<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 12, 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
---------------------
NABISCO GROUP HOLDINGS CORP.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
DELAWARE 1-10215 13-3490602
<S> <C> <C>
(State or other jurisdiction (Commission file number) (I.R.S. Employer Identification No.)
of
incorporation or organization)
</TABLE>
7 CAMPUS DRIVE
PARSIPPANY, NJ 07054-0311
(973) 682-5000
(Address, including zip code, and telephone number, including area
code, of the registrant's principal executive offices)
------------------------------
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X , NO ___.
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S
CLASSES OF COMMON STOCK AS OF THE LATEST PRACTICABLE DATE: APRIL 30, 2000:
326,442,347 SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INDEX
<TABLE>
<CAPTION>
PAGE
--------------
<S> <C> <C>
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Income--Three Months
Ended March 31, 2000 and 1999............................. 1
Consolidated Condensed Statements of Comprehensive
Income--Three Months Ended March 31, 2000 and 1999........ 2
Consolidated Condensed Statements of Cash Flows--Three
Months Ended March 31, 2000 and 1999...................... 3
Consolidated Condensed Balance Sheets--March 31, 2000 and
December 31, 1999......................................... 4
Notes to Consolidated Condensed Financial Statements........ 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 10
Item 3. Quantitative and Qualitative Disclosures About Market
Risk...................................................... 14
PART II--OTHER INFORMATION
Item 1. Legal Proceedings........................................... 16
Item 4........ Submission of Matters to a Vote of Security Holders......... 16
Item 5. Other Information........................................... 17
Item 6. Exhibits and Reports on Form 8-K............................ 17
Signatures.......................................................................... 19
</TABLE>
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
NABISCO GROUP HOLDINGS CORP.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
----------------------
2000 1999
-------- --------
<S> <C> <C>
NET SALES................................................... $2,069 $1,855
------ ------
Costs and expenses:
Cost of products sold..................................... 1,147 1,027
Selling, advertising, administrative and general
expenses................................................ 696 641
Amortization of trademarks and goodwill................... 55 53
------ ------
OPERATING INCOME........................................ 171 134
Interest and debt expense................................... (72) (98)
Other income (expense), net................................. (2) (10)
------ ------
INCOME BEFORE INCOME TAXES.............................. 97 26
Provision for income taxes.................................. 38 9
------ ------
INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY
INTEREST.............................................. 59 17
Less minority interest in income of Nabisco Holdings........ 12 7
------ ------
INCOME FROM CONTINUING OPERATIONS....................... 47 10
Discontinued operations:
Income from operations of discontinued businesses, net of
income taxes............................................ -- 66
------ ------
NET INCOME.............................................. $ 47 $ 76
====== ======
NET INCOME PER COMMON SHARE--BASIC:
Income from continuing operations......................... $ .14 $ .02
Income from discontinued operations....................... -- .20
------ ------
Net income.............................................. $ .14 $ .22
====== ======
NET INCOME PER COMMON SHARE--DILUTED:
Income from continuing operations......................... $ .14 $ .02
Income from discontinued operations....................... -- .20
------ ------
Net income.............................................. $ .14 $ .22
====== ======
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK................ $.1225 $.5125
====== ======
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
1
<PAGE>
NABISCO GROUP HOLDINGS CORP.
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
----------------------
2000 1999
-------- --------
<S> <C> <C>
NET INCOME.................................................. $ 47 $ 76
------ ------
Other comprehensive income (loss):
Cumulative translation adjustment......................... 3 (106)
Provision for income taxes................................ -- --
------ ------
OTHER COMPREHENSIVE INCOME (LOSS), NET OF INCOME TAX........ 3 (106)
------ ------
COMPREHENSIVE INCOME (LOSS)................................. $ 50 $ (30)
====== ======
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
2
<PAGE>
NABISCO GROUP HOLDINGS CORP.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 2000 MARCH 31, 1999
--------------- --------------
<S> <C> <C>
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net income................................................ $ 47 $ 76
Less (income) from discontinued operations................ -- (66)
------ -----
Income from continuing operations......................... 47 10
------ -----
Adjustments to reconcile to net cash flows from (used in)
continuing operating activities:
Depreciation of property, plant and equipment......... 67 67
Amortization of intangibles........................... 55 53
Deferred income tax provision......................... 28 16
Restructuring payments................................ (21) (18)
Accounts receivable, net.............................. 127 (8)
Inventories........................................... (74) (73)
Accounts payable and accrued liabilities, including
income taxes........................................ (299) (243)
Other, net............................................ 3 10
------ -----
Total adjustments................................... (114) (196)
------ -----
Net cash flows (used in) continuing operating
activities............................................ (67) (186)
Net cash flows from discontinued operations............. -- 150
------ -----
Net cash flows (used in) operating activities........... (67) (36)
------ -----
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Capital expenditures...................................... (40) (47)
Proceeds from sale of assets.............................. 2 2
Proceeds from exercise of Nabisco Holdings' common stock
options................................................. -- 2
------ -----
Net cash flows (used in) investing activities........... (38) (43)
------ -----
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Net proceeds from long-term debt.......................... 57 226
Increase in notes payable................................. 33 5
Dividends paid on common and preferred stock.............. (50) (183)
Other, net................................................ -- 23
------ -----
Net cash flows from financing activities................ 40 71
------ -----
Effect of exchange rate changes on cash and cash
equivalents............................................... -- (6)
------ -----
Net change in cash and cash equivalents................. (65) (14)
Cash and cash equivalents at beginning of period............ 254 112
------ -----
Cash and cash equivalents at end of period.................. $ 189 $ 98
====== =====
Income taxes paid, net of refunds........................... $ 8 $ 11
Interest paid............................................... $ 79 $ 104
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
3
<PAGE>
NABISCO GROUP HOLDINGS CORP.
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
MARCH 31, 2000 DECEMBER 31, 1999
-------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 189 $ 254
Short-term investments.................................... 8 6
Accounts receivable, net.................................. 555 681
Deferred income taxes..................................... 104 114
Inventories............................................... 964 898
Prepaid expenses and other current assets................. 81 79
------- -------
TOTAL CURRENT ASSETS.................................. 1,901 2,032
------- -------
Property, plant and equipment, net.......................... 3,058 3,089
Trademarks, net............................................. 3,414 3,443
Goodwill, net............................................... 3,151 3,159
Other assets and deferred charges........................... 266 238
------- -------
$11,790 $11,961
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable............................................. $ 72 $ 39
Account payable........................................... 403 642
Accrued liabilities....................................... 983 1,056
Current maturities of long-term debt...................... 11 158
Income taxes accrued...................................... 116 107
------- -------
TOTAL CURRENT LIABILITIES............................. 1,585 2,002
------- -------
Long-term debt (less current maturities).................... 4,094 3,892
Minority interest in Nabisco Holdings....................... 765 763
Other noncurrent liabilities................................ 784 768
Deferred income taxes....................................... 1,293 1,277
Contingencies (Note 5)
Nabisco Group Holdings' obligated mandatorily redeemable
preferred securities of subsidiary trusts holding solely
junior subordinated debentures*........................... 98 98
Stockholders' equity:
Common stock (326,442,347 and 326,146,847 shares issued
and outstanding at March 31, 2000 and December 31, 1999,
respectively)........................................... 3 3
Paid-in capital........................................... 3,462 3,459
Retained earnings......................................... 132 125
Accumulated other comprehensive income (loss)............. (317) (320)
Treasury stock, at cost................................... (100) (100)
Other stockholders' equity................................ (9) (6)
------- -------
TOTAL STOCKHOLDERS' EQUITY.......................... 3,171 3,161
------- -------
$11,790 $11,961
======= =======
</TABLE>
- ------------------------
* The sole asset of the subsidiary trust is the junior subordinated debentures
of Nabisco Group Holdings Corp. The remaining outstanding junior
subordinated debentures have an aggregate principal amount of approximately
$101 million, an annual interest rate of 9 1/2%, and mature in September,
2047. The preferred securities will be mandatorily redeemed upon redemption
of the junior subordinated debentures.
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
4
<PAGE>
NABISCO GROUP HOLDINGS CORP.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1 -- INTERIM REPORTING AND RESULTS OF OPERATIONS
GENERAL
The consolidated condensed financial statements include the accounts of
Nabisco Group Holdings Corp. ("NGH"), and its majority-owned subsidiaries,
including 80.6% of Nabisco Holdings Corp. ("Nabisco Holdings") and its
wholly-owned subsidiary, Nabisco, Inc. ("Nabisco").
For interim reporting purposes, certain costs and expenses are charged to
operations in proportion to the estimated total annual amount expected to be
incurred. The results for the three months ended March 31, 2000 are not
necessarily indicative of the results to be expected for the year ended
December 31, 2000.
In management's opinion, the accompanying unaudited consolidated condensed
financial statements (the "Consolidated Condensed Financial Statements") of NGH
contain all adjustments, consisting only of normal recurring adjustments,
necessary for a fair statement of the results for the interim periods presented.
The Consolidated Condensed Financial Statements should be read in conjunction
with the consolidated financial statements and footnotes in the Annual Report on
Form 10-K of NGH at December 31, 1999.
Certain prior period amounts have been reclassified to conform to the
current period presentation.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT
During the second quarter of 1998, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133,
Accounting for Derivative Instruments and Hedging Activities, which was required
to be adopted by January 1, 2000, with early adoption permitted. In June 1999,
the FASB issued SFAS No. 137, Accounting for Derivative Instruments and Hedging
Activities--Deferral of the Effective Date of SFAS No. 133, which amended SFAS
No. 133 to delay its effective date one year. SFAS No. 133 requires that all
derivative instruments be recorded on the consolidated balance sheet at their
fair value. Changes in the fair value of derivatives will be recorded each
period in earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if it is, the type
of hedge transaction. NGH has not yet determined the impact, if any, that
adoption or subsequent application of SFAS No. 133 will have on its financial
position or results of operations.
ACQUISITION GOODWILL ADJUSTMENT
In November 1999, Nabisco acquired certain assets and liabilities of
Favorite Brands International, Inc. As of March 31, 2000 the purchase price
allocation has not been fully completed, pending the completion of the
acquisition integration plan. However, additional goodwill of $24 million was
recognized during the first quarter of 2000 from the settlement of the purchase
price for working capital amounts, resulting in total goodwill of $92 million.
1998 RESTRUCTURING CHARGES
In the second and fourth quarters of 1998, Nabisco recorded restructuring
charges of $406 million ($216 million after tax, net of minority interest) and
$124 million ($75 million after tax, net of minority interest), respectively,
and in 1999, recorded a net restructuring credit of $67 million ($39 million
after tax, net of minority interest) resulting in a total net charge for the
1998 restructuring programs of $463 million ($252 million after tax, net of
minority interest). These restructuring programs were undertaken to streamline
operations and improve profitability and will result in a workforce reduction of
approximately 6,900 employees of which 6,700 positions were eliminated as of
March 31, 2000.
5
<PAGE>
NOTE 1 -- INTERIM REPORTING AND RESULTS OF OPERATIONS (CONTINUED)
The June 1998 program was substantially completed in 1999 and the December
1998 program is expected to be substantially completed by mid-year 2000. The
restructuring programs when completed will require cash expenditures, net of
cash proceeds, of approximately $140 million.
The key elements of the restructuring programs include:
<TABLE>
<CAPTION>
SEVERANCE CONTRACT ASSET OTHER EXIT
IN MILLIONS AND BENEFITS TERMINATIONS IMPAIRMENTS COSTS TOTAL
- ----------- ------------ ------------ ----------- ---------- --------
<S> <C> <C> <C> <C> <C>
Sales force reorganizations.............. $ 37 $ 3 $ -- $-- $ 40
Distribution reorganizations............. 16 8 9 -- 33
Staff reductions......................... 83 -- 3 -- 86
Manufacturing cost reduction
initiatives............................. 22 -- 8 -- 30
Plant closures........................... 46 3 217 15 281
Product line rationalizations............ 4 4 20 32 60
---- --- ---- --- ----
Total 1998 restructuring reserves.... 208 18 257 47 530
1999 net restructuring credit............ (50) 1 (14) (4) (67)
---- --- ---- --- ----
158 19 243 43 463
---- --- ---- --- ----
Charges and Payments:
Cumulative through December 31, 1999..... (132) (14) (233) (35) (414)
Three months ended March 31, 2000........ (11) -- (4) (2) (17)
---- --- ---- --- ----
Total charges and payments, net of
cash proceeds...................... (143) (14) (237) (37) (431)
---- --- ---- --- ----
Reserve and valuation account balances as
of March 31, 2000....................... $ 15 $ 5 $ 6 $ 6 $ 32
==== === ==== === ====
</TABLE>
The key elements of the restructuring programs, after the restructuring
credit of $67 million include:
<TABLE>
<CAPTION>
SEVERANCE CONTRACT ASSET OTHER EXIT
IN MILLIONS AND BENEFITS TERMINATIONS IMPAIRMENTS COSTS TOTAL
- ----------- ------------ ------------ ----------- ---------- --------
<S> <C> <C> <C> <C> <C>
Sales force reorganization............... $ 16 $ 3 $ -- $-- $ 19
Distribution reorganization.............. 11 4 7 -- 22
Staff reductions......................... 59 1 4 -- 64
Manufacturing cost reduction
initiatives............................. 19 -- 8 -- 27
Plant closures........................... 51 6 203 15 275
Product line rationalizations............ 2 5 21 28 56
---- --- ---- --- ----
Total restructuring charges.......... $158 $19 $243 $43 $463
==== === ==== === ====
</TABLE>
Total charges and payments include cash expenditures, non-cash charges
primarily for asset impairments and committed severance and benefits to be paid.
The total cash payments, net of cash proceeds applied against the restructuring
reserves totaled $123 million, which is comprised of cumulative cash
expenditures of $145 million and cumulative cash proceeds of $22 million. For
the quarter ended March 31, 2000, cash payments, net of cash proceeds totaled
$20 million, which is comprised of $21 million of cash expenditures and
$1 million of cash proceeds which were applied against the restructuring
reserves. Cash payments for the three months ended March 31, 2000 exceeded
charges and payments, net of cash proceeds, for the three months ended
March 31, 2000 due to payments made to satisfy severance and benefit obligations
previously committed and charged against the reserves.
6
<PAGE>
NOTE 2 -- INVENTORIES
The major classes of inventory are as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
IN MILLIONS 2000 1999
- ----------- --------- ------------
<S> <C> <C>
Finished products........................................... $576 $551
Raw materials............................................... 244 199
Work in process............................................. 42 45
Other....................................................... 102 103
---- ----
$964 $898
==== ====
</TABLE>
NOTE 3 -- NET INCOME PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-----------------------------------------
2000 1999
------------------- -------------------
BASIC DILUTED BASIC DILUTED
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Income from continuing operations applicable to common
stock:
Income from continuing operations....................... $ 47 $ 47 $ 10 $ 10
Preferred stock dividends............................... -- -- (4) (4)
-------- -------- -------- --------
$ 47 $ 47 $ 6 $ 6
======== ======== ======== ========
Weighted average number of common and common equivalent
shares outstanding (in thousands):
Common shares........................................... 325,762 325,762 324,053 324,053
Assumed exercise of NGH's stock options................. -- 49 -- 248
-------- -------- -------- --------
325,762 325,811 324,053 324,301
======== ======== ======== ========
</TABLE>
Shares of ESOP convertible preferred stock of 12,543,347 were not included
in computing diluted earnings per share for 1999, because the effect would have
been antidilutive. Common shares also exclude 680,500 and 949,100 shares of
restricted stock as the vesting provisions had not been met at March 31, 2000
and 1999, respectively.
NOTE 4 -- SEGMENT REPORTING
NGH is a holding company whose majority-owned subsidiaries are engaged
principally in the manufacture, distribution and sale of cookies, crackers, and
other food products. NGH is organized and reports its results of operations in
three operating segments: Nabisco Biscuit Company, the Nabisco Foods Company and
the International Food Group which are segregated by both product and geographic
area.
NGH's management evaluates the performance and allocates resources based
upon operating company contribution ("OCC") before restructuring-related
expenses. OCC, for each reportable segment is operating income before
amortization of intangibles and restructuring charges and credits and exclusive
of, restructuring-related expenses.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
IN MILLIONS 2000 1999
- ----------- -------- ----------
<S> <C> <C>
Net sales from external customers:
Nabisco Biscuit Company................................... $ 881 $ 867
Nabisco Foods Company..................................... 631 435
International Food Group.................................. 557 553
------- -------
Total................................................. $ 2,069 $ 1,855
======= =======
</TABLE>
7
<PAGE>
NOTE 4 -- SEGMENT REPORTING (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
IN MILLIONS 2000 1999
- ----------- -------- ----------
<S> <C> <C>
Segment operating company contribution:
Nabisco Biscuit Company................................... $ 132 $ 121
Nabisco Foods Company..................................... 65 49
International Food Group.................................. 33 32
Other..................................................... (4) --
------- -------
Total segment operating company contribution................ 226 202
Restructuring-related expenses.............................. -- 15
Amortization of trademarks and goodwill..................... 55 53
------- -------
Consolidated operating income............................... 171 134
Interest and debt expense................................... 72 98
Other expense, net.......................................... 2 10
------- -------
Income before income taxes.................................. $ 97 $ 26
======= =======
</TABLE>
NOTE 5 -- CONTINGENCIES
TOBACCO LITIGATION
As of April 26, 2000, NGH was a defendant in 43 lawsuits arising out of its
now severed relationship with the tobacco business conducted by its former
subsidiary, Reynolds Tobacco or its subsidiaries. These cases name NGH on a
variety of theories, not always specifically pled, that seek to impose liability
on NGH for injuries allegedly caused by the use, sale, distribution,
manufacture, development, advertising, marketing or health effects of, exposure
to, or research, statements or warnings regarding cigarettes.
Fifteen of the active suits were brought in state courts by claimants
seeking recovery of health care costs they incurred for large numbers of
beneficiaries whose illnesses are allegedly related to cigarettes. The
plaintiffs in these cases include groups of union health-benefit trust funds, a
Native American tribe and two foreign countries or political subdivisions. Four
of the cases are non-union class action suits, one in Pennsylvania federal
court, one in Indiana state court, one in New York federal court and one in
Missouri state court.
In addition, as of April 26, 2000, 21 anti-trust cases have been served on
NGH as well as a number of cigarette manufacturers and their present or former
parent companies in three federal courts and various state courts. NGH has been
named in an additional nine such cases, but has not been served. These cases,
all of which seek to be certified as class actions, allege violations of state
and/or federal anti-trust law and are brought by plaintiffs who claim to
represent direct purchasers, indirect purchasers and retail purchasers of
cigarettes.
NGH's defenses in all the cigarette cases in which it is named include the
merits defenses of Reynolds Tobacco plus separate arguments that NGH is a
holding company that does not engage in any of the activities for which
plaintiffs seek to impose liability. NGH also seeks to be dismissed from some of
these cases based on the fact that it has no presence in the state in which a
particular case is pending and therefore should not be subject to the
jurisdiction of the applicable court.
In the health-care cost-recovery cases of the kind noted above, defendants
also argue that the case should be dismissed because of the settled law that one
who pays an injured person's medical expenses is legally too remote to maintain
an action against the person allegedly responsible for the injury. Most courts
that have decided motions to dismiss based on this argument, including the
federal court of appeals for the Second, Third, Fifth, Seventh and Ninth
Circuits, have granted motions to dismiss on these "remoteness" grounds. Ten of
these union cases, all pending in New York State courts, have been consolidated
and, on March 6, 2000, defendants' motion to dismiss these cases on "remoteness"
grounds was granted. Plaintiffs' time to appeal has not expired.
8
<PAGE>
NOTE 5 -- CONTINGENCIES (CONTINUED)
As of May 3, 2000, no case in which NGH is a named defendant was scheduled
for trial in 2000. One class action case, described below, in which Reynolds
Tobacco is a defendant is in the process of being tried in Florida, and an
individual case, ANDERSON V. PHILIP MORRIS INC. has just begun trial in New
York. It is likely that several more will be tried during the course of the
year.
NGH's litigation defense costs as well as any liabilities it might incur as
a result of the cases pending against it are to be paid by RJR and Reynolds
Tobacco under the indemnification provisions of an agreement between NGH, RJR
and Reynolds Tobacco. NGH's cost of defense, as well as any liabilities incurred
as a result of the cases brought by plaintiffs based on sales of cigarettes
outside the United States, are generally also subject to an indemnity from Japan
Tobacco Inc. as provided under the sale agreement among Japan Tobacco, Reynolds
Tobacco and RJR. If RJR and Reynolds Tobacco and Japan Tobacco cannot fulfill
their respective indemnity obligations, NGH could be required to make the
relevant payments itself.
In addition to the cases pending against NGH, there are several hundred
lawsuits relating to cigarettes in which Reynolds Tobacco, and sometimes RJR,
are named defendants. One Florida class action case, in which Reynolds Tobacco
is a defendant, ENGLE VS. R.J. REYNOLDS TOBACCO COMPANY, is being tried in
several phases. A jury found against Reynolds Tobacco and the other cigarette
company defendants in the first phase. The second phase, considering the claims
of class representatives, was completed on April 7, 2000 with an award of
$12.7 million to three class members. Beginning on May 15, 2000, the same jury
will hear the case for an award of punitive damages, which would be a lump sum
for the class as a whole. A decision on this award may be made during June or
July 2000. It is not possible to estimate the size of such an award if made, but
it could be in the billions of dollars. No payment of damages should be required
until the end of the trail and appellate process. If Reynolds Tobacco and RJR
are unable to satisfy their payment obligations for any adverse judgments
against them in some or all of these cases, it is possible that plaintiffs in
these cases would seek to recover the unsatisfied obligations from the assets of
NGH by bringing lawsuits on various theories.
Some of the claims against NGH seek recovery of hundreds of millions and
possibly billions of dollars. This is also true of the litigation pending
against Reynolds Tobacco and RJR. Litigation is subject to many uncertainties.
While management believes it has strong defenses in the litigation against NGH,
management is unable to predict the outcome of the litigation against NGH, or to
derive a meaningful estimate of the amount or range of any possible loss in any
quarterly or annual period or in the aggregate.
NOTE 6 -- SUBSEQUENT EVENT
On May 5, 2000, the European Commission gave clearance to Nabisco's
previously announced intention of joining a consortium of investors, Finalrealm
Limited ("Finalrealm"), that has acquired the equity of United Biscuits
(Holdings) plc ("UB"), a United Kingdom company, for cash of 265 pence per UB
share. Pursuant to the definitive agreements and subject to completion:
(i) Nabisco will contribute approximately $45 million in cash and its operations
in Spain, Portugal and the Middle East (in 1999, these operations had net sales
of approximately $290 million) to an associate of Finalrealm and in exchange
receive dual convertible discounted preferred securities; (ii) Finalrealm has
agreed to procure the sale to Nabisco of UB's operations in China, Hong Kong and
Taiwan (in 1999, these operations had net sales of approximately $66 million).
It is expected that Nabisco will have: (i) an economic interest of 26.5% in
the consortium which will be comprised of UB's businesses in the United Kingdom,
France, the Benelux countries and Nabisco's operations named above; and
(ii) ownership of UB's Asian businesses cited above.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following is a discussion and analysis of NGH's financial condition and
results of operations. The discussion and analysis of the results of operations
is divided into separate sections for sales, operating company contribution and
operating income. The sales section includes information as reported in the
historical financial statements, followed by management's discussion and
analysis of these results. The operating company contribution and operating
income sections include information as reported in the historical financial
statements, followed by special items that management believes impact the
comparability of historical results, results excluding special items and
management's discussion and analysis of results excluding special items. Results
excluding special items are presented on a basis consistent with how the
businesses are managed. Special items include restructuring-related expenses
that management believes affect the comparability of the results of operations.
The results of operations excluding special items should not be viewed as a
substitute for the historical results of operations but as a tool to better
understand the underlying trends in the business. The discussion and analysis of
NGH's financial condition and results of operations should be read in
conjunction with the historical financial information and the related notes
thereto included in the Consolidated Condensed Financial Statements.
NGH's business is conducted by Nabisco Holdings Corp.'s ("Nabisco Holdings")
wholly-owned subsidiary Nabisco Inc. ("Nabisco"). The food business is conducted
by the operating subsidiaries of Nabisco Holdings. Nabisco's businesses in the
United States are comprised of Nabisco Biscuit Company and the Nabisco Foods
Company. Nabisco's businesses outside the United States are conducted by Nabisco
Ltd and Nabisco International, Inc. ("Nabisco International" together with
Nabisco Ltd, the "International Food Group").
NET SALES
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------
IN MILLIONS 2000 1999 % CHANGE
- ----------- -------- -------- --------
<S> <C> <C> <C>
REPORTED NET SALES:
Nabisco Biscuit Company................................... $ 881 $ 867 2%
Nabisco Foods Company..................................... 631 435 45%
International Food Group.................................. 557 553 1%
------ ------
Total..................................................... $2,069 $1,855 12%
====== ======
</TABLE>
- Nabisco Biscuit Company's net sales increased 2% versus the prior year due
to continued momentum in volume growth from its core cookie and cracker
brands as well as the impact of several new products. Offsetting some of
these gains were several discontinued breakfast food and snack items.
- Nabisco Foods Company's net sales increased 45% to $631 million. Excluding
the impact on net sales resulting from the November 1999 acquisition of
the Favorite Brands' business, net sales grew 14%, over the prior year,
primarily due to volume gains from nuts, confections and pet snacks.
- International's net sales increased 1% versus the prior year to
$557 million. Excluding the impact of unfavorable foreign currency
translations, International's net sales increased 2%. This increase is
primarily due to volume gains in Argentina, principally due to the impact
of the Canale S.A. acquisition, the Andean region and Asia as well as
price increases in Brazil, partially offset by volume declines in Brazil,
Mexico and Spain.
10
<PAGE>
OPERATING COMPANY CONTRIBUTION
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------
IN MILLIONS 2000 1999 % CHANGE
- ----------- -------- -------- --------
<S> <C> <C> <C>
REPORTED OPERATING COMPANY CONTRIBUTION(1):
Nabisco Biscuit Company................................... $132 $108 22%
National Foods Company.................................... 65 48 35%
International Food Group.................................. 33 31 6%
Other..................................................... (4) -- --
---- ----
Total....................................................... 226 187 21%
---- ----
SPECIAL ITEMS:
Restructuring-related expenses:
Nabisco Biscuit Company................................. -- (13)
Nabisco Foods Company................................... -- (1)
International Food Group................................ -- (1)
---- ----
Total....................................................... -- (15)
---- ----
OPERATING COMPANY CONTRIBUTION EXCLUDING SPECIAL ITEMS:
Nabisco Biscuit Company................................... 132 121 9%
Nabisco Foods Company..................................... 65 49 33%
International Food Group.................................. 33 32 3%
Other..................................................... (4) -- --
---- ----
Total....................................................... $226 $202 12%
==== ====
</TABLE>
- ------------------------
(1) Operating company contribution represents operating income before
amortization of trademarks and goodwill and restructuring charges (credits).
THE FOLLOWING DISCUSSION AND ANALYSIS IS BASED ON OPERATING COMPANY CONTRIBUTION
EXCLUDING SPECIAL
ITEMS:
- Nabisco Biscuit Company's operating company contribution increased 9%
versus the prior year. The increase reflects the impact of ongoing
productivity programs on manufacturing costs and volume gains in its core
cookie and cracker brands. Increased marketing spending and lower
breakfast snack volumes partially offset these gains.
- Nabisco Foods Company's operating company contribution increased 33%
versus the prior year. The results were primarily due to strong volume
gains from nuts, confections and pet snacks partially offset by increased
marketing spending.
- International's operating company contribution increased 3% versus the
prior year. The increase was primarily due to volume increase in
Argentina, the Andean region and Asia. Also contributing to the increase
was the impact of productivity programs on lowering costs in Canada and
Argentina. Partially offsetting this increase were volume declines in
Brazil, Mexico and Spain in addition to increased marketing investments in
Canada, Asia and Brazil.
11
<PAGE>
OPERATING INCOME
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
------------------------------
IN MILLIONS 2000 1999 % CHANGE
- ----------- -------- -------- --------
<S> <C> <C> <C>
REPORTED OPERATING INCOME................................... $171 $ 134 28%
---- -----
SPECIAL ITEMS:
Restructuring-related expenses.......................... -- (15)
---- -----
OPERATING INCOME EXCLUDING SPECIAL ITEMS.................... $171 $ 149 15%
==== =====
</TABLE>
THE FOLLOWING DISCUSSION AND ANALYSIS IS BASED ON OPERATING INCOME EXCLUDING
SPECIAL ITEMS:
- NGH's operating income was $171 million for the first quarter of 2000, an
increase of 15% from the first quarter 1999 level, primarily due to the
increase in operating company contribution discussed previously.
INTEREST AND DEBT EXPENSE
Consolidated interest and debt expense of $72 million for the first quarter
of 2000 decreased by $26 million or 27% from the same 1999 period primarily due
to the repurchase and redemption of trust preferred securities in May of 1999.
OTHER INCOME (EXPENSE), NET
Other income (expense), net was $2 million expense for the first three
months of 2000 compared to $10 million expense for the first three months of
1999. The first three months comparison primarily reflects foreign exchange
gains in 2000 compared to foreign exchange losses in 1999 and higher interest
income.
NET INCOME
Nabisco Group Holdings' net income of $47 million for the first quarter of
2000 compared with net income of $76 million for the first quarter of 1999. The
first quarter decrease primarily reflects the absence of income from operations
of discontinued businesses and an increased provision for income taxes partially
offset by higher operating income, lower interest and debt expense and lower
other income (expense), net.
COMPREHENSIVE INCOME (LOSS)
Comprehensive income was $50 million for the first quarter of 2000 versus a
loss of $30 million in the first quarter of 1999. The $80 million change
reflects foreign currency translation gains in 2000 compared to foreign currency
translation losses in 1999 partially offset by lower net income.
RESTRUCTURING
Savings objectives set in Nabisco's 1998 restructuring programs are on
target despite lower than anticipated spending to date. The June 1998 program
was substantially completed in 1999 and the December 1998 program is expected to
be substantially completed by mid-year 2000. Pre-tax savings in 2000 are
expected to be approximately $140 million including cash savings of
$133 million and, after completion of the programs, are expected to be
approximately $145 million annually including cash savings of $135 million. In
1999, Nabisco recorded a net restructuring credit of $67 million. This net
credit reduced the restructuring charges to $463 million. As the remaining
projects from the December 1998 restructuring program are completed, Nabisco
will continue to analyze the actual spending and the estimated cost to complete
the programs. The results of that analysis will determine what further
adjustments, if any, will be necessary. Cumulative cash expenditures, net of
cash proceeds, to date have totaled $123 million with $20 million expended in
2000. The cash component of the restructuring charge for the programs will be
12
<PAGE>
approximately $140 million including an estimated $37 million expenditure in
2000. For a further discussion of the restructuring programs, see Note 1 to the
Consolidated Financial Statements.
DISCONTINUED OPERATIONS
Total income from discontinued operations was $66 million in the first
quarter of 1999. Discontinued operations represent the results from tobacco
businesses and RJR Nabisco, Inc.'s corporate headquarters' expenses prior to the
sale in 1999 of the international tobacco business and subsequent spin-off to
shareholders of the domestic tobacco business.
LIQUIDITY AND FINANCIAL CONDITION
Net cash flows used in continuing operating activities amounted to
$67 million for the first three months of 2000 compared to $186 million for the
first three months of 1999. The decrease in net cash flows used in continuing
operating activities primarily reflects the 2000 increase in income from
continuing operations and lower working capital requirements.
Cash flows used in investing activities for the first three months of 2000
decreased $5 million from the first three months of 1999 to $38 million,
primarily due to lower capital expenditures and partially offset by the absence
of proceeds from the exercise of Nabisco Holdings' common stock options.
Capital expenditures were $40 million in the first three months of 2000.
Management expects that capital expenditures for 2000 will be approximately
$250 million, which is sufficient to support the strategic and operating needs
of Nabisco Holdings' businesses. Management also expects that cash flow from
operations will be sufficient to support its planned capital expenditures in
2000.
Cash flows from financing activities were $40 million for the first three
months of 2000, a decrease of $31 million from the first three months of 1999,
principally due to the lower net proceeds from long-term debt partially offset
by lower dividends paid on common and preferred stock.
As of March 31, 2000, Nabisco's $1.5 billion revolving credit facility was
unutilized and available to support borrowings and the 364-day $1.1 billion
credit facility was unavailable as it supported outstanding commercial paper
borrowings.
The companies believe that they are currently in compliance with all
covenants and restrictions imposed by the terms of their indebtedness.
At March 31, 2000, NGH's total debt (notes payable and long-term debt,
including current maturities and mandatorily redeemable preferred securities)
and total capital (total debt and stockholders' equity) amounted to
approximately $4.3 billion and $7.4 billion, respectively, of which total debt
is higher by approximately $88 million and total capital is higher by
$98 million than at December 31, 1999, NGH's ratios of total debt to
stockholders' equity and total debt to total capital were 1.35 to 1 and .57 to
1, respectively.
NGH currently anticipates that it will pay a regular quarterly cash dividend
that is approximately equal to the amount of the regular Nabisco Holdings'
quarterly cash dividend that NGH expects to receive. However, the dividend
payable on each NGH common share will be less than the dividend payable on each
Nabisco Holdings' common share because the number of outstanding NGH common
shares exceeds the number of Nabisco Holdings' shares owned by NGH. Passing
through Nabisco Holdings' current annual dividend of $0.75 per share on NGH's
213,250,000 shares of Nabisco Holdings' stock would yield an annual dividend of
approximately $0.49 per share on the 326,442,347 shares of NGH stock outstanding
on March 31, 2000.
On April 3, 2000 the Board of NGH directed its management to explore all
alternatives to maximize shareholder value including the sale of NGH or the sale
of Nabisco Holdings.
13
<PAGE>
SUBSEQUENT EVENT
On May 5, 2000, the European Commission gave clearance to Nabisco's
previously announced intention of joining a consortium of investors, Finalrealm
Limited ("Finalrealm"), that has acquired the equity of United Biscuits
(Holdings) plc ("UB"), a United Kingdom company, for cash of 265 pence per UB
share. Pursuant to the definitive agreements and subject to completion:
(i) Nabisco will contribute approximately $45 million in cash and its operations
in Spain, Portugal and the Middle East (in 1999, these operations had net sales
of approximately $290 million) to an associate of Finalrealm and in exchange
receive dual convertible discounted preferred securities; (ii) Finalrealm has
agreed to procure the sale to Nabisco of UB's operations in China, Hong Kong and
Taiwan (in 1999, these operations had net sales of approximately $66 million).
It is expected that Nabisco will have: (i) an economic interest of 26.5% in
the consortium which will be comprised of UB's businesses in the United Kingdom,
France, the Benelux countries and Nabisco's operations named above; and
(ii) ownership of UB's Asian businesses cited above.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE EXPOSURE
Nabisco is exposed to changes in interest rates primarily as a result of its
borrowing activities which include commercial paper, short-term borrowings and
long-term fixed rate debt used to maintain liquidity and fund its business
operations. Nabisco employs a variance/co-variance approach to its calculation
of Value at Risk ("VaR"), which is a statistical measure of potential loss in
terms of fair value, cash flows, or earnings of interest rate sensitive
financial instruments over a one year horizon using a 95% confidence interval
for changes in interest rates. The model assumes that financial returns are
normally distributed. For options and instruments with non-linear returns, the
model uses the delta/gamma method to approximate the financial return.
