Exhibit 10.33
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
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THIS AGREEMENT, dated as of the 5th day of December, 1995, by and among RJR
Nabisco Holdings Corp., a Delaware corporation ("Holdings"), RJR Nabisco, Inc.,
a Delaware corporation and a direct subsidiary of Holdings (the "Company") and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Executive") amends and restates that certain agreement by
and among Holdings, the Company and Executive made the 27th day of May, 1993, as
amended February 15, 1995, and April 13, 1995, (the "Initial Agreement"). This
Agreement reflects the fact that Executive has ceased to serve as Chief
Executive Officer of Holdings and the Company and will continue to serve in the
executive positions of Chairman of the Boards of Holdings and the Company, This
Agreement will (i) following a Change of Control (as defined in Exhibit E),
supersede the Executive's participation in the RJR Nabisco Holdings Corp.
Headquarters Continuing Excellence Recognition Program (the "Headquarters
Program") and (ii) be in lieu of Executive's participation in the RJR Nabisco
Holdings Corp. 1995 Employee Protection Program (the "1995 Program"), but will
in no event provide lesser benefits to Executive in the event of the termination
of Executive's employment following a Change of Control than would otherwise be
available under the 1995 Program.
RECITALS
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In order to induce Executive to continue in his current position as Chairman
of the Boards of Holdings and the Company, Holdings and the Company desire to
provide Executive with compensation and other benefits under the conditions set
forth in this Agreement. Executive is willing to continue employment as Chairman
of the Boards of Holdings and the Company, and to perform services for Holdings
and the Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as follows:
1. Employment.
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1.1 Subject to the terms and conditions of this Agreement, Holdings
agrees to employ Executive during the term hereof as Chairman of the Boards of
Holdings and the Company. In such capacities, Executive shall have the customary
powers, responsibilities and authorities of a chairman of the board of
corporations of the size, type and nature of Holdings and the Company,
respectively, as such powers, responsibilities and authorities have existed and
continue to exist on the date hereof at Holdings and the Company. Executive's
principal office shall be at the principal executive offices of Holdings and the
Company in New York, New York, as well as Omaha, Nebraska, and Executive shall
commute between such offices of Holdings and the Company as he reasonably
determines.
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1.2 Holdings and the Company shall, throughout the term hereof, cause
the election of Executive as Chairman of the Board of Directors of Holdings (the
"Holdings Board") and the Board of Directors of the Company (the "Board") (and
sometimes, collectively, the "Boards").
1.3 Subject to the terms.and conditions set forth herein, Executive
agrees to continue to serve in the executive positions of Chairman of the Boards
of Holdings and the Company and shall devote his 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 including, without
limitation, consideration of strategic issues relating to Holdings and the
Company and consultation with and advice to the Chief Executive Officer of
Holdings and the Company with respect to such issues. 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
listed on Exhibit A or from serving (subject to approval of the Holdings Board)
as a member of boards of directors of other companies.
2. Term of Employment.
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Executive's employment with Holdings and the Company commenced on May
31, 1993, (the "Commencement Date") and, unless terminated or extended in
accordance herewith or
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as otherwise provided herein, shall continue through December 5, 1998 (the
"Expiration Date").
3. Compensation.
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3.1 Salary. Except as set forth below, while Executive is employed
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by Holdings and the Company the Company shall pay Executive a base salary
("Base Salary"). Effective January 1, 1996, the annual rate of Base Salary shall
be FIVE HUNDRED THOUSAND DOLLARS ($500,000) per annum. Base Salary shall be
payable in accordance with the ordinary payroll practices of the Company. Except
as may otherwise be agreed in writing by the parties, Executive's rate of Base
Salary shall be increased on January 1 of each of 1997 and 1998 to the greater
of an amount equal to $500,000 plus 6% per year, compounded annually, from
January 1, 1996, or the amount specified by the Holdings Board. Notwithstanding
the foregoing, for the fiscal year ending December 31, 1995, the Executive's
Base Salary is payable at the annual rate of $600,000 per annum.
3.2 Annual Bonus. (a) Except as set forth in Section 3.2(c), in
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addition to his Base Salary, Executive shall be entitled while employed by
Holdings and the Company to be granted an annual incentive bonus (any annual
bonus paid or accrued hereunder, a "Bonus") in respect of each fiscal year of
the Company ("Fiscal Year") as determined by the Holdings Board in its sole
discretion. As provided in the Company' s Annual Incentive Award Plan ("AIAP")
and subject to Section 6(e) of the AIAP, with respect to the
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Fiscal Year in which Executive's "Retirement Date" (as provided in Section 5
herein) occurs if Executive shall be a Participant in the AIAP with respect to
such Fiscal Year, Executive shall receive a Bonus scored at target and prorated
for the number of months Executive was actively employed by Holdings and the
Company during such Fiscal Year.
(b) The Bonus for each Fiscal Year shall be paid in cash when bonuses
are paid generally to other senior executives of the Company for such Fiscal
Year, but no later than May 1 of the next Fiscal Year. However, payment shall be
deferred if, no later than March 1 of the Fiscal Year to which such Bonus
relates, Executive shall deliver notice to the Company of his intent to defer
payment of the Bonus for such Fiscal Year to a later date, on terms mutually
agreeable to Executive and Company.
(c) For the Fiscal Year ending December 31, 1995, Sections 3.2(a) and
(b) shall have no force or effect and the right of Executive to any bonus
payments hereunder shall be governed by this Section 3.2(c). In addition to Base
Salary, for the. fiscal year ending December 31, 1995 Executive has been granted
Performance Units under the Company's 1990 Long Term Incentive Plan ("LTIP")
pursuant to the Performance Unit Agreement dated February 15, 1995, between the
Company and Executive, the form of which is attached hereto as Exhibit D (the
"Performance Unit Agreement"). The value of such Performance Units shall be
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determined by Cash Net Income for 1995, as specified in the Performance Unit
Agreement and attachments thereto; provided that following a Change of Control,
the Committee (as defined in the LTIP) shall not exercise its discretion under
Sections 2 and 3 of the Performance Unit Agreement or otherwise to reduce the
Payment Value per unit below the Initial Grant Value (all as defined in the
Performance Unit Agreement). For purposes of this Section 3.2(c), "Cash Net
Income" means Cash Net Income from continuing operations, determined without
regard to the effect of any unanticipated major financial or corporate event or
any change in accounting standards that may be required or permitted by the
Financial Accounting Standards Board. Such Performance Units shall be in lieu of
any award under the AIAP for the Fiscal Year ending December 31, 1995. Nothing
in this Section 3.2(c) shall affect the provisions of Sections 3.2(a) or (b)
hereof for any Fiscal Year other than the Fiscal Year ending December 31, 1995.
3.3 Compensation Plans and Proprams. Executive shall participate
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while employed by Holdings and the Company in any compensation plan or program,
whether annual or long term, maintained by Holdings or the Company on terms
comparable to those applicable to other senior management of Holdings or the
Company.
3.4 Special Bonus Payments. Upon a Change of Control, the Company
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shall pay to Executive a special cash bonus payment equal to the sum of (a)
Executive's AIAP
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Vested Amount as of such Change of Control, Executive's PS Vested Amount as of
such Change of Control, and Executive's PU Vested Amount as of such Change of
Control (all as defined in Exhibit E); (b) any additional premium amounts
required under Exhibit F hereto; and (c) any additional funding amounts required
to fully fund the SERP Benefit (as defined in Section 5) accrued to the date of
such Change of Control under Section 5 hereof. Notwithstanding the foregoing, in
the event that following a Change of Control any performance period relating to
any award under the AIAP or of Performance Units or Performance Shares under the
LTIP (as such terms are defined therein) within which such Change of Control
occurred is completed prior to Executive's termination of employment with
Holdings and the Company, upon such completion Executive 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 Executive upon such Change of Control in respect
of such AIAP award, Performance Units or Performance Shares.
