, and
various other tax matters; and
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WHEREAS, Holdings and the Nabisco Tax Group will continue to file
certain tax returns on a Consolidated Group basis following the Distribution,
and, in this Agreement, have set forth their respective rights and obligations
with respect to the handling and allocation of certain federal, state, local
and other taxes incurred in Taxable periods prior and subsequent to the
Distribution;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. (a) As used herein, the following terms have
the following meanings:
"After-Tax Amount" means an additional amount (taking into account
any taxation of such additional amount) necessary to reflect the hypothetical
tax consequences of the receipt or accrual of any payment, using the highest
tax rate (or rates, in the case of an item that affects more than one tax)
applicable to the recipient of such payment for the relevant taxable period,
reflecting for example, the effect of any deductions available for interest
paid or accrued and for appropriate taxes such as State Taxes.
"Business Day" means any day other than a Saturday, a Sunday or one
on which banks are authorized or required by law to close in New York, New
York.
"Combined State Taxes" mean any State Tax, the return for which is
filed on an affiliated, consolidated, combined or unitary basis by (i) a group
that includes Holdings and at least one member of the Nabisco Tax Group, or
(ii) a group that includes at least one member of the RJRN Tax Group and at
least one corporation among Holdings and the members of the Nabisco Tax Group.
"Deconsolidation Date" means the date of any Nabisco Deconsolidation.
"Del Monte State Tax" means any State Taxes for which the Nabisco Tax
Group may be liable by reason of an assertion by a Taxing Authority or a Final
Determination that Del Monte Corporation and at least one member of the
Nabisco Tax Group are part of an affiliated, consolidated, combined or unitary
group.
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"Designated RJRN Affiliate" means RJRT or the member of the RJRN Tax
Group that has been designated as such by RJRN.
"Distribution Agreement" means the Distribution Agreement dated as of
May 12, 1999 among Holdings, RJRN and RJRT.
"Distribution Date" means the Business Day on which the Distribution is
effected.
"Effective Realization" (and the correlative terms, "Effectively
Realized" and "Effectively Realizes") means, with respect to a tax saving, tax
benefit or tax attribute, the earliest to occur of (i) the receipt by any of
Holdings, a member of the Nabisco Tax Group or a member of the RJRN Tax Group
of cash from a Taxing Authority reflecting such tax saving, tax benefit or tax
attribute, or (ii) the application of such tax saving, tax benefit or tax
attribute to reduce (A) the tax liability on a Return of any of such
corporations or of any affiliated, consolidated, combined or unitary group of
which any of such corporations is a member, or (B) any other outstanding tax
liability of any of such corporations or of such group; provided that any
reference in this definition to tax shall include, without limitation, a
reference to a recovery of statutory interest.
"Federal Employment Tax" means the Federal Insurance Contributions
Act, the Federal Unemployment Tax Act and any other federal tax that applies
or that shall apply to a corporation in connection with the payment or
provision of salaries, or the provision of benefits and other remuneration, to
employees.
"Federal Tax" means any tax imposed under Subtitle A of the Code.
"Final Determination" means (i) with respect to Federal Taxes, (A) a
"determination" as defined in Section 1313(a) of the Code, or (B) the
acceptance by or on behalf of the IRS of Form 870-AD (or any successor form
thereto) as a final resolution of Tax liability for any Taxable period, except
as to items in respect of which the right of the taxpayer to file a claim for
refund or the right of the IRS to assert a further deficiency has been
reserved; (ii) with respect to Taxes other than Federal Taxes, any final
determination of liability in respect of a Tax that, under applicable law, is
not subject to further appeal, review or modification, through Tax Proceedings
or otherwise (including, without limitation, the expiration of a statute of
limitations or a period for the filing of claims for refunds, amended returns
or appeals from adverse determinations); or (iii) the payment of tax by the
corporation among Holdings, the members of the Nabisco Tax Group and the
members of the RJRN Tax Group that is responsible for payment of such tax
under applicable law with respect to any item that has been disallowed or
adjusted by a Taxing Authority and as to which Holdings has made
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a determination that no recoupment would be sought. For the avoidance of
doubt, any determination made by Holdings pursuant to clause (iii) of this
definition shall not preclude Holdings from reversing or otherwise modifying
such determination.
"Holdings Consolidated Group" means (i) Holdings and each direct and
indirect corporate subsidiary (including predecessors and successors thereto)
that is eligible to join with Holdings (A) with respect to Federal Taxes, in
the filing of a consolidated Federal Tax return, (B) with respect to State
Taxes, in the filing of an affiliated, consolidated, combined or unitary State
Tax return, or (C) with respect to other Taxes, in the filing of a Tax return
as an affiliated, consolidated, combined or unitary group, or (ii) the
corporations that are members of a group that (A) files a Tax return as an
affiliated, consolidated, combined or unitary group and (B) includes at least
one member of the Nabisco Tax Group and one member of the RJRN Tax Group. A
reference to the Holdings Consolidated Group in this Agreement shall include a
reference to any affiliated, consolidated, combined or unitary group of which
RJRN was the parent during any taxable period (or portion thereof) ending on
or before April 29, 1989.
"Intercompany Interest Rate" means the rate, from time to time, that
is equal to the London Interbank Offered Rate for dollar deposits.
"Intercompany Services Agreement" means the Intercompany Services
Agreement to be dated as of the Distribution Date among Holdings, Nabisco and
RJRN, substantially in the form of Exhibit C to the Distribution Agreement.
"Internal Distribution Date" means May 18, 1999.
"International Tobacco Purchase Agreement" means the Purchase
Agreement dated as of March 9, 1999 among Japan Tobacco Inc., RJRT and RJRN.
"International Tobacco Sale" means (i) the sale to Japan Tobacco Inc.
pursuant to the International Tobacco Purchase Agreement of the capital stock
of the companies listed in Exhibit D to such agreement and of certain other
assets, and (ii) the restructuring transactions and other transactions
undertaken in preparation for such sale.
"IRS" means the Internal Revenue Service.
"Nabisco Combined State Tax Liability" means, with respect to any
taxable period and any jurisdiction, an amount of Combined State Taxes
determined in accordance with the principles set forth in the definition of
Nabisco
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Federal Tax Liability and comparable provisions under applicable law.
"Nabisco Deconsolidation" means any event pursuant to which Nabisco
ceases to be a subsidiary includible in a Consolidated Group filing a
consolidated Federal Tax return of which Holdings is a member.
"Nabisco Federal Tax Liability" means, with respect to any taxable
period, the sum of the Nabisco Tax Group's Federal Tax liability and any
interest, penalties and other additions to such taxes for such taxable period,
computed as if the Nabisco Tax Group were not part of the Holdings
Consolidated Group, but rather were a separate affiliated group of
corporations filing a consolidated Federal Tax return pursuant to Section 1501
of the Code; provided, however, that transactions with members of the RJRN Tax
Group or Holdings shall be reflected in accordance with applicable provisions
of the consolidated return regulations governing intercompany transactions.
Without limiting the generality of the foregoing, such computation shall be
made (i) without regard to the income, deductions (including, without
limitation, net operating loss and capital loss deductions) and credits in any
taxable period of any member of the Holdings Consolidated Group that is not a
member of the Nabisco Tax Group, (ii) by taking account of any Tax Asset of
the Nabisco Tax Group in accordance with the principles of Section 3.05(d),
(iii) with regard to tax carryforwards and tax carrybacks (including, without
limitation, carryforwards and carrybacks of net operating losses or capital
losses) of any member of the Nabisco Tax Group, but without regard to any
carryforwards from a taxable year or portion thereof ending on or before
December 31, 1994 and arising solely due to creating the Nabisco Tax Group as
if it were not part of the Holdings Consolidated Group, (iv) as though the
highest rate of tax specified in Section 11(b) of the Code were the only rates
set forth in that subsection, and (v) by taking account of the positions,
elections and accounting methods reflected in the consolidated Federal Tax
returns, as amended and as finally adjusted, of the Holdings Consolidated
Group.
"Nabisco Tax Group" means, at any time, Nabisco and any direct or
indirect corporate subsidiaries (including predecessors and successors
thereto) of Nabisco that would be eligible, if Nabisco were not a member of a
group that included Holdings or RJRN, to join with Nabisco, (i) with respect
to Federal Taxes, in the filing of a consolidated Federal Tax return, (ii)
with respect to State Taxes, in the filing of an affiliated, consolidated,
combined or unitary State Tax return, or (iii) with respect to other Taxes, in
the filing of a Tax return as an affiliated, consolidated, combined or unitary
group.
"Name Change Merger" means such term as it is defined in the
Distribution Agreement.
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"1999 Pre-Distribution Period" means the taxable period from January
1, 1999 through the Distribution Date.
"Post-Deconsolidation Period" means any taxable period (or portion
thereof) beginning after the close of business on the Deconsolidation Date.
"Post-Distribution Period" means any taxable period (or portion
thereof) beginning after the close of business on the Distribution Date.
"Post-1989 Period" means any taxable period (or portion thereof)
beginning after the close of business on December 31, 1989.
"Pre-Deconsolidation Period" means any taxable period (or portion
thereof) ending on or before the close of business on the Deconsolidation
Date.
"Pre-Distribution Period" means any taxable period (or portion
thereof) ending on or before the close of business on the Distribution Date.
"Pre-1990 Period" means any taxable period (or portion thereof)
ending on or before the close of business on December 31, 1989.
"Return" means any Tax return, statement, report, form or election
(including, without limitation, estimated Tax returns and reports, extension
requests and forms, and information returns and reports) required to be filed
with any Taxing Authority, in each case as amended and as finally adjusted.
"RJRN Combined State Tax Liability" means, with respect to any
taxable period and any jurisdiction, an amount of Combined State Taxes
determined in accordance with the principles set forth in the definition of
RJRN Federal Tax Liability and comparable provisions under applicable law.
"RJRN Federal Tax Liability" means, with respect to any taxable
period, the sum of the RJRN Tax Group's Federal Tax liability and any
interest, penalties and other additions to such taxes for such taxable period,
computed as if the RJRN Tax Group were not part of the Holdings Consolidated
Group, but rather were a separate affiliated group of corporations filing a
consolidated Federal Tax return pursuant to Section 1501 of the Code;
provided, however, that transactions with members of the Nabisco Tax Group or
Holdings shall be reflected in accordance with applicable provisions of the
consolidated return regulations governing intercompany transactions. Without
limiting the generality of the foregoing, such computation shall be made (i)
without regard to the income, deductions (including, without limitation, net
operating loss and capital loss deductions) and credits in any taxable period
of any member of the Holdings
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Consolidated Group that is not a member of the RJRN Tax Group, (ii) by taking
account of any Tax Asset of the RJRN Tax Group in accordance with the
principles of Section 3.04(d), (iii) with regard to tax carryforwards and tax
carrybacks (including, without limitation, carryforwards and carrybacks of net
operating losses or capital losses) of any member of the RJRN Tax Group, (iv)
as though the highest rate of tax specified in Section 11(b) of the Code were
the only rates set forth in that subsection, (v) by taking account of the
positions, elections and accounting methods reflected in the consolidated
Federal Tax returns, as amended and as finally adjusted, of the Holdings
Consolidated Group, and (vi) without gain, if any, attributable to the
Internal Distribution.
"RJRN Tax Group" means, at any time, RJRN and any direct or indirect
corporate subsidiaries (including predecessors and successors thereto) of
RJRN, except for the members of the Nabisco Tax Group, that would be eligible,
if RJRN were not a member of a group that included Holdings, to join with
RJRN, (i) with respect to Federal Taxes, in the filing of a consolidated
Federal Tax return, (ii) with respect to State Taxes, in the filing of an
affiliated, consolidated, combined or unitary State Tax return or (iii) with
respect to other Taxes, in the filing of a Tax return as an affiliated,
consolidated, combined or unitary group.
"State Tax" means any income, franchise or similar tax payable to a
state or local taxing jurisdiction of the United States.
"Tax" (and the correlative term, "Taxable") means (i) any Federal
Tax, or any net income, alternative or add-on minimum, gross income, gross
receipts, sales, use, ad valorem, value added, transfer, franchise, profits,
license, withholding (as payor or recipient), payroll, employment, excise,
severance, stamp, capital stock, occupation, property, real property gains,
environmental, windfall, premium, custom, duty or other tax, governmental fee
or other like assessment or charge of any kind whatsoever (including, without
limitation, any Tobacco Tax), together with any interest thereon and any
penalty, addition to tax or additional amount thereto; (ii) any liability of a
corporation for the payment of any amounts of the type described in clause (i)
for any taxable period resulting from such corporation's being a part of a
Consolidated Group pursuant to the application of Treasury Regulations Section
1.1502-6 (or a successor thereto) or any similar provision applicable under
state, local or foreign law; or (iii) any liability for the payment of any
amounts described in clause (i) as a result of any express or implied
obligation to indemnify any other person.
"Tax Asset" means any net operating loss, net capital loss,
investment tax credit, foreign tax credit, charitable deduction, or any other
loss, credit, deduction or tax attribute that could be applied to reduce any
tax (including, without limitation, deductions, credits, alternative minimum
net operating loss
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carryforwards related to alternative minimum taxes or additions to the basis
of property). For the avoidance of doubt, any elimination, reduction or other
change in an overall foreign loss account or excess credit limitation shall
not be considered a Tax Asset.
"Tax Opinion" means the opinion dated as of May 12, 1999 of Davis
Polk & Wardwell regarding the Federal Tax consequences of the Distribution and
the Internal Distribution, together with bring-downs of such opinion to each
of the Internal Distribution Date and the Distribution Date.
"Tax Proceeding" means any Tax audit, dispute or proceeding (whether
administrative or judicial). Without limiting the generality of the foregoing,
a reference to a Tax Proceeding relating to any taxable year shall include a
Tax Proceeding relating to multiple taxable years that include such taxable
year, notwithstanding that other included taxable years may be (i)
Post-Distribution Periods, in the case of the RJRN Tax Group, or (ii)
Post-Deconsolidation Periods, in the case of the Nabisco Tax Group.
"Taxing Authority" means any governmental authority (whether United
States or non-United States, and including, without limitation, any state,
municipality, political subdivision or governmental agency) responsible for
the imposition of any Tax.
"Tobacco Claim" means such term as it is defined in the Distribution
Agreement.
"Tobacco Tax" means (i) any excise, custom duty or other tax, whether
United States or non-United States, (A) levied on or otherwise determined in
whole or in part, directly or indirectly, by the quantity, weight, raw
ingredient or other component content, value, cost or price (whether
intercompany, wholesale, retail, undiscounted, discounted or otherwise) of
cigarettes or other tobacco products, or (B) in connection with the
manufacture, development, import, export, shipment, delivery, transportation,
movement, receipt, distribution, sale, offering for sale, marketing, promotion
or advertisement of cigarette or other tobacco products, or (ii) any claim for
payment of any amounts described in clause (i), together, in the case of each
of clauses (i) and (ii), with any interest thereon and any penalty, addition
to tax or additional amount thereto.
"Two-Year Period" means the period that begins on the date on which
the Internal Distribution shall be effected and that ends on the date that is
two years after the Distribution Date.
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(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
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Combined State Tax Payment Date 3.02(a)
Corporate Headquarters Expenses 6.04(a)
Employer Group 6.02(a)
Federal Tax Payment Date 3.02(a)
Indemnitee 7.04
Indemnitor 7.04
Pro Forma Combined State Return 3.04(a)
Pro Forma Federal Return 3.04(a)
Pro Forma Returns 3.04(a)
R&D Credits 3.10
Tax Asset Beneficiary 3.06
Tax Asset Provider 3.06
(c) Any term used in this Agreement that is not defined in this
Agreement shall, to the extent the context requires, have the meaning assigned
to it in the Code or in comparable provisions of applicable Tax law.
ARTICLE 2
ADMINISTRATIVE AND COMPLIANCE MATTERS
SECTION 2.01. Sole Tax Sharing Agreement. (a) Except for Sections
7.03, 8.04 and 10.08 of the Distribution Agreement, any and all existing Tax
sharing agreements or arrangements, written or unwritten, among two or more of
Holdings, any member of the Nabisco Tax Group and any member of the RJRN Tax
Group (including, without limitation, the Tax Sharing Agreement dated January
26, 1995 between Holdings and Nabisco) shall be or shall have been terminated
as of the Distribution Date. On and after the Distribution Date, none of
Holdings, the members of the Nabisco Tax Group and the members of the RJRN Tax
Group shall have any rights or liabilities (including, without limitation, any
rights and liabilities that accrued prior to the Distribution Date) under such
terminated agreements and arrangements, and this Agreement shall be the sole
Tax sharing agreement among such corporations.
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(b) This Agreement shall not address the obligations or arrangements,
if any, (i) among members of the RJRN Tax Group, or (ii) among members of the
Nabisco Tax Group.
SECTION 2.02. Designation of Agent. (a) Each member of the RJRN Tax
Group and each member of the Nabisco Tax Group hereby irrevocably authorizes
and designates Holdings as its agent, attorney-in-fact, coordinator and
administrator for the purposes of taking any and all actions with respect to
(i) Taxes for which such member is a member of the Holdings Consolidated Group
and (ii) Federal Employment Taxes of such member, in the case of each of
clauses (i) and (ii) in connection with any taxable year that includes a
Pre-Distribution Period, in the case of the RJRN Tax Group, or in connection
with any taxable year that includes a Pre-Deconsolidation Period, in the case
of the Nabisco Tax Group. In connection with any taxable year that includes a
Pre-Distribution Period, in the case of a member of the RJRN Tax Group, or
with any taxable year that includes a Pre-Deconsolidation Period, in the case
of a member of the Nabisco Tax Group, Holdings shall have the same authority
under this Section 2.02(a), with respect to such Taxes as are described in the
preceding sentence, to act on behalf of each member of the RJRN Tax Group and
each member of the Nabisco Tax Group as would such member, were such member
acting on its own behalf, and as would the parent of the Consolidated Group
that includes such member, were such parent acting on behalf of such member.
Holdings covenants to the RJRN Tax Group and the Nabisco Tax Group that it
shall be responsible to see that matters handled pursuant to its exercise of
its authority under this Section 2.02(a) shall be handled promptly and, to the
knowledge of Holdings, appropriately.
(b) Without limiting the generality of Section 2.02(a), Holdings
shall have the authority, with respect to such Taxes and such taxable years as
are described in Section 2.02(a), to take any and all actions necessary,
helpful or incidental to, or otherwise in connection with, (i) the preparation
or filing of any Return or claim for refund (even where an item or Tax Asset
giving rise to an amended Return or claim for refund arises in a
Post-Distribution Period, in the case of the RJRN Tax Group, or in a
Post-Deconsolidation Period, in the case of the Nabisco Tax Group), (ii) the
conduct, management, prosecution, defense, contest, compromise or settlement
of (A) any adjustment or deficiency proposed, asserted or assessed as a result
of any audit of any Return or claim for refund, or (B) any other Tax
Proceeding, (iii) the determination of the taxable years (including, without
limitation, taxable years that include a Post-Distribution Period, in the case
of the RJRN Tax Group, or a Post-Deconsolidation Period, in the case of the
Nabisco Tax Group) that a settlement of a Tax Proceeding may impact and other
timing considerations, (iv) the determination as to whether any refunds shall
be received by way of refund, credited against tax liability or otherwise
applied to any tax period, (v) the determination as to the treatment of
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Tax Assets that are allowed under applicable law to be carried back or carried
forward, (vi) the determination as to whether any Tax elections shall be made
or modified, (vii) the determination as to whether any extensions shall be
requested or granted, (viii) the receipt of confidential information from, or
the provision of such information to, any Taxing Authority, and (ix) the
making of payments to, or collection of refunds from, any Taxing Authority.
(c) Notwithstanding anything in Section 11.07 to the contrary,
Holdings may, in its sole and absolute discretion, delegate (including,
without limitation, pursuant to the Intercompany Services Agreement) at any
time all or a portion of its authority, rights or obligations under this
Agreement to any corporation(s) or any person(s) (including, without
limitation, Nabisco and/or Nabisco, Inc.). Such delegation may be revoked by
Holdings in its sole and absolute discretion.
SECTION 2.03. Preparation of Returns. (a) Holdings shall prepare and
file the Returns (including, without limitation, the consolidated Federal Tax
Returns and Combined State Tax Returns) of the Holdings Consolidated Group for
all taxable years through the taxable year in which a Nabisco Deconsolidation
occurs with the assistance of the members of the Nabisco Tax Group and, in the
case of any taxable year that includes a Pre-Distribution Period, the
assistance of the members of the RJRN Tax Group. In preparing such Returns,
Holdings shall not discriminate among the members of the Holdings Consolidated
Group. Without limiting the generality of Section 2.02, Holdings shall have
the right to determine the manner in which such Returns shall be prepared and
filed, including, without limitation, the manner in which any item of income,
gain, loss, deduction or credit shall be reported thereon.
(b) The Returns of the Holdings Consolidated Group for the taxable
year ended December 31, 1999 shall reflect the inclusion of the members of the
RJRN Tax Group in the Holdings Consolidated Group for the 1999
Pre-Distribution Period.
SECTION 2.04. Certain Information Furnished By Holdings. Within a
reasonable period of time (as determined by Holdings) following the
Distribution, Holdings shall deliver to each of the Designated RJRN Affiliate
and Nabisco a copy of such Federal Tax and Combined State Tax information on
the International Tobacco Sale and other tax matters as is reasonably
necessary for the preparation by the RJRN Tax Group of Pro Forma Returns
pursuant to Section 3.04(a). Such information shall include (i) the amounts of
gain or income, if any (by company and by the type of gain or income), on the
dispositions of such assets as are described in clause (i) of the definition
of International Tobacco Sale in Section 1.01(a), (ii) any rulings or opinions
received from, or material correspondence with, Tax Authorities or independent
counsel relating to the
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International Tobacco Sale, (iii) any elections made or to be made in
connection with the International Tobacco Sale (including, without limitation,
any Federal Tax elections pursuant to Treasury Regulations Section
301.7701-2), (iv) foreign tax credit computations relating to the
International Tobacco Sale, (v) pro forma Federal Tax returns for each of RJRN
and RJR Industries, Inc., and (vi) pro forma Federal Tax returns for the
corporations that were sold to Japan Tobacco Inc. and that were members of the
Holdings Consolidated Group for Federal Tax purposes prior to the
International Tobacco Sale.
SECTION 2.05. Allocation. Holdings may, at its option, elect, and the
RJRN Tax Group shall join it in electing (if necessary), to ratably allocate
items (other than extraordinary items) of the RJRN Tax Group in accordance
with relevant provisions of Treasury Regulations Section 1.1502-76. If
Holdings makes such an election, the members of the RJRN Tax Group shall
provide to Holdings such statements as are required under the regulations and
other appropriate assistance.