The VaR, which is the potential loss in fair value associated with Nabisco's
exposure to changing interest rates, was $182 million after tax, net of minority
interest at March 31, 2000, an increase of $4 million from the December 31, 1999
amount. This exposure is primarily related to long-term debt with fixed interest
rates.
The VaR model is a risk analysis tool and does not purport to represent
actual losses in fair value that will be incurred by Nabisco, nor does it
consider the potential effect of favorable changes in market factors.
COMMODITY PRICE EXPOSURE
The VaR associated with Nabisco's derivative commodity instruments due to
reasonably possible near-term changes in commodity prices, based on historical
commodity price movements, would not result in a material effect on the future
earnings of Nabisco.
The VaR associated with Nabisco's net commodity exposure (anticipated future
purchases less derivatives, inventory and firm purchase commitments) would
result in a potential loss in earnings, before taxes and minority interest of
$40 million at March 31, 2000, an increase of $10 million from the December 31,
1999 amount.
The VaR associated with either Nabisco's derivative commodity instruments or
its net commodity exposure would not have a material effect on the fair values
or cash flows of Nabisco.
------------------------
14
<PAGE>
The foregoing discussion in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and in Note 5 to the Consolidated
Condensed Financial Statements contains forward-looking statements concerning,
among other things, the amount of savings from the restructuring program, the
level of future capital expenditures, the level of dividends and litigation.
These statements reflect management's current views with respect to future
events and financial performance. These forward-looking statements are based on
many assumptions and factors including competitive pricing for products,
commodity prices, success of new product innovations and acquisitions, economic
conditions in countries where Nabisco Group Holdings' subsidiaries do business,
the effects of currency fluctuations, the effects of government regulation and
the status of litigation. Any changes in such assumptions or factors could
produce significantly different results.
15
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
NGH has been named as a defendant in a number of lawsuits (43 as of
April 26, 2000) as a result of its now severed relationship with the tobacco
business conducted by Reynolds Tobacco or its subsidiaries. For information
about this litigation see Note 5 to the Consolidated Condensed Financial
Statements.
Some of the claims against NGH in the tobacco-related litigation noted above
seek recovery of hundreds of millions and possibly billions of dollars. This is
also true of litigation pending against Reynolds Tobacco and RJR, former
subsidiaries of NGH. Litigation is subject to many uncertainties. While
management believes it has strong defenses in the litigation against NGH,
management is unable to predict the outcome of the litigation against NGH, or to
derive a meaningful estimate of the amount or range of any possible loss in any
quarterly or annual period or in the aggregate.
Nabisco Holdings and Nabisco, both subsidiaries of NGH, are defendants in
various lawsuits arising in the ordinary course of business. In the opinion of
management, resolution of these matters is not expected to have a material
adverse effect on those companies' or on NGH's financial condition or results of
operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
The matters below were voted upon at the annual meeting of stockholders of
NGH held on May 9, 2000. Holders of Common Stock were entitled to vote upon the
proposals to elect directors, ratify the appointment of auditors and to vote on
one stockholder proposal. Holders present in person or by proxy at the meeting
were entitled to vote 300,340,458 shares of Common Stock.
(a) Election of Twelve Directors
<TABLE>
<CAPTION>
NAME VOTES FOR VOTES WITHHELD
- ---- ----------- --------------
<S> <C> <C>
John T. Chain, Jr............................... 281,014,732 19,325,726
Julius L. Chambers.............................. 281,032,413 19,308,045
John L. Clendenin............................... 280,934,980 19,405,478
Steven F. Goldstone............................. 280,865,642 19,474,816
Ray J. Groves................................... 280,952,377 19,388,081
David B. Jenkins................................ 279,716,734 20,623,724
Nancy Karch..................................... 279,897,120 20,353,338
James M. Kilts.................................. 281,057,355 19,283,103
Fred H. Langhammer.............................. 281,065,202 19,275,256
H. Eugene Lockhart.............................. 279,640,098 20,700,360
Theodore E. Martin.............................. 281,028,259 19,312,199
Rozanne L. Ridgway.............................. 280,923,439 19,417,019
</TABLE>
(b) Ratification of appointment of Deloitte & Touche LLP as independent
auditors.
<TABLE>
<S> <C>
For:................................................... 298,597,320
Against:............................................... 582,517
Abstain:............................................... 1,160,621
</TABLE>
(c) Stockholder Proposal on Financial and Social Accountability in
Executive Compensation
<TABLE>
<S> <C>
For:................................................... 10,057,279
Against:............................................... 183,678,118
Abstain:............................................... 20,754,328
Non-Votes:............................................. 85,850,733
</TABLE>
16
<PAGE>
ITEM 5. OTHER INFORMATION
STOCKHOLDER RIGHTS PLAN
On March 13, 2000, the Board of Directors of NGH (the "Board") adopted a
stockholder rights plan. Under the plan, the Board declared a dividend of one
preferred stock purchase right (a "Right") for each share of NGH common stock
outstanding on March 20, 2000, and authorized the distribution of one Right for
each subsequently issued common share. Each Right entitles the holder to
purchase from NGH one one-hundredth of a share of a new series of preferred
stock at an initial purchase price of $30. The Board authorized the issuance of
4,400,000 preferred shares under this plan, none of which has been issued. The
Rights will become exercisable at a specified period of time after any person
becomes the beneficial owner of 10% or more of the common stock of NGH or
commences a tender or exchange offer which, if consummated, would result in any
person becoming the beneficial owner of 10% or more of the common stock. If any
person becomes the beneficial owner of 10% or more of the common stock, each
Right will entitle the holder, other than the acquiring person, to purchase, for
$30, a number of shares of NGH common stock having a market value of $60. For
persons who as of March 13, 2000 beneficially owned 10% or more of the common
stock, the plan "grandfathers" their current level of ownership, so long as they
do not purchase additional shares. Unless earlier redeemed, the Rights will
expire on March 13, 2002.
EXPLORATION OF ALTERNATIVES TO MAXIMIZE SHAREHOLDER VALUE
On April 3, 2000, the Board of NGH directed its management to explore all
alternatives to maximize shareholder value, including the sale of NGH or the
sale of Nabisco Holdings. In this connection, NGH engaged UBS Warburg LLC and
Morgan Stanley & Co. Incorporated as financial advisors.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<C> <S>
10.1 Nabisco Group Holdings Corp. 1990 Long Term Incentive Plan
(effective April 16, 1997 as amended and restated through
March 17, 2000).
10.2 Form of Non-Qualified Stock Option Agreement between Nabisco
Group Holdings Corp. and the optionee named therein (2000
grant).
10.3 Form of Restricted Stock Agreement between Nabisco Group
Holdings Corp. and the grantee named therein.
10.4 Amended and Restated Employment Agreement by and among
Nabisco Holdings Corp., Nabisco, Inc., Nabisco Group
Holdings Corp. and James M. Kilts (effective April 1,
2000).
10.5 Employment Agreement (dated October 1, 1997) by and among
Nabisco, Inc., Nabisco Holdings Corp., Nabisco Group
Holdings Corp. and James E. Healey (as amended and restated
effective March 17, 2000).
10.6 Employment Agreement (dated October 31, 1988) by and among
Nabisco, Inc., Nabisco Holdings Corp., Nabisco Group
Holdings Corp. and James A. Kirkman III (as amended and
restated effective March 17, 2000).
10.7 Employment Agreement (dated February 9, 1998) by and among
Nabisco, Inc., Nabisco Holdings Corp., Nabisco Group
Holdings Corp. and Richard H. Lenny (as amended and restated
effective March 17, 2000).
10.8 Employment Agreement (dated September 1, 1995) by and among
Nabisco, Inc., Nabisco Holdings Corp., Nabisco Group
Holdings Corp. and Douglas R. Conant (as amended and
restated effective March 17, 2000).
</TABLE>
17
<PAGE>
<TABLE>
<C> <S>
12.1 Nabisco Group Holdings Corp. Computation of Ratio of
Earnings to Combined Fixed Charges and Preferred Stock
Dividends/Deficiency in the Coverage of Combined Fixed
Charges and Preferred Stock Dividends by Earnings Before
Fixed Charges for the three months ended March 31, 2000.
12.2 Nabisco Group Holdings Corp. Computation of Ratio of
Earnings to Fixed Charges/ Deficiency in the Coverage of
Fixed Charges By Earnings Before Fixed Charges for the three
months ended March 31, 2000.
27.1 Nabisco Group Holdings Corp. Financial Data Schedule for the
three months ended March 31, 2000.
</TABLE>
(b) Reports on Form 8-K
<TABLE>
<S> <C>
Current report on Form 8-K dated March 14, 2000, regarding
NGH's adoption of a Stockholder Rights Plan.
</TABLE>
18
<PAGE>
SIGNATURES
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.
<TABLE>
<S> <C>
NABISCO GROUP HOLDINGS CORP.
(Registrant)
/s/ JAMES E. HEALEY
---------------------------------------------
James E. Healey
Senior Vice President and Chief Financial Officer
Date: May 12, 2000 /s/ THOMAS J. PESCE
---------------------------------------------
Thomas J. Pesce
Senior Vice President and Controller
</TABLE>
19
<PAGE>
EXHIBIT 10.1
NABISCO GROUP HOLDINGS CORP.
1990 LONG TERM INCENTIVE PLAN
(AS AMENDED AND RESTATED THROUGH MARCH 17, 2000)
1. PURPOSE OF PLAN
The Nabisco Group Holdings Corp. 1990 Long Term Incentive Plan (the "Plan")
is amended and restated effective June 15, 1999, to reflect corporate
transactions pursuant to which RJR Nabisco Holdings Corp. became known as
Nabisco Group Holdings Corp. The Plan is designed:
(a) to promote the long term financial interests and growth of Nabisco
Group Holdings Corp. and subsidiaries (the "Corporation") by attracting and
retaining management personnel with the training, experience and ability to
enable them to make a substantial contribution to the success of the
Corporation's business;
(b) to motivate management personnel by means of growth-related incentives
to achieve long range goals; and
(c) to further the identity of interests of participants with those of the
stockholders of the Corporation through opportunities for increased stock, or
stock-based, ownership in the Corporation.
2. DEFINITIONS
As used in the Plan, the following words shall have the following meanings:
(a) "Base Value" means not less than the Fair Market Value on the date a
Stock Appreciation Right is granted, or, in the case of a Stock Appreciation
Right granted retroactively in tandem with (or in replacement of) an outstanding
stock option, not less than the exercise price of such option;
(b) "Board of Directors" means the Board of Directors of NGH;
(c) "Code" means the Internal Revenue Code of 1986, as amended;
(d) "Committee" means the Compensation Committee of the Board of Directors;
(e) "Common Stock" or "Share" means common stock of NGH which may be
-1-
<PAGE>
authorized but unissued, or issued and reacquired;
(f) "Effective Date" shall have the meaning set forth in Section 12;
(g) "Exchange Act" means the Securities Exchange Act of 1934, as amended;
(h) "Fair Market Value" means such value of a Share as reported for stock
exchange transactions and/or determined in accordance with any applicable
resolutions or regulations of the Committee in effect at the relevant time;
(i) "Grant Agreement" means an agreement between NGH and a Participant that
sets forth the terms, conditions and limitations applicable to a Grant;
(j) "Grant" means an award made to a Participant pursuant to the Plan and
described in Paragraph 5, including, without limitation, an award of an
Incentive Stock Option, Other Stock Option, Stock Appreciation Right, Restricted
Stock, Performance Units or Performance Shares or any combination of the
foregoing;
(k) "Incentive Stock Options" shall have the meaning set forth in Section
5(a);
(l) "NGH" means Nabisco Group Holdings Corp.
(m) "Other Stock Options" shall have the meaning set forth in Section 5(b);
(n) "Options" shall mean Incentive Stock Options and Other Stock Options;
(o) "Participant" means any employee, or other person having a unique
relationship with NGH or one of its Subsidiaries, to whom one or more Grants
have been made and such Grants have not all been forfeited or terminated under
the Plan; provided, however, a non-employee director of NGH or one of its
Subsidiaries may not be a Participant;
(p) "Performance Units" shall have the meaning set forth in Section 5(e);
(q) "Performance Shares" shall have the meaning set forth in Section 5(f);
(r) "Restricted Stock" shall have the meaning set forth in Section 5(d);
(s) "Stock Appreciation Rights" shall have the meaning set forth in Section
5(c); and
(t) "Subsidiary" means any corporation or other entity in which NGH has a
significant equity or other interest as determined by the Committee.
3. ADMINISTRATION OF PLAN
(a) The Plan shall be administered by the Committee or, in lieu of the
Committee, the Board of Directors. The Committee may adopt its own rules of
procedure, and the
-2-
<PAGE>
action of a majority of the Committee, taken at a meeting or taken without a
meeting by a writing signed by such majority, shall constitute action by the
Committee. The Committee shall have the power and authority to administer,
construe and interpret the Plan, to make rules for carrying it out and to make
changes in such rules. Any such interpretations, rules, and administration shall
be consistent with the basic purposes of the Plan.
(b) The Committee may delegate to the Chief Executive Officer and to other
senior officers of the Corporation its duties under the Plan, subject to such
conditions and limitations as the Committee shall prescribe, except that only
the Committee may designate and make Grants to Participants who are subject to
Section 16 of the Exchange Act.
(c) The Committee may employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, NGH, and the officers and
directors of NGH shall be entitled to rely upon the advice, opinions or
valuations of any such persons. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon all Participants, NGH and all other interested persons. No member of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Grants, and
all members of the Committee shall be fully protected by NGH with respect to any
such action, determination or interpretation.
4. ELIGIBILITY
The Committee may from time to time make Grants under the Plan to such
employees, or other persons having a unique relationship with NGH or any of its
Subsidiaries, and in such form and having such terms, conditions and limitations
as the Committee may determine. No Grants may be made under this Plan to
non-employee directors of NGH or any of its Subsidiaries. Grants may be granted
singly, in combination or in tandem. The terms, conditions and limitations of
each Grant under the Plan shall be set forth in a Grant Agreement, in a form
approved by the Committee, consistent, however, with the terms of the Plan;
provided, however, such Grant Agreement shall contain provisions dealing with
the treatment of Grants in the event of the termination, death or disability of
a Participant, and may also include provisions concerning the treatment of
Grants in the event of a change of control of NGH.
5. GRANTS
From time to time, the Committee will determine the forms and amounts of
Grants for Participants. Such Grants may take the following forms in the
Committee's sole discretion:
(a) INCENTIVE STOCK OPTIONS - These are stock options within the meaning of
Section 422 of the Code to purchase Common Stock. In addition to other
restrictions contained in the Plan, an option granted under this Section 5(a),
(i) may not be exercised
-3-
<PAGE>
more than 10 years after the date it is granted, (ii) may not have an option
price less than the Fair Market Value of Common Stock on the date the option is
granted, (iii) must otherwise comply with Code Section 422, and (iv) must be
designated as an "Incentive Stock Option" by the Committee. The maximum
aggregate Fair Market Value of Common Stock (determined at the time of each
Grant) with respect to which any Participant may first exercise Incentive Stock
Options under this Plan and any Incentive Stock Options granted to the
Participant for such year under any plans of NGH or any Subsidiary in any
calendar year is $100,000. Payment of the option price shall be made in cash or
in shares of Common Stock, or a combination thereof, in accordance with the
terms of the Plan, the Grant Agreement, and of any applicable guidelines of the
Committee in effect at the time.
(b) OTHER STOCK OPTIONS - These are options to purchase Common Stock which
are not designated by the Committee as "Incentive Stock Options". At the time of
the Grant the Committee shall determine, and shall have contained in the Grant
Agreement or other Plan rules, the option exercise period, the option price, and
such other conditions or restrictions on the grant or exercise of the option as
the Committee deems appropriate. In addition to other restrictions contained in
the Plan, an option granted under this Section 5(b), (i) may not be exercised
more than 15 years after the date it is granted and (ii) may not have an option
exercise price less than the Fair Market Value of Common Stock on the date the
option is granted. Payment of the option price shall be made in cash or in
shares of Common Stock, or a combination thereof, in accordance with the terms
of the Plan and of any applicable guidelines of the Committee in effect at the
time. Payment of the option price may also be made by tender of an amount equal
to the full exercise price which has been borrowed from NGH or one of its
Subsidiaries if the Participant also authorizes the concurrent sale of the
exercised Common Stock by a broker (through an arrangement established by NGH,
or one of its Subsidiaries, for Participants) and repays the borrowing, all in
accordance with any applicable guidelines of the Committee.
(c) STOCK APPRECIATION RIGHTS - These are rights that on exercise entitle
the holder to receive the excess of (i) the Fair Market Value of a share of
Common Stock on the date of exercise over (ii) the Base Value multiplied by
(iii) the number of rights exercised in cash, stock or a combination thereof as
determined by the Committee. Stock Appreciation Rights granted under the Plan
may, but need not be, granted in conjunction with an Option under Paragraphs
5(a) or 5(b).
The Committee, in the Grant Agreement or by other Plan rules, may impose
such conditions or restrictions on the exercise of Stock Appreciation Rights as
it deems appropriate, and may terminate, amend, or suspend such Stock
Appreciation Rights at any time. No Stock Appreciation Right granted under this
Plan may be exercised more than 15 years after the date it is granted.
(d) RESTRICTED STOCK - Restricted Stock is a Grant of Common Stock or stock
units equivalent to Common Stock subject to such conditions and restrictions as
the Committee shall determine. Any rights to dividends or dividend equivalents
accruing due to a grant of Restricted Stock shall also be determined by the
Committee. Grants of Restricted Stock
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shall be subject to a normal minimum vesting schedule of 3 years. The number of
shares of Restricted Stock and the restrictions or conditions on such shares, as
the Committee may determine, shall be set forth in the Grant Agreement or by
other Plan rules, and the certificate for the Restricted Stock shall bear
evidence of the restrictions or conditions.
(e) PERFORMANCE UNITS - These are rights, denominated in cash or cash
units, to receive, at a specified future date, payment in cash or stock of an
amount equal to all or a portion of the value of a unit granted by the
Committee. At the time of the Grant, in the Grant Agreement or by other Plan
rules, the Committee must determine the base value of the unit, the performance
factors applicable to the determination of the ultimate payment value of the
unit as set forth in Section 7 and the period over which performance will be
measured.
(f) PERFORMANCE SHARES - These are rights granted in the form of Common
Stock or stock units equivalent to Common Stock to receive, at a specified
future date, payment in cash or Common Stock, as determined by the Committee, of
an amount equal to all or a portion of the Fair Market Value at which the Common
Stock is traded on the last day of the specified performance period of a
specified number of shares of Common Stock based on performance during the
period. At the time of the Grant, the Committee, in the Grant Agreement or by
Plan rules, will determine the factors which will govern the portion of the
Grants so payable as set forth in Section 7 and the period over which
performance will be measured.
6. LIMITATIONS AND CONDITIONS
(a) The number of shares available for Grants under this Plan shall be 33
million shares of the authorized Common Stock as of the Effective Date. The
maximum number of Shares subject to Grants of Options and Stock Appreciation
Rights made after December 31, 1996 to any one Participant in any calendar year
shall not exceed 2 million shares for each type of Grant, plus any amount of
shares that were available within this limit for such type of Grant for any
prior year such limitation was in effect and which were not covered by Options
or Stock Appreciation Rights granted to such Participant during such year. No
more than 3 million shares of Common Stock may be granted as Incentive Stock
Options after December 31, 1996. The maximum payment that any one Participant
may be paid in respect of any Grant of Performance Units granted for any
specified performance period shall not exceed $10 million. The maximum payment
that any one Participant may receive in respect of any Grant of Performance
Shares granted for any specified performance period shall not exceed 500,000
shares of Common Stock or the cash equivalent thereof. The aggregate maximum
number of shares of Common Stock to which Restricted Stock or Performance Shares
granted after December 31, 1996 may relate shall not exceed 3 million shares.
Shares related to Grants that are forfeited, terminated, cancelled, expire
unexercised, settled in cash in lieu of stock, received in full or partial
payment of any exercise price or in such manner that all or some of the Shares
covered by a Grant are not issued to a Participant, shall immediately become
available for Grants. A Grant may contain the right to receive dividends or
dividend equivalent payments which may be paid
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<PAGE>
either currently, credited to a Participant or deemed invested in shares or
share units of Common Stock. Any such crediting of dividends or dividend
equivalents or reinvestment in Shares may be subject to such conditions,
restrictions and contingencies as the Committee shall establish, including the
reinvestment of such credited amounts in Common Stock equivalents. Subject to
the overall limitation on the number of shares of Common Stock that may be
delivered under this Plan, the Committee may use available shares of Common
Stock as the form of payment for compensation, grants or rights earned or due
under any other compensation plans or arrangements of NGH, including the plan of
any entity acquired by NGH.
(b) At the time a Grant is made or amended or the terms or conditions of a
Grant are changed, the Committee may provide for limitations or conditions on
such Grant. NGH may adopt other compensation programs, plans or arrangements as
it deems appropriate.
(c) Nothing contained herein shall affect the right of the Corporation to
terminate any Participant's employment at any time or for any reason.
(d) Deferrals of Grant payouts may be provided for, at the sole discretion
of the Committee, in the Grant Agreements.
(e) No benefit under the Plan shall, prior to receipt thereof by the
Participant, be in any manner liable for or subject to the debts, contracts,
liabilities, engagements, or torts of the Participant.
(f) Except to the extent otherwise provided in any other retirement or
benefit plan, any grant under this Plan shall not be deemed compensation for
purposes of computing benefits or contributions under any retirement plan of NGH
or its Subsidiaries and shall not affect any benefits under any other benefit
plan of any kind or subsequently in effect under which the availability or
amount of benefits is related to level of compensation.
This Plan is not a "Retirement Plan" or "Welfare Plan" under the Employee
Retirement Income Security Act of 1974, as amended. This Plan shall be unfunded
and shall not create (or be construed to create) a trust or a separate fund or
funds. The Plan shall not establish any fiduciary relationship between NGH and
any Participant or beneficiary of a Participant. To the extent any person holds
any obligation of NGH by virtue of an award granted under this Plan, such
obligation shall merely constitute a general unsecured liability of NGH and
accordingly shall not confer upon such person any right, title or interest in
any assets of NGH.
(g) Unless the Committee determines otherwise, no benefit or promise under
the Plan shall be secured by any specific assets of NGH or any of its
Subsidiaries, nor shall any assets of NGH or any of its Subsidiaries be
designated as attributable or allocated to the satisfaction of NGH's obligations
under the Plan.
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<PAGE>
7. PERFORMANCE FACTORS
The performance factors selected by the Compensation Committee in respect
of Performance Units and Performance Shares shall be based on any one or more of
the following: price of Common Stock or the stock of any affiliate, shareholder
return, return on equity, return on investment, return on capital, return on
invested capital, economic profit, economic value added, net income, cash net
income, free cash flow, earnings per share, cash earnings per share, operating
company contribution or market share. These factors shall have a minimum
performance standard below which no amount will be paid and may have a maximum
performance standard above which no additional payments will be made. The
applicable performance period shall not exceed 10 years.
8. ADJUSTMENTS
(a) In the event of any stock split, spin-off, stock dividend,
extraordinary cash dividend, stock combination or reclassification,
recapitalization or merger, change in control, or similar event, the Committee
may adjust appropriately the number or kind of shares subject to the Plan and
available for or covered by Grants, share prices related to outstanding Grants
and the other applicable limitations of Section 6(a), and make such other
revisions to outstanding Grants and the LTIP as it deems are equitably required.
(b) In the event of a Change of Control, except as otherwise set forth in
the terms of a Grant:
(i) Options granted pursuant to paragraphs 5(a) or 5(b) hereof
shall become fully vested and exercisable; provided, however, that the Committee
may make a cash payment to Participants (A) in cancellation of such Options as
provided in the applicable Grant Agreements or any amendments or deemed
amendments thereto entered into by NGH and the Participant in such amount as
shall be provided in such Grant Agreements or amendments or (B) in lieu of the
delivery of shares upon exercise, equal to the product of (x) and (y), where (x)
is the excess of the Fair Market Value on the date of exercise over the exercise
price, and (y) is the number of Shares subject to the stock options being
exercised;
(ii) Stock Appreciation Rights shall become fully vested and
exercisable;
(iii) Restricted Stock shall have all restrictions removed;
(iv) Performance Units whose performance period ends after the
date of the Change of Control shall become vested as to a percentage of
Performance Units granted equal to the number of months (including partial
months) in the performance period before the date of the Change of Control,
divided by the total number of months in the performance period. The value of
the Performance Units shall be equal to the greater of the target value of the
Performance Units or the value derived from the actual
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performance as of the date of the Change of Control;
(v) Performance Shares whose performance period ends after the
date of the Change of Control shall become vested pro rata as to the number of
Performance Shares granted equal to the number of months (including partial
months) in the performance period before the date of Change of Control, divided
by the total number of months in the performance period. The prorated number of
Performance Shares derived from the preceding calculation shall be further
adjusted by applying the higher of target or actual performance to the date of
Change of Control; and
(vi) The Committee shall have authority to establish or to revise
the terms of any such Grant or any other Grant as it, in its discretion, deems
appropriate; provided, however, that the Committee may not make revisions that
are adverse to the Participant without the Participant's consent unless such
revision is provided for or contemplated in the terms of the Grant.
(c) As used herein, a "Change of Control" shall occur on the date upon
which one of the following events occurs (except as otherwise provided in
paragraph (iii) below):
(i) Any individual, corporation, partnership, group, associate or
other entity or "person" as such term is defined in Section 14(d)
of the Securities Exchange Act of 1934 (the "Exchange Act"),
other than Nabisco Holdings Corp. ("NHC"), the Corporation or any
of their Subsidiaries, or any employee benefit plan(s) sponsored
by NHC, the Corporation or any of their subsidiaries, is or
becomes the "beneficial owner" (as defined in Rule 13D-3 under
the Exchange Act), directly or indirectly, of 30% or more of the
combined voting power of NHC or the Corporation's outstanding
securities ordinarily having the right to vote at elections of
directors;
(ii) Individuals who constitute the Board of Directors of either NHC
or the Corporation on January 1, 2000 (each such Board the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board of NHC or the Corporation, as the case may
be, provided that any person becoming a director subsequent to
such date hereof whose election, or nomination for election by
NHC's or the Corporation's shareholders, as the case may be, was
approved by a vote of at least three-quarters of the directors
comprising that Incumbent Board (either by a specific vote or by
approval of the proxy statement of NHC or the Corporation, as the
case may be, in which such person is named a nominee of NHC or
the Corporation, as the case may be, but excluding for this
purpose any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election
contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of an
individual, corporation, partnership, group,
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associate or other entity of "person" other than NHC's or the
Corporation's Board, as the case may be, shall be, for purposes
of this paragraph (ii), considered as though such person were a
member of the Incumbent Board.
(iii)The approval by the shareholders of NHC or the Corporation, as
the case may be, of a plan or agreement providing (A) for a
merger or consolidation of NHC or the Corporation, as the case
may be, other than with a wholly-owned subsidiary or with the
Corporation, NHC or any of their subsidiaries, and other than a
merger or consolidation that would result in the voting
securities of NHC or the Corporation, as the case may be,
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of NHC or the
Corporation, as the case may be, of such surviving entity
outstanding immediately after such merger or consolidation or (B)
for a sale, exchange or other disposition of all or substantially
all of the assets of NHC or the Corporation. If any of the events
enumerated in this paragraph (iii) occurs, the Corporation's
Board of Directors shall determine the effective date of the
Change of Control resulting therefrom.
For purposes hereof, "Subsidiary" of NHC or the Corporation means any
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by NHC or the
Corporation, as the case may be.
9. AMENDMENT AND TERMINATION
The Committee shall have the authority to make such amendments to any terms
and conditions applicable to outstanding Grants as are consistent with this
Plan, provided that, except for adjustments under Paragraph 8(a) hereof, no such
action shall modify such Grant in a manner adverse to the Participant without
the Participant's consent except as such modification is provided for or
contemplated in the terms of the Grant. Except as provided in Section 8(a), the
exercise price of any outstanding Option or Stock Appreciation Right may not be
adjusted or amended, whether through amendment, cancellation or replacement,
unless such adjustment or amendment is properly approved by NGH's shareholders.
Likewise, the share and payment limitations set forth in Section 6(a) cannot be
increased, and the minimum Option or Stock Appreciation Right grant price
limitations set forth in Sections 5(a), 5(b) and 5(c) cannot be reduced, in
either case without proper shareholder approval. Subject to the foregoing, NGH's
Board of Directors may amend, suspend or terminate this Plan as it deems
necessary and appropriate to better achieve the Plan's purpose.
10. FOREIGN OPTIONS AND RIGHTS
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(a) The Committee may make Grants to employees who are subject to the tax
laws of nations other than the United States, which Grants may have terms and
conditions that differ from the terms thereof as provided elsewhere in the Plan
for the purpose of complying with the foreign tax laws. Grants of stock options
may have terms and conditions that differ from Incentive Stock Options and Other
Stock Options for the purpose of complying with the foreign tax laws.
(b) The terms and conditions of stock options granted under Paragraph 10(a)
may differ from the terms and conditions which the Plan would require to be
imposed upon Incentive Stock Options and Other Stock Options if the Committee
determines that the Grants are desirable to promote the purposes of the Plan.
11. WITHHOLDING TAXES
The Corporation shall have the right to deduct from any payment or
settlement made under the Plan any federal, state or local income or other taxes
required by law to be withheld with respect to such payment.
12. EFFECTIVE DATE AND TERMINATION DATES
The Plan shall be effective on and as of April 16, 1997, subject to the
approval of NGH's shareholders, and shall terminate ten years later, subject to
earlier termination by the Board of Directors pursuant to Paragraph 9. The terms
of Grants made on or before the expiration of the Plan shall extend beyond such
expiration. Grants made under the Plan prior to the Effective Date shall be
governed by the terms of the Plan as in effect on the date such Grant was made.
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EXHIBIT 10.2
NABISCO GROUP HOLDINGS CORP.
1990 LONG TERM INCENTIVE PLAN
STOCK OPTION AGREEMENT
---------------------------
DATE OF GRANT:
W I T N E S S E T H :
1. GRANT OF OPTION. Pursuant to the provisions of the 1990 Long Term
Incentive Plan (the "Plan"), Nabisco Group Holdings Corp. on the above
date has granted to
((FIRSTNAME)) ((LASTNAME)) (THE "OPTIONEE"),
subject to the terms and conditions which follow and the terms and conditions of
the Plan, the right and option to exercise from the Company a total of
((NGH_OPTIONS)) SHARES
of Common Stock of the Company, at the exercise price of per share (the
"Option"). A copy of the Plan is attached and made a part of this Agreement with
the same effect as if set forth in the Agreement itself. All capitalized terms
used herein shall have the meaning set forth in the Plan, unless the context
requires a different meaning. The "Company" shall refer to Nabisco Group
Holdings Corp. and, if the context so requires, may refer to Nabisco, Inc.
2. EXERCISE OF OPTION.
(a) Shares may be purchased by giving the Corporate Secretary of the
Company written notice of exercise, on a form prescribed by the Company,
specifying the number of shares to be purchased. The notice of exercise shall be
accompanied by
(i) tender to the Company of cash for the full purchase price of the
shares with respect to which such Option or portion thereof is
exercised; OR
(ii) the unsecured, demand borrowing by the Optionee from the Company on an
open account maintained solely for this purpose in the amount of the
full exercise price together with the instruction from the Optionee to
sell the shares exercised on the open market through a duly registered
broker-dealer with which the Company makes an arrangement for the sale
of such shares under the Plan. This method is known as the
"broker-dealer
<PAGE>
exercise method" and is subject to the terms and conditions set forth
herein, in the Plan and in guidelines established by the Committee.
The Option shall be deemed to be exercised simultaneously with the
sale of the shares by the broker-dealer. If the shares purchased upon
the exercise of an Option or a portion thereof cannot be sold for a
price equal to or greater than the full exercise price plus direct
costs of the sales, then there is no exercise of the Option. Election
of this method authorizes the Company to deliver shares to the
broker-dealer and authorizes the broker-dealer to sell said shares on
the open market. The broker-dealer will remit proceeds of the sale to
the Company which will remit net proceeds to the Optionee after
repayment of the borrowing, deduction of costs, if any, and
withholding of taxes. The Optionee's borrowing from the Company on an
open account shall be a personal obligation of the Optionee which
shall bear interest at the published Applicable Federal Rate (AFR) for
short-term loans and shall be payable upon demand by the Company. Such
borrowing may be authorized by telephone or other telecommunications
acceptable to the Company. Upon such borrowing and the exercise of the
Option or portion thereof, title to the shares shall pass to the
Optionee whose election hereunder shall constitute instruction to the
Company to register the shares in the name of the broker-dealer or its
nominee. The Company reserves the right to discontinue this
broker-dealer exercise method at any time for any reason whatsoever.
The Optionee agrees that if this broker-dealer exercise method under
this paragraph is used, the Optionee promises unconditionally to pay
the Company the full balance in his open account at any time upon
demand. Optionee also agrees to pay interest on the account balance at
the AFR for short-term loans from and after demand.
(b) Subject to Section 4, this Option shall be exercisable in three
installments. The first installment shall be exercisable on the first
anniversary following the Date of Grant for 33% of the number of shares of
Common Stock subject to this Option. Thereafter, on each subsequent anniversary
date an installment shall become exercisable for 33% and 34%, respectively, of
the number of shares subject to this Option until the Option has become fully
exercisable. To the extent that any of the above installments is not exercised
when it becomes exercisable, it shall not expire, but shall continue to be
exercisable at any time thereafter until this Option shall terminate, expire or
be surrendered. An exercise shall be for whole shares only.
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3. TERMINATION OF EMPLOYMENT
Subject to Section 4:
(a) Unless otherwise provided in a written employment or termination
agreement between the Optionee and the Company, the Option shall not become
exercisable as to any additional shares following the Termination of Employment
of the Optionee for any reason other than a Termination of Employment because of
death, Permanent Disability or Retirement of the Optionee. Notwithstanding the
foregoing, in the event of Termination of Employment because of death, Permanent
Disability or Retirement, the Option shall immediately become exercisable as to
all shares.
(b) Unless otherwise defined in a written employment or termination
agreement between the Optionee and the Company, Termination for Cause shall mean
Termination by the Company where such termination results from: (a) criminal
dishonesty, (b) deliberate continual refusal to perform employment duties on
substantially a full time basis, (c) deliberate and continual refusal to act in
accordance with any specific lawful instructions of a majority of the Board of
Directors of the Company, or (d) deliberate misconduct which could be materially
damaging to the Company or any of its business operations without a reasonable
good faith belief by the Optionee that such conduct was in the best interests of
the Company. A termination of Optionee's employment shall not be deemed for
Cause hereunder unless the senior personnel executive of the Company shall
confirm that any such termination is for Cause as defined hereunder. Any
voluntary termination by the Optionee in anticipation of an involuntary
termination of the Optionee's employment for Cause shall be deemed to be a
termination of Optionee's employment for Cause.