4. Employee Benefits.
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4.1 Employee Benefit Plans and programs. The Company and Holdings
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shall provide Executive until Executive's termination of employment with
Holdings and the Company coverage under all employee benefit programs, plans
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and practices (commensurate with the positions of Chairman of the Boards of
Holdings and the Company and to the extent possible under any employee benefit
plan), in accordance with the terms thereof, which Holdings and the Company make
available to their senior executive officers, including, but not limited to (a)
retirement, pension and profit sharing (other than the SERP, as defined in
Section 5) and (b) medical, dental, hospitalization, short and long term
disability, accidental death and dismemberment and travel accident coverage. It
is understood that the provisions of Section 4.1(c) of the Initial Agreement
relating to life insurance have been amended and restated by the letter
agreement dated June 20, 1995, attached as Exhibit C hereto, which letter
agreement is incorporated herein by this reference.
4.2 Vacation and Fringe Benefits. Executive shall be entitled to the
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number of vacation days customarily accorded senior executives of the Company.
In addition, Executive shall be entitled to the perquisites and fringe benefits
accorded from time to time to senior executives of the Company as well as the
other perquisites and benefits currently accorded Executive by Holdings and the
Company, including but not limited to, a car and driver, use of a Company
aircraft for commuting between Executive's residences and the various offices of
Holdings and the Company and use of a Company or Holdings provided apartment in
New York, New York. Such apartment and its furnishings
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shall be subject to the reasonable approval of Executive. Holdings or the
Company shall pay to Executive an additional amount such that after payment by
Executive of all applicable Federal, State and local taxes (computed at the
maximum marginal rates) Executive retains a sufficient amount to pay all such
taxes incurred by Executive as a result of the provision of a car and driver and
the use of a Company aircraft and of a Company or Holdings-provided apartment as
provided herein.
4.3 Directors and Officers Liability. The Company and Holdings shall
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indemnify Executive and provide Executive with Directors and Officers Liability
coverage and shall maintain the indemnification and directors' and officers'
liability insurance coverage, at levels of coverage and protection no less
favorable than was provided by the Company or Holdings as of May 1, 1993, for
any director or officer of Holdings or the Company. The Directors and Officers
coverage and indemnification provided herein shall continue, as to Executive,
throughout the period of any applicable statute of limitations or through the
continuation of any period during which any applicable statute of limitations
may be tolled.
5. Supplemental Pension. The obligations under Section 5 of the
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Initial Agreement to provide to Executive a pension benefit (the "SERP Benefit")
in lieu of the pension benefit to which Executive would otherwise be entitled
under the Company's Supplemental Executive Retirement Plan
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("SERP") has been funded for the estimated SERP Benefit accrued through the
Expiration Date of this Agreement by the purchase of annuities held in the
Excess Benefit Master Trust Agreement by and between RJR Nabisco, Inc. and
Wachovia Bank and Trust Company, N.A., dated February 5, 1988, as amended
through January 27, 1989, (the "1988 Secular Trust"). Such annuities are to be
delivered to Executive upon his Retirement Date. Executive's "Retirement Date"
for purposes of delivery of the foregoing annuities under this Section 5 shall
be the date of his termination of employment with the Company for any reason. It
is understood that extensions in the Expiration Date of this Agreement, in the
interest rate assumptions, in tax rates, in Executive's tax status as determined
by state or local taxing authorities, and in other actuarial factors or
considerations as of Executive's Retirement Date may affect the adequacy of such
funding of the SERP Benefit. Periodically, upon any extensions in the Expiration
Date, and in all events immediately prior to or promptly following the
Retirement Date, an actuarial calculation shall be performed to determine if any
additional funding through the purchase of an annuity on a tax grossed up-basis
(as described in the SERP acknowledgment executed by Executive and attached
hereto as Exhibit F (the "Acknowledgment")) is required as of the Retirement
Date to deliver the full benefit to which Executive is entitled pursuant to
Section 5 of the Initial Agreement, Exhibit B thereto and hereto and the
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Acknowledgment, all of which are incorporated herein by this reference, as such
benefit may be increased pursuant to Section 6.1(a)(v) if applicable. If such
additional funding is required, the Company shall promptly (i) purchase such
additional annuities and (ii) pay to Executive an additional amount such that
after payment by Executive of all applicable Federal, State and local taxes
(computed at the maximum marginal rates) Executive retains a sufficient amount
to pay all such taxes incurred by Executive as a result of the purchase of such
additional annuities. Nothing herein shall adversely affect the validity of the
Acknowledgment.
6. Termination of Employment.
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6.1 Termination Not For Cause or For Good Reason. (a) The Company and
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Holdings may terminate Executive's employment at any time for any reason, and
Executive may terminate his employment at any time for any reason. If
Executive's employment is terminated by the Company or Holdings other than for
Cause (as hereinafter defined) prior to the Expiration Date or if Executive
terminates his employment for Good Reason (as hereinafter defined) prior to the
Expiration Date, the Company shall pay to Executive (x) if such termination is
prior to, or more than twenty-four months after a Change of Control,
compensation until the Expiration Date (or, if earlier, until his date of
death), payable monthly at a monthly rate equal to the amounts set forth in
clauses (i) and (ii) below, or (y) if such
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termination occurs during the twenty-four month period following a Change of
Control and prior to the Expiration Date, then upon such termination a lump sum
payment, discounted to its present value, based on a notional payment period
equal to the number of months, including partial months, in the period beginning
on the date of such termination of employment and ending on the Expiration Date
(the "Balance of the Term"), assuming equal monthly payments and a discount rate
equal to the product of (I) the Treasury bond yield for instruments having a
term approximately equal to the Balance of the Term as published in the New York
Times on the first of the month in which the termination occurs and (II) 100%
minus the aggregate applicable Federal, state and local taxes then imposed on
Executive's employment income computed at the maximum applicable marginal rates,
in cash in an amount equal to the sum of the amounts set forth in clauses (i)
and (ii) below times the number of whole and partial months in the Balance of
the Term:
(i) Executive's Base Salary at its then current monthly rate (or
following a Change of Control, if higher, the rate in effect
immediately prior to such Change of Control); and
(ii) the product of (x) the highest annual Bonus paid or accrued
by the Company to or for Executive since the commencement of
his employment on May 27, 1993 times (y) a fraction (A) the
numerator of which is one (1) and (B) the denominator of
which is twelve (12).
