Exhibit 10.84
NI
November 1, 1995
[FirstName] [LastName]
Dear [AName]:
RJR Nabisco Holdings Corp. ("Holdings") and RJR Nabisco, Inc. (the
"Company") consider it essential to the best interests of Holdings' stockholders
to ▇▇▇▇▇▇ the continuous employment of key management personnel of the Company.
In furtherance of the foregoing interests of Holdings and its
stockholders, Holdings and the Company have previously committed, in a series of
letters to you, the most recent of which is dated January 20, 1995 (the "1995
Letter" and, collectively, the "Letters") and in a protection program for
headquarters employees established on July 1, 1994 and implemented as of January
31, 1995, as the RJR Nabisco Holdings Corp. Headquarters Continuing Excellence
Recognition Program (the "Headquarters Program"), to provide to you certain
payments and benefits in the event of your involuntary separation of employment
with the Company other than for cause.
In light of the success of the 1995 Letter and the Headquarters Program in
retaining and motivating headquarters employees, the Board of Directors of
Holdings (the "Holdings Board") and the Board of Directors of the Company (the
"Board") (and sometimes, collectively, the "Boards") have determined that
further appropriate steps should be taken to reinforce and encourage the
continued attention and dedication of key management personnel, including
yourself, to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from any possible change of control
of Holdings. The Boards have also determined that it is in the best interest of
Holdings and its stockholders to ensure your continued availability to Holdings
in the event of a change of control.
In order to induce you to remain in the employ of the Company,
Holdings and the Company agree that you shall receive (i) certain payments
and benefits as set forth in this letter agreement (the "Agreement") in the
event your employment with the Company is terminated under the
circumstances described below and (ii) certain other payments, as set forth
in this Agreement, upon a Change of Control (as defined in Section 2
below).
This Agreement, when executed by you, will (1) supersede and
replace the 1995 Letter and, following a Change of Control, the
Headquarters Program and (2) will be in lieu of your participation in the
RJR Nabisco, Inc. Salary and Benefit Continuation Program (the "SBC
Program") and the RJR Nabisco Holdings Corp. 1995 Employee Protection
Program (the "1995 Program") but will in no event provide lesser benefits
to you in the event of the termination of your employment than would
otherwise have been available under the provisions of the SBC Program or
the 1995 Program, as applicable. As a precondition to payment of the
benefits provided herein, you will be required to sign the relevant release
of claims against Holdings and/or the Company, as the case may be, in the
form attached hereto as Exhibit A.
1. Term of Aqreement. This Agreement shall be effective as of the
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date hereof and shall continue in effect as long as you are employed by the
Company or any of its affiliates or successors.
2. Chanqe Of Control. For purposes of this Agreement, the term
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"Change of Control" shall mean the first to occur of the following events
provided such event occurs prior to October 11, 1996 or such later date as
the Boards may specify from time to time:
(a) an 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 Holdings or any employee benefit plan(s)
sponsored by Holdings or the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 30% or more of the
combined voting power of the Holdings' outstanding
securities ordinarily having the right to vote at elections
of directors.
(b) individuals who constitute the Holdings Board on October 11,
1995 (the "Incumbent Board") cease for any reason to
constitute at least a majority thereof, provided that any
person becoming a director subsequent
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to such date whose election, or nomination for election by
the Holdings' shareholders, was approved by a vote of at
least three-quarters of the directors comprising the
Incumbent Board (either by a specific vote or by approval of
the proxy statement of the Holdings in which such person is
named as a nominee for director, without objection to such
nomination) shall be, for purposes of this paragraph (ii),
considered as though such person were a member of the
Incumbent Board;
(c) the approval by the shareholders of the Company of a plan or
agreement providing (1) for a merger or consolidation of
Holdings other than with a wholly-owned subsidiary and other
than a merger or consolidation that would result in the
voting securities of Holdings 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 Holdings or such surviving
entity outstanding immediately after such merger or
consolidation, or (2) for a sale, exchange or other
disposition of all or substantially all of the assets of
Holdings. If any of the events enumerated in this paragraph
(c) occurs, the Holdings Board shall determine the effective
date of the Change of Control resulting therefrom for
purposes of this Agreement.
3. Termination of Employment. (a) Definitions.
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(i) Disability. You shall be deemed to be Disabled if you become
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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, prior to a Change of Control, if the
Board or any committee thereof so determines.
(ii) Retirement. "Retirement" shall mean your retirement on or
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after attaining age 55 and with ten or more years of service with the
Company or any affiliate of the Company.