SECTION 2.06. Certain Other Returns. (a) The members of the RJRN Tax
Group shall be solely responsible for the preparation and filing of (i) their
respective separate State Tax Returns, (ii) Returns filed on behalf of an
affiliated, consolidated, combined or unitary group that includes neither
Holdings nor any member of the Nabisco Tax Group, and (iii) Returns for all
taxable years that begin after the Distribution Date.
(b) The members of the Nabisco Tax Group shall be solely responsible
for the preparation and filing of (i) their respective separate State Tax
Returns, (ii) Returns filed on behalf of an affiliated, consolidated, combined
or unitary group that includes neither Holdings nor any member of the RJRN Tax
Group, and (iii) Returns for all taxable years that begin after the
Deconsolidation Date.
ARTICLE 3
TAX SHARING
SECTION 3.01. General Tax Sharing Principles. (a) The Designated RJRN
Affiliate shall pay to Holdings an amount equal to the RJRN Federal Tax
Liability, as shown on the Pro Forma Federal Return (as defined in Section
3.04(a) below) of the RJRN Tax Group for the 1999 Pre-Distribution Period. For
each taxable year of the Holdings Consolidated Group during which income, loss
or credit against tax of any member of the RJRN Tax Group is includible in a
return relating to a Combined State Tax of the Holdings Consolidated Group,
the
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Designated RJRN Affiliate shall pay to Holdings an amount equal to the RJRN
Combined State Tax Liability, as shown on the Pro Forma Combined State Returns
(as defined in Section 3.04(a) below) of the RJRN Tax Group for (i) such
taxable year, if such taxable year ends prior to the Distribution Date, or
(ii) the 1999 Pre-Distribution Period, if such taxable year includes the
Distribution Date.
(b) For each taxable year of the Holdings Consolidated Group during
which income, loss or credit against tax of any member of the Nabisco Tax
Group is includible in the consolidated Federal Tax return of the Holdings
Consolidated Group, Nabisco shall pay to Holdings an amount equal to the
Nabisco Federal Tax Liability, as shown on the Pro Forma Federal Return of the
Nabisco Tax Group for (i) such taxable year, if such taxable year ends prior
to a Nabisco Deconsolidation, or (ii) the period from the beginning of such
taxable year through the Deconsolidation Date, if a Nabisco Deconsolidation
occurs during such taxable year. For each taxable year of the Holdings
Consolidated Group during which income, loss or credit against tax of any
member of the Nabisco Tax Group is includible in a return relating to a
Combined State Tax of the Holdings Consolidated Group, Nabisco shall pay to
Holdings an amount equal to the Nabisco Combined State Tax Liability, as shown
on the Pro Forma Combined State Returns of the Nabisco Tax Group for (i) such
taxable year, if such taxable year ends prior to a Nabisco Deconsolidation, or
(ii) the period from the beginning of such taxable year through the
Deconsolidation Date, if a Nabisco Deconsolidation occurs during such taxable
year.
SECTION 3.02. Estimated Payments by RJRN Tax Group. (a) No later than
20 Business Days prior to each date on which an estimated Federal Tax
installment or an estimated Combined State Tax installment of the Holdings
Consolidated Group is due (including all applicable and valid extensions) (a
"Federal Tax Payment Date" or "Combined State Tax Payment Date", respectively)
with respect to a taxable year during which any member of the RJRN Tax Group
is included in the Holdings Consolidated Group, the Designated RJRN Affiliate
shall (i) determine (under Section 6655(d) of the Code or, if applicable,
Section 6655(e) or other provisions of the Code in the case of Federal Taxes,
or under comparable provisions of Combined State Tax law) the estimated amount
of the related installment of the RJRN Federal Tax Liability or of the RJRN
Combined State Tax Liability, respectively (taking into account, without
limitation, the inclusion of the RJRN Tax Group in the Holdings Consolidated
Group for the 1999 Pre-Distribution Period, in the case of the taxable year
that includes the Distribution Date), and (ii) deliver a written statement to
Holdings reflecting such determination. No later than two Business Days prior
to the Federal Tax Payment Date or the Combined State Tax Payment Date, as the
case may be, the Designated RJRN Affiliate shall pay to Holdings the amount
thus determined.
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(b) Holdings may adjust the determination made by the Designated
RJRN Affiliate under Section 3.02(a) if it notifies the Designated RJRN
Affiliate, no later than 10 Business Days prior to the applicable Federal Tax
Payment Date or Combined State Tax Payment Date, that the Designated RJRN
Affiliate's calculation of any amounts reflected in such determination is
incorrect or incomplete. Any adjustment made by Holdings under this Section
3.02(b) shall be treated for the purposes of Section 3.02(a) as though it had
always been reflected in the determination made by the Designated RJRN
Affiliate. The Designated RJRN Affiliate shall not be permitted to invoke the
dispute resolution procedures in Section 11.02 until it shall have paid the
amounts reflected on such determination, as adjusted by Holdings.
SECTION 3.03. Estimated Payments by Nabisco Tax Group. (a) No later
than 20 Business Days prior to each Federal Tax Payment Date or Combined State
Tax Payment Date with respect to a taxable year during which any member of the
Nabisco Tax Group is included in the Holdings Consolidated Group, Nabisco
shall (i) determine (under Section 6655(d) of the Code or, if applicable,
Section 6655(e) or other provisions of the Code in the case of Federal Taxes,
or under comparable provisions of Combined State Tax law) the estimated amount
of the related installment of the Nabisco Federal Tax Liability or of the
Nabisco Combined State Tax Liability, respectively (taking into account,
without limitation, the inclusion of the Nabisco Tax Group in the Holdings
Consolidated Group only for the period from the beginning of the taxable year
through the Deconsolidation Date, in the case of a taxable year during which a
Nabisco Deconsolidation occurs), and (ii) notify Holdings of such
determination. No later than two Business Days prior to the Federal Tax
Payment Date or the Combined State Tax Payment Date, as the case may be,
Nabisco shall pay to Holdings the amount thus determined.
(b) Holdings may adjust the determination made by Nabisco under
Section 3.03(a) if it notifies Nabisco, no later than 10 Business Days prior
to the applicable Federal Tax Payment Date or Combined State Tax Payment Date,
that Nabisco's calculation of any amounts reflected in such determination is
incorrect or incomplete. Any adjustment made by Holdings under this Section
3.03(b) shall be treated for the purposes of Section 3.03(a) as though it had
always been reflected in the determination made by Nabisco. Nabisco shall not
be permitted to invoke the dispute resolution procedures in Section 11.02
until it shall have paid the amounts reflected on such determination, as
adjusted by Holdings.
SECTION 3.04. Payment of Taxes at Year-End by RJRN Tax Group. (a) No
later than December 15, 1999, the Designated RJRN Affiliate shall deliver to
Holdings a pro forma Federal Tax return (a "Pro Forma Federal Return") of the
RJRN Tax Group reflecting the RJRN Federal Tax Liability for the 1999 Pre-
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Distribution Period. No later than December 15, 1999, for each Combined State
Tax liability of the Holdings Consolidated Group, the Designated RJRN
Affiliate shall deliver to Holdings a pro forma Combined State Tax Return
(each a "Pro Forma Combined State Return", and, together with the Pro Forma
Federal Return, the "Pro Forma Returns") of the RJRN Tax Group reflecting the
related RJRN Combined State Tax Liability for the 1999 Pre-Distribution
Period. The Designated RJRN Affiliate shall not take any unreasonable position
in preparing such Pro Forma Returns. Each Pro Forma Return shall be delivered
together with a statement showing a calculation of the amount to be paid
pursuant to Section 3.04(c) below.
(b) Upon receipt of a Pro Forma Return from the Designated RJRN
Affiliate, Holdings may adjust such return if it determines that the
calculation of the RJRN Federal Tax Liability or the RJRN Combined State
Liability, as the case may be, reflected on such return is incorrect or
incomplete. Any adjustment made by Holdings under this Section 3.04(b) shall
be treated for purposes of Article 3 as though it had always been reflected on
such Pro Forma Return. The Designated RJRN Affiliate shall not be permitted to
invoke the dispute resolution procedures in Section 11.02 until it shall have
paid any amounts required under Section 3.04(c).
(c) No later than two Business Days prior to the due date (including
all applicable and valid extensions) for the Return of the Holdings
Consolidated Group to which a Pro Forma Return described in Section 3.04(a)
relates, the Designated RJRN Affiliate shall pay to Holdings, or Holdings
shall pay to the Designated RJRN Affiliate, as appropriate, an amount equal to
the difference, if any, between the RJRN Federal Tax Liability or the RJRN
Combined State Tax Liability, as the case may be, reflected on such Pro Forma
Return for the taxable period covered thereby and the aggregate amount of the
estimated installments paid by the Designated RJRN Affiliate with respect to
such taxable period in accordance with the principles of Section 3.02.
(d) If a Pro Forma Return of the RJRN Tax Group described in Section
3.04(a) reflects a Tax Asset that may under applicable law be used to reduce a
Federal Tax liability or State Tax liability, in each case for any taxable
period of a member of the Holdings Consolidated Group that is not also a
member of the RJRN Tax Group, Holdings shall pay to the Designated RJRN
Affiliate (and, as appropriate, shall receive payment from Nabisco of) an
amount equal to the actual tax saving produced by such Tax Asset within 30
days of the Effective Realization of such tax saving, and the Pro Forma
Returns of the RJRN Tax Group and other relevant determinations under this
Article 3 shall thereafter reflect such use. The amount of the tax saving
under this Section 3.04(d) or under Section 3.05(d) for any taxable period
shall be the amount of the reduction in
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Federal Taxes or State Taxes that are payable to a Taxing Authority with
respect to such taxable period, as compared to the Federal Taxes or State
Taxes that would have been payable to a Taxing Authority with respect to such
taxable period in the absence of such Tax Asset. Without limiting the
generality of the foregoing, the determination of the tax saving under this
Section 3.04(d) or under Section 3.05(d) shall take into account the
application of Section 3.06.
SECTION 3.05. Payment of Taxes at Year-End by Nabisco Tax Group. (a)
No later than 20 Business Days prior to the due date (including all applicable
and valid extensions) for the Holdings Consolidated Group's consolidated
Federal Tax return for a taxable year that begins prior to a Nabisco
Deconsolidation, Nabisco shall deliver to Holdings a Pro Forma Federal Return
of the Nabisco Tax Group reflecting the Nabisco Federal Tax Liability for (i)
such taxable year, if such taxable year ends prior to a Nabisco
Deconsolidation, or (ii) the period from the beginning of such taxable year
through the Deconsolidation Date, if a Nabisco Deconsolidation occurs during
such taxable year. No later than 20 Business Days prior to the due date
(including all applicable and valid extensions) for each Combined State return
of the Holdings Consolidated Group for a taxable year that begins prior to a
Nabisco Deconsolidation, Nabisco shall deliver to Holdings a Pro Forma
Combined State Return of the Nabisco Tax Group reflecting the related Nabisco
Combined State Tax Liability for (i) such taxable year, if such taxable year
ends prior to a Nabisco Deconsolidation, or (ii) the period from the beginning
of such taxable year through the Deconsolidation Date, if a Nabisco
Deconsolidation occurs during such taxable year. Nabisco shall not take any
unreasonable position in preparing such Pro Forma Returns. Each Pro Forma
Return shall be delivered together with a statement showing a calculation of
the amount to be paid pursuant to Section 3.05(c) below.
(b) Upon receipt of a Pro Forma Return from Nabisco, Holdings may
adjust such return if it determines that the calculation of the Nabisco
Federal Tax Liability or the Nabisco Combined State Liability, as the case may
be, reflected on such return is incorrect or incomplete. Any adjustment made
by Holdings under this Section 3.05(b) shall be treated for the purposes of
Article 3 as though it had always been reflected on such Pro Forma Return.
Nabisco shall not be permitted to invoke the dispute resolution procedures in
Section 11.02 until it shall have paid any amounts required under Section
3.05(c).
(c) No later than two Business Days prior to the due date for the
Return of the Holdings Consolidated Group that results in the delivery of a
Pro Forma Return pursuant to Section 3.05(a) above, Nabisco shall pay to
Holdings, or Holdings shall pay to Nabisco, as appropriate, an amount equal to
the difference, if any, between the Nabisco Federal Tax Liability or the
Nabisco Combined State Tax Liability, as the case may be, reflected on such
Pro Forma Return for the
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taxable period covered thereby and the aggregate amount of the estimated
installments paid by Nabisco with respect to such taxable period in accordance
with the principles of Section 3.03.
(d) If a Pro Forma Return of the Nabisco Tax Group described in
Section 3.05(a) reflects a Tax Asset that may under applicable law be used to
reduce a Federal Tax liability or a State Tax liability, in each case for any
taxable period of a member of the Holdings Consolidated Group that is not also
a member of the Nabisco Tax Group, Holdings shall pay to Nabisco (and, as
appropriate, shall receive payment from the Designated RJRN Affiliate of) an
amount equal to the actual tax saving (which would be computed in accordance
with Section 3.04(d)) produced by such Tax Asset within 30 days of the
Effective Realization of such tax saving, and the Pro Forma Returns of the
Nabisco Tax Group and other relevant determinations under this Article 3 shall
thereafter reflect such use.
SECTION 3.06. Foreign Tax Credit Considerations. In connection with
any determinations under this Agreement of the tax saving or tax benefit
Effectively Realized by a corporation (the "Tax Asset Beneficiary") from the
use of a Tax Asset of another corporation (the "Tax Asset Provider"), (i)
there shall be taken into account the tax saving or tax benefit from any net
increase in the foreign tax credits that the Tax Asset Beneficiary or any
other member of the Nabisco Tax Group or of the RJRN Tax Group, whichever (if
either) includes the Tax Asset Beneficiary as a member, Effectively Realizes
by reason of the use of such Tax Asset, at the time of the Effective
Realization of such tax saving or tax benefit from the net increase in the
foreign tax credits, and (ii) there shall not be taken into account the tax
effect of (A) any net decrease in the foreign tax credits to which the
corporations described in clause (i) may be entitled by reason of the use of
such Tax Asset, or (B) any change in the foreign tax credits to which any
other corporation, including the Tax Asset Provider, may be entitled by reason
of the use of such Tax Asset.
SECTION 3.07. Remittances To Taxing Authorities. (a) In the event
that Holdings makes a cash remittance (other than a mandatory estimated tax
payment or a payment of tax in connection with the filing of a Return at
year-end) with a Taxing Authority to stop the running of interest in whole or
in part, Nabisco and the Designated RJRN Affiliate shall pay to Holdings an
amount equal to the appropriate share of the Nabisco Tax Group or the RJRN Tax
Group, respectively, of the amount to be so remitted no later than two
Business Days prior to the date on which Holdings makes such remittance to
such Taxing Authority. For purposes of this Section 3.07(a), the appropriate
share of the Nabisco Tax Group or the RJRN Tax Group, as the case may be, of
any remittance shall be determined by Holdings. No later than five Business
Days prior to the date planned for a remittance under this Section 3.07(a),
Holdings shall notify Nabisco
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and the Designated RJRN Affiliate of (i) such planned date, and (ii) their
respective appropriate shares of such remittance.
(b) Upon the Effective Realization by Holdings, any member of the
Nabisco Tax Group or any member of the RJRN Tax Group of the benefit
attributable to the refund or recoupment of amounts paid by Nabisco or the
Designated RJRN Affiliate under Section 3.07(a), the corporation that
Effectively Realized such benefit shall pay to Nabisco or the Designated RJRN
Affiliate, respectively, the amount of such refund or recoupment, together
with interest, if any, received thereon, within 30 days of Effective
Realization thereof. If and to the extent that any claim for refund or contest
relating to amounts paid under Section 3.07(a) shall be unsuccessful, any
payment made by Nabisco or the Designated RJRN Affiliate under Section 3.07(a)
shall be credited toward any payment obligations of Nabisco or the RJRN Tax
Group, respectively, under Article 3.
SECTION 3.08. Carrybacks from Periods After the Distribution. (a)
Holdings agrees to pay the Designated RJRN Affiliate, within 30 days of
Effective Realization, the actual Federal Tax or Combined State Tax benefit
Effectively Realized by any member of the Holdings Consolidated Group from the
use in any taxable year that includes a Pre-Distribution Period (but that is
not a Pre-1990 Period) of a carryback of any Tax Asset of any member of the
RJRN Tax Group from a Post-Distribution Period. Such tax benefit shall be
considered equal to the excess of (i) the amount of Federal Taxes or Combined
State Taxes, as the case may be, that would have been payable (or the Federal
Tax or Combined State Tax refund actually receivable) by the Holdings
Consolidated Group in the absence of such carryback, over (ii) the amount of
Federal Taxes or Combined State Taxes actually payable (or the Federal Tax or
Combined State Tax refund that would have been receivable). The determination
of the tax benefit under this Section 3.08(a) shall take into account (A) the
application of Section 3.06, (B) the receipt by any member of the Holdings
Consolidated Group of any interest on a carryback that results in a tax
refund, or (C) the reduction of any interest otherwise owed by any member of
the Holdings Consolidated Group as a result of a carryback that reduces a tax
deficiency.
(b) If, subsequent to the payment by Holdings to the Designated RJRN
Affiliate of an amount pursuant to Section 3.08(a), there shall be (i) a Final
Determination that results in a disallowance or a reduction of the Tax Asset
so carried back or (ii) a reduction in the amount of the tax benefit
Effectively Realized by the Holdings Consolidated Group from such Tax Asset as
a result of the use by the Holdings Consolidated Group of a Tax Asset of
Holdings or any member of the Nabisco Tax Group, the Designated RJRN Affiliate
shall repay to Holdings, within 30 days of such event, any amount that would
not have been
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payable by Holdings pursuant to Section 3.08(a) had the amount of the tax
benefit been determined in light of such event. In addition, the RJRN Tax
Group shall hold Holdings and the Nabisco Tax Group harmless from any penalty
or interest payable as a result of any event described in the preceding
sentence.
SECTION 3.09. Treatment of Adjustments. (a) If any adjustment is made
in a Return relating to Federal Taxes or Combined State Taxes of the Holdings
Consolidated Group, after the filing thereof, in which income or loss of any
member of the RJRN Tax Group is included, then within 30 days of the time of a
Final Determination of such adjustment, the Designated RJRN Affiliate shall
pay to Holdings, or Holdings shall pay to the Designated RJRN Affiliate, as
the case may be and as appropriate, (i) the difference between (A) all
payments actually made, net of all refunds or recoupments received or
otherwise Effectively Realized, by the Designated RJRN Affiliate (or treated
as such) in accordance with the principles of Article 3 for the taxable year
covered by such Return, and (B) all payments that would have been made by the
Designated RJRN Affiliate (or treated as such) in accordance with the
principles of this Article 3 for the taxable year covered by such Return
taking such adjustment into account, and (ii) related adjustments to penalties
and interest. Without limiting the generality of Section 3.09(a)(ii) or
3.09(b)(ii), the determination of penalties and interest generally shall take
into account the timing and magnitude of the relevant payments, refunds or
recoupments made.
(b) If any adjustment is made in a Return relating to Federal Taxes
or Combined State Taxes of the Holdings Consolidated Group, after the filing
thereof, in which income or loss of any member of the Nabisco Tax Group is
included, then within 30 days of the time of a Final Determination of such
adjustment, Nabisco shall pay to Holdings, or Holdings shall pay to Nabisco,
as the case may be and as appropriate, (i) the difference between (A) all
payments actually made, net of all refunds or recoupments received or
otherwise Effectively Realized, by Nabisco (or treated as such) in accordance
with the principles of Article 3 for the taxable year covered by such Return,
and (B) all payments that would have been made by Nabisco (or treated as such)
in accordance with the principles under Article 3 for the taxable year covered
by such Return taking such adjustment into account, and (ii) related
adjustments to penalties and interest.
(c) Any refunds or credits of tax received or otherwise Effectively
Realized by Holdings, a member of the Nabisco Tax Group or a member of the
RJRN Tax Group, as the case may be, relating to a taxable year that includes a
Pre-Distribution Period, to the extent reflecting a tax saving attributable to
any item of income, loss, credit, deduction or other tax attribute of (i) any
member of the Nabisco Tax Group or of the RJRN Tax Group, in the case of
Holdings, shall be paid to Nabisco or the Designated RJRN Affiliate,
respectively, (ii) Holdings
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or any member of the RJRN Tax Group, in the case of a member of the Nabisco
Tax Group, shall be paid to Holdings (and, as appropriate, forwarded by
Holdings to the Designated RJRN Affiliate), or (iii) Holdings or any member of
the Nabisco Tax Group, in the case of a member of the RJRN Tax Group, shall be
paid to Holdings (and, as appropriate, forwarded by Holdings to Nabisco), in
each case within 30 days of Effective Realization of such tax saving. In
addition, any refunds or credits of tax received or Effectively Realized by
Holdings or a member of the Nabisco Tax Group, as the case may be, relating to
a taxable year that includes a Post-Distribution Period, to the extent
reflecting a tax saving attributable to any item of income, loss, credit,
deduction or other tax attribute of any member of the Nabisco Tax Group or
Holdings, respectively, shall be paid to Nabisco or Holdings, respectively,
within 30 days of Effective Realization of such tax saving. Notwithstanding
anything in this Section 3.09(c) to the contrary, no payment shall be required
to the extent such refunds or credits are attributable to a Tax Asset or an
adjustment for which the corporation that receives or otherwise Effectively
Realizes the refund or credit has previously made payment in accordance with
the principles of this Agreement.
(d) For purposes of this Agreement, any income, loss, credit,
deduction or other tax attribute of, any tax liability, refund or credit of
tax or interest of, or any payments by or on behalf of, any member of the
Holdings Consolidated Group (including, without limitation, Holdings or a
member of the Nabisco Tax Group) with respect to a Pre-1990 Period shall be
treated as an item of the RJRN Tax Group. If, with respect to any Pre-1990
Period, Holdings or any member of the Nabisco Tax Group Effectively Realizes
the benefit of a refund of any statutory interest or any Federal Tax or State
Tax, Holdings or Nabisco, respectively, shall promptly remit to the Designated
RJRN Affiliate the amount of such refund (net of any taxes on the taxable
portion, if any, of such refund for which Holdings or the Nabisco Tax Group,
respectively, is liable), together with any interest received thereon.
SECTION 3.10. Treatment of R&D Credits. For purposes of this
Agreement, if the amount of the research and development credits (the "R&D
Credits") actually allowable to the Holdings Consolidated Group with respect
to any taxable period is less than the sum of (i) the separately computed
amount of R&D Credits of the RJRN Tax Group with respect to such taxable
period and (ii) the separately computed amount of R&D Credits of the Nabisco
Tax Group with respect to such taxable period, in the case of each of clauses
(i) and (ii), calculated as though the relevant tax group were not a part of
the Holdings Consolidated Group (but rather were a separate Consolidated
Group), then for purposes of this Agreement each of the RJRN Tax Group and the
Nabisco Tax Group shall be entitled only to its proportionate share of the
actually allowable R&D Credits of the Holdings Consolidated Group with respect
to such taxable period.
