EXHIBIT 10.3
INTERCOMPANY SERVICES AGREEMENT
This Intercompany Services Agreement (this "Agreement") is made and
entered into as of the 14th day of June 1999, by and between RJR Nabisco
Holdings Corp. (to be renamed "Nabisco Group Holdings Corp."), a Delaware
corporation ("NGH"), Nabisco Holdings Corp., a Delaware corporation
("Nabisco"), and, solely for purposes of Section 21 of this Agreement, ▇.▇.
▇▇▇▇▇▇▇▇ Tobacco Holdings, Inc. a Delaware corporation (formerly named "RJR
Nabisco, Inc.") ("RJRTH").
1. Corporate Services, Insurance and Employee Benefits. Beginning
on the date (the "Effective Date") that NGH shall have distributed to its
shareholders all of its shares of the common stock of RJR Nabisco, Inc.,
Nabisco shall provide to NGH all of the services set forth from time to time
on Exhibit A to this Agreement ("Corporate Services"). To the extent provided
in this Agreement, Nabisco will also include NGH in its insurance coverage
("Insurance"). In addition, NGH and Nabisco have agreed that both Nabisco
employees and NGH employees may continue to participate in the benefit plans
and programs set forth in Exhibit B to this Agreement ("Benefit Plans"). The
Corporate Services and Benefit Plans of Nabisco may be provided by (i) any
employee of Nabisco or its subsidiaries or (ii) any third party designated at
the sole discretion of Nabisco. Insurance may be provided by such third party
insurers as Nabisco may designate.
2. Corporate Services.
(a) Cash Management Provisions. As noted in Exhibit A, the
Corporate Services include cash management services. Nabisco shall
place all of NGH's collections in, make all of its disbursements
from, and concentrate all uninvested funds in accounts (the "NGH
Accounts") in the name of NGH. The NGH Accounts, the funds therein
and all earnings thereon shall remain under the sole ownership and
control of NGH, except to the extent that NGH, at its option, assigns
or pledges such accounts to any independent third party. Nabisco
shall have no rights in or to the NGH Accounts, the funds therein, or
the earnings thereon and hereby waives any rights of setoff it may
now or hereafter have with respect thereto. Nabisco shall comply with
all of NGH's instructions concerning the use of funds in the NGH
Accounts.
(b) Expansion or Contraction of Corporate Services. At any time
during the term of this Agreement, NGH may request that Nabisco
provide additional or different Corporate Services or cease providing
one or more Corporate Services then being provided. Upon any such
request,
the parties will discuss in good faith, without obligation, an
appropriate adjustment, if any, to the Services Fee (as defined
below) to reflect such additional or different Corporate Services or
termination of such Corporate Services, after which NGH shall notify
Nabisco in writing whether it shall accept such additional Corporate
Services or termination of Corporate Services and, upon acceptance,
such adjustments shall become effective. If the Services Fee is
reduced, Nabisco shall promptly refund to NGH any amount overcharged
as a result of such reduction. If the Services Fee is increased, NGH
shall promptly pay to Nabisco the amount necessary to cover such
increase.
3. (a) Insurance. Unless NGH notifies Nabisco within ten (10) days of
this Agreement that it has elected to terminate its Insurance benefits and
obligations, Nabisco shall use all commercially reasonable efforts to cause
NGH to be covered during the term of this Agreement under Nabisco's insurance
policies (including, without limitation, directors' and officers' liability
insurance and workers' compensation) which will provide to NGH the type of
Insurance that NGH had in place immediately prior to the date hereof, subject
to availability. Nabisco shall not be responsible for obtaining or maintaining
any insurance coverage for NGH other than as set forth in the preceding
sentence. The Insurance provided shall be subject to such policies of
insurance or self-insurance, and such guidelines or procedures in respect of
insurance or self-insurance, as NGH had in effect immediately prior to the
date hereof. In the event the terms of the Insurance (including the scope of
coverage), self-insurance, or other policies, guidelines or procedures
relating to Insurance or self-insurance, change or require change from those
terms NGH had in effect immediately prior to the date hereof, Nabisco agrees
(a) to the extent Nabisco is aware of a material change prior to the effective
date of the change, to provide notice to NGH of such change prior to its
effective date, or (b) otherwise to provide notice to NGH upon becoming aware
of the change.