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(iii) Cause. (A) Prior to a Change of Control, termination for
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"Cause" shall mean termination of your employment resulting from your
(I) criminal conduct, (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 an authorized officer or employee senior to you or
(IV) deliberate misconduct which could be materially damaging to
Holdings or the Company without a reasonable good faith belief by the
Employee that such conduct was in the best interests of Holdings or
the Company. A termination of employment shall not be deemed for Cause
hereunder unless the senior personnel executive of Holdings or the
Company shall confirm that any such termination is for Cause as
defined above.
(B) Following a Change of Control, termination for "Cause" shall
mean termination of your employment resulting from (I) your willful
and continued failure substantially to perform your duties with
Holdings or the Company (other than as a result of total or partial
incapacity due to physical or mental illness or as a result of a
termination by you for Good Reason) after a written demand for
substantial performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes that
you have not substantially performed your duties, (II) the willful
engaging by you in conduct which is demonstrably and materially
injurious to Holdings or the Company, monetarily or otherwise or (III)
your conviction of (x) a felony under the laws of the United States or
any state or (y) a felony under the laws of any other country or
political sub-division thereof involving moral turpitude. For purposes
of this clause (a)(iii)(B), no act or failure to act, on your part
shall be deemed "willful" unless done or omitted to be done, by you
not in good faith and without reasonable belief that your action or
omission was in the best interest of Holdings or the Company.
Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause under this Clause (a)(iii)(B) unless and until
there shall have been delivered affirmative vote (which cannot be
delegated) of not less than three-quarters (3/4) of the entire
membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice to you and an opportunity for
you, together with your counsel, to be heard before the Board),
finding that in the good faith
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opinion of the Board you were guilty of conduct set forth above in
subclauses (I), (II) or (III) above, specifying the particulars
thereof in detail.
(iv) Good Reason. During the twenty-four month period following a
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Change of Control, you shall be entitled to terminate your employment
for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, any of the following
occurring following a Change of Control:
(A) A material reduction in your duties, a material
diminution in your position or a material adverse change in your
reporting relationship from those in effect immediately prior to
the Change of Control;
(B) A reduction in your pay grade or bonus 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 plan
in which you participate at the time of the Change of Control,
including but not limited to the RJR Nabisco Holdings Corp. 1990
Long Term Incentive Plan ("LTIP") and the RJR Nabisco, Inc.
Annual Incentive Award Plan (the "AIAP"), or any substitute plans
adopted prior to the Change of Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative
plan providing you with substantially similar benefits) has been
made with respect to such plan in connection with the Change of
Control, or the failure to continue your participation therein on
substantially the same basis, both in terms of the amount of
benefits provided and the level of your 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 materially reduce any of the benefits to be provided
under Section 6(c) or deprive you of any material fringe benefit
enjoyed by you at the time of the Change of Control, or the
failure to provide you with the number of paid vacation days to
which you are entitled on the basis of the Company's practice
with respect to
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you as in effect at the time of the Change of Control;
(E) Any purported termination of your employment which is
not effected pursuant to a Notice of Termination satisfying the
requirements of subsection (b) below; provided further that for
purposes of this Agreement, no such purported termination shall
be effective;
(F) Any material breach by Holdings or the Company of any
provision of this Agreement including, but not limited to any
provision of Section 6, or any agreements entered into pursuant
hereto; or
(G) Requiring you to be based at any office or location more
than 50 miles from the office or location at which you were based
immediately prior to such Change of Control, except for travel
reasonably required in the performance of your responsibilities.
(b) Notice of Termination. After a Change of Control, any
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purported termination of your employment by the Company or by you shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Section 6 hereof. For purposes of this Agreement, after a
Change of Control a "Notice of Termination" 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 your employment under the
provision so indicated.
(c) Date Of Termination, Etc. Following a Change of Control,
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"Date of Termination" shall mean (i) if your employment is terminated for
Disability, thirty (30) days after Notice of Termination is given (provided
that you shall not have returned to the full-time performance of your
duties during such thirty (30) day period), (ii) if your employment is
terminated by reason of your death, the date of your death, and (iii) if
your employment is terminated by reason of your Retirement, for Cause, for
Good Reason or for any other reason (other than Disability or death), the
date specified in the Notice of Termination (which in the case of a
termination for Cause following 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).
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4. Compensation Upon Termination.