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ARTICLE 4
CERTAIN REPRESENTATIONS AND COVENANTS IN CONNECTION WITH THE
DISTRIBUTION AND THE INTERNAL DISTRIBUTION
SECTION 4.01. RJRN Tax Group Representations. RJRN and each other
member of the RJRN Tax Group represent to Holdings and each member of the
Nabisco Tax Group that as of the date of this Agreement there is no plan or
intention to (i) liquidate RJRN or RJRT or merge or consolidate any of such
corporations with any other person subsequent to the Distribution, (ii) sell
or otherwise dispose of the assets of RJRN, RJRT or any other member of the
RJRN Tax Group subsequent to the Distribution, except in the ordinary course
of business, (iii) take any action inconsistent with the information and
representations furnished by RJRN in connection with the Tax Opinion, (iv)
purchase stock of RJRN other than in accordance with the requirements of
Revenue Procedure 96-30 and in conformity with the representations furnished
by RJRN in connection with the Tax Opinion, or (v) enter into any
negotiations, agreements or arrangements with respect to transactions or
events (including, without limitation, stock issuances, pursuant to the
exercise of options or otherwise, option grants, capital contributions or
acquisitions, or a series of such transactions or events, but excluding the
Internal Distribution and the Distribution) that may cause the Distribution
and/or the Internal Distribution to be treated as part of a plan pursuant to
which one or more persons acquire directly or indirectly stock of RJRN,
Nabisco or Holdings representing a "50-percent or greater interest" therein
within the meaning of Section 355(d)(4) of the Code.
SECTION 4.02. Holdings and Nabisco Tax Group Representations.
Holdings and each member of the Nabisco Tax Group represent to each member of
the RJRN Tax Group that as of the date of this Agreement there is no plan or
intention to (i) liquidate Holdings, Nabisco or Nabisco, Inc. or merge or
consolidate any of such corporations with any other person subsequent to the
Internal Distribution, (ii) sell or otherwise dispose of the assets of
Holdings, Nabisco, Nabisco, Inc. or any other member of the Nabisco Tax Group
subsequent to the Internal Distribution, except (A) in the ordinary course of
business, or (B) pursuant to plant rationalization programs, to the extent
implemented in a manner consistent with practice prior to the Distribution,
(iii) take any action inconsistent with the information and representations
furnished by Holdings in connection with the Tax Opinion, (iv) purchase stock
of Nabisco or Holdings, other than (A) in accordance with the requirements of
Revenue Procedure 96-30 and in conformity with the representations furnished
by Holdings in connection with the Tax Opinion (including, without limitation,
the purchase by Nabisco on the New York Stock Exchange of shares of its Class
A common stock for delivery upon the exercise of employee stock options), or
(B)
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any payment of cash in lieu of fractional shares in any reverse stock split
with respect to the common stock of Holdings or Nabisco following the Internal
Distribution, or (v) enter into any negotiations, agreements or arrangements
with respect to transactions or events (including stock issuances, pursuant to
the exercise of options or otherwise, option grants, capital contributions or
acquisitions, or a series of such transactions or events, but excluding the
Internal Distribution and the Distribution) that may cause the Internal
Distribution and/or the Distribution to be treated as part of a plan pursuant
to which one or more persons acquire directly or indirectly stock of Nabisco,
Holdings or RJRN representing a "50-percent or greater interest" therein
within the meaning of Section 355(d)(4) of the Code.
SECTION 4.03. Representations of Holdings, RJRN Tax Group and Nabisco
Tax Group. Each of Holdings, the members of the Nabisco Tax Group, RJRN and
the other members of the RJRN Tax Group represents that it is not aware of any
plan or intention by the shareholders or securityholders of Holdings to sell,
exchange, transfer or otherwise dispose of any of their stock or securities in
Holdings or RJRN subsequent to the Distribution.
SECTION 4.04. RJRN Tax Group Covenants. RJRN and each other member of
the RJRN Tax Group covenant to Holdings and each member of the Nabisco Tax
Group that (i) during the Two-Year Period, RJRN and RJRT shall not liquidate
or merge or consolidate with any other person, (ii) during the Two-Year
Period, RJRN shall not sell, exchange, distribute or otherwise dispose of the
assets of RJRN, RJRT or any other member of the RJRN Tax Group, except in the
ordinary course of business, (iii) during the Two-Year Period, RJRT shall
continue the active conduct of the historic trade or business (i.e., the
manufacture, distribution and sale of cigarettes and other tobacco products in
the United States), within the meaning of Section 355 of the Code, conducted
throughout the five-year period prior to the Internal Distribution, (iv) no
member of the RJRN Tax Group shall purchase stock of RJRN, other than in
accordance with the requirements of Revenue Procedure 96-30 and in conformity
with the representations furnished by RJRN in connection with the Tax Opinion,
(v) on or after the Distribution Date, RJRN shall not, nor shall it permit any
member of the RJRN Tax Group to, make or change any tax election, change any
accounting method, amend any Return or take any tax position on any Return,
take any action, omit to take any action or enter into any transaction that
results in an increased tax liability or reduction of any Tax Asset of
Holdings or of the Nabisco Tax Group with respect to any Pre-Distribution
Period that is not also a Pre-1990 Period, and (vi) during the Two-Year
Period, RJRN shall not enter into any transaction or make any change in equity
structure (including, without limitation, stock issuances, pursuant to the
exercise of options or otherwise, option grants, capital contributions or
acquisitions, or a series of such transactions or events, but
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excluding the Distribution and the Internal Distribution) that may cause the
Distribution and/or the Internal Distribution to be treated as part of a plan
pursuant to which one or more persons acquire directly or indirectly stock of
RJRN, Nabisco or Holdings representing a "50-percent or greater interest"
therein within the meaning of Section 355(d)(4) of the Code. The RJRN Tax
Group agrees that Holdings and the Nabisco Tax Group shall have no liability
for any Tax resulting from any action referred to in the preceding sentence
and agrees to hold harmless Holdings and the Nabisco Tax Group from any such
Tax.
SECTION 4.05. Holdings and Nabisco Tax Group Covenants. Holdings and
each member of the Nabisco Tax Group covenant to each member of the RJRN Tax
Group that (i) during the Two-Year Period, Holdings, Nabisco and Nabisco, Inc.
shall not liquidate or merge or consolidate with any other person, (ii) during
the Two-Year Period, Holdings shall not sell, exchange, distribute or
otherwise dispose of the assets of Holdings, Nabisco, Nabisco, Inc. or any
other member of the Nabisco Tax Group, except (A) in the ordinary course of
business, (B) pursuant to plant rationalization programs, to the extent
implemented in a manner consistent with practice prior to the Distribution, or
(C) for an asset, (I) the gross proceeds of disposition of which do not exceed
$10 million, (II) which, together with all other assets to which this clause
(C) has been applied, would not have aggregate gross proceeds of disposition
in excess of $200 million, and (III) which is not part of a plan for the
disposition of multiple assets unless each of the assets covered by such plan
would meet the requirements of this clause (C), (iii) during the Two-Year
Period, Nabisco, Inc. shall continue the active conduct of the historic trade
or business (i.e., the manufacture, distribution and sale of cookies, crackers
and other food and snack products within the United States), within the
meaning of Section 355 of the Code, conducted throughout the five-year period
prior to the Internal Distribution, (iv) during the Two-Year Period, neither
any member of the Nabisco Tax Group nor Holdings shall purchase stock of
Nabisco or Holdings other than (A) in accordance with the requirements of
Revenue Procedure 96-30 and in conformity with the representations furnished
by Holdings in connection with the Tax Opinion (including, without limitation,
the purchase by Nabisco on the New York Stock Exchange of shares of its Class
A common stock for delivery upon the exercise of employee stock options), or
(B) any payment of cash in lieu of fractional shares in any reverse stock
split with respect to the common stock of Nabisco or Holdings following the
Internal Distribution, and (v) during the Two-Year Period, each of Nabisco and
Holdings shall not enter into any transaction or make any change in equity
structure (including, without limitation, stock issuances, pursuant to the
exercise of options or otherwise, option grants, capital contributions or
acquisitions, or a series of such transactions or events, but excluding the
Internal Distribution and the Distribution) that may cause the Internal
Distribution and/or the Distribution to be treated as part of a plan pursuant
to which one or more persons acquire directly or
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indirectly stock of Nabisco, Holdings or RJRN representing a "50-percent or
greater interest" therein within the meaning of Section 355(d)(4) of the Code.
Each of Holdings and Nabisco agrees that the members of the RJRN Tax Group
shall have no liability for any Tax resulting from any action referred to in
the preceding sentence taken by Holdings or any member of the Nabisco Tax
Group, respectively, and agrees to indemnify and hold harmless any member of
the RJRN Tax Group from any such Tax.
SECTION 4.06. Exceptions. Notwithstanding the foregoing, RJRN and the
other members of the RJRN Tax Group shall be permitted to take an action
inconsistent with the covenants contained in Section 4.04, and Holdings and
the members of the Nabisco Tax Group shall be permitted to take an action
inconsistent with the covenants contained in Section 4.05, if, prior to taking
such action the Designated RJRN Affiliate, Holdings or Nabisco, as the case
may be, (i) provides notification, upon determining that it shall pursue such
action, to the other parties to this Agreement of its plans with respect to
such action, and promptly responds to any inquiries made by such parties
following such notification, and (ii) obtains either (A) a ruling from the IRS
to the effect that such action shall not cause the Distribution to be taxable
to Holdings or its shareholders or the Internal Distribution to be taxable to
RJRN or Holdings, or (B) an opinion of Davis Polk & Wardwell (or of an
independent counsel, comparable thereto, that is nationally recognized as an
expert in Federal Tax matters), which opinion and, in the case of counsel
other than Davis Polk & Wardwell, which counsel are acceptable to the parties
to which the relevant covenant(s) in this Agreement have been made, to the
same effect as is set forth in clause (A).
ARTICLE 5
COVENANTS AND OTHER MATTERS FOLLOWING NABISCO DECONSOLIDATION
SECTION 5.01. Certain Nabisco Covenants. Nabisco covenants to Holdings
that upon or after a Nabisco Deconsolidation it shall not, nor shall it cause or
permit any member of the Nabisco Tax Group to, make or change any tax election,
change any accounting method, amend any Return or take any tax position on any
Return, take any action, omit to take any action or enter into any transaction
that results in any increased tax liability or reduction of any Tax Asset of the
Holdings Consolidated Group with respect to any Pre-Deconsolidation Period;
provided, however, that with respect to a Pre-Deconsolidation Period that is
also a Post-1989 Period, for purposes of this Section 5.01, the Holdings
Consolidated Group shall include only those members of the Holdings Consolidated
Group that are not members of the Nabisco Tax Group. Nabisco
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agrees that Holdings and the RJRN Tax Group, as applicable, shall have no
liability for any tax or any increase in indemnification obligations resulting
from any action referred to in the preceding sentence and agrees to hold
harmless such corporations from any such tax or increase in indemnification
obligations.
SECTION 5.02. Carrybacks from Periods Following Nabisco
Deconsolidation. (a) Holdings agrees to pay to Nabisco the actual Federal Tax
or Combined State Tax benefit Effectively Realized by any member of the
Holdings Consolidated Group from the use in any taxable year that includes a
Pre-Deconsolidation Period and that does not include a Pre-1990 Period of a
carryback of any Tax Asset of any member of the Nabisco Tax Group from a
taxable year that includes a Post-Deconsolidation Period. Such tax benefit
shall be considered equal to the excess of (i) the Federal Taxes or Combined
State Taxes, as the case may be, that would have been payable (or the Federal
Tax or Combined State Tax refund actually receivable) by the Holdings
Consolidated Group in the absence of such carryback, over (ii) the amount of
Federal Taxes or Combined State Taxes actually payable (or the Federal Tax or
Combined State Tax refund that would have been receivable). Without limiting
the generality of the foregoing, the determination of the tax benefit under
this Section 5.02(a) shall take into account the application of Section 3.06.
Payment of the amount of the tax benefit under this Section 5.02(a) shall be
made within 30 days of the Effective Realization thereof.
(b) If, subsequent to the payment by Holdings to Nabisco of an
amount under Section 5.02(a), there shall be (i) a Final Determination that
results in a disallowance or a reduction of the Tax Asset so carried back or
(ii) a reduction in the amount of the benefit Effectively Realized by the
Holdings Consolidated Group from such Tax Asset as a result of the use by the
Holdings Consolidated Group of a Tax Asset of Holdings or of the RJRN Tax
Group, Nabisco shall repay to Holdings, within 30 days of such event, any
amount that would not have been payable to Nabisco pursuant to Section 5.02(a)
had the amount of the benefit been determined in light of such events. Nabisco
shall hold Holdings harmless from any penalty or interest payable as a result
of any event described in the preceding sentence.
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ARTICLE 6
DEDUCTIONS AND CERTAIN TAX MATTERS RELATED TO THE DISTRIBUTION
AGREEMENT
SECTION 6.01. Payment of After-Tax Amounts. If any amount paid by
RJRN or Holdings under the Distribution Agreement results in any increased tax
liability or reduction of any Tax Asset of Holdings or any member of the
Nabisco Tax Group, in the case of RJRN, or any member of the RJRN Tax Group,
in the case of Holdings, then the party making such payment shall, in addition
to paying any amounts otherwise owed under the Distribution Agreement,
indemnify the recipient of such payment against and hold it harmless from (i)
such increased tax or the reduction of such Tax Asset, (ii) any interest or
penalty attributable to such increased tax liability or the reduction of such
Tax Asset and (iii) the After-Tax Amount.
SECTION 6.02. Deductions and Certain Taxes Related to Stock Options
and Restricted Stock. (a) The Holdings Consolidated Group shall claim, and for
purposes of this Agreement Holdings shall be entitled to the economic benefit
of, any Federal Tax deductions and State Tax deductions with respect to a
Post-Distribution Period that are attributable to the exercise of options to
purchase the stock of Holdings, of Nabisco or of RJRN or the vesting of
restricted stock of Holdings, of Nabisco or of RJRN, in each case that are
held by a person who (i) at the time the deduction is claimed is an employee
of Holdings, (ii) at the time the deduction is claimed is not employed by any
corporation among Holdings, the members of the RJRN Tax Group and the members
of the Nabisco Tax Group (collectively, the "Employer Group"), but who (A) on
the day before the Distribution Date was an employee of Holdings or (B) on the
day before the Distribution Date was not employed by any corporation in the
Employer Group and was last employed, among the corporations in the Employer
Group, by Holdings, or (iii) notwithstanding anything in Section 6.04 or this
Section 6.02 to the contrary except for Section 6.02(b)(iii), has been an
employee of Holdings at any time after the Distribution.
(b) The Holdings Consolidated Group shall claim, and for purposes of
this Agreement the Nabisco Tax Group shall be entitled to the economic benefit
of, any Federal Tax deductions and State Tax deductions with respect to a
Post-Distribution Period that are attributable to the exercise of options to
purchase the stock of Holdings, of Nabisco or of RJRN or the vesting of
restricted stock of Holdings, of Nabisco or of RJRN, in each case that are
held by a person who (i) at the time the deduction is claimed is an employee
of a member of the Nabisco Tax Group, (ii) at the time the deduction is
claimed is not employed by any corporation in the Employer Group, but who (A)
on the day before the
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Distribution Date was an employee of a member of the Nabisco Tax Group or (B)
on the day before the Distribution Date was not employed by any corporation in
the Employer Group and was last employed, among the corporations in the
Employer Group, by a member of the Nabisco Tax Group, or (iii) in the case of
options to purchase the stock of Nabisco or restricted stock of Nabisco and
notwithstanding anything in Section 6.04 or this Section 6.02 to the contrary,
is Mr. Steven F. Goldstone or Mr. Charles M. Harper.
(c) The RJRN Tax Group shall claim, and for purposes of this
Agreement the RJRN Tax Group shall be entitled to the economic benefit of, any
Federal Tax deductions and State Tax deductions with respect to a
Post-Distribution Period that are attributable to the exercise of options to
purchase the stock of Holdings, of Nabisco or of RJRN or the vesting of
restricted stock of Holdings, of Nabisco or of RJRN, in each case that are
held by a person who (i) at the time the deduction is claimed is an employee
of a member of the RJRN Tax Group, or (ii) at the time the deduction is
claimed is not employed by any corporation in the Employer Group, but who (A)
on the day before the Distribution Date was an employee of a member of the
RJRN Tax Group or (B) on the day before the Distribution Date was not employed
by any corporation in the Employer Group and was last employed, among the
corporations in the Employer Group, by a member of the RJRN Tax Group.
(d) For purposes of this Section 6.02, references to options to
purchase stock of any corporation and references to the restricted stock of
any corporation are limited to options and restricted stock outstanding
immediately after the Distribution.
SECTION 6.03. Certain Employment Taxes. (a) The employer of the
person who exercises stock options or with respect to whom restricted stock
vests (or, if such person is not employed by a corporation in the Employer
Group at the time of such exercise or vesting, the corporation in the Employer
Group that last employed such person) shall timely pay all applicable Federal
Employment Taxes and state employment taxes in connection with such exercise
or vesting.
(b) If the payor under Section 6.03(a) of Federal Employment Taxes
and state employment taxes in connection with the exercise of options to
purchase the stock of Nabisco, or the vesting of restricted stock of Nabisco,
held by Mr. Steven F. Goldstone or Mr. Charles M. Harper is not a member of
the Nabisco Tax Group, Nabisco shall pay to such payor an amount equal to such
taxes within 30 days of Nabisco's receipt of documentation that such payor has
remitted such taxes to the appropriate Taxing Authorities.
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SECTION 6.04. Deductions Related to Employee Severance and Certain
Other Expenses. (a) The Holdings Consolidated Group shall claim, and for
purposes of this Agreement the Nabisco Tax Group shall be entitled to the
economic benefit of, any Federal Tax deductions and State Tax deductions, as
appropriate, that are attributable to (i) the expenses (except for expenses
related to stock options and restricted stock) arising out of (A) the closing
of the corporate headquarters of RJRN and Holdings, or (B) the severance and
benefit payment obligations to Holdings Employees (as defined in the
Distribution Agreement) arising as a result of the completion of the
Distribution, or (ii) such miscellaneous expenses as are described in Section
10.03(b)(iii) of the Distribution Agreement (collectively, the "Corporate
Headquarters Expenses").
(b) Notwithstanding anything in Section 10.03(b) of the Distribution
Agreement to the contrary, upon the provision by Holdings of not less than 15
days' notice to Nabisco that (i) Holdings is required to make a cash payment
of Corporate Headquarters Expenses to a third party no later than a specified
date, and (ii) the sum of such payment and all prior payments of Corporate
Headquarters Expenses exceeds the amount transferred by RJRN to Holdings
pursuant to Section 10.03(b)(iii) of the Distribution Agreement, Nabisco shall
remit to Holdings cash equal to such excess prior to such specified date.
SECTION 6.05. Deductions Related to Certain Litigation Expenses. The
RJRN Tax Group shall claim, and for purposes of this Agreement RJRN shall be
entitled to the economic benefit of, any Federal Tax deductions and State Tax
deductions, as appropriate, that are attributable to the expenses (including,
without limitation, attorneys' fees, expenses of investigation and other
expenses) incurred in the defense of Tobacco Claims against (i) RJRN,
including, without limitation, Tobacco Claims the defense of which has been
assumed by Holdings pursuant to the Distribution Agreement, or (ii) Holdings,
Nabisco, Nabisco, Inc. or any other Nabisco Indemnitee as such term is defined
in the Distribution Agreement, to the extent that RJRN has agreed under the
Distribution Agreement to indemnify such party against any liabilities in
connection with such Tobacco Claims, provided that, in the case of each of (i)
and (ii), RJRN has satisfied its obligations under the relevant provisions of
the Distribution Agreement.
SECTION 6.06. Indemnification under Article 6. (a) To the extent that
any deduction that is allocated to Holdings under Section 6.02(a) is
disallowed because a Taxing Authority makes a Final Determination that a
member of the RJRN Tax Group or of the Nabisco Tax Group should have claimed
such deduction, the Designated RJRN Affiliate or Nabisco, respectively, shall
pay to Holdings an amount equal to the resulting actual tax benefit
Effectively Realized by the RJRN Tax Group or the Nabisco Tax Group,
respectively, within 30 days of the Effective Realization thereof.
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(b) To the extent that any deduction that is allocated to a member of
the Nabisco Tax Group under Section 6.02(b) or 6.04 is disallowed because a
Taxing Authority makes a Final Determination that Holdings or a member of the
RJRN Tax Group should have claimed such deduction, Holdings or the Designated
RJRN Affiliate, respectively, shall pay to Nabisco an amount equal to the
resulting actual tax benefit Effectively Realized by Holdings or the RJRN Tax
Group, respectively, within 30 days of the Effective Realization thereof.
(c) To the extent that any deduction that is allocated to a member of
the RJRN Tax Group under Section 6.02(c) or 6.05 is disallowed because a
Taxing Authority determines that Holdings or a member of the Nabisco Tax Group
should have claimed such deduction, Holdings or Nabisco, respectively, shall
pay to the Designated RJRN Affiliate an amount equal to the resulting actual
tax benefit Effectively Realized by Holdings or the Nabisco Tax Group,
respectively, within 30 days of the Effective Realization thereof.
ARTICLE 7
INDEMNITIES
SECTION 7.01. Indemnification of Holdings and Nabisco Tax Group by
RJRN Tax Group. RJRN, RJRT and each other member of the RJRN Tax Group shall
jointly and severally indemnify Holdings, Nabisco, Nabisco, Inc. and the other
members of the Nabisco Tax Group against and hold them harmless from:
(a) liability for Taxes attributable to any member of the RJRN Tax
Group relating to any taxable period (provided that, for purposes of the
foregoing portion of this Section 7.01(a), Taxes shall refer only to such
taxes as are described in clause (i) of the definition of such term in Section
1.01(a)), including without limitation, (i) any Tax liability resulting from
the International Tobacco Sale, (ii) any Tobacco Tax liability, (iii) any tax
liability of any member of the RJRN Tax Group resulting from the existence of
any excess loss accounts or deferred intercompany gains immediately before the
Distribution, (iv) any Federal Employment Tax of any member of the RJRN Tax
Group and (v) any Puerto Rican tax liability of any member of the RJRN Tax
Group, but excluding any Tax liability resulting from the Internal
Distribution except (A) to the extent the Internal Distribution is taxable by
reason of a breach by RJRN or any other member of the RJRN Tax Group of any
representation or covenant made by any member of the RJRN Tax Group in this
Agreement, and (B) for such amounts as are described in clause (iii) of this
Section 7.01(a);
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(b) liability for Taxes relating to any taxable period resulting
from a breach by RJRN or any other member of the RJRN Tax Group of any
representation or covenant made by any member of the RJRN Tax Group in this
Agreement;
(c) liability for Taxes relating to any Pre-1990 Period of Holdings,
Nabisco, Nabisco, Inc. or any other member of the Holdings Consolidated Group;
and
(d) liability for Taxes of Del Monte Corporation relating to any
taxable period (or portion thereof) ending on or before the close of business
on January 9, 1990, including, without limitation, (i) any tax liability
pursuant to the Stock Purchase Agreement dated as of September 24, 1989, as
amended, among DMPF Corp., RJR Investments, Inc., DMPF Holdings Corp. and
RJRN, and (ii) any Del Monte State Tax.