(c) Unless otherwise defined in a written employment or termination
agreement between the Optionee and the Company, termination for Good Reason
shall mean termination by Optionee where such termination results from (i) the
total amount of Optionee's base salary and targeted awards under the Long-Term
Incentive Plan and the Annual Incentive Award Plan (or successors thereto) being
reduced at any time without the Optionee's consent, (ii) Optionee's job
responsibilities being substantially reduced in importance without the
Optionee's consent, or (iii) Optionee being required as a condition of continued
employment to relocate more than 35 miles from the Optionee's place of
employment as of the date of a Change of Control without the Optionee's consent.
(d) The Optionee shall be deemed to have a "Permanent Disability" if the
Optionee totally and permanently disabled (as defined in the Company's Long Term
Disability Plan applicable to senior executive officers as in effect on the date
hereof), or if the Board of Directors or any committee thereof so determines.
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(e) "Retirement" as used herein means Retirement at age 65 or over, or
early retirement at age 55 or over with the approval of the Company, which
approval specifically states that the Option shall become fully vested as to all
shares.
(f) "Termination of Employment" as used herein means termination from
active employment with Nabisco, Inc. or any of its subsidiaries or affiliates
(including the Company); it does not mean termination of payment of severance or
benefits at the end of salary continuation or other form of severance or pay in
lieu of salary.
4. EXPIRATION OF OPTION. The Option shall expire or terminate and may not
be exercised to any extent by the Optionee after the first to occur of the
following events:
(a) The tenth anniversary of the Date of Grant, or such earlier time as the
Company may determine is necessary or appropriate in light of applicable foreign
tax laws; or
(b) The first anniversary of the date of the Optionee's Termination of
Employment for any reason other than the Optionee's death, Permanent Disability,
Retirement, termination for Good Reason or involuntary Termination of Employment
by the Company without Cause; or
(c) Immediately upon the Optionee's Termination of Employment for Cause.
5. TRANSFERABILITY. Other than as specifically provided in the Plan with
regard to the death of the Optionee, this Option agreement and any benefit
provided or accruing hereunder shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or
charge; and any attempt to do so shall be void. No such benefit shall, prior to
receipt thereof by the Optionee, be in any manner liable for or subject to the
debts, contracts, liabilities, engagements or torts of the Optionee.
6. NO RIGHT TO EMPLOYMENT. The execution and delivery of this Agreement and
the granting of the Option hereunder shall not constitute or be evidence of any
agreement or understanding, express or implied, on the part of the Company or
its subsidiaries to employ the Optionee for any specific period or in any
particular capacity shall not prevent the Company or its subsidiaries from
terminating the Optionee's employment at any time with or without Cause.
7. ADJUSTMENTS IN OPTION. In the event that the outstanding shares of the
Common Stock subject to the Option are, from time to time, changed into or
exchanged for a different number or kind of shares of the Company or other
securities by reason of a merger, consolidation, recapitalization,
reclassification, stock split, stock dividend, combination of shares, or
otherwise, the Committee shall make an appropriate and equitable adjustment in
the number and kind of shares or other consideration as to which
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the Option, or portions thereof then unexercised, shall be exercisable. Any
adjustment made by the Committee shall be final and binding upon the Optionee,
the Company and all other interested persons.
8. APPLICATION OF LAWS. The granting and the exercise of this Option and
the obligations of the Company to sell and deliver shares hereunder and to remit
cash under the broker-dealer exercise method shall be subject to all applicable
laws, rules, and regulations and to such approvals of any governmental agencies
as may be required.
9. TAXES. Any taxes required by federal, state, or local laws to be
withheld by the Company upon exercise by the Optionee of the Option for Common
Stock, shall be paid to the Company before delivery of the Common Stock is made
to the Optionee. When the Option is exercised under the broker-dealer exercise
method, the full amount of any taxes required to be withheld by the Company on
exercise of stock options shall be deducted by the Company from the proceeds.
10. NOTICES. Any notices required to be given hereunder to the Company
shall be addressed to The Secretary, Nabisco Group Holdings Corp., 7 Campus
Drive, Parsippany, NJ 07054, and any notice required to be given hereunder to
the Optionee shall be sent to the Optionee's address as shown on the records of
the Company.
11. ADMINISTRATION AND INTERPRETATION. In consideration of the grant, the
Optionee specifically agrees that the Committee shall have the exclusive power
to interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation and application of the Plan and Agreement as are
consistent therewith and to interpret or revoke any such rules. All actions
taken and all interpretations and determinations made by the Committee shall be
final, conclusive, and binding upon the Optionee, the Company and all other
interested persons. No member of the Committee shall be personally liable for
any action, determination or interpretation made in good faith with respect to
the Plan or the Agreement. The Committee may delegate its interpretive authority
to an officer or officers of the Company.
12. NON-COMPETITION. Provided that the Optionee is not party to a written
employment or termination agreement with the Company containing restrictions on
Optionee's eligibility to compete with the Company following Optionee's
Termination of Employment, in consideration for the Option Optionee agrees that:
(a) For the twelve (12) month period commencing on the date of Optionee's
Termination of Employment, Optionee shall not engage in Competitive Employment.
As used herein, "Competitive Employment" means providing any person, company or
other entity with any services, whether as a consultant, employee, investor or
otherwise, regarding any business, product, service or other matter which: (i)
is substantially similar to or competes with any business, product, service or
other matter regarding which
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Optionee worked for the Company, or any of its affiliates, during the two (2)
years prior to Optionee's Termination of Employment; or (ii) concerns subject
matters about which Optionee gained proprietary information of the Company, or
its affiliates, during the two (2) year period prior to Optionee's Termination
of Employment.
(b) If the Company reasonably determines that Optionee has materially
violated any of Optionee's obligations under subparagraph (a), above, then, in
addition to any other remedies at law or in equity it may have: (i) the Company
shall have the right to cease payment of any compensation, salary continuation,
benefits, perquisites and any other remuneration which is due or may become due
Optionee under any employment, salary continuation or similar agreement between
the Company, or any of its affiliates, and Optionee; and (ii) all past, present
and future stock option grants awarded Optionee under the Plan, including grants
which according to their terms are vested, shall terminate, effective the date
on which such violation began (the "Violation Date"). The Company may demand the
return of any gain realized by Optionee from the exercise of any such grants by
Optionee at any time on or after the date sixty (60) days prior to the Violation
Date. If after such demand Optionee fails to return said amounts, Optionee
acknowledges that the Company has the right to offset against said amounts any
amounts, including compensation, owed Optionee by the Company or to commence
judicial proceedings against Optionee to recover said amounts and any attorneys'
fees and costs.
(c) Optionee acknowledges and agrees that: (i) the restrictions contained
in this Section 12 are necessary to protect the legitimate interests of the
Company and impose no undue hardship on Optionee; (ii) the violation or
threatened violation of this Section 12 will result in irreparable injury to the
Company and Optionee consents to the issuance of any restraining order,
preliminary restraining order or injunction, without bond, which arises from
conduct by Optionee in violation of this Section 12, and the existence of any
claim Optionee may have against the Company will not constitute a defense
thereto; (iii) if the Company prevails in any suit or proceeding to enforce its
rights under this Section 12, Optionee shall indemnify the Company for all
expenses incurred by the Company, including reasonable attorneys' fees; and (iv)
no one employed by or representing the Company has any authority to make oral
statements which modify, waive or discharge in any manner any provision of this
Section 12.
13. OTHER PROVISIONS.
a) Titles are provided herein for convenience only and are not to serve as
a basis for interpretation of the Agreement.
b) This Agreement may be amended only by a writing executed by the parties
hereto which specifically states that it is amending this Agreement.
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c) THE LAWS OF THE STATE OF DELAWARE SHALL GOVERN THE INTERPRETATION,
VALIDITY AND PERFORMANCE OF THE TERMS OF THIS AGREEMENT REGARDLESS OF THE LAW
THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICTS OF LAWS.
IN WITNESS WHEREOF, the Company, by its duly authorized officer, and the
Optionee have executed this Agreement as of the date of Grant first above
written.
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EXHIBIT 10.3
1990 NABISCO GROUP HOLDINGS CORP.
LONG-TERM INCENTIVE PLAN
RESTRICTED STOCK PROGRAM
RESTRICTED STOCK AGREEMENT
-------------------------------------
DATE OF GRANT:
W I T N E S S E T H
1. GRANT OF RESTRICTED STOCK. Pursuant to the provisions of the 1990
Long-Term Incentive Plan and the Restricted Stock Program (collectively, the
"Plan") Nabisco Group Holdings Corp. (the "Company") on the above date has
granted, and this Agreement evidences the grant to
(THE "GRANTEE")
------------
subject to the terms and conditions which follow and the terms and conditions of
the Plan and this Agreement (the "Agreement") a total of
("RESTRICTED STOCK")
--------
of Common Stock, no par value, of the Company ("Common Stock"). A copy of the
Plan is attached and made a part of this Agreement with the same effect as if
set forth in the Agreement itself. All capitalized terms used below shall have
the meaning set forth in the Plan, unless the context requires a different
meaning.
2. VESTING OF RESTRICTED STOCK. Subject to Section 4, the Restricted Stock
granted hereunder shall vest, and all restrictions thereon shall lapse, on the
first to occur of the dates as set forth below in subsections (a) through (f),
("Vesting Date"):
(a) 33%, December 31, 2002, 33%, December 31, 2003, and 34%, December
31, 2004;
(b) the date of Grantee's death;
(c) the date of the Grantee's Disability, as defined in the
Nabisco, Inc.'s Long-Term Disability Plan; or the date grantee
shall be deemed to have a "Permanent Disability", applicable to
senior executive officers as in effect on such dates hereof), or
if the Board of Directors or any committee thereof so determines;
(d) the date of Grantee's Retirement at age 65 or over;
(e) the date of a Change of Control;
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(f) the date Grantee's active employment with the Company is terminated
by the Company without Cause (excluding any termination to which
subsection (e) applies)
3. SETTLEMENT OF RESTRICTED STOCK. In the event Grantee's Vesting Date arises
pursuant to Section 2(f), shares of Restricted Stock shall be adjusted by
multiplying the number of shares of Common Stock by a fraction the denominator
of which is the number of days in the restriction period and the numerator of
which is the number of days from the Date of Grant to the Vesting Date, and
Grantee shall receive shares of Common Stock as so adjusted.
4. TERMINATION AND FORFEITURE OF THE STOCK. The Restricted Stock granted
hereunder shall terminate and Grantee shall immediately forfeit all rights to
such Restricted Stock upon Grantee's termination of active employment from the
Company for Cause, Resignation or for any other reason, excluding termination
from active employment arising from the events specifically enumerated in
Section 2.
5. TERMINATION OF EMPLOYMENT.
Subject to Sections 2(f) and 4:
(a) Unless otherwise provided in a written employment or termination
agreement between the Grantee and the Company, the Restricted Stock shall not
become vested as to any additional shares following the Termination of
Employment of the Grantee for any reason other than a Termination of Employment
because of death, Permanent Disability or Retirement of the Grantee. In the
event of Termination of Employment because of death, Permanent Disability or
Retirement, the Restricted Stock shall immediately become vested as to the
number of shares.
(b) TERMINATION FOR CAUSE. Unless otherwise defined in a written
employment or termination agreement between the Grantee and the Company,
termination for Cause shall mean termination by the Company where such
termination results from (i) criminal dishonesty, (ii) deliberate and continual
refusal to perform employment duties on substantially a full-time basis, (iii)
deliberate and continual refusal to act in accordance with any specific lawful
instructions of a majority of the Board of Directors of the Company, or (iv)
deliberate misconduct which could be materially damaging to the Company without
reasonable good faith belief by the Grantee that such conduct was in the best
interests of the Company.
(c) TERMINATION FOR GOOD REASON. Unless otherwise defined in a written
employment or termination agreement between the Grantee and the Company,
termination for Good Reason shall mean termination by Grantee where such
termination results from (i) the total amount of Grantee's base salary and
targeted awards under the Long-Term Incentive Plan and the Annual Incentive
Award Plan (or successors thereto) being reduced at any time without the
Grantee's consent, (ii) Grantee's job responsibilities being substantially
reduced in importance without the Grantee's consent, or (iii) Grantee being
required as a condition of continued employment to relocate more than 35 miles
from the Grantee's place of employment as of the date of a Change of Control
without the Grantee's consent.
(d) "Retirement" as used herein means Retirement at age 65 or over.
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(e) "Termination of Employment" as used herein means termination from
active employment; it does not mean termination of payment or benefits at the
end of salary continuation or other form of severance or pay in lieu of salary.
(f) "Permanent Disability" as used herein means to have a "Permanent
Disability" as defined in the Nabisco, Inc. Long-Term Disability Plan,
applicable to senior executive officers as in effect on such dates hereof, or if
the Board of Directors or any committee thereof so determines.
6. RECEIPT AND DELIVERY OF STOCK. The Grantee waives receipt from the Company
of a certificate or certificates representing the shares of Common Stock granted
hereunder, registered in the Grantee's name and bearing a legend evidencing the
restrictions imposed on such Common Stock by this Agreement. The Grantee
acknowledges and agrees that the Company shall retain custody of such
certificate or certificates until the restrictions imposed by Section 2 on the
Common Stock granted hereunder lapse. Concurrently with the execution of this
Agreement, the Grantee has delivered to the Company an irrevocable stock power
endorsed in blank.
7. RESTRICTIONS ON TRANSFER OF STOCK. The Common Stock granted hereunder may
not be sold, tendered, assigned, transferred, pledged or otherwise encumbered
prior to as defined in Section 2, at which time the restrictions imposed on such
Common Stock by this paragraph shall lapse and the Common Stock shall be
delivered to the Grantee without a restrictive legend on any Common Stock
certificate.
8. DIVIDEND PAYMENTS. At all times prior to the date restrictions lapses, the
Grantee shall receive cash payments at the same time and in the same amount as
any cash dividends paid on an equivalent number of shares of Common Stock.
9. VOTING. If the Grantee is a shareholder of record on any applicable record
date, the Grantee shall have the right to vote the Common Stock granted
hereunder regardless of whether the restrictions imposed by Section 3 hereof
have lapsed.
10. NO RIGHT TO EMPLOYMENT. The execution and delivery of this Agreement and
the granting of Common Stock hereunder shall not constitute or be evidence of
any agreement or understanding, express or implied, on the part of the Company
or its subsidiaries to employ the Grantee for any specific period or in any
particular capacity and shall not prevent the Company or its subsidiaries from
terminating the Grantee's employment at any time with or without Cause.
11. REGISTRATION. The Common Stock granted hereunder may be offered and sold
by the Grantee only if such stock is registered for resale under the Securities
Act of 1933 (the "1933 Act") as amended, or if an exemption from registration
under such Act is available. The Company has no obligation to effect such
registration. By executing this Agreement, the Grantee (i) agrees not to offer
or sell the Common Stock granted hereunder unless and until such stock is
registered for resale under the 1933 Act or an exemption from registration is
available, (ii) represents that the Grantee accepts such Common Stock for the
Grantee's own account for investment and not with a view to, or for sale in
connection with, the distribution of any part thereof and (iii) agrees that the
Grantee or the Grantee's beneficiary, on request, will be obligated to repeat
these representations in writing prior to any future delivery of such Common
Stock.
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<PAGE>
12. CHANGE IN COMMON STOCK OR CORPORATE STRUCTURE.
a) If at any time the number or nature of outstanding shares of Common Stock
of the Company shall be increased or changed as the result of any stock
dividend, subdivision or reclassification of shares, the number or nature of
shares of Common Stock subject to this Agreement after such an event shall be
increased or changed in the same proportion or manner as the outstanding number
of shares of Common Stock are increased or changed, or if the number of
outstanding shares of Common Stock shall at any time be decreased as the result
of any combination or reclassification of shares, the number of shares of Common
Stock subject to this Agreement after such an event shall be decreased in the
same proportion as the outstanding number of shares of Common Stock is
decreased.
b) In the event the Company shall at any time be consolidated with or merged
into any other corporation and holders of the Company's Common Stock receive
common shares of the resulting or surviving corporation, there shall be an
adjustment to the shares of Common Stock subject to this Agreement after such an
event, and in place of the shares so subject, a stock equivalent shall be
determined by multiplying the number of common shares of stock delivered in
exchange for a share of Common Stock upon such consolidation or merger, by the
number of shares of Common Stock subject to this Agreement. If in such a
consolidation or merger, holders of the Company's Common Stock shall receive any
consideration other than common shares of the resulting or surviving
corporation, the Committee shall determine the appropriate adjustment to shares
held pursuant to this Agreement after such an event; provided, however, such
adjustment shall not be to the detriment of the Grantee.
13. APPLICATION OF LAWS. The granting of Common Stock hereunder shall be
subject to all applicable laws, rules and regulations and to such approvals of
any governmental agencies as may be required.
14. TAXES. Any taxes required by federal, state or local laws to be withheld
by the Company on the Grant or the delivery of Common Stock hereunder shall be
paid to the Company by the Grantee by the time such taxes are required to be
paid or deposited by the Company. The Grantee hereby authorizes the conversion
to cash by the Company of a sufficient amount of Common Stock to satisfy
withholding prior to delivery of Common Stock.
15. NOTICES. Any notices required to be given hereunder to the Company shall
be addressed to The Secretary, Nabisco Holdings Corp., 7 Campus Drive,
Parsippany, New Jersey 07054, and any notice required to be given hereunder to
the Grantee shall be sent to the Grantee's address as shown on the records of
the Company.
16. GRANTEE. In consideration of the grant, the Grantee specifically agrees
that the Committee shall have the exclusive power to interpret the Plan and this
Agreement and to adopt such rules for the administration, interpretation and
application of the Plan and Agreement as are consistent therewith and to
interpret or revoke any such rules. All actions taken and all interpretation and
determinations made by the Committee shall be final, conclusive and binding upon
the Grantee, the Company and all other interested persons. No member of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the
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Agreement. The Committee may delegate its interpretive authority to an officer
or officers of the Company.
17. TRANSFERABILITY. Other than as specifically provided in the Plan with
regard to the death of the Grantee, this Agreement and any benefit provided or
accruing hereunder shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or charge; and any
attempt to do so shall be void. No such benefit shall, prior to receipt thereof
by the Grantee, be in any manner liable for or subject to the debts, contracts,
liabilities, engagements or torts of the Grantee.
18. NON-COMPETITION.
Provided that the Grantee is not party to a written employment or
termination agreement with the Company containing restrictions on Grantee's
eligibility to compete with the Company following Grantee's Termination of
Employment, in consideration for the Common Stock Grantee agrees that:
(a) For the twelve (12) month period commencing on the date of Grantee's
Termination of Employment, Grantee shall not engage in Competitive Employment.
As used herein, "Competitive Employment" means providing any person, company or
other entity with any services, whether as a consultant, employee, investor or
otherwise, regarding any business, product, service or other matter which: (i)
is substantially similar to or competes with any business, product, service or
other matter regarding which Grantee worked for the Company, or any of its
affiliates, during the two (2) years prior to Grantee's Termination of
Employment; or (ii) concerns subject matters about which Grantee gained
proprietary information of the Company, or its affiliates, during the two (2)
year period prior to Grantee's Termination of Employment.
(b) If the Company reasonably determines that Grantee has materially
violated any of Grantee's obligations under subparagraph (a), above, then, in
addition to any other remedies at law or in equity it may have: (i) the Company
shall have the right to cease payment of any compensation, salary continuation,
benefits, perquisites and any other remuneration which is due or may become due
Grantee under any employment, salary continuation or similar agreement between
the Company, or any of its affiliates, and Grantee; and (ii) all past, present
and future stock option grants awarded Grantee under the Plan, including grants
which according to their terms are vested, shall terminate, effective the date
on which such violation began (the "Violation Date"). The Company may demand the
return of any gain realized by Grantee from the exercise of any such grants by
Grantee at any time on or after the date sixty (60) days prior to the Violation
Date. If after such demand Grantee fails to return said amounts, Grantee
acknowledges that the Company has the right to offset against said amounts any
amounts, including compensation, owed Grantee by the Company or to commence
judicial proceedings against Grantee to recover said amounts and any attorneys'
fees and costs.
(c) Grantee acknowledges and agrees that: (i) the restrictions contained
in this Section 18 are necessary to protect the legitimate interests of the
Company and impose no undue hardship on Grantee; (ii) the violation or
threatened violation of this Section 18 will result in irreparable injury to the
Company and Grantee consents to the issuance of any restraining order,
preliminary restraining order or injunction, without bond, which arises from
conduct by Grantee in violation of this Section 18, and the existence of any
claim Grantee may have against the Company will not
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constitute a defense thereto; (iii) if the Company prevails in any suit or
proceeding to enforce its rights under this Section 14, Grantee shall indemnify
the Company for all expenses incurred by the Company, including reasonable
attorneys' fees; and (iv) no one employed by or representing the Company has any
authority to make oral statements which modify, waive or discharge in any manner
any provision of this Section 18.
19. OTHER PROVISIONS.
a) Titles are provided herein for convenience only and are not to serve as
a basis for interpretation of the Agreement.
b) The Agreement may be amended only by a writing executed by the parties
hereto which specifically states that it is amending this Agreement.
c) THE LAWS OF THE STATE OF DELAWARE SHALL GOVERN THE INTERPRETATION,
VALIDITY AND PERFORMANCE OF THE TERMS OF THIS AGREEMENT REGARDLESS OF THE LAW
THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICTS OF LAWS.
IN WITNESS WHEREOF, the Company, by its duly authorized officer, and the
Grantee have executed this Agreement as of the Date of Grant first above
written.
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<PAGE>
Exhibit 10.4
EMPLOYMENT AGREEMENT
(amended and restated as of April 1, 2000)
This Amended and Restated Employment Agreement by and among NABISCO
HOLDINGS CORP., a Delaware Corporation ("NHC"), NABISCO, INC., a New Jersey
Corporation ("NA", together with NHC, the "Company"), NABISCO GROUP HOLDINGS
CORP. ("NGH") and JAMES M. KILTS ("Executive"), is effective as of April 1,
2000.
RECITALS
WHEREAS, in order to induce Executive to continue to serve as President
and Chief Executive Officer of the Company and of NGH and as a member of the
Board of Directors of the Company and of NGH, the Company, NGH and Executive
agree that the Employment Agreement between the Company and Executive dated as
of November 20, 1997 (the "Prior Agreement") should be amended and restated.
NOW, THEREFORE, in consideration of mutual incentives, it is hereby agreed
by and between the Company, NGH and Executive to amend and restate the Prior
Agreement, effective on the date first above written, as follows:
1. EMPLOYMENT.
1.1. Subject to the terms and conditions of this Agreement, the Company
agrees to employ Executive during the Term of Employment, as defined in Section
2 below. It is also the intention of the parties that Executive shall serve as
President and Chief Executive Officer of the Company and of NGH, and as a member
of the Boards of Directors of the Company and of NGH throughout the Term of
Employment (for purposes of this Agreement, the positions and titles associated
with "the Company" shall mean the same position and titles at each of NHC and
NA). Executive's principal office shall be at the principal executive offices of
the Company in East Hanover and Parsippany, New Jersey. Executive shall perform
his duties hereunder subject only to the direction and control of the Board of
Directors of the Company and NGH and the Chairman of each of the Boards of
Directors of the Company and NGH (the "Chairman").
1.2. The Company shall, during the term of this Agreement, use its best
efforts to insure the election and retention of Executive as President and Chief
Executive Officer of the Company and of NGH and as a member of the Boards of
Directors of the Company and of NGH.
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1.3. Subject to the terms and conditions of this Agreement, Executive
hereby (i) agrees to continue employment with the Company and agrees to continue
to serve as President and Chief Executive Officer of the Company and of NGH and
shall devote his full working time and efforts to the best of his ability,
experience and talent, to the performance of the services, duties and
responsibilities in connection therewith; and (ii) agrees to continue to serve
as a member of the Boards of Directors of the Company and of NGH. Executive's
authority and duties shall include the exclusive right to hire, discharge and
fix the terms and conditions of employment of all employees of the Company and
its subsidiaries, subject only to the approval of the Chairman with respect to
senior level management employees. Nothing in this Agreement shall preclude
Executive from engaging, consistent with his duties and responsibilities
hereunder, in charitable and community affairs, from managing his personal
investments, from continuing to serve on the boards of directors of any
Affiliate (as hereinafter defined) of the Company or NGH or from serving,
subject to approval of the Board of Directors of the Company, as a member of
boards of directors of other companies.
1.4. For purposes of this Agreement, (a) "Affiliate" means, with respect
to the Company or NGH, any person or entity directly or indirectly controlling,
controlled by, or under common control with the Company or NGH, as the case may
be,
(b) "Subsidiary" of the Company or NGH means any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by the Company or NGH, as the case
may be, and
(c) the term "available to Senior Executive Officers" shall mean that
something is available to the senior executive officers of the Company or NGH or
generally available to all chief executive officers of the major operating
companies of the Company or NGH; PROVIDED, HOWEVER, such term shall not include
the Chairman of NGH or NHC.
2. TERM OF EMPLOYMENT.
Executive's term of employment under this Agreement shall continue in
accordance with the terms hereof until a termination of Executive's employment.
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3. COMPENSATION.
3.1. SALARY. The Company shall pay Executive a base salary ("Base
Salary") at the rate of $1,000,000 per annum. Base Salary shall be payable in
accordance with the ordinary payroll practices of the Company. Executive's rate
of Base Salary shall be reviewed for increase by the Chairman at least annually
and by the Boards of Directors of the Company and Holdings, if necessary, and if
any increases are approved, such higher amount shall constitute Executive's Base
Salary.
3.2. ANNUAL BONUS.
(a) In addition to his Base Salary, subject to Section 3.2(b) below,
Executive shall be entitled, while he remains employed hereunder, to receive an
annual bonus opportunity under NHC's Annual Incentive Award Plan or any
successor thereto (the "NHC AIAP"), in accordance with the terms thereof.
Executive's annual bonus will be determined in accordance with the NHC AIAP
available to Senior Executive Officers; the NHC AIAP, in any event, will provide
an annual target bonus opportunity to Executive no less favorable than one
hundred percent (100%) of his Base Salary, subject to the attainment of the
performance goals established from time to time under the NHC AIAP.
(b) Executive may be granted Performance Units under NHC's 1994 Long
Term Incentive Plan or any successor thereto (the "NHC LTIP") in lieu of all or
a portion of a cash bonus opportunity under the NHC AIAP pursuant to Section
3.2(a), provided that with respect to any year the aggregate annual target bonus
opportunity under the NHC AIAP and the "Initial Grant Value" of all such
Performance Units granted in such year shall not be less than the annual target
bonus opportunity under Section 3.2(a) (the aggregate annual target bonus
opportunity under Section 3.2(a) and/or 3.2(b), as applicable, is hereinafter
referred to as the "Target Bonus Opportunity"). The term "Initial Grant Value"
shall have the meaning customarily given to it in Performance Unit Agreements
awarded to Senior Executive Officers of the Company under the NHC LTIP prior to
the date hereof.
3.3. COMPENSATION PLANS AND PROGRAMS. Executive shall participate in
any compensation plan or program, whether annual or long term, maintained by the
Company or NGH on terms no less favorable than those available to Senior
Executive Officers eligible to participate therein.
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4. EMPLOYEE BENEFITS.
4.1. EMPLOYEE BENEFIT PROGRAMS, PLANS AND PRACTICES. The Company shall
provide Executive during the term of his employment hereunder with coverage
under the employee benefit programs, plans and practices (commensurate with his
position in the Company and to the extent possible under any employee benefit
plan), if any, in accordance with the terms thereof, which the Company makes
available to Senior Executive Officers from time to time.
4.2. VACATION AND FRINGE BENEFITS. Executive shall be entitled to the
number of vacation days customarily available to Senior Executive Officers. In
addition, Executive shall be entitled to the perquisites and fringe benefits
normally made available to Senior Executive Officers by the Company.
4.3. DIRECTORS AND OFFICERS LIABILITY COVERAGE, INDEMNIFICATION.
(a) Executive shall be entitled to the same level of coverage (as
determined from time to time by the Board of Directors of the Company) under
such directors' and officers' liability insurance policies, if any, or other
arrangements as are available to Senior Executive Officers and directors of the
Company, to the fullest extent permitted by the existing By-laws of the Company.
(b) The Company agrees that if Executive is made a party, or is
threatened to be made a party, to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of the
fact that he is or was a director, officer or employee of the Company or NGH or
is or was serving at the request of the Company or NGH as a director, officer,
member, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, Executive shall be indemnified and held harmless by the Company and NGH
to the fullest extent legally permitted or authorized by the Company's or NGH's
certificate of incorporation or bylaws or resolutions of the Company's or NGH's
Board of Directors, as the case may be, or, if greater, by the applicable state
laws, against all cost, expense, liability and loss (including, without
limitation, attorney's fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
the Executive in connection therewith, and such indemnification shall continue
as to Executive even if he has ceased to be a director, member, employee or
agent of the Company or NGH or other entity and shall inure to the benefit of
Executive's heirs, executors and administrators. The Company or NGH, as the case
may be, shall advance to Executive all reasonable costs and expenses incurred by
him in connection with a Proceeding within 20 days after receipt by the Company
or NGH, as the case may be, of a written request for such advance. Such request
shall include an
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undertaking by Executive to repay the amount of such advance if it shall
ultimately be determined that he is not entitled to be indemnified against such
costs and expenses.
(c) The Company also agrees that if Executive is made a party, or is
threatened to be made a party, to any action, suit or proceeding by reason of
the termination of his employment with his prior employer or his accepting
employment with the Company, he shall be indemnified and held harmless by the
Company against all costs, expenses, liabilities and losses (including, without
limitation, attorney's fees) reasonably incurred or suffered by Executive in
connection therewith provided; however, that Executive provides full and
substantial cooperation in the defense of any such action.
(d) The Company also agrees to indemnify Executive against any
liabilities, costs or expenses, including attorney's fees, if his prior employer
takes legal action against him in connection with his employment at the Company;
provided, however, that Executive provides full and substantial cooperation in
the defense of any such action. To the extent that Executive's prior employer
does not comply with its obligations to provide a SERP benefit of $300,000 per
year because of an assertion that Executive has violated a non-competition
covenant, the Company shall provide Executive with 90% of the equivalent
payments and benefits; provided, however, that Executive shall take any and all
necessary or appropriate action to recover such amounts and further provided
that Executive will fully cooperate with the Company in any action to recover
said amounts. This Section 4.3 shall survive the termination of the Agreement
for any reason.
4.4. LIFE INSURANCE. In addition to any life insurance coverage which
Executive has under programs of the Company, except to the extent superseded by
the Travelers Agreement and the Hancock Agreement (each as defined in Section 19
hereof) the Company shall, at Company cost, provide Executive with term life
insurance coverage in the amount of $5,000,000 on the Executive's life, and term
life insurance coverage in the amount of $5,000,000 on the life of the
Executive's spouse. The policies shall be owned by the Kilts DYN Preservation
Trust dated December 21, 1999 (the "Trust") and Bessemer Trust Company (the
"Owner"). The Company shall hold Executive harmless from taxes, if any, incurred
as a result of premiums paid on such life insurance. As long as Executive (i) is
actively employed by the Company, (ii) retires pursuant to Section 5(d) hereof,
(iii) is terminated by the Company other than for Cause (as defined in Section
6.4(a) hereof) or (iv) terminates for Good Reason (as defined in Section 6.1(b)
hereof), the Company shall pay all premiums due for such insurance until the
executive attains age 65.
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4.5. RETIREE MEDICAL. Upon retirement under Section 5 hereof on or
after age 55, Executive shall be eligible for retiree medical coverage based on
his actual number of years of service with a minimum of 10 years credited
service. The benefit provided hereunder shall be offset by any retiree medical
benefits provided to Executive by his prior employers.
5. SUPPLEMENTAL PENSION.
(a) Executive shall participate in (i) the Retirement Plan for
Employees of Nabisco Holdings Corp. ("PEP"), (ii) the Nabisco Holdings Corp.
Supplemental Benefits Plan ("SBP") and (iii) the Nabisco Holdings Corp.
Additional Benefits Plan ("ABP") (collectively, the "Plans") in accordance with
the terms of the Plans.
(b) Upon completion of five years of active service with the Company or
upon Executive's termination at any time other than (i) by the Company for Cause
or (ii) by Executive without Good Reason, Executive shall be entitled to a
minimum annual pension (the "Minimum Pension") equal to $200,000, (determined on
the basis of a single-life annuity beginning at age 60, determined using the
actuarial assumptions under the PEP). If and to the extent that the benefits
payable under the terms of the Plans are less than the Minimum Pension,
Executive, at the later of (i) Executive's Normal Retirement Age (as defined in
subsection (d) hereof) or (ii) termination of Executive's employment other than
for (A) by the Company for Cause or (B) by Executive without Good Reason, shall
receive a supplemental pension (the "Supplemental Pension") equal to the
difference between the Minimum Pension and the pension payable under the terms
of the Plans. The Supplemental Pension shall be paid from the general assets of
the Company (subject to Section 5(c) hereof) and shall be paid in the form of a
single life annuity. If Executive dies after completing five years of active
service with the Company, but prior to the commencement of his Supplemental
Pension payments, Executive's beneficiary (as defined in Section 6.3 hereof)
shall receive a benefit equal to the amount the beneficiary would have received
in respect of the Supplemental Pension had Executive retired and been entitled
to receive Supplemental Pension payments commencing immediately on the day prior
to his death and elected to receive the Supplemental Pension in the form of a
joint and 50% survivor annuity.
(c) The Supplemental Benefit will be pre-funded only if similar
retirement benefits provided to any other executives of the Company are
pre-funded.
(d) Executive's "Normal Retirement Age" shall be the first day of the
month next following Executive's 60th birthday, unless Executive is permitted to
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retire earlier with the consent of the Compensation Committee of the Board of
Directors of the Company; provided, however, Executive's Normal Retirement Age
shall in any event not occur until the end of any period of Compensation
Continuance. Notwithstanding the foregoing, if termination of Executive's
employment is other than for (i) by the Company for Cause or (ii) by Executive
without Good Reason and is following a Change of Control (as defined in Section
6.1(d) hereof), Executive's "Normal Retirement Age" shall be deemed to be the
date of such termination. Executive's voluntary termination of employment
without Good Reason on or after his Normal Retirement Age shall be a termination
of employment, but shall not be an "Involuntary Termination" (as defined in
Section 6.1 (a) hereof) entitling Executive to Compensation Continuance (as
defined in Section 6.1(a) hereof) under this Agreement.
6. TERMINATION OF EMPLOYMENT.
6.1. TERMINATION NOT FOR CAUSE OR FOR GOOD REASON. (a) The Company may
terminate Executive's employment at any time for any reason, and as provided in
Section 6.4, Executive may terminate his employment at any time for any reason.