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Upon termination of your employment, subject to your execution of
a release of claims against Holdings and/or the Company (in the relevant
form set forth in Exhibit A if such termination is without Cause or for
Good Reason after a Change of Control), you shall be entitled to the
following benefits:
(a) If your employment shall be terminated by the Company
for Cause, or by you other than following a Change of Control for Good
Reason, the Company shall pay you your full base salary through the
Date of Termination at the rate in effect at the time Notice of
Termination is given and any amounts to be paid to you pursuant to the
Company's retirement and other benefit plans of the Company then in
effect, and Holdings and/or the Company shall have no further
obligations to you under this Agreement.
(b) If your employment shall be terminated by reason of your
voluntary Retirement, Disability or death, the Company shall pay you
or your estate, as the case may be, your full base salary through the
Date of Termination at the rate in effect at the time the Notice of
Termination is given or the time of your death, as the case may be.
Benefits to you, your beneficiaries or your estate, as the case may
be, shall be determined in accordance with the Company's retirement,
benefit, disability and insurance plans and programs in effect at the
time of such termination.
(c) If, other than during the twenty-four month period following
a Change of Control, your employment shall be involuntarily terminated
by the Company other than for Cause, you shall be entitled to the
payments and benefits provided below:
(i) The Company shall pay you your full base salary through
the Date of Termination at the rate in effect at the time the
Notice of Termination is given, and, except as set forth below,
all other amounts to which you are entitled under any
compensation or benefit plan of the Company including, but not
limited to, the AIAP and LTIP at the times such payments are due
under the terms of such plans;
(ii) The Company shall pay to you in seventy-two equal semi-
monthly installments an amount
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equal to two times the sum of (x) your annual base salary as in
effect immediately prior to such termination and (y) the amount
of your target award under the AIAP as in effect at the time of
such termination;
(iii) The Company shall provide you with the benefits under
the RJR Nabisco, Inc. Flexible Perquisites Program (the
"Perquisites Program") for the thirty-six month period following
such termination;
(iv) The Company shall provide you with the opportunity to
participate in the medical and dental plans as provided under the
SELECT Omnibus Welfare Plan as in effect for active employees
other than the Short and Long Term Disability Plans (or similar
coverage as may be provided for active employees), the core life,
optional life, and accidental death and dismemberment insurance
coverage provided under the SELECT Omnibus Insurance Plan as in
effect for active employees (or similar coverage as may be
provided for active employees), and the Executive Medical Plan as
in effect for active employees until the end of the 36 month
period after such termination, subject to any applicable
coordination of benefits rules.
(v) You shall be paid for any unused vacation for the year
of termination, for vacation accrued to your Date of Termination
for the following calendar year, and/or any accumulated vacation
(if applicable) from previous years, all in accordance with the
normal practice of the Company.
(vi) You shall be entitled to outplacement assistance
pursuant to the Company's normal practice for the 12-month period
following your Date of Termination at an out-of-pocket cost to
the Company not to exceed 18% of annualized Base Pay.
(vii) You shall continue to participate in the Retirement
Plans and Savings Plans, as defined in Exhibit B, for purposes of
benefit accrual and employer matching contribution, as
applicable, for 36 months.
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(viii) If you are at least age 55 with at least ten years of
service including any period of severance, you shall be eligible
for MedChoice Retiree Medical benefits as in effect for other
retirees and as amended from time to time thereafter.
(ix) If your Date of Termination occurs prior to March 1,
1996, you shall be entitled to any applicable additional benefits
and protections provided under the Headquarters Program.
(d) If within the twenty-four month period following a Change of
Control your employment by the Company shall be terminated (x) by the
Company other than for Cause and other than because of your death,
Disability or voluntary Retirement or (y) by you for Good Reason,
then, effective as of the Date of Termination, in lieu of any benefits
which you otherwise would be eligible to receive under Section 4 (c)
above, you shall be entitled to the payments and benefits provided
below:
(i) The Company shall pay you your full base salary through
the Date of Termination at the rate in effect at the time the
Notice of Termination is given, and, except as set forth below,
all other amounts to which you are entitled under any
compensation or benefit plan of the Company at the time such
payments are due under the terms of such plans, or as otherwise
provided herein.
