Exhibit 10.6
January 21, 1998
H. Xxxx Xxxxxxxxx
Dear Xxxx:
This letter agreement (the "Agreement") by and among RJR Nabisco Holdings Corp.,
RJR Nabisco, Inc. (collectively, "RJR Nabisco"), Nabisco Holdings Corp.,
Nabisco, Inc. (collectively, "Nabisco"), (RJR Nabisco and Nabisco are
collectively referred herein as the "Company"), their successors, affiliates
and/or assigns, and you, describes the termination of your employment
relationship with the Company, and the Company's obligations to you under your
Amended and Restated Employment Agreement dated December 14, 1995, with the
Company (the "Employment Agreement"). Except as otherwise defined herein,
capitalized terms herein shall be defined as in the Employment Agreement.
1. a) Effective January 1, 1998, you will cease to be actively employed by
the Company and you will no longer serve as Chairman, President and
Chief Executive Officer of Nabisco.
b) In accordance with the letter provided by your doctor on November 3,
1997, and subject to the provisions of this Agreement, the Company and
you agree that your termination of employment is a result of your
disability.
2. The Company will make a lump-sum payment to you in January 1998, in
satisfaction of the Company's obligation with respect to your unused and
accrued vacation days. No further vacation will accrue after December 31,
1997.
3. You will receive benefits under the Company's short-term disability plan
(the "STD Plan") from January 1, 1998 until June 30, 1998. STD Plan
payments to you will be equal to 100% of your base salary as in effect on
December 31, 1997 (your "Base Salary") for the first 22 weeks of short-term
disability and two-thirds of your Base Salary thereafter. Except as
otherwise provided in this Agreement, you will continue to participate in
the Company's employee benefit programs as an active employee in accordance
with the terms of the short-term disability program.
4. You will receive benefits under the Company's long-term disability
plan (the "LTD Plan") from July 1, 1998 until December 31, 2000 (your
"Retirement Date"). Payments to you under the LTD Plan will be equal
to 60% of your Base Salary.
Except as otherwise provided in this Agreement, you will continue to
participate in the Company's employee benefit programs as an active
employee until December 31, 2000 and you will be retired on January 1,
2001.
5. a) Provided you make any required employee contributions in a timely
manner, full coverage (or equivalent coverage to that provided)
in the SELECT Omnibus Welfare Benefit and Insurance Plans as well
as the Executive Medical Plan (the "Welfare Plans") will continue
in accordance with the terms of the Welfare Plans, until the end
of the month in which your Retirement Date occurs. You will be
required to re-enroll each year in the same manner as active
employees. Should you become employed by an employer not
affiliated with the Company, health and dental care coverage
provided by your new employer will be coordinated with health and
dental care benefits under the Welfare Plans.
b) If, on and after your Retirement Date, the Company provides
retiree medical, dental and life insurance coverage for its
retirees, you shall be eligible for such coverage at the Company
and retiree contribution rate for a retiree with your years of
service as of your Retirement Date. New Welfare Plans which
replace or supersede current programs will apply to you unless
the Company chooses to continue the current program for you.
6. You are fully vested in your account under the RJR Nabisco Capital
Investment Plan ("CIP"). During your period of short-term disability, you
may continue to make contributions to your CIP account. After June 30,
1998, you may not contribute to your CIP account and you will not accrue
any benefits under the deferred contribution portion of SUPP or ABP (each
as defined in Section 8(a)).
7. You are fully vested in the tax-qualified Retirement Plan for Employees of
RJR Nabisco, Inc., (the "PEP"). You will receive credited service until
June 30, 2000 under the PEP.
8. a) Pursuant to Section 5 of the Employment Agreement, you participate in
(i) the RJR Nabisco, Inc. Supplemental Executive Retirement Plan
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("SERP"), (ii) the RJR Nabisco, Inc. Supplemental Benefits Plan
("SUPP") and (iii) the RJR Nabisco, Inc. Additional Benefits Plan
("ABP") (collectively, the "Plans"). Annuities have been purchased
for your benefit and are held in the Excess Benefit Master Trust dated
February 5, 1988, as amended through January 27, 1989 (the "Secular
Trust"), representing the after-tax cash lump sum value of your
accrued benefit as of December 31, 1994 under the SERP, SUPP and ABP.
The annuities are to be delivered on your Retirement Date subject to
the terms of Section 5 of the Employment Agreement.
b) The Company agrees to contribute such funds to the Secular Trust in
1998 as shall be necessary to fully fund additional supplemental
pension accruals under the Plans for the period January 1, 1995 until
your Retirement Date (the "Supplemental Accruals"), subject to the
execution by you of acknowledgment waivers requested by the Company.
The amount to be funded in 1998 will be the discounted present value
of the Supplemental Accruals using factors reflecting the interest
rate to be credited under annuities purchased in 1998 to fund the
Supplemental Accruals. The funds will be delivered on an after-tax
basis based on tax rates applicable to you at the time of funding.
c) The Company agrees that you will continue to accrue credited service
under the Plans until your Retirement Date. The Company agrees to
consent to your retirement on December 31, 2000 and to authorize
payment of your benefits under the Plans as of January 1, 2001.