If Executive's employment is terminated by the Company other than for Cause or
if Executive terminates his employment for Good Reason (collectively, an
"Involuntary Termination"), in either case prior to, or after the second
anniversary of, a Change of Control (hereafter, the 24-month period beginning on
a Change of Control, a "Window Period"), Executive shall, subject to Section
6.1(e) hereof and the execution of a letter containing a waiver and release, in
form and substance reasonably acceptable to Executive and the Company, releasing
the Company and NGH from all claims and liabilities relating to such Termination
and the Company's employment of Executive, become entitled to receive
compensation ("Compensation Continuance") as provided in this Section 6.1 from
the date of such Termination until the third anniversary (the "Compensation
Period") of the date of such Involuntary Termination, and in lieu of any other
severance, in an amount in cash equal to two (2) year's Full Pay, calculated as
described below, payable in equal monthly installments over the Compensation
Period, each installment representing 1/18th of one year's Full Pay (as defined
below). One year's "Full Pay" is the sum of (i) plus (ii), where (i) is the
Executive's highest annual rate of Base Salary in effect during the twelve (12)
month period prior to the Executive's Involuntary Termination and (ii) is the
Target Bonus Opportunity for the calendar year in which the Executive's
employment terminated, or, if greater, the amount of the actual award for the
calendar year immediately preceding the year of such Termination; provided,
however, in the event that Executive's termination of employment with the
Company occurs before he has foregone the entire $3,030,000 amount contemplated
in Sections 1a. and 1b. of the Amended Agreement to Forego Compensation,
effective as of April 6, 2000 between Executive and NA, as
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subsequently amended from time to time (the "Relinquishment Agreement"), each
monthly installment payable under this Section 6.1(a) shall be reduced by 1/36th
of the difference between (x) $3,030,000 and (y) the amount actually foregone by
the Executive under Sections 1a. and 1b. of the Relinquishment Agreement prior
to his termination of employment with the Company.
In addition, Executive shall be entitled to receive as Compensation
Continuance during the Compensation Period under this Section 6.1(a):
(iii) all unpaid amounts, as of the date of Executive's
Involuntary Termination, in respect of any bonus, for any fiscal year
ending before such termination which would have been payable had
Executive remained in employment until the date such amount would
otherwise have been paid, and an amount equal to the Vested Target
Bonus Opportunity (as defined in Exhibit A);
(iv) any payment deferred by Executive, together with any
applicable interest or other accruals thereon;
(v) full coverage under the Company's employee benefit
programs, plans and practices, including continued crediting of service
under the Company pension plans, described in Section 4.1 hereof (in
the case of any plan meeting the requirements of Section 401 (a) of the
Internal Revenue Code of 1986, as amended (the "Code"), only to the
extent consistent with such requirements) for the Compensation Period,
or the Company will provide for equivalent coverage (on an equivalent
tax basis); PROVIDED, HOWEVER, that if, in connection with an
Involuntary Termination outside a Window Period, Executive is provided
with benefit plan or executive perquisite program coverage other than
retirement plan coverage by an unaffiliated successor employer, any
such coverage by the Company shall be reduced, with respect to amounts
payable hereunder, by the benefits actually provided to Executive under
any similar plan or coverage by any unaffiliated successor employer;
(vi) full vesting of any outstanding stock options granted
pursuant to the Prior Agreement or otherwise outstanding under the NHC
LTIP or NGH's Long-Term Incentive Plan or successor thereto (the "NGH
LTIP", and together with the NHC LTIP, the "LTIPs"), with the continued
right to exercise such stock options for the remainder of their
respective terms;
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(vii) lapse of restrictions and deemed satisfaction of any
performance objectives on or applicable to any outstanding restricted
or contingent stock awards or units granted pursuant to the Prior
Agreement or the LTIPs;
(viii) such rights to payments under applicable plans or
programs as may be appropriate to the terms of such plans or programs;
(ix) for the first six (6) months after termination, the
reasonable cost of one secretary and a fully functional office, such
office location to be determined by Executive as long as the office is
not to be located on the premises of the Company; and
(x) outplacement counseling services at Company expense;
provided, however, this expense shall not exceed 18% of the amount of
Compensation Continuance for any calendar year. This counseling shall
include, but is not limited to, skill assessment, job market analysis,
resume preparation, interviewing skills, job search techniques and
negotiating.
If, subsequent to an Involuntary Termination, Executive shall die or
suffer Permanent Disability (as defined in Section 6.2 hereof), such death or
Permanent Disability shall not diminish the rights of Executive, his
beneficiaries or successors to the payments and benefits under this Section
6.1(a) or Section 6.5(a) hereof, less any amounts paid under 6.2 (other than as
required under any applicable subsections of this Section 6.1(a)).
(b) For purposes of this Agreement, "Good Reason" shall mean the
occurrence, without Executive's prior written consent, of one or more of the
following events:
(i) the aggregate amount of Executive's Base Salary from the
Company and ordinary course of business annual award opportunities
under the NHC AIAP or NGH's Annual Incentive Award Plan or any
successor thereto (the "NGH AIAP", and together with the NHC AIAP, the
"AIAPs") and/or either LTIP is at any time reduced without the
Executive's consent; provided, however, nothing herein shall be
construed to guarantee the Executive's targeted bonus or other awards
if performance is below target;
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(ii) the termination or material reduction of any employee
benefit or perquisite enjoyed by him (other than, outside a Window
Period, as part of an across-the-board reduction applicable to all
executive officers of the Company);
(iii) The failure to elect or reelect Executive to any of the
positions described in Section 1 above or removal of him from any such
position;
(iv) Subject to Section 6.1 (c) hereof, Executive's job
responsibilities as President and Chief Executive Officer of the
Company or NGH are substantially reduced in importance without the
Executive's consent or he is assigned duties which are materially
inconsistent with his duties or which materially impair his ability to
function as the President and Chief Executive Officer of the Company or
of NGH;
(v) The failure to continue Executive's participation in any
incentive compensation plan unless a plan providing a substantially
similar opportunity is substituted;
(vi) Executive, without his consent, is at any time required
as a condition of continued employment with the Company to relocate a
distance of more than 35 miles from the current headquarters;
(vii) Following a Change of Control or the divestiture of NHC
or NA by NGH or NHC, as the case may be, the Chairman of NHC is anyone
other than the Chairman of NGH (immediately prior to such Change of
Control or divestiture);
(viii) The failure of the Company to obtain the assumption in
writing or its obligation to perform this Agreement by any successor to
all or substantially all of the assets of the Company within 45 days
after a merger, consolidation, sale or similar transaction; or
(ix) Unilateral termination of the Agreement by the Company or
any material breach by the Company of any provision of this Agreement
or any agreements entered into pursuant thereto.
Unless the Executive provides written notification of his non-consent
to the Company to any of the events described above within 180 days after his
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learning of the occurrence of such event, the Executive shall be deemed to have
consented to the occurrence of such event, or events, and no "Good Reason" shall
continue to exist. If the Executive provides written notice of his non-consent
to any of the events above within 180 days after the occurrence of such event,
or events, and if the Company does not cure such event, or events, within 30
days of such written notice, he may thereupon terminate his employment for Good
Reason ninety (90) days after receipt of written notice of such termination by
the Company.
(c) In the event of Executive's promotion with his consent, no "Good
Reason" under Section 6.1(b) shall be deemed to have occurred, and the parties
to this Agreement agree to amend and restate the Agreement to reflect the change
in status resulting from the promotion. If, however, Executive refuses a
promotion, the provisions of Section 6.1 (b) shall continue to be applicable.
(d) As used herein, a "Change of Control" shall occur on the date upon
which one of the following events occurs (except as otherwise provided in
paragraph (iii) below):
(i) Any individual, corporation, partnership, group, associate
or other entity or "person" as such term is defined in Section 14(d) of
the Securities Exchange Act of 1934 (the "Exchange Act"), other than
NHC, NGH or any of their Subsidiaries, or any employee benefit plan(s)
sponsored by NHC, NGH or any of their Subsidiaries, is or becomes the
"beneficial owner" (as defined in Rule 13D-3 under the Exchange Act),
directly or indirectly, of 30% or more of the combined voting power of
NHC or NGH outstanding securities ordinarily having the right to vote
at elections of directors;
(ii) Individuals who constitute the Board of either NHC or NGH
on January 1, 2000 (each such Board the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board of NHC or
NGH, as the case may be, provided that any person becoming a director
subsequent to such date hereof whose election, or nomination for
election by NHC or NGH shareholders, as the case may be, was approved
by a vote of at least three-quarters of the directors comprising that
Incumbent Board (either by a specific vote or by approval of the proxy
statement of NHC or NGH, as the case may be, in which such person is
named a nominee of NHC or NGH, as the case may be, but excluding for
this purpose any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election contest
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(as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of an individual, corporation,
partnership, group, associate or other entity or "person" other than
the NHC or NGH Board, as the case may be, shall be, for purposes of
this paragraph (ii), considered as though such person were a member of
the Incumbent Board.
(iii) The approval by the shareholders of NHC or NGH, as the
case may be, of a plan or agreement providing (A) for a merger or
consolidation of NHC or NGH, as the case may be, other than with a
wholly-owned subsidiary or with NGH, NHC or any of their subsidiaries,
and other than a merger or consolidation that would result in the
voting securities of NHC or NGH, as the case may be, outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the
voting securities of NHC or NGH, as the case may be, of such surviving
entity outstanding immediately after such merger or consolidation or
(B) for a sale, exchange or other disposition of all or substantially
all of the assets of NHC or NGH. If any of the events enumerated in
this paragraph (iii) occurs, the NHC Board shall determine the
effective date of the Change of Control resulting therefrom.
(e)(i) During any Compensation Period beginning outside a Window
Period, the Executive shall provide consulting services to the Company on a
reasonable basis, subject to appropriate notice and reimbursement of all travel
and other expenses. During the first six (6) months of the Compensation Period
the Executive may be required by the Company to provide up to fifteen (15) days
of consultation during normal business hours and business days, subject to his
other reasonable business and personal commitments. When and if the Executive
becomes employed on a full-time basis, either with another company or on a
self-employed basis, his obligation to provide consulting services shall be
limited by the requirements of such employment, subject to his other reasonable
business and personal commitments, and under appropriate circumstances, may be
restricted to telephone conference. Continuing failure to provide such
consulting services shall result in the termination of Compensation Continuance.
(ii) If the Executive's Compensation Continuance is terminated pursuant
to this Section 6.1(e), he may, within fifteen (15) days after mailing of notice
thereof to him, submit to the Chairman a written objection to such termination.
In such event, the Compensation Committee of the Board of
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Directors of the Company at or before its next regularly scheduled meeting must
determine by majority vote that termination of Compensation Continuance was
appropriate or, failing that, Compensation Continuance must be reinstated with
full retroactive effect.
6.2. PERMANENT DISABILITY. The event of the Executive becoming eligible
for benefits under the Company's Long Term Disability Plan is not a termination
under Section 6.1(a) or Section 6.5(a) hereof entitling Executive to
Compensation Continuance under this Agreement. If, however, Executive becomes
eligible for benefits under the Company's Long Term Disability Plan during his
Compensation Period, the amount of Compensation Continuance shall be reduced
during the Compensation Period by the amount of disability benefits payable to
the Executive. All other provisions of this Agreement shall remain in effect
notwithstanding the Executive's disability.
6.3. DEATH. In the event of Executive's death while actively employed,
the Company's obligations under this Agreement shall cease except for the
obligations under any program of the Company providing for a death benefit. In
the event of Executive's death subsequent to commencement of his Compensation
Period hereunder, the balance of Compensation Continuance will be paid to his
beneficiary in a lump sum. "Beneficiary" shall mean the Executive's designated
beneficiary under his Executive Program life insurance.
6.4. VOLUNTARY RESIGNATION; DISCHARGE FOR CAUSE; NOTICE AND DATE OF
TERMINATION. (a) If Executive resigns voluntarily, other than for Good Reason or
Permanent Disability, or the Company terminates the employment of Executive at
any time for Cause, the Company's obligations under this Agreement to make any
further payments to Executive, including, but not limited to, the benefits under
Section 3 or Section 6.1(a), shall thereupon cease and terminate except with
respect to any previously deferred amounts, or accrued but unpaid salary.
"Cause" shall mean: (a) Executive is convicted of a felony involving moral
turpitude; or (b) Executive is guilty of willful gross neglect or willful gross
misconduct in carrying out his duties under this Agreement, which results, or
reasonably likely may result, in either case, in material economic harm to the
Company, unless Executive believed in good faith that such act or nonact was in
the best interests of the Company.
(b) For purposes of this Agreement, a "Notice of Termination for Cause"
shall mean delivery to Executive of a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the membership of the NHC
Board (or a committee thereof) (which, for these purposes, will be hereinafter
referred to as the "NHC Board") at a meeting thereof called and held for the
purpose (after reasonable notice to the Executive, "Preliminary Notice", and
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reasonable opportunity for Executive, together with the Executive's counsel, to
be heard before the Board prior to such vote), finding that in the good faith
opinion of the Board, Executive was guilty of conduct set forth in the second
sentence of this Section 6.4(a) and specifying the particulars thereof in
detail. Upon the receipt of the Preliminary Notice, Executive shall have 14 days
in which to appear with counsel or take such action as he desires on his behalf,
and such 14-day period is hereby agreed to by the parties as a reasonable
opportunity for Executive to be heard. The Board shall no later than 30 days
after the receipt of the Preliminary Notice by Executive communicate its
findings to Executive. A failure by the Board to make its finding of Cause or to
communicate its conclusions within such 30-day period (the "Determination
Period") shall be deemed to be a finding that Executive was not guilty of the
conduct described in the second sentence of this Section 6.4(b). Any termination
of Executive's employment by Executive outside a Window Period (other than by
death or Permanent Disability) within 30 days after the date that the
Preliminary Notice has been given to Executive shall be deemed to be a
termination for Cause for purposes of the Agreement.
(c) Except as provided in Section 6.4(b) above, (i) Any purported
termination of the Executive's employment by the Company or by the Executive
shall be communicated by written Notice of Termination to the other party hereto
in accordance with Section 10 hereof. For purposes of this Agreement, (A) during
a Window Period a "Notice of Termination" by the Company shall mean, and (B)
outside a Window Period a "Notice of Termination" by the Executive shall mean, a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated.
(ii) "Date of Termination" shall mean (i) if the Executive's
employment is terminated for Disability, thirty (30) days after Notice
of Termination is given (provided that the Executive shall not have
returned to the full-time performance of the Executive's duties during
such thirty (30) day period), (ii) if the Executive's employment is
terminated by reason of the Executive's death, the date of the
Executive's death, (iii) if the Executive's employment is terminated by
reason of the Executive's Retirement, for Cause, Involuntary
Termination or for any other reason (other than Disability or death),
the date specified in the Notice of Termination or Notice of
Termination for Cause, as the case may be, (which (A) in the case of a
Notice of Termination for Cause during a Window Period shall not be
less than thirty (30) nor more than sixty (60) days from the date, if
any, in the Determination Period that the Board notifies the Executive
of its finding of Cause and (B) in the case of the
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Executive's voluntary termination (other than Executive's termination
of employment for Good Reason) shall not be less than three (3) months
after the date such Notice of Termination is given).
6.5. TERMINATION FOLLOWING A CHANGE OF CONTROL. (a) Upon the
Executive's Involuntary Termination during a Window Period, in lieu of the
benefits provided by Section 6.1(a)(i) and (ii) hereof Executive shall be
entitled to a lump sum payment within fifteen (15) business days following the
date of such Termination equal to three hundred percent (300%) of the sum of
(i), (ii) and (iii), where (i) is the greater of the Executive's annual rate of
Base Salary as in effect immediately prior to such termination or immediately
prior to the Change of Control to which such Window Period relates, (ii) is the
greater of (1) the Executive's annual Target Bonus Opportunity immediately prior
to such termination or immediately prior to such Change of Control or (2) the
greater of the aggregate amount of such actual award for the calendar year
immediately preceding the year of such termination or immediately preceding the
year of such Change of Control and (iii) is the greater of the annual perquisite
allowance applicable to the Executive under the Nabisco Flexible Perquisites
Program as in effect immediately prior to such termination or immediately prior
to such Change of Control (such greater amount, the "Allowance"); provided,
however, in the event that Executive's termination of employment with the
Company occurs before he has foregone the entire $3,030,000 amount contemplated
in Sections 1a. and 1b. of the Relinquishment Agreement, the amount payable
under this Section 6.5(a) shall be reduced by the difference between (x)
$3,030,000 and (y) the amount actually foregone by the Executive under Sections
1a. and 1b. of the Relinquishment Agreement prior to his termination of
employment with the Company.
(b) In addition to the benefits provided by Section 6.5(a) above, upon
the Executive's Involuntary Termination during a Window Period, the Executive
shall be entitled to receive Compensation Continuance as set forth in Section
6.1(a)(iii)-(x) hereof until the third anniversary of such Involuntary
Termination.
(c) (i) Anything herein to the contrary notwithstanding, in the event
that it is determined that any payment or distribution by the Company to or for
the Executive's benefit, whether paid or payable or distributed or distributable
pursuant to the terms hereof, including but not limited to Section 7, or
otherwise, other than any payment pursuant to this Section 6.5(c), (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive, within fifteen (15) business days following the determination described
in Section 6.5(c)(ii) below, an additional
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payment ("Excise Tax Adjustment Payment") in an amount such that after payment
by the Executive of all applicable Federal, state and local taxes (computed at
the maximum marginal rates and including any interest or penalties imposed with
respect to such taxes), including any Excise Tax, imposed upon the Excise Tax
Adjustment Payment, the Executive shall retain an amount of the Excise Tax
Adjustment Payment equal to the Excise Tax imposed upon the Payments.
(ii) All determinations required to be made under this Section 6.5(b),
including whether Excise Tax Adjustment Payment is required and the amount of
such Excise Tax Adjustment Payment, shall be made by DELOITTE & TOUCHE LLP, or
such other accounting firm as the Company may designate prior to a Change of
Control, which shall provide to the Company and the Executive detailed
supporting calculations within fifteen (15) business days of the date of the
Executive's termination of employment. Except as hereinafter provided, any
determination by DELOITTE & TOUCHE LLP, or such other accounting firm as the
Company may designate prior to a Change of Control, shall be binding upon the
Company and the Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination hereunder, it
is possible that (A) Excise Tax Adjustment Payments which should have been made
will not have been made by the Company ("Underpayment"), or (B) certain Payments
will have been made which should not have been made ("Overpayment"), consistent
with the calculations required to be made hereunder. In the event of an
Underpayment, the Company shall promptly determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Company to or for the Executive's benefit. In the event that the
Executive discovers that an Overpayment shall have occurred, the amount thereof
shall be promptly repaid to the Company.
6.6. NO MITIGATION; NO OFFSET. In the event of any termination of
employment under this Section 6, Executive shall be under no obligation to seek
other employment and, except to the extent provided in Section 14(c) hereof,
there shall be no offset against amounts due Executive under this Agreement on
account of any remuneration attributable to any subsequent employment that he
may obtain.
7. CERTAIN AIAP PROVISIONS. In the event of a Change of Control, the
Executive will be paid within fifteen (15) business days following the date of
such Change of Control a lump sum cash payment equal to the Executive's Vested
Target Bonus Opportunity.
8. EXPENSES. Upon submission of proper vouchers therefor, the Company
will pay or reimburse Executive for all transportation, hotel and living
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expenses incurred by Executive on business trips outside New Jersey, and for all
other business and entertainment expenses reasonably incurred by him in
connection with the business of the Company and its Affiliates during the term
of his employment hereunder, at a standard commensurate with chief executive
officers of the Company and its significant subsidiaries.
9. LEGAL FEES AND EXPENSES. (a) The Company shall reimburse Executive
for reasonable legal fees incurred in connection with executing this Agreement
and shall pay all reasonable legal fees and expenses which Executive may incur
outside a Window Period in respect of obtaining any compensation or other
benefits to which he is entitled under this Agreement.
(b) The Company shall pay to the Executive as incurred all legal and
accounting fees and expenses incurred by the Executive as a result of the
Executive's Involuntary Termination on the date of a Change of Control or during
the resulting Window Period (including all such fees and expenses, if any, in
seeking to obtain or enforce any right or benefit provided by this Agreement or
any other compensation-related plan, agreement or arrangement of the Company)
unless the Executive's claim is found by an arbitral tribunal of competent
jurisdiction to have been frivolous.
(c) The Company shall pay to the Executive as incurred all legal and
accounting fees and expenses incurred by the Executive during a Window Period as
a result of both (i) the Executive's Involuntary Termination prior to the Change
of Control to which such Window Period relates and (ii) the Company's refusal
after such Change of Control to provide any right or benefit provided by this
Agreement or any other compensation-related plan, agreement or arrangement of
the Company in respect of such Termination, including all such fees and
expenses, if any, in seeking to obtain or enforce any such right or benefit
unless the Executive's claim is found by an arbitral tribunal or court of
competent jurisdiction to have been frivolous.
10. NOTICES. All notices or communications hereunder shall be in
writing, addressed as follows:
To the Company:
Steven F. Goldstone
Chairman
Nabisco, Inc.
7 Campus Drive
Parsippany, NJ 07054
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with a copy to:
Chief Legal Officer
Nabisco, Inc.
7 Campus Drive
Parsippany, NJ 07054
Any such notice or communication shall be sent certified or registered mail,
return receipt requested, postage prepaid, addressed as above (or to such other
address as such party may designate in a notice duly delivered as described
above), and three days after the actual date of mailing shall be deemed the time
at which notice was given.
11. LIMITED WAIVER/SEPARABILITY. The waiver by any party of a violation
by Executive of any of the provisions of this Agreement, whether expressed or
implied, shall not operate or be construed as a waiver of any subsequent
violation of any such provision. In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall remain in full force
and effect to the fullest extent permitted by law.
12. ASSIGNABILITY; BINDING NATURE. This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors,
heirs (in the case of the Executive) and assigns. No rights or obligations of
the Company or NGH under this Agreement may be assigned or transferred by the
Company or NGH, as the case may be, except that such rights or obligations may
be assigned or transferred pursuant to a merger or consolidation in which the
Company or NGH, as the case may be, is not the continuing entity, or the sale or
liquidation of all or substantially all of the assets of the Company or NGH, as
the case may be, provided that the assignee or transferee is the successor to
all or substantially all of the assets of the Company or NGH, as the case may
be, and such assignee or transferee assumes the liabilities, obligations and
duties of the Company or NGH, as the case may be, , as contained in this
Agreement, either contractually or as a matter of law. The Company or NGH, as
the case may be, further agree that, in the event of a sale of assets or
liquidation as described in the preceding sentence, they shall take whatever
action it legally can in order to cause such assignee or transferee to expressly
assume the liabilities, obligations and duties of the Company hereunder.
13. AMENDMENT. The Agreement may be amended at any time only by mutual
written agreement of the parties hereto.
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14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION; COOPERATION DURING THE
COMPENSATION PERIOD; NONCOMPETITION. (a) Executive shall not, without the prior
consent of the Company and/or NGH, divulge, disclose or make accessible to any
other person, firm, partnership or corporation or other entity any Confidential
Information pertaining to the business of the Company or NGH except (1) while
employed by the Company in the business of and for the benefit of the Company or
NGH or (2) while employed by the Company when required to do so by a court of
competent jurisdiction, by any governmental agency having supervisory authority
over the business of NGH or the Company, or by any administrative body or
legislative body (including a committee thereof) with jurisdiction to order
Executive to divulge, disclose or make accessible such information or (3) while
on Compensation Continuance when required to do so as provided in Section 14(b)
hereof. For purposes of this Section 14(a), "Confidential Information" shall
mean non-public information concerning the Company's or NGH's financial data,
strategic business plans, product development (or other proprietary product
data), customer lists, marketing plans and other proprietary information, except
for specific items which have become publicly available information (other than
such items which Executive knows have become publicly available through a breach
of fiduciary duty or any confidentiality agreement). During active employment or
during Compensation Continuance, in accordance with normal ethical and
professional standards, Executive will refrain from taking actions or making
statements, written or oral, which defame or denigrate the goodwill or
reputation of the Company and/or NGH, their properties, products, directors,
officers, executives and employees or which constitute willful conduct under
circumstances where it is reasonable for Executive to anticipate or to expect
that the natural consequences of such conduct by Executive will be to affect
adversely the morale of other employees.
(b) During the Compensation Period, Executive agrees that (1) subject
to reasonable scheduling requirements, he will personally provide reasonable
assistance and cooperation to the Company and/or NGH in activities related to
the prosecution or defense of any pending or future lawsuits or claims involving
the Company and/or NGH, (2) he will promptly notify the Company and/or NGH if he
receives any requests from anyone other than an employee or agent of the Company
and/or NGH for information regarding the Company and/or NGH or if he becomes
aware of any potential claim or proposed litigation against the Company and/or
NGH, (3) he will refrain from providing any information related to any claim or
potential litigation against the Company and/or NGH to any non-Company or
non-NGH representatives without either the Company's or NGHs' written permission
or being required to provide information pursuant to legal process, (4) if
required by law to provide sworn testimony regarding any Company or NGH-related
matter, he will consult with and have Company or NGH-designated legal counsel
present for such testimony, (5) the Company and/or NGH
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will be responsible for the costs of such designated counsel and he will bear no
cost for same, (6) he will confine his testimony to items about which he has
knowledge rather than speculation, unless otherwise directed by legal process
and (7) he will cooperate with the Company's and/or NGHs' attorneys to assist
their efforts, especially on matters he has been privy to, holding all
privileged attorney-client matters in strictest confidence. Nothing in the
foregoing clauses 2-7 is intended to apply to governmental or judicial
investigations; provided, however, the Company and/or NGH will reimburse
Executive for legal expenses if he is compelled to appear in a governmental or
judicial investigation.
(c) Any Compensation Period resulting from an Involuntary Termination
outside a Window Period shall be terminated if the Executive, without the
Company's written approval, accepts a substantially similar or higher executive
position, paying a substantially comparable or greater level of cash
compensation, with any other company conducting a business which is
substantially competitive with a business conducted by the Company or an
Affiliate. Alternatively, the Company may, in its discretion, appropriately
reduce the Executive's cash compensation and employee benefits coverage for the
balance of the Compensation Period.
(d) In the event that the Executive unreasonably refuses to provide
consulting services in accordance with Section 6.1(e) or materially violates the
terms and conditions of Sections 14(a) or 14(b) above, the Company may, at its
election upon ten (10) days notice, terminate the Compensation Period,
discontinue cash compensation payments and employee benefits coverage and cancel
any outstanding stock options or other LTIP awards. The Company may also
initiate any form of legal action it may deem appropriate seeking damages or
injunctive relief with respect to any material violations of Sections 14(a),
14(b) or 14(c) above.
15. BENEFICIARIES/REFERENCES. Executive shall be entitled to select
(and change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
Executive's death, and may change such election, in either case by giving the
Company written notice thereof. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative. Any reference to the masculine gender in this Agreement
shall include, where appropriate, the feminine.
16. SURVIVORSHIP. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this
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Section are in addition to the survivorship provisions of any other section of
this Agreement.
17. GOVERNING LAW. This Agreement shall be construed, interpreted, and
governed in accordance with the laws of New Jersey, without reference to rules
relating to conflicts of law.
18. WITHHOLDING & TAXES. The Company shall be entitled to withhold
from payment any amount of withholding required by law.
19. ENTIRE AGREEMENT.
(a) (i) Except as set forth in Subsection (ii) of this Section 19(a),
this Agreement sets forth the entire agreement and understanding of the parties
hereto with respect to the matters covered hereby and supersedes and replaces
any prior agreement with respect to employment, compensation continuation and
the matters contained in this Agreement which Executive may have had with the
Company or an Affiliate.
(ii) This Agreement does not supersede or replace the
Relinquishment Agreement, that certain Travelers Life Insurance Agreement
effective as of January 1, 2000 between NA, Executive, The Trust, the Owner and
all agreements, assignments and other documentation related thereto
(collectively, the "Travelers Agreements") or that certain John Hancock Life
Insurance Agreement between NA, Executive, the Trust and the Owner, effective as
of January 1, 2000 and all agreements, assignments and other documentation
related thereto (collectively, the "Hancock Agreements"), which Relinquishment
Agreement, Travelers Agreements and Hancock Agreements remain in full force and
effect according to their terms.
(b) This Agreement shall be binding upon and inure to the benefit of
Executive, the Company or Affiliates, and any successor organization or
organizations which shall succeed to substantially all of the business and
property of the Company, whether by means of merger, consolidation, acquisition
of substantially all of the assets of the Company or otherwise, including by
operation of law.
(c) Unless otherwise stated herein, no benefit or promise hereunder
shall be secured by any specific assets of the Company. Unless otherwise stated
herein, Executive shall have only the rights of an unsecured general creditor of
the Company in seeking satisfaction of such benefits or promises.
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20. LATE PAYMENTS. To the extent that any payments required to be made
hereunder following a Change of Control in connection with any Involuntary
Termination occurring prior to the second anniversary of such Change of Control
are not made within the period specified therefor, the Company shall be liable
for interest on such delayed payments at the rate of 150% of the prime rate
compounded monthly, as posted by the Morgan Guaranty Trust Company of New York,
from time to time.
21. ACTUARIAL CALCULATIONS. All required actuarial calculations of
payments to be made hereunder shall be made by WATSON WYATT WORLDWIDE, NEW
YORK, NEW YORK, or such other actuarial firm as the Company may designate prior
to a Change of Control.
22. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
23. PARAGRAPH HEADINGS. Paragraph headings are inserted for
convenience only and do not constitute a part and shall not affect the
interpretation of this Agreement.
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IN WITNESS WHEREOF. the parties have executed this Agreement as
of , 2000.
NABISCO HOLDINGS CORP.
/s/ James M. Kilts By: /s/ James A. Kirkman III
- ----------------------------- --------------------------------------
James M. Kilts James A. Kirkman III
Executive Vice President,
General Counsel & Secretary
NABISCO INC.
By: /s/ James A. Kirkman III
--------------------------------------
James A. Kirkman III
Executive Vice President,
General Counsel & Secretary
NABISCO GROUP HOLDINGS CORP.
By: /s/ James A. Kirkman III
--------------------------------------
James A. Kirkman III
Executive Vice President,
General Counsel & Secretary
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EXHIBIT A
DEFINITIONS
VESTED TARGET BONUS OPPORTUNITY means, as of a Change of Control or as of
a Termination Date, as the case may be, an amount equal to the value of the
Executive's target award or Target Bonus Opportunity, as the case may be, under
the relevant AIAP or LTIP, as the case may be, for the relevant performance
period in which the Change of Control or Involuntary Termination occurs, as the
case may be, multiplied by a fraction, the numerator of which is the number of
days in the period beginning on the first day of the relevant performance period
and ending on the Change of Control or such Termination Date, as the case may
be, and the denominator of which is 365; provided that in the event of an
Involuntary Termination following a Change of Control in the year in which a
Change of Control occurs, for purposes of computing the Vested Target Bonus
Opportunity as of the date of such Termination, the performance period shall be
deemed to begin on the first day following the Change of Control and the target
award or Target Bonus Opportunity, as the case may be, shall be that in effect
immediately preceding such Change of Control.
<PAGE>
Exhibit 10.5
EMPLOYMENT AGREEMENT
AMENDMENT AND RESTATEMENT, made effective as of this 17th day of March,
2000, of the EMPLOYMENT AGREEMENT dated October 1, 1997, as amended, by and
between NABISCO, INC., a New Jersey corporation (the "Company"), and James E.
Healey ("the Executive").
RECITALS
WHEREAS, the Executive and RJR Nabisco, Inc., a Delaware corporation
("RJRN"), entered into the Employment Agreement dated October 1, 1997; and
WHEREAS, the Executive, RJRN and the Company executed an Amendment to the
Employment Agreement as of May 1, 1999; and
WHEREAS, the Company and the Executive agree that the Employment Agreement
should be further amended and restated, in order to more effectively provide the
Executive continued incentives to remain in the service of the Company or its
subsidiaries or affiliates;
NOW, THEREFORE, in consideration of mutual incentives, it is hereby agreed
by and between the Company, Nabisco Holdings Corp. ("NHC") and Nabisco Group
Holdings Corp. ("NGH") and the Executive to amend and restate the Employment
Agreement, effective on the date first above written, as follows:
1. Employment. The Executive agrees to devote the Executive's working time
exclusively to the performance of such services for the Company or NHC or any of
their Subsidiaries or Affiliates (each, as defined below) as may be assigned to
the Executive from time to time and to perform such services faithfully and to
the best of the Executive's ability except as the provisions of subsections
4(b)(i) or 4(b)(ii) shall apply.
For purposes of this Agreement, (i) "Affiliate" means, with respect to the
Company, NHC or NGH, any person or entity directly or indirectly controlling,
controlled by, or under common control with the Company, NHC or NGH, as the case
may be, and (ii) "Subsidiary" of the Company, NHC or NGH means any entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the Company, NHC or
NGH, as the case may be.
<PAGE>
2. Term of Agreement. Subject to Section 7(e) hereof, this Agreement shall
commence on the date hereof and shall remain in effect so long as the Executive
remains employed by the Company or NHC or any of their subsidiaries or any
successor organizations.
3. Termination of Employment Without Compensation Continuance.
(a) Termination for Cause. This Agreement shall immediately be
terminated and neither party shall have any obligation hereunder if the
Executive's employment is terminated for Cause (as defined below).
(i) At any time before a Change of Control (as defined below)
or following the second anniversary of such Change of Control,
termination for "Cause" shall mean termination by the Company of the
Executive's employment resulting from the Executive's: (A) criminal
dishonesty; (B) deliberate and continual refusal to perform
employment duties on substantially a full-time basis; (C) deliberate
and continual refusal to act in accordance with any specific lawful
instructions of a majority of the Board of Directors of NHC (the
"NHC Board"); or (D) deliberate misconduct which could be materially
damaging to the Company without reasonable good faith belief by the
Executive that such conduct was in the best interests of the
Company.
(ii) Any purported termination for Cause under Section 3(a)(i)
shall not be applicable unless (A) the Executive is advised in
writing that the Executive is being terminated for Cause and, (B) if
within fifteen (15) days thereafter the Executive submits to the
Chief Executive Officer of the Company a written objection to such a
determination, the Compensation Committee of the NHC Board at or
before its next regularly scheduled meeting determines by majority
vote that the Executive has been terminated for Cause.
(iii) During the two (2) year period beginning on a Change of
Control, termination for "Cause" shall mean termination by the
Company of the Executive's employment resulting from the
Executive's: (A) willful and continued failure substantially to
perform employment duties with the Company or any Subsidiary or
Affiliate (other than as a result of total or partial incapacity due
to physical or mental illness or as a result of a termination by the
Executive for Good Reason (as defined below)) after a written demand
for substantial performance is delivered to the Executive by the NHC
Board, which demand specifically identifies the manner in which the
NHC Board believes that the Executive has not substantially
performed the Executive's duties; (B) the willful engaging by the
Executive in conduct which is demonstrably and materially injurious
to NHC, NGH or the Company, monetarily or otherwise; or (C) the
Executive's conviction of a
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felony under the laws of the United States, any state or any other
country or political sub-division thereof involving moral turpitude.
For purposes of this paragraph (iii), no act or failure to act on
the Executive's part shall be deemed "willful" unless done or
omitted to be done by the Executive not in good faith and without
reasonable belief that the Executive's action or omission was in the
best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause
under this paragraph (iii) unless and until there shall have been
delivered to the Executive documentation of the affirmative vote
(which cannot be delegated) of not less than three-quarters (3/4) of
the entire membership of the NHC Board of Directors at a meeting of
the NHC Board called and held for such purpose (after reasonable
notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the NHC
Board), finding that in the good faith opinion of the NHC Board the
Executive was guilty of conduct set forth above in subclauses (A),
(B) or (C) above, specifying the particulars thereof in detail.
(b) Voluntary Termination of Employment by the Executive. The
Executive reserves the right to terminate voluntarily the Executive's
employment at any time for any reason. Upon such a termination other than
a termination pursuant to Section 4(b), all obligations of the Company
hereunder shall be cancelled automatically, and the Executive shall not be
entitled to any form of Compensation Continuance under this Agreement,
including that described in Section 5 below.