In addition, Executive shall be entitled to receive:
(iii) Executive's full Base Salary through the date of termination
at the rate in effect at the time notice of termination is
given, AIAP Vested Amount
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as of the date of termination, and, except as set forth below, all
other amounts to which Executive is entitled under any compensation
or benefit plan of the Company including, but not limited to, the
AIAP and LTIP, and all unpaid amounts, as of the date of such
termination, in respect of any bonus, including any Bonus for any
Fiscal Year ending before such termination which would have been
payable had the Executive remained in employment until the date such
bonus would otherwise have been paid and including any bonus under
Section 3.4, at the times such payments are due under the terms of
such plans or, in the event such termination occurs during the
twenty-four month period following a Change of Control, upon such
termination;
(iv) any payment deferred by Executive, together with any applicable
interest or other accruals thereon;
(v) the benefits under Section 5 hereof shall be paid out in accordance
with their terms; provided, however, that Executive shall,for
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employed purposes of Section 5, be deemed to have remained employed
by the Company and Holdings for the lesser of (i) the period equal
to the Balance of the Term or (ii) the period between his date of
termination and his date of death, at the compensation level in
effect on the date of termination or if such termination occurs
during the twenty-four month period following a Change of Control,
at the compensation level in effect immediately prior to such Change
of Control if higher;
(vi) continued coverage under Holdings' and the Company's employee benefit
programs, plans and practices described in Section 4.1 and 4.2 hereof
(other than the use of a Company or Holdings- provided apartment or
Company aircraft) for a period equal to the Balance of the Term, or
Holdings or the Company will provide for equivalent coverage (on an
after-tax basis), subject to any applicable coordination of benefits
rules; provided that (A) in the case of any plan meeting the
requirements of Section 401(a) of the Internal Revenue Code of 1986,
as amended (the "Code"), in the event of a termination of employment
prior to or more than twenty-four months following a Change of
Control, such coverage shall be provided only to the extent
consistent with such requirements and (B) in the event of such
termination during the twenty-four month period following a Change
of Control, such
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coverage shall not be less favorable in the aggregate than that in
effect immediately prior to such Change of Control;
(vii) such payments under applicable plans or programs, including but not
limited to those described in Section 3.3 and 4.3 and payment for
accrued vacation, as may be determined pursuant to the terms of such
plans or programs and this Agreement;
(viii) the immediate right to exercise all Options granted pursuant to
Section 7.1 and the immediate lapse of transfer restrictions on the
Purchased Stock as described in Section 7.2;
(ix) if Executive's termination occurs prior to March 1, 1996 and prior to
a Change of Control, any applicable additional benefits and
protections provided under the Headquarters Program;
(x) if Executive's termination occurs during the twenty-four month period
following a Change of Control, all cash payments to be made hereunder
upon a termination of employment shall be made not later than 15
business days following the date of termination, and in addition
Executive shall receive, to the extent not already provided herein:
(A) a lump sum cash payment equal to the sum of Executive's AIAP
Vested Amount, PS Vested Amount and PU Vested Amount (each as defined
in Exhibit (E)) all as of the date of termination;
(B) a lump sum cash payment equal to the value of the annual
credit under the RJR Nabisco. Inc. Flexible Perquisites Program (the
"Perquisites Program") to which Executive was entitled immediately
prior to such termination or, if higher, to which Executive was
entitled immediately prior to the Change of Control, in each case
multiplied by a fraction, the numerator of which is the number of
whole and partial months in the Balance of the Term and the
denominator of which is twelve reducedby such credits as would
otherwise be applied to the continued benefits under Section 6.1(a)
(vi) above;
(C) use of the automobile assigned to Executive immediately
prior to the Change of Control for a period equal to the Balance of
the Term and, at the end of such period, the transfer
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of ownership of such automobile to Executive plus 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;
(D) in addition to and upon the expiration of the benefits
provided pursuant to Section 6.1(a) (vi) above, MedChoice Retiree
Medical benefits as in effect at the time of such expiration 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
all years of service (actual and imputed) credited for purposes of the
SERP Benefit; and
(E) if the Company fails to provide any of the benefits under
Section 6.1(a) (vi) or Section 6.1(a)(x) (D) above, reimbursement for
the actual cost of Executive's obtaining comparable benefits within 15
business days after the date Executive gives the Company written
notice that he incurred such costs plus such additional amount that
after payment of all applicable Federal, state and local taxes
thereon, computed at the maximum applicable marginal rates, is equal
to all such taxes, so computed, imposed with respect to such
reimbursement.
(b) For purposes of this Agreement, "Good Reason" shall mean any of
the following (without Executive's express prior written consent):
(i) (A) The assignment to Executive of duties materially
inconsistent with Executive's position (including duties,
responsibilities, status, titles or offices as set forth in
Section 1 hereof); (B) any elimination or reduction of
Executive's duties or responsibilities; or (C) any removal
of Executive from or any failure to elect or reelect
Executive to the positions of Chairman of Holdings and the
Company (including the failure to elect Executive to the
positions of Chairman of the ultimate controlling entity in
connection with any merger, acquisition or other
extraordinary corporate transaction that includes Holdings
or the Company), except in connection with the termination
of Executive's employment for Cause, Permanent Disability
(as hereinafter defined) or as a result of Executive's death
or by Executive
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other than for Good Reason or except as a result of a change
in the By-laws of Holdings or the Company which change is
not approved by the Holdings Board provided Executive is
promptly restored to such position or positions;
(ii) A reduction in Executive's Base Salary from the level
required hereunder at the time in question, as the same may
be or may be required to be increased from time to time
during the term or pursuant to the terms of this Agreement,
or the failure to provide Executive with an annual incentive
bonus opportunity pursuant to Section 3.2;
(iii) The failure by the Company or Holdings to obtain the
specific assumption of this Agreement by any successor or
assign of Holdings or the Company or any person acquiring
substantially all of the Company's or Holdings' assets;
(iv) Any material breach by the Company or Holdings of any
provision of this Agreement or any agreements entered into
pursuant thereto;
(v) Requiring Executive to be based at any office or location
other than those described in Section 1 above, except for
travel reasonably required in the performance of the
Executive's responsibilities; or
(vi) During the twenty-four month period following a Change of
Control, (A) the failure to continue in effect any
compensation plan in which Executive participates at the
time of the Change of Control, including but not limited to
the LTIP, the AIAP, the Perquisites Program, or any
substitute plans adopted prior to the Change of Control,
unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan providing 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 Executive's participation therein on
substantially the same basis, both in terms of the amount of
benefits provided and the level of his participation
relative to other participants, as existed at the time of
the Change of Control; or (B) the failure to continue to
provide Executive with benefits at least as favorable in the
aggregate as those enjoyedby him under any of the Company's
pension, life insurance, medical, health and accident,
disability, deferred compensation or
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savings plans in which he was participating at the time of
the Change of Control, the taking of any action which would
directly or indirectly materially reduce any of such
benefits or deprive Executive of any material fringe benefit
enjoyed by him at the time of the Change of Control, or the
failure to provide him with the number of paid vacation days
to which he was entitled on the basis of the Company's
practice with respect to him as in effect at the time of the
Change of Control.
(c) (i) Anything in this Agreement to the contrary
notwithstanding, in the event that it is determined that any
payment or distribution by Holdings or the Company to or for the
benefit of Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise, other than any payment pursuant to this Section
6.1(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 Executive shall be
entitled to receive from Holdings or the Company, within 15 days
following the determination described in Section 6.1(c)(ii)
below, an additional payment ("Excise Tax Adjustment Payment") in
an amount such that after payment by 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),
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including any Excise Tax, imposed upon the Excise Tax Adjustment
Payment, Executive retains 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 6.1(c), including whether an Excise Tax Adjustment
Payment is required and the amount of such Excise Tax Adjustment
Payment, shall be made by Ernst & ▇▇▇▇▇, ▇▇▇▇▇▇▇-Salem, North
Carolina, or such other national accounting firm as the Company
or Holdings may designate prior to a Change of Control, which
shall provide detailed supporting calculations to the Company and
the Executive within 15 business days of the date of termination
of Executive's employment. Except as hereinafter provided, any
determination by Ernst & ▇▇▇▇▇, ▇▇▇▇▇▇▇-Salem, North Carolina, or
such other national accounting firm as the Company or Holdings
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) certain
Excise Tax Adjustment Payments will not have been made by the
Company which should have been made (an "Underpayment"), or (y)
certain Excise Tax Adjustment Payments will have been made which
should not have been made (an "Overpayment"), consistent with
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the calculations required to be made hereunder. In the event of
an Underpayment, such Underpayment shall be promptly paid by
Holdings or the Company to or for the benefit of the Executive.