(ii) The Company shall pay to you, not later than 15
business days following the Date of Termination, a lump sum cash
payment equal to (A) your AIAP Vested Amount, PS Vested Amount
and PU Vested Amount (each as defined in Exhibit B) as of the
Date of Termination plus (B) two (2) times the sum of (I) your
annual base salary as in effect immediately prior to the Change
of Control or the Date of Termination if higher and (II) the
amount of your AIAP target award as in effect at the time of such
termination or, if higher, as in effect immediately prior to the
Change of Control (all as defined in Schedule B). The amount of
the payment under this Section 4(d)(ii)(B) shall be discounted to
its present value, based on a notional payment period of 36
months, assuming equal semi-monthly payments and a discount rate
equal to the product of (x) the 3-year Treasury bond yield as
published
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in the New York Times on the first of the month in which the
Termination Date occurs and (y) 100% minus the aggregate
applicable federal, state and local taxes then imposed on your
employment income computed at the maximum applicable marginal
rates.
(iii)(A) The Company shall pay to you a lump sum cash
payment equal to three times the value of the annual credit under
the Perquisites Program to which you were entitled immediately
prior to such termination or, if higher, to which you were
entitled immediately prior to the Change of Control, reduced by
such credits as would otherwise be applied to the continued
benefits under Section 4(d)(iii)(C) below.
(B) You shall be entitled to use the automobile assigned to
you immediately prior to the Change of Control for 36 months
following such termination and, at the end of such 36 month
period, ownership of such automobile shall be transferred to you.
At the time of such transfer, the Company shall pay to you 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.
(C) The Company shall provide you with benefits equivalent
to those provided under the Perquisites Program immediately prior
to the Change of Control for 36 months following such
termination.
(iv) The Company shall provide you with the opportunity to
participate in medical and dental plans and in core life,
optional life, and accidental death and dismemberment insurance
coverage no less favorable in the aggregate than provided under
the SELECT Omnibus Welfare Plan (other than the Short and Long
Term Disability Plans), the SELECT Omnibus Insurance Plan, and
the Executive Medical Plan, as such plans are in effect for
active employees immediately prior to such Change of Control,
until the end of the 36 month period after such termination,
subject to any applicable coordination of benefits rules.
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(v) The Company shall pay to you, not later than 15 business
days following the Date of Termination, a lump sum cash payment
for any unused vacation for the year of termination, for vacation
accrued to the Date of Termination for the following calendar
year, and/or any accumulated vacation (if applicable) from
previous years, all in accordance with the normal practice of the
Company immediately prior to such Change of Control.
(vi) (A) You shall receive 36 months of service credit
("Additional Credited Service") under the Retirement Plans and
Savings Plans for purposes of benefit accrual and employer
matching contribution, as applicable, based on the same formula
and matching amount as in effect immediately prior to such Change
of Control.
(B) Within 15 days following the Date of Termination, the
Company shall pay to you in cash a lump sum equal to (x) the
actuarial present value of such portion, if any, of the benefit
resulting from such Additional Credited Service as may not be
accrued under the qualified Retirement Plans and/or Savings Plans
plus (y) the actuarial present value of all accruals as of the
Date of Termination under the non-qualified Retirement Plans and
Savings Plans in which you participate.
(vii) If you have between three and five years of credited
service under the Retirement Plans, including Additional Credited
Service, you shall be deemed to receive further credited service
under the Retirement Plans for purposes of both vesting and
accrual of benefits sufficient to bring you to 5 years of
credited service. The actuarial present value as of the Date of
Termination of any resulting increase in benefits thereunder,
computed based on the formula in effect immediately prior to such
Change of Control, shall be paid to you within 15 days of the
Date of Termination in cash in a lump sum.
(viii) If you are at least age 50 with at least five years
of service, including Additional Credited Service under Section
4(d)(vi) but not under Section 4(d)(vii), you shall be entitled
(in addition to and upon the expiration of the benefits provided
pursuant to Section 4(d)(iv)) to
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MedChoice Retiree Medical benefits as in effect for other
retirees and as amended from time to time thereafter at the
minimum level of Company subsidy or, if greater, the subsidy
level based on actual years of service.
(ix) If you had relocated to New York or New Jersey at the
Company's request during or after 1989, you shall, if you make a
written request within twelve months of your Date of Termination,
be entitled to a moving and relocation benefit to a new job
location in accordance with the terms and limitations of the
Company's relocation program as in effect immediately prior to
the Change of Control.
(x) You shall be entitled to outplacement assistance
pursuant to the Company's normal practice for the 12-month period
following your Date of Termination, in an amount not to exceed
18% of annualized Base Pay.
