Exhibit 10.47
[LETTERHEAD OF NABISCO GROUP HOLDINGS]
October 27, 1999
Xxxxxx X. Xxxxxxxxx
Chairman and Chief Executive Officer
Nabisco Group Holdings Corp.
Dear Xxxxxx:
This letter agreement (together with Schedule A hereto, the "Agreement")
constitutes the entire agreement between NABISCO GROUP HOLDINGS CORP. (the
"Company"), its predecessors, successors, affiliates, former affiliates
and/or assigns, and you regarding the termination of your employment
relationship with the Company. It implements the provisions of your
Amended and Restated Employment Agreement dated January 1, 1997 (the
"Employment Agreement").
Please read the rest of this letter carefully. If you agree to be bound by
its terms, please sign the copy of this letter agreement where indicated
and return it to me by November 15, 1999.
1. a) You will continue as a regular full-time employee through your
"Termination Date" of December 30, 1999. Effective December 31,
1999, you will cease to be actively employed as Chief Executive
Officer of the Company, although you will continue to serve as
(non-executive) Chairman of the Board of Directors of the Company.
b) As soon as practicable following your Termination Date and unless
otherwise deferred by you under a deferral plan provided by the
Company and/of its affiliates, you shall receive a lump sum
Severance Payment. You specifically acknowledge that upon receipt of
your Severance Payment, any Company obligation to make a cash
severance payment to you shall have been satisfied.
c) Your "Benefit Continuation", as summarized below, commences December
31, 1999 and continues through December 31, 2002. Except as
otherwise noted, Benefit Continuation as described herein continues
through December 31, 2002 regardless of whether or not you become
employed by an employer not affiliated with the Company.
2. If you die during Benefit Continuation, any survivor benefits shall be
governed by the terms of applicable individual benefit plan provisions. If
you die before December 31, 1999, any survivor benefits shall be
determined in accordance with Section 6.3 of the Employment Agreement.
3. The Company will make a lump-sum payment to you in January 2000, in
satisfaction of the Company's obligation with respect to your unused and
accrued vacation days. You will not accrue any further vacation after
December 30, 1999.
4. During Benefit Continuation, you may continue to participate in the
employee welfare benefit programs in which you participated as of your
Termination Date except as otherwise provided in this Agreement or by the
terms of the individual program. You may participate as though you were an
active employee, subject to applicable contributions by you. The term
"employee welfare benefit programs" does not include the SELECT Short Term
or Long Term Disability Plans, the Annual Incentive Award Plan ("AlA"),
the Long Term Incentive Plan ("LTIP"), the Retirement Plan for Employees
of RJR Nabisco, Inc. ("PEP") or the Capital Investment Plan ("CIP"), the
dispositions of which are detailed in other provisions of this Agreement.
Unless otherwise specified by the Company in its sole discretion, changes
in the employee welfare benefit programs after the date of this letter
will not apply to you, unless otherwise required by law. New benefit
programs which replace or supercede current programs will apply to you if
the Company chooses not to continue to make the current programs available
to employees; provided however such employee welfare benefit programs
shall be no less favorable, in the aggregate, than provided to you on the
date of this Agreement.
5. a) Your participation in the Company's Executive Medical Plan and in
the SELECT Flexible Benefits Program will continue until December
31, 2002, provided you make any required Plan contributions in the
manner
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specified by the Company. If your Benefits Continuation period
continues into a new SELECT Plan Year, you will be required to
re-enroll in the same manner as active employees. Should you become
employed by an employer not affilated with the Company, health care
coverage provided by your new employer will be coordinated with
health care benefits provided by the Company. If you elect COBRA
(Consolidated Omnibus Budget Reconciliation Act of 1985)
continuation coverage under SELECT after December 31, 2002, the
monthly premium will be equal to the full 102% of the then actual
plan cost. Specific costs and details will be provided on request.
You may elect COBRA coverage for 18 months.
b) You will not be eligible for Short or Long Term Disability benefits
during Benefits Continuation.
c) If at the end of your Benefit Continuation the Company provides
retiree medical, dental and/or life insurance for its retirees, you
shall be eligible for such insurance at the Company and retiree
contribution rate for a retiree (i) of your actual age and (ii) with
service equal to the maximum creditable years of service.