SECTION 7.02. Indemnification of RJRN Tax Group by Holdings or
Nabisco Tax Group. (a) Holdings shall indemnify RJRN, RJRT and the other
members of the RJRN Tax Group against and hold them harmless from:
(i) liability for Taxes attributable to Holdings (including,
without limitation, any Federal Employment Tax of Holdings)
relating to a Post-1989 Period, provided that, for purposes
of this Section 7.02(a)(i), (A) Tax shall refer only to such
taxes as are described in clause (i) of the definition of
such term in Section 1.01(a), and (B) any Federal Employment
Tax relating to a Pre- 1990 Period shall be treated as
relating to a Post-1989 Period;
(ii) liability for Taxes relating to any taxable period
resulting from a breach by Holdings of any representation or
covenant made by Holdings in this Agreement;
(iii) liability for Taxes resulting from the Name Change
Merger; and
(iv) liability for Taxes resulting from the Internal
Distribution or from the Distribution, except (A) to the
extent that such liability arises by reason of the breach by
RJRN or any other member of the RJRN Tax Group of any
representation or covenant made by any member of the RJRN
Tax Group in this Agreement, and (B) for such amounts as are
described in Section 7.01(a)(iii).
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(b) Nabisco, Nabisco, Inc. and each other member of the Nabisco Tax
Group shall jointly and severally indemnify RJRN, RJRT and the other members
of the RJRN Tax Group against and hold them harmless from:
(i) liability for Taxes attributable to any member of the
Nabisco Tax Group (including, without limitation, any
Federal Employment Tax of any member of the Nabisco Tax
Group) relating to a Post-1989 Period, provided that, for
purposes of this Section 7.02(b)(i), (A) Tax shall refer
only to such taxes as are described in clause (i) of the
definition of such term in Section 1.01(a), and (B) any
Federal Employment Tax relating to a Pre- 1990 Period shall
be treated as relating to a Post-1989 Period; and
(ii) liability for Taxes relating to any taxable period
resulting from a breach by Nabisco or any other member of
the Nabisco Tax Group of any representation or covenant made
by any member of the Nabisco Tax Group in this Agreement.
SECTION 7.03. Indemnification Between Holdings and Nabisco. (a)
Holdings shall indemnify Nabisco, Nabisco, Inc. and the other members of the
Nabisco Tax Group against and hold them harmless from:
(i) liability for Taxes attributable to Holdings (including,
without limitation, any Federal Employment Tax of Holdings)
relating to a Post-1989 Period, provided that, for purposes
of this Section 7.03(a)(i), (A) Tax shall refer only to such
taxes as are described in clause (i) of the definition of
such term in Section 1.01(a), and (B) any Federal Employment
Tax relating to a Pre- 1990 Period shall be treated as
relating to a Post-1989 Period;
(ii) liability for Taxes resulting from the Name Change
Merger;
(iii) liability for Taxes resulting from the Internal
Distribution or from the Distribution, except (A) the extent
that such liability arises by reason of the breach by (I)
RJRN or any other member of the RJRN Tax Group of any
representation or covenant made by any member of the RJRN
Tax Group in this Agreement, or (II) Nabisco or any other
member of the Nabisco Tax Group of any representation or
covenant made by any member of the Nabisco Tax Group in this
Agreement, (B) for such amounts as are described in Section
7.01(a)(iii), and (C) for any tax liability of any member of
the Nabisco Tax Group resulting from the existence of any
deferred intercompany gains immediately before the
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Distribution; and
(iv) liability for Taxes relating to any taxable period
resulting from a breach by Holdings of any representation or
covenant made by Holdings in this Agreement.
(b) Nabisco, Nabisco, Inc. and each other member of the Nabisco Tax
Group shall jointly and severally indemnify Holdings against and hold it
harmless from:
(i) liability for Taxes attributable to the Nabisco Tax
Group (including, without limitation, any Federal Employment
Tax of the Nabisco Tax Group) relating to a Post-1989
Period, provided that, for purposes of this Section
7.03(b)(i), Tax shall refer only to such taxes as are
described in clause (i) of the definition of such term in
Section 1.01(a), and (B) any Federal Employment Tax relating
to a Pre-1990 Period shall be treated as relating to a
Post-1989 Period; and
(ii) liability for Taxes relating to any taxable period
resulting from a breach by Nabisco or any other member of
the Nabisco Tax Group of any representation or covenant made
by any member of the Nabisco Tax Group in this Agreement.
SECTION 7.04. Additional Indemnity Amounts. Each party with
indemnification obligations under Section 7.01, 7.02 or 7.03 (an "Indemnitor")
shall also pay to each party that is indemnified by such Indemnitor under such
provision (an "Indemnitee") all liabilities, losses, damages, assessments,
settlements, judgments, costs or properly documented expenses (including,
without limitation, expenses of investigation and attorneys' fees and
expenses) arising out of or incident to the imposition, assessment or
assertion of any liabilities or damage described in such provision, including,
without limitation, those incurred in the contest in good faith in appropriate
proceedings relating to the imposition, assessment or assertion of any such
liability or damage.
SECTION 7.05. Notice of Claim. The Indemnitee agrees to give prompt
notice to the Indemnitor of the assertion of any claim, or the commencement of
any suit, action or proceeding in respect of which indemnity may be sought
under Section 7.01, 7.02 or 7.03.
SECTION 7.06. Discharge of Indemnity. An Indemnitor shall discharge its
obligations by paying all amounts specified in Sections 7.01, 7.02, 7.03 and
7.04 within 30 days of demand therefor. After a Final Determination of an
obligation
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for which an Indemnitee is to be indemnified, the Indemnitee shall send a
statement to the Indemnitor showing the amount, if any, due under such
provisions. Certain calculation mechanics relating to items described in
Sections 7.01, 7.02 and 7.03 shall be in accordance with the principles of
Article 3. Notwithstanding that an Indemnitor disputes in good faith the fact
or the amount of any obligation under Section 7.01, 7.02 or 7.03, payment
thereunder and under Section 7.04 shall be made within 30 days of demand
therefor.
SECTION 7.07. Certain Effects of Indemnification Obligations. (a) If
(i) (A) an indemnification obligation of the RJRN Tax Group under Section 7.01
arises in respect of an adjustment that makes a Tax Asset allowable to
Holdings or any member of the Nabisco Tax Group in a Post-1989 Period or (B)
any other adjustment for which the RJRN Tax Group is liable under this
Agreement makes a Tax Asset allowable to Holdings or any member of the Nabisco
Tax Group in a Post-1989 Period, and (ii) such Tax Asset would not be
allowable but for such adjustment, then Holdings or Nabisco, respectively,
shall pay to the Designated RJRN Affiliate an amount equal to the actual tax
saving produced by such Tax Asset within 30 days of the Effective Realization
of such tax saving, provided that the RJRN Tax Group has satisfied its
obligations under this Agreement in respect of the adjustment giving rise to
such tax saving.
(b) If (i) (A) an indemnification obligation of Holdings or any
member of the Nabisco Tax Group under Section 7.02 or 7.03, as the case may
be, arises in respect of an adjustment that makes a Tax Asset allowable to any
member of the Holdings Consolidated Group in a Pre-1990 Period or to any
member of the RJRN Tax Group in a Post-1989 Period or (B) any other adjustment
for which Holdings or the Nabisco Tax Group is liable under this Agreement
makes a Tax Asset allowable to any member or the RJRN Tax Group, and (ii) such
Tax Asset would not be allowable but for such adjustment, then the Designated
RJRN Affiliate shall pay to Holdings or Nabisco, respectively, an amount equal
to the actual tax saving produced by such Tax Asset within 30 days of the
Effective Realization of such tax saving, provided that Holdings or Nabisco,
as the case may be, has satisfied its obligations under this Agreement in
respect of the adjustment giving rise to such tax saving. Without limiting the
generality of the foregoing, if a Tax Asset is made allowable in a Pre-1990
Period, the amount to be paid under this Section 7.07(b) shall not exceed the
indemnification obligation that arises in respect of the adjustment that makes
such Tax Asset allowable.
(c) The amount of the tax saving under Section 7.07(a) or under
Section 7.07(b) for any taxable period shall be the amount of the reduction in
taxes payable to a Taxing Authority with respect to such taxable period as
compared to the taxes that would have been payable to a Taxing Authority with
respect to such taxable period in the absence of such Tax Asset. Without
limiting the generality
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of the foregoing, the determination of the tax saving under Section 7.07(a) or
under Section 7.07(b) shall take into account the application of Section 3.06.
ARTICLE 8
AUDIT AND OTHER TAX PROCEEDINGS
SECTION 8.01. Control Over Tax Proceedings. (a) Notwithstanding
Section 11.02 or anything in this Agreement to the contrary, Holdings shall
have full control over any and all matters with respect to which the Nabisco
Tax Group and the RJRN Tax Group have provided authority to Holdings under
Section 2.02, including, without limitation, any and all matters that would
give rise to an indemnification obligation under Article 7 on the part of any
member of the Nabisco Tax Group or any member of the RJRN Tax Group. Holdings
shall have absolute discretion with respect to any decisions to be made, or
any action to be taken, with respect to any matter described in the preceding
sentence.
(b) Without limiting the generality of Section 8.01(a), Holdings
may, in its sole and absolute discretion, settle any Tax Proceeding with
respect to the Taxes over which it has authority under Section 2.02(a)
(including, without limitation, a Tax Proceeding relating to any and all
matters that would give rise to an indemnification obligation under Section
7.01, 7.02 or 7.03). Any such settlement shall be binding on the parties to
this Agreement without further recourse. Section 11.02 shall not apply with
respect to (i) any such settlement or (ii) any Tax Proceeding with respect to
the Taxes over which Holdings has authority under Section 2.02(a).
SECTION 8.02. Del Monte State Taxes and Certain Other State Taxes.
Holdings shall conduct, and shall have full control over all matters relating
to, any Tax Proceedings in connection with (i) Del Monte State Taxes, or (ii)
any State Tax liability of Holdings or any member of the Nabisco Tax Group
(including, without limitation, tax liabilities that are reflected on (A) a
separate State Tax return, or (B) a Combined State Tax return filed on behalf
of an affiliated, consolidated, combined or unitary group that does not
include any member of the RJRN Tax Group) with respect to any Pre-1990 Period.
In its sole and absolute discretion, Holdings may determine that the RJRN Tax
Group shall be required to conduct such Tax Proceedings following the
provision by Holdings of not less than 180 days' notice to the Designated RJRN
Affiliate to such effect.
SECTION 8.03. Federal Employment Taxes. Holdings shall conduct, and
shall have full control over all matters relating to, any Tax Proceedings in
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connection with any Federal Employment Tax for which (i) any member of the
Nabisco Tax Group is liable with respect to a taxable year that begins prior
to a Nabisco Deconsolidation, or (ii) any member of the RJRN Tax Group is
liable with respect to a taxable year that begins prior to the Distribution
Date.
ARTICLE 9
COMMUNICATIONS AND COOPERATION
SECTION 9.01. Consult and Cooperate. Holdings, Nabisco, RJRN and RJRT
shall consult and cooperate (and shall cause their respective subsidiaries to
cooperate) fully at such time and to the extent reasonably requested by a
party to this Agreement in connection with all matters subject to this
Agreement; provided that (a) in the case of the companies listed in Exhibit D
to the International Tobacco Purchase Agreement, RJRN and RJRT shall be
required to cause such companies to cooperate only to the extent allowed under
the International Tobacco Purchase Agreement, and (b) for the avoidance of
doubt, any disagreement as to the scope of the consultation and cooperation
required under this Section 9.01 shall be governed by Section 11.02. The
cooperation under this Section 9.01 shall include, without limitation:
(i) the retention and provision on reasonable request of any
information (including, without limitation, any books, records, documentation
or other information) pertaining to Tax matters relating to Holdings, the
Nabisco Tax Group and the RJRN Tax Group, any necessary explanations of
information, and access to personnel, until the expiration of the applicable
statute of limitation (giving effect to any extension, waiver, or mitigation
thereof);
(ii) the execution, acknowledgment and delivery of any instrument or
document that may be necessary or helpful in connection with (A) any Return,
(B) any Tax Proceeding or other litigation, investigation or action, or (C)
the carrying out of the parties' respective obligations under this Agreement;
and
(iii) the use of the parties' best efforts to obtain any documentation
from a Taxing Authority, another governmental authority or another third party
that may be necessary or helpful in connection with the foregoing.
SECTION 9.02. Provide Information. Holdings, Nabisco and the
Designated RJRN Affiliate shall keep one another fully informed with respect
to any material developments relating to the matters subject to this
Agreement.
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SECTION 9.03. Tax Attribute Matters. Holdings, Nabisco and the
Designated RJRN Affiliate shall promptly advise one another with respect to
any proposed Tax adjustments, relating to a Consolidated Group, that are the
subject of a Tax Proceeding or other litigation, investigation or action and
that may materially affect any Tax liability or Tax attribute of the other
parties to this Agreement.
ARTICLE 10
PAYMENTS
SECTION 10.01. Procedure for Making Payments. All payments to be made
under this Agreement shall be made in immediately available funds. Except as
otherwise provided, all payments required to be made under this Agreement
shall be due 30 days after the receipt of notice of such payment or, where no
notice is required, 30 days after (i) the fixing of a tax liability, (ii) the
Effective Realization of a tax saving, tax benefit or tax attribute, (iii) the
receipt of a refund, or (iv) the resolution of a dispute. Unless otherwise
indicated, any payment that is not made when due shall bear interest at the
Intercompany Interest Rate. If, pursuant to a Final Determination, any amount
paid by Holdings, the members of the Nabisco Tax Group or the members of the
RJRN Tax Group under this Agreement results in any increased tax liability or
reduction of any Tax Asset of the recipient of such payment, then, in addition
to any amounts otherwise owed under this Agreement, the payor shall pay the
sum of (i) any interest or penalty attributable to such increased tax
liability or to the reduction of such Tax Asset, and (ii) the After-Tax
Amount.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Guarantee. Nabisco shall guarantee the obligations
under this Agreement of each other member of the Nabisco Tax Group. RJRN and
RJRT shall guarantee the obligations under this Agreement of each other member
of the RJRN Tax Group.
SECTION 11.02. Dispute Resolution. If the parties hereto are unable
to resolve any disagreement or dispute relating to this Agreement within 20
days, such disagreement or dispute shall be resolved by Holdings. Any such
resolution shall be binding on the parties to this Agreement without further
recourse.
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SECTION 11.03. Authorization. Each of Holdings, RJRN, Nabisco and
RJRT hereby represents and warrants that (i) it has the power and authority to
execute, deliver and perform this Agreement, (ii) this Agreement has been duly
authorized by all necessary corporate action on the part of such party, (iii)
this Agreement constitutes a legal, valid and binding obligation of such
party, and (iv) the execution, delivery and performance of this Agreement by
such party does not contravene or conflict with any provision or law or of
such party's charter or bylaws or any agreement, instrument or order binding
on such party.
SECTION 11.04. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile or similar
writing) and shall be given:
if to Holdings, to:
Nabisco Group Holdings Corp.
f/k/a RJR Nabisco Holdings Corp.
1301 Avenue of the Americas
New York, NY 10019
Attention: Chief Financial Officer
Facsimile: To be determined
if to RJRN and/or RJRT, to:
R.J. Reynolds Tobacco Holdings, Inc.
f/k/a/ RJR Nabisco, Inc.
R. J. Reynolds Tobacco Company
401 North Main Street
Plaza 6
Winston-Salem, NC 27102
Attention: Vice President -- Tax
Facsimile: 336-741-0259
if to Nabisco, to:
Nabisco Holdings Corp.
7 Campus Drive
Parsippany, NJ 07054-0311
Attention: Senior Vice President -- Tax
Facsimile: 973-682-6649
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and, in each case, to:
Nabisco, Inc.
200 DeForest Avenue
East Hanover, NJ 07936
Attention: Stephen Katzman
Vice President -- Tax Audits and Research
Facsimile: 973-503-3568
or any other address or facsimile number as such party may hereafter specify
in writing for this purpose by notice to the other parties to this Agreement.
Each such notice, request or other communication under this Section 11.04
shall be effective (a) if given by facsimile, when such facsimile is
transmitted to the facsimile number specified in this Section and the
appropriate facsimile confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section.
SECTION 11.05. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived if, and only if, such amendment or waiver
is in writing and signed by the parties that would be affected by such amendment
or waiver.
(b) Without limiting the generality of Section 11.05(a), Holdings and
the Nabisco Tax Group shall have the right, in connection with any of the
matters covered by this Agreement or other tax matters, to make additional
arrangements between themselves without the approval of RJRN or RJRT, so long
as the RJRT Tax Group's rights under this Agreement are not adversely affected
by such additional arrangements.
(c) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
provided in this Agreement shall be cumulative and not exclusive of any rights
or remedies provided by law.
SECTION 11.06. Expenses. (a) Except as specifically provided otherwise
in this Agreement or in Section 10.03 or 10.08 of the Distribution Agreement,
each party shall bear its own costs and expenses (including, without
limitation, attorneys' fees and other professional fees and expenses).
(b) Without limiting the generality of Section 11.06(a), each party
shall bear the costs and expenses in connection with the preparation for or
conduct of
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litigation (or any other Tax Proceeding that is not a Tax audit) relating to
taxes (i) that are a liability of such party, and/or (ii) against which such
party has an indemnification obligation under Article 7.
SECTION 11.07. Successors and Assigns. The provisions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
to this Agreement and their respective successors (whether by merger,
acquisition of assets or otherwise, and, including, without limitation, any
successor succeeding to the tax attributes of a party under Section 381 of the
Code) and assigns, to the same extent as if such successor or assign had been
an original party to this Agreement; provided that, except as set forth in
this Agreement, no party may assign, delegate or otherwise transfer any of its
rights or obligations under this Agreement without the consent of each of the
other parties to this Agreement.
SECTION 11.08. Governing Law. This Agreement shall be construed in
accordance with and governed by the internal laws of the State of New York.
SECTION 11.09. Counterparts; Effectiveness; No Third Party
Beneficiaries. (a) This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Agreement shall become
effective upon the consummation of the Distribution, provided that at or
before such time, each party to this Agreement shall have received a
counterpart of this Agreement signed by the other parties. The parties to this
Agreement do not intend that any of its provisions will or do confer any
rights, benefits, remedies, obligations or liabilities under this Agreement
upon any person other than (i) the parties to this Agreement, (ii) other
members of the Nabisco Tax Group and (iii) other members of the RJRN Tax
Group, together in each case with their respective successors and assigns.
(b) All rights and obligations arising under of this Agreement shall
survive until they are fully effectuated or performed. Notwithstanding
anything in this Agreement to the contrary, this Agreement shall remain in
effect and its provisions shall survive for the full period of all applicable
statutes of limitation (giving effect to any extension, waiver or mitigation
thereof).
SECTION 11.10. Severability. If any one or more of the provisions of
this Agreement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained in this Agreement shall not in any way be affected or impaired by
such holding. The parties shall endeavor in good faith negotiations to replace
the invalid, illegal or unenforceable provisions so that the replacement
provisions will be valid, legal and enforceable and will have an economic
effect which comes as close as
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possible to that of the invalid, illegal or unenforceable provisions.
SECTION 11.11. Specific Performance. Each of RJRN and the other
members of the RJRN Tax Group acknowledges and agrees that damages for a
breach or threatened breach of any of the provisions of this Agreement would
be inadequate and that irreparable harm would occur. In recognition of this
fact, each such corporation agrees that, if there is a breach or threatened
breach, in addition to any damages, any of the other nonbreaching parties to
this Agreement, without posting any bond, shall be entitled to seek and obtain
equitable relief in the form of specific performance, temporary restraining
order, temporary or permanent injunction, attachment or any other equitable
remedy that may then be available to obligate the breaching party to (i)
comply with the covenants made by, and perform other obligations of, it (or,
as appropriate, of RJRN) under this Agreement, or (ii) if the breaching party
is unable, for whatever reason, to comply with such covenants and perform such
obligations, to take such other actions as are necessary, advisable or
appropriate to give the other parties to this Agreement (and the other
corporations in the Nabisco Tax Group) the tax effect and the economic effect
that come as close as possible to compliance with such covenants and
performance of such obligations.
SECTION 11.12. Captions. Section captions used in this Agreement are
for convenience only and shall not affect the construction of this Agreement.
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IN WITNESS WHEREOF, the parties to this Agreement have caused this Tax
Sharing Agreement to be duly executed by their respective authorized officers
as of the date first above written.
RJR NABISCO HOLDINGS CORP.
By: /s/ J. T. Pearson
--------------------------------------
Name: J. T. Pearson
Title: Senior Vice President
-- Taxation
R.J. REYNOLDS TOBACCO HOLDINGS,
INC.
By /s/ J. T. Pearson
---------------------------------------
Name: J. T. Pearson
Title: Senior Vice President
-- Taxation
NABISCO HOLDINGS CORP.
By /s/ Gary Lewbel
---------------------------------------
Name: Gary Lewbel
Title: Senior Vice President -- Tax
R. J. REYNOLDS TOBACCO COMPANY
By /s/ Kenneth J. Lapiejko
---------------------------------------
Name: Kenneth J. Lapiejko
Title: Senior Vice President, Chief
Financial Officer and Treasurer
41
EXHIBIT 10.2
THIS CORPORATE AGREEMENT ("Agreement", as amended) is entered into as
of June 14, 1999, by and between RJR NABISCO HOLDINGS CORP. (to be renamed
"Nabisco Group Holdings Corp."), a Delaware corporation ("Holdings"), NABISCO
HOLDINGS CORP., a Delaware corporation ("Nabisco"), and, solely for purposes
of Section 5.13, R.J. REYNOLDS TOBACCO HOLDINGS, INC., a Delaware corporation
(formerly named "RJR Nabisco, Inc.") ("RJRTH").
RECITALS
A. Holdings beneficially owns all of the issued and outstanding
Nabisco Class B Common Stock, par value $0.01 per share ("Class B Common
Stock"), and Nabisco is a member of Holdings' "affiliated group" of
corporations (the "Holdings Group") for federal income tax purposes.