(c) Disability. The event of physical or mental disability of a
nature that entitles the Executive to benefits under the Company's
Long-Term Disability Plan is not a termination of employment under any
section of this Agreement. As such, disability shall not qualify the
Executive for the Compensation Continuance described herein unless the
Executive is terminated under Section 4(a) or Section 4(b)(i).
(d) Death. In the event of the Executive's death prior to
Involuntary Termination, this Agreement will be null and void.
4. Termination With Compensation Continuance.
(a) Involuntary Termination Without Cause by the Company.
(i) The Company reserves the right to terminate the employment
of the Executive at any time for any reason subject to providing the
compensation and benefits described herein. Except as provided in
Section 6, the Company will provide the Executive with the
Compensation Continuance described in Section 5 hereof if the
Executive is involuntarily separated from active employment without
Cause by the Company ("Involuntary Termination").
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(ii) The divestiture of the operating company employing the
Executive, and the assignment of the obligations of the Company
under this Agreement to such operating company, or its successor or
acquiror, in connection with the divestiture of either all, or
substantially all, the shares or assets of such operating company
shall not automatically be an Involuntary Termination unless such
divestiture and assignment would result in an Involuntary
Termination under Section 4(b) hereof.
(iii) The transfer of the Executive's employment to any
company that owns at least 50% of the voting power of the Company,
or any subsidiary of such company (an "Affiliated Company"), shall
not automatically be deemed an Involuntary Termination unless such
transfer would result in an Involuntary Termination under Section
4(b) hereof.
(b) Deemed Involuntary Termination Without Cause by the Company.
(i) At any time before a Change of Control or following the
second anniversary of a Change of Control, Involuntary Termination
shall be deemed to occur if the Executive voluntarily terminates
employment after: (A) the total amount of the Executive's base
salary, annual bonus and long term incentive opportunity under the
Annual Incentive Award Plans (or other annual incentive plans) of
NGH or NHC, as the case may be, (collectively, as in effect from
time to time, the "AIAPs") and Long Term Incentive Plans (or other
long term incentive plans) of NGH or NHC, as the case may be
(collectively, as in effect from time to time, the "LTIPs") is at
any time reduced by more than 20% without the Executive's consent,
provided, however, nothing herein shall be construed to guarantee
the Executive's target award if performance is below target; (B) the
Executive's job responsibilities are substantially reduced in
importance without the Executive's consent or the Company fails to
guarantee the obligations hereunder as required by Section 7(d); or
(C) the Executive, without the Executive's consent, is at any time
required as a condition of continued employment to relocate more
than thirty-five (35) miles from the Executive's then current place
of employment. Unless the Executive provides written notification of
the Executive's non-consent to an event in (A), (B) or (C) above
within ninety (90) days after the occurrence of such event, the
Executive shall be deemed to have consented to the occurrence of
such event and no deemed Involuntary Termination shall occur. If the
Executive provides written notice of the Executive's non-consent to
any of the events in (A), (B) or (C) above within ninety (90) days
after the occurrence of such event, the Executive shall be deemed to
have been Involuntarily Terminated ninety (90) days after receipt of
such written notice by the Company.
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(ii) At any time during the two (2) year period beginning on a
Change of Control, Involuntary Termination shall be deemed to occur
if the Executive voluntarily terminates employment after an event of
"Good Reason". For purposes of this Agreement "Good Reason" shall
mean, without the Executive's express written consent, any of the
following:
(A) Any reduction in the Executive's duties, any
diminution in the Executive's position or any adverse change
in the Executive's reporting relationship from those in effect
immediately prior to the Change of Control;
(B) Any reduction in the Executive's base salary, grade
or annual bonus or long term incentive opportunity as in
effect immediately prior to the Change of Control or as the
same may thereafter be increased from time to time during the
term of this Agreement;
(C) The failure to continue in effect any compensation
or benefit plan in which the Executive participates or is
entitled to participate in at the time of the Change of
Control, including but not limited to the relevant LTIP, the
relevant AIAP, any defined benefit or defined contribution
plan or related supplemental plans, or any substitute plans
adopted prior to the Change of Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative
plan providing the Executive with substantially similar
benefits) has been made with respect to such plan in
connection with the Change of Control, or the failure to
continue the Executive's participation therein on
substantially the same basis, both in terms of the amount of
the benefits provided and the level of the Executive's
participation relative to other participants, as existed at
the time of the Change of Control;
(D) The taking of any action which would directly or
indirectly reduce any of the benefits to be provided under
Section 5 or any benefits thereunder or any compensation or
benefit plan of the Company, NGH or NHC including, without
limitation the LTIPs, the AIAPs and the Company's Deferred
Compensation Plan or deprive the Executive of or reduce any
benefits or amounts with respect to any perquisite or any
material fringe benefit enjoyed by the Executive at the time
of the Change of Control, or the failure to provide the
Executive with the number of paid vacation days to which the
Executive is entitled on the basis of the Company's practice
with respect to the Executive as in effect at the time of the
Change of Control;
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(E) Any material breach by the Company, NGH or NHC of
any provision of this Agreement including, but not limited to
any provision of Section 5, any benefits thereunder or any
compensation, benefit or perquisite plan of the Company, NGH
or NHC including, without limitation the LTIPs, the AIAPs and
the Company's Deferred Compensation Plan, or any agreements
entered into pursuant thereto;
(F) Any purported termination of Executive's employment
which is not effected pursuant to a Notice of Termination
satisfying the requirements of subsection (c) below; provided
further that for purposes of this Agreement, no such purported
termination shall be effective; or
(G) Requiring the Executive to be based at any office or
location more than thirty-five (35) miles from the office or
location at which the Executive was based immediately prior to
such Change of Control, except for travel reasonably
consistent with the Executive's travel requirements prior to
such Change of Control;
If the Executive provides written notice of the
Executive's non-consent to any of the events in (A), (B), (C),
(D), (E), (F) or (G), above within 180 days after the
occurrence of any such event, the Executive shall be deemed to
have been Involuntarily Terminated upon the earlier of the
date set forth in Executive's Notice of Termination or 181
days after the occurrence of such event.
(iii) As used herein, a "Change of Control" shall occur on the
date upon which one of the following events occurs (except as
otherwise provided in paragraph (C) below):
(A) Any individual, corporation, partnership, group,
associate or other entity or "person" as such term is defined
in Section 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"), other than NHC, NGH or any of their
Subsidiaries, or any employee benefit plan(s) sponsored by
NHC, NGH or any of their Subsidiaries, is or becomes the
"beneficial owner" (as defined in Rule 13D-3 under the
Exchange Act), directly or indirectly, of 30% or more of the
combined voting power of NHC or NGH outstanding securities
ordinarily having the right to vote at elections of directors;
(B) Individuals who constitute the Board of either NHC
or NGH on January 1, 2000 (each such Board the "Incumbent
Board") cease for any reason to constitute at least a majority
of the Board of NHC or NGH, as the case may be, provided that
any person becoming a director subsequent to such date hereof
whose election, or nomination for election by NHC or NGH
shareholders, as the case may
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be, was approved by a vote of at least three-quarters of the
directors comprising that Incumbent Board (either by a
specific vote or by approval of the proxy statement of NHC or
NGH, as the case may be, in which such person is named a
nominee of NHC or NGH, as the case may be, but excluding for
this purpose any such individual whose initial assumption of
office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or
on behalf of an individual, corporation, partnership, group,
associate or other entity or "person" other than the NHC or
NGH Board, as the case may be, shall be, for purposes of this
paragraph (B), considered as though such person were a number
of the Incumbent Board.
(C) The approval by the shareholders of NHC or NGH, as
the case may be, of a plan or agreement providing (I) for a
merger or consolidation of NHC or NGH, as the case may be,
other than with a wholly-owned subsidiary or with NGH, NHC or
any of their subsidiaries, and other than a merger or
consolidation that would result in the voting securities of
NHC or NGH, as the case may be, outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting
power of the voting securities of NHC or NGH, as the case may
be, of such surviving entity outstanding immediately after
such merger or consolidation or (II) for a sale, exchange or
other disposition of all or substantially all of the assets of
NHC or NGH. If any of the events enumerated in this paragraph
(C) occurs, the NHC Board shall determine the effective date
of the Change of Control resulting therefrom.
(c) (i) Any purported termination of the Executive's employment by
the Company or by the Executive shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 7(b)
hereof. For purposes of this Agreement, (A) during the twenty-four (24)
month period beginning on a Change of Control a "Notice of Termination" by
the Company shall mean, and (B) prior to, and following the second
anniversary of, a Change of Control a "Notice of Termination" by the
Executive shall mean, a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of Executive's employment under the provision so
indicated.
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(ii) "Date of Termination" shall mean (i) if the Executive's
employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that the Executive shall
not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), (ii) if the Executive's
employment is terminated by reason of the Executive's death, the
date of the Executive's death, (iii) if the Executive's employment
is terminated by reason of the Executive's Retirement, for Cause,
Involuntary Termination or for any other reason (other than
Disability or death), the date specified in the Notice of
Termination (which (A) in the case of a termination for Cause during
the two (2) year period beginning on a Change of Control shall not
be less than thirty (30) nor more than sixty (60) days from the date
such Notice of Termination is given and (B) in the case of the
Executive's voluntary termination (other than pursuant to Section
4(b) and other than during the two (2) year period beginning on a
Change of Control) shall not be less than three (3) months after the
date such Notice of Termination is given).
5. Compensation Continuance Under This Agreement.
(a) Compensation Period. If at any time during the term of this
Agreement the Executive has an Involuntary Termination pursuant to Section
4, subject to Section 6(g), if applicable, the Executive will be provided
with Compensation Continuance as provided in this Section 5.
(b) Cash Compensation.
(i)(A) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, the Executive will be
entitled to cash compensation equal to two (2) year's Full Pay,
calculated as described below, payable in equal monthly installments
over the Compensation Period (as defined below), each installment
representing 1/18th of one year's Full Pay (as defined below). One
year's "Full Pay" is the sum of (x) plus (y), where (x) is the
Executive's highest annual rate of base salary in effect during the
twelve (12) month period prior to the Executive's Involuntary
Termination and (y) is the annual target amount of the Executive's
annual bonus under the relevant AIAP and/or LTIP for the calendar
year in which the Executive's employment terminated (or, if greater,
the amount of such actual award for the next preceding calendar year
of full-time employment). For all purposes of this Agreement,
"Compensation Period" shall mean the three (3) year period
commencing on the Date of Termination.
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(B) Upon an Involuntary Termination during the two (2)
year period beginning on a Change of Control, the Executive will be
entitled to a lump sum payment within fifteen (15) business days
following the date of such Involuntary Termination equal to twice
the sum of (u), (v) and (w), where (u) is the greater of the
Executive's annual base salary as in effect immediately prior to
such Termination or immediately prior to such Change of Control
(such greater amount, the "Base Salary"), (v) is the greater of the
Executive's annual target bonus under the relevant AIAP and/or LTIP
immediately prior to such Termination or immediately prior to the
Change of Control or ("Target Amount") and (w) is 1.5 times the
greater of the annual perquisite allowance applicable to the
Executive under the Nabisco Flexible Perquisite Program (the
"Program") as in effect immediately prior to such Termination or
immediately prior to such Change of Control (such greater amount,
the "Allowance"). The sum of Base Salary, Target Amount and
Allowance are hereinafter referred to as "Base Cash". For purposes
of this Agreement, "Compensation Period" shall mean the three (3)
year period commencing on the Date of Termination.
(ii) Cash compensation paid pursuant to this Section 5(b)
shall be subject to all required payroll deductions.
(c) Annual Incentive and Retention Plan Awards.
(i) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, the Executive will be
paid at the time of such Involuntary Termination a portion of the
Executive's annual bonus under the relevant AIAP and/or LTIP, based
upon the target award for the year in which the Executive's
Involuntary Termination occurs, prorated for the Executive's active
employment during such year. Except as stated in the foregoing
sentence, all provisions of the relevant AIAP and/or LTIP shall be
applicable to the Executive.
(ii) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, all provisions of NHC's
1999 Retention Program (the "1999 Program") shall be applicable to
the Executive.
(iii) Upon an Involuntary Termination during the two (2) year
period beginning on a Change of Control, the Company shall pay to
the Executive, not later than fifteen (15) business days following
the Date of Termination, a lump sum cash payment equal to the sum of
(A) and (B), where (A) is Executive's AIAP Vested Amount for such
plan year and (B) is the sum of (x) and (y) where (x) is the
Executive's Vested 1999 Program Award Amount and (y) is the
Executive's Earned 1999 Program Amount (each as defined in Exhibit
A) as of the Date of Termination.
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(d) Long Term Incentive Plan Awards. The treatment of long term
incentive awards during the Compensation Period shall be determined
pursuant to the terms of the relevant LTIP and related award agreements;
provided, however, that for such purposes, the Compensation Period shall
be treated as a period of salary and benefit continuance.
(e) Welfare Benefits. During the Compensation Period the Executive
will be provided the welfare benefits and other fringe benefits afforded
by the employee benefit plans and programs maintained by the Company in
which the Executive participated immediately prior to Involuntary
Termination.
(f) Retirement and Savings Plans.
(i) If Executive was participating in any Retirement Plan or
Savings Plan (each as defined in Exhibit A) immediately prior to an
Involuntary Termination prior to, or after the second anniversary
of, a Change of Control, the Executive will continue to accrue or be
deemed to accrue benefits during the Compensation Period under such
Retirement Plans and Savings Plans for purposes of benefit accrual
and employer matching contributions, as applicable, based on the
same formula and matching amount as in effect immediately prior to
such Termination. If the Executive will have attained age 50 at the
end of the Compensation Period with 10 years of service (including
the Compensation Period), the Executive will, subject to the
conditions of Paragraph 6, be deemed retired with the consent of the
Company for the purposes of welfare and executive compensation plans
but not for the purposes of any Retirement or Savings Plan.
Notwithstanding any provision herein to the contrary, upon such a
Termination pension benefits under any Retirement Plan based on
"Average Final Compensation" will be calculated applying the rate of
one year's Full Pay and the Executive's Annual Flexible Perquisite
Allowance for each year in the Compensation Period.
(ii) If Executive was participating in any Retirement Plan
immediately prior to an Involuntary Termination during the two (2)
year period beginning on a Change of Control, the Executive will be
deemed to accrue benefits during the Compensation Period under such
Retirement Plans for purposes of benefit accrual based on the same
formula as in effect immediately prior to such Termination. If the
Executive will have attained age 50 at the end of the Compensation
Period with 10 years of service (including the Compensation Period),
the Executive will, subject to the conditions of Paragraph 6, be
deemed retired with the consent of the Company for the purposes of
welfare and executive compensation plans but not for the purposes of
any Retirement. Notwithstanding any provision herein to the
contrary, upon such a Termination pension benefits under any
Retirement Plan based on "Average Final Compensation" will be
calculated applying the rate of one year's Base Cash for each year
in the Compensation Period.
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(g) Flexible Perquisite Program. During the Compensation Period, the
Executive shall continue to receive benefits under the Program; provided,
further, that in the event of an Involuntary Termination during the two
(2) year period beginning on a Change of Control, ownership of the
automobile assigned to the Executive immediately prior to such Termination
shall be transferred to the Executive within fifteen (15) business days
after such Termination. At the time of such transfer, the Company shall
pay to the Executive such amount in cash that, after payment of all
applicable federal, state and local taxes thereon, computed at the maximum
marginal rates, is equal to all such taxes, so computed, imposed in
connection with such transfer.
(h) Outplacement. During the Compensation Period, Executive will be
provided with outplacement counseling services at Company expense;
provided, however, this expense shall not exceed 18% of the amount of one
year's Full Pay or Base Cash, as the case may be. This counseling shall
include, but is not limited to, skill assessment, job market analysis,
resume preparation, interviewing skills, job search techniques and
negotiating.
6. Conditions on Compensation Continuance.
(a) Availability and Consulting. Upon an Involuntary Termination
prior to, or after the second anniversary of, a Change of Control, during
the related Compensation Period the Executive shall provide consulting
services to the Company on a reasonable basis subject to appropriate
notice and reimbursement of all travel and other expenses. During the
first six (6) months of such Compensation Period, the Executive may be
required by the Company to provide up to fifteen (15) days of consultation
during normal business hours and business days. When and if the Executive
becomes employed on a full-time basis, either with another company or on a
self-employed basis, the Executive's obligation to provide consulting
services shall be limited by the requirements of such employment, and
under appropriate circumstances, may be restricted to telephone
conference.
(b) Confidentiality and Conduct. The Executive warrants that the
Executive will not disclose to any other person any confidential
information or trade secrets concerning the Company or any of its
subsidiaries at any time during or after the Compensation Period and upon
an Involuntary Termination prior to, or after the second anniversary of, a
Change of Control, the Executive will at all times refrain from taking any
action or making any statements, written or oral, which are intended to
and do disparage the goodwill or reputation of the Company, its directors,
officers or executives or which could adversely affect the morale of
Company employees.
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(c) Breach of Conditions. In the event that the Executive
unreasonably refuses to provide consulting services to the extent required
under paragraph (a) above or materially violates the terms and conditions
of paragraph (b) above, the Company may, at its election upon ten (10)
days notice, terminate any ongoing Compensation Period, discontinue cash
compensation payments and employee benefits coverage and cancel any
outstanding stock options or restricted stock. The Company may also
initiate any form of legal action it may deem appropriate seeking damages
or injunctive relief with respect to any material violations of paragraph
(b) above.
(d) Non-Competition. Any Compensation Period resulting from an
Involuntary Termination prior to, or after the second anniversary of, a
Change of Control shall be terminated if the Executive, without the
Company's written approval, accepts a substantially similar or higher
executive position, paying a substantially comparable or greater level of
cash compensation, with any company (other than an Affiliate of the
Company) conducting a business which is substantially competitive with a
business conducted by the Company. Alternatively, the Company may, in its
discretion, appropriately reduce the Executive's cash compensation and
employee benefits coverage for the balance of such Compensation Period.
(e) Employment With Another Employer During Compensation Period.
Except as otherwise provided in this Section 6, if the Executive commences
employment with another employer during a Compensation Period commencing
prior to, or after the second anniversary of, a Change of Control, the
Executive will continue to receive the compensation continuance provided
under Section 5 for the balance of such Compensation Period, except that,
unless otherwise required by law, benefits under the Company's Employee
Benefits Plans, including the Program, if applicable, shall be
appropriately terminated or offset to the extent the same are provided by
the other employer.
(f) Other Severance Benefits. The Executive is entitled to no form
of severance benefits, including benefits otherwise payable under any of
the Company's regular severance policies, other than those set forth or
made applicable by reference in this Agreement. Notwithstanding the
foregoing, the Executive will at the time of termination of employment be
eligible for any form of post-retirement benefit provided under the
Company's qualified Employee Benefits Plans, including retiree medical
benefits, as any other employee upon retirement with the same age and
service. Nothing contained in this Agreement shall adversely affect the
Executive's rights to accrued vested pension benefits or the Executive's
right to receive previously deferred awards or amounts under any of the
Company's short and long term incentive award programs or deferred
compensation plans or perquisite programs.
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(g) Release and Waiver of Claims. In consideration of the
compensation and benefits continuance available pursuant to this
Agreement, upon an Involuntary Termination prior to, or after the second
anniversary of, a Change of Control the Executive agrees to execute a
release, in form and substance reasonably acceptable to the Executive and
the Company, releasing the Company, NHC and NGH from all claims and
liabilities relating to such Termination and the Company's employment of
the Executive.
(h) Disability. In the event the Executive is eligible for benefits
under the Company's Short Term or Long Term Disability Plan during the
Executive's Compensation Period, any Compensation Continuance will be
suspended while disability benefits are paid from any Company plan and
resumed when such disability payments cease. All other provisions of this
Agreement shall remain in effect notwithstanding the Executive's
disability.
(i) Death. In the event of the Executive's death subsequent to
commencement of the Executive's Compensation Period hereunder, the balance
of Compensation Continuance will be paid to the Executive's beneficiary in
a lump sum. "Beneficiary" shall mean the Executive's designated
beneficiary under the Executive's Executive Program life insurance or, if
not so eligible, the Executive's core life insurance benefit under the
Company's plans.
(j) No Mitigations. Notwithstanding anything to the contrary in this
Agreement, the Executive shall not be required to mitigate the amount of
any payment provided for in Section 5 by seeking other employment or
otherwise, nor, except under coordination of benefit rules in connection
with certain welfare benefits under Section 5(e), shall the amount of any
payment or benefit provided for in Section 5 hereof be reduced by any
compensation earned by the Executive as the result of employment by
another employer or by retirement benefits after the Date of Termination
of employment, or otherwise.
7. General Provisions.
(a) Limited Right of Appeal. If the Executive's Compensation Period
is terminated pursuant to Section 6, the Executive may, within fifteen
(15) days after mailing of notice thereof to the Executive, submit to the
Chief Executive Officer of the Company a written objection to such
termination. In such event, the Compensation Committee of the NHC Board at
or before its next regularly scheduled meeting must determine by majority
vote that termination of the Compensation Period was appropriate or,
failing that, the Compensation Period must be reinstated with full
retroactive effect.
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(b) Notices. All notices hereunder shall be in writing and deemed
given if delivered by hand and receipted or if mailed by registered mail,
return receipt requested. Notices to the Company shall be directed to the
Corporate Secretary at the Company's headquarters offices. Notices to the
Executive shall be directed to the Executive's last known home address.
(c) Limited Waiver. The waiver by any party hereto of a violation of
any of the provisions of this Agreement, whether express or implied, shall
not operate or be construed as a waiver of any subsequent violation of any
such provision.
(d) No Assignment. Except as provided herein, no right, benefit,
obligation or interest hereunder shall be subject to assignment,
encumbrance, charge, pledge, hypothecation or set off by Executive or the
Company. The Company, however, may assign its obligations hereunder in the
event of the transfer of the Executive's employment to an Affiliated
Company or the divestiture (whether by the sale of shares or assets) of
the operating company employing the Executive. In the event the
obligations of the Company under this Agreement are assigned to an
employing Affiliated Company as contemplated by Section 4(a)(iii), the
Company agrees to guarantee to Executive the obligations of such
Affiliated Company under this Agreement. Except as provided in the
preceding sentence, upon any permitted assignment of the Company's
obligations hereunder, "Company" shall be deemed to refer to the assignee
as the context may require.
(e) Amendment. This Agreement may not be amended, modified or
cancelled except by written agreement of the parties.
(f) Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall remain in full
force and effect to the fullest extent permitted by law.
(g) Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Executive, the Company, its affiliates, and any
successor organization or organizations which shall succeed to
substantially all of the business and property of the Company, whether by
means of merger, consolidation, acquisition of substantially all of the
assets of the Company or otherwise, including by operation of law.
(h) Unsecured Promise. Unless otherwise stated herein, no benefit or
promise hereunder shall be secured by any specific assets of the Company.
Unless otherwise stated herein, the Executive shall have only the rights
of an unsecured general creditor of the Company in seeking satisfaction of
such benefits or promises. Notwithstanding the foregoing, the Company may
choose to maintain a rabbi trust or trusts for the purpose of paying
certain of the benefits hereunder or under other plans and programs of the
Company and, if so, the Executive shall be entitled to payments therefrom,
if any, as and to the extent provided in such rabbi trust or trusts.
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(i) Governing Law. This Agreement has been made in and shall be
governed and construed in accordance with the laws of the State of
Delaware.
(j) Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties hereto with respect to the matters
covered hereby. This Agreement supersedes and replaces any prior agreement
with respect to employment, compensation continuation and the matters
contained in this Agreement which the Executive may have had with the
Company or any affiliate.
(k) Legal Fees and Expenses.
(i) The Company shall pay to the Executive as incurred all
legal and accounting fees and expenses incurred by the Executive as
a result of the Executive's Involuntary Termination on or during the
two (2) year period beginning on a Change of Control (including all
such fees and expenses, if any, in seeking to obtain or enforce any
right or benefit provided by this Agreement or any other
compensation-related plan, agreement or arrangement of the Company)
unless the Executive's claim is found by an arbitral tribunal of
competent jurisdiction to have been frivolous.
(ii) The Company shall pay to the Executive as incurred all
legal and accounting fees and expenses incurred by the Executive
during the two (2) year period beginning on a Change of Control as a
result of both (A) the Executive's Involuntary Termination prior to
such Change of Control and (B) the Company's refusal after such
Change of Control to provide any right or benefit provided by this
Agreement or any other compensation-related plan, agreement or
arrangement of the Company in respect of such Termination, including
all such fees and expenses, if any, in seeking to obtain or enforce
any such right or benefit unless the Executive's claim is found by
an arbitral tribunal or court of competent jurisdiction to have been
frivolous.
(l) Certain AIAP and LTIP Change of Control Provisions.
(i) In the event of a Change of Control, the Executive will be
paid within fifteen (15) business days following the date of such
Change of Control a lump sum cash payment equal to the Executive's
AIAP Vested Amount.
(ii) Upon a Change of Control, all stock options, shares of
restricted stock, restricted stock units and restricted stock
equivalents then held by the Executive under either LTIP shall
become 100% vested and non-forfeitable on the date of such Change of
Control and any restrictions thereon shall immediately lapse on such
date.
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(m) Certain Payments.
(i) Anything herein to the contrary notwithstanding, in the
event that it is determined that any payment or distribution by the
Company to or for the Executive's benefit, whether paid or payable
or distributed or distributable pursuant to the terms hereof,
including but not limited to Section 7(l), or otherwise, other than
any payment pursuant to this Section 7(m), (a "Payment"), would be
subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive, within fifteen (15) business days
following the determination described in Section 7(m)(ii) below, an
additional payment ("Excise Tax Adjustment Payment") in an amount
such that after payment by the Executive of all applicable Federal,
state and local taxes (computed at the maximum marginal rates and
including any interest or penalties imposed with respect to such
taxes), including any Excise Tax, imposed upon the Excise Tax
Adjustment Payment, the Executive shall retain an amount of the
Excise Tax Adjustment Payment equal to the Excise Tax imposed upon
the Payments.
(ii) All determinations required to be made under this Section
7(m), including whether Excise Tax Adjustment Payment is required
and the amount of such Excise Tax Adjustment Payment, shall be made
by Deloitte & Touche LLP, or such other accounting firm as the
Company may designate prior to a Change of Control, which shall
provide to the Company and the Executive detailed supporting
calculations within fifteen (15) business days of the date of the
Executive's termination of employment. Except as hereinafter
provided, any determination by Deloitte & Touche LLP, or such other
accounting firm as the Company may designate prior to a Change of
Control, shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the
Code at the time of the initial determination hereunder, it is
possible that (x) Excise Tax Adjustment Payments which should have
been made will not have been made by the Company ("Underpayment"),
or (y) certain Payments will have been made which should not have
been made ("Overpayment"), consistent with the calculations required
to be made hereunder. In the event of an Underpayment, the Company
shall promptly determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the
Company to or for the Executive's benefit. In the event that the
Executive discovers that an Overpayment shall have occurred, the
amount thereof shall be promptly repaid to the Company.
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(n) Arbitration. Following a Change of Control, any dispute or
controversy arising under or in connection with this Agreement shall be
settled exclusively by arbitration in New York, New York in accordance
with the National Rules for the Resolution of Employment Disputes of the
American Arbitration Association then in effect. The determination of the
arbitral tribunal shall be conclusive and binding on the parties and
judgment may be entered on the arbitrator's award in any court having
jurisdiction.
(o) Unconditional Obligation. The Company's obligations to make all
payments and honor all commitments under this Agreement or otherwise
following a Change of Control or in connection with an Involuntary
Termination during the two (2) year period beginning on a Change of
Control shall be absolute and unconditional and shall not be affected by
any circumstances including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may
have against the Executive.
(p) Late Payments. To the extent that any payments required to be
made hereunder following a Change of Control in connection with any
Involuntary Termination occurring prior to the second anniversary of such
Change of Control are not made within the period specified therefor, the
Company shall be liable for interest on such delayed payments at the rate
of 150% of the prime rate compounded monthly, as posted by the Morgan
Guaranty Trust Company of New York, from time to time.
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(q) Actuarial Calculations. All required actuarial calculations of
payments to be made hereunder shall be made by Watson Wyatt Worldwide, New
York, New York, or such other actuarial firm as the Company may designate
prior to a Change of Control.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
NABISCO, INC.
By: /s/ C. Michael Sayeau
-------------------------------------
C. Michael Sayeau
Executive Vice President and
Chief Personnel Officer
NABISCO HOLDINGS CORP.
By: /s/ C. Michael Sayeau
-------------------------------------
C. Michael Sayeau
Executive Vice President and
Chief Personnel Officer
NABISCO GROUP HOLDINGS, INC.
By: /s/ James M. Kilts
-------------------------------------
James M. Kilts
President and Chief Executive Officer
THE EXECUTIVE
/s/ James E. Healey
- -------------------
James E. Healey
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EXHIBIT A
DEFINITIONS
AIAP Vested Amount means, as of a Change of Control or as of a Termination
Date during the two (2) year period beginning on a Change of Control, as the
case may be, an amount equal to the value of the Executive's target award under
the relevant AIAP for the relevant performance period in which the Change of
Control or such termination occurs, as the case may be, multiplied by a
fraction, the numerator of which is the number of months (including partial
months) in the period beginning on the first day of the relevant performance
period and ending on the Change of Control or such Termination Date, as the case
may be, and the denominator of which is the number of months in such performance
period; provided that in the event of a termination of employment following a
Change of Control in the year in which a Change of Control occurs, for purposes
of computing the AIAP Vested Amount as of the date of such termination, the
performance period shall be deemed to begin on the first day following the
Change of Control and the target award shall be that in effect immediately
preceding such Change of Control.
Earned 1999 Program Amount means, as of a Termination Date during the two
(2) year period beginning on a Change of Control, an amount equal to the
Executive's Retention Award or awards under the 1999 Program in respect of
calendar years ending prior to such Termination Date and not previously paid to
the Executive.
Vested 1999 Program Amount means, as of a Termination Date during the two
(2) year period beginning on a Change of Control, an amount equal to the value
of the Executive's Retention Award under the 1999 Program in respect of the year
in which such Termination Date occurs.
Retirement Plans means the Retirement Plan for Employees of Nabisco, Inc.,
the Additional Benefits Plan of Nabisco, Inc. and participating Companies, the
Supplemental Benefits Plan of Nabisco, Inc. and participating Companies and the
Supplemental Executive Retirement Plan of Nabisco, Inc. and participating
Companies, and such other plans as the Board may hereafter determine.
Savings Plans means the Capital Investment Plan of Nabisco, Inc., the
Additional Benefits Plan of Nabisco, Inc. and participating Companies and the
Supplemental Benefits Plan of Nabisco, Inc. and participating Companies, and
such other plans as the Board may hereafter determine.
<PAGE>
Exhibit 10.6
EMPLOYMENT AGREEMENT
AMENDMENT AND RESTATEMENT, made effective as of this 17th day of March,
2000, of the EMPLOYMENT AGREEMENT dated October 31, 1988, as amended, by and
between NABISCO, INC., a New Jersey corporation (the "Company"), and James A.
Kirkman III ("the Executive").
RECITALS
WHEREAS, the Executive and RJR Nabisco, Inc., a Delaware corporation
("RJRN"), entered into the Employment Agreement dated October 31, 1988; and
WHEREAS, the Executive and RJRN executed a Special Addendum to the
Employment Agreement as of December 20, 1988; and
WHEREAS, the Executive, RJRN and the Company executed Amendments to the
Employment Agreement as of July 18, 1995 and May 1, 1999; and
WHEREAS, the Company and the Executive agree that the Employment Agreement
should be further amended and restated, in order to more effectively provide the
Executive continued incentives to remain in the service of the Company or its
subsidiaries or affiliates;
NOW, THEREFORE, in consideration of mutual incentives, it is hereby agreed
by and between the Company, Nabisco Holdings Corp. ("NHC") and Nabisco Group
Holdings Corp. ("NGH") and the Executive to amend and restate the Employment
Agreement, effective on the date first above written, as follows:
1. Employment. The Executive agrees to devote the Executive's working time
exclusively to the performance of such services for the Company or NHC or any of
their Subsidiaries or Affiliates (each, as defined below) as may be assigned to
the Executive from time to time and to perform such services faithfully and to
the best of the Executive's ability except as the provisions of subsections
4(b)(i) or 4(b)(ii) shall apply.
For purposes of this Agreement, (i) "Affiliate" means, with respect to the
Company, NHC or NGH, any person or entity directly or indirectly controlling,
controlled by, or under common control with the Company, NHC or NGH, as the case
may be, and (ii) "Subsidiary" of the Company, NHC or NGH means any entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the Company, NHC or
NGH, as the case may be.
<PAGE>
2. Term of Agreement. Subject to Section 7(e) hereof, this Agreement shall
commence on the date hereof and shall remain in effect so long as the Executive
remains employed by the Company or NHC or any of their subsidiaries or any
successor organizations.
3. Termination of Employment Without Compensation Continuance.
(a) Termination for Cause. This Agreement shall immediately be
terminated and neither party shall have any obligation hereunder if the
Executive's employment is terminated for Cause (as defined below).
(i) At any time before a Change of Control (as defined below)
or following the second anniversary of such Change of Control,
termination for "Cause" shall mean termination by the Company of the
Executive's employment resulting from the Executive's: (A) criminal
dishonesty; (B) deliberate and continual refusal to perform
employment duties on substantially a full-time basis; (C) deliberate
and continual refusal to act in accordance with any specific lawful
instructions of a majority of the Board of Directors of NHC (the
"NHC Board"); or (D) deliberate misconduct which could be materially
damaging to the Company without reasonable good faith belief by the
Executive that such conduct was in the best interests of the
Company.
(ii) Any purported termination for Cause under Section 3(a)(i)
shall not be applicable unless (A) the Executive is advised in
writing that the Executive is being terminated for Cause and, (B) if
within fifteen (15) days thereafter the Executive submits to the
Chief Executive Officer of the Company a written objection to such a
determination, the Compensation Committee of the NHC Board at or
before its next regularly scheduled meeting determines by majority
vote that the Executive has been terminated for Cause.
(iii) During the two (2) year period beginning on a Change of
Control, termination for "Cause" shall mean termination by the
Company of the Executive's employment resulting from the
Executive's: (A) willful and continued failure substantially to
perform employment duties with the Company or any Subsidiary or
Affiliate (other than as a result of total or partial incapacity due
to physical or mental illness or as a result of a termination by the
Executive for Good Reason (as defined below)) after a written demand
for substantial performance is delivered to the Executive by the NHC
Board, which demand specifically identifies the manner in which the
NHC Board believes that the Executive has not substantially
performed the Executive's duties; (B) the willful engaging by the
Executive in conduct which is demonstrably and materially injurious
to NHC, NGH or the Company, monetarily or otherwise; or (C) the
Executive's conviction of a
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felony under the laws of the United States, any state or any other
country or political sub-division thereof involving moral turpitude.
For purposes of this paragraph (iii), no act or failure to act on
the Executive's part shall be deemed "willful" unless done or
omitted to be done by the Executive not in good faith and without
reasonable belief that the Executive's action or omission was in the
best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause
under this paragraph (iii) unless and until there shall have been
delivered to the Executive documentation of the affirmative vote
(which cannot be delegated) of not less than three-quarters (3/4) of
the entire membership of the NHC Board of Directors at a meeting of
the NHC Board called and held for such purpose (after reasonable
notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the NHC
Board), finding that in the good faith opinion of the NHC Board the
Executive was guilty of conduct set forth above in subclauses (A),
(B) or (C) above, specifying the particulars thereof in detail.