6. You are fully vested in your account under the CIP. Your lump sum
Severance Payment is compensation subject to elective contributions to
CIP. If and to the extent that your lump sum Severance Payment is not
recognized as compensation under CIP, a non-qualified Company matching
payment will be made to you in accordance with your elected deferral
percentage. This non-qualified Company matching payment will be
distributed to you as soon as possible following your Termination Date,
less withholding taxes and other applicable deductions, unless otherwise
deferred by you under a deferral plan provided by the Company and/or its
affiliates. Following your Termination Date, you may elect to receive a
distribution of your CIP account balance in accordance with the terms of
CIP. If you elect to leave your account balance in CIP, you will retain
all rights under the Plan as a terminated employee, including the right to
transfer investments between fluids and to request a distribution from
CIP.
7. a) You are fully vested in the PEP. You are also entitled to a
Supplemental Pension pursuant to Section 5 of the Employment
Agreement Annuities representing the after-tax lump sum value of
your Supplemental Pension accrued benefit as of December 31, 1998
have already been purchased for your benefit and are held in the
Excess Benefit Master Trust dated
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February 5, 1988, as amended through January 27, 1989 (the "Secular
Trust"). The annuities will be delivered to you on or about December 31,
1999 (your "Retirement Date").
b) As provided in Section 5 of the Employment Agreement, on or about
your Retirement Date the Company shall fully fund and deliver to you
the after-tax lump sum value of the Supplemental Pension benefit
provided in Section 5(d)(ii) of the Employment Agreement. The
funding may be accomplished by direct cash payment to you or by the
purchase of additional annuities subject to the terms of Section 5
of the Employment Agreement.
8. a) You will be paid the full value of your Flexible Perquisite Program
for a period of tree years in a lump sum as soon as practicable
following your Termination Date. This lump sum payment shall not be
included in any benefit plan calculations.
b) No new car or lease will be provided during Benefit Continuation;
provided, however, the car currently leased for you by the Company
shall be transferred to you as soon a practicable following your
Termination Date, plus a cash tax equalization payment equal to the
applicable tax liability to you of such transfer (and equalization
payments) as determined by the Company. Car related expenses after
the foregoing transfer shall be your responsibility. Company car
insurance under the Flexible Perquisite Program shall be available
to you during the Benefit Continuation provided applicable premiums
are paid by you.
9. a) The Paragon Group Universal Life Insurance policies on your life may
be retained by the respective insurance trusts after your
Termination Date by payment of applicable premium Details regarding
direct billing to the insurance rusts will be made available prior
to your Termination Date.
b) In connection with the $3,000,000 of life insurance coverage
provided under the Equitable Variable Life Insurance contract
pursuant to Section 4.5 of the Employment Agreement, the payments
required under Section 4.5(a) of the Employment Agreement will be
made to you (rather than to the owner of the policy) by the Company
on a tax adjusted basis as provided in Section 4.5(b) of the
Employment Agreement provided, however, that the Company's
obligation to make each payment required under Section 4.5(a) of the
Employment Agreement shall be contingent
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upon an amount equal to the immediately preceding payment (exclusive
of any such tax adjustment payment) being invested in said contract
prior to such next payment.
10. a) Your annual bonus for 1999 will be determined pursuant to the
Performance Unit Grant Agreement dated March 19,1999 and, unless
otherwise deferred by you under a deferral plan provided by the
Company and/or its affiliates, will be paid as soon as practicable
following your Termination Date at 150% of target. This payment is
includable for benefit calculation purposes. Your lump sum Severance
Payment described above includes a full payment for annual bonuses
for the full period of severance, so no further payment for annual
bonuses will be made after your Termination Date.
b) Your previously awarded Special Bonus has been credited for your
benefit under Xxxxxxx's Deferred Compensation Plan. The Special
Bonus is not includable in any benefit plan calculations.