B. The parties desire to enter into this Agreement to set forth their
agreement regarding (i) Holdings' rights to purchase additional shares of
Class B Common Stock, upon any issuance of certain classes of capital stock of
Nabisco to any person, to permit Holdings to maintain its then percentage
ownership interest in Nabisco, (ii) Holdings' rights to purchase shares of
non-voting classes of capital stock of Nabisco to permit Holdings to own 80
percent of each class of such stock outstanding, (iii) certain registration
rights with respect to Class B Common Stock (and any other securities issued
in respect thereof or in exchange therefor) and (iv) certain representations,
warranties, covenants and agreements applicable to Nabisco so long as it is a
subsidiary of Holdings.
AGREEMENTS
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Holdings and Nabisco, for
themselves, their successors, and assigns, hereby agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. As used in this Agreement, the following
terms will have the following meanings, applicable both to the singular and the
plural forms of the terms described:
<PAGE>
"Affiliate" means, with respect to a given Person, any Person
controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlled by" and "under common control with"), as applied to any
Person, means the possession, directly or indirectly, of the power to vote a
majority of the securities having voting power for the election of directors
(or other Persons acting in similar capacities) of such Person or otherwise to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or
otherwise.
"Applicable Stock" means at any time the (i) shares of Class B Common
Stock owned by the Holdings Entities that were owned on the date hereof, plus
(ii) shares of Class B Common Stock purchased by the Holdings Entities
pursuant to Article II of this Agreement, plus (iii) shares of Common Stock
that were issued to Holdings Entities in respect of shares described in either
clause (i) or clause (ii) in any reclassification, share combination, share
subdivision, share dividend, share exchange, merger, consolidation or similar
transaction or event.
"Class A Common Stock" means the Class A Common Stock, par value
$0.01 per share, of Nabisco.
"Class B Common Stock" has the meaning ascribed thereto in the
recitals to this Agreement.
"Class B Common Stock Option" has the meaning ascribed thereto in
Section 2.01(a).
"Class B Common Stock Option Notice" has the meaning ascribed thereto
in Section 2.02.
"Common Stock" means the Class B Common Stock, the Class A Common
Stock, any other class of Nabisco capital stock representing the right to vote
generally for the election of directors and, for so long as Nabisco continues
to be a subsidiary corporation includible in a consolidated federal income tax
return of the Holdings Group, any other security of Nabisco treated as stock
for purposes of Section 1504 of the Internal Revenue Code of 1986, as amended.
"Company Securities" has the meaning ascribed thereto in Section
3.02(b).
"Disadvantageous Condition" has the meaning ascribed thereto in
Section 3.01(a).
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"Holder" means Holdings and any Transferee.
"Holder Securities" has the meaning ascribed thereto in Section
3.02(b).
"Holdings Entities" means Holdings and Subsidiaries of Holdings
(other than Subsidiaries that constitute Nabisco Entities) and "Holdings
Entity" shall mean any of the Holdings Entities.
"Holdings Group" has the meaning ascribed thereto in the recitals to
this Agreement.
"Holdings Ownership Reduction" means any decrease at any time in the
Ownership Percentage to less than 50%.
"Holdings Transferee" has the meaning ascribed thereto in Section 3.09.
"Issuance Event" has the meaning ascribed thereto in Section 2.02.
"Issuance Event Date" has the meaning ascribed thereto in Section 2.02.
"Market Price" of any shares of Class A Common Stock on any date
means (i) the average of the last sale price of such shares on each of the
five trading days immediately preceding such date on the New York Stock
Exchange, Inc. or, if such shares are not listed thereon, on the principal
national securities exchange or automated interdealer quotation system on
which such shares are traded or (ii) if such sale prices are unavailable or
such shares are not so traded, the value of such shares on such date
determined in accordance with agreed-upon procedures reasonably satisfactory
to Nabisco and Holdings.
"Nabisco" has the meaning ascribed thereto in the preamble hereto.
"Nabisco Entities" means Nabisco and its Subsidiaries.
"Nonvoting Stock" means any class of Nabisco capital stock not
representing the right to vote generally for the election of directors.
"Nonvoting Stock Option" has the meaning ascribed thereto in Section
2.01(c).
"Nonvoting Stock Option Notice" has the meaning ascribed thereto in
Section 2.02.
"Other Holders" has the meaning ascribed thereto in Section 3.02(b).
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"Other Securities" has the meaning ascribed thereto in Section 3.02.
"Ownership Percentage" means, at any time, the fraction, expressed as
a percentage and rounded to the next highest thousandth of a percent, whose
numerator is the aggregate Value of the Applicable Stock and whose denominator
is the sum of the aggregate Value of outstanding shares of Common Stock of
Nabisco plus Repurchased Shares; provided, however, that any shares of Common
Stock issued by Nabisco in violation of its obligations under Article II of
this Agreement shall not be deemed outstanding for the purpose of determining
the Ownership Percentage. For purposes of this definition and the definition
of Repurchased Shares, "Value" means, with respect to any share of stock, the
value of such share determined by Holdings under principles applicable for
purposes of Section 1504 of the Internal Revenue Code of 1986, as amended.
"Person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization,
government (and any department or agency thereof) or other entity.
"Registrable Securities" means Class B Common Stock and any stock or
other securities into which or for which such Class B Common Stock may
hereafter be changed, converted or exchanged and any other shares or
securities issued to Holders of such Class B Common Stock (or such shares or
other securities into which or for which such shares are so changed, converted
or exchanged) upon any reclassification, share combination, share subdivision,
share dividend, share exchange, merger, consolidation or similar transaction
or event or pursuant to the Nonvoting Stock Option. As to any particular
Registrable Securities, such Registrable Securities shall cease to be
Registrable Securities when (i) a registration statement with respect to the
sale by the Holder thereof shall have been declared effective under the
Securities Act and such securities shall have been disposed of in accordance
with such registration statement, (ii) they shall have been distributed to the
public in accordance with Rule 144, (iii) they shall have been otherwise
transferred, new certificates for them not bearing a legend restricting
further transfer shall have been delivered by Nabisco and subsequent
disposition of them shall not require registration or qualification of them
under the Securities Act or any state securities or blue sky law then in
effect or (iv) they shall have ceased to be outstanding.
"Registration Expenses" means any and all expenses incident to
performance of or compliance with any registration of securities pursuant to
Article III, including, without limitation, (i) the fees, disbursements and
expenses of Nabisco's counsel and accountants and the reasonable fees and
expenses of counsel selected by the Holders in accordance with this Agreement
in connection with the registration of the securities to be disposed of; (ii)
all expenses, including
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filing fees, in connection with the preparation, printing and filing of the
registration statement, any preliminary prospectus or final prospectus, any
other offering document and amendments and supplements thereto and the mailing
and delivering of copies thereof to any underwriters and dealers; (iii) the
cost of printing or producing any agreements among underwriters, underwriting
agreements, and blue sky or legal investment memoranda, any selling agreements
and any other documents in connection with the offering, sale or delivery of
the securities to be disposed of; (iv) all expenses in connection with the
qualification of the securities to be disposed of for offering and sale under
state securities laws, including the fees and disbursements of counsel for the
underwriters or the Holders of securities in connection with such
qualification and in connection with any blue sky and legal investment
surveys; (v) the filing fees incident to securing any required review by the
National Association of Securities Dealers, Inc. of the terms of the sale of
the securities to be disposed of; (vi) transfer agents' and registrars' fees
and expenses and the fees and expenses of any other agent or trustee appointed
in connection with such offering; (vii) all security engraving and security
printing expenses; (viii) all fees and expenses payable in connection with the
listing of the securities on any securities exchange or automated interdealer
quotation system or the rating of such securities, (ix) any other fees and
disbursements of underwriters customarily paid by the sellers of securities,
but excluding underwriting discounts and commissions and transfer taxes, if
any, and (x) other reasonable out-of-pocket expenses of Holders other than
legal fees and expenses referred to in clause (i) above.
"Repurchased Shares" mean the aggregate Value of shares of Nabisco's
Common Stock that are, from and after the date hereof, repurchased by Nabisco
from its shareholders, less the aggregate Value of shares of Common Stock (up
to the aggregate Value so repurchased) that are re-issued from and after the
date hereof upon the exercise of stock options or otherwise.
"Rule 144" means Rule 144 (or any successor rule to similar effect)
promulgated under the Securities Act.
"Rule 415 Offering" means an offering on a delayed or continuous
basis pursuant to Rule 415 (or any successor rule to similar effect)
promulgated under the Securities Act.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor statute.
"Selling Holder" has the meaning ascribed thereto in Section 3.04(e).
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"Subsidiary" means, as to any Person, any corporation, association,
partnership, joint venture or other business entity of which more than 50% of
the voting capital stock or other voting ownership interests is owned or
controlled directly or indirectly by such Person or by one or more of the
Subsidiaries of such Person or by a combination thereof. Subsidiary, when used
with respect to Holdings or Nabisco, shall also include any other entity
affiliated with Holdings or Nabisco, as the case may be, that Holdings and
Nabisco may hereafter agree in writing shall be treated as a "Subsidiary" for
the purposes of this Agreement.
"Transferee" has the meaning ascribed thereto in Section 3.09.
SECTION 1.02. Internal References. Unless the context indicates
otherwise, references to Articles, Sections and paragraphs shall refer to the
corresponding articles, sections and paragraphs in this Agreement and
references to the parties shall mean the parties to this Agreement.
ARTICLE 2
OPTIONS
SECTION 2.01. Options. (a) Nabisco hereby grants to Holdings, on the
terms and conditions set forth herein, a continuing right (the "Class B Common
Stock Option") to purchase from Nabisco, at the times set forth herein, such
number of shares of Class B Common Stock as is necessary to allow the Holdings
Entities to maintain the then-current Ownership Percentage. The Class B Common
Stock Option shall be assignable, in whole or in part and from time to time,
by Holdings to any Holdings Entity. The exercise price for the shares of Class
B Common Stock purchased pursuant to the Class B Common Stock Option shall be
the Market Price of the Class A Common Stock as of the date of first delivery
of notice of exercise of the Class B Common Stock Option by Holdings (or its
permitted assignee hereunder) to Nabisco.
(b) The provisions of Section 2.01(a) hereof notwithstanding, the
Class B Common Stock Option granted pursuant to Section 2.01(a) shall not
apply and shall not be exercisable in connection with the issuance by Nabisco
of any shares of Class B Common Stock upon the exercise of stock options
granted pursuant to Nabisco's Long Term Incentive Plan or any successor plan,
so long as, from and after the date hereof and prior to the issuance of such
shares upon exercise of options, Nabisco has repurchased from shareholders
such number of shares as shall be equal to or greater than the total number of
shares previously issued or to be issued under the Nabisco Long Term Incentive
Plan or any successor plan in connection with any such exercise of options.
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(c) Nabisco hereby grants to Holdings, on the terms and conditions
set forth herein, a continuing right (the "Nonvoting Stock Option" and,
together with the Class B Common Stock Option, the "Options") to purchase from
Nabisco, at the times set forth herein, such number of shares of Nonvoting
Stock as is necessary to allow the Holdings Entities to own 80 percent of each
class of outstanding Nonvoting Stock. The Nonvoting Stock Option shall be
assignable, in whole or in part and from time to time, by Holdings to any
Holdings Entity. The exercise price for the shares of Nonvoting Stock
purchased pursuant to the Nonvoting Stock Option shall be the price at which
such Nonvoting Stock is then being sold to third parties.
SECTION 2.02. Notice. At least 20 business days prior to the issuance
of any shares of Common Stock or the first date on which any event could occur
that, in the absence of a full or partial exercise of the Class B Common Stock
Option, would result in a reduction in the Ownership Percentage, Nabisco will
notify Holdings in writing (a "Class B Common Stock Option Notice") of any
plans it has to issue such shares or the date on which such event could first
occur. At least 20 business days prior to the issuance of any shares of
Nonvoting Stock or the first date on which any event could occur that, in the
absence of a full or partial exercise of the Nonvoting Stock Option, would
result in the Holdings Entities owning less than 80 percent of each class of
outstanding Nonvoting Stock, Nabisco will notify Holdings in writing (a
"Nonvoting Stock Option Notice" and, together with or separate from a Class B
Common Stock Option Notice, an "Option Notice") of any plans it has to issue
such shares or the date on which such event could first occur.
Each Option Notice must specify the date on which Nabisco intends to
issue such additional shares or on which such event could first occur (such
issuance or event being referred to herein as an "Issuance Event" and the date
of such issuance or event as an "Issuance Event Date"), the number of shares
Nabisco intends to issue or may issue and the other terms and conditions of
such Issuance Event.
SECTION 2.03. Option Exercise and Payment. The Class B Common Stock
Option may be exercised by Holdings (or any Holdings Entity to which all or
any part of the Class B Common Stock Option has been assigned) for a number of
shares equal to or less than the number of shares that are necessary for the
Holdings Entities to maintain, in the aggregate, the Ownership Percentage. The
Nonvoting Stock Option may be exercised by Holdings (or any Holdings Entity to
which all or any part of the Nonvoting Stock Option has been assigned) for a
number of shares equal to or less than the number of shares that are necessary
for the Holdings Entities to own, in the aggregate, 80 percent of each class
of outstanding Nonvoting Stock. Each Option may be exercised at any time after
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receipt of an applicable Option Notice and prior to the applicable Issuance
Event Date by the delivery to Nabisco of a written notice to such effect
specifying (i) the number of shares of Class B Common Stock or Nonvoting Stock
(as the case may be) to be purchased by Holdings, or any of the Holdings
Entities, and (ii) a calculation of the exercise price for such shares. Upon
any such exercise of either Option, Nabisco will, prior to the applicable
Issuance Event Date, deliver to Holdings (or any Holdings Entity designated by
Holdings), against payment therefor, certificates (issued in the name of
Holdings or its permitted assignee hereunder, or as directed by Holdings)
representing the shares of Class B Common Stock or Nonvoting Stock (as the
case may be) being purchased upon such exercise. Payment for such shares shall
be made by wire transfer or intrabank transfer to such account as shall be
specified by Nabisco, for the full purchase price for such shares.
SECTION 2.04. Effect of Failure to Exercise. Any failure by Holdings
to exercise either Option, or any exercise for less than all shares
purchasable under either Option, in connection with any particular Issuance
Event shall not affect Holdings' right to exercise the relevant Option in
connection with any subsequent Issuance Event; provided, however, that, in the
case of the Class B Common Stock Option, the Ownership Percentage following
such Issuance Event in connection with which Holdings so failed to exercise
such Option in full or in part shall be recalculated as set forth in Section
1.01.
SECTION 2.05. Termination of Options. The Options shall terminate
upon the occurrence of any Issuance Event that, after considering Holdings'
response thereto and to any other Issuance Events, results in the Ownership
Percentage being less than 50%, other than any Issuance Event in violation of
this Agreement. Each Option, or any portion thereof assigned to any Holdings
Entity other than Holdings, also shall terminate in the event that the Person
to whom such Option, or such portion thereof has been transferred, ceases to
be an Holdings Entity for any reason whatsoever.
ARTICLE 3
REGISTRATION RIGHTS
SECTION 3.01. Demand Registration. (a) Upon written notice provided
at any time after the date hereof from any Holder of Registrable Securities
requesting that Nabisco effect the registration under the Securities Act of
any or all of the Registrable Securities held by such Holder, which notice
shall specify the intended method or methods of disposition of such
Registrable Securities,
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Nabisco shall use its best efforts to effect the registration under the
Securities Act and applicable state securities laws of such Registrable
Securities for disposition in accordance with the intended method or methods
of disposition stated in such request (including in a Rule 415 Offering, if
Nabisco is then eligible to register such Registrable Securities on Form S-3
(or a successor form) for such offering); provided that:
(i) with respect to any registration statement filed, or to be
filed, pursuant to this Section 3.01, if Nabisco shall furnish to the
Holders of Registrable Securities that have made such request a
certified resolution of the Board of Directors of Nabisco (adopted by
the affirmative vote of a majority of the directors not designated by
the Holdings Entities) stating that in the Board of Directors' good
faith judgment it would (because of the existence of, or in
anticipation of, any acquisition or financing activity, or the
unavailability for reasons beyond Nabisco's reasonable control of any
required financial statements, or any other event or condition of
similar significance to Nabisco) be significantly disadvantageous (a
"Disadvantageous Condition") to Nabisco for such a registration
statement to be maintained effective, or to be filed and become
effective, and setting forth the general reasons for such judgment,
Nabisco shall be entitled to cause such registration statement to be
withdrawn and the effectiveness of such registration statement
terminated, or, in the event no registration statement has yet been
filed, shall be entitled not to file any such registration statement,
until such Disadvantageous Condition no longer exists (notice of
which Nabisco shall promptly deliver to such Holders). Upon receipt
of any such notice of a Disadvantageous Condition, such Holders shall
promptly discontinue use of the prospectus contained in such
registration statement and, if so directed by Nabisco, each such
Holder will deliver to Nabisco all copies, other than permanent file
copies then in such Holder's possession, of the prospectus then
covering such Registrable Securities current at the time of receipt
of such notice; provided, that the filing of any such registration
statement may not be delayed for a period in excess of six months due
to the occurrence of any particular Disadvantageous Condition;
(ii) after any Holdings Ownership Reduction, the Holders of
Registrable Securities may collectively exercise their rights under
this Section 3.01 on not more than three occasions (it being
acknowledged that prior to any Holdings Ownership Reduction, there
shall be no limit to the number of occasions on which such Holders
(other than any Holdings Transferees and their Affiliates (other than
Holdings Entities)) may exercise such rights); and
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(iii) the Holders of Registrable Securities shall not have the
right to exercise registration rights pursuant to this Section 3.01
in any six-month period following the registration and sale of
Registrable Securities effected pursuant to a prior exercise of the
registration rights provided in this Section 3.01.
(b) Notwithstanding any other provision of this Agreement to the
contrary, a registration requested by a Holder of Registrable Securities
pursuant to this Section 3.01 shall not be deemed to have been effected (and,
therefore, not requested for purposes of paragraph (a) above), (i) unless it
has become effective, (ii) if after it has become effective such registration
is interfered with by any stop order, injunction or other order or requirement
of the SEC or other governmental agency or court for any reason other than a
misrepresentation or an omission by such Holder and, as a result thereof, the
Registrable Securities requested to be registered cannot be completely
distributed in accordance with the plan of distribution set forth in the
related registration statement or (iii) if the conditions to closing specified
in the purchase agreement or underwriting agreement entered into in connection
with such registration are not satisfied or waived other than by reason of
some act or omission by such Holder of Registrable Securities.
(c) In the event that any registration pursuant to this Section 3.01
shall involve, in whole or in part, an underwritten offering, the Holders of a
majority of the Registrable Securities to be registered shall have the right
to designate an underwriter or underwriters as the lead or managing
underwriters of such underwritten offering and, in connection with each
registration pursuant to this Section 3.01, such Holders may select one
counsel to represent all such Holders.
(d) Nabisco shall have the right to cause the registration of
additional equity securities for sale for the account of any Person
(including, without limitation, Nabisco and any existing or former directors,
officers or employees of the Nabisco Entities) in any registration of
Registrable Securities requested by the Holders pursuant to paragraph (a)
above; provided, that if such Holders are advised in writing (with a copy to
Nabisco) by a nationally recognized investment banking firm selected by such
Holders (which shall be the lead underwriter or a managing underwriter in the
case of an underwritten offering) that, in such firm's good faith view, all or
a part of such additional equity securities cannot be sold and the inclusion
of such additional equity securities in such registration would be likely to
have an adverse effect on the price, timing or distribution of the offering
and sale of the Registrable Securities then contemplated by any Holder, the
registration of such additional equity securities or part thereof shall not be
permitted. The Holders with respect to the Registrable Securities to be
offered may require that any such additional equity securities be included in
the offering proposed by such Holders on the same conditions as the
Registrable Securities
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that are included therein. If the number of Registrable Securities requested
to be included in a registration statement by the Holders thereof exceeds the
number which, in the good faith view of such investment banking firm, can be
sold, the number shall be allocated pro rata among the requesting Holders on
the basis of the relative number of Registrable Securities then held by each
such Holder (provided that any number in excess of a Holder's request may be
reallocated among the remaining requesting Holders in a like manner).
SECTION 3.02. Piggyback Registration. In the event that Nabisco at
any time after the date hereof proposes to register any of its Common Stock,
any other of its equity securities or securities convertible into or
exchangeable for its equity securities (collectively, "Other Securities")
under the Securities Act, whether or not for sale for its own account, in a
manner that would permit registration of Registerable Securities for sale for
cash to the public under the Securities Act, it shall at each such time give
prompt written notice to each Holder of Registrable Securities of its
intention to do so and of the rights of such Holder under this Section 3.03.