(xi) If the Company fails to provide any of the benefits
under Section 4(d)(iv) or Section 4(d)(viii) above, the Company
shall reimburse you for the actual cost of your obtaining
comparable benefits within 15 business days after the date you
give the Company written notice that you incurred such costs plus
such additional amount 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
with respect to such reimbursement.
(xii)(A) Anything herein to the contrary notwithstanding, in
the event that it is determined that any payment or distribution
by the Company to or for your benefit, whether paid or payable or
distributed or distributable pursuant to the terms hereof or
otherwise (a "Payment"), would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (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 you shall be entitled to receive, within 15
days following the determination described in Section
4(d)(xii)(B)
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below, an additional payment ("Excise Tax Adjustment Payment") in
an amount such that after payment by you 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, you shall retain an amount of
the Excise Tax Adjustment Payment equal to the Excise Tax imposed
upon the Payments.
(B) All determinations required to be made under this
Section 4(d)(xii), including whether an Excise Tax Adjustment
Payment is required and the amount of such Excise Tax Adjustment
Payment, shall be made by ▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇▇▇▇▇-Salem, North
Carolina, or such other accounting firm as the Company may
designate prior to a Change of Control, which shall provide to
the Company and you detailed supporting calculations within 15
business days of the date of your termination of employment.
Except as hereinafter provided, any determination by ▇▇▇▇▇ &
▇▇▇▇▇, ▇▇▇▇▇▇▇-Salem, North Carolina, or such other accounting
firm as the Company may designate prior to a Change of Control,
shall be binding upon the Company and you. 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 your benefit. In the event that you
discover that an Overpayment shall have occurred, the amount
thereof shall be promptly repaid to the Employer.
(xiii) The Company shall also pay to you as incurred all
legal and accounting fees and expenses incurred by you as a
result of such termination (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
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compensation-related plan, agreement or arrangement of the
Company) unless your claim is found by an arbitral tribunal of
competent jurisdiction to have been frivolous.
5. Special Bonus Payments. Upon a Change of Control, subject to
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your execution of a release of claims against Holdings and the Company in
the relevant form set forth on Exhibit A, the Company shall pay to you a
special cash bonus payment equal to the sum of (a) a cash payment in
respect of each option you hold under the LTIP equal to the higher of (i)
the excess, if any, of the Fair Market Value (as defined in the LTIP) over
--
the option price of such option multiplied by the number of Shares (as
defined in the LTIP) subject to such option or (ii) the value of such
option using the Black Scholes method of valuing such option, based on the
following assumptions: Fair Market Value (as so defined), a risk free
factor equal to the average rate for zero coupon United States government
issues with a remaining term equal to the expected term of the option, a
dividend yield calculated by dividing the annual dividend by the Fair
Market Value, and volatility of 35.6% (the 4 1/2 year weighted average
volatility of the Shares); and (b) your AIAP Vested Amount, your PS Vested
Amount and your PU Vested Amount (all as of the date of the Change of
Control and all as defined in Exhibit B). Notwithstanding the foregoing, in
the event that following a Change of Control any performance period within
which such Change of Control occurred relating to any award under the AIAP
or of Performance Units or Performance Shares under the LTIP (as such terms
are defined therein) is completed prior to your termination of employment,
upon such completion you shall be entitled to payment in respect of each
such award of an amount, if any, equal to the excess of the value of such
award, based on actual performance for such performance period, over the
AIAP Vested Amount, PU Vested Amount or PS Vested Amount, as the case may
be, previously paid to you upon such Change of Control in respect of such
AIAP award, Performance Units or Performance Shares.
6. Successors: Binding Agreement; Undertaking. (a) Holdings and
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the Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of Holdings and the Company to expressly
assume and agree to perform this Agreement in the same manner and to the
same extent that Holdings and the Company would be required to perform it
if no such succession had taken place. As used in this Agreement,
"Holdings" and/or the "Company" shall mean Holdings or the
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Company, respectively, as hereinbefore defined and any successor to the
business and/or assets of either of them as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise. Prior
to a Change of Control, the term "Company" shall also mean any affiliate of
the Company to which you may be transferred and the Company shall cause
such successor employer to be considered the "Company" bound by the terms
of this Agreement and this Agreement shall be amended to so provide.
Following a Change of Control the term "Company" shall not mean any
affiliate of the Company to which you may be transferred unless you shall
have previously approved of such transfer in writing, in which case the
Company shall cause such successor employer to be considered the "Company"
bound by the terms of this Agreement and this Agreement shall be amended to
so provide.
