EXHIBIT 10.3
INTERCOMPANY SERVICES AGREEMENT
This Intercompany Services Agreement (this "Agreement") is made and
entered into as of the 14th day of June 1999, by and between RJR Nabisco
Holdings Corp. (to be renamed "Nabisco Group Holdings Corp."), a Delaware
corporation ("NGH"), Nabisco Holdings Corp., a Delaware corporation ("Nabisco"),
and, solely for purposes of Section 21 of this Agreement, X.X. Xxxxxxxx Tobacco
Holdings, Inc. a Delaware corporation (formerly named "RJR Nabisco, Inc.")
("RJRTH").
1. Corporate Services, Insurance and Employee Benefits. Beginning on
the date (the "Effective Date") that NGH shall have distributed to its
stockholders all of its shares of the common stock of RJRTH, Nabisco shall
provide to NGH all of the services set forth from time to time on Exhibit A to
this Agreement ("Corporate Services"). To the extent provided in this Agreement,
Nabisco will also include NGH in its insurance coverage ("Insurance"). In
addition, NGH and Nabisco have agreed that both Nabisco employees and NGH
employees may participate in the benefit plans and programs set forth in Exhibit
B to this Agreement ("Benefit Plans"). The Corporate Services and Benefit Plans
of Nabisco may be provided by (i) any employee of Nabisco or its subsidiaries or
(ii) any third party designated at the sole discretion of Nabisco. Insurance may
be provided by such third party insurers as Nabisco may designate.
2. Corporate Services.
(a) Cash Management Provisions. As noted in Exhibit A, the Corporate
Services include cash management services. Nabisco shall place all of
NGH's collections in, make all of its disbursements from, and
concentrate all uninvested funds in accounts (the "NGH Accounts") in
the name of NGH. The NGH Accounts, the funds therein and all earnings
thereon shall remain under the sole ownership and control of NGH,
except to the extent that NGH, at its option, assigns or pledges such
accounts to any independent third party. Nabisco shall have no rights
in or to the NGH Accounts, the funds therein, or the earnings thereon
and hereby waives any rights of setoff it may now or hereafter have
with respect thereto. Nabisco shall comply with all of NGH's
instructions concerning the use of funds in the NGH Accounts.
(b) Expansion or Contraction of Corporate Services. At any time during
the term of this Agreement, NGH may request that Nabisco provide
additional or different Corporate Services or cease providing one or
more Corporate Services then being provided. Upon any such request, the
parties will discuss in good faith, without obligation, an appropriate
adjustment, if any, to the Services Fee (as defined below) to reflect
such additional or different Corporate Services or termination of such
Corporate Services, after which NGH shall notify Nabisco in writing
whether it shall accept such additional Corporate Services or
termination of Corporate Services and, upon acceptance, such
adjustments shall become effective. If the Services Fee is reduced,
Nabisco shall promptly refund to NGH any amount overcharged as a result
of such reduction. If the Services Fee is increased, NGH shall promptly
pay to Nabisco the amount necessary to cover such increase.
3. (a) Insurance. Unless NGH notifies Nabisco within ten (10) days of
this Agreement that it has elected to terminate its Insurance benefits and
obligations, Nabisco shall use all commercially reasonable efforts to cause NGH
to be covered during the term of this Agreement under Nabisco's insurance
policies (including, without limitation, directors' and officers' liability
insurance and workers' compensation) which will provide to NGH the type of
Insurance that NGH had in place immediately prior to the date hereof, subject to
availability. Nabisco shall not be responsible for obtaining or maintaining any
insurance coverage for NGH other than as set forth in the preceding sentence.
The Insurance provided shall be subject to such policies of insurance or
self-insurance, and such guidelines or procedures in respect of insurance or
self-insurance, as NGH had in effect immediately prior to the date hereof. In
the event the terms of the Insurance (including the scope of coverage),
self-insurance, or other policies, guidelines or procedures relating to
Insurance or self-insurance, change or require change from those terms NGH had
in effect immediately prior to the date hereof, Nabisco agrees (a) to the extent
Nabisco is aware of a material change prior to the effective date of the change,
to provide notice to NGH of such change prior to its effective date, or (b)
otherwise to provide notice to NGH upon becoming aware of the change.