In the event that the Executive discovers that an Overpayment
shall have occurred, the amount thereof shall be promptly repaid
to Holdings or the Company.
(d) Except as provided in this Agreement, if Executive is a
participant in the LTIP or any other stock award plan of the
Company, Holdings, or any of their affiliates and has outstanding
awards thereunder, the treatment of such awards shall be governed
by the terms of such applicable plans and awards.
6.2 Permanent Disability. If prior to the Expiration Date
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the Executive becomes totally and permanently disabled (as defined in
the Company's Long-Term Disability Plan applicable to senior executive
officers ("LTD Plan") as in effect on May 27, 1993 ("Permanent
Disability")) Holdings or the Company or Executive may terminate his
employment on written notice thereof and
(a) Executive shall continue to receive until the
Expiration Date (or, if earlier, the end of his
Permanent Disability or his death) amounts equal to no
less than 50% of Executive's then annual Base Salary
(or, if higher, 50% of $500,000 plus 6% per year,
compounded annually, from January 1, 1996, to the
January 1 immediately preceding such termination);
provided, however, that any such payments shall be
reduced but not below zero, by any benefits payable
during such period to Executive under the LTD Plan;
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(b) the benefits under Section 5 hereof shall be paid out
in accordance with their terms;
(c) all unpaid amounts, as of the date of such termination,
in respect of any bonus, including any bonus for any
Fiscal Year ending before such termination which would
have been payable had Executive remained in employment
until the date such bonus would otherwise have been
paid and including any bonus under Section 3.4, shall
be paid;
(d) any payment deferred by Executive, together with any
applicable interest or other accruals thereon shall be
paid;
(e) Executive shall continue to be covered under Holdings'
and the Company's employee benefit programs, plans and
practices described in Section 4.1 (in the case of any
plan meeting the requirements of Section 401(a) of the
Code, only to the extent consistent with such
requirements) hereof until the Expiration Date (or, if
earlier, the end of his Permanent Disability or his
death) or Holdings or the Company will provide for
equivalent coverage on an after-tax basis; provided
that if Executive is provided with similar coverage by
a successor employer, any such coverage by Holdings or
the Company shall cease;
(f) Executive shall have such rights to payments under
applicable plans or programs, including but not limited
to those described in Sections 3.3 and 4.3, as may be
determined pursuant to the terms of such plans or
programs and this Agreement; and
(g) all Options granted pursuant to Section 7.1 shall
become immediately exercisable, and the transfer
restrictions on the Purchased Stock as described in
Section 7.2 shall thereupon lapse.
6.3 Death. In the event of Executive's death prior to the
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Expiration Date, (i) the Executive's estate or designated
beneficiaries shall receive payment of Executive's then annual Base
Salary (or, if higher, 50% of
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$500,000 plus 6% per year, compounded annually, from January 1, 1993,
to the January 1 immediately preceding such termination) for a period
of three months after the date of death; (ii) Executive's estate or
designated beneficiary shall receive a bonus equal to the highest
annual bonus paid or accrued to or for Executive since the
commencement of his employment on May 27, 1993, or if higher the bonus
opportunity for the Fiscal Year in which such termination occurs
(computed in the same manner as under Section 6.1(a)(ii) hereof)
multiplied by a fraction, the numerator of which is the number of days
during which Executive was employed by the company in the Fiscal Year
in which death occurred, and the denominator of which is 365; (iii)
all unpaid amounts, as of the date of such termination, in respect of
any bonus, including any Bonus for any Fiscal Year ending before such
termination which would have been payable had Executive remained in
employment until the date such bonus would otherwise have been paid
and including any bonus under Section 3.4, shall be paid; (iv) any
payment deferred by Executive, together with any applicable interest
or other accruals thereon shall be paid; (v) the benefits under
Section 5 hereof shall be paid out in accordance with the terms of
that Section; (vi) any death benefits provided under the employee
benefit programs, plans and practices described in Section 4.1 hereof
shall be payable in accordance with their terms; (vii) Executive's
estate or designated beneficiary shall have such other rights to
21
payments under applicable plans or programs, including but not limited
to those described in Sections 3.2(c) (for 1995 or thereafter, as may
be agreed), 3.3, 4.1, 4.2 and 4.3, as may be determined pursuant to
the terms of such plans or programs and this Agreement; and (viii) all
Options granted pursuant to Section 7.1 shall become immediately
exercisable, and the transfer restrictions on the Purchased Shares as
described in Section 7.2 shall thereupon lapse.
6.4 Voluntary Resignation; Discharqe for Cause. If
------------------------------------------
Executive resigns voluntarily, other than for Good Reason or Permanent
Disability, or the Company and Holdings terminate the employment of
Executive at any time for Cause, the transfer restrictions on the
Purchased Shares as described in Section 7.2 shall thereupon lapse and
the Company's and Holdings' obligations under this Agreement to make
any further payments to Executive shall thereupon cease and terminate
except with respect to obligations pursuant to Section 5 hereof, the
terms of any applicable plans, including those described in Sections
3.2(c) (for 1995, and thereafter as may be agreed), 3.3, 4.1, 4.2 and
4.3 hereof and all unpaid amounts, as of the date of such termination,
in respect of any bonus, including any Bonus for any Fiscal Year
ending prior to such termination which would have been payable had
Executive remained in employment until the date such bonus would
otherwise have been paid and including any bonus under Section 3.4,
and any payment deferred by Executive, together with any applicable
interest or other
22
accruals thereon. The term "Cause" shall be limited to (a) action by
Executive involving willful malfeasance in connection with his
employment having a material adverse effect on Holdings or the
Company, (b) any action by Executive involving willful gross
misconduct having a material adverse effect on Holdings or the Company
(other than an effect that could not reasonably constitute grounds for
dismissal under the circumstances), (c) violation by the Executive of
the restrictions placed upon transfer of Shares (as defined
hereinafter) by Section 7.2 hereof, (d) substantial and continuing
willful refusal by Executive in breach of this Agreement to perform
his duties hereunder, which refusal has a material adverse effect on
Holdings or the Company or (e) Executive being convicted of (i) a
felony under the laws of the United States or any state or (ii) a
felony under the laws of any other country or political subdivision
thereof involving moral turpitude; provided that no action or refusal
to perform shall be deemed willful if done in the reasonable belief
that such action or refusal was in the best interests of the Company
or Holdings. Termination of Executive pursuant to Section 6.4 shall be
communicated by a Notice of Termination given within one year
after.the Holdings Board both (i) had knowledge of conduct or an event
allegedly constituting Cause and (ii) had reason to believe that such
conduct or event could be grounds for Cause. For purposes of this
Agreement a "Notice of Termination" shall mean delivery to Executive
of a copy of a resolution duly
23
adopted by the affirmative vote of not less than three-quarters of the
entire membership of Holdings Board at a meeting of the Holdings Board
called and held for the purposes (after reasonable notice to the
Executive ("Preliminary Notice") and reasonable opportunity for
Executive, together with the Executive's counsel, to be heard before
the Holdings Board prior to such vote), finding that in the good faith
opinion of the Holdings Board, Executive was guilty of conduct set
forth in the second sentence of this Section 6.4 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 other 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 Holdings 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 Holdings Board
to make its findings of Cause or to communicate its conclusions within
such 30-day 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. Where the Holdings Board has made such findings that,
based upon conduct described in clause (a), (b), (c) or (d) above,
Cause exists the Executive shall have 30 days in which to cure such
conduct, to the extent such cure is possible. Any termination of
Executive's employment (other
24
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; provided, however, that if
during such period Executive voluntarily terminates other than for
Good Reason or the Company terminates Executive other than for Cause,
and either (A) Executive cured his conduct, as permitted in the
preceding sentence of this Section 6.4, or (B) Executive is found (or
is deemed to be found) not guilty of the conduct described in the
second sentence of this Section 6.4, such termination shall not be
deemed to be for Cause.