(b) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
you should die while any amount would still be payable to you hereunder if
you had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to
your devises, legatee or other designee or, if there is no such designee,
to your estate.
(c) (i) During the two-year period following a Change of
Control, there shall be no reduction in the benefit formula of the
Retirement Plans or the employer matching contribution amount of the
Savings Plans except as may be required by the Code or the Employee
Retirement Income Security Act of 1974, as amended, ("ERISA"); and
(ii) The Company shall maintain for not less than two years
following a Change of Control programs providing benefits on a basis no
less favorable in the aggregate than provided under the SELECT Omnibus
Welfare Plan, the Executive Medical Plan, the SELECT Omnibus Insurance Plan
and the Perquisites Program, or successor programs, all as in effect for
active employees immediately prior to such Change of Control.
7. Notice. For the purpose of this Agreement, notices and all
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other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first
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page of this Agreement; provided that all notices to Holdings or the
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Company shall be directed to the attention of the Board with a copy to the
Secretaries of the Company and of Holdings, or to such other address as
either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only
upon receipt.
8. Amendments; Waivers; Mitigation; Other Plans. (a) Except as
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otherwise specifically provided herein, no provision of this Agreement may
be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by you and such officers as
may be specifically designated by the respective Boards. No waiver by any
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been
made by either party which are not expressly set forth in this Agreement.
(b) You shall not be required to mitigate the amount of any
payment provided for in Section 4 by seeking other employment or otherwise,
nor except to the extent provided in Section 4(c)(iv) or Section 4(d)(iv),
shall the amount of any payment or benefit provided for in Section 4(c) or
Section (d) hereof be reduced by any compensation earned by you as the
result of employment by another employer or by retirement benefits after
the Date of Termination, or otherwise.
(c) Except as provided in this Agreement, if you are a
participant in the LTIP or any other stock award plan of Holdings or an
affiliate and have outstanding awards thereunder, the treatment of such
awards shall be governed by the terms of such applicable plans and awards.
9. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the substantive law (and not the choice of law
rules) of the State of New York.
10. Validity. If any provision of this Agreement shall be
--------
declared to be invalid or unenforceable, in whole or in part, such
invalidity or unenforceability shall not affect the validity or
enforceability of any other provision
16
of this Agreement, which shall remain in full force and effect.
11. Counterparts. This Agreement may be signed in several
------------
counterparts, each of which shall be an original, with the same effect as
if the signatures thereto and hereto were upon the same instrument.
12. 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 rules of the American Arbitration Association then in effect. The
determination of the arbitrator shall be conclusive and binding on the
parties and judgment may be entered on the arbitrator's award in any court
having jurisdiction.
13. Continued Employment. You agree to be bound by the terms and
--------------------
conditions of this Agreement and to remain in the employ of the Company
during any period following any public announcement by any person of any
proposed transaction or transactions which, if effected, would result in a
Change of Control until a Change of Control has taken place or, in the
opinion of the Holdings Board, such person has abandoned or terminated its
efforts to effect a Change of Control. Subject to the foregoing, nothing
contained in this Agreement shall impair or interfere in any way with your
right to terminate your employment or the right of the Company or any
subsidiary to terminate your employment with or without cause prior to a
Change of Control. Nothing contained in this Agreement shall be construed
as a contract of employment between the Company and you.
14. Payment Obligations Absolute; Obligor. Subject to your
-------------------------------------
execution of the relevant release of claims against Holdings and/or the
Company in the form set forth on Exhibit A hereto, following a Change of
Control, Holdings' and the Company's obligations to make all payments and
honor all commitments under this Agreement 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 Holdings or the Company may have against you. In default of any
payment or provision of benefits hereunder by the Company following a
Change of Control, such payment or benefit shall be the obligation of
Holdings.
15. Interest on Late payments. To the extent that any payments
-------------------------
required to be made hereunder following a
17
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 ▇▇▇▇▇▇
Guaranty Trust Company of New York, from time to time.
16. Withholding. Payments under this Agreement will be subject
-----------
to normal deductions for taxes and other legally required withholding.
17. Actuarial Calculations. All required actuarial calculations
----------------------
of payments to be made hereunder shall be made by ▇▇▇▇▇▇ ▇▇▇▇▇ Worldwide,
New York, New York, or such other actuarial firm as the Company may
designate prior to a Change of Control.