(b) Termination of Insurance. Notwithstanding paragraph 6 hereof,
either NGH or Nabisco may terminate all or any portion of the Insurance at any
time on 90 days' prior written notice to the other party hereto. In the event
all or any portion of the Insurance is terminated, if appropriate, the charges
therefor shall be adjusted equitably to reflect such termination and Nabisco
shall promptly refund to NGH any amounts overcharged.
4. Employee Benefit Plans.
(a) Plans and Services. During the period from the Effective Date until
the termination of this Section of this Agreement, employees of NGH shall be
eligible to participate in the Benefit Plans, subject to the terms of the
governing plan documents as interpreted by the appropriate plan fiduciaries.
During such
period, in accordance with and subject to regulatory requirements, Nabisco will
continue to provide Corporate Services with respect to the Benefit Plans in
substantially the same manner as it administered the plans or the benefits
provided under the plans prior to the Effective Date.
(b) Changes; Additional Services and Plan Terms. NGH may request
changes in the applicable Benefit Plan terms or services, subject, as to the
services only, to the approval of Nabisco, which approval shall not be
unreasonably withheld. Approval of changes in the terms of a Benefit Plan shall
be in the sole discretion of the plan sponsor. Upon any such request, the
parties will discuss in good faith, without obligation, appropriate adjustments
to the Services Fee to reflect such adjustments, after which NGH shall notify
Nabisco in writing whether it shall accept such adjustments, and upon
acceptance, such adjustments shall become effective. If the Services Fee is
reduced, Nabisco shall promptly refund to NGH any amount overcharged as a result
of such reduction. If the Services Fee is increased, NGH shall promptly pay to
Nabisco the amount necessary to cover such increase. From time to time, Nabisco
may, as plan sponsor, make changes in the benefit plans or in the administration
of any of the plans.
(c) Regulatory Matters. Nabisco and NGH agree to cooperate fully with
each other in the administration and coordination of regulatory and
administrative requirements associated with the Benefit Plans that apply either
to the other party or jointly to NGH and Nabisco and its other subsidiaries.
Such coordination, upon request, will include (but is not limited to) the
following: sharing payroll data for determination of highly compensated
employees, providing census information (including accrued benefits) for
purposes of running discrimination tests, providing actuarial reports for
purposes of determining the funded status of any plan, review and coordination
of insurance and other independent third party contracts, and providing for
review of all summary plan descriptions, requests for determination letters,
insurance contracts, Forms 5500, financial statement disclosures and plan
documents.
(d) Executive Compensation. Certain NGH employees participate in
executive compensation and benefit programs and arrangements that are sponsored
by Nabisco and listed in Exhibit C-Part 1. Certain Nabisco and NGH employees
participate in executive compensation and benefit programs and arrangements that
are sponsored by, or entered into with, NGH and listed in Exhibit C-Part 2.
During the period from the Effective Date until termination of this Section of
this Agreement, Nabisco will administer and provide Corporate Services with
respect to the plans and arrangements listed in Exhibit C.
(e) Directors Compensation. Directors of NGH participate in certain
directors compensation plans and arrangements sponsored by NGH. During the
period from the Effective Date until the termination of this Section of this
Agreement, Nabisco will administer and provide Corporate Services with respect
to all of those directors compensation plans and arrangements.
(f) Certain Notices. In the event there is an ERISA Event, with respect
to Benefit Plans administered by Nabisco, Nabisco shall advise NGH as soon as
reasonably practicable after Nabisco determines the ERISA Event has occurred.