Subject to the terms and conditions hereof, such notice shall offer each such
Holder the opportunity to include in such registration statement such number
of Registerable Securities as such Holder may request. Upon the written
request of any such Holder made within 15 days after the receipt of Nabisco's
notice (which request shall specify the number of Registrable Securities
intended to be disposed of and the intended method of disposition thereof),
Nabisco shall use its best efforts to effect, in connection with the
registration of the Other Securities, the registration under the Securities
Act of all Registerable Securities which Nabisco has been so requested to
register, to the extent required to permit the disposition (in accordance with
such intended methods thereof) of the Registrable Securities so requested to
be registered; provided, that:
(a) if, at any time after giving such written notice of its intention
to register any Other Securities and prior to the effective date of the
registration statement filed in connection with such registration, Nabisco
shall determine for any reason not to register the Other Securities, Nabisco
may, at its election, give written notice of such determination to such
Holders and thereupon Nabisco shall be relieved of its obligation to register
such Registrable Securities in connection with the registration of such Other
Securities, without prejudice, however, to the rights of the Holders of
Registrable Securities immediately to request that such registration be
effected as a registration under Section 3.01 to the extent permitted
thereunder;
(b) if the registration referred to in the first sentence of this
Section 3.03 is to be an underwritten registration on behalf of Nabisco, and a
nationally recognized investment banking firm selected by Nabisco advises
Nabisco in writing that, in such firm's good faith view, all or a part of such
Registrable
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Securities cannot be sold and inclusion of such Registrable Securities in such
registration would be likely to have an adverse effect upon the price, timing
or distribution of the offering and sale of the Other Securities then
contemplated, Nabisco shall include in such registration: (i) first, all Other
Securities Nabisco proposes to sell for its own account ("Company
Securities"), (ii) second, up to the full number of Registrable Securities
held by Holders constituting Holdings Entities of Registrable Securities that
are requested to be included in such registration (Registrable Securities that
are so held being sometimes referred to herein as "Holder Securities") in
excess of the number of Company Securities to be sold in such offering which,
in the good faith view of such investment banking firm, can be sold without
adversely affecting such offering (and (x) if such number is less than the
full number of such Holder Securities, such number shall be allocated by
Holdings among such Holdings Entities and (y) in the event that such
investment banking firm advises that less than all of such Holder Securities
may be included in such offering, such Holdings Entities may withdraw their
request for registration of their Registrable Securities under this Section
3.03 and 90 days subsequent to the effective date of the registration
statement for the registration of such Other Securities request that such
registration be effected as a registration under Section 3.01 to the extent
permitted thereunder), (iii) third, up to the full number of Registrable
Securities held by Holders (other than Holdings Entities) of Registrable
Securities that are requested to be included in such registration in excess of
the number of Company Securities and Holder Securities to be sold in such
offering which, in the good faith view of such investment banking firm, can be
so sold without so adversely affecting such offering (and (x) if such number
is less than the full number of such Registrable Securities, such number shall
be allocated pro rata among such Holders on the basis of the number of
Registrable Securities requested to be included therein by each such Holder
and (y) in the event that such investment banking firm advises that less than
all of such Registrable Securities may be included in such offering, such
Holders may withdraw their request for registration of their Registrable
Securities under this Section 3.03 and 90 days subsequent to the effective
date of the registration statement for the registration of such Other
Securities request that such registration be effected as a registration under
Section 3.01 to the extent permitted thereunder), and (iv) fourth, up to the
full number of the Other Securities (other than Company Securities), if any,
in excess of the number of Company Securities and Registrable Securities to be
sold in such offering which, in the good faith view of such investment banking
firm, can be so sold without so adversely affecting such offering (and, if
such number is less than the full number of such Other Securities, such number
shall be allocated pro rata among the holders of such Other Securities (other
than Company Securities) on the basis of the number of securities requested to
be included therein by each such holder);
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(c) if the registration referred to in the first sentence of this
Section 3.03 is to be an underwritten secondary registration on behalf of
holders of Other Securities (the "Other Holders"), and the lead underwriter or
managing underwriter advises Nabisco in writing that in their good faith view,
all or a part of such additional securities cannot be sold and the inclusion
of such additional securities in such registration would be likely to have an
adverse effect on the price, timing or distribution of the offering and sale
of the Other Securities then contemplated, Nabisco shall include in such
registration the number of securities (including Registrable Securities) that
such underwriters advise can be so sold without adversely affecting such
offering, allocated pro rata among the Other Holders and the Holders of
Registrable Securities on the basis of the number of securities (including
Registrable Securities) requested to be included therein by each Other Holder
and each Holder of Registrable Securities; provided, that if such registration
statement is to be filed at any time after an Holdings Ownership Reduction, if
such Other Holders have requested that such registration statement be filed
pursuant to demand registration rights granted to them by Nabisco, Nabisco
shall include in such registration (1) first, Other Securities sought to be
included therein by the Other Holders pursuant to the exercise of such demand
registration rights, (2) second, the number of Holder Securities sought to be
included in such registration in excess of the number of Other Securities
sought to be included in such registration by the Other Holders which in the
good faith view of such investment banking firm, can be so sold without so
adversely affecting such offering (and (x) if such number is less than the
full number of such Holder Securities, such number shall be allocated by
Holdings among such Holdings Entities and (y) in the event that such
investment banking firm advises that less than all of such Holder Securities
may be included in such offering, such Holdings Entities may withdraw their
request for registration of their Registrable Securities under this Section
3.03 and 90 days after the effective date of the registration statement for
the registration of such Other Securities request that such registration be
effected as a registration under Section 3.01 to the extent permitted
thereunder) and (3) third, the number of Registrable Securities sought to be
included in such registration by Holders (other than Holdings Entities) of
Registrable Securities in excess of the number of Other Securities and the
number of Holder Securities sought to be included in such registration which,
in the good faith view of such investment banking firm, can be so sold without
so adversely affecting such offering (and (x) if such number is less than the
full number of such Registrable Securities, such number shall be allocated pro
rata among such Holders on the basis of the number of Registrable Securities
requested to be included therein by each such Holder and (y) in the event that
such investment banking firm advises that less than all of such Registrable
Securities may be included in such offering, such Holders may withdraw their
request for registration of their Registrable Securities under this Section
3.03 and 90 days after the effective date of the registration statement for
the registration of such
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Other Securities request that such registration be effected as a registration
under Section 3.0l to the extent permitted thereunder);
(d) Nabisco shall not be required to effect any registration of
Registrable Securities under this Section 3.03 incidental to the registration
of any of its securities in connection with mergers, acquisitions, exchange
offers, subscription offers, dividend reinvestment plans or stock option or
other executive or employee benefit or compensation plans; and
(e) no registration of Registrable Securities effected under this
Section 3.03 shall relieve Nabisco of its obligation to effect a registration
of Registrable Securities pursuant to Section 3.01.
SECTION 3.03. Expenses. Except as provided herein, Nabisco shall pay
all Registration Expenses with respect to a particular offering (or proposed
offering). Notwithstanding the foregoing, each Holder and Nabisco shall be
responsible for its own internal administrative and similar costs, which shall
not constitute Registration Expenses.
SECTION 3.04. Registration and Qualification. If and whenever Nabisco
is required to effect the registration of any Registrable Securities under the
Securities Act as provided in Sections 3.01, 3.02 or 3.03, Nabisco shall as
promptly as practicable:
(a) prepare, file and use its best efforts to cause to become
effective a registration statement under the Securities Act relating to the
Registrable Securities to be offered;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective and to comply
with the provisions of the Securities Act with respect to the disposition of
all Registrable Securities until the earlier of (A) such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition set forth in such registration statement and (B) the
expiration of nine months after such registration statement becomes effective;
provided, that such nine-month period shall be extended for such number of
days that equals the number of days elapsing from (x) the date the written
notice contemplated by paragraph (f) below is given by Nabisco to (y) the date
on which Nabisco delivers to the Holders of Registrable Securities the
supplement or amendment contemplated by paragraph (f) below;
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(c) furnish to the Holders of Registrable Securities and to any
underwriter of such Registrable Securities such number of conformed copies of
such registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the prospectus
included in such registration statement (including each preliminary prospectus
and any summary prospectus), in conformity with the requirements of the
Securities Act, such documents incorporated by reference in such registration
statement or prospectus, and such other documents, as the Holders of
Registrable Securities or such underwriter may reasonably request, and a copy
of any and all transmittal letters or other correspondence to or received
from, the SEC or any other governmental agency or self-regulatory body or
other body having jurisdiction (including any domestic or foreign securities
exchange) relating to such offering;
(d) use its best efforts to register or qualify all Registrable
Securities covered by such registration statement under the securities or blue
sky laws of such jurisdictions as the Holders of such Registrable Securities
or any underwriter to such Registrable Securities shall request, and use its
best efforts to obtain all appropriate registrations, permits and consents in
connection therewith, and do any and all other acts and things which may be
necessary or advisable to enable the Holders of Registrable Securities or any
such underwriter to consummate the disposition in such jurisdictions of its
Registrable Securities covered by such registration statement; provided, that
Nabisco shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any such jurisdiction wherein it is not
so qualified or to consent to general service of process in any such
jurisdiction;
(e) (i) use its best efforts to furnish to each Holder of
Registrable Securities included in such registration (each, a "Selling
Holder") and to any underwriter of such Registrable Securities an opinion of
counsel for Nabisco addressed to each Selling Holder and dated the date of the
closing under the underwriting agreement (if any) (or if such offering is not
underwritten, dated the effective date of the registration statement), and
(ii) use its best efforts to furnish to each Selling Holder a "cold comfort"
letter addressed to each Selling Holder and signed by the independent public
accountants who have audited the financial statements of Nabisco included in
such registration statement, in each such case covering substantially the same
matters with respect to such registration statement (and the prospectus
included therein) as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to underwriters in underwritten public
offerings of securities and such other matters as the Selling Holders may
reasonably request and, in the case of such accountants' letter, with respect
to events subsequent to the date of such financial statements;
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(f) as promptly as practicable, notify the Selling Holders in
writing (i) at any time when a prospectus relating to a registration pursuant
to Sections 3.01, 3.02 or 3.03 is required to be delivered under the
Securities Act of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (ii) of any request by the SEC or any other regulatory body or
other body having jurisdiction for any amendment of or supplement to any
registration statement or other document relating to such offering, and in
either such case, at the request of the Selling Holders prepare and furnish to
the Selling Holders a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made,
not misleading:
(g) if reasonably requested by the lead or managing underwriters,
use its best efforts to list all such Registrable Securities covered by such
registration on each securities exchange and automated inter-dealer quotation
system on which a class of common equity securities of Nabisco is then listed;
(h) to the extent reasonably requested by the lead or managing
underwriters send appropriate officers of Nabisco to attend any "road shows"
scheduled in connection with any such registration, with all out-of-pocket
costs and expense incurred by Nabisco or such officers in connection with such
attendance to be paid by Nabisco; and
(i) furnish for delivery in connection with the closing of any
offering of Registrable Securities pursuant to a registration effected
pursuant to Sections 3.01, 3.02 or 3.03 unlegended certificates representing
ownership of the Registrable Securities in registered form being sold in such
denominations as shall be requested by the Selling Holders or the
underwriters.
SECTION 3.05. Conversion of Other Securities, Etc. In the event that
any Holder offers any options, rights, warrants or other securities issued by
it or any other Person that are offered with, convertible into or exercisable
or exchangeable for any Registrable Securities, the Registrable Securities
underlying such options, rights, warrants or other securities shall continue
to be eligible for registration pursuant to Sections 3.01 and 3.03.
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SECTION 3.06. Underwriting; Due Diligence. (a) If requested by the
underwriters for any underwritten offering of Registrable Securities pursuant
to a registration requested under this Article III, Nabisco shall enter into
an underwriting agreement with such underwriters for such offering, which
agreement will contain such representations and warranties by Nabisco and such
other terms and provisions as are customarily contained in underwriting
agreements with respect to secondary distributions, including, without
limitation, indemnification and contribution provisions substantially to the
effect and to the extent provided in Section 3.08, and agreements as to the
provision of opinions of counsel and accountants' letters to the effect and to
the extent provided in Section 3.05(e). The Selling Holders on whose behalf
the Registrable Securities are to be distributed by such underwriters shall be
parties to any such underwriting agreement and the representations and
warranties by, and the other agreements on the part of, Nabisco to and for the
benefit of such underwriters, shall also be made to and for the benefit of
such Selling Holders. Such underwriting agreement shall also contain such
representations and warranties by such Selling Holders and such other terms
and provisions as are customarily contained in underwriting agreements with
respect to secondary distributions, including, without limitation,
indemnification and contribution provisions substantially to the effect and to
the extent provided in Section 3.08.
(b) In connection with the preparation and filing of each
registration statement registering Registrable Securities under the Securities
Act pursuant to this Article III, Nabisco shall give the Holders of such
Registrable Securities and the underwriters, if any, and their respective
counsel and accountants, such reasonable and customary access to its books and
records and such opportunities to discuss the business of Nabisco with its
officers and the independent public accountants who have certified the
financial statements of Nabisco as shall be necessary, in the opinion of such
Holders and such underwriters or their respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
SECTION 3.07. Indemnification and Contribution. (a) In the case of
each offering of Registrable Securities made pursuant to this Article III,
Nabisco agrees to indemnify and hold harmless, to the extent permitted by law,
each Selling Holder, each underwriter of Registrable Securities so offered and
each Person, if any, who controls any of the foregoing Persons within the
meaning of the Securities Act and the officers, directors, affiliates,
employees and agents of each of the foregoing, against any and all losses,
liabilities, costs (including reasonable attorney's fees and disbursements),
claims and damages, joint or several, to which they or any of them may become
subject, under the Securities Act or otherwise, including any amount paid in
settlement of any litigation commenced or threatened, insofar as such losses,
liabilities, costs, claims and damages (or actions
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or proceedings in respect thereof, whether or not such indemnified Person is a
party thereto) arise out of or are based upon any untrue statement by Nabisco
or alleged untrue statement by Nabisco of a material fact contained in the
registration statement (or in any preliminary or final prospectus included
therein) or in any offering memorandum or other offering document relating to
the offering and sale of such Registrable Securities prepared by Nabisco or at
its direction, or any amendment thereof or supplement thereto, or in any
document incorporated by reference therein, or any omission by Nabisco or
alleged omission by Nabisco to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that Nabisco shall not be liable to any Person in any such
case to the extent that any such loss, liability, cost, claim or damage arises
out of or relates to any untrue statement or alleged untrue statement, or any
omission, if such statement or omission shall have been made in reliance upon
and in conformity with information relating to a Selling Holder, another
holder of securities included in such registration statement or underwriter
furnished to Nabisco by or on behalf of such Selling Holder, other holder or
underwriter specifically for use in the registration statement (or in any
preliminary or final prospectus included therein), offering memorandum or
other offering document, or any amendment thereof or supplement thereto. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any Selling Holder, any other holder or
any underwriter and shall survive the transfer of such securities. The
foregoing indemnity agreement is in addition to any liability that Nabisco may
otherwise have to each Selling Holder, other holder or underwriter of the
Registrable Securities or any controlling person of the foregoing and the
officers, directors, affiliates, employees and agents of each of the
foregoing; provided, further, that, in the case of an offering with respect to
which a Selling Holder has designated the lead or managing underwriters (or a
Selling Holder is offering Registrable Securities directly, without an
underwriter), this indemnity does not apply to any loss, liability, cost,
claim or damage arising out of or relating to any untrue statement or alleged
untrue statement or omission or alleged omission in any preliminary prospectus
or offering memorandum if a copy of a final prospectus or offering memorandum
was not sent or given by or on behalf of any underwriter (or such Selling
Holder or other holder, as the case may be) to such Person asserting such
loss, liability, cost, claim or damage at or prior to the written confirmation
of the sale of the Registrable Securities as required by the Securities Act
and such untrue statement or omission had been corrected in such final
prospectus or offering memorandum.
(b) In the case of each offering made pursuant to this Agreement,
each Selling Holder, by exercising its registration rights hereunder, agrees
to indemnify and hold harmless, and to cause each underwriter of Registrable
Securities included in such offering to indemnify and hold harmless (in the
same manner and
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to the same extent as set forth in Section 3.08(a)) Nabisco, each other
underwriter who participates in such offering, each other Selling Holder or
other holder with securities included in such offering and in the case of an
underwriter, such Selling Holder or other holder, and each Person, if any, who
controls any of the foregoing within the meaning of the Securities Act and the
officers, directors, affiliates, employees and agents of each of the
foregoing, against any and all losses, liabilities, costs, claims and damages
to which they or any of them may become subject, under the Securities Act or
otherwise, including any amount paid in settlement of any litigation commenced
or threatened, insofar as such losses, liabilities, costs, claims and damages
(or actions or proceedings in respect thereof, whether or not such indemnified
Person is a party thereto) arise out of or are based upon any untrue statement
or alleged untrue statement by such Selling Holder or underwriter, as the case
may be, of a material fact contained in the registration statement (or in any
preliminary or final prospectus included therein) or in any offering
memorandum or other offering document relating to the offering and sale of
such Registrable Securities prepared by Nabisco or at its direction, or any
amendment thereof or supplement thereto, or any omission by such Selling
Holder or underwriter, as the case may be, or alleged omission by such Selling
Holder or underwriter, as the case may be, of a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
in each case only to the extent that such untrue statement of a material fact
is contained in, or such material fact is omitted from information relating to
such Selling Holder or underwriter, as the case may be, furnished to Nabisco
by or on behalf of such Selling Holder or underwriter, as the case may be,
specifically for use in such registration statement (or in any preliminary or
final prospectus included therein), offering memorandum or other offering
document. The foregoing indemnity is in addition to any liability which such
Selling Holder or underwriter, as the case may be, may otherwise have to
Nabisco, or controlling persons and the officers, directors, affiliates,
employees, and agents of each of the foregoing; provided, however, that, in
the case of an offering made pursuant to this Agreement with respect to which
Nabisco has designated the lead or managing underwriters (or Nabisco is
offering securities directly, without an underwriter), this indemnity does not
apply to any loss, liability, cost, claim, or damage arising out of or based
upon any untrue statement or alleged untrue statement or omission or alleged
omission in any preliminary prospectus or offering memorandum if a copy of a
final prospectus or offering memorandum was not sent or given by or on behalf
of any underwriter (or Nabisco, as the case may be) to such Person asserting
such loss, liability, cost, claim or damage at or prior to the written
confirmation of the sale of the Registrable Securities as required by the
Securities Act and such untrue statement or omission had been corrected in
such final prospectus or offering memorandum.
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(c) Each party indemnified under paragraph (a) or (b) above shall,
promptly after receipt of notice of a claim or action against such indemnified
part in respect of which indemnity may be sought hereunder, notify the
indemnifying party in writing of the claim or action; provided, that the
failure to notify the indemnifying party shall not relieve it from any
liability that it may have to an indemnified party on account of the indemnity
agreement contained in paragraph (a) or (b) above except to the extent that
the indemnifying party was actually prejudiced by such failure, and in no
event shall such failure relieve the indemnifying party from any other
liability that it may have to such indemnified party. If any such claim or
action shall be brought against an indemnified party, and it shall have
notified the indemnifying party thereof, unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified party and
indemnifying parties may exist in respect of such claim, the indemnifying
party shall be entitled to participate therein, and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel satisfactory to the indemnified party.
After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 3.08 for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation. Any indemnifying party against whom indemnity may be sought
under this Section 3.08 shall not be liable to indemnify an indemnified party
if such indemnified party settles such claim or action without the consent of
the indemnifying party. The indemnifying party may not agree to any settlement
of any such claim or action as the result of which any remedy or relief other
than solely for monetary damages for which the indemnifying party shall be
responsible hereunder shall be applied to or against the indemnifying party,
without the prior written consent of the indemnifying party, which consent
shall not be unreasonably withheld. In any action hereunder as to which the
indemnifying party has assumed the defense thereof with counsel satisfactory
to the indemnified party, the indemnified party shall continue to be entitled
to participate in the defense thereof, with counsel of its own choice, but the
indemnifying party shall not be obligated hereunder to reimburse the
indemnified party for the costs thereof.
(d) If the indemnification provided for in this Section 3.08 shall
for any reason be unavailable (other than as a result of its terms) to an
indemnified party in respect of any loss, liability, cost, claim or damage
referred to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified party as a result of such loss, liability, cost, claim or
damage in such proportion as shall be appropriate to reflect (i) the relative
benefits received by the indemnifying party on the one hand and the
indemnified party on the other hand or (ii) if the
20
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allocation provided by clause (i) above is not permitted by applicable law,
the relative benefits and the relative fault of the indemnifying party on the
one hand and the indemnified party on the other with respect to the statements
or omissions which resulted in such loss, liability, cost, claim or damage as
well as any other relevant equitable considerations. The relative benefits
received by the indemnifying party and the indemnified party shall be deemed
to be in the same respective proportion as the net proceeds (before deducting
expenses) of the offering received by such party (or, in the case of an
underwriter, such underwriter's discounts and commissions) bear to the
aggregate offering price of the Registrable Securities or Other Securities.
The relative fault shall be determined by reference to whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the indemnifying
party on the one hand or the indemnified party on the other, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such statement or omission, but not by reference to any
indemnified party's stock ownership in Nabisco. The amount paid or payable by
an indemnified party as a result of the loss, cost, claim, damage or
liability, or action in respect thereof, referred to above in this paragraph
(d) shall be deemed to include, for purposes of this paragraph (d), any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(e) Indemnification and contribution similar to that specified in
the preceding paragraphs of this Section 3.08 (with appropriate modifications)
shall be given by Nabisco, the Selling Holders and underwriters with respect
to any required registration or other qualification of securities under any
state law or regulation or governmental authority.
(f) The obligations of the parties under this Section 3.08 shall be
in addition to any liability which any party may otherwise have to any other
party.
SECTION 3.08. Rule 144 and Form S-3. Commencing 90 days after the
date hereof, Nabisco shall ensure that the conditions to the availability of
Rule 144 set forth in paragraph (c) thereof shall be satisfied. Upon the
request of any Holder of Registrable Securities, Nabisco will deliver to such
Holder a written statement as to whether it has complied with such
requirements. Nabisco further agrees to use its reasonable efforts to cause
all conditions to the availability of Form S-3 (or any successor form) under
the Securities Act of the filing of registration statements under this
Agreement to be met as soon as practicable after the date hereof.
Notwithstanding anything contained in this Section 3.09, Nabisco
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may deregister under Section 12 of the Securities Exchange Act of 1934, as
amended, if it then is permitted to do so pursuant to said Act and the rules
and regulations thereunder.
SECTION 3.09. Transfer of Registration Rights. Any Holder may
transfer all or any portion of its rights under Article III to any transferee
of a number of Registrable Securities owned by such Holder exceeding three
percent (3%) of the outstanding class or series of such securities at the time
of transfer (each transferee that receives such minimum number of Registrable
Securities, a "Transferee"); provided, that each Transferee of Registrable
Securities to which Registrable Securities are transferred, sold or assigned
directly by a Holdings Entity (such Transferee, an "Holdings Transferee"),
together with any Affiliate of such Holdings Transferee (and any subsequent
direct or indirect Transferees of Registrable Securities from such Holdings
Transferee and any Affiliates (other than Holdings Entities) thereof), shall
be entitled to request the registration of Registrable Securities pursuant to
Section 3.01 only once. Any transfer of registration rights pursuant to this
Section 3.10 shall be effective upon receipt by Nabisco of (i) written notice
from such Holder stating the name and address of any Transferee and
identifying the number of Registrable Securities with respect to which the
rights under this Agreement are being transferred and the nature of the rights
so transferred and (ii) a written agreement from such Transferee to be bound
by the terms of this Article III and Sections 5.03, 5.04, 5.09, 5.10, and 5.11
of this Agreement. The Holders may exercise their rights hereunder in such
priority as they shall agree upon among themselves.
SECTION 3.10. Holdback Agreement. If any registration pursuant to
this Article III shall be in connection with an underwritten public offering
of Registrable Securities, each Selling Holder agrees not to effect any public
sale or distribution, including any sale under Rule 144, of any equity
security of Nabisco or any security convertible into or exchangeable or
exercisable for any equity security of Nabisco, in the case of Registrable
Securities, otherwise than through the registered public offering then being
made), within 90 days (or such lesser period as the lead or managing
underwriters may permit) after the effective date of the registration
statement (or the commencement of the offering to the public of such
Registrable Securities in the case of Rule 415 offerings). Nabisco hereby also
so agrees and agrees to cause each other holder of equity securities or debt
securities, as the case may be, or securities convertible into or exchangeable
or exercisable for such securities (other than in the case of equity
securities, under employee stock plans) purchased from Nabisco otherwise than
in a public offering to so agree.