(b) Termination of Insurance. Notwithstanding paragraph 6 hereof,
either NGH or Nabisco may terminate all or any portion of the Insurance at any
time on 90 days' prior written notice to the other party hereto. In the event
all or any portion of the Insurance is terminated, if appropriate, the charges
therefor shall be adjusted equitably to reflect such termination and Nabisco
shall promptly refund to NGH any amounts overcharged.
4. Employee Benefit Plans.
(a) Plans and Services. Prior to the Effective Date, certain
employees of Nabisco and NGH participated in the Benefit Plans. During the
period from the Effective Date until the termination of this Agreement,
employees of NGH
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shall continue to be eligible to participate in the Benefit Plans, subject to
the terms of the governing plan documents as interpreted by the appropriate
plan fiduciaries. During such period, subject to regulatory requirements,
Nabisco will continue to provide Corporate Services with respect to the
Benefit Plans in substantially the same manner as it administered the plans
prior to the Effective Date.
(b) Changes; Additional Services and Plan Terms. NGH may request
changes in the applicable Benefit Plan terms or services, subject, as to the
services only, to the approval of Nabisco, which approval shall not be
unreasonably withheld. Approval of changes in the terms of a Benefit Plan
shall be in the sole discretion of the plan sponsor. Upon any such request,
the parties will discuss in good faith, without obligation, an appropriate
adjustment to the Services Fee to reflect such changes, after which NGH shall
notify Nabisco in writing whether it shall accept such changes, and upon
acceptance, such adjustments shall become effective. If the Services Fee is
reduced, Nabisco shall promptly refund to NGH any amount overcharged as a
result of such reduction. If the Services Fee is increased, NGH shall promptly
pay to Nabisco the amount necessary to cover such increase. From time to time,
Nabisco may, as plan sponsor, make changes in the benefit plans or in the
administration of any of the plans.
(c) Regulatory Matters. Nabisco and NGH agree to cooperate fully
with each other in the administration and coordination of regulatory and
administrative requirements associated with the Benefit Plans that apply
either to the other party or jointly to NGH and Nabisco and its other
subsidiaries. Such coordination, upon request, will include (but is not
limited to) the following: sharing payroll data for determination of highly
compensated employees, providing census information (including accrued
benefits) for purposes of running discrimination tests, providing actuarial
reports for purposes of determining the funded status of any plan, review and
coordination of insurance and other independent third party contracts, and
providing for review of all summary plan descriptions, requests for
determination letters, insurance contracts, Forms 5500, financial statement
disclosures and plan documents.
(d) Executive Compensation. Certain NGH executives participate
in executive compensation and benefit programs offered by Nabisco. These plans
are listed in Exhibit C-Part 1, and are administered by Nabisco. Certain
Nabisco executives participate in executive compensation and benefit plans
administered by Nabisco. These plans are listed in Exhibit C-Part 2, and
administered by NGH.