9. In addition to annuities purchased for retirement benefits as referred to
in Section 8(a), in 1989, an annuity was purchased for you from Pacific
Mutual Life Insurance Company representing the value of compensation
continuance payments calculated at that time. The annuity was placed in
the Secular Trust, to be paid to you following your termination of
employment. The Company agrees to cause the annuity to be paid to you in a
single lump-sum as soon as practicable in 1998. This payment will not
affect the amount of, or entitlement to, any other benefits contemplated in
this Agreement.
10. The Company will continue to provide you with $3,000,000 of life insurance
as provided in Section 4.4 of the Employment Agreement. The premium on
this policy shall continue to be paid by the Company on a taxed grossed-up
basis as provided in Section 4.4 of the Employment Agreement.
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11. a) Except as indicated below, you will continue to receive the benefits
of the Flexible Perquisite Program until your Retirement Date. Your
perquisite allowances for calendar years 1998, 1999 and 2000 shall be
as follows, less applicable withholding taxes:
1998 $54,750
1999 $54,750
2000 $54,750
b) Current car lease arrangements provided by the Company will continue
until your Retirement Date. No new car or lease will be provided, but
you shall have the right to buy the car currently leased for you by
the Company on your Retirement Date for its then "blue book" wholesale
value.
12. Your 1997 annual performance unit award will be paid to you in 1998, in
accordance with the terms of your grant dated February 26, 1997.
13. Prior to February 15, 1998, you are expected to submit Expense Reports for
all outstanding travel, entertainment and other business expenses cash
advances. In addition, prior to your Retirement Date you must return all
Company equipment such as personal computers and mobile telephones.
14. Because your termination of employment is due to disability, all
outstanding stock options granted to you under the Nabisco Holdings Corp.
1994 Long-Term Incentive Plan (the "Nabisco LTIP") and under the RJR
Nabisco Holdings Corp., 1990 Long-Term Incentive Plan (the "RN LTIP") will
be fully vested on January 1, 1998, in accordance with Section 3(a) of the
agreements evidencing such grants. All other provisions of the stock
option agreements, including provisions governing the exercise of your
stock options, remain in effect.
15. a) Your have outstanding indebtedness to Nabisco Holdings Corp. under
secured Promisory Notes as follows:
INITIAL INDEBTEDNESS NHC STOCK
DATE INDEBTEDNESS ON 1/1/98 HELD AS SECURITY
---- ------------ ------------ ----------------
February 26, 1996 $348,750 $389,023.52 10,000
February 28, 1996 $341,250 $380,534.40 10,000
March 11, 1996 $692,500 $770,464.41 20,000
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Total $1,382,500 $1,540,022.33 40,000
The indebtedness becomes due and payable on your Retirement Date and, at
your election, may be satisfied by either (i) a cash payment by you to
Nabisco Holdings Corp. or (ii) the sale of collateralized stock and use of
the proceeds to repay the indebtedness. If, and to the extent that, the
indebtedness exceeds the sale proceeds you will be responsible to repay the
remaining indebtedness in accordance with the terms of the appropriate
Promissory Notes.
b) You have outstanding indebtedness to RJR Nabisco Holdings Corp. under
a secured promisory note dated April 15, 1991. As of January 1, 1998,
the outstanding indebtedness is $1,176,584.38, which is secured by
36,000 shares of RJR Nabisco Holdings Corp. common stock. The
indebtedness becomes due and payable on your Retirement Date and, at
your election, may be satisfied by either (i) a cash payment by you to
RJR Nabisco Holdings Corp. or (ii) the sale of collateralized stock
and use of the proceeds to repay the indebtedness. If, and to the
extent that, the indebtedness exceeds the sale proceeds you will be
responsible to repay the remaining indebtedness in accordance with the
terms of the appropriate Promissory Notes. You understand and agree
that RJR Nabisco Holdings Corp. has no further obligation to you under
your Executive Equity Program agreement dated July 1, 1993, as
modified on July 11, 1995..
16. a) You agree that until your Retirement Date you will provide consulting
services on a reasonable basis (i) to help in the transition to your
successor and (ii) with respect to any other matters concerning the
Company (past or present) about which you are knowledgeable, subject
to appropriate notice and reimbursement of all travel and other
expenses. Nothing in this Section 16(a) will require you to take any
action which you reasonably believe may be injurious to your
disability.
b) You acknowledge that as of January 1, 1998, your active employment
with the Company will end irrevocably and will not be resumed again at
any time in the future, except upon mutual agreement of the parties
hereto.
17. In the event of your death prior to your Retirement Date: (i) benefits
under the STD Plan and the LTD Plan shall cease; (ii) continued spousal
coverage is
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available under the Welfare Plans and retiree welfare plans in accordance
with the terms of the plans; (iii) your CIP account may be distributed to
your designated beneficiary under CIP; (iv) your retirement plan benefits
(including SERP) may be distributed to your designated beneficiary based on
the form of payment that you elect; (v) your benefits under the Perquisite
Program (including your entitlement to a company car) will cease; (vi)
outstanding stock option grants will remain in effect and may be exercised
in accordance with the appropriate stock option agreements; and (vii)
outstanding indebtedness will become due and payable.