11. a) Your unvested stock options, if any, will be fully vested on your
Termination Date, and your vested stock options may be exercised
anytime up to the exercise expiration date. The exercise of your
stock options is governed by the terms of your Stock Option
Agreements and the LTIP.
b) Your Performance Notes will be fully vested on your Termination Date
and shall be calculated and paid as soon as practicable following
your Termination Date in accordance with your applicable Performance
Note Agreements, unless otherwise deferred by you under a deferral
plan provided by the Company and/or its affiliates. Your Performance
Notes are includable for benefit calculation purposes.
c) As part of the "Chairmanship Agreement" between you and the Company
dated as of January 1,2000, the restricted stock agreement between
you and the Company dated January 15, 1999 (the "Restricted Stock
Agreement") is mended to provide that the Restricted Stock shall not
vest on your Termination Date. The Restricted Stock shall vest upon
termination of the Chairmanship Agreement, unless you voluntarily
terminate the Chairmanship Agreement without the consent of the
Company's Board of Directors. Except for the foregoing, the terms of
the
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Restricted Stock Agreement (including the vesting provisions in
Section 3 therein) shall remain in full force and effect.
d) Your Contingent Performance Share Agreement, as amended and restated
effective July 14, 1999 will remain in effect subject to the terms
thereof.
12. Following termination of the Chairmanship Agreement, the Company will
provide you with a fully functional office and one secretary until you
attain age sixty-five (65) and will hold you harmless from any taxes that
may be due as a result of this arrangement. The office will be located at
000 Xxxxxxxxx Xxx., Xxx Xxxx, XX (the Company's New York headquarters)
unless otherwise agreed by the parties hereto.
13. You are entitled to the use of the outplacement counseling services
designated by the Company for a period of twelve (12) months after your
Termination Date for which the Company will pay the fee, which may not
exceed 18% of your Base Salary (as set forth in Section 3.1 of the
Employment Agreement) Such assistance must be started within three (3)
months of your Termination Date and will end twelve (12) months after
commencement of such services or upon your acceptance of new employment,
whichever comes first. This benefit may not be converted into a cash
award.
14. a) You have outstanding indebtedness to Nabisco Group Holdings Corp.
under a secured "Promissory Note" dated December 5, 1995. The
indebtedness becomes due and payable on your Termination Date and,
at your election, may be satisfied by either (i) a cash payment by
you to Nabisco Group 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 Promissory Note.
b) You have outstanding indebtedness to Nabisco Holdings Corp. under a
secured promissory note dated May 15, 1996 (The "NHC Promissory
Note"). The indebtedness becomes due and payable when your service
as a director terminates 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,
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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 NHC Promissory Note.
15. The provisions of Section 6.1(c) of the Employment Agreement (regarding
golden parachute tax) shall apply in the event that any "golden parachute"
tax is imposed on you by any federal, state or local taxing authority as a
result of any of the payments made to you by the Company in connection
with your employment under the Employment Agreement. You agree to
cooperate fully with the Company in any protest or appeal by the Company
in the event of the imposition of such golden parachute tax.
16. Section 4.3 of the Employment Agreement (regarding Directors and Officers
liability and indemnification programs) shall remain in full force and
effect.
17. a) The provisions of Section 14 of the Employment Agreement (regarding
non-disclosure of confidential information and non-competition) will
remain in effect in accordance with its terms.
b) You agree that any breach of the covenants contained or referred to
in this Section 17 would irreparably injure the Company.
Accordingly, the Company may, in addition to pursuing any other
remedies it may have in law or in equity obtain an injunction
against you from any court having jurisdiction over the matter,
restraining any further violation of this letter agreement by you.
18. Except as otherwise stated herein, no benefits (other than those provided
by a tax-qualified plan or trust) or promise hereunder shall be secured by
any specific assets of the Company. The payments under this Agreement
shall not be assigned by you or anticipated in any way and any such
attempted assignment will be void.