(b) Voluntary Termination of Employment by the Executive. The
Executive reserves the right to terminate voluntarily the Executive's
employment at any time for any reason. Upon such a termination other than
a termination pursuant to Section 4(b), all obligations of the Company
hereunder shall be cancelled automatically, and the Executive shall not be
entitled to any form of Compensation Continuance under this Agreement,
including that described in Section 5 below.
(c) Disability. The event of physical or mental disability of a
nature that entitles the Executive to benefits under the Company's
Long-Term Disability Plan is not a termination of employment under any
section of this Agreement. As such, disability shall not qualify the
Executive for the Compensation Continuance described herein unless the
Executive is terminated under Section 4(a) or Section 4(b)(i).
(d) Death. In the event of the Executive's death prior to
Involuntary Termination, this Agreement will be null and void.
4. Termination With Compensation Continuance.
(a) Involuntary Termination Without Cause by the Company.
(i) The Company reserves the right to terminate the employment
of the Executive at any time for any reason subject to providing the
compensation and benefits described herein. Except as provided in
Section 6, the Company will provide the Executive with the
Compensation Continuance described in Section 5 hereof if the
Executive is involuntarily separated from active employment without
Cause by the Company ("Involuntary Termination").
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(ii) The divestiture of the operating company employing the
Executive, and the assignment of the obligations of the Company
under this Agreement to such operating company, or its successor or
acquiror, in connection with the divestiture of either all, or
substantially all, the shares or assets of such operating company
shall not automatically be an Involuntary Termination unless such
divestiture and assignment would result in an Involuntary
Termination under Section 4(b) hereof.
(iii) The transfer of the Executive's employment to any
company that owns at least 50% of the voting power of the Company,
or any subsidiary of such company (an "Affiliated Company"), shall
not automatically be deemed an Involuntary Termination unless such
transfer would result in an Involuntary Termination under Section
4(b) hereof.
(b) Deemed Involuntary Termination Without Cause by the Company.
(i) At any time before a Change of Control or following the
second anniversary of a Change of Control, Involuntary Termination
shall be deemed to occur if the Executive voluntarily terminates
employment after: (A) the total amount of the Executive's base
salary, annual bonus and long term incentive opportunity under the
Annual Incentive Award Plans (or other annual incentive plans) of
NGH or NHC, as the case may be, (collectively, as in effect from
time to time, the "AIAPs") and Long Term Incentive Plans (or other
long term incentive plans) of NGH or NHC, as the case may be
(collectively, as in effect from time to time, the "LTIPs") is at
any time reduced by more than 20% without the Executive's consent,
provided, however, nothing herein shall be construed to guarantee
the Executive's target award if performance is below target; (B) the
Executive's job responsibilities are substantially reduced in
importance without the Executive's consent or the Company fails to
guarantee the obligations hereunder as required by Section 7(d); or
(C) the Executive, without the Executive's consent, is at any time
required as a condition of continued employment to relocate more
than thirty-five (35) miles from the Executive's then current place
of employment. Unless the Executive provides written notification of
the Executive's non-consent to an event in (A), (B) or (C) above
within ninety (90) days after the occurrence of such event, the
Executive shall be deemed to have consented to the occurrence of
such event and no deemed Involuntary Termination shall occur. If the
Executive provides written notice of the Executive's non-consent to
any of the events in (A), (B) or (C) above within ninety (90) days
after the occurrence of such event, the Executive shall be deemed to
have been Involuntarily Terminated ninety (90) days after receipt of
such written notice by the Company.
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(ii) At any time during the two (2) year period beginning on a
Change of Control, Involuntary Termination shall be deemed to occur
if the Executive voluntarily terminates employment after an event of
"Good Reason". For purposes of this Agreement "Good Reason" shall
mean, without the Executive's express written consent, any of the
following:
(A) Any reduction in the Executive's duties, any
diminution in the Executive's position or any adverse change
in the Executive's reporting relationship from those in effect
immediately prior to the Change of Control;
(B) Any reduction in the Executive's base salary, grade
or annual bonus or long term incentive opportunity as in
effect immediately prior to the Change of Control or as the
same may thereafter be increased from time to time during the
term of this Agreement;
(C) The failure to continue in effect any compensation
or benefit plan in which the Executive participates or is
entitled to participate in at the time of the Change of
Control, including but not limited to the relevant LTIP, the
relevant AIAP, any defined benefit or defined contribution
plan or related supplemental plans, or any substitute plans
adopted prior to the Change of Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative
plan providing the Executive with substantially similar
benefits) has been made with respect to such plan in
connection with the Change of Control, or the failure to
continue the Executive's participation therein on
substantially the same basis, both in terms of the amount of
the benefits provided and the level of the Executive's
participation relative to other participants, as existed at
the time of the Change of Control;
(D) The taking of any action which would directly or
indirectly reduce any of the benefits to be provided under
Section 5 or any benefits thereunder or any compensation or
benefit plan of the Company, NGH or NHC including, without
limitation the LTIPs, the AIAPs and the Company's Deferred
Compensation Plan or deprive the Executive of or reduce any
benefits or amounts with respect to any perquisite or any
material fringe benefit enjoyed by the Executive at the time
of the Change of Control, or the failure to provide the
Executive with the number of paid vacation days to which the
Executive is entitled on the basis of the Company's practice
with respect to the Executive as in effect at the time of the
Change of Control;
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(E) Any material breach by the Company, NGH or NHC of
any provision of this Agreement including, but not limited to
any provision of Section 5, any benefits thereunder or any
compensation, benefit or perquisite plan of the Company, NGH
or NHC including, without limitation the LTIPs, the AIAPs and
the Company's Deferred Compensation Plan, or any agreements
entered into pursuant thereto;
(F) Any purported termination of Executive's employment
which is not effected pursuant to a Notice of Termination
satisfying the requirements of subsection (c) below; provided
further that for purposes of this Agreement, no such purported
termination shall be effective; or
(G) Requiring the Executive to be based at any office or
location more than thirty-five (35) miles from the office or
location at which the Executive was based immediately prior to
such Change of Control, except for travel reasonably
consistent with the Executive's travel requirements prior to
such Change of Control;
If the Executive provides written notice of the
Executive's non-consent to any of the events in (A), (B), (C),
(D), (E), (F) or (G), above within 180 days after the
occurrence of any such event, the Executive shall be deemed to
have been Involuntarily Terminated upon the earlier of the
date set forth in Executive's Notice of Termination or 181
days after the occurrence of such event.
(iii) As used herein, a "Change of Control" shall occur on the
date upon which one of the following events occurs (except as
otherwise provided in paragraph (C) below):
(A) Any individual, corporation, partnership, group,
associate or other entity or "person" as such term is defined
in Section 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"), other than NHC, NGH or any of their
Subsidiaries, or any employee benefit plan(s) sponsored by
NHC, NGH or any of their Subsidiaries, is or becomes the
"beneficial owner" (as defined in Rule 13D-3 under the
Exchange Act), directly or indirectly, of 30% or more of the
combined voting power of NHC or NGH outstanding securities
ordinarily having the right to vote at elections of directors;
(B) Individuals who constitute the Board of either NHC
or NGH on January 1, 2000 (each such Board the "Incumbent
Board") cease for any reason to constitute at least a majority
of the Board of NHC or NGH, as the case may be, provided that
any person becoming a director subsequent to such date hereof
whose election, or nomination for election by NHC or NGH
shareholders, as the case may
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be, was approved by a vote of at least three-quarters of the
directors comprising that Incumbent Board (either by a
specific vote or by approval of the proxy statement of NHC or
NGH, as the case may be, in which such person is named a
nominee of NHC or NGH, as the case may be, but excluding for
this purpose any such individual whose initial assumption of
office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or
on behalf of an individual, corporation, partnership, group,
associate or other entity or "person" other than the NHC or
NGH Board, as the case may be, shall be, for purposes of this
paragraph (B), considered as though such person were a number
of the Incumbent Board.
(C) The approval by the shareholders of NHC or NGH, as
the case may be, of a plan or agreement providing (I) for a
merger or consolidation of NHC or NGH, as the case may be,
other than with a wholly-owned subsidiary or with NGH, NHC or
any of their subsidiaries, and other than a merger or
consolidation that would result in the voting securities of
NHC or NGH, as the case may be, outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting
power of the voting securities of NHC or NGH, as the case may
be, of such surviving entity outstanding immediately after
such merger or consolidation or (II) for a sale, exchange or
other disposition of all or substantially all of the assets of
NHC or NGH. If any of the events enumerated in this paragraph
(C) occurs, the NHC Board shall determine the effective date
of the Change of Control resulting therefrom.
(c) (i) Any purported termination of the Executive's employment by
the Company or by the Executive shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 7(b)
hereof. For purposes of this Agreement, (A) during the twenty-four (24)
month period beginning on a Change of Control a "Notice of Termination" by
the Company shall mean, and (B) prior to, and following the second
anniversary of, a Change of Control a "Notice of Termination" by the
Executive shall mean, a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of Executive's employment under the provision so
indicated.
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(ii) "Date of Termination" shall mean (i) if the Executive's
employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that the Executive shall
not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), (ii) if the Executive's
employment is terminated by reason of the Executive's death, the
date of the Executive's death, (iii) if the Executive's employment
is terminated by reason of the Executive's Retirement, for Cause,
Involuntary Termination or for any other reason (other than
Disability or death), the date specified in the Notice of
Termination (which (A) in the case of a termination for Cause during
the two (2) year period beginning on a Change of Control shall not
be less than thirty (30) nor more than sixty (60) days from the date
such Notice of Termination is given and (B) in the case of the
Executive's voluntary termination (other than pursuant to Section
4(b) and other than during the two (2) year period beginning on a
Change of Control) shall not be less than three (3) months after the
date such Notice of Termination is given).
5. Compensation Continuance Under This Agreement.
(a) Compensation Period. If at any time during the term of this
Agreement the Executive has an Involuntary Termination pursuant to Section
4, subject to Section 6(g), if applicable, the Executive will be provided
with Compensation Continuance as provided in this Section 5.
(b) Cash Compensation.
(i)(A) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, the Executive will be
entitled to cash compensation equal to two (2) year's Full Pay,
calculated as described below, payable in equal monthly installments
over the Compensation Period (as defined below), each installment
representing 1/18th of one year's Full Pay (as defined below). One
year's "Full Pay" is the sum of (x) plus (y), where (x) is the
Executive's highest annual rate of base salary in effect during the
twelve (12) month period prior to the Executive's Involuntary
Termination and (y) is the annual target amount of the Executive's
annual bonus under the relevant AIAP and/or LTIP for the calendar
year in which the Executive's employment terminated (or, if greater,
the amount of such actual award for the next preceding calendar year
of full-time employment). For all purposes of this Agreement,
"Compensation Period" shall mean the three (3) year period
commencing on the Date of Termination.
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(B) Upon an Involuntary Termination during the two (2)
year period beginning on a Change of Control, the Executive will be
entitled to a lump sum payment within fifteen (15) business days
following the date of such Involuntary Termination equal to twice
the sum of (u), (v) and (w), where (u) is the greater of the
Executive's annual base salary as in effect immediately prior to
such Termination or immediately prior to such Change of Control
(such greater amount, the "Base Salary"), (v) is the greater of (1)
the Executive's annual target bonus under the relevant AIAP and/or
LTIP immediately prior to such Termination or immediately prior to
the Change of Control or (2) the greater of the aggregate amount of
such actual award for the calendar year immediately prior to such
Termination or immediately prior to the Change of Control (the
greater of (1) and (2), the "Target Amount") and (w) is 1.5 times
the greater of the annual perquisite allowance applicable to the
Executive under the Nabisco Flexible Perquisite Program (the
"Program") as in effect immediately prior to such Termination or
immediately prior to such Change of Control (such greater amount,
the "Allowance"). The sum of Base Salary, Target Amount and
Allowance are hereinafter referred to as "Base Cash". For purposes
of this Agreement, "Compensation Period" shall mean the three (3)
year period commencing on the Date of Termination.
(ii) Cash compensation paid pursuant to this Section 5(b)
shall be subject to all required payroll deductions.
(c) Annual Incentive and Retention Plan Awards.
(i) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, the Executive will be
paid at the time of such Involuntary Termination a portion of the
Executive's annual bonus under the relevant AIAP and/or LTIP, based
upon the target award for the year in which the Executive's
Involuntary Termination occurs, prorated for the Executive's active
employment during such year. Except as stated in the foregoing
sentence, all provisions of the relevant AIAP and/or LTIP shall be
applicable to the Executive.
(ii) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, all provisions of NHC's
1999 Retention Program (the "1999 Program") shall be applicable to
the Executive.
(iii) Upon an Involuntary Termination during the two (2) year
period beginning on a Change of Control, the Company shall pay to
the Executive, not later than fifteen (15) business days following
the Date of Termination, a lump sum cash payment equal to the sum of
(A) and (B), where (A) is Executive's AIAP Vested Amount for such
plan year and (B) is the sum of (x) and (y) where (x) is the
Executive's Vested 1999 Program Award Amount and (y) is the
Executive's Earned 1999 Program Amount
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(each as defined in Exhibit A) as of the Date of Termination.
(d) Long Term Incentive Plan Awards. The treatment of long term
incentive awards during the Compensation Period shall be determined
pursuant to the terms of the relevant LTIP and related award agreements;
provided, however, that for such purposes, the Compensation Period shall
be treated as a period of salary and benefit continuance.
(e) Welfare Benefits. During the Compensation Period the Executive
will be provided the welfare benefits and other fringe benefits afforded
by the employee benefit plans and programs maintained by the Company in
which the Executive participated immediately prior to Involuntary
Termination.
(f) Retirement and Savings Plans.
(i) If Executive was participating in any Retirement Plan or
Savings Plan (each as defined in Exhibit A) immediately prior to an
Involuntary Termination prior to, or after the second anniversary
of, a Change of Control, the Executive will continue to accrue or be
deemed to accrue benefits during the Compensation Period under such
Retirement Plans and Savings Plans for purposes of benefit accrual
and employer matching contributions, as applicable, based on the
same formula and matching amount as in effect immediately prior to
such Termination. If the Executive will have attained age 50 at the
end of the Compensation Period with 10 years of service (including
the Compensation Period), the Executive will, subject to the
conditions of Paragraph 6, be deemed retired with the consent of the
Company for the purposes of welfare and executive compensation plans
but not for the purposes of any Retirement or Savings Plan.
Notwithstanding any provision herein to the contrary, upon such a
Termination pension benefits under any Retirement Plan based on
"Average Final Compensation" will be calculated applying the rate of
one year's Full Pay and the Executive's Annual Flexible Perquisite
Allowance for each year in the Compensation Period.
(ii) If Executive was participating in any Retirement Plan
immediately prior to an Involuntary Termination during the two (2)
year period beginning on a Change of Control, the Executive will be
deemed to accrue benefits during the Compensation Period under such
Retirement Plans for purposes of benefit accrual based on the same
formula as in effect immediately prior to such Termination. If the
Executive will have attained age 50 at the end of the Compensation
Period with 10 years of service (including the Compensation Period),
the Executive will, subject to the conditions of Paragraph 6, be
deemed retired with the consent of the Company for the purposes of
welfare and executive compensation plans but not for the purposes of
any Retirement. Notwithstanding any provision herein to the
contrary, upon such a Termination pension benefits under any
Retirement Plan
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based on "Average Final Compensation" will be calculated applying
the rate of one year's Base Cash for each year in the Compensation
Period.
(g) Flexible Perquisite Program. During the Compensation Period, the
Executive shall continue to receive benefits under the Program; provided,
further, that in the event of an Involuntary Termination during the two
(2) year period beginning on a Change of Control, ownership of the
automobile assigned to the Executive immediately prior to such Termination
shall be transferred to the Executive within fifteen (15) business days
after such Termination. At the time of such transfer, the Company shall
pay to the Executive such amount in cash that, after payment of all
applicable federal, state and local taxes thereon, computed at the maximum
marginal rates, is equal to all such taxes, so computed, imposed in
connection with such transfer.
(h) Outplacement. During the Compensation Period, Executive will be
provided with outplacement counseling services at Company expense;
provided, however, this expense shall not exceed 18% of the amount of one
year's Full Pay or Base Cash, as the case may be. This counseling shall
include, but is not limited to, skill assessment, job market analysis,
resume preparation, interviewing skills, job search techniques and
negotiating.
6. Conditions on Compensation Continuance.
(a) Availability and Consulting. Upon an Involuntary Termination
prior to, or after the second anniversary of, a Change of Control, during
the related Compensation Period the Executive shall provide consulting
services to the Company on a reasonable basis subject to appropriate
notice and reimbursement of all travel and other expenses. During the
first six (6) months of such Compensation Period, the Executive may be
required by the Company to provide up to fifteen (15) days of consultation
during normal business hours and business days. When and if the Executive
becomes employed on a full-time basis, either with another company or on a
self-employed basis, the Executive's obligation to provide consulting
services shall be limited by the requirements of such employment, and
under appropriate circumstances, may be restricted to telephone
conference.
(b) Confidentiality and Conduct. The Executive warrants that the
Executive will not disclose to any other person any confidential
information or trade secrets concerning the Company or any of its
subsidiaries at any time during or after the Compensation Period and upon
an Involuntary Termination prior to, or after the second anniversary of, a
Change of Control, the Executive will at all times refrain from taking any
action or making any statements, written or oral, which are intended to
and do disparage the goodwill or reputation of the Company, its directors,
officers or executives or which could adversely affect the morale of
Company employees.
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(c) Breach of Conditions. In the event that the Executive
unreasonably refuses to provide consulting services to the extent required
under paragraph (a) above or materially violates the terms and conditions
of paragraph (b) above, the Company may, at its election upon ten (10)
days notice, terminate any ongoing Compensation Period, discontinue cash
compensation payments and employee benefits coverage and cancel any
outstanding stock options or restricted stock. The Company may also
initiate any form of legal action it may deem appropriate seeking damages
or injunctive relief with respect to any material violations of paragraph
(b) above.
(d) Non-Competition. Any Compensation Period resulting from an
Involuntary Termination prior to, or after the second anniversary of, a
Change of Control shall be terminated if the Executive, without the
Company's written approval, accepts a substantially similar or higher
executive position, paying a substantially comparable or greater level of
cash compensation, with any company (other than an Affiliate of the
Company) conducting a business which is substantially competitive with a
business conducted by the Company. Alternatively, the Company may, in its
discretion, appropriately reduce the Executive's cash compensation and
employee benefits coverage for the balance of such Compensation Period.
(e) Employment With Another Employer During Compensation Period.
Except as otherwise provided in this Section 6, if the Executive commences
employment with another employer during a Compensation Period commencing
prior to, or after the second anniversary of, a Change of Control, the
Executive will continue to receive the compensation continuance provided
under Section 5 for the balance of such Compensation Period, except that,
unless otherwise required by law, benefits under the Company's Employee
Benefits Plans, including the Program, if applicable, shall be
appropriately terminated or offset to the extent the same are provided by
the other employer.
(f) Other Severance Benefits. The Executive is entitled to no form
of severance benefits, including benefits otherwise payable under any of
the Company's regular severance policies, other than those set forth or
made applicable by reference in this Agreement. Notwithstanding the
foregoing, the Executive will at the time of termination of employment be
eligible for any form of post-retirement benefit provided under the
Company's qualified Employee Benefits Plans, including retiree medical
benefits, as any other employee upon retirement with the same age and
service. Nothing contained in this Agreement shall adversely affect the
Executive's rights to accrued vested pension benefits or the Executive's
right to receive previously deferred awards or amounts under any of the
Company's short and long term incentive award programs or deferred
compensation plans or perquisite programs.
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(g) Release and Waiver of Claims. In consideration of the
compensation and benefits continuance available pursuant to this
Agreement, upon an Involuntary Termination prior to, or after the second
anniversary of, a Change of Control the Executive agrees to execute a
release, in form and substance reasonably acceptable to the Executive and
the Company, releasing the Company, NHC and NGH from all claims and
liabilities relating to such Termination and the Company's employment of
the Executive.
(h) Disability. In the event the Executive is eligible for benefits
under the Company's Short Term or Long Term Disability Plan during the
Executive's Compensation Period, any Compensation Continuance will be
suspended while disability benefits are paid from any Company plan and
resumed when such disability payments cease. All other provisions of this
Agreement shall remain in effect notwithstanding the Executive's
disability.
(i) Death. In the event of the Executive's death subsequent to
commencement of the Executive's Compensation Period hereunder, the balance
of Compensation Continuance will be paid to the Executive's beneficiary in
a lump sum. "Beneficiary" shall mean the Executive's designated
beneficiary under the Executive's Executive Program life insurance or, if
not so eligible, the Executive's core life insurance benefit under the
Company's plans.
(j) No Mitigations. Notwithstanding anything to the contrary in this
Agreement, the Executive shall not be required to mitigate the amount of
any payment provided for in Section 5 by seeking other employment or
otherwise, nor, except under coordination of benefit rules in connection
with certain welfare benefits under Section 5(e), shall the amount of any
payment or benefit provided for in Section 5 hereof be reduced by any
compensation earned by the Executive as the result of employment by
another employer or by retirement benefits after the Date of Termination
of employment, or otherwise.
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7. General Provisions.
(a) Limited Right of Appeal. If the Executive's Compensation Period
is terminated pursuant to Section 6, the Executive may, within fifteen
(15) days after mailing of notice thereof to the Executive, submit to the
Chief Executive Officer of the Company a written objection to such
termination. In such event, the Compensation Committee of the NHC Board at
or before its next regularly scheduled meeting must determine by majority
vote that termination of the Compensation Period was appropriate or,
failing that, the Compensation Period must be reinstated with full
retroactive effect.
(b) Notices. All notices hereunder shall be in writing and deemed
given if delivered by hand and receipted or if mailed by registered mail,
return receipt requested. Notices to the Company shall be directed to the
Corporate Secretary at the Company's headquarters offices. Notices to the
Executive shall be directed to the Executive's last known home address.
(c) Limited Waiver. The waiver by any party hereto of a violation of
any of the provisions of this Agreement, whether express or implied, shall
not operate or be construed as a waiver of any subsequent violation of any
such provision.
(d) No Assignment. Except as provided herein, no right, benefit,
obligation or interest hereunder shall be subject to assignment,
encumbrance, charge, pledge, hypothecation or set off by Executive or the
Company. The Company, however, may assign its obligations hereunder in the
event of the transfer of the Executive's employment to an Affiliated
Company or the divestiture (whether by the sale of shares or assets) of
the operating company employing the Executive. In the event the
obligations of the Company under this Agreement are assigned to an
employing Affiliated Company as contemplated by Section 4(a)(iii), the
Company agrees to guarantee to Executive the obligations of such
Affiliated Company under this Agreement. Except as provided in the
preceding sentence, upon any permitted assignment of the Company's
obligations hereunder, "Company" shall be deemed to refer to the assignee
as the context may require.
(e) Amendment. This Agreement may not be amended, modified or
cancelled except by written agreement of the parties.
(f) Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall remain in full
force and effect to the fullest extent permitted by law.
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(g) Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Executive, the Company, its affiliates, and any
successor organization or organizations which shall succeed to
substantially all of the business and property of the Company, whether by
means of merger, consolidation, acquisition of substantially all of the
assets of the Company or otherwise, including by operation of law.
(h) Unsecured Promise. Unless otherwise stated herein, no benefit or
promise hereunder shall be secured by any specific assets of the Company.
Unless otherwise stated herein, the Executive shall have only the rights
of an unsecured general creditor of the Company in seeking satisfaction of
such benefits or promises. Notwithstanding the foregoing, the Company may
choose to maintain a rabbi trust or trusts for the purpose of paying
certain of the benefits hereunder or under other plans and programs of the
Company and, if so, the Executive shall be entitled to payments
therefrom, if any, as and to the extent provided in such rabbi trust or
trusts.
(i) Governing Law. This Agreement has been made in and shall be
governed and construed in accordance with the laws of the State of
Delaware.
(j) Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties hereto with respect to the matters
covered hereby. This Agreement supersedes and replaces any prior agreement
with respect to employment, compensation continuation and the matters
contained in this Agreement which the Executive may have had with the
Company or any affiliate.
(k) Legal Fees and Expenses.
(i) The Company shall pay to the Executive as incurred all
legal and accounting fees and expenses incurred by the Executive as
a result of the Executive's Involuntary Termination on or during the
two (2) year period beginning on a Change of Control (including all
such fees and expenses, if any, in seeking to obtain or enforce any
right or benefit provided by this Agreement or any other
compensation-related plan, agreement or arrangement of the Company)
unless the Executive's claim is found by an arbitral tribunal of
competent jurisdiction to have been frivolous.
(ii) The Company shall pay to the Executive as incurred all
legal and accounting fees and expenses incurred by the Executive
during the two (2) year period beginning on a Change of Control as a
result of both (A) the Executive's Involuntary Termination prior to
such Change of Control and (B) the Company's refusal after such
Change of Control to provide any right or benefit provided by this
Agreement or any other compensation-related plan, agreement or
arrangement of the Company in respect of such Termination, including
all such fees and expenses, if any, in seeking to obtain or enforce
any such right or benefit unless the Executive's claim is found by
an arbitral tribunal or court of competent jurisdiction to have been
frivolous.
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(l) Certain AIAP and LTIP Change of Control Provisions.
(i) In the event of a Change of Control, the Executive will be
paid within fifteen (15) business days following the date of such
Change of Control a lump sum cash payment equal to the Executive's
AIAP Vested Amount.
(ii) Upon a Change of Control, all stock options, shares of
restricted stock, restricted stock units and restricted stock
equivalents then held by the Executive under either LTIP shall
become 100% vested and non-forfeitable on the date of such Change of
Control and any restrictions thereon shall immediately lapse on such
date.
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(m) Certain Payments.
(i) Anything herein to the contrary notwithstanding, in the
event that it is determined that any payment or distribution by the
Company to or for the Executive's benefit, whether paid or payable
or distributed or distributable pursuant to the terms hereof,
including but not limited to Section 7(l), or otherwise, other than
any payment pursuant to this Section 7(m), (a "Payment"), would be
subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive, within fifteen (15) business days
following the determination described in Section 7(m)(ii) below, an
additional payment ("Excise Tax Adjustment Payment") in an amount
such that after payment by the Executive of all applicable Federal,
state and local taxes (computed at the maximum marginal rates and
including any interest or penalties imposed with respect to such
taxes), including any Excise Tax, imposed upon the Excise Tax
Adjustment Payment, the Executive shall retain an amount of the
Excise Tax Adjustment Payment equal to the Excise Tax imposed upon
the Payments.
(ii) All determinations required to be made under this Section
7(m), including whether Excise Tax Adjustment Payment is required
and the amount of such Excise Tax Adjustment Payment, shall be made
by Deloitte & Touche LLP, or such other accounting firm as the
Company may designate prior to a Change of Control, which shall
provide to the Company and the Executive detailed supporting
calculations within fifteen (15) business days of the date of the
Executive's termination of employment. Except as hereinafter
provided, any determination by Deloitte & Touche LLP, or such other
accounting firm as the Company may designate prior to a Change of
Control, shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the
Code at the time of the initial determination hereunder, it is
possible that (x) Excise Tax Adjustment Payments which should have
been made will not have been made by the Company ("Underpayment"),
or (y) certain Payments will have been made which should not have
been made ("Overpayment"), consistent with the calculations required
to be made hereunder. In the event of an Underpayment, the Company
shall promptly determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the
Company to or for the Executive's benefit. In the event that the
Executive discovers that an Overpayment shall have occurred, the
amount thereof shall be promptly repaid to the Company.
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(n) Arbitration. Following a Change of Control, any dispute or
controversy arising under or in connection with this Agreement shall be
settled exclusively by arbitration in New York, New York in accordance
with the National Rules for the Resolution of Employment Disputes of the
American Arbitration Association then in effect. The determination of the
arbitral tribunal shall be conclusive and binding on the parties and
judgment may be entered on the arbitrator's award in any court having
jurisdiction.
(o) Unconditional Obligation. The Company's obligations to make all
payments and honor all commitments under this Agreement or otherwise
following a Change of Control or in connection with an Involuntary
Termination during the two (2) year period beginning on a Change of
Control shall be absolute and unconditional and shall not be affected by
any circumstances including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may
have against the Executive.
(p) Late Payments. To the extent that any payments required to be
made hereunder following a Change of Control in connection with any
Involuntary Termination occurring prior to the second anniversary of such
Change of Control are not made within the period specified therefor, the
Company shall be liable for interest on such delayed payments at the rate
of 150% of the prime rate compounded monthly, as posted by the Morgan
Guaranty Trust Company of New York, from time to time.
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(q) Actuarial Calculations. All required actuarial calculations of
payments to be made hereunder shall be made by Watson Wyatt Worldwide, New
York, New York, or such other actuarial firm as the Company may designate
prior to a Change of Control.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
NABISCO, INC.
By: /s/ C. Michael Sayeau
-------------------------------------
C. Michael Sayeau
Executive Vice President and
Chief Personnel Officer
NABISCO HOLDINGS CORP.
By: /s/ C. Michael Sayeau
-------------------------------------
C. Michael Sayeau
Executive Vice President and
Chief Personnel Officer
NABISCO GROUP HOLDINGS, INC.
By: /s/ James M. Kilts
-------------------------------------
James M. Kilts
President and Chief Executive Officer
THE EXECUTIVE
/s/ James A. Kirkman III
- ------------------------
James A. Kirkman III
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EXHIBIT A
DEFINITIONS
AIAP Vested Amount means, as of a Change of Control or as of a Termination
Date during the two (2) year period beginning on a Change of Control, as the
case may be, an amount equal to the value of the Executive's target award under
the relevant AIAP for the relevant performance period in which the Change of
Control or such termination occurs, as the case may be, multiplied by a
fraction, the numerator of which is the number of months (including partial
months) in the period beginning on the first day of the relevant performance
period and ending on the Change of Control or such Termination Date, as the case
may be, and the denominator of which is the number of months in such performance
period; provided that in the event of a termination of employment following a
Change of Control in the year in which a Change of Control occurs, for purposes
of computing the AIAP Vested Amount as of the date of such termination, the
performance period shall be deemed to begin on the first day following the
Change of Control and the target award shall be that in effect immediately
preceding such Change of Control.
Earned 1999 Program Amount means, as of a Termination Date during the two
(2) year period beginning on a Change of Control, an amount equal to the
Executive's Retention Award or awards under the 1999 Program in respect of
calendar years ending prior to such Termination Date and not previously paid to
the Executive.
Vested 1999 Program Amount means, as of a Termination Date during the two
(2) year period beginning on a Change of Control, an amount equal to the value
of the Executive's Retention Award under the 1999 Program in respect of the year
in which such Termination Date occurs.
Retirement Plans means the Retirement Plan for Employees of Nabisco, Inc.,
the Additional Benefits Plan of Nabisco, Inc. and participating Companies, the
Supplemental Benefits Plan of Nabisco, Inc. and participating Companies and the
Supplemental Executive Retirement Plan of Nabisco, Inc. and participating
Companies, and such other plans as the Board may hereafter determine.
Savings Plans means the Capital Investment Plan of Nabisco, Inc., the
Additional Benefits Plan of Nabisco, Inc. and participating Companies and the
Supplemental Benefits Plan of Nabisco, Inc. and participating Companies, and
such other plans as the Board may hereafter determine.
<PAGE>
Exhibit 10.7
EMPLOYMENT AGREEMENT
AMENDMENT AND RESTATEMENT, made effective as of this 17th day of March,
2000, of the EMPLOYMENT AGREEMENT dated February 9, 1998, as amended, by and
between NABISCO, INC., a New Jersey corporation (the "Company"), and Richard H.
Lenny ("the Executive").
RECITALS
WHEREAS, the Executive and RJR Nabisco, Inc., a Delaware corporation
("RJRN"), entered into the Employment Agreement dated February 9, 1998; and
WHEREAS, the Executive, RJRN and the Company executed an Amendment to the
Employment Agreement as of May 1, 1999; and
WHEREAS, the Company and the Executive agree that the Employment Agreement
should be further amended and restated, in order to more effectively provide the
Executive continued incentives to remain in the service of the Company or its
subsidiaries or affiliates;
NOW, THEREFORE, in consideration of mutual incentives, it is hereby agreed
by and between the Company, Nabisco Holdings Corp. ("NHC") and Nabisco Group
Holdings Corp. ("NGH") and the Executive to amend and restate the Employment
Agreement, effective on the date first above written, as follows:
1. Employment. The Executive agrees to devote the Executive's working time
exclusively to the performance of such services for the Company or NHC or any of
their Subsidiaries or Affiliates (each, as defined below) as may be assigned to
the Executive from time to time and to perform such services faithfully and to
the best of the Executive's ability except as the provisions of subsections
4(b)(i) or 4(b)(ii) shall apply.
For purposes of this Agreement, (i) "Affiliate" means, with respect to the
Company, NHC or NGH, any person or entity directly or indirectly controlling,
controlled by, or under common control with the Company, NHC or NGH, as the case
may be, and (ii) "Subsidiary" of the Company, NHC or NGH means any entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the Company, NHC or
NGH, as the case may be.
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2. Term of Agreement. Subject to Section 7(e) hereof, this Agreement shall
commence on the date hereof and shall remain in effect so long as the Executive
remains employed by the Company or NHC or any of their subsidiaries or any
successor organizations.
3. Termination of Employment Without Compensation Continuance.
(a) Termination for Cause. This Agreement shall immediately be
terminated and neither party shall have any obligation hereunder if the
Executive's employment is terminated for Cause (as defined below).
(i) At any time before a Change of Control (as defined below)
or following the second anniversary of such Change of Control,
termination for "Cause" shall mean termination by the Company of the
Executive's employment resulting from the Executive's: (A) criminal
dishonesty; (B) deliberate and continual refusal to perform
employment duties on substantially a full-time basis; (C) deliberate
and continual refusal to act in accordance with any specific lawful
instructions of a majority of the Board of Directors of NHC (the
"NHC Board"); or (D) deliberate misconduct which could be materially
damaging to the Company without reasonable good faith belief by the
Executive that such conduct was in the best interests of the
Company.
(ii) Any purported termination for Cause under Section 3(a)(i)
shall not be applicable unless (A) the Executive is advised in
writing that the Executive is being terminated for Cause and, (B) if
within fifteen (15) days thereafter the Executive submits to the
Chief Executive Officer of the Company a written objection to such a
determination, the Compensation Committee of the NHC Board at or
before its next regularly scheduled meeting determines by majority
vote that the Executive has been terminated for Cause.
(iii) During the two (2) year period beginning on a Change of
Control, termination for "Cause" shall mean termination by the
Company of the Executive's employment resulting from the
Executive's: (A) willful and continued failure substantially to
perform employment duties with the Company or any Subsidiary or
Affiliate (other than as a result of total or partial incapacity due
to physical or mental illness or as a result of a termination by the
Executive for Good Reason (as defined below)) after a written demand
for substantial performance is delivered to the Executive by the NHC
Board, which demand specifically identifies the manner in which the
NHC Board believes that the Executive has not substantially
performed the Executive's duties; (B) the willful engaging by the
Executive in conduct which is demonstrably and materially injurious
to NHC, NGH or the Company, monetarily or otherwise; or (C) the
Executive's conviction of a
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felony under the laws of the United States, any state or any other
country or political sub-division thereof involving moral turpitude.