(e) Certain Notices. In the event there is an ERISA Event, with
respect to Benefit Plans administered by Nabisco, Nabisco shall advise NGH as
soon as reasonably practicable after Nabisco determines the ERISA Event has
occurred. For purposes of this Section 4(e), an "ERISA Event" means (a) the
termination
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of a Benefit Plan or the filing of a Notice of Intent to Terminate such a
plan, in either case, under Section 4041(c) of the Employee Retirement Income
Security Act of 1974, as amended from time to time ("ERISA"); (b) the
institution of proceedings by the Pension Benefit Guaranty Corporation (or any
successor thereof) to terminate a Benefit Plan or to appoint a trustee to
administer such a plan or the receipt of notice by Nabisco that such an action
has been taken with respect to such a plan; (c) any substantial accumulated
funding deficiency within the meaning of Section 412 of the Internal Revenue
Code of 1986, as amended (the "Code"), or Section 302 of ERISA is incurred
with respect to any Benefit Plan sponsored by Nabisco and no waiver of that
deficiency has been obtained from the Internal Revenue Service; (d) the
Internal Revenue Service determines that a Benefit Plan that is intended to be
qualified under Section 401 of the Code fails to meet the applicable
requirements of the Code and disqualifies the plan; or (e) an amendment to a
Benefit Plan sponsored by Nabisco that results in a significant underfunding
described in Section 401(a)(29) of the Code or Section 307 of ERISA.
(f) Third Party Beneficiary. Nothing in this Agreement is
intended to entitle any employee or individual to any benefit or compensation
from NGH or Nabisco or to otherwise establish or create any rights on the part
of any third party. Nothing in this Agreement is intended to restrict or limit
Nabisco in the exercise of its rights or the fulfillment of its duties as plan
sponsor.
(g) Conflicts. In the event of a conflict between the terms of
this Section 4 and the terms of Section 2 hereof relating to providing
Corporate Services in connection with Benefit Plans, the terms of this Section
4 shall control.
5. Fee. In exchange for the Corporate Services, Insurance and
Benefit Plans provided by Nabisco during the term of this Agreement, NGH shall
pay to Nabisco a fee (the "Services Fee") in an amount equal to the fair
market value of such Corporate Services, Insurance and Benefit Plans as
determined in good faith by Nabisco and NGH. NGH shall make such payments in
arrears within 30 days of receipt of a reasonably detailed invoice therefor or
with such other frequency or at such other times as Nabisco and NGH may agree.
6. Term; Termination of Services. This Agreement shall commence on
the date hereof and end on the first date that NGH owns less than 50% of the
Nabisco Stock (as that term is defined in the Corporate Agreement among the
parties hereto on the date hereof) that NGH owns on the date of this
Agreement. Either party hereto may terminate this Agreement if the other party
commits any payment default or otherwise breaches its obligations hereunder in
any material respect.
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7. Cooperation; No Agency. Nabisco and NGH shall cooperate with
each other with respect to all provisions of this Agreement and the Corporate
Services, Insurance and Benefit Plans provided hereunder. However, this
Agreement creates no agency relationship between Nabisco and NGH except as may
be otherwise required for purposes of this Agreement.
8. Limitation of Liability. Except as may be provided in Section 9
below, Nabisco, its controlling persons, if any, directors, officers,
employees, agents and permitted assigns (each, a "Nabisco Party") shall not be
liable to NGH, its directors, officers, employees, agents or permitted assigns
(each, a "NGH Party") and each NGH Party shall not be liable to any Nabisco
Party, in each case, for any and all claims, debts, liabilities, assessments,
fines, penalties, damages, losses, disgorgements and obligations, of any kind,
character or description (whether absolute, contingent, matured, not matured,
liquidated, unliquidated, accrued, known, unknown, direct, indirect,
derivative or otherwise) whenever arising, including all costs and expenses
relating thereto (including, without limitation, all court costs,
out-of-pocket expenses of investigation and attorneys' fees and out-of-pocket
expenses in connection with any claim, action, or threatened action)
("Damages"), of a NGH Party, in the case of an Nabisco Party, or an Nabisco
Party, in the case of a NGH Party, arising in connection with this Agreement,
the Corporate Services, the Insurance or the Benefit Plans.