18. a) Your will not, without the prior written consent of 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 the Company except when
required to do so by a court of competent jurisdiction, by any
governmental agency having supervisory authority over the business of
the Company, or by any administrative body or legislative body
(including a committee thereof) with jurisdiction to order you to
divulge, disclose or make accessible such information. For purposes
of this Section Agreement, "Confidential Information" means non-public
information concerning 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 (other than such items which you know have
become publicly available through a breach of fiduciary duty or any
confidentiality agreement). In accordance with normal ethical and
professional standards, you agree to refrain from taking actions or
making statements, written or oral, which defame or denigrate the
goodwill or reputation of the Company, their properties, products,
directors, officers, executives and employees or which constitute
willful conduct under circumstances where it is reasonable for you to
anticipate or to expect that the natural consequences of such conduct
will be to affect adversely the morale of other employees.
b) Subject to the final sentence of this paragraph (b), during the period
ending on your Retirement Date, you agree that (1) 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, (2) 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
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of any potential claim or proposed litigation against the Company, (3)
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, (4)
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, (5) the Company
will be responsible for the costs of such designated counsel and you
will bear no cost for same, (6) you will confine his testimony to
items about which you have knowledge rather than speculation, unless
otherwise directed by legal process and (7) 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 the foregoing clauses 2-7 is
intended to apply to governmental or judicial investigations;
provided, however, the Company will reimburse you for legal expenses
if you are compelled to appear in a governmental judicial
investigation. Nothing in this Section 18(b) will require you to take
any action which you reasonably believe may be injurious to your
disability.
c) You agree that until your Retirement Date, you will not, without the
written approval of the Chairman of Nabisco (and the Chairman of any
majority shareholder of Nabisco), accept employment or act as a
director, consultant or advisor to, or with, any other company
conducting a business which is substantially competitive with a
business conducted by the Company or any affiliate. You also agree
that until your Retirement Date you will not solicit or encourage any
incumbent employee of the Company or an affiliate to leave the employ
of the Company or an affiliate and will ask written approval from the
Chairman of Nabisco (and the Chairman of any majority shareholder of
Nabisco) to discuss employment offers with incumbent employee of the
Company or an affiliate.
d) In the event that the Company determines that you materially violate
the terms and conditions of Sections 18(a),(b) or (c) above, the
Company may, at its election upon ten (10) days notice, take such
action as it deems appropriate, including terminating the disability
period, discontinuing cash compensation payments and employee benefits
coverage, canceling any outstanding stock options or other Long Term
Incentive Plan awards and recovering amounts previously paid to, or
gain realized by, you. The Company may also initiate any form of
legal action it may deem
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appropriate seeking damages or injunctive relief with respect to any
material violations of Sections 18(a),(b) or (c) above.
19. IN CONSIDERATION OF THE COMPENSATION AND BENEFITS SET FORTH IN THIS
AGREEMENT AND EXCEPT FOR THE COMPANY'S OBLIGATIONS HEREUNDER 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 REASON OF ANY MATTER, CAUSE OR THING
WHATSOEVER ARISING TO THE EFFECTIVE DATE OF THIS AGREEMENT. YOU FURTHER
AGREE THAT, EXCEPT IN CONNECTION WITH THE ENFORCEMENT OF YOUR RIGHTS
HEREUNDER, 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, OR ANY OTHER FEDERAL, STATE OR LOCAL LAW.
20. 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 19, with an attorney
of your choice should you so desire. You also understand and agree that
you are under no obligation to consent to the release set forth in
paragraph 19 and that you have entered into this Agreement freely,
knowingly and voluntarily.
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21. This Agreement contains our entire understanding with respect to the
subject matter hereof. There are no restrictions, agreements, promises,
warranties, covenants, representations or undertakings between the parties
with respect to the subject matter hereof other than those expressly set
forth herein.
22. You hereby acknowledge that you have consulted with, and relied on your own
advisors with respect to the amounts of the payments the Company will make
pursuant hereto or has heretofore made to you, and you further acknowledge
that in signing this Agreement you are not relying on any statements or
representations made by the Company or its agents concerning the
calculation of such amounts.
23. You have at least twenty-one (21) 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 ("Effective Date").
Please indicate your acceptance of the terms of this Agreement by signing this
letter and the attached duplicate and returning one signed original to me.
Sincerely,
RJR NABISCO HOLDINGS CORP.
RJR NABISCO, INC.
By:
-----------------------------
Xxxxxx X. Xxxxxxxxx
Chairman & Chief Executive Officer
NABISCO HOLDINGS CORP.
NABISCO, INC.
By:
------------------------------
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Xxxxxx X. Xxxxxxxxx
Chairman
Understood and Agreed:
------------------------------
H. Xxxx Xxxxxxxxx
Date:
-------------------------
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