For purposes of this Section 4(e), an "ERISA Event" means (a) the termination of
a Benefit Plan or the filing of a Notice of Intent to Terminate such a plan, in
either case, under Section 4041(c) of the Employee Retirement Income Security
Act of 1974, as amended from time to time ("ERISA"); (b) the institution of
proceedings by the Pension Benefit Guaranty Corporation (or any successor
thereof) to terminate a Benefit Plan or to appoint a trustee to administer such
a plan or the receipt of notice by Nabisco that such an action has been taken
with respect to such a plan; (c) any substantial accumulated funding deficiency
within the meaning of Section 412 of the Internal Revenue Code of 1986, as
amended (the "Code"), or Section 302 of ERISA is incurred with respect to any
Benefit Plan sponsored by Nabisco and no waiver of that deficiency has been
obtained from the Internal Revenue Service; (d) the Internal Revenue Service
determines that a Benefit Plan that is intended to be qualified under Section
401 of the Code fails to meet the applicable requirements of the Code and
disqualifies the plan; or (e) an amendment to a Benefit Plan sponsored by
Nabisco that results in a significant underfunding described in Section
401(a)(29) of the Code or Section 307 of ERISA.
(g) Third Party Beneficiary. Nothing in this Agreement is intended to
entitle any employee or individual to any benefit or compensation from NGH or
Nabisco or to otherwise establish or create any rights on the part of any third
party. Nothing in this Agreement is intended to restrict or limit Nabisco in the
exercise of its rights or the fulfillment of its duties as plan sponsor.
(h) Conflicts. In the event of a conflict between the terms of this
Section 4 and the terms of Section 2 hereof relating to providing Corporate
Services in connection with Benefit Plans, the terms of this Section 4 shall
control.
5. Fee. In exchange for the Corporate Services, Insurance and Benefit
Plans provided by Nabisco during the term of this Agreement, NGH shall pay to
Nabisco a fee (the "Services Fee") in an amount equal to the fair market value
of such Corporate Services, Insurance and Benefit Plans as determined in good
faith by Nabisco and NGH. NGH shall make such payments in arrears within 30 days
of receipt of a reasonably detailed invoice therefor or with such other
frequency or at such other times as Nabisco and NGH may agree.
6. Term; Termination of Services. This Agreement shall commence on
the date hereof and end on the first date that NGH owns less than 50% of the
Nabisco Stock (as that term is defined in the Corporate Agreement among the
parties hereto on the date hereof) that NGH owns on the date of this Agreement.
Either party hereto may terminate this Agreement if the other party commits any
payment default or otherwise breaches its obligations hereunder in any material
respect.
7. Cooperation; No Agency. Nabisco and NGH shall cooperate with each
other with respect to all provisions of this Agreement and the Corporate
Services, Insurance and Benefit Plans provided hereunder. However, this
Agreement creates no agency relationship between Nabisco and NGH except as may
be otherwise required for purposes of this Agreement.
8. Limitation of Liability. Except as may be provided in Section 9
below, Nabisco, its controlling persons, if any, directors, officers, employees,
agents and permitted assigns (each, a "Nabisco Party") shall not be liable to
NGH, its directors, officers, employees, agents or permitted assigns (each, a
"NGH Party") and each NGH Party shall not be liable to any Nabisco Party, in
each case, for any and all claims, debts, liabilities, assessments, fines,
penalties, damages, losses, disgorgements and obligations, of any kind,
character or description (whether absolute, contingent, matured, not matured,
liquidated, unliquidated, accrued, known, unknown, direct, indirect, derivative
or otherwise) whenever arising, including all costs and expenses relating
thereto (including, without limitation, all court costs, out-of-pocket expenses
of investigation and attorneys' fees and out-of-pocket expenses in connection
with any claim, action, or threatened action) ("Damages"), of a NGH Party, in
the case of an Nabisco Party, or an Nabisco Party, in the case of a NGH Party,
arising in connection with this Agreement, the Corporate Services, the Insurance
or the Benefit Plans.