9. Indemnification. Nabisco shall indemnify, defend and hold
harmless each of the NGH Parties from and against all Damages, of third
parties unrelated to any NGH Party caused by or arising in connection with the
gross negligence or willful misconduct of any employee of Nabisco in
connection with the performance of the Corporate Services or the
administration of the Benefit Plans, or the provision of the Insurance, except
to the extent that Damages were caused directly or indirectly by statements,
acts or omissions of any NGH Party; provided that, in the case of any Benefit
Plan, NGH's right of indemnification also shall extend to claims of NGH
employees but shall not extend to any Damages that otherwise would have been
owed in the absence of such gross negligence or willful misconduct.
Notwithstanding the foregoing, Nabisco shall not be liable for any special,
indirect, incidental or consequential damages relating to such third party
claims. If NGH knows of a claim that may be the subject of indemnification
under this paragraph, it shall promptly notify Nabisco of such claim and
Nabisco may defend, settle or otherwise litigate such claim; provided that
Nabisco may not agree to any such settlement or compromise pursuant to which
any remedy or relief, other than monetary damages for which the indemnifying
party shall be responsible hereunder, shall be applied to or against the
indemnified party, without the prior written consent of the indemnified party,
which consent shall not be unreasonably withheld.
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10. Information. Subject to applicable law and privileges, each
party hereto covenants and agrees to provide the other party with all
information regarding itself and transactions under this Agreement that the
other party reasonably believes are required to comply with all applicable
federal, state, county and local laws, ordinances, regulations and codes,
including, but not limited to, securities laws and regulations.
11. Confidential Information. NGH and Nabisco hereby covenant and
agree to hold in trust and maintain confidential all Confidential Information
relating to the other party. "Confidential Information" shall mean all
information disclosed by either party to the other in connection with this
Agreement whether orally, visually, in writing or in any other tangible form,
and includes, but is not limited to, economic and business data, business
plans, and the like, but shall not include (i) information which becomes
generally available other than by release in violation of the provisions of
this Section 11, (ii) information which becomes available on a nonconfidential
basis to a party from a source other than the other party to this Agreement;
provided that such source is not and was not bound to hold such information
confidential, (iii) information acquired or developed independently by a party
without violating this Section 11 or any other confidentiality agreement with
the other party and (iv) information that any party hereto reasonably believes
it is required to disclose by law; provided that it first notifies the other
party hereto of such requirement and allows such party a reasonable
opportunity to seek a protective order or other appropriate remedy to prevent
such disclosure. Without prejudice to the rights and remedies of either party
to this Agreement, a party disclosing any Confidential Information to the
other party in accordance with the provisions of this Agreement shall be
entitled to equitable relief by way of an injunction if the other party hereto
breaches or threatens to breach any provision of this Section 11.
12. Assignment. Except as otherwise provided herein, neither party
may assign or transfer any of its rights or duties under this Agreement to any
third person or entity without the prior written consent of the other party.
13. Notices. Any notice, instruction, direction or demand under the
terms of this Agreement required to be in writing will be duly given upon
delivery, if delivered by hand, facsimile transmission or intercompany mail,
or five (5) days after posting if sent by mail, to the following addresses:
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NGH:
Nabisco Group Holdings Corp.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
and
Nabisco:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Parsippany, New Jersey 07054-0311
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
RJRTH:
▇. ▇. ▇▇▇▇▇▇▇▇ Tobacco Holdings, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
or to such other address as either party may have furnished to the other in
writing in accordance with this Section 13.
14. Governing Law. This Agreement shall be construed in accordance
with and governed by the substantive internal laws of the State of New York.
15. Suspension. The obligations of any party to perform any acts
hereunder may be suspended if such performance is prevented by fires, strikes,
embargoes, riot, invasion, governmental interference, inability to secure
goods or materials, or other circumstances outside the control of the parties.
16. Severability. If any provision of this Agreement shall be
invalid or unenforceable, such invalidity or unenforceability shall not render
the entire Agreement invalid. Rather, the Agreement shall be construed as if
not containing the particular invalid or unenforceable provision, and the
rights and obligations of each party shall be construed and enforced
accordingly.