19. IN CONSIDERATION OF THE PAYMENT OF THE COMPENSATION AND BENEFITS SET FORTH
IN THIS AGREEMENT AND PURSUANT TO YOUR EMPLOYMENT AGREEMENT, YOU
VOLUNTARILY, KNOWINGLY AND WILLINGLY RELEASE AND FOREVER DISCHARGE THE
COMPANY, ITS PARENTS, SUBSIDIARIES AND AFFILIATES, TOGETHER WITH THEIR
RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS, AND
EACH OF
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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 TIME YOU SIGN THIS AGREEMENT. YOU FURTHER AGREE
THAT YOU WILL NOT SEEK OR BE ENTITLED TO ANY AWARD OF EQUITABLE OR
MONETARY RELIEF IN ANY PROCEEDING OF ANY NATURE BROUGHT ON YOUR BEHALF
ARISING OUT OF ANY OF THE MATTERS RELEASED BY THIS PARAGRAPH. THIS RELEASE
INCLUDES, BUT IS NOT LIMITED TO, ANY RIGHTS OR CLAIMS RELATING IN ANY WAY
TO YOUR EMPLOYMENT RELATIONSHIP WITH THE COMPANY, OR THE TERMINATION
THEREOF, OR UNDER ANY STATUTE, INCLUDING THE AGE DISCRIMINATION IN
EMPLOYMENT ACT, TITLE VII OF THE CIVIL RIGHTS ACT, THE AMERICANS WITH
DISABILITIES ACT, THE NEW YORK STATE AND CITY HUMAN RIGHTS LAWS OR ANY
OTHER FEDERAL, STATE OR LOCAL LAW.
20. By signing this Agreement, you represent that you have not commenced any
proceeding against the Company in any forum (administrative or judicial)
concerning your employment or the termination thereof. You further
acknowledge that you were given sufficient notice under the Worker
Adjustment and Retraining Notification Act (the "WARN Act") and that the
termination of your employment does not give rise to any claim or right to
notice, or pay or benefits in lieu of notice under the WARN Act. In the
event any WARN Act issue does exist or arises in the future, you agree and
acknowledge that the payments and benefits set forth in this Agreement
shall be applied to any pay or benefits in lieu of notice required by the
WARN Act, provided that any such offset shall not impair or affect the
validity of any provision of this Agreement, including the release set
forth in paragraph 19.
21. 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
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your choice should you so desire. You have entered into this Agreement
freely, knowingly and voluntarily and specifically in consideration of the
additional benefits provided to you under the Agreement.
22. You will be reimbursed for travel, food, lodging or similar out-of-pocket
expense incurred at the Company's request in discharging any of your
obligations under this Agreement. The Company, or its designated
representative thereof, shall have exclusive authority to interpret this
Agreement. The decision of the Company, or its designated representative,
with respect to any question arising as to the amount, term, form and time
of payment of benefits under this Agreement or any other matter concerning
this Agreement shall be final, conclusive and binding on both you and the
Company.
23. This Agreement may not be amended except in writing signed by you and the
Company and no amendments or modifications are contemplated at this time.
This Agreement shall not be construed to provide any rights to anyone
other than you and the Company.
24. You have at least twenty-one days to consider the terms of this Agreement,
although you may sign and return it sooner if you wish. This Agreement may
be revoked by you for a period of seven (7) consecutive calendar days
after you have signed and dated it, and after such seven (7) days, it
becomes final.
Please indicate your acceptance of the terms of this Agreement by signing this
letter and returning it to me.
Sincerely,
NABISCO GROUP HOLDINGS CORP.
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxxx
Senior Vice President,
Human Resources and Administration
Understood and Agreed:
/s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
Date: 10/27/99
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[LETTERHEAD OF NABISCO GROUP HOLDINGS]
SCHEDULE A
This Schedule A is intended to address the financial implications of certain
provisions of the foregoing Agreement. The items addressed below are subject in
all respects to the terms and conditions of the Agreement.
1) Section 1(b) of the Agreement
Your lump sum Severance Payment will be $7,500,000, less withholding taxes
and other applicable deductions. You may defer your Severance Payment
under a deferral plan provided by the Company and/or its affiliates.
2) Section 3 of the Agreement
As of December 31, 1999, you will have 40 days of unused and accrued
vacation. You will receive a lump-sum payment in January 2000 of $192,308
for these vacation days, based on your annual base salary of $1,250,000.
3) Section 6 of the Agreement
The non-qualified Company matching payment in respect of your Severance
Payment will be approximately $225,000, equal to 3% of your Severance
Payment. This non-qualified Company matching payment will be distributed
to you as soon as possible following your Termination Date, less
withholding taxes and other applicable deductions, unless otherwise
deferred by you under a deferral plan provided by the Company and/or its
affiliates.