9. Indemnification. Nabisco shall indemnify, defend and hold harmless
each of the NGH Parties from and against all Damages, of third parties unrelated
to any NGH Party caused by or arising in connection with the gross negligence or
willful misconduct of any employee of Nabisco in connection with the performance
of the Corporate Services or the administration of the Benefit Plans, or the
provision of the Insurance, except to the extent that Damages were caused
directly or indirectly by statements, acts or omissions of any NGH Party;
provided that, in the case of any Benefit Plan, NGH's right of indemnification
also shall extend to claims of NGH employees but shall not extend to any Damages
that otherwise would have been owed in the absence of such gross negligence or
willful misconduct. Notwithstanding the foregoing, Nabisco shall not be liable
for any special, indirect, incidental or consequential damages relating to such
third party claims. If NGH knows of a claim that may be the subject of
indemnification under this paragraph, it shall promptly notify Nabisco of such
claim and Nabisco may defend, settle or otherwise litigate such claim; provided
that Nabisco may not agree to any such settlement or compromise pursuant to
which any remedy or relief, other than monetary damages for which the
indemnifying party shall be responsible hereunder, shall be applied to or
against the indemnified party, without the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld.
10. Information. Subject to applicable law and privileges, each party
hereto covenants and agrees to provide the other party with all information
regarding itself and transactions under this Agreement that the other party
reasonably believes are required to comply with all applicable federal, state,
county and local laws, ordinances, regulations and codes, including, but not
limited to, securities laws and regulations.
11. Confidential Information. NGH and Nabisco hereby covenant and
agree to hold in trust and maintain confidential all Confidential Information
relating to the other party. "Confidential Information" shall mean all
information disclosed by either party to the other in connection with this
Agreement whether orally, visually, in writing or in any other tangible form,
and includes, but is not limited to, economic and business data, business plans,
and the like, but shall not include (i) information which becomes generally
available other than by release in violation of the provisions of this Section
11, (ii) information which becomes available on a nonconfidential basis to a
party from a source other than the other party to this Agreement; provided that
such source is not and was not bound to hold such information confidential,
(iii) information acquired or developed independently by a party without
violating this Section 11 or any other confidentiality agreement with the other
party and (iv) information that any party hereto reasonably believes it is
required to disclose by law; provided that it first notifies the other party
hereto of such requirement and allows such party a reasonable opportunity to
seek a protective order or other appropriate remedy to prevent such disclosure.
Without prejudice to the rights and remedies of either party to this Agreement,
a party disclosing any Confidential Information to the other party in accordance
with the provisions of this Agreement shall be entitled to equitable relief by
way of an injunction if the other party hereto breaches or threatens to breach
any provision of this Section 11.
12. Assignment. Except as otherwise provided herein, neither party may
assign or transfer any of its rights or duties under this Agreement to any third
person or entity without the prior written consent of the other party.
13. Notices. Any notice, instruction, direction or demand under the
terms of this Agreement required to be in writing will be duly given upon
delivery, if delivered by hand, facsimile transmission or intercompany mail, or
five (5) days after posting if sent by mail, to the following addresses:
NGH:
Nabisco Group Holdings Corp.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Facsimile: 000-000-0000
and
Nabisco:
Nabisco Holdings Corp.
0 Xxxxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: General Counsel
Facsimile: 000-000-0000
RJRTH:
X. X. Xxxxxxxx Tobacco Holdings, Inc.
000 Xxxxx Xxxx Xxxxxx
Xxxxxxx-Xxxxx, XX 00000
Attention: General Counsel
Facsimile: 000-000-0000
or to such other address as either party may have furnished to the other in
writing in accordance with this Section 13.
14. Governing Law. This Agreement shall be construed in accordance with
and governed by the substantive internal laws of the State of New York.
15. Suspension. The obligations of any party to perform any acts
hereunder may be suspended if such performance is prevented by fires, strikes,
embargoes, riot, invasion, governmental interference, inability to secure goods
or materials, or other circumstances outside the control of the parties.
16. Severability. If any provision of this Agreement shall be invalid
or unenforceable, such invalidity or unenforceability shall not render the
entire Agreement invalid. Rather, the Agreement shall be construed as if not
containing
the particular invalid or unenforceable provision, and the rights and
obligations of each party shall be construed and enforced accordingly.