18. Funding. All benefits hereunder are unfunded and will be
-------
paid out of the general assets of the Company or Holdings. Notwithstanding
the foregoing, the Company or Holdings 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 or Holdings and, if so, you
shall be entitled to payments therefrom, if any, as and to the extent
provided in such rabbi trust or trusts.
18
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this
letter which will then constitute our agreement on this subject.
Sincerely,
RJR NABISCO HOLDINGS CORP.
By:
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
RJR NABISCO, INC.
By:
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
[FirstName] [LastName]
Agreed to this day of
------
, 1995
----------------
-----------------------------
19
EXHIBIT A
FORM OF RELEASE AGREEMENT
-------------------------
[ ] [Incorporation of terms of Employment Contract]
[ ] [Acknowledgment that Release Agreement is the entire
agreement to provide severance benefits.]
[ ] [Description of Benefits to be provided]
[ ] You shall maintain the terms and conditions of this
Agreement in confidence. In addition, you will not
disclose to any other employer or person any trade
secrets or other proprietary, non-public, or
confidential information pertaining to the Company.
You will return all Company information or documents in
whatever form, except information relating to your
personal employee benefits or executive compensation.
In accordance with normal ethical and professional
standards, you will refrain from taking actions or
making statements, written or oral, which defame the
goodwill or reputation of the Company, its directors,
officers, executives and employees or which constitute
willful misconduct under circumstances where it is
reasonable for you to anticipate or to expect that the
natural consequences of such conduct by you will be to
affect adversely the business or reputation of the
Company or its affiliates, or the morale of other
employees.
[ ] a) You agree that you will personally provide
reasonable assistance and cooperation to the Company in
activities related to the prosecution or defense of any
pending or future lawsuits or claims involving the
Company. b) You will promptly notify the Company if
you receive any requests from anyone other than an
employee or agent of the Company for information
regarding the Company or if you become aware of any
potential claim or proposed litigation against the
Company. c) You will refrain from providing any
information related to any claim or potential
litigation against the Company to any non-Company
representatives without either the Company's written
permission or being required to provide information
pursuant to legal process. d) If required by law to
provide sworn testimony regarding any Company-related
matter, you will consult with and have Company-
designated legal counsel present for such testimony.
e) The Company will be responsible for the costs of
such designated counsel and you will bear no cost for
same. f) You will confine your testimony to items
about which you have knowledge rather than speculation,
unless otherwise directed by legal process. g) You
will cooperate with the Company's attorneys to assist
their efforts, especially on matters you have been
privy to, holding all privileged attorney-client
matters in strictest confidence.
Nothing in sentences c-g of the above paragraph is
intended to apply to governmental or judicial
investigations, including, but not limited to, an
investigation by any agency or department of the
Federal or state government, any hearing before a
committee of the Congress of the United States or of a
state legislature, any investigation or proceeding by
or of a special prosecutor, or any proceeding by or
before a grand jury; provided, however, the Company
will reimburse you for legal expenses including, but
not limited to, the cost of any attorney reasonably
acceptable to the Company and other out-of-pocket
expenses if you are compelled to appear in a
governmental or judicial investigation.
[ ] IN CONSIDERATION OF THE COMPENSATION AND BENEFITS SET
FORTH IN THIS AGREEMENT, YOU VOLUNTARILY, KNOWINGLY AND
WILLINGLY RELEASE AND FOREVER DISCHARGE THE COMPANY,
ITS PARENTS, SUBSIDIARIES AND AFFILIATES, TOGETHER WITH
THEIR RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS,
EMPLOYEES AND AGENTS, AND EACH OF THEIR PREDECESSORS,
SUCCESSORS AND ASSIGNS, FROM ANY AND ALL CHARGES,
COMPLAINTS, CLAIMS, PROMISES, AGREEMENTS,
CONTROVERSIES, CAUSES OF ACTION AND DEMANDS OF ANY
NATURE WHATSOEVER WHICH AGAINST THEM YOU OR YOUR
EXECUTORS, ADMINISTRATORS, SUCCESSORS OR ASSIGNS EVER
HAD, NOW HAVE OR HEREAFTER CAN, SHALL OR MAY HAVE BY
REAS0N OF ANY MATTER, CAUSE OR THING WHATSOEVER ARISING
TO THE TIME YOU SIGN THIS AGREEMENT. YOU FURTHER AGREE
THAT YOU WILL NOT SEEK OR BE ENTITLED TO ANY AWARD OF
EQUITABLE OR MONETARY RELIEF IN ANY PROCEEDING OF ANY
NATURE BROUGHT ON YOUR BEHALF ARISING OUT OF ANY OF THE
MATTERS RELEASED BY THIS PARAGRAPH. THIS RELEASE
INCLUDES, BUT IS NOT LIMITED TO, ANY RIGHTS OR CLAIMS
RELATING IN ANY WAY TO YOUR EMPLOYMENT RELATIONSHIP
WITH THE COMPANY, OR THE TERMINATION THEREOF, OR UNDER
ANY STATUTE, INCLUDING THE AGE DISCRIMINATION IN
EMPLOYMENT ACT, TITLE VII OF THE CIVIL RIGHTS ACT, THE
AMERICANS WITH DISABILITIES ACT, THE NEW YORK STATE AND
CITY HUMAN RIGHTS LAWS OR ANY OTHER FEDERAL, STATE OR
LOCAL LAW.