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ARTICLE 4
CERTAIN COVENANTS AND AGREEMENTS
SECTION 4.01. No Violations. (a) For so long as the Ownership
Percentage is equal to or greater than 50%, Nabisco covenants and agrees that
it will not take any action or enter into any commitment or agreement which
may reasonably be anticipated to result, with or without notice and with or
without lapse of time or otherwise, in a contravention or event of default by
any Holdings Entity of (i) any provisions of applicable law or regulation,
including but not limited to provisions pertaining to the Internal Revenue
Code of 1986, as amended, or the Employee Retirement Income Security Act of
1974, as amended, (ii) any provision of Holdings' certificate of incorporation
or bylaws, (iii) any credit agreement or other material instrument binding
upon Holdings, or (iv) any judgment, order or decree of any governmental body,
agency or court having jurisdiction over Holdings or any of its respective
assets.
(b) Nabisco and Holdings agree to provide to the other any
information and documentation requested by the other for the purpose of
evaluating and ensuring compliance with Section 4.01(a) hereof.
(c) Notwithstanding the foregoing Sections 4.01(a) and 4.01(b),
nothing in this Agreement is intended to limit or restrict in any way the
ability of Holdings to effect, restrict or limit any action or proposed action
of Nabisco, including, but not limited to, the incurrence by Nabisco of
indebtedness, based upon Holdings' internal policies or other factors.
ARTICLE 5
MISCELLANEOUS
SECTION 5.01. Limitation of Liability. Neither Holdings nor Nabisco
shall be liable to the other for any special, indirect, incidental or
consequential damages of the other arising in connection with this Agreement.
SECTION 5.02. Subsidiaries. Holdings agrees and acknowledges that
Holdings shall be responsible for the performance by each Holdings Entity of the
obligations hereunder applicable to such Holdings Entity.
SECTION 5.03. Amendments. This Agreement may not be amended or
terminated orally, but only by a writing duly executed by or on behalf of the
parties hereto. Any such amendment shall be validly and sufficiently authorized
23
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for purposes of this Agreement if it is signed on behalf of Holdings and
Nabisco by any of their respective presidents or vice presidents.
SECTION 5.04. Term. This Agreement shall remain in effect until all
Registrable Securities held by Holders have been transferred by them to
Persons other than Transferees; provided, that the provisions of Section 3.08
shall survive any such expiration.
SECTION 5.05. Severability. If any provision of this Agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid, illegal or
unenforceable to any extent, the remainder of this Agreement or such provision
of the application of such provision to such party or circumstances, other
than those to which it is so determined to be invalid, illegal or
unenforceable, shall remain in full force and effect to the fullest extent
permitted by law and shall not be affected thereby, unless such a construction
would be unreasonable.
SECTION 5.06. Notices. All notices and other communications required
or permitted hereunder shall be in writing, shall be deemed duly given upon
actual receipt, and shall be delivered (a) in person, (b) by registered or
certified mail, postage prepaid, return receipt requested, or (c) by facsimile
or other generally accepted means of electronic transmission (provided that a
copy of any notice delivered pursuant to this clause (c) shall also be sent
pursuant to clause (b), addressed as follows:
(a) If to Nabisco, to:
Nabisco Holdings Corp.
7 Campus Drive
Parsippany, New Jersey 07054
Attention: General Counsel
Fax: (973) 539-9150
(b) If to Holdings, to:
Nabisco Group Holdings Corp.
1301 Avenue of the Americas
New York, New York 10019-6013
Attention: General Counsel
Fax: (212) 969-9917
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(c) If to RJRTH, to:
R.J. Reynolds Tobacco Holdings, Inc.
401 North Main Street
Winston-Salem, NC 27102
Attention: General Counsel
Fax: (336) 741-2998
with a copy to:
Nabisco Group Holdings Corp.
1301 Avenue of the Americas
New York, New York 10019-6013
Attention: Treasurer
Fax: (212) 969-9112
or to such other addresses or telecopy numbers as may be specified by like
notice to the other parties.
SECTION 5.07. Further Assurances. Holdings and Nabisco shall execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such instruments and take such other action as may be necessary or advisable
to carry out their obligations under this Agreement and under any exhibit,
document or other instrument delivered pursuant hereto.
SECTION 5.08. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original instrument,
but all of which together shall constitute but one and the same agreement.
SECTION 5.09. Governing Law. This Agreement and the transactions
contemplated hereby shall be construed in accordance with, and governed by, the
internal laws of the State of New York.
SECTION 5.10. Entire Agreement. This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter hereof.
SECTION 5.11. Successors. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors and assigns. Nothing contained in this Agreement, express or
implied, is intended to confer upon any other person or entity any benefits,
rights or remedies.
SECTION 5.12. Specific Performance. The parties hereto acknowledge
and agree that irreparable damage would occur in the event that any of the
provisions
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of this Agreement were not performed in accordance with their specific terms
or were otherwise breached. Accordingly, it is agreed that they shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Agreement and to enforce specifically the terms and provisions hereof
in any court of competent jurisdiction in the United States or any state
thereof, in addition to any other remedy to which they may be entitled at law
or equity.
SECTION 5.13. Termination of Prior Agreement. RJRTH and Nabisco
hereby agree to terminate the Corporate Agreement dated as of January 26, 1995
between RJRTH and Nabisco, without liability on the part of either such party
except for a willful breach of any provision of that agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first set forth above.
RJR NABISCO HOLDINGS CORP.
By: /s/ William L. Rosoff
-------------------------------------
Name: William L. Rosoff
Title: Senior Vice President
and General Counsel
NABISCO HOLDINGS CORP.
By: /s/ James A. Kirkman III
-------------------------------------
Name: James A. Kirkman III
Title: Executive Vice President,
General Counsel and
Secretary
R.J. REYNOLDS TOBACCO HOLDINGS,
INC.
By: /s/ William L. Rosoff
-------------------------------------
Name: William L. Rosoff
Title: Senior Vice President
and General Counsel
27
EXHIBIT 10.3
INTERCOMPANY SERVICES AGREEMENT
This Intercompany Services Agreement (this "Agreement") is made and
entered into as of the 14th day of June 1999, by and between RJR Nabisco
Holdings Corp. (to be renamed "Nabisco Group Holdings Corp."), a Delaware
corporation ("NGH"), Nabisco Holdings Corp., a Delaware corporation
("Nabisco"), and, solely for purposes of Section 21 of this Agreement, R.J.
Reynolds Tobacco Holdings, Inc. a Delaware corporation (formerly named "RJR
Nabisco, Inc.") ("RJRTH").
1. Corporate Services, Insurance and Employee Benefits. Beginning
on the date (the "Effective Date") that NGH shall have distributed to its
shareholders all of its shares of the common stock of RJR Nabisco, Inc.,
Nabisco shall provide to NGH all of the services set forth from time to time
on Exhibit A to this Agreement ("Corporate Services"). To the extent provided
in this Agreement, Nabisco will also include NGH in its insurance coverage
("Insurance"). In addition, NGH and Nabisco have agreed that both Nabisco
employees and NGH employees may continue to participate in the benefit plans
and programs set forth in Exhibit B to this Agreement ("Benefit Plans"). The
Corporate Services and Benefit Plans of Nabisco may be provided by (i) any
employee of Nabisco or its subsidiaries or (ii) any third party designated at
the sole discretion of Nabisco. Insurance may be provided by such third party
insurers as Nabisco may designate.
2. Corporate Services.
(a) Cash Management Provisions. As noted in Exhibit A, the
Corporate Services include cash management services. Nabisco shall
place all of NGH's collections in, make all of its disbursements
from, and concentrate all uninvested funds in accounts (the "NGH
Accounts") in the name of NGH. The NGH Accounts, the funds therein
and all earnings thereon shall remain under the sole ownership and
control of NGH, except to the extent that NGH, at its option, assigns
or pledges such accounts to any independent third party. Nabisco
shall have no rights in or to the NGH Accounts, the funds therein, or
the earnings thereon and hereby waives any rights of setoff it may
now or hereafter have with respect thereto. Nabisco shall comply with
all of NGH's instructions concerning the use of funds in the NGH
Accounts.
(b) Expansion or Contraction of Corporate Services. At any time
during the term of this Agreement, NGH may request that Nabisco
provide additional or different Corporate Services or cease providing
one or more Corporate Services then being provided. Upon any such
request,
<PAGE>
the parties will discuss in good faith, without obligation, an
appropriate adjustment, if any, to the Services Fee (as defined
below) to reflect such additional or different Corporate Services or
termination of such Corporate Services, after which NGH shall notify
Nabisco in writing whether it shall accept such additional Corporate
Services or termination of Corporate Services and, upon acceptance,
such adjustments shall become effective. If the Services Fee is
reduced, Nabisco shall promptly refund to NGH any amount overcharged
as a result of such reduction. If the Services Fee is increased, NGH
shall promptly pay to Nabisco the amount necessary to cover such
increase.
3. (a) Insurance. Unless NGH notifies Nabisco within ten (10) days of
this Agreement that it has elected to terminate its Insurance benefits and
obligations, Nabisco shall use all commercially reasonable efforts to cause
NGH to be covered during the term of this Agreement under Nabisco's insurance
policies (including, without limitation, directors' and officers' liability
insurance and workers' compensation) which will provide to NGH the type of
Insurance that NGH had in place immediately prior to the date hereof, subject
to availability. Nabisco shall not be responsible for obtaining or maintaining
any insurance coverage for NGH other than as set forth in the preceding
sentence. The Insurance provided shall be subject to such policies of
insurance or self-insurance, and such guidelines or procedures in respect of
insurance or self-insurance, as NGH had in effect immediately prior to the
date hereof. In the event the terms of the Insurance (including the scope of
coverage), self-insurance, or other policies, guidelines or procedures
relating to Insurance or self-insurance, change or require change from those
terms NGH had in effect immediately prior to the date hereof, Nabisco agrees
(a) to the extent Nabisco is aware of a material change prior to the effective
date of the change, to provide notice to NGH of such change prior to its
effective date, or (b) otherwise to provide notice to NGH upon becoming aware
of the change.
(b) Termination of Insurance. Notwithstanding paragraph 6 hereof,
either NGH or Nabisco may terminate all or any portion of the Insurance at any
time on 90 days' prior written notice to the other party hereto. In the event
all or any portion of the Insurance is terminated, if appropriate, the charges
therefor shall be adjusted equitably to reflect such termination and Nabisco
shall promptly refund to NGH any amounts overcharged.
4. Employee Benefit Plans.
(a) Plans and Services. Prior to the Effective Date, certain
employees of Nabisco and NGH participated in the Benefit Plans. During the
period from the Effective Date until the termination of this Agreement,
employees of NGH
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shall continue to be eligible to participate in the Benefit Plans, subject to
the terms of the governing plan documents as interpreted by the appropriate
plan fiduciaries. During such period, subject to regulatory requirements,
Nabisco will continue to provide Corporate Services with respect to the
Benefit Plans in substantially the same manner as it administered the plans
prior to the Effective Date.
(b) Changes; Additional Services and Plan Terms. NGH may request
changes in the applicable Benefit Plan terms or services, subject, as to the
services only, to the approval of Nabisco, which approval shall not be
unreasonably withheld. Approval of changes in the terms of a Benefit Plan
shall be in the sole discretion of the plan sponsor. Upon any such request,
the parties will discuss in good faith, without obligation, an appropriate
adjustment to the Services Fee to reflect such changes, after which NGH shall
notify Nabisco in writing whether it shall accept such changes, and upon
acceptance, such adjustments shall become effective. If the Services Fee is
reduced, Nabisco shall promptly refund to NGH any amount overcharged as a
result of such reduction. If the Services Fee is increased, NGH shall promptly
pay to Nabisco the amount necessary to cover such increase. From time to time,
Nabisco may, as plan sponsor, make changes in the benefit plans or in the
administration of any of the plans.
(c) Regulatory Matters. Nabisco and NGH agree to cooperate fully
with each other in the administration and coordination of regulatory and
administrative requirements associated with the Benefit Plans that apply
either to the other party or jointly to NGH and Nabisco and its other
subsidiaries. Such coordination, upon request, will include (but is not
limited to) the following: sharing payroll data for determination of highly
compensated employees, providing census information (including accrued
benefits) for purposes of running discrimination tests, providing actuarial
reports for purposes of determining the funded status of any plan, review and
coordination of insurance and other independent third party contracts, and
providing for review of all summary plan descriptions, requests for
determination letters, insurance contracts, Forms 5500, financial statement
disclosures and plan documents.
(d) Executive Compensation. Certain NGH executives participate
in executive compensation and benefit programs offered by Nabisco. These plans
are listed in Exhibit C-Part 1, and are administered by Nabisco. Certain
Nabisco executives participate in executive compensation and benefit plans
administered by Nabisco. These plans are listed in Exhibit C-Part 2, and
administered by NGH.
(e) Certain Notices. In the event there is an ERISA Event, with
respect to Benefit Plans administered by Nabisco, Nabisco shall advise NGH as
soon as reasonably practicable after Nabisco determines the ERISA Event has
occurred. For purposes of this Section 4(e), an "ERISA Event" means (a) the
termination
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of a Benefit Plan or the filing of a Notice of Intent to Terminate such a
plan, in either case, under Section 4041(c) of the Employee Retirement Income
Security Act of 1974, as amended from time to time ("ERISA"); (b) the
institution of proceedings by the Pension Benefit Guaranty Corporation (or any
successor thereof) to terminate a Benefit Plan or to appoint a trustee to
administer such a plan or the receipt of notice by Nabisco that such an action
has been taken with respect to such a plan; (c) any substantial accumulated
funding deficiency within the meaning of Section 412 of the Internal Revenue
Code of 1986, as amended (the "Code"), or Section 302 of ERISA is incurred
with respect to any Benefit Plan sponsored by Nabisco and no waiver of that
deficiency has been obtained from the Internal Revenue Service; (d) the
Internal Revenue Service determines that a Benefit Plan that is intended to be
qualified under Section 401 of the Code fails to meet the applicable
requirements of the Code and disqualifies the plan; or (e) an amendment to a
Benefit Plan sponsored by Nabisco that results in a significant underfunding
described in Section 401(a)(29) of the Code or Section 307 of ERISA.
(f) Third Party Beneficiary. Nothing in this Agreement is
intended to entitle any employee or individual to any benefit or compensation
from NGH or Nabisco or to otherwise establish or create any rights on the part
of any third party. Nothing in this Agreement is intended to restrict or limit
Nabisco in the exercise of its rights or the fulfillment of its duties as plan
sponsor.
(g) Conflicts. In the event of a conflict between the terms of
this Section 4 and the terms of Section 2 hereof relating to providing
Corporate Services in connection with Benefit Plans, the terms of this Section
4 shall control.
5. Fee. In exchange for the Corporate Services, Insurance and
Benefit Plans provided by Nabisco during the term of this Agreement, NGH shall
pay to Nabisco a fee (the "Services Fee") in an amount equal to the fair
market value of such Corporate Services, Insurance and Benefit Plans as
determined in good faith by Nabisco and NGH. NGH shall make such payments in
arrears within 30 days of receipt of a reasonably detailed invoice therefor or
with such other frequency or at such other times as Nabisco and NGH may agree.
6. Term; Termination of Services. This Agreement shall commence on
the date hereof and end on the first date that NGH owns less than 50% of the
Nabisco Stock (as that term is defined in the Corporate Agreement among the
parties hereto on the date hereof) that NGH owns on the date of this
Agreement. Either party hereto may terminate this Agreement if the other party
commits any payment default or otherwise breaches its obligations hereunder in
any material respect.
4
<PAGE>
7. Cooperation; No Agency. Nabisco and NGH shall cooperate with
each other with respect to all provisions of this Agreement and the Corporate
Services, Insurance and Benefit Plans provided hereunder. However, this
Agreement creates no agency relationship between Nabisco and NGH except as may
be otherwise required for purposes of this Agreement.
8. Limitation of Liability. Except as may be provided in Section 9
below, Nabisco, its controlling persons, if any, directors, officers,
employees, agents and permitted assigns (each, a "Nabisco Party") shall not be
liable to NGH, its directors, officers, employees, agents or permitted assigns
(each, a "NGH Party") and each NGH Party shall not be liable to any Nabisco
Party, in each case, for any and all claims, debts, liabilities, assessments,
fines, penalties, damages, losses, disgorgements and obligations, of any kind,
character or description (whether absolute, contingent, matured, not matured,
liquidated, unliquidated, accrued, known, unknown, direct, indirect,
derivative or otherwise) whenever arising, including all costs and expenses
relating thereto (including, without limitation, all court costs,
out-of-pocket expenses of investigation and attorneys' fees and out-of-pocket
expenses in connection with any claim, action, or threatened action)
("Damages"), of a NGH Party, in the case of an Nabisco Party, or an Nabisco
Party, in the case of a NGH Party, arising in connection with this Agreement,
the Corporate Services, the Insurance or the Benefit Plans.
9. Indemnification. Nabisco shall indemnify, defend and hold
harmless each of the NGH Parties from and against all Damages, of third
parties unrelated to any NGH Party caused by or arising in connection with the
gross negligence or willful misconduct of any employee of Nabisco in
connection with the performance of the Corporate Services or the
administration of the Benefit Plans, or the provision of the Insurance, except
to the extent that Damages were caused directly or indirectly by statements,
acts or omissions of any NGH Party; provided that, in the case of any Benefit
Plan, NGH's right of indemnification also shall extend to claims of NGH
employees but shall not extend to any Damages that otherwise would have been
owed in the absence of such gross negligence or willful misconduct.
Notwithstanding the foregoing, Nabisco shall not be liable for any special,
indirect, incidental or consequential damages relating to such third party
claims. If NGH knows of a claim that may be the subject of indemnification
under this paragraph, it shall promptly notify Nabisco of such claim and
Nabisco may defend, settle or otherwise litigate such claim; provided that
Nabisco may not agree to any such settlement or compromise pursuant to which
any remedy or relief, other than monetary damages for which the indemnifying
party shall be responsible hereunder, shall be applied to or against the
indemnified party, without the prior written consent of the indemnified party,
which consent shall not be unreasonably withheld.
5
<PAGE>
10. Information. Subject to applicable law and privileges, each
party hereto covenants and agrees to provide the other party with all
information regarding itself and transactions under this Agreement that the
other party reasonably believes are required to comply with all applicable
federal, state, county and local laws, ordinances, regulations and codes,
including, but not limited to, securities laws and regulations.
11. Confidential Information. NGH and Nabisco hereby covenant and
agree to hold in trust and maintain confidential all Confidential Information
relating to the other party. "Confidential Information" shall mean all
information disclosed by either party to the other in connection with this
Agreement whether orally, visually, in writing or in any other tangible form,
and includes, but is not limited to, economic and business data, business
plans, and the like, but shall not include (i) information which becomes
generally available other than by release in violation of the provisions of
this Section 11, (ii) information which becomes available on a nonconfidential
basis to a party from a source other than the other party to this Agreement;
provided that such source is not and was not bound to hold such information
confidential, (iii) information acquired or developed independently by a party
without violating this Section 11 or any other confidentiality agreement with
the other party and (iv) information that any party hereto reasonably believes
it is required to disclose by law; provided that it first notifies the other
party hereto of such requirement and allows such party a reasonable
opportunity to seek a protective order or other appropriate remedy to prevent
such disclosure. Without prejudice to the rights and remedies of either party
to this Agreement, a party disclosing any Confidential Information to the
other party in accordance with the provisions of this Agreement shall be
entitled to equitable relief by way of an injunction if the other party hereto
breaches or threatens to breach any provision of this Section 11.
12. Assignment. Except as otherwise provided herein, neither party
may assign or transfer any of its rights or duties under this Agreement to any
third person or entity without the prior written consent of the other party.
13. Notices. Any notice, instruction, direction or demand under the
terms of this Agreement required to be in writing will be duly given upon
delivery, if delivered by hand, facsimile transmission or intercompany mail,
or five (5) days after posting if sent by mail, to the following addresses:
6
<PAGE>
NGH:
Nabisco Group Holdings Corp.
1301 Avenue of the Americas
New York, New York 10019
Attention: General Counsel
Facsimile: 212-969-9917
and
Nabisco:
Nabisco Holdings Corp.
7 Campus Drive
Attention: General Counsel
Parsippany, New Jersey 07054-0311
Facsimile: 973-539-9150
RJRTH:
R. J. Reynolds Tobacco Holdings, Inc.
401 North Main Street
Winston-Salem, NC 27102
Attention: General Counsel
Facsimile: 336-741-2998
or to such other address as either party may have furnished to the other in
writing in accordance with this Section 13.
14. Governing Law. This Agreement shall be construed in accordance
with and governed by the substantive internal laws of the State of New York.
15. Suspension. The obligations of any party to perform any acts
hereunder may be suspended if such performance is prevented by fires, strikes,
embargoes, riot, invasion, governmental interference, inability to secure
goods or materials, or other circumstances outside the control of the parties.
16. Severability. If any provision of this Agreement shall be
invalid or unenforceable, such invalidity or unenforceability shall not render
the entire Agreement invalid. Rather, the Agreement shall be construed as if
not containing the particular invalid or unenforceable provision, and the
rights and obligations of each party shall be construed and enforced
accordingly.
17. Rights Upon Orderly Termination; Survival. Upon termination or
expiration of this Agreement or any of the Corporate Services, Insurance or
Benefit Plans described herein, each party shall, upon request, forthwith
return to
7
<PAGE>
the other party all reports, papers, materials and other information required
to be provided to the other party by this Agreement. In addition, each party
shall assist the other in the orderly termination of this Agreement or any of
the Corporate Services, Insurance or Benefit Plans described herein.
Notwithstanding any termination of this Agreement, the obligations of the
parties hereto to make payments hereunder and the provisions of Sections 4, 8,
9, 13 and 14 shall survive.
18. Amendment. This Agreement may only be amended by a written
agreement executed by Nabisco and NGH.
19. Entire Agreement. This Agreement, including the exhibits hereto,
constitutes the entire agreement between the parties, and supersedes all prior
agreements, representations, negotiations, statements or proposals related to
the subject matter hereof.
20. Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original and all of which, when
taken together, shall constitute one agreement.
21. Termination of Prior Agreement. RJRTH and Nabisco hereby agree
to terminate the Intercompany Services and Operating Agreement dated as of
January 26, 1995 between RJRTH and Nabisco, as amended, without any liability
on the part of either such party except for any liability arising out of a
willful breach of any provision of such agreement.
8
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed by their duly authorized representatives.
NABISCO HOLDINGS CORP.
By: /s/ James A. Kirkman III
---------------------------------------
Name: James A. Kirkman III
Title: Executive Vice President,
General Counsel and Secretary
RJR NABISCO HOLDINGS CORP.
By: /s/ William L. Rosoff
---------------------------------------
Name: William L. Rosoff
Title: Senior Vice President and
General Counsel
R.J. REYNOLDS TOBACCO HOLDINGS,
INC.