17. Rights Upon Orderly Termination; Survival. Upon termination or
expiration of this Agreement or any of the Corporate Services, Insurance or
Benefit Plans described herein, each party shall, upon request, forthwith return
to the other party all reports, papers, materials and other information required
to be provided to the other party by this Agreement. In addition, each party
shall assist the other in the orderly termination of this Agreement or any of
the Corporate Services, Insurance or Benefit Plans described herein.
Notwithstanding any termination of this Agreement, the obligations of the
parties hereto to make payments hereunder and the provisions of Sections 4, 8,
9, 13 and 14 shall survive.
18. Amendment. This Agreement may only be amended by a written
agreement executed by Nabisco and NGH.
19. Entire Agreement. This Agreement, including the exhibits hereto,
constitutes the entire agreement between the parties, and supersedes all prior
agreements, representations, negotiations, statements or proposals related to
the subject matter hereof.
20. Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original and all of which, when
taken together, shall constitute one agreement.
21. Termination of Prior Agreement. RJRTH and Nabisco hereby agree to
terminate the Intercompany Services and Operating Agreement dated as of January
26, 1995 between RJRTH and Nabisco, as amended, without any liability on the
part of either such party except for any liability arising out of a willful
breach of any provision of such agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their duly authorized representatives.
NABISCO HOLDINGS CORP.
By: /s/ Xxxxx X. Xxxxxxx III
--------------------------------
Name: Xxxxx X. Xxxxxxx III
Title: Executive Vice President,
General Counsel and Secretary
NABISCO HOLDINGS CORP.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
and General Counsel
X.X. XXXXXXXX TOBACCO HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
and General Counsel
EXHIBIT A
Corporate Services
(provided to NGH)
1. Tax Services
2. Accounting, Public Reporting and Consolidation Services
3. Internal Audit Services
4. Cash Management, Corporate Finance and other Treasury Services
5. Investor, Public Relations and Governmental Affairs Advice
6. Risk Management Services
7. Legal Services
8. Corporate Secretary Services
9. Corporate Development Advice
10. Executive Compensation and Benefit Services
11. Consulting Services of Selected Executives
A
EXHIBIT B
Employee Benefit Plans
(Sponsored by Nabisco)
Retirement Plan for Employees of Nabisco, Inc. ("PEP")
Nabisco, Inc. Capital Investment Plan
Pacific Hawaiian Products Company Profit Sharing and Retirement Plan
SELECT Omnibus Insurance Plan
o Core Life Insurance Plan
o Group Universal Life
o AD&D Insurance Plan
o Dependent AD&D Insurance Plan
o Business Travel Accident
o MedChoice Retiree Life Insurance
Nabisco Salary and Benefits Continuation Program
SELECT Omnibus Welfare Benefits
o Medical Care Plan
o Select Dental Care Plan
o Short-Term Disability Plan (STD)
o Long-Term Care
o EAP
o MedChoice Retiree Medical
o MedChoice Retiree Dental
o MedChoice Retiree Spending Account
Select Flexible Benefits Program (Cafeteria)
Health Care Spending Account
Long-Term Disability Plan (LTD)
MedSave Retiree Savings Plan
Dependent Day Care Spending Account
Scholastic Savings Plan
Scholastic Loan Programs
B
EXHIBIT C
Part 1
Executive Compensation Plans
(Sponsored by Nabisco)
Annual Incentive Award Plan (AIAP)
Nabisco Long-Term Incentive Plan (Nabisco LTIP)
Flexible Perquisite Program
Supplemental Executive Retirement Plan (SERP)
Supplemental Benefits Plan (SBP)
Additional Benefits Plan (ABP)
Deferred Compensation Plan
Part 2
Executive Compensation Plans
(Sponsored by NGH)
Management Equity Participation Plan (MEPP)
NGH Long-Term Incentive Plan (NGH LTIP)
HQ Protection Plan (NGH employees only)
Individual Employment/Severance Agreements (NGH employees only)
C