For purposes of this paragraph (iii), no act or failure to act on
the Executive's part shall be deemed "willful" unless done or
omitted to be done by the Executive not in good faith and without
reasonable belief that the Executive's action or omission was in the
best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause
under this paragraph (iii) unless and until there shall have been
delivered to the Executive documentation of the affirmative vote
(which cannot be delegated) of not less than three-quarters (3/4) of
the entire membership of the NHC Board of Directors at a meeting of
the NHC Board called and held for such purpose (after reasonable
notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the NHC
Board), finding that in the good faith opinion of the NHC Board the
Executive was guilty of conduct set forth above in subclauses (A),
(B) or (C) above, specifying the particulars thereof in detail.
(b) Voluntary Termination of Employment by the Executive. The
Executive reserves the right to terminate voluntarily the Executive's
employment at any time for any reason. Upon such a termination other than
a termination pursuant to Section 4(b), all obligations of the Company
hereunder shall be cancelled automatically, and the Executive shall not be
entitled to any form of Compensation Continuance under this Agreement,
including that described in Section 5 below.
(c) Disability. The event of physical or mental disability of a
nature that entitles the Executive to benefits under the Company's
Long-Term Disability Plan is not a termination of employment under any
section of this Agreement. As such, disability shall not qualify the
Executive for the Compensation Continuance described herein unless the
Executive is terminated under Section 4(a) or Section 4(b)(i).
(d) Death. In the event of the Executive's death prior to
Involuntary Termination, this Agreement will be null and void.
4. Termination With Compensation Continuance.
(a) Involuntary Termination Without Cause by the Company.
(i) The Company reserves the right to terminate the employment
of the Executive at any time for any reason subject to providing the
compensation and benefits described herein. Except as provided in
Section 6, the Company will provide the Executive with the
Compensation Continuance described in Section 5 hereof if the
Executive is involuntarily separated from active employment without
Cause by the Company ("Involuntary Termination").
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(ii) The divestiture of the operating company employing the
Executive, and the assignment of the obligations of the Company
under this Agreement to such operating company, or its successor or
acquiror, in connection with the divestiture of either all, or
substantially all, the shares or assets of such operating company
shall not automatically be an Involuntary Termination unless such
divestiture and assignment would result in an Involuntary
Termination under Section 4(b) hereof.
(iii) The transfer of the Executive's employment to any
company that owns at least 50% of the voting power of the Company,
or any subsidiary of such company (an "Affiliated Company"), shall
not automatically be deemed an Involuntary Termination unless such
transfer would result in an Involuntary Termination under Section
4(b) hereof.
(b) Deemed Involuntary Termination Without Cause by the Company.
(i) At any time before a Change of Control or following the
second anniversary of a Change of Control, Involuntary Termination
shall be deemed to occur if the Executive voluntarily terminates
employment after: (A) the total amount of the Executive's base
salary, annual bonus and long term incentive opportunity under the
Annual Incentive Award Plans (or other annual incentive plans) of
NGH or NHC, as the case may be, (collectively, as in effect from
time to time, the "AIAPs") and Long Term Incentive Plans (or other
long term incentive plans) of NGH or NHC, as the case may be
(collectively, as in effect from time to time, the "LTIPs") is at
any time reduced by more than 20% without the Executive's consent,
provided, however, nothing herein shall be construed to guarantee
the Executive's target award if performance is below target; (B) the
Executive's job responsibilities are substantially reduced in
importance without the Executive's consent or the Company fails to
guarantee the obligations hereunder as required by Section 7(d); or
(C) the Executive, without the Executive's consent, is at any time
required as a condition of continued employment to relocate more
than thirty-five (35) miles from the Executive's then current place
of employment. Unless the Executive provides written notification of
the Executive's non-consent to an event in (A), (B) or (C) above
within ninety (90) days after the occurrence of such event, the
Executive shall be deemed to have consented to the occurrence of
such event and no deemed Involuntary Termination shall occur. If the
Executive provides written notice of the Executive's non-consent to
any of the events in (A), (B) or (C) above within ninety (90) days
after the occurrence of such event, the Executive shall be deemed to
have been Involuntarily Terminated ninety (90) days after receipt of
such written notice by the Company.
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(ii) At any time during the two (2) year period beginning on a
Change of Control, Involuntary Termination shall be deemed to occur
if the Executive voluntarily terminates employment after an event of
"Good Reason". For purposes of this Agreement "Good Reason" shall
mean, without the Executive's express written consent, any of the
following:
(A) Any reduction in the Executive's duties, any
diminution in the Executive's position or any adverse change
in the Executive's reporting relationship from those in effect
immediately prior to the Change of Control;
(B) Any reduction in the Executive's base salary, grade
or annual bonus or long term incentive opportunity as in
effect immediately prior to the Change of Control or as the
same may thereafter be increased from time to time during the
term of this Agreement;
(C) The failure to continue in effect any compensation
or benefit plan in which the Executive participates or is
entitled to participate in at the time of the Change of
Control, including but not limited to the relevant LTIP, the
relevant AIAP, any defined benefit or defined contribution
plan or related supplemental plans, or any substitute plans
adopted prior to the Change of Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative
plan providing the Executive with substantially similar
benefits) has been made with respect to such plan in
connection with the Change of Control, or the failure to
continue the Executive's participation therein on
substantially the same basis, both in terms of the amount of
the benefits provided and the level of the Executive's
participation relative to other participants, as existed at
the time of the Change of Control;
(D) The taking of any action which would directly or
indirectly reduce any of the benefits to be provided under
Section 5 or any benefits thereunder or any compensation or
benefit plan of the Company, NGH or NHC including, without
limitation the LTIPs, the AIAPs and the Company's Deferred
Compensation Plan or deprive the Executive of or reduce any
benefits or amounts with respect to any perquisite or any
material fringe benefit enjoyed by the Executive at the time
of the Change of Control, or the failure to provide the
Executive with the number of paid vacation days to which the
Executive is entitled on the basis of the Company's practice
with respect to the Executive as in effect at the time of the
Change of Control;
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(E) Any material breach by the Company, NGH or NHC of
any provision of this Agreement including, but not limited to
any provision of Section 5, any benefits thereunder or any
compensation, benefit or perquisite plan of the Company, NGH
or NHC including, without limitation the LTIPs, the AIAPs and
the Company's Deferred Compensation Plan, or any agreements
entered into pursuant thereto;
(F) Any purported termination of Executive's employment
which is not effected pursuant to a Notice of Termination
satisfying the requirements of subsection (c) below; provided
further that for purposes of this Agreement, no such purported
termination shall be effective; or
(G) Requiring the Executive to be based at any office or
location more than thirty-five (35) miles from the office or
location at which the Executive was based immediately prior to
such Change of Control, except for travel reasonably
consistent with the Executive's travel requirements prior to
such Change of Control;
If the Executive provides written notice of the
Executive's non-consent to any of the events in (A), (B), (C),
(D), (E), (F) or (G), above within 180 days after the
occurrence of any such event, the Executive shall be deemed to
have been Involuntarily Terminated upon the earlier of the
date set forth in Executive's Notice of Termination or 181
days after the occurrence of such event.
(iii) As used herein, a "Change of Control" shall occur on the
date upon which one of the following events occurs (except as
otherwise provided in paragraph (C) below):
(A) Any individual, corporation, partnership, group,
associate or other entity or "person" as such term is defined
in Section 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"), other than NHC, NGH or any of their
Subsidiaries, or any employee benefit plan(s) sponsored by
NHC, NGH or any of their Subsidiaries, is or becomes the
"beneficial owner" (as defined in Rule 13D-3 under the
Exchange Act), directly or indirectly, of 30% or more of the
combined voting power of NHC or NGH outstanding securities
ordinarily having the right to vote at elections of directors;
(B) Individuals who constitute the Board of either NHC
or NGH on January 1, 2000 (each such Board the "Incumbent
Board") cease for any reason to constitute at least a majority
of the Board of NHC or NGH, as the case may be, provided that
any person becoming a director subsequent to such date hereof
whose election, or nomination for election by NHC or NGH
shareholders, as the case may
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<PAGE>
be, was approved by a vote of at least three-quarters of the
directors comprising that Incumbent Board (either by a
specific vote or by approval of the proxy statement of NHC or
NGH, as the case may be, in which such person is named a
nominee of NHC or NGH, as the case may be, but excluding for
this purpose any such individual whose initial assumption of
office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or
on behalf of an individual, corporation, partnership, group,
associate or other entity or "person" other than the NHC or
NGH Board, as the case may be, shall be, for purposes of this
paragraph (B), considered as though such person were a number
of the Incumbent Board.
(C) The approval by the shareholders of NHC or NGH, as
the case may be, of a plan or agreement providing (I) for a
merger or consolidation of NHC or NGH, as the case may be,
other than with a wholly-owned subsidiary or with NGH, NHC or
any of their subsidiaries, and other than a merger or
consolidation that would result in the voting securities of
NHC or NGH, as the case may be, outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting
power of the voting securities of NHC or NGH, as the case may
be, of such surviving entity outstanding immediately after
such merger or consolidation or (II) for a sale, exchange or
other disposition of all or substantially all of the assets of
NHC or NGH. If any of the events enumerated in this paragraph
(C) occurs, the NHC Board shall determine the effective date
of the Change of Control resulting therefrom.
(c) (i) Any purported termination of the Executive's employment by
the Company or by the Executive shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 7(b)
hereof. For purposes of this Agreement, (A) during the twenty-four (24)
month period beginning on a Change of Control a "Notice of Termination" by
the Company shall mean, and (B) prior to, and following the second
anniversary of, a Change of Control a "Notice of Termination" by the
Executive shall mean, a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of Executive's employment under the provision so
indicated.
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(ii) "Date of Termination" shall mean (i) if the Executive's
employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that the Executive shall
not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), (ii) if the Executive's
employment is terminated by reason of the Executive's death, the
date of the Executive's death, (iii) if the Executive's employment
is terminated by reason of the Executive's Retirement, for Cause,
Involuntary Termination or for any other reason (other than
Disability or death), the date specified in the Notice of
Termination (which (A) in the case of a termination for Cause during
the two (2) year period beginning on a Change of Control shall not
be less than thirty (30) nor more than sixty (60) days from the date
such Notice of Termination is given and (B) in the case of the
Executive's voluntary termination (other than pursuant to Section
4(b) and other than during the two (2) year period beginning on a
Change of Control) shall not be less than three (3) months after the
date such Notice of Termination is given).
5. Compensation Continuance Under This Agreement.
(a) Compensation Period. If at any time during the term of this
Agreement the Executive has an Involuntary Termination pursuant to Section
4, subject to Section 6(g), if applicable, the Executive will be provided
with Compensation Continuance as provided in this Section 5.
(b) Cash Compensation.
(i)(A) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, the Executive will be
entitled to cash compensation equal to two (2) year's Full Pay,
calculated as described below, payable in equal monthly installments
over the Compensation Period (as defined below), each installment
representing 1/18th of one year's Full Pay (as defined below). One
year's "Full Pay" is the sum of (x) plus (y), where (x) is the
Executive's highest annual rate of base salary in effect during the
twelve (12) month period prior to the Executive's Involuntary
Termination and (y) is the annual target amount of the Executive's
annual bonus under the relevant AIAP and/or LTIP for the calendar
year in which the Executive's employment terminated (or, if greater,
the amount of such actual award for the next preceding calendar year
of full-time employment). For all purposes of this Agreement,
"Compensation Period" shall mean the three (3) year period
commencing on the Date of Termination.
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(B) Upon an Involuntary Termination during the two (2)
year period beginning on a Change of Control, the Executive will be
entitled to a lump sum payment within fifteen (15) business days
following the date of such Involuntary Termination equal to twice
the sum of (u), (v) and (w), where (u) is the greater of the
Executive's annual base salary as in effect immediately prior to
such Termination or immediately prior to such Change of Control
(such greater amount, the "Base Salary"), (v) is the greater of the
Executive's annual target bonus under the relevant AIAP and/or LTIP
immediately prior to such Termination or immediately prior to the
Change of Control or ("Target Amount") and (w) is 1.5 times the
greater of the annual perquisite allowance applicable to the
Executive under the Nabisco Flexible Perquisite Program (the
"Program") as in effect immediately prior to such Termination or
immediately prior to such Change of Control (such greater amount,
the "Allowance"). The sum of Base Salary, Target Amount and
Allowance are hereinafter referred to as "Base Cash". For purposes
of this Agreement, "Compensation Period" shall mean the three (3)
year period commencing on the Date of Termination.
(ii) Cash compensation paid pursuant to this Section 5(b)
shall be subject to all required payroll deductions.
(c) Annual Incentive and Retention Plan Awards.
(i) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, the Executive will be
paid at the time of such Involuntary Termination a portion of the
Executive's annual bonus under the relevant AIAP and/or LTIP, based
upon the target award for the year in which the Executive's
Involuntary Termination occurs, prorated for the Executive's active
employment during such year. Except as stated in the foregoing
sentence, all provisions of the relevant AIAP and/or LTIP shall be
applicable to the Executive.
(ii) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, all provisions of NHC's
1999 Retention Program (the "1999 Program") shall be applicable to
the Executive.
(iii) Upon an Involuntary Termination during the two (2) year
period beginning on a Change of Control, the Company shall pay to
the Executive, not later than fifteen (15) business days following
the Date of Termination, a lump sum cash payment equal to the sum of
(A) and (B), where (A) is Executive's AIAP Vested Amount for such
plan year and (B) is the sum of (x) and (y) where (x) is the
Executive's Vested 1999 Program Award Amount and (y) is the
Executive's Earned 1999 Program Amount (each as defined in Exhibit
A) as of the Date of Termination.
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(d) Long Term Incentive Plan Awards. The treatment of long term
incentive awards during the Compensation Period shall be determined
pursuant to the terms of the relevant LTIP and related award agreements;
provided, however, that for such purposes, the Compensation Period shall
be treated as a period of salary and benefit continuance.
(e) Welfare Benefits. During the Compensation Period the Executive
will be provided the welfare benefits and other fringe benefits afforded
by the employee benefit plans and programs maintained by the Company in
which the Executive participated immediately prior to Involuntary
Termination.
(f) Retirement and Savings Plans.
(i) If Executive was participating in any Retirement Plan or
Savings Plan (each as defined in Exhibit A) immediately prior to an
Involuntary Termination prior to, or after the second anniversary
of, a Change of Control, the Executive will continue to accrue or be
deemed to accrue benefits during the Compensation Period under such
Retirement Plans and Savings Plans for purposes of benefit accrual
and employer matching contributions, as applicable, based on the
same formula and matching amount as in effect immediately prior to
such Termination. If the Executive will have attained age 50 at the
end of the Compensation Period with 10 years of service (including
the Compensation Period), the Executive will, subject to the
conditions of Paragraph 6, be deemed retired with the consent of the
Company for the purposes of welfare and executive compensation plans
but not for the purposes of any Retirement or Savings Plan.
Notwithstanding any provision herein to the contrary, upon such a
Termination pension benefits under any Retirement Plan based on
"Average Final Compensation" will be calculated applying the rate of
one year's Full Pay and the Executive's Annual Flexible Perquisite
Allowance for each year in the Compensation Period.
(ii) If Executive was participating in any Retirement Plan
immediately prior to an Involuntary Termination during the two (2)
year period beginning on a Change of Control, the Executive will be
deemed to accrue benefits during the Compensation Period under such
Retirement Plans for purposes of benefit accrual based on the same
formula as in effect immediately prior to such Termination. If the
Executive will have attained age 50 at the end of the Compensation
Period with 10 years of service (including the Compensation Period),
the Executive will, subject to the conditions of Paragraph 6, be
deemed retired with the consent of the Company for the purposes of
welfare and executive compensation plans but not for the purposes of
any Retirement. Notwithstanding any provision herein to the
contrary, upon such a Termination pension benefits under any
Retirement Plan based on "Average Final Compensation" will be
calculated applying the rate of one year's Base Cash for each year
in the Compensation Period.
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(g) Flexible Perquisite Program. During the Compensation Period, the
Executive shall continue to receive benefits under the Program; provided,
further, that in the event of an Involuntary Termination during the two
(2) year period beginning on a Change of Control, ownership of the
automobile assigned to the Executive immediately prior to such Termination
shall be transferred to the Executive within fifteen (15) business days
after such Termination. At the time of such transfer, the Company shall
pay to the Executive such amount in cash that, after payment of all
applicable federal, state and local taxes thereon, computed at the maximum
marginal rates, is equal to all such taxes, so computed, imposed in
connection with such transfer.
(h) Outplacement. During the Compensation Period, Executive will be
provided with outplacement counseling services at Company expense;
provided, however, this expense shall not exceed 18% of the amount of one
year's Full Pay or Base Cash, as the case may be. This counseling shall
include, but is not limited to, skill assessment, job market analysis,
resume preparation, interviewing skills, job search techniques and
negotiating.
6. Conditions on Compensation Continuance.
(a) Availability and Consulting. Upon an Involuntary Termination
prior to, or after the second anniversary of, a Change of Control, during
the related Compensation Period the Executive shall provide consulting
services to the Company on a reasonable basis subject to appropriate
notice and reimbursement of all travel and other expenses. During the
first six (6) months of such Compensation Period, the Executive may be
required by the Company to provide up to fifteen (15) days of consultation
during normal business hours and business days. When and if the Executive
becomes employed on a full-time basis, either with another company or on a
self-employed basis, the Executive's obligation to provide consulting
services shall be limited by the requirements of such employment, and
under appropriate circumstances, may be restricted to telephone
conference.
(b) Confidentiality and Conduct. The Executive warrants that the
Executive will not disclose to any other person any confidential
information or trade secrets concerning the Company or any of its
subsidiaries at any time during or after the Compensation Period and upon
an Involuntary Termination prior to, or after the second anniversary of, a
Change of Control, the Executive will at all times refrain from taking any
action or making any statements, written or oral, which are intended to
and do disparage the goodwill or reputation of the Company, its directors,
officers or executives or which could adversely affect the morale of
Company employees.
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(c) Breach of Conditions. In the event that the Executive
unreasonably refuses to provide consulting services to the extent required
under paragraph (a) above or materially violates the terms and conditions
of paragraph (b) above, the Company may, at its election upon ten (10)
days notice, terminate any ongoing Compensation Period, discontinue cash
compensation payments and employee benefits coverage and cancel any
outstanding stock options or restricted stock. The Company may also
initiate any form of legal action it may deem appropriate seeking damages
or injunctive relief with respect to any material violations of paragraph
(b) above.
(d) Non-Competition. Any Compensation Period resulting from an
Involuntary Termination prior to, or after the second anniversary of, a
Change of Control shall be terminated if the Executive, without the
Company's written approval, accepts a substantially similar or higher
executive position, paying a substantially comparable or greater level of
cash compensation, with any company (other than an Affiliate of the
Company) conducting a business which is substantially competitive with a
business conducted by the Company. Alternatively, the Company may, in its
discretion, appropriately reduce the Executive's cash compensation and
employee benefits coverage for the balance of such Compensation Period.
(e) Employment With Another Employer During Compensation Period.
Except as otherwise provided in this Section 6, if the Executive commences
employment with another employer during a Compensation Period commencing
prior to, or after the second anniversary of, a Change of Control, the
Executive will continue to receive the compensation continuance provided
under Section 5 for the balance of such Compensation Period, except that,
unless otherwise required by law, benefits under the Company's Employee
Benefits Plans, including the Program, if applicable, shall be
appropriately terminated or offset to the extent the same are provided by
the other employer.
(f) Other Severance Benefits. The Executive is entitled to no form
of severance benefits, including benefits otherwise payable under any of
the Company's regular severance policies, other than those set forth or
made applicable by reference in this Agreement. Notwithstanding the
foregoing, the Executive will at the time of termination of employment be
eligible for any form of post-retirement benefit provided under the
Company's qualified Employee Benefits Plans, including retiree medical
benefits, as any other employee upon retirement with the same age and
service. Nothing contained in this Agreement shall adversely affect the
Executive's rights to accrued vested pension benefits or the Executive's
right to receive previously deferred awards or amounts under any of the
Company's short and long term incentive award programs or deferred
compensation plans or perquisite programs.
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(g) Release and Waiver of Claims. In consideration of the
compensation and benefits continuance available pursuant to this
Agreement, upon an Involuntary Termination prior to, or after the second
anniversary of, a Change of Control the Executive agrees to execute a
release, in form and substance reasonably acceptable to the Executive and
the Company, releasing the Company, NHC and NGH from all claims and
liabilities relating to such Termination and the Company's employment of
the Executive.
(h) Disability. In the event the Executive is eligible for benefits
under the Company's Short Term or Long Term Disability Plan during the
Executive's Compensation Period, any Compensation Continuance will be
suspended while disability benefits are paid from any Company plan and
resumed when such disability payments cease. All other provisions of this
Agreement shall remain in effect notwithstanding the Executive's
disability.
(i) Death. In the event of the Executive's death subsequent to
commencement of the Executive's Compensation Period hereunder, the balance
of Compensation Continuance will be paid to the Executive's beneficiary in
a lump sum. "Beneficiary" shall mean the Executive's designated
beneficiary under the Executive's Executive Program life insurance or, if
not so eligible, the Executive's core life insurance benefit under the
Company's plans.
(j) No Mitigations. Notwithstanding anything to the contrary in this
Agreement, the Executive shall not be required to mitigate the amount of
any payment provided for in Section 5 by seeking other employment or
otherwise, nor, except under coordination of benefit rules in connection
with certain welfare benefits under Section 5(e), shall the amount of any
payment or benefit provided for in Section 5 hereof be reduced by any
compensation earned by the Executive as the result of employment by
another employer or by retirement benefits after the Date of Termination
of employment, or otherwise.
7. General Provisions.
(a) Limited Right of Appeal. If the Executive's Compensation Period
is terminated pursuant to Section 6, the Executive may, within fifteen
(15) days after mailing of notice thereof to the Executive, submit to the
Chief Executive Officer of the Company a written objection to such
termination. In such event, the Compensation Committee of the NHC Board at
or before its next regularly scheduled meeting must determine by majority
vote that termination of the Compensation Period was appropriate or,
failing that, the Compensation Period must be reinstated with full
retroactive effect.
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(b) Notices. All notices hereunder shall be in writing and deemed
given if delivered by hand and receipted or if mailed by registered mail,
return receipt requested. Notices to the Company shall be directed to the
Corporate Secretary at the Company's headquarters offices. Notices to the
Executive shall be directed to the Executive's last known home address.
(c) Limited Waiver. The waiver by any party hereto of a violation of
any of the provisions of this Agreement, whether express or implied, shall
not operate or be construed as a waiver of any subsequent violation of any
such provision.
(d) No Assignment. Except as provided herein, no right, benefit,
obligation or interest hereunder shall be subject to assignment,
encumbrance, charge, pledge, hypothecation or set off by Executive or the
Company. The Company, however, may assign its obligations hereunder in the
event of the transfer of the Executive's employment to an Affiliated
Company or the divestiture (whether by the sale of shares or assets) of
the operating company employing the Executive. In the event the
obligations of the Company under this Agreement are assigned to an
employing Affiliated Company as contemplated by Section 4(a)(iii), the
Company agrees to guarantee to Executive the obligations of such
Affiliated Company under this Agreement. Except as provided in the
preceding sentence, upon any permitted assignment of the Company's
obligations hereunder, "Company" shall be deemed to refer to the assignee
as the context may require.
(e) Amendment. This Agreement may not be amended, modified or
cancelled except by written agreement of the parties.
(f) Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall remain in full
force and effect to the fullest extent permitted by law.
(g) Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Executive, the Company, its affiliates, and any
successor organization or organizations which shall succeed to
substantially all of the business and property of the Company, whether by
means of merger, consolidation, acquisition of substantially all of the
assets of the Company or otherwise, including by operation of law.
(h) Unsecured Promise. Unless otherwise stated herein, no benefit or
promise hereunder shall be secured by any specific assets of the Company.
Unless otherwise stated herein, the Executive shall have only the rights
of an unsecured general creditor of the Company in seeking satisfaction of
such benefits or promises. Notwithstanding the foregoing, the Company may
choose to maintain a rabbi trust or trusts for the purpose of paying
certain of the benefits hereunder or under other plans and programs of the
Company and, if so, the Executive shall be entitled to payments therefrom,
if any, as and to the extent provided in such rabbi trust or trusts.
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(i) Governing Law. This Agreement has been made in and shall be
governed and construed in accordance with the laws of the State of
Delaware.
(j) Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties hereto with respect to the matters
covered hereby. This Agreement supersedes and replaces any prior agreement
with respect to employment, compensation continuation and the matters
contained in this Agreement which the Executive may have had with the
Company or any affiliate.
(k) Legal Fees and Expenses.
(i) The Company shall pay to the Executive as incurred all
legal and accounting fees and expenses incurred by the Executive as
a result of the Executive's Involuntary Termination on or during the
two (2) year period beginning on a Change of Control (including all
such fees and expenses, if any, in seeking to obtain or enforce any
right or benefit provided by this Agreement or any other
compensation-related plan, agreement or arrangement of the Company)
unless the Executive's claim is found by an arbitral tribunal of
competent jurisdiction to have been frivolous.
(ii) The Company shall pay to the Executive as incurred all
legal and accounting fees and expenses incurred by the Executive
during the two (2) year period beginning on a Change of Control as a
result of both (A) the Executive's Involuntary Termination prior to
such Change of Control and (B) the Company's refusal after such
Change of Control to provide any right or benefit provided by this
Agreement or any other compensation-related plan, agreement or
arrangement of the Company in respect of such Termination, including
all such fees and expenses, if any, in seeking to obtain or enforce
any such right or benefit unless the Executive's claim is found by
an arbitral tribunal or court of competent jurisdiction to have been
frivolous.
(l) Certain AIAP and LTIP Change of Control Provisions.
(i) In the event of a Change of Control, the Executive will be
paid within fifteen (15) business days following the date of such
Change of Control a lump sum cash payment equal to the Executive's
AIAP Vested Amount.
(ii) Upon a Change of Control, all stock options, shares of
restricted stock, restricted stock units and restricted stock
equivalents then held by the Executive under either LTIP shall
become 100% vested and non-forfeitable on the date of such Change of
Control and any restrictions thereon shall immediately lapse on such
date.
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(m) Certain Payments.
(i) Anything herein to the contrary notwithstanding, in the
event that it is determined that any payment or distribution by the
Company to or for the Executive's benefit, whether paid or payable
or distributed or distributable pursuant to the terms hereof,
including but not limited to Section 7(l), or otherwise, other than
any payment pursuant to this Section 7(m), (a "Payment"), would be
subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive, within fifteen (15) business days
following the determination described in Section 7(m)(ii) below, an
additional payment ("Excise Tax Adjustment Payment") in an amount
such that after payment by the Executive of all applicable Federal,
state and local taxes (computed at the maximum marginal rates and
including any interest or penalties imposed with respect to such
taxes), including any Excise Tax, imposed upon the Excise Tax
Adjustment Payment, the Executive shall retain an amount of the
Excise Tax Adjustment Payment equal to the Excise Tax imposed upon
the Payments.
(ii) All determinations required to be made under this Section
7(m), including whether Excise Tax Adjustment Payment is required
and the amount of such Excise Tax Adjustment Payment, shall be made
by Deloitte & Touche LLP, or such other accounting firm as the
Company may designate prior to a Change of Control, which shall
provide to the Company and the Executive detailed supporting
calculations within fifteen (15) business days of the date of the
Executive's termination of employment. Except as hereinafter
provided, any determination by Deloitte & Touche LLP, or such other
accounting firm as the Company may designate prior to a Change of
Control, shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the
Code at the time of the initial determination hereunder, it is
possible that (x) Excise Tax Adjustment Payments which should have
been made will not have been made by the Company ("Underpayment"),
or (y) certain Payments will have been made which should not have
been made ("Overpayment"), consistent with the calculations required
to be made hereunder. In the event of an Underpayment, the Company
shall promptly determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the
Company to or for the Executive's benefit. In the event that the
Executive discovers that an Overpayment shall have occurred, the
amount thereof shall be promptly repaid to the Company.
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(n) Arbitration. Following a Change of Control, any dispute or
controversy arising under or in connection with this Agreement shall be
settled exclusively by arbitration in New York, New York in accordance
with the National Rules for the Resolution of Employment Disputes of the
American Arbitration Association then in effect. The determination of the
arbitral tribunal shall be conclusive and binding on the parties and
judgment may be entered on the arbitrator's award in any court having
jurisdiction.
(o) Unconditional Obligation. The Company's obligations to make all
payments and honor all commitments under this Agreement or otherwise
following a Change of Control or in connection with an Involuntary
Termination during the two (2) year period beginning on a Change of
Control shall be absolute and unconditional and shall not be affected by
any circumstances including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may
have against the Executive.
(p) Late Payments. To the extent that any payments required to be
made hereunder following a Change of Control in connection with any
Involuntary Termination occurring prior to the second anniversary of such
Change of Control are not made within the period specified therefor, the
Company shall be liable for interest on such delayed payments at the rate
of 150% of the prime rate compounded monthly, as posted by the Morgan
Guaranty Trust Company of New York, from time to time.
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(q) Actuarial Calculations. All required actuarial calculations of
payments to be made hereunder shall be made by Watson Wyatt Worldwide, New
York, New York, or such other actuarial firm as the Company may designate
prior to a Change of Control.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
NABISCO, INC.
By: /s/ C. Michael Sayeau
------------------------------------
C. Michael Sayeau
Executive Vice President and
Chief Personnel Officer
NABISCO HOLDINGS CORP.
By: /s/ C. Michael Sayeau
------------------------------------
C. Michael Sayeau
Executive Vice President and
Chief Personnel Officer
NABISCO GROUP HOLDINGS, INC.
By: /s/ James M. Kilts
------------------------------------
James M. Kilts
President and Chief Executive Officer
THE EXECUTIVE
/s/ Richard H. Lenny
- --------------------
Richard H. Lenny
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EXHIBIT A
DEFINITIONS
AIAP Vested Amount means, as of a Change of Control or as of a Termination
Date during the two (2) year period beginning on a Change of Control, as the
case may be, an amount equal to the value of the Executive's target award under
the relevant AIAP for the relevant performance period in which the Change of
Control or such termination occurs, as the case may be, multiplied by a
fraction, the numerator of which is the number of months (including partial
months) in the period beginning on the first day of the relevant performance
period and ending on the Change of Control or such Termination Date, as the case
may be, and the denominator of which is the number of months in such performance
period; provided that in the event of a termination of employment following a
Change of Control in the year in which a Change of Control occurs, for purposes
of computing the AIAP Vested Amount as of the date of such termination, the
performance period shall be deemed to begin on the first day following the
Change of Control and the target award shall be that in effect immediately
preceding such Change of Control.
Earned 1999 Program Amount means, as of a Termination Date during the two
(2) year period beginning on a Change of Control, an amount equal to the
Executive's Retention Award or awards under the 1999 Program in respect of
calendar years ending prior to such Termination Date and not previously paid to
the Executive.
Vested 1999 Program Amount means, as of a Termination Date during the two
(2) year period beginning on a Change of Control, an amount equal to the value
of the Executive's Retention Award under the 1999 Program in respect of the year
in which such Termination Date occurs.
Retirement Plans means the Retirement Plan for Employees of Nabisco, Inc.,
the Additional Benefits Plan of Nabisco, Inc. and participating Companies, the
Supplemental Benefits Plan of Nabisco, Inc. and participating Companies and the
Supplemental Executive Retirement Plan of Nabisco, Inc. and participating
Companies, and such other plans as the Board may hereafter determine.
Savings Plans means the Capital Investment Plan of Nabisco, Inc., the
Additional Benefits Plan of Nabisco, Inc. and participating Companies and the
Supplemental Benefits Plan of Nabisco, Inc. and participating Companies, and
such other plans as the Board may hereafter determine.
<PAGE>
Exhibit 10.8
EMPLOYMENT AGREEMENT
AMENDMENT AND RESTATEMENT, made effective as of this 17th day of March,
2000, of the EMPLOYMENT AGREEMENT dated September 1, 1995, as amended, by and
between NABISCO, INC., a New Jersey corporation (the "Company"), and Douglas R.
Conant ("the Executive").
RECITALS
WHEREAS, the Executive and RJR Nabisco, Inc., a Delaware corporation
("RJRN"), entered into the Employment Agreement dated September 1, 1995; and
WHEREAS, the Executive, RJRN and the Company executed an Amendment to the
Employment Agreement as of May 1, 1999; and
WHEREAS, the Company and the Executive agree that the Employment Agreement
should be further amended and restated, in order to more effectively provide the
Executive continued incentives to remain in the service of the Company or its
subsidiaries or affiliates;
NOW, THEREFORE, in consideration of mutual incentives, it is hereby agreed
by and between the Company, Nabisco Holdings Corp. ("NHC") and Nabisco Group
Holdings Corp. ("NGH") and the Executive to amend and restate the Employment
Agreement, effective on the date first above written, as follows:
1. Employment. The Executive agrees to devote the Executive's working time
exclusively to the performance of such services for the Company or NHC or any of
their Subsidiaries or Affiliates (each, as defined below) as may be assigned to
the Executive from time to time and to perform such services faithfully and to
the best of the Executive's ability except as the provisions of subsections
4(b)(i) or 4(b)(ii) shall apply.
For purposes of this Agreement, (i) "Affiliate" means, with respect to the
Company, NHC or NGH, any person or entity directly or indirectly controlling,
controlled by, or under common control with the Company, NHC or NGH, as the case
may be, and (ii) "Subsidiary" of the Company, NHC or NGH means any entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the Company, NHC or
NGH, as the case may be.
<PAGE>
2. Term of Agreement. Subject to Section 7(e) hereof, this Agreement shall
commence on the date hereof and shall remain in effect so long as the Executive
remains employed by the Company or NHC or any of their subsidiaries or any
successor organizations.
3. Termination of Employment Without Compensation Continuance.
(a) Termination for Cause. This Agreement shall immediately be
terminated and neither party shall have any obligation hereunder if the
Executive's employment is terminated for Cause (as defined below).
(i) At any time before a Change of Control (as defined below)
or following the second anniversary of such Change of Control,
termination for "Cause" shall mean termination by the Company of the
Executive's employment resulting from the Executive's: (A) criminal
dishonesty; (B) deliberate and continual refusal to perform
employment duties on substantially a full-time basis; (C) deliberate
and continual refusal to act in accordance with any specific lawful
instructions of a majority of the Board of Directors of NHC (the
"NHC Board"); or (D) deliberate misconduct which could be materially
damaging to the Company without reasonable good faith belief by the
Executive that such conduct was in the best interests of the
Company.
(ii) Any purported termination for Cause under Section 3(a)(i)
shall not be applicable unless (A) the Executive is advised in
writing that the Executive is being terminated for Cause and, (B) if
within fifteen (15) days thereafter the Executive submits to the
Chief Executive Officer of the Company a written objection to such a
determination, the Compensation Committee of the NHC Board at or
before its next regularly scheduled meeting determines by majority
vote that the Executive has been terminated for Cause.