[ ] By signing this Agreement, you represent that you have
not commenced any proceeding against the Company in any
forum (administrative or judicial) concerning your
employment or the termination thereof. You further
acknowledge that you were given sufficient notice under
2
the Worker Adjustment and Retraining Notification Act
(the "WARN Act") and that the termination of your
employment does not give rise to any claim or right to
notice, or pay or benefits in lieu of notice under the
WARN Act. In the event any WARN Act issue does exist or
arises in the future, you agree and acknowledge that
the payments and benefits set forth in this Agreement
shall be applied to any pay or benefits in lieu of
notice required by the WARN Act, provided that any such
offset shall not impair or affect the validity of any
provision of this Agreement, including the release set
forth in paragraph [ ].
[ ] The Company advises you that you may wish to consult
with an attorney of your choosing prior to signing this
Agreement. You understand and agree that you have the
right and have been given the opportunity to review
this Agreement and, specifically, the release in
paragraph [ ], with an attorney of your choice should
you so desire. You have entered into this Agreement
freely, knowingly and voluntarily.
[ ] You have at least twenty-one days to consider the terms
of this Agreement, although you may sign and return it
sooner if you wish. This Agreement may be revoked by
you for a period of seven (7) consecutive calendar days
after you have signed and dated it, and after such
seven (7) days, it becomes final.
3
EXHIBIT B
DEFINITIONS
AIAP Vested Amount means, as of a Change of Control or as of the
------------------
date your employment terminates after a Change of Control, as the case may
be, an amount equal to the value of your target award under the 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, 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.
PS Vested Amount means, with respect to any award of Performance
----------------
Shares (as defined in the LTIP) you hold as of a Change of Control or as of
the date your employment terminates after a Change of Control, as the case
may be, an amount equal to the adjusted value of (i) the number of
Performance Shares subject to such award, multiplied by a fraction, the
numerator of which is the number of months (including partial months)
elapsed in the relevant performance period as of the Change of Control or
as of the date of such termination, as the case may be, and the denominator
of which is the number of months in such performance period, (ii) adjusted
by applying target performance with respect to such award; provided that in
the event of a termination of employment following a Change of Control in
the year in which such Change of Control occurs, for purposes of computing
the PS 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 target performance with respect to such Performance Shares
shall be that in effect immediately preceding such Change of Control.
PU Vested Amount means, with respect to any award of Performance
----------------
Units (as defined in the LTIP) you hold as of a Change of Control or as of
the date your employment terminates, as the case may be, an amount equal to
the target value of the number of Performance Units subject to
such award multiplied by a fraction, the numerator of which is the number
of months (including partial months) elapsed in the relevant performance
period as of the Change of Control or as of the date of such termination,
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 PU 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 value of
such Performance Units shall be that in effect immediately preceding such
Change of Control.
Retirement Plans means the Retirement Plan for Employees of RJR
---------------
Nabisco, Inc., the RJR Nabisco, Inc. Additional Benefits Plan, the RJR
Nabisco, Inc., Supplemental Benefits Plan and the RJR Nabisco, Inc.
Supplemental Executive Retirement Plan, and such other plans as the Board
may hereafter determine.
Savinqs Plans means the RJR Nabisco, Inc. Capital Investment
-------------
Plan, the RJR Nabisco, Inc. Additional Benefits Plan and the RJR Nabisco,
Inc. Supplemental Benefits Plans and such other plans as the Board may
hereafter determine.
Year of Service means each completed 12-month period of service
---------------
by you with the Company or any other affiliate of the Company, including
periods of approved leaves of absence, up to the last day of active
employment.
2