By: /s/ William L. Rosoff
---------------------------------------
Name: William L. Rosoff
Title: Senior Vice President and
General Counsel
9
<PAGE>
EXHIBIT A
Corporate Services
(provided to NGH)
1. Tax Services
2. Accounting, Public Reporting and Consolidation Services
3. Internal Audit Services
4. Cash Management, Corporate Finance and other Treasury Services
5. Investor, Public Relations and Governmental Affairs Advice
6. Risk Management Services
7. Legal Services
8. Corporate Secretary Services
9. Corporate Development Advice
10. Executive Compensation and Benefit Services
11. Consulting Services of Selected Executives
A
<PAGE>
EXHIBIT B
Employee Benefit Plans
(Sponsored by Nabisco)
Retirement Plan for Employees of Nabisco, Inc. ("PEP")
Nabisco, Inc. Capital Investment Plan
Pacific Hawaiian Products Company Profit Sharing and Retirement Plan
SELECT Omnibus Insurance Plan
o Core Life Insurance Plan
o Group Universal Life
o AD&D Insurance Plan
o Dependent AD&D Insurance Plan
o Business Travel Accident
o MedChoice Retiree Life Insurance
Nabisco Salary and Benefits Continuation Program
SELECT Omnibus Welfare Benefits
o Medical Care Plan
o Select Dental Care Plan
o Short-Term Disability Plan (STD)
o Long-Term Care
o EAP
o MedChoice Retiree Medical
o MedChoice Retiree Dental
o MedChoice Retiree Spending Account
Select Flexible Benefits Program (Cafeteria)
Health Care Spending Account
Long-Term Disability Plan (LTD)
MedSave Retiree Savings Plan
Dependent Day Care Spending Account
Scholastic Savings Plan
Scholastic Loan Programs
B
<PAGE>
EXHIBIT C
Part 1
Executive Compensation Plans
(Sponsored by Nabisco)
Annual Incentive Award Plan (AIAP) Nabisco Long-Term
Incentive Plan (Nabisco LTIP) Flexible Perquisite Program
Supplemental Executive Retirement Plan (SERP) Supplemental
Benefits Plan (SBP) Additional Benefits Plan (ABP) Deferred
Compensation Plan
Part 2
Executive Compensation Plans
(Sponsored by NGH)
Management Equity Participation Plan (MEPP)
NGH Long-Term Incentive Plan (NGH LTIP)
HQ Protection Plan (NGH employees only)
Individual Employment/Severance Agreements (NGH employees only)
C
EXHIBIT 10.4
RJR NABISCO HOLDINGS CORP.,
Issuer
and
THE BANK OF NEW YORK,
Trustee
---------------------
THIRD SUPPLEMENTAL INDENTURE AND WAIVER
Dated as of May 18, 1999
(Supplemental to the Indenture dated as of September 21,
1995 as supplemented by the First Supplemental Indenture thereto dated as of
September 21, 1995
and the Second Supplemental Indenture thereto dated as of September 16, 1998)
---------------------
<PAGE>
THIRD SUPPLEMENTAL INDENTURE AND WAIVER (this "Third Supplemental
Indenture"), dated as of May 18, 1999 between RJR NABISCO HOLDINGS CORP., a
Delaware corporation (the "Issuer"), and THE BANK OF NEW YORK, a New York
banking corporation (the "Trustee"),
WHEREAS, there is proposed to be a series of certain transactions
(collectively, the "Reorganization"), which includes (i) the sale (the
"International Tobacco Sale") by RJR Nabisco, Inc. ("RJRN") and R.J. Reynolds
Tobacco Company of the international tobacco business to Japan Tobacco Inc.,
(ii) the transfer of RJRN's 80.5% interest in Nabisco Holdings Corp., together
with approximately $1.6 billion in after-tax proceeds from the International
Tobacco Sale, to the Issuer through a merger transaction that is intended to
be tax-free (the "Reorganization Merger"), and (iii) the spinoff of RJRN to
the common stockholders of the Issuer that is intended to be tax-free (the
"RJRN Spin-Off");
WHEREAS, the Issuer executed and delivered an Indenture dated as of
September 21, 1995 between the Issuer and the Trustee, as supplemented by the
First Supplemental Indenture dated as of September 21, 1995 between the Issuer
and the Trustee and the Second Supplemental Indenture dated as of September
16, 1998 between the Issuer and the Trustee (as so supplemented, the "Original
Indenture") providing for the issue from time to time of its notes, debentures
and other evidences of indebtedness to be issued in one or more series (the
"Securities");
WHEREAS, Section 8.2 of the Original Indenture provides that the
Original Indenture may be amended with the consent of the holders of a
majority in aggregate principal amount of the Securities then Outstanding (as
defined therein) of all series affected by such supplemental indenture (voting
as one class) (and, in the case of any series of Securities held as trust
assets of an RJR Nabisco Holdings Capital Trust and with respect to which a
Security Exchange (as defined therein) has not theretofore occurred, such
consent of holders of the Preferred Securities and the Common Securities (each
as defined therein) of such RJR Nabisco Holdings Capital Trust as may be
required under the Declaration of Trust of such RJR Nabisco Holdings Capital
Trust), and the Issuer has determined that, as of the date hereof, the
Outstanding series of Securities affected by this Third Supplemental Indenture
includes the 9 1/2 % Junior Subordinated Debentures Due 2047 (the "Affected
Securities") held as trust assets of RJR Nabisco Holdings Capital Trust II
(the "Trust") and that such required holders of the Affected Securities and of
the Preferred Securities and the Common Securities of the Trust have consented
to the amendment and waiver herein; and
1
<PAGE>
WHEREAS, all other conditions and requirements necessary to make this
Third Supplemental Indenture a valid and binding instrument in accordance with
its terms and the terms of the Original Indenture have been satisfied.
NOW, THEREFORE, this Third Supplemental Indenture
W I T N E S S E T H:
That in consideration of the premises and of the mutual covenants
herein contained, the Issuer and the Trustee hereby covenant and agree, for
the equal and proportionate benefit of all holders from time to time of the
Affected Securities as follows:
SECTION 1. For all purposes of this Third Supplemental Indenture,
except as otherwise expressly provided or unless the context otherwise
requires, all capitalized terms used and not defined herein that are defined
in the Original Indenture shall have the meanings assigned to them in the
Original Indenture.
SECTION 2. Section 1.1 of the Original Indenture is hereby amended by
deleting the definition of "Restricted Subsidiary" therein in its entirety.
SECTION 3. The Original Indenture is hereby amended by deleting the
words "or any Restricted Subsidiary" from Section 5.1(e) and (f) thereof.
SECTION 4. Subject to Section 5(b) hereof, the application of the
covenants contained in Article 9 of the Original Indenture is hereby waived as
applied to the Affected Securities to the extent required to effect the RJRN
Spin- Off (the "Waiver").
SECTION 5. (a) Upon the execution and delivery of this Third Supple
mental Indenture by the Issuer and the Trustee, the Original Indenture shall
be amended and supplemented in accordance herewith, and this Third
Supplemental Indenture shall form a part of the Original Indenture for all
purposes, and every holder of Affected Securities heretofore or hereafter
authenticated and delivered under the Original Indenture shall be bound
thereby, as hereby amended and supplemented; provided, however, that the
provisions of this Third Supplemental Indenture, except as described in (b)
with respect to the Waiver, shall not become operative until the later of (x)
the consummation of the Reorganization Merger and (y) the time that the Issuer
has notified the Trustee that it has accepted for payment the Affected
Securities tendered pursuant to the offer to purchase for cash any and all of
the Affected Securities, upon the terms and conditions set forth in the Offer
to Purchase and Consent Solicitation Statement dated April 13, 1999, as
amended from time to time (the "Offer") (and at such time the provisions of
2
<PAGE>
this Third Supplemental Indenture shall automatically become operative without
the requirement of any further action by or notice to the Issuer, the Trustee
or any holder of Affected Securities).
(b) The Waiver shall become operative upon the later of (x) the
execution and delivery of this Third Supplemental Indenture by the Issuer and
the Trustee and (y) the consummation of the Reorganization Merger. However, if
the Offer is terminated or withdrawn or the tendered Affected Securities are
not accepted for payment pursuant to the Offer, the Waiver will cease to be
operative.
SECTION 6. Nothing in this Third Supplemental Indenture, expressed or
implied, is intended or shall be construed to confer upon or give to any
person or corporation, other than the parties hereto and the holders of the
Affected Securities any right, remedy or claim under or by reason of this
Third Supplemental Indenture or any covenant, stipulation, promise or
agreement contained herein; all the covenants, stipulations, promises and
agreements contained herein being for the sole and exclusive benefit of the
parties hereto and their successors, and the holders from time to time of the
Affected Securities.
SECTION 7. This Third Supplemental Indenture shall form a part of the
Original Indenture for all purposes and every holder of Affected Securities
heretofore or hereafter authenticated and delivered under the Original
Indenture shall be bound hereby. The Original Indenture as supplemented by
this Third Supplemental Indenture is hereby in all respects ratified and
confirmed.
SECTION 8. The Trustee, for itself and its successor or successors,
accepts the trust of the Original Indenture as amended by this Third
Supplemental Indenture, and agrees to perform the same, but only upon the
terms and conditions set forth in the Original Indenture, including the terms
and provisions defining and limiting the liabilities and responsibilities of
the Trustee, which terms and provisions shall in like manner define and limit
its liabilities and responsibilities in the performance of the trust created
by the Original Indenture, and, without limiting the generality of the
foregoing, the recitals contained herein shall be taken as the statements of
the Issuer, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Third Supplemental Indenture other than as to the validity of its execution
and delivery by the Trustee.
SECTION 9. This Third Supplemental Indenture shall be governed by and
construed in accordance with the laws of the State of New York.
3
<PAGE>
SECTION 10. This Third Supplemental Indenture may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Third
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the date first written
above.
RJR NABISCO HOLDINGS CORP., ISSUER
By: /s/ Francis X. Suozzi
------------------------------------
Name: Francis X. Suozzi
Title: Senior Vice President -
Treasurer
[CORPORATE SEAL]
Attest:
By: /s/ Suzanne P. Jenney
----------------------------------
Name: Suzanne P. Jenney
Title: Assistant Secretary
THE BANK OF NEW YORK, TRUSTEE
By: /s/ Iliana Arciprete
------------------------------------
Name: Iliana Arciprete
Title: Assistant Treasurer
[CORPORATE SEAL]
Attest:
By: /s/ Mary Beth Lewick
----------------------------------
Name: Mary Beth Lewick
Title: Assistant Vice President
5
<TABLE>
EXHIBIT 21.1
NABISCO GROUP HOLDINGS CORP.
SUBSIDIARIES & INVESTMENTS
Date of Place of
Name of Subsidiary Incorporation Incorporation
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Nabisco Group Holdings Corp. Oct 25, 1988 Delaware
Airco IHC, Inc. Mar 22, 1989 Delaware
A/O Nabisco * Aug 16, 1994 Russia
Arrimo Fomento Comercial Ltda. * Oct 27, 1987 Brazil
Beech-Nut Life Savers (Panama) S.A. Jul 12, 1963 Panama
Beijing Nabisco Food Company Ltd. (91.9%) Mar 16, 1995 China
Carnes y Conservas Espanolas, S.A. [CARCESA] Dec 02, 1975 Spain
Cartera e Inversiones S.A. * Mar 05, 1979 Peru
Comercial Benut, S.A. de C.V. ** Mar 16, 1977 Mexico
Compania Venezolana de Conservas C.A. [COVENCO] Jul 25, 1969 Venezuela
Consiber, S.A. Mar 31, 1979 Spain
Covenco Holding C.A. Nov 26, 1991 Venezuela
Dely, S.A. Dec 18, 1960 Guatemala
Distribuidora Pan Americana, S.A. Oct 22, 1974 Panama
Establecimiento Modelo Terrabusi S.A. (99.2%) Dec 20, 1929 Argentina
Exhold Limited * Oct 03, 1989 Liberia
Fleischmann Corporation, The Nov 02, 1929 Delaware
Fleischmann International, Inc. Nov 20, 1944 Delaware
Fleischmann Peruana Inc. Sep 01, 1939 Delaware
Fleischmann Uruguaya S.A. Mar 09, 1961 Uruguay
Freezer Queen Foods (Canada) Limited Nov 03, 1967 Ontario, Canada
Fulmer Corporation Limited May 15, 1981 Bahamas
Galletas Artiach, S.A. Jul 23, 1932 Spain
Galletas Fontaneda, S.A. Mar 09, 1967 Spain
Gelatinas Ecuatoriana S.A. (66.7%) Nov 21, 1978 Ecuador
Grupo Gamesa, S.A. de C.V. (1%) Jul 29, 1981 Mexico
Hanover Servicing, Inc. Apr 13, 1992 Delaware
Hervin Company, The May 28, 1965 Oregon
Hervin Holdings, Inc. Mar 29, 1988 Delaware
Industria de Colores y Sabores S.A. * Jun 21, 1967 Colombia
Industria de Laticinios Gloria Ltda. * Jan 18, 1978 Brazil
Industria e Comercio de Produtos Alimenticios Cerqueirense Ltda. May 11, 1971 Brazil
Industrias Alimenticias Maguary Ltda. May 07, 1953 Brazil
Iracema Industrias de Caju Ltda Aug 08, 1978 Brazil
Jupiter Produtos Alimenticios Ltda. Mar 02, 1962 Brazil
Knox Company, The Dec 30, 1991 New Jersey
* Inactive Page 1
** In Liquidation SUB-NGH
*** Partnership/Joint Venture/Trust Post-Distribution
**** Nameholder At 6/14/99
<PAGE>
Date of Place of
Name of Subsidiary Incorporation Incorporation
- ------------------------------------------------------------------------------------------------------------
Landers Centro Americana, Fabricantes de Molinos Marca "Corona",
S.A. de C.V. (95%)** Jan 09, 1979 Honduras
Landers y Cia, S.A. Oct 01, 1951 Colombia
Leite Gloria do Nordeste S.A. May 16, 1968 Brazil
Life Savers Manufacturing, Inc. Apr 21, 1976 Delaware
Lowney Inc. Jan 01, 1983 Federal, Canada
Marbu, S.A. Oct 26, 1967 Spain
Merola Finance B.V. * May 09, 1995 Netherlands
MEX Holdings, Ltd. Nov 27, 1991 Delaware
NABEC, S.A. Nov 17, 1982 Ecuador
Nabisco Arabia Co. Ltd. (75%) *** Jan 29, 1996 Saudi Arabia
Nabisco Argentina S.A. Mar 14, 1994 Argentina
Nabisco Biscuit Manufacturing (Midwest), Inc. Dec 21, 1988 Delaware
Nabisco Biscuit Manufacturing (West), Inc. Dec 21, 1988 Delaware
Nabisco Brands Company Aug 01, 1995 Delaware
Nabisco Brands Holdings Denmark Limited Apr 17, 1989 Liberia
Nabisco Brands Nominees Limited * Aug 22, 1983 England
Nabisco Brazil, Inc. May 10, 1990 Delaware
Nabisco Caribbean Export, Inc. Jun 13, 1984 Delaware
Nabisco/Cetus Food Biotechnology Research Partnership (80%) *** Mar 01, 1984 Delaware
Nabisco (China) Limited Aug 29, 1995 China
Nabisco Chongqing Food Company Ltd. * Mar 01, 1995 China
Nabisco de Nicaragua, S.A. (60%) Dec 10, 1965 Nicaragua
Nabisco Direct, Inc. Aug 23, 1995 Delaware
Nabisco Dominicana, S.A. Dec 11, 1995 Dom. Repub.
Nabisco England IHC, Inc. Mar 29, 1989 Delaware
Nabisco Enterprises IHC, Inc. Mar 22, 1989 Delaware
Nabisco Europe, Middle East and Africa Trading, S.A. Oct 28, 1992 Spain
Nabisco Financing I, Inc. July 13, 1998 Delaware
Nabisco Financing II, Inc. July 13, 1998 Delaware
Nabisco Food (Suzhou) Co. Ltd. Mar 16, 1995 China
Nabisco Group Ltd. Jun 02, 1995 Delaware
Nabisco Holdco, Inc. July 13, 1998 Delaware
Nabisco Holdings Corp. (80.7%) Apr 21, 1981 Delaware
Nabisco Holdings IHC, Inc. Mar 22, 1989 Delaware
Nabisco Holdings I B.V. May 03, 1996 Netherlands
Nabisco Holdings II B.V. May 28, 1996 Netherlands
Nabisco Hong Kong Limited Apr 12, 1994 Hong Kong
Nabisco Iberia Lda. Dec 23, 1916 Portugal
Nabisco Iberia, S.L. (98.85%) Jul 15, 1993 Spain
Nabisco, Inc. Feb 03, 1898 New Jersey
Nabisco, Inc. Foreign Sales Corporation Dec 17, 1991 US Virgin Is.
* Inactive Page 2
** In Liquidation SUB-NGH
*** Partnership/Joint Venture/Trust Post-Distribution
**** Nameholder At 6/14/99
<PAGE>
Date of Place of
Name of Subsidiary Incorporation Incorporation
- ------------------------------------------------------------------------------------------------------------
Nabisco International, Inc. Jul 29, 1947 Delaware
Nabisco International Limited Dec 11, 1987 Nevada
Nabisco International Market Development Group, Inc. Mar 22, 1989 Delaware
Nabisco International M.E./Africa L.L.C. (49%) ? Dubai, U.A.E.
Nabisco International, S.A. Nov 26, 1953 Panama
Nabisco Investments, Inc. Mar 22, 1989 Delaware
Nabisco (Jamaica) Limited Jun 16, 1998 Jamaica
Nabisco Korea Ltd. Feb 10, 1998 Korea
Nabisco Ltd-Nabisco Ltee Jan 01, 1993 Federal, Canada
Nabisco Music Publishers, Inc. Mar 24, 1986 Delaware
Nabisco Music Ventures, Inc. Mar 24, 1986 Delaware
Nabisco (New Zealand) Limited **** Mar 30, 1990 New Zealand
Nabisco Overseas Financing, Inc. July 15, 1998 Delaware
Nabisco Partnership *** July 15, 1998 Delaware
Nabisco Peru S.A. Jan 28, 1972 Peru
Nabisco Philippines, Inc. Oct 14, 1997 Philippines
Nabisco Preferred, Inc. (90%) July 15, 1998 Delaware
Nabisco Royal Argentina LLC Sep 10, 1998 Delaware
Nabisco Royal Chile Limitada Mar 22, 1978 Chile
Nabisco Royal de Honduras, S.A. Jul 22, 1982 Honduras
Nabisco Royal del Ecuador, S.A. Sep 16, 1977 Ecuador
Nabisco Royal, Inc. Sep 21, 1951 New York
Nabisco Royal Panama, S.A. Mar 07, 1979 Panama
Nabisco S.A. de C.V. (99.5%) Jun 15, 1992 Mexico
Nabisco, S.L. * Jan 18, 1989 Spain
Nabisco South Africa (Proprietary) Limited (49%) Jan 02, 1945 South Africa
Nabisco Taiwan Corporation May 27, 1996 Taiwan
Nabisco Technology Company Dec 13, 1996 Delaware
Nabisco (Thailand) Limited Oct 01, 1997 Thailand
Nabisco Trading AG Aug 02, 1960 Switzerland
Nabisco Tunisia S.A. Jul 02, 1976 Tunisia
Nabisco Venezuela, C.A. Nov 26, 1991 Venezuela
National Biscuit Company **** Jan 17, 1971 Delaware
Planters & Biscuits Co. Jan 01, 1997 Russia
Posto Apolo Ltda. Dec 05, 1984 Brazil
Productos Confitados Salvavidas de Guatemala, S.A. Jul 03, 1974 Guatemala
Productos Mayco S.A.I.C.I.F. May 11, 1962 Argentina
Produtos Alimenticios Fleischmann e Royal Ltda. Nov 28, 1964 Brazil
Produtos Alimenticios Pilar Ltda. Jun 23, 1934 Brazil
Produtos Alimenticios Royal S.A. Jan 01, 1966 Costa
Rica PT Nabisco Foods (70%) *** Mar 21, 1995 Indonesia
* Inactive Page 3
** In Liquidation SUB-NGH
*** Partnership/Joint Venture/Trust Post-Distribution
**** Nameholder At 6/14/99
<PAGE>
Date of Place of
Name of Subsidiary Incorporation Incorporation
- ------------------------------------------------------------------------------------------------------------
Ritz Biscuit Company Limited **** Sep 28, 1989 England
RJR Industries (U.K.) Limited ** Jun 01, 1982 England
RJR Nabisco Securities Ltd.-Titres RJR Nabisco Ltee Sep 28, 1987 Federal, Canada
Royal Beech-Nut (Namibia) (PTY) Ltd. * Aug 08, 1989 South Africa
Royal Holding C.A. Nov 26, 1991 Venezuela
Royal Productos Alimenticios, C.A. Jul 26, 1971 Venezuela
Salvavidas S. de R.L. de C.V. ** Mar 30, 1967 Mexico
Stella D'oro Biscuit Co., Inc. Jan 02, 1948 New York
Tevalca Holding C.A. Nov 26, 1991 Venezuela
Transapolo-Transportes Rodoviarios Apolo Ltda. Oct 24, 1984 Brazil
20th Century Denmark Limited Mar 06, 1990 Liberia
West Indies Yeast Company Limited (72%) Nov 29, 1965 Jamaica
Yili-Nabisco Biscuit & Food Company Limited (51%) *** Jan 29, 1985 China
TOTAL: 131
* Inactive Page 4
** In Liquidation SUB-NGH
*** Partnership/Joint Venture/Trust Post-Distribution
**** Nameholder At 6/14/99
</TABLE>
EXHIBIT 99.1
NABISCO GROUP NEWS
HOLDINGS RELEASE
- -------------------------------------------------------------------------------
CONTACT: Carol Makovich DRAFT 6/9/99; 4 pm
(212) 258-5785
NABISCO GROUP HOLDINGS ANNOUNCES COMPLETION OF
SPIN-OFF OF DOMESTIC TOBACCO BUSINESS
NEW YORK, NEW YORK - June 15, 1999 - Nabisco Group Holdings Corp. (NYSE: NGH)
said today that it had completed the spin-off of its domestic tobacco
subsidiary, R.J. Reynolds Tobacco Holdings, Inc., to shareholders. Shares in
the domestic tobacco business begin trading today on the New York Stock
Exchange under the symbol "RJR."
With the completion of the spin-off at the close of business
yesterday, RJR Nabisco Holdings Corp. (NYSE:RN) changed its name to Nabisco
Group Holdings Corp. and as of today, the company's shares will trade on the
New York Stock Exchange under the symbol "NGH."
As previously announced on May 12, 1999, the RJR Nabisco board of
directors had declared a 1-for-3 stock dividend of shares in R.J. Reynolds
Tobacco Holdings, Inc. to RJR Nabisco shareholders, payable June 14, 1999 to
shareholders of record May 27, 1999.
Nabisco Group Holdings owns approximately 80 percent of Nabisco
Holdings Corp., the parent company of Nabisco, Inc., one of the world's major
manufacturers of cookies, crackers, snacks, and premium grocery products.
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