(iii) During the two (2) year period beginning on a Change of
Control, termination for "Cause" shall mean termination by the
Company of the Executive's employment resulting from the
Executive's: (A) willful and continued failure substantially to
perform employment duties with the Company or any Subsidiary or
Affiliate (other than as a result of total or partial incapacity due
to physical or mental illness or as a result of a termination by the
Executive for Good Reason (as defined below)) after a written demand
for substantial performance is delivered to the Executive by the NHC
Board, which demand specifically identifies the manner in which the
NHC Board believes that the Executive has not substantially
performed the Executive's duties; (B) the willful engaging by the
Executive in conduct which is demonstrably and materially injurious
to NHC, NGH or the Company, monetarily or otherwise; or (C) the
Executive's conviction of a
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felony under the laws of the United States, any state or any other
country or political sub-division thereof involving moral turpitude.
For purposes of this paragraph (iii), no act or failure to act on
the Executive's part shall be deemed "willful" unless done or
omitted to be done by the Executive not in good faith and without
reasonable belief that the Executive's action or omission was in the
best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause
under this paragraph (iii) unless and until there shall have been
delivered to the Executive documentation of the affirmative vote
(which cannot be delegated) of not less than three-quarters (3/4) of
the entire membership of the NHC Board of Directors at a meeting of
the NHC Board called and held for such purpose (after reasonable
notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the NHC
Board), finding that in the good faith opinion of the NHC Board the
Executive was guilty of conduct set forth above in subclauses (A),
(B) or (C) above, specifying the particulars thereof in detail.
(b) Voluntary Termination of Employment by the Executive. The
Executive reserves the right to terminate voluntarily the Executive's
employment at any time for any reason. Upon such a termination other than
a termination pursuant to Section 4(b), all obligations of the Company
hereunder shall be cancelled automatically, and the Executive shall not be
entitled to any form of Compensation Continuance under this Agreement,
including that described in Section 5 below.
(c) Disability. The event of physical or mental disability of a
nature that entitles the Executive to benefits under the Company's
Long-Term Disability Plan is not a termination of employment under any
section of this Agreement. As such, disability shall not qualify the
Executive for the Compensation Continuance described herein unless the
Executive is terminated under Section 4(a) or Section 4(b)(i).
(d) Death. In the event of the Executive's death prior to
Involuntary Termination, this Agreement will be null and void.
4. Termination With Compensation Continuance.
(a) Involuntary Termination Without Cause by the Company.
(i) The Company reserves the right to terminate the employment
of the Executive at any time for any reason subject to providing the
compensation and benefits described herein. Except as provided in
Section 6, the Company will provide the Executive with the
Compensation Continuance described in Section 5 hereof if the
Executive is involuntarily separated from active employment without
Cause by the Company ("Involuntary Termination").
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(ii) The divestiture of the operating company employing the
Executive, and the assignment of the obligations of the Company
under this Agreement to such operating company, or its successor or
acquiror, in connection with the divestiture of either all, or
substantially all, the shares or assets of such operating company
shall not automatically be an Involuntary Termination unless such
divestiture and assignment would result in an Involuntary
Termination under Section 4(b) hereof.
(iii) The transfer of the Executive's employment to any
company that owns at least 50% of the voting power of the Company,
or any subsidiary of such company (an "Affiliated Company"), shall
not automatically be deemed an Involuntary Termination unless such
transfer would result in an Involuntary Termination under Section
4(b) hereof.
(b) Deemed Involuntary Termination Without Cause by the Company.
(i) At any time before a Change of Control or following the
second anniversary of a Change of Control, Involuntary Termination
shall be deemed to occur if the Executive voluntarily terminates
employment after: (A) the total amount of the Executive's base
salary, annual bonus and long term incentive opportunity under the
Annual Incentive Award Plans (or other annual incentive plans) of
NGH or NHC, as the case may be, (collectively, as in effect from
time to time, the "AIAPs") and Long Term Incentive Plans (or other
long term incentive plans) of NGH or NHC, as the case may be
(collectively, as in effect from time to time, the "LTIPs") is at
any time reduced by more than 20% without the Executive's consent,
provided, however, nothing herein shall be construed to guarantee
the Executive's target award if performance is below target; (B) the
Executive's job responsibilities are substantially reduced in
importance without the Executive's consent or the Company fails to
guarantee the obligations hereunder as required by Section 7(d); or
(C) the Executive, without the Executive's consent, is at any time
required as a condition of continued employment to relocate more
than thirty-five (35) miles from the Executive's then current place
of employment. Unless the Executive provides written notification of
the Executive's non-consent to an event in (A), (B) or (C) above
within ninety (90) days after the occurrence of such event, the
Executive shall be deemed to have consented to the occurrence of
such event and no deemed Involuntary Termination shall occur. If the
Executive provides written notice of the Executive's non-consent to
any of the events in (A), (B) or (C) above within ninety (90) days
after the occurrence of such event, the Executive shall be deemed to
have been Involuntarily Terminated ninety (90) days after receipt of
such written notice by the Company.
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(ii) At any time during the two (2) year period beginning on a
Change of Control, Involuntary Termination shall be deemed to occur
if the Executive voluntarily terminates employment after an event of
"Good Reason". For purposes of this Agreement "Good Reason" shall
mean, without the Executive's express written consent, any of the
following:
(A) Any reduction in the Executive's duties, any
diminution in the Executive's position or any adverse change
in the Executive's reporting relationship from those in effect
immediately prior to the Change of Control;
(B) Any reduction in the Executive's base salary, grade
or annual bonus or long term incentive opportunity as in
effect immediately prior to the Change of Control or as the
same may thereafter be increased from time to time during the
term of this Agreement;
(C) The failure to continue in effect any compensation
or benefit plan in which the Executive participates or is
entitled to participate in at the time of the Change of
Control, including but not limited to the relevant LTIP, the
relevant AIAP, any defined benefit or defined contribution
plan or related supplemental plans, or any substitute plans
adopted prior to the Change of Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative
plan providing the Executive with substantially similar
benefits) has been made with respect to such plan in
connection with the Change of Control, or the failure to
continue the Executive's participation therein on
substantially the same basis, both in terms of the amount of
the benefits provided and the level of the Executive's
participation relative to other participants, as existed at
the time of the Change of Control;
(D) The taking of any action which would directly or
indirectly reduce any of the benefits to be provided under
Section 5 or any benefits thereunder or any compensation or
benefit plan of the Company, NGH or NHC including, without
limitation the LTIPs, the AIAPs and the Company's Deferred
Compensation Plan or deprive the Executive of or reduce any
benefits or amounts with respect to any perquisite or any
material fringe benefit enjoyed by the Executive at the time
of the Change of Control, or the failure to provide the
Executive with the number of paid vacation days to which the
Executive is entitled on the basis of the Company's practice
with respect to the Executive as in effect at the time of the
Change of Control;
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(E) Any material breach by the Company, NGH or NHC of
any provision of this Agreement including, but not limited to
any provision of Section 5, any benefits thereunder or any
compensation, benefit or perquisite plan of the Company, NGH
or NHC including, without limitation the LTIPs, the AIAPs and
the Company's Deferred Compensation Plan, or any agreements
entered into pursuant thereto;
(F) Any purported termination of Executive's employment
which is not effected pursuant to a Notice of Termination
satisfying the requirements of subsection (c) below; provided
further that for purposes of this Agreement, no such purported
termination shall be effective; or
(G) Requiring the Executive to be based at any office or
location more than thirty-five (35) miles from the office or
location at which the Executive was based immediately prior to
such Change of Control, except for travel reasonably
consistent with the Executive's travel requirements prior to
such Change of Control;
If the Executive provides written notice of the
Executive's non-consent to any of the events in (A), (B), (C),
(D), (E), (F) or (G), above within 180 days after the
occurrence of any such event, the Executive shall be deemed to
have been Involuntarily Terminated upon the earlier of the
date set forth in Executive's Notice of Termination or 181
days after the occurrence of such event.
(iii) As used herein, a "Change of Control" shall occur on the
date upon which one of the following events occurs (except as
otherwise provided in paragraph (C) below):
(A) Any individual, corporation, partnership, group,
associate or other entity or "person" as such term is defined
in Section 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"), other than NHC, NGH or any of their
Subsidiaries, or any employee benefit plan(s) sponsored by
NHC, NGH or any of their Subsidiaries, is or becomes the
"beneficial owner" (as defined in Rule 13D-3 under the
Exchange Act), directly or indirectly, of 30% or more of the
combined voting power of NHC or NGH outstanding securities
ordinarily having the right to vote at elections of directors;
(B) Individuals who constitute the Board of either NHC
or NGH on January 1, 2000 (each such Board the "Incumbent
Board") cease for any reason to constitute at least a majority
of the Board of NHC or NGH, as the case may be, provided that
any person becoming a director subsequent to such date hereof
whose election, or nomination for election by NHC or NGH
shareholders, as the case may
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be, was approved by a vote of at least three-quarters of the
directors comprising that Incumbent Board (either by a
specific vote or by approval of the proxy statement of NHC or
NGH, as the case may be, in which such person is named a
nominee of NHC or NGH, as the case may be, but excluding for
this purpose any such individual whose initial assumption of
office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or
on behalf of an individual, corporation, partnership, group,
associate or other entity or "person" other than the NHC or
NGH Board, as the case may be, shall be, for purposes of this
paragraph (B), considered as though such person were a number
of the Incumbent Board.
(C) The approval by the shareholders of NHC or NGH, as
the case may be, of a plan or agreement providing (I) for a
merger or consolidation of NHC or NGH, as the case may be,
other than with a wholly-owned subsidiary or with NGH, NHC or
any of their subsidiaries, and other than a merger or
consolidation that would result in the voting securities of
NHC or NGH, as the case may be, outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting
power of the voting securities of NHC or NGH, as the case may
be, of such surviving entity outstanding immediately after
such merger or consolidation or (II) for a sale, exchange or
other disposition of all or substantially all of the assets of
NHC or NGH. If any of the events enumerated in this paragraph
(C) occurs, the NHC Board shall determine the effective date
of the Change of Control resulting therefrom.
(c) (i) Any purported termination of the Executive's employment by
the Company or by the Executive shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 7(b)
hereof. For purposes of this Agreement, (A) during the twenty-four (24)
month period beginning on a Change of Control a "Notice of Termination" by
the Company shall mean, and (B) prior to, and following the second
anniversary of, a Change of Control a "Notice of Termination" by the
Executive shall mean, a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of Executive's employment under the provision so
indicated.
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(ii) "Date of Termination" shall mean (i) if the Executive's
employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that the Executive shall
not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), (ii) if the Executive's
employment is terminated by reason of the Executive's death, the
date of the Executive's death, (iii) if the Executive's employment
is terminated by reason of the Executive's Retirement, for Cause,
Involuntary Termination or for any other reason (other than
Disability or death), the date specified in the Notice of
Termination (which (A) in the case of a termination for Cause during
the two (2) year period beginning on a Change of Control shall not
be less than thirty (30) nor more than sixty (60) days from the date
such Notice of Termination is given and (B) in the case of the
Executive's voluntary termination (other than pursuant to Section
4(b) and other than during the two (2) year period beginning on a
Change of Control) shall not be less than three (3) months after the
date such Notice of Termination is given).
5. Compensation Continuance Under This Agreement.
(a) Compensation Period. If at any time during the term of this
Agreement the Executive has an Involuntary Termination pursuant to Section
4, subject to Section 6(g), if applicable, the Executive will be provided
with Compensation Continuance as provided in this Section 5.
(b) Cash Compensation.
(i)(A) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, the Executive will be
entitled to cash compensation equal to two (2) year's Full Pay,
calculated as described below, payable in equal monthly installments
over the Compensation Period (as defined below), each installment
representing 1/18th of one year's Full Pay (as defined below). One
year's "Full Pay" is the sum of (x) plus (y), where (x) is the
Executive's highest annual rate of base salary in effect during the
twelve (12) month period prior to the Executive's Involuntary
Termination and (y) is the annual target amount of the Executive's
annual bonus under the relevant AIAP and/or LTIP for the calendar
year in which the Executive's employment terminated (or, if greater,
the amount of such actual award for the next preceding calendar year
of full-time employment). For all purposes of this Agreement,
"Compensation Period" shall mean the three (3) year period
commencing on the Date of Termination.
8
<PAGE>
(B) Upon an Involuntary Termination during the two (2)
year period beginning on a Change of Control, the Executive will be
entitled to a lump sum payment within fifteen (15) business days
following the date of such Involuntary Termination equal to twice
the sum of (u), (v) and (w), where (u) is the greater of the
Executive's annual base salary as in effect immediately prior to
such Termination or immediately prior to such Change of Control
(such greater amount, the "Base Salary"), (v) is the greater of the
Executive's annual target bonus under the relevant AIAP and/or LTIP
immediately prior to such Termination or immediately prior to the
Change of Control or ("Target Amount") and (w) is 1.5 times the
greater of the annual perquisite allowance applicable to the
Executive under the Nabisco Flexible Perquisite Program (the
"Program") as in effect immediately prior to such Termination or
immediately prior to such Change of Control (such greater amount,
the "Allowance"). The sum of Base Salary, Target Amount and
Allowance are hereinafter referred to as "Base Cash". For purposes
of this Agreement, "Compensation Period" shall mean the three (3)
year period commencing on the Date of Termination.
(ii) Cash compensation paid pursuant to this Section 5(b)
shall be subject to all required payroll deductions.
(c) Annual Incentive and Retention Plan Awards.
(i) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, the Executive will be
paid at the time of such Involuntary Termination a portion of the
Executive's annual bonus under the relevant AIAP and/or LTIP, based
upon the target award for the year in which the Executive's
Involuntary Termination occurs, prorated for the Executive's active
employment during such year. Except as stated in the foregoing
sentence, all provisions of the relevant AIAP and/or LTIP shall be
applicable to the Executive.
(ii) Upon an Involuntary Termination prior to, or after the
second anniversary of, a Change of Control, all provisions of NHC's
1999 Retention Program (the "1999 Program") shall be applicable to
the Executive.
(iii) Upon an Involuntary Termination during the two (2) year
period beginning on a Change of Control, the Company shall pay to
the Executive, not later than fifteen (15) business days following
the Date of Termination, a lump sum cash payment equal to the sum of
(A) and (B), where (A) is Executive's AIAP Vested Amount for such
plan year and (B) is the sum of (x) and (y) where (x) is the
Executive's Vested 1999 Program Award Amount and (y) is the
Executive's Earned 1999 Program Amount (each as defined in Exhibit
A) as of the Date of Termination.
9
<PAGE>
(d) Long Term Incentive Plan Awards. The treatment of long term
incentive awards during the Compensation Period shall be determined
pursuant to the terms of the relevant LTIP and related award agreements;
provided, however, that for such purposes, the Compensation Period shall
be treated as a period of salary and benefit continuance.
(e) Welfare Benefits. During the Compensation Period the Executive
will be provided the welfare benefits and other fringe benefits afforded
by the employee benefit plans and programs maintained by the Company in
which the Executive participated immediately prior to Involuntary
Termination.
(f) Retirement and Savings Plans.
(i) If Executive was participating in any Retirement Plan or
Savings Plan (each as defined in Exhibit A) immediately prior to an
Involuntary Termination prior to, or after the second anniversary
of, a Change of Control, the Executive will continue to accrue or be
deemed to accrue benefits during the Compensation Period under such
Retirement Plans and Savings Plans for purposes of benefit accrual
and employer matching contributions, as applicable, based on the
same formula and matching amount as in effect immediately prior to
such Termination. If the Executive will have attained age 50 at the
end of the Compensation Period with 10 years of service (including
the Compensation Period), the Executive will, subject to the
conditions of Paragraph 6, be deemed retired with the consent of the
Company for the purposes of welfare and executive compensation plans
but not for the purposes of any Retirement or Savings Plan.
Notwithstanding any provision herein to the contrary, upon such a
Termination pension benefits under any Retirement Plan based on
"Average Final Compensation" will be calculated applying the rate of
one year's Full Pay and the Executive's Annual Flexible Perquisite
Allowance for each year in the Compensation Period.
(ii) If Executive was participating in any Retirement Plan
immediately prior to an Involuntary Termination during the two (2)
year period beginning on a Change of Control, the Executive will be
deemed to accrue benefits during the Compensation Period under such
Retirement Plans for purposes of benefit accrual based on the same
formula as in effect immediately prior to such Termination. If the
Executive will have attained age 50 at the end of the Compensation
Period with 10 years of service (including the Compensation Period),
the Executive will, subject to the conditions of Paragraph 6, be
deemed retired with the consent of the Company for the purposes of
welfare and executive compensation plans but not for the purposes of
any Retirement. Notwithstanding any provision herein to the
contrary, upon such a Termination pension benefits under any
Retirement Plan based on "Average Final Compensation" will be
calculated applying the rate of one year's Base Cash for each year
in the Compensation Period.
10
<PAGE>
(g) Flexible Perquisite Program. During the Compensation Period, the
Executive shall continue to receive benefits under the Program; provided,
further, that in the event of an Involuntary Termination during the two
(2) year period beginning on a Change of Control, ownership of the
automobile assigned to the Executive immediately prior to such Termination
shall be transferred to the Executive within fifteen (15) business days
after such Termination. At the time of such transfer, the Company shall
pay to the Executive such amount in cash that, after payment of all
applicable federal, state and local taxes thereon, computed at the maximum
marginal rates, is equal to all such taxes, so computed, imposed in
connection with such transfer.
(h) Outplacement. During the Compensation Period, Executive will be
provided with outplacement counseling services at Company expense;
provided, however, this expense shall not exceed 18% of the amount of one
year's Full Pay or Base Cash, as the case may be. This counseling shall
include, but is not limited to, skill assessment, job market analysis,
resume preparation, interviewing skills, job search techniques and
negotiating.
6. Conditions on Compensation Continuance.
(a) Availability and Consulting. Upon an Involuntary Termination
prior to, or after the second anniversary of, a Change of Control, during
the related Compensation Period the Executive shall provide consulting
services to the Company on a reasonable basis subject to appropriate
notice and reimbursement of all travel and other expenses. During the
first six (6) months of such Compensation Period, the Executive may be
required by the Company to provide up to fifteen (15) days of consultation
during normal business hours and business days. When and if the Executive
becomes employed on a full-time basis, either with another company or on a
self-employed basis, the Executive's obligation to provide consulting
services shall be limited by the requirements of such employment, and
under appropriate circumstances, may be restricted to telephone
conference.
(b) Confidentiality and Conduct. The Executive warrants that the
Executive will not disclose to any other person any confidential
information or trade secrets concerning the Company or any of its
subsidiaries at any time during or after the Compensation Period and upon
an Involuntary Termination prior to, or after the second anniversary of, a
Change of Control, the Executive will at all times refrain from taking any
action or making any statements, written or oral, which are intended to
and do disparage the goodwill or reputation of the Company, its directors,
officers or executives or which could adversely affect the morale of
Company employees.
11
<PAGE>
(c) Breach of Conditions. In the event that the Executive
unreasonably refuses to provide consulting services to the extent required
under paragraph (a) above or materially violates the terms and conditions
of paragraph (b) above, the Company may, at its election upon ten (10)
days notice, terminate any ongoing Compensation Period, discontinue cash
compensation payments and employee benefits coverage and cancel any
outstanding stock options or restricted stock. The Company may also
initiate any form of legal action it may deem appropriate seeking damages
or injunctive relief with respect to any material violations of paragraph
(b) above.
(d) Non-Competition. Any Compensation Period resulting from an
Involuntary Termination prior to, or after the second anniversary of, a
Change of Control shall be terminated if the Executive, without the
Company's written approval, accepts a substantially similar or higher
executive position, paying a substantially comparable or greater level of
cash compensation, with any company (other than an Affiliate of the
Company) conducting a business which is substantially competitive with a
business conducted by the Company. Alternatively, the Company may, in its
discretion, appropriately reduce the Executive's cash compensation and
employee benefits coverage for the balance of such Compensation Period.
(e) Employment With Another Employer During Compensation Period.
Except as otherwise provided in this Section 6, if the Executive commences
employment with another employer during a Compensation Period commencing
prior to, or after the second anniversary of, a Change of Control, the
Executive will continue to receive the compensation continuance provided
under Section 5 for the balance of such Compensation Period, except that,
unless otherwise required by law, benefits under the Company's Employee
Benefits Plans, including the Program, if applicable, shall be
appropriately terminated or offset to the extent the same are provided by
the other employer.
(f) Other Severance Benefits. The Executive is entitled to no form
of severance benefits, including benefits otherwise payable under any of
the Company's regular severance policies, other than those set forth or
made applicable by reference in this Agreement. Notwithstanding the
foregoing, the Executive will at the time of termination of employment be
eligible for any form of post-retirement benefit provided under the
Company's qualified Employee Benefits Plans, including retiree medical
benefits, as any other employee upon retirement with the same age and
service. Nothing contained in this Agreement shall adversely affect the
Executive's rights to accrued vested pension benefits or the Executive's
right to receive previously deferred awards or amounts under any of the
Company's short and long term incentive award programs or deferred
compensation plans or perquisite programs.
12
<PAGE>
(g) Release and Waiver of Claims. In consideration of the
compensation and benefits continuance available pursuant to this
Agreement, upon an Involuntary Termination prior to, or after the second
anniversary of, a Change of Control the Executive agrees to execute a
release, in form and substance reasonably acceptable to the Executive and
the Company, releasing the Company, NHC and NGH from all claims and
liabilities relating to such Termination and the Company's employment of
the Executive.
(h) Disability. In the event the Executive is eligible for benefits
under the Company's Short Term or Long Term Disability Plan during the
Executive's Compensation Period, any Compensation Continuance will be
suspended while disability benefits are paid from any Company plan and
resumed when such disability payments cease. All other provisions of this
Agreement shall remain in effect notwithstanding the Executive's
disability.
(i) Death. In the event of the Executive's death subsequent to
commencement of the Executive's Compensation Period hereunder, the balance
of Compensation Continuance will be paid to the Executive's beneficiary in
a lump sum. "Beneficiary" shall mean the Executive's designated
beneficiary under the Executive's Executive Program life insurance or, if
not so eligible, the Executive's core life insurance benefit under the
Company's plans.
(j) No Mitigations. Notwithstanding anything to the contrary in this
Agreement, the Executive shall not be required to mitigate the amount of
any payment provided for in Section 5 by seeking other employment or
otherwise, nor, except under coordination of benefit rules in connection
with certain welfare benefits under Section 5(e), shall the amount of any
payment or benefit provided for in Section 5 hereof be reduced by any
compensation earned by the Executive as the result of employment by
another employer or by retirement benefits after the Date of Termination
of employment, or otherwise.
7. General Provisions.
(a) Limited Right of Appeal. If the Executive's Compensation Period
is terminated pursuant to Section 6, the Executive may, within fifteen
(15) days after mailing of notice thereof to the Executive, submit to the
Chief Executive Officer of the Company a written objection to such
termination. In such event, the Compensation Committee of the NHC Board at
or before its next regularly scheduled meeting must determine by majority
vote that termination of the Compensation Period was appropriate or,
failing that, the Compensation Period must be reinstated with full
retroactive effect.
13
<PAGE>
(b) Notices. All notices hereunder shall be in writing and deemed
given if delivered by hand and receipted or if mailed by registered mail,
return receipt requested. Notices to the Company shall be directed to the
Corporate Secretary at the Company's headquarters offices. Notices to the
Executive shall be directed to the Executive's last known home address.
(c) Limited Waiver. The waiver by any party hereto of a violation of
any of the provisions of this Agreement, whether express or implied, shall
not operate or be construed as a waiver of any subsequent violation of any
such provision.
(d) No Assignment. Except as provided herein, no right, benefit,
obligation or interest hereunder shall be subject to assignment,
encumbrance, charge, pledge, hypothecation or set off by Executive or the
Company. The Company, however, may assign its obligations hereunder in the
event of the transfer of the Executive's employment to an Affiliated
Company or the divestiture (whether by the sale of shares or assets) of
the operating company employing the Executive. In the event the
obligations of the Company under this Agreement are assigned to an
employing Affiliated Company as contemplated by Section 4(a)(iii), the
Company agrees to guarantee to Executive the obligations of such
Affiliated Company under this Agreement. Except as provided in the
preceding sentence, upon any permitted assignment of the Company's
obligations hereunder, "Company" shall be deemed to refer to the assignee
as the context may require.
(e) Amendment. This Agreement may not be amended, modified or
cancelled except by written agreement of the parties.
(f) Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall remain in full
force and effect to the fullest extent permitted by law.
(g) Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Executive, the Company, its affiliates, and any
successor organization or organizations which shall succeed to
substantially all of the business and property of the Company, whether by
means of merger, consolidation, acquisition of substantially all of the
assets of the Company or otherwise, including by operation of law.
(h) Unsecured Promise. Unless otherwise stated herein, no benefit or
promise hereunder shall be secured by any specific assets of the Company.
Unless otherwise stated herein, the Executive shall have only the rights
of an unsecured general creditor of the Company in seeking satisfaction of
such benefits or promises. Notwithstanding the foregoing, the Company may
choose to maintain a rabbi trust or trusts for the purpose of paying
certain of the benefits hereunder or under other plans and programs of the
Company and, if so, the Executive shall be entitled to payments therefrom,
if any, as and to the extent provided in such rabbi trust or trusts.
14
<PAGE>
(i) Governing Law. This Agreement has been made in and shall be
governed and construed in accordance with the laws of the State of
Delaware.
(j) Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties hereto with respect to the matters
covered hereby. This Agreement supersedes and replaces any prior agreement
with respect to employment, compensation continuation and the matters
contained in this Agreement which the Executive may have had with the
Company or any affiliate.
(k) Legal Fees and Expenses.
(i) The Company shall pay to the Executive as incurred all
legal and accounting fees and expenses incurred by the Executive as
a result of the Executive's Involuntary Termination on or during the
two (2) year period beginning on a Change of Control (including all
such fees and expenses, if any, in seeking to obtain or enforce any
right or benefit provided by this Agreement or any other
compensation-related plan, agreement or arrangement of the Company)
unless the Executive's claim is found by an arbitral tribunal of
competent jurisdiction to have been frivolous.
(ii) The Company shall pay to the Executive as incurred all
legal and accounting fees and expenses incurred by the Executive
during the two (2) year period beginning on a Change of Control as a
result of both (A) the Executive's Involuntary Termination prior to
such Change of Control and (B) the Company's refusal after such
Change of Control to provide any right or benefit provided by this
Agreement or any other compensation-related plan, agreement or
arrangement of the Company in respect of such Termination, including
all such fees and expenses, if any, in seeking to obtain or enforce
any such right or benefit unless the Executive's claim is found by
an arbitral tribunal or court of competent jurisdiction to have been
frivolous.
(l) Certain AIAP and LTIP Change of Control Provisions.
(i) In the event of a Change of Control, the Executive will be
paid within fifteen (15) business days following the date of such
Change of Control a lump sum cash payment equal to the Executive's
AIAP Vested Amount.
(ii) Upon a Change of Control, all stock options, shares of
restricted stock, restricted stock units and restricted stock
equivalents then held by the Executive under either LTIP shall
become 100% vested and non-forfeitable on the date of such Change of
Control and any restrictions thereon shall immediately lapse on such
date.
15
<PAGE>
(m) Certain Payments.
(i) Anything herein to the contrary notwithstanding, in the
event that it is determined that any payment or distribution by the
Company to or for the Executive's benefit, whether paid or payable
or distributed or distributable pursuant to the terms hereof,
including but not limited to Section 7(l), or otherwise, other than
any payment pursuant to this Section 7(m), (a "Payment"), would be
subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive, within fifteen (15) business days
following the determination described in Section 7(m)(ii) below, an
additional payment ("Excise Tax Adjustment Payment") in an amount
such that after payment by the Executive of all applicable Federal,
state and local taxes (computed at the maximum marginal rates and
including any interest or penalties imposed with respect to such
taxes), including any Excise Tax, imposed upon the Excise Tax
Adjustment Payment, the Executive shall retain an amount of the
Excise Tax Adjustment Payment equal to the Excise Tax imposed upon
the Payments.
(ii) All determinations required to be made under this Section
7(m), including whether Excise Tax Adjustment Payment is required
and the amount of such Excise Tax Adjustment Payment, shall be made
by Deloitte & Touche LLP, or such other accounting firm as the
Company may designate prior to a Change of Control, which shall
provide to the Company and the Executive detailed supporting
calculations within fifteen (15) business days of the date of the
Executive's termination of employment. Except as hereinafter
provided, any determination by Deloitte & Touche LLP, or such other
accounting firm as the Company may designate prior to a Change of
Control, shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the
Code at the time of the initial determination hereunder, it is
possible that (x) Excise Tax Adjustment Payments which should have
been made will not have been made by the Company ("Underpayment"),
or (y) certain Payments will have been made which should not have
been made ("Overpayment"), consistent with the calculations required
to be made hereunder. In the event of an Underpayment, the Company
shall promptly determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the
Company to or for the Executive's benefit. In the event that the
Executive discovers that an Overpayment shall have occurred, the
amount thereof shall be promptly repaid to the Company.
16
<PAGE>
(n) Arbitration. Following a Change of Control, any dispute or
controversy arising under or in connection with this Agreement shall be
settled exclusively by arbitration in New York, New York in accordance
with the National Rules for the Resolution of Employment Disputes of the
American Arbitration Association then in effect. The determination of the
arbitral tribunal shall be conclusive and binding on the parties and
judgment may be entered on the arbitrator's award in any court having
jurisdiction.
(o) Unconditional Obligation. The Company's obligations to make all
payments and honor all commitments under this Agreement or otherwise
following a Change of Control or in connection with an Involuntary
Termination during the two (2) year period beginning on a Change of
Control shall be absolute and unconditional and shall not be affected by
any circumstances including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may
have against the Executive.
(p) Late Payments. To the extent that any payments required to be
made hereunder following a Change of Control in connection with any
Involuntary Termination occurring prior to the second anniversary of such
Change of Control are not made within the period specified therefor, the
Company shall be liable for interest on such delayed payments at the rate
of 150% of the prime rate compounded monthly, as posted by the Morgan
Guaranty Trust Company of New York, from time to time.
17
<PAGE>
(q) Actuarial Calculations. All required actuarial calculations of
payments to be made hereunder shall be made by Watson Wyatt Worldwide, New
York, New York, or such other actuarial firm as the Company may designate
prior to a Change of Control.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
NABISCO, INC.
By: /s/ C. Michael Sayeau
------------------------------------
C. Michael Sayeau
Executive Vice President and
Chief Personnel Officer
NABISCO HOLDINGS CORP.
By: /s/ C. Michael Sayeau
------------------------------------
C. Michael Sayeau
Executive Vice President and
Chief Personnel Officer
NABISCO GROUP HOLDINGS, INC.
By: /s/ James M. Kilts
------------------------------------
James M. Kilts
President and Chief Executive Officer
THE EXECUTIVE
/s/ Douglas R. Conant
- ---------------------
Douglas R. Conant
18
<PAGE>
EXHIBIT A
DEFINITIONS
AIAP Vested Amount means, as of a Change of Control or as of a Termination
Date during the two (2) year period beginning on a Change of Control, as the
case may be, an amount equal to the value of the Executive's target award under
the relevant AIAP for the relevant performance period in which the Change of
Control or such termination occurs, as the case may be, multiplied by a
fraction, the numerator of which is the number of months (including partial
months) in the period beginning on the first day of the relevant performance
period and ending on the Change of Control or such Termination Date, as the case
may be, and the denominator of which is the number of months in such performance
period; provided that in the event of a termination of employment following a
Change of Control in the year in which a Change of Control occurs, for purposes
of computing the AIAP Vested Amount as of the date of such termination, the
performance period shall be deemed to begin on the first day following the
Change of Control and the target award shall be that in effect immediately
preceding such Change of Control.
Earned 1999 Program Amount means, as of a Termination Date during the two
(2) year period beginning on a Change of Control, an amount equal to the
Executive's Retention Award or awards under the 1999 Program in respect of
calendar years ending prior to such Termination Date and not previously paid to
the Executive.
Vested 1999 Program Amount means, as of a Termination Date during the two
(2) year period beginning on a Change of Control, an amount equal to the value
of the Executive's Retention Award under the 1999 Program in respect of the year
in which such Termination Date occurs.
Retirement Plans means the Retirement Plan for Employees of Nabisco, Inc.,
the Additional Benefits Plan of Nabisco, Inc. and participating Companies, the
Supplemental Benefits Plan of Nabisco, Inc. and participating Companies and the
Supplemental Executive Retirement Plan of Nabisco, Inc. and participating
Companies, and such other plans as the Board may hereafter determine.
Savings Plans means the Capital Investment Plan of Nabisco, Inc., the
Additional Benefits Plan of Nabisco, Inc. and participating Companies and the
Supplemental Benefits Plan of Nabisco, Inc. and participating Companies, and
such other plans as the Board may hereafter determine.
<PAGE>
EXHIBIT 12.1
NABISCO GROUP HOLDINGS CORP.
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS/DEFICIENCY IN THE COVERAGE OF
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
BY EARNINGS BEFORE FIXED CHARGES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, 2000
---------------
<S> <C>
Earnings before fixed charges:
Income before income taxes................................ $ 97
Less minority interest in pre-tax income.................. 19
----
Adjusted income before income taxes....................... 78
Interest and debt expense................................. 72
Interest portion of rental expense........................ 8
----
Earnings before fixed charges............................... $158
====
Combined fixed charges and preferred stock dividends:
Interest and debt expense................................. $ 72
Interest portion of rental expense........................ 8
Capitalized interest...................................... 1
Preferred stock dividends................................. --
----
Total fixed charges and preferred stock dividends....... $ 81
====
Ratio of earnings to combined fixed charges and preferred
stock dividends............................................. 1.95
====
</TABLE>
<PAGE>
EXHIBIT 12.2
NABISCO GROUP HOLDINGS CORP.
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES/DEFICIENCY
IN THE COVERAGE OF FIXED CHARGES BY EARNINGS BEFORE FIXED CHARGES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, 2000
--------------
<S> <C>
Earnings before fixed charges:
Income before income taxes................................ $ 97
Less minority interest in pre-tax income.................. 19
----
Adjusted income before income taxes....................... 78
Interest and debt expense................................. 72
Interest portion of rental expense........................ 8
----
Earnings before fixed charges............................... $158
====
Fixed charges:
Interest and debt expense................................. $ 72
Interest portion of rental expense........................ 8
Capitalized interest...................................... 1
----
Total fixed charges..................................... $ 81
====
Ratio of earnings to fixed charges.......................... 1.95
====
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NABISCO
GROUP HOLDINGS' CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000847903
<NAME> NABISCO GROUP HOLDINGS CORP.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 189
<SECURITIES> 8
<RECEIVABLES> 555
<ALLOWANCES> 0
<INVENTORY> 964
<CURRENT-ASSETS> 1,901
<PP&E> 3,058
<DEPRECIATION> (2,050)
<TOTAL-ASSETS> 11,790
<CURRENT-LIABILITIES> 1,585
<BONDS> 4,094
98
0
<COMMON> 3
<OTHER-SE> 3,168
<TOTAL-LIABILITY-AND-EQUITY> 11,790
<SALES> 2,069
<TOTAL-REVENUES> 2,069
<CGS> 1,147
<TOTAL-COSTS> 1,147
<OTHER-EXPENSES> 55
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 72
<INCOME-PRETAX> 97
<INCOME-TAX> 38
<INCOME-CONTINUING> 47
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47
<EPS-BASIC> .14
<EPS-DILUTED> .14
</TABLE>
