EXHIBIT 10.4
Performance Units
Performance Notes
1997
Special - One Year
RJR NABISCO HOLDINGS CORP.
1990 LONG TERM INCENTIVE PLAN
GRANT AGREEMENT
DATE OF GRANT: FEBRUARY 28, 1997
WITNESSETH:
1. GRANT. Pursuant to the 1990 Long Term Incentive Plan (the "Plan"), RJR
Nabisco Holdings Corp. (the "Company") on the above date has granted to
(FIRST NAME)(LAST NAME)(THE "GRANTEE"),
subject to the terms and conditions of this Agreement and the Plan,
( ) PERFORMANCE UNITS
AND
( ) PERFORMANCE NOTES
A copy of the Plan is attached and constitutes an integral part of this
Agreement. All undefined capitalized terms in this Agreement have the same
meaning as in the Plan or, if not defined therein, the Annual Incentive Award
Plan.
2. PERFORMANCE UNITS. Each Performance Unit has an initial value of
$1,000. The Committee will value each Performance Unit at the end of 1997 using
the performance measures set forth in the grid attached as Exhibit A, but the
Committee has the discretion to reduce the resulting valuation. You agree that
these Performance Units are in lieu of an award under the Annual Incentive Award
Plan for 1997.
3. PERFORMANCE NOTES.
(a) The Performance Notes have a three year term commencing January 1, 1997
and ending December 31, 1999 (the "Performance Period"). The value of the Notes
as of January 1, 1997 is $32.00. Promptly after 1997, 1998 and 1999, the
Committee will value the Performance Notes as of December 31 of the preceding
year using the performance measures and payment formula set forth in the grid
attached as Exhibit B. The Committee has the discretion to reduce the resulting
valuations and, on the basis of the Company's performance in 1997, to cancel
some or all of the Performance Notes.
(b) PURCHASE NOTES. You may elect to receive additional Performance Notes
in lieu of from 5% to 100% (in 5% increments) of the cash that you receive for
your Performance Units pursuant to Section 5 below (the "Discount Note
Program"). The number of Performance Notes issued will equal 103% of the value
of the Performance Units that you take in the form of Performance Notes, divided
by 85% of the value of the Notes on January 1, 1998. The Performance Notes
issued pursuant to the Discount Note Program will have the same value and
performance period as Performance Notes issued at the same time pursuant to the
Annual Incentive Award Plan. You must make your election to convert the
proceeds of Performance Units into additional Performance Notes at the same time
and in the same manner as the election to defer awards pursuant to Section 6.
4. VESTING.
(a) Performance Units vest on December 31, 1997 or, if earlier, your death,
Disability or Retirement. If your employment is involuntarily terminated
without Cause, your Performance Units will vest in proportion to the ratio of
(i) the number of partial or complete months of employment during 1997, to (ii)
12. If termination is voluntary or with Cause, the Performance Units will be
canceled immediately.
(b) Performance Notes granted pursuant to Section 1 vest on December 31,
1999 or, if earlier, your death, Disability or Retirement. If your employment
is involuntarily terminated without Cause, these Performance Notes will vest in
proportion to the ratio of (i) the number of partial or complete months of
employment between January 1, 1998 and December 31, 1999, to (ii) 24. If
termination is voluntary or with Cause, these Performance Notes will be canceled
immediately. Notes issued pursuant to the Discount Note Program are vested when
issued.
5. PAYMENT OF AWARDS.
(a) Subject to Section 5(b), the Company will pay you the value of your
vested Performance Units and Performance Notes as soon as practicable after the
end of 1997 and 1999, respectively.
(b) Subject to Section 5(c), if your employment terminates before you
receive payment for your vested Performance Notes, you will receive payment in
an amount equal to their value as of the beginning of the year in which
employment terminates. Payment will be made as soon as practicable.
(c) If your employment terminates voluntarily or for Cause prior to
December 31, 1999, you will receive payment for Performance Notes issued
pursuant to the Discount Note Program in an amount equal to (i) 85% of the value
of the Performance Notes when issued, or (ii) the value of the Performance Notes
as of the end of the most recently completed year, whichever is less. If your
employment terminates prior to December 31, 1999 for any other reason, you will
receive payment for these Performance Notes in an amount equal to their value as
of the end of the most recently completed year.
(d) All payments will be in cash and in exchange for the Performance Units
and Performance Notes, as applicable. You may not obtain payment for them in
Common Stock or other Company securities, and they do not give you any rights as
a holder of such securities.
6. DEFERRAL.
(a) You may elect to defer payment of Performance Units as