7. Stock and Option Arrangements.
-----------------------------
7.1 Options. Subject to the terms and conditions
-------
hereinafter set forth, in consideration of Executive's entering into
this Agreement, Holdings has caused the actions described in
paragraphs (a), (b) and (c) below to be authorized and taken and shall
cause the actions described in paragraph (d) below to be taken:
(a) the granting to Executive on the Commencement Date of
an option or options (the "Initial Options") to
purchase an aggregate of 8,000,000 shares of Common
Stock, par value $.01 per share, of Holdings (the
"Common Stock") (subsequently adjusted as described in
paragraph (c) below) at an exercise price equal to the
lower of the closing price, as reported on the New York
Stock Exchange (the "NYSE"), on the day immediately
prior to the signing of the Initial Agreement or on
Friday, May 21, 1993; provided that the exercise price
of the Initial Options was not permitted to be less
than 50% of the Fair Market Value (as defined in the
LTIP) of the Common Stock on the date such Initial
Options were granted. The Initial Options shall be
vested and exercisable in four equal annual
installments on
25
May 31, 1994, May 31, 1995, May 31, 1996 and May 31,
1997;
(b) the granting to Executive on each of December 31, 1993
and December 31, 1994 of options (the "1993 and 1994
Options") to purchase an aggregate on each such date of
750,000 shares of Common Stock (subsequently adjusted
as described in paragraph (c) below) at an exercise
price equal to the Fair Market Value (as defined in the
Stock Option Plan for Directors and Key Employees of
RJR Nabisco Holdings Corp. and Subsidiaries, as amended
(the "Stock Option Plan")) of such shares as of the
business day immediately preceding the date of grant;
(c) the cancellation on January 19, 1995 of one-half of
the Initial Options and one-half of the 1993 and 1994
Options in exchange for an equivalent number of options
to purchase shares of Nabisco Holdings Corp.
("Nabisco") Class A common stock (the "Nabisco
Options"), which Nabisco Options are fully vested and
have a 15 year term from the date of grant and the
adjustment of the Initial Options and the 1993 and 1994
Options to reflect the 1 for 5 reverse stock split as
of April 13, 1995, and to make certain other changes in
the terms of such Options as of April 13, 1995, and
October 11, 1995; and
(d) the granting to Executive on each of December 31, 1995
and December 31, 1996 on which Executive remains
employed by the Company of an Option or Options (the
"Additional Options" and, together with the Initial
Options, the 1993 and 1994 Options and the Nabisco
Options, the "Options") to purchase an aggregate on
each such date of 150,000 shares of Common Stock at an
exercise price equal to the Fair Market Value (as
defined in the Stock Option Plan) of such shares as of
the business day immediately preceding the date of
grant, pursuant to the terms of the Stock Option Plan
and non-qualified stock option agreements containing
terms and conditions substantially similar to those
applicable to the Initial Options as the same have been
amended as described above, and having the vesting
provisions set forth in paragraph (e) below; provided
that the exercise price of the Additional Options shall
not be less than 50% of such Fair Market Value of the
Common Stock on the date each such Additional Option is
granted; and provided further that the number and type
of securities represented by such Additional Options
26
will be subject to adjustment as if Section 1.4 of the
Option Agreement had been applicable thereto.
(e) The 1993 and 1994 Options and each respective grant of
the Additional Options shall be vested and exercisable
as follows:
================================================================================
Percentage of Total
Shares as to Which
Date Option Becomes Option is Vested And
Grant Date Vested and Exercisable Excercisable
---------- ---------------------- --------------------
December 31, 1993 May 31, 1994 25%
----------------------------------------------------------------------------
May 31, 1995 50%
----------------------------------------------------------------------------
May 31, 1996 75%
----------------------------------------------------------------------------
May 31, 1997 100%
----------------------------------------------------------------------------
December 31, 1994 May 31, 1995 33 1/3
----------------------------------------------------------------------------
May 31, 1996 66 2/3
----------------------------------------------------------------------------
May 31, 1997 100%
----------------------------------------------------------------------------
December 31, 1995 May 31, 1996 50%
----------------------------------------------------------------------------
May 31, 1997 100%
----------------------------------------------------------------------------
December 31, 1996 May 31, 1997 100%
================================================================================
(f) As provided in the April 13, 1995, amendment to
Executive's outstanding stock option awards, upon
Executive's "Retirement Date" (as provided in Section 5
herein) all Options subject to said April 13, 1995,
amendment shall become 100% vested and exercisable.
7.2 Purchased Stock and Transfer Restrictions.
-----------------------------------------
(a) In consideration for Holdings' and the Company's entering into
this Agreement, subject to the terms and conditions hereinafter set
forth, Executive purchased from Holdings 662,222 shares of Common
Stock at a price of $5.625 per share, the closing price of such
shares, as reported on the NYSE, on Friday, May 21, 1993, one-half of
which shares were repurchased by Holdings in December, 1994, subject
to the proceeds of such repurchase being applied by Executive
27
to the acquisition of shares of Nabisco Class A Common Stock ("Nabisco
Shares") in the initial Public Offering of such Nabisco Shares, (such
purchased Common Stock of Holdings and such purchased Nabisco Shares,
the "Purchased Stock"). All of the Purchased Stock is subject to the
transfer restrictions set forth below. Executive agrees and
acknowledges that he will not, directly or indirectly, offer,
transfer, sell, assign, pledge, hypothecate or otherwise dispose of
any of such shares of Purchased Stock (any such act being herein
referred to as a "transfer") so long as Executive remains employed by
Holdings or any of its subsidiaries, except for such transfers as may
be permitted by the Holdings Board or the Board of Directors of
Nabisco, as the case may be, and that any transfers made, whether
permitted to be made during such period or made thereafter, will be
made fully in compliance with applicable securities and other laws. No
transfer of any such shares in violation hereof shall be made or
recorded on the books of Holdings and any such transfer shall be void
and of no effect.
(b) The certificate or certificates representing the Purchased Stock
shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE
PROVISIONS OF THE EMPLOYMENT AGREEMENT BETWEEN RJR NABISCO
HOLDINGS CORP. ("HOLDINGS") AND THE PERSON NAMED ON THE FACE
HEREOF (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
HOLDINGS)."
28
Holdings agrees that, upon request after the termination of Executive's
employment by Holdings and all of its subsidiaries, it shall cause such
certificates representing shares of Common Stock and shall use its
reasonable best efforts to cause such certificates representing Nabisco
Shares to be exchanged for certificates that do not bear such legend.
(c) Executive agrees and acknowledges that in connection with any
transfer of shares of Purchased Stock or shares of Common Stock or Nabisco
Shares issued upon exercise of any Options (collectively, the "Shares"),
whether during the term hereof or thereafter, he shall provide Holdings or
Nabisco, as the case may be, with such customary certificates, opinions and
other documents as Holdings or Nabisco may reasonably request to assure
that Executive has complied fully with applicable securities and other
laws, to the extent such compliance is within the control of Executive.