4) Section 7 of the Agreement
In accordance with Section 5(d)(ii) of the Employment Agreement, the
Supplemental Pension benefit payable upon your Retirement Date is equal to
the present value of the maximum 50% SERP benefit that would have been
paid to you commencing on the third anniversary of your Retirement Date.
The present value reflects the acceleration of payments by 36 months, but
without any other reduction under the SERP formula for early commencement
of payment prior to age 60.
Based on the maximum Federal, New York State and New York City
(nonresident) tax rates, your Supplemental Pension benefit expressed as an
after-tax lump-sum payment as of your Retirement Date would be
approximately $14.8 million. Annuities representing the after-tax lump
sum
value of approximately $10.3 million have already been purchased for your
benefit, are held in the Secular Trust and will be distributed to you on
or about December 31, 1999. The supplemental amount required to fully fund
the after-tax lump sum value of your Supplemental Pension benefit is
approximately $8.4 million, of which approximately $3.9 million represents
a tax equalization payment. This amount will be funded and distributed to
you on or about December 31, 1999 and will fully discharge the Company's
obligations to you under Section 5 of the Employment Agreement.
5) Section 8 of the Agreement
The amount of your lump-sum Flexible Perquisite payment is $185,250, less
taxes and applicable deductions, payable as soon as practicable following
your Termination Date, unless otherwise deferred by you under a deferral
plan provided by the Company and/or its affiliates.
6) Section 9(b) of the Agreement
The annual premium on the $3,000,000 of life insurance is approximately
$73,400. Based on the maximum Federal, New York State and New York City
(nonresident) tax rates, the annual tax equalization payment will be
approximately $64,175.
7) Section 10(a) of the Agreement
Your annual bonus for 1999, determined at 150% of target, is $2,575,000.
8) Section 10(b) of the Agreement
Your Special Bonus is $3,000,000, which has been credited for your benefit
under Xxxxxxx's Deferred Compensation Plan.
9) Section 12(a) of the Agreement
The following is an outline of your LTIP stock options:
----------------------------------------------------------------
Grant Exercise
Year Type Outstanding Vested Price
----------------------------------------------------------------
1999 NGH 1,059,876 1,059,876 $17.949
----------------------------------------------------------------
1997 NGH 716,108 716,108 $20.719
----------------------------------------------------------------
1996 NGH 622,702 622,702 $22.406
----------------------------------------------------------------
1995 NGH 311,296 311,296 $19.434
----------------------------------------------------------------
1995 NGH 155,676 155,676 $20.719
----------------------------------------------------------------
1995 NGH 155,665 155,665 $18.069
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Total NGH 3,021,323 3,021,323
----------------------------------------------------------------
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----------------------------------------------------------------
Grant Exercise
Year Type Outstanding Vested Price
----------------------------------------------------------------
1999 NA 100,000 100,000 $39.938
----------------------------------------------------------------
1998 NA 100,000 100,000 $47.625
----------------------------------------------------------------
1997 NA 60,000 60,000 $37.000
----------------------------------------------------------------
1996 NA 200,000 200,000 $33.375
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Total NA 460,000 460,000
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10) Section 12(b) of the Agreement
Your 1997 Performance Notes are valued at $270,703. Your 1998 Performance
Notes are valued at $305,278.
11) Section 14(a) of the Agreement
As of December 31, 1999, your outstanding indebtedness to Nabisco Group
Holdings Corp is expected to be approximately $642,671, which is secured
by 16,529 shares of Nabisco Group Holdings Corp. common stock and 5,509
shares of X.X. Xxxxxxxx Tobacco Holdings, Inc common stock.
12) Section 14(b) of the Agreement
As of December 31, 1999, your outstanding indebtedness to Nabisco Holdings
Corp is expected to be approximately $635,565, which is secured by 14,981
shares of Nabisco Holdings Corp. common stock.
This Schedule A is an integral part of the Agreement and may be amended only by
mutual written agreement of the parties hero.
NABISCO GROUP HOLDINGS CORP.
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxxx
Senior Vice President,
Human Resources and Administration
Understood and Agreed:
/s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
Date: 10/27/99
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