17. Rights Upon Orderly Termination; Survival. Upon termination or
expiration of this Agreement or any of the Corporate Services, Insurance or
Benefit Plans described herein, each party shall, upon request, forthwith
return to
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the other party all reports, papers, materials and other information required
to be provided to the other party by this Agreement. In addition, each party
shall assist the other in the orderly termination of this Agreement or any of
the Corporate Services, Insurance or Benefit Plans described herein.
Notwithstanding any termination of this Agreement, the obligations of the
parties hereto to make payments hereunder and the provisions of Sections 4, 8,
9, 13 and 14 shall survive.
18. Amendment. This Agreement may only be amended by a written
agreement executed by Nabisco and NGH.
19. Entire Agreement. This Agreement, including the exhibits hereto,
constitutes the entire agreement between the parties, and supersedes all prior
agreements, representations, negotiations, statements or proposals related to
the subject matter hereof.
20. Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original and all of which, when
taken together, shall constitute one agreement.
21. Termination of Prior Agreement. RJRTH and Nabisco hereby agree
to terminate the Intercompany Services and Operating Agreement dated as of
January 26, 1995 between RJRTH and Nabisco, as amended, without any liability
on the part of either such party except for any liability arising out of a
willful breach of any provision of such agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed by their duly authorized representatives.
NABISCO HOLDINGS CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Title: Executive Vice President,
General Counsel and Secretary
RJR NABISCO HOLDINGS CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President and
General Counsel
▇.▇. ▇▇▇▇▇▇▇▇ TOBACCO HOLDINGS,
INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President and
General Counsel
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EXHIBIT A
Corporate Services
(provided to NGH)
1. Tax Services
2. Accounting, Public Reporting and Consolidation Services
3. Internal Audit Services
4. Cash Management, Corporate Finance and other Treasury Services
5. Investor, Public Relations and Governmental Affairs Advice
6. Risk Management Services
7. Legal Services
8. Corporate Secretary Services
9. Corporate Development Advice
10. Executive Compensation and Benefit Services
11. Consulting Services of Selected Executives
A
EXHIBIT B
Employee Benefit Plans
(Sponsored by Nabisco)
Retirement Plan for Employees of Nabisco, Inc. ("PEP")
Nabisco, Inc. Capital Investment Plan
Pacific Hawaiian Products Company Profit Sharing and Retirement Plan
SELECT Omnibus Insurance Plan
o Core Life Insurance Plan
o Group Universal Life
o AD&D Insurance Plan
o Dependent AD&D Insurance Plan
o Business Travel Accident
o MedChoice Retiree Life Insurance
Nabisco Salary and Benefits Continuation Program
SELECT Omnibus Welfare Benefits
o Medical Care Plan
o Select Dental Care Plan
o Short-Term Disability Plan (STD)
o Long-Term Care
o EAP
o MedChoice Retiree Medical
o MedChoice Retiree Dental
o MedChoice Retiree Spending Account
Select Flexible Benefits Program (Cafeteria)
Health Care Spending Account
Long-Term Disability Plan (LTD)
MedSave Retiree Savings Plan
Dependent Day Care Spending Account
Scholastic Savings Plan
Scholastic Loan Programs
B
EXHIBIT C
Part 1
Executive Compensation Plans
(Sponsored by Nabisco)
Annual Incentive Award Plan (AIAP) Nabisco Long-Term
Incentive Plan (Nabisco LTIP) Flexible Perquisite Program
Supplemental Executive Retirement Plan (SERP) Supplemental
Benefits Plan (SBP) Additional Benefits Plan (ABP) Deferred
Compensation Plan
Part 2
Executive Compensation Plans
(Sponsored by NGH)
Management Equity Participation Plan (MEPP)
NGH Long-Term Incentive Plan (NGH LTIP)
HQ Protection Plan (NGH employees only)
Individual Employment/Severance Agreements (NGH employees only)
C