(d) The provisions of this Section 7.2 shall apply, to the full extent
set forth herein with respect to the Purchased Stock or the Shares as the
case may be, and to any and all shares of capital stock of Holdings or
Nabisco or any capital stock, partnership units or any other securities or
evidence of indebtedness or assets (other than cash dividends) which may be
issued in respect of, in exchange for, upon conversion of or in
substitution of, the Purchased Stock or other Shares, by reason of any
stock
29
dividend, split, reverse split, combination, recapitalization, liquidation,
reclassification, merger, consolidation or otherwise.
8. Expenses. The Executive is authorized to incur reasonable expense in
---------
carrying out his duties and responsibilities under this Agreement,
including expenses for travel and similar items related to such duties and
responsibilities. The Company shall reimburse Executive for all such
expenses upon presentation by Executive from time to time of an itemized
account of such expenditures.
9. No Obligation to Mitigate Damages. The Executive shall not be
----------------------------------
required to mitigate damages or the amount of any payment provided for
under this Agreement by seeking other employment or otherwise nor will (a)
any payments under any Section hereof be subject to offset in respect of
any claims which the Company may have against Executive or (b) except as
otherwise provided in Section 6.1(a)(vi) or Section 6.2(e), the amount of
any payment or benefit provided for in Section 6 be reduced by any
compensation earned as a result of Executive's employment with another
employer.
10. Notices. All notices or communications hereunder shall be in
--------
writing, addressed as follows:
To the Company or Holdings:
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
c/o RJR Nabisco Holdings Corp.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
30
To the Executive:
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, North, ▇▇▇▇▇▇ & ▇▇▇▇, P.C.
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Any such notice or communication shall be sent both via fax and
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 the actual date of fax
shall determine the time at which notice was given.
11. Separability; Leqal Fees; Arbitration. 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 remaining
provisions hereof which shall remain in full force and effect. In addition,
the Company shall reimburse Executive for reasonable legal fees incurred in
connection with entering into this Agreement and shall also pay to
Executive as incurred all legal and accounting fees and expenses incurred
by Executive in seeking to obtain or enforce any right or benefit provided
by this Agreement or any other
31
compensation-related plan, agreement or arrangement of the Company, unless
Executive's claim is found by an arbitral tribunal of competent
jurisdiction to have been frivolous. Any good faith controversy or claim
arising out of or relating to this Agreement or the breach of this
Agreement (other than Section 14 hereof) that cannot be resolved by
Executive and the Company, including any dispute as to the calculation of
Executive's benefits or any payments hereunder shall be submitted to
arbitration in Winston-Salem, North Carolina in accordance with Delaware
law and the procedures of the Judicial Arbitration and Mediation Services,
Inc. ("JAMS"). The determination of the JAMS arbitrator shall be conclusive
and binding on the Company and Executive and judgment may be entered on the
arbitrators award in any court having jurisdiction.
12. Assignment. This contract shall be binding upon and inure to the
-----------
benefit of the heirs and representatives of Executive and the assigns and
successors of Holdings and the Company, but neither this Agreement nor any
rights hereunder shall be assignable or otherwise subject to hypothecation
by Executive (except by will or by operation of the laws of intestate
succession) or by Holdings or the Company, except that Holdings or the
Company may assign this Agreement to any successor (whether by merger,
purchase or otherwise) to all or substantially all of the stock, assets or
businesses of Holdings or the Company.
32
13. Amendment/Termination.
----------------------
(a) The Agreement may only be amended at any time by mutual written
agreement of the parties hereto.
(b) Company and Holdings represent and warrant they will make
appropriate adjustments and amendments to the number of shares of Purchased
Stock and the number of shares subject to, and the exercise price of,
Options (including, in the case of Options, in the event of a spinoff or
distribution of assets or stock of Holdings or an affiliated entity,
substituting or replacing the shares issuable upon the exercise of Options)
should extraordinary events or transactions occur involving the Company,
Holdings, or an affiliated corporation.
14. Nondisclosure of Confidential Information; Non-Competition.
-----------------------------------------------------------
(a) Executive shall not, without the prior written consent of Holdings or the
Company, divulge, disclose or make accessible to any other person, firm,
partnership or corporation or other entity any Confidential Information
pertaining to the business of Holdings or the Company except (i) while
employed by Holdings or the Company in the business of and for the benefit
of Holdings or the Company or (ii) when required to do so by a court of
competent jurisdiction, by any governmental agency having supervisory
authority over the business of Holdings or the Company, or by any
administrative body or legislative body (including a committee thereof)
with purported or apparent jurisdiction to order Executive to divulge,
disclose or make
33
accessible such information. For purposes of this Section 14(a),
"Confidential Information" shall mean non-public information concerning
Holdings' or the Company'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 or otherwise known
to the public other than through a breach by Executive of his fiduciary
duty or any confidentiality agreement, or information known to the
Executive prior to the date of this Agreement. Confidential Information
does not include information the disclosure of which cannot reasonably be
expected to adversely affect the business of Holdings or the Company.
(b) During the period commencing on the date hereof and ending (i) in
the case of a termination described in Section 6.1 hereof, three years
after the date of termination and (ii) in case of a termination described
in Section 6.4 hereof, two years after the date of termination, Executive
covenants and agrees that he will not be an executive officer, board
member, owner, partner, consultant or employee of a food or tobacco company
with annual revenues over $1 billion, if such food or tobacco company is
engaged in a "major business" of Holdings or the Company. A "major
business" for this purpose is each major business segment of the Company
and its subsidiaries on the date hereof that produces products constituting
over 5% of the
34
annual revenues of Holdings and its subsidiaries. For purposes of this
Section 14, Executive shall be deemed not a shareholder of a company
that would otherwise be a competing entity if Executive's record
and beneficial ownership of the capital stock of such company amount to not
more than one percent of the outstanding capital stock of any such company
subject to the periodic and other reporting requirements of Section 13
or Section 15(d) or the Securities Exchange Act of 1934, as amended.
Executive, Holdings, and Company agree this covenant not to compete is
a reasonable covenant under the circumstances, and further agree
that if in the opinion of any court of competent jurisdiction, such restraint
is not reasonable in any respect, such court shall have the
right, power and authority to excise or modify such provision or provisions
of this covenant as to the court shall appear not reasonable and to enforce
the remainder of the covenant as so amended. Notwithstanding any provision
herein to the contrary, Holdings and Company recognize that Executive is a
substantial stockholder and former Chairman and Chief Executive Officer of
ConAgra, Inc. ("ConAgra") and Executive intends to continue as a Board
member of ConAgra. In the event that Executive no longer serves in any
capacity with Holdings or the Company or any successor to either entity,
Holdings and the Company will not object to his serving on the Board of
ConAgra. The parties also recognize that Holdings and Company do not compete
on the date of this Agreement in businesses with ConAgra which have competitive
35
sales which exceed the thresholds contained in Sec. 8 of the ▇▇▇▇▇▇▇ Act (15
USC Sec. 19). Accordingly, Company and Holdings do not object to Executive
serving on the Board of ConAgra during and after the termination of this
Agreement and will make no objection to such service. Executive, Company
and Holdings and their advisers shall take all reasonable actions to
support the position stated herein.
(c) Executive agrees that any breach of the covenants contained in this
Section 14 would irreparably injure Holdings and the Company. Accordingly,
Holdings or the Company may, in addition to pursuing any other remedies
they may have in law or in equity, obtain an injunction against Executive
from any court having jurisdiction over the matter, restraining any further
violation of this Agreement by Executive.
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 hereof. 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.
36
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 Section are in addition to the survivorship provisions
of any other section of this Agreement.
17. Representations and Warranties. Holdings and the Company each
-------------------------------
represent and warrant that (a), respectively, they are fully authorized and
empowered to enter into this Agreement, (b) the execution of this Agreement
and the performance of their respective obligations under this Agreement
will not violate or result in a breach of the terms of any material
agreement to which Holdings and/or the Company is a party or by which it is
bound, (c) no approval by any governmental authority or body is required
for them to enter into this Agreement or perform their obligations
hereunder, other than the Securities and Exchange Commission if so required
in connection with the registration or sale of any securities hereunder,
and (d) this Agreement is valid, binding and enforceable against Holdings
and the Company in accordance with its terms, except to the extent affected
or limited by applicable bankruptcy laws or other statutes governing the
rights of creditors and any regulations or interpretations thereof.
Executive represents and warrants that his execution of this Agreement and
his performance of his duties and responsibilities under
37
this Agreement will not violate or result in a breach of the terms of any
material agreement to which he is a party or by which he is bound.
18. Governing Law. This Agreement shall be construed, interpreted, and
--------------
governed in accordance with laws of Delaware, without reference to rules
relating to conflicts of law.
19. Withholding. The Company and Holdings shall be entitled to withhold
------------
for payment any amount of withholding required by law.
20. Interest on Late Payments. To the extent that any payments required
--------------------------
to be made hereunder upon or following a Change of Control are not made
within the period specified therefor, the Company and Holdings 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.
21. Actuarial Calculations. All required actuarial calculations of
-----------------------
payments to be made hereunder and of annuities to be purchased pursuant to
Section 5 hereof shall be made by ▇▇▇▇▇▇ ▇▇▇▇▇ Worldwide, New York, New
York, or such other national actuarial firm as the Company or Holdings may
designate prior to a Change of Control.
22. Funding. Except as otherwise provided herein, 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
38
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, Executive shall be entitled to payments therefrom, if
any, as and to the extent provided in such rabbi trust or trusts.
23. Counterparts. This Agreement may be executed in two or more
-------------
counterparts, each of which will be deemed an original.
RJR NABISCO HOLDINGS CORP.
By: /s/
-------------------------------
RJR NABISCO, INC.
By: /s/
----------------------------------
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
39
EXHIBIT "A"
ConAgra, Inc.
Valmont Industries, Inc.
Norwest Corp.
▇▇▇▇▇ ▇▇▇▇▇▇ Sons', Inc.
▇.▇. ▇▇▇▇▇▇ de Nemours and Co.
EXHIBIT "B"
ESTIMATED SUPPLEMENTAL PENSION ANNUAL BENEFIT
---------------------------------------------
AVERAGE FINAL YEARS OF SERVICE
COMPENSATION 6 10 15
------------ - -- --
$ 800,000 213,332 266,666 300,000
-----------------------------------------------------------
$ 900,000 240,000 300,000 337,500
-----------------------------------------------------------
$1,000,000 266,666 333,333 375,000
-----------------------------------------------------------
$1,200,000 320,000 400,000 450,000
-----------------------------------------------------------
$1,600,000 426,666 533,333 600,000
-----------------------------------------------------------
$2,000,000 533,332 666,666 750,000
-----------------------------------------------------------
$2,400,000 640,000 800,000 900,000
-----------------------------------------------------------
$2,800,000 746,664 933,333 1,050,000
-----------------------------------------------------------
$3,200,000 853,332 1,066,666 1,200,000
-----------------------------------------------------------
$3,600,000 960,000 1,200,000 1,350,000
-----------------------------------------------------------
$4,000,000 1,066,666 1,333,333 1,500,000
-----------------------------------------------------------
EXHIBIT "C"
[RJR NABISCO LETTERHEAD]
June 20, 1995
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman and Chief Executive Officer
RJR Nabisco, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
RE: Employment Agreement; Life insurance Provision
Dear ▇▇▇▇:
This letter agreement replaces in its entirety the side letter
agreement dated March 8, 1994 concerning the Company's obligation, under
Section 4.1(c) of your Employment Agreement dated May 27, 1993, to provide
you with "life insurance in the amount of $5,000,000."
As you know, the Company previously made an advance premium deposit
with Northwestern Mutual Life Insurance Company (NML), which at that time
represented the present value of the balance of eight annual premiums to
provide the insurance under Section 4.1(c) of your May 27, 1993 Employment
Agreement.
The Compensation Committee of the Board of Directors at its April 10,
1995 meeting agreed to allow the conversion of this whole life insurance
policy to a joint life/second to die policy with your wife, ▇▇▇▇ ▇. ▇▇▇▇▇▇,
as the second life insured by the policy.
In order to achieve increasing the face amount of the policy to
$10,000,000 without increased cost, the Company will agree to the transfer
of the advanced premium deposit from NML to Massachusetts Mutual Life
Insurance Company (Mass. Mutual) from which future premium payments will be
made. The deposit with Mass. Mutual is calculated to pay the premium for
the remaining 6 premiums due on the policy pursuant to Section 4. l(c) of
your May 27, 1993 Employment Agreement. If, and only if, the full sum of the
deposit with Mass. Mutual is used to pay premiums to Mass. Mutual, and
additional premiums are required by Mass. Mutual at any time during your
lifetime to keep $8,000,000 of face value of the policy in force, the
Company will pay such additional premiums. You shall be responsible for any
premium amounts needed to keep the face value of the policy in excess of
$8,000,000. Notwithstanding the foregoing, you further agree that should
you withdraw any of the advance
RJR Nabisco, Inc.
1301 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
premium deposit from Mass Mutual, the Company shall have no obligation to
replace any part of the deposit, and should such withdrawal cause any
diminution in the coverage or a cancellation of the policy, the Company
shall have no obligation to cure the diminution in coverage or
cancellation.
If this correctly states our agreement on the Company's obligation to
provide life insurance coverage to you under Section 4.1 (c) of your
Employment Agreement, please sign a copy of this letter where indicated.
Sincerely,
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President,
Human Resources & Administration
Understood and Agreed:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
6/20/95
---------------------------
Date
EXHIBIT "D"
Performance Unit
1995
Special - One Year
RJR NABISCO HOLDINGS CORP.
1990 LONG TERM INCENTIVE PLAN PERFORMANCE UNIT PROGRAM
AMENDED AND RESTATED
PERFORMANCE UNIT AGREEMENT
DATE OF GRANT: FEBRUARY 15, 1995
-----------------
WITNESETH:
1. Grant. Pursuant to the provisions of the 1990 Long Term Incentive
------
Plan and the Performance Unit Program thereunder (collectively, the
"Plan"), RJR Nabisco Holdings Corp. (the "Company") on the above date has
granted to
▇.▇. ▇▇▇▇▇▇ (the "Grantee"),
subject to the terms and conditions which follow and the terms and
conditions of the Plan,
2,410 Performance Units.
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. The Initial Grant
Value of each Performance Unit shall be one thousand dollars. All
capitalized terms used herein shall have the meaning set forth in the Plan,
unless the context requires a different meaning.
2. Adjustment Of Value of Performance Units. For the Performance Period
-----------------------------------------
commencing on January 1, 1995 and ending December 31, 1995, the Committee
has determined that the Performance Measure shall be cash net income of the
Company during such Performance Period. The value of each Performance Unit
shall be as determined in the grid attached as Exhibit A may be reduced by
the Committee in its discretion. The Grantee specifically agrees that this
award of Performance Units is in
lieu of any award under the Annual Incentive Award Plan for the fiscal year
ending December 31, 1995.
3. Payment of Performance Units. Unless deferred pursuant to the
-----------------------------
provisions of the Plan, units so earned will be paid only in cash as soon
as practicable following the close of the Company's books at the end of the
Performance Period. Payment Value for tax and other calculations shall be
determined in accordance with the provisions of the Plan and Exhibit A and
the discretion of the Committee to reduce the Payment Value. Except as
provided in the Plan, no units will be earned or paid unless the Grantee
has been a full-time employee of the Company throughout the Performance
Period.
4. Deferral. Deferral of a payment of Performance Units shall be
---------
pursuant to the provisions of the Plan; provided, however, in no event, may
a deferred award be paid within six months of the date of deferral.
5. 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.
6. No Riqht to Employment. Neither the execution and delivery of this
-----------------------
Agreement nor the granting of the Performance Units evidenced hereby shall
constitute 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 specific capacity or shall prevent the Company or its
subsidiaries from terminating the Grantee's employment at any time with or
without cause. "Termination of employment" under the Plan and this
Agreement means termination from active employment; it does not mean the
termination of pay and benefits at the end of salary continuation (or other
form of severance pay or pay in lieu of salary).
7. Notices. Any notices required to be given hereunder to the Company
--------
shall be addressed to The Secretary, RJR Nabisco Holdings, Inc., ▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ 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.
8. Grantee. In consideration of the grant, the Grantee specifically
--------
agrees that the Committee shall have the exclusive
2
power to interpret the Plan and this Agreement and to adopt such rules for
the administration, interpretation and application of the Plan and
Agreement as are consistent therewith and to interpret or revoke any such
rules. All actions taken and all interpretation and determinations made by
the Committee shall be final, conclusive, and binding upon the Grantee, the
Company and all other interested persons. No member of the Committee shall
be personally liable for any action, determination or interpretation made
in good faith with respect to the Plan or the Agreement. The Committee may
delegate its interpretive authority to an officer or officers of the
Company.
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.
RJR NABISCO HOLDINGS CORP.
By
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Authorized Signatory
---------------------------------
GRANTEE
Grantee's Taxpayer Identification Number:
Date:
--------------------------------- ----------------------
Grantee's Home Address:
---------------------------------
---------------------------------
---------------------------------
3
Exhibit D - continued
1995 Performance Unit Program
▇.▇. ▇▇▇▇▇▇
AIAP Target = $2,410,000 Grant = 2,410 Units
Value
CNI Perf. Award Per
Available Rating Value Unit
--------- ------ ---------- ---------
$1,390 150 $3,615,000 $1,500
$1,376 145 $3,494,500 $1,450
$1,362 140 $3,374,000 $1,400
$1,348 135 $3,253,500 $1,350
$1,334 130 $3,133,000 $1,300
$1,320 125 $3,012,500 $1,250
$1,306 120 $2,892,000 $1,200
$1,292 115 $2,771,500 $1,150
$1,278 110 $2,651,000 $1,100
$1,264 105 $2,530,500 $1,050
Plan $1,250 100 $2,410,000 $1,000
$1,225 100 $2,410,000 $1,000
$1,200 100 $2,410,000 $1,000
$1,175 100 $2,410,000 $1,000
$1,150 100 $2,410,000 $1,000
$1,125 100 $2,410,000 $1,000
$1,100 100 $2,410,000 $1,000
$1,100 0 $0 $0
Each unit valued at $1,000 upon Grant
Cash Net Income = millions
Assumes $600,000 annual base salary earnings
4
EXHIBIT "E"
AIAP Vested Amount means, as of a Change of Control or as of the date
------------------
Executive's employment terminates, as the case may be, an amount equal to
(a) in the case of any bonus opportunity under the AIAP, the value of
Executive's target award under the AIAP for the relevant period in which
such 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 in Control in the year in
which such 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 such Change of Control
and the target award shall be that in effect immediately preceding such
Change of Control, or (b) in the case of any annual bonus opportunity in
the form of Performance Units, the PU Vested Amount as of the date of such
termination.
Change of Control means 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 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 to such date whose
election, or nomination for election by 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 Holdings in which such person is named as a
nominee of Holdings for director), 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-ll 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 Holdings Board, shall
be, for purposes of this paragraph (b), considered as
though such person were a member of the Incumbent Board;
(c) the approval by the shareholders of Holdings 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 the Program.
PS vested Amount means with respect to any award of
----------------
Performance Shares (as defined in the LTIP) Executive holds as of
2
a Change of Control or as of the date Executive's employment terminates, 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 such 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 such Change of Control and target performance with respect to
such Performance Shares shall be that in effect immediately preceding the
Change of Control.
PU Vested Amount means, for any award of Performance Units (as defined
----------------
in the LTIP) Executive holds as of a Change of Control or as of the date
Executive's 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 and the denominator of which is the number of months
in such performance period; provided that
3
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 PU Vested Amount as of the date of such termination, the
performance period shall be deemed to begin on the first day following such
Change of Control and the target value of such Performance Units shall be
that in effect immediately preceding the Change of Control.
4
EXHIBIT F
ACKNOWLEDGMENT
WHEREAS, I am vested in certain supplemental retirement benefits under (i)
the RIR Nabisco, Inc., Supplemental Executive Retirement Plan, as amended
by ancillary agreements, if any, (SERP), (ii) the RJR Nabisco, Inc.,
Supplemental Retirement Plan (SUPP) and (iii) the RIR Nabisco, Inc.,
Additional Benefits Plan (ABP) (collectively, the "Plans") to which funds
are dedicated in a Master Trust Agreement dated January 1, 1987, as amended
through January 27, 1989 (the "Rabbi Trust"); and
WHEREAS, to provide me with greater security and financial flexibility in
the aforementioned benefits, an annuity will be purchased for my benefit
from funds in the Rabbi Trust upon the execution of this Acknowledgment,
and such annuity shall be transferred to the Excess Benefit Master Trust
dated February 5, 1988, as amended through January 27, 1989 (the "Secular
Trust"); and
WHEREAS, the Company desires to deliver said annuity to me with the
federal, state and local income taxes on the present value of the annuity
paid by the Company or the aforementioned Trusts, the amount of the annuity
being reduced to reflect such tax payments; and
NOW, THEREFORE, I hereby agree as follows:
1. The annuity transferred, represents the cash value of my accrued
benefit as of December 31, 1993 under the SERP, SUPP and ABP
delivered on an after-tax basis based on tax rates currently
applicable to me (the "Benefit").
2. Any additional taxes due as a result of the transfer of the
annuity in any tax year prior to my Retirement Date shall be paid
by the Company or the Trusts. My "Retirement Date" is
fixed by the terms of my individual SERP arrangement with
the Company, and shall be deemed to include the date of my death
if death occurs before retirement.
3. The annuity will be delivered to me from the Secular Trust on my
Retirement Date. The annuity delivered at my Retirement Date will
have a lump sum cash-out option.
4. The value of the Benefit including earnings thereon will be an
offset to the after-tax benefits determined at my Retirement Date
under the Plans.
5. If an annuity instead of a lump sum is elected at retirement, a
portion of the annuity payments to be made during retirement may be
taxable to me, and I will be responsible for the payment of any taxes
on such payments.
IN WITNESS THEREOF, I have executed this Acknowledgment as of
2/3/94
------------------------
Date
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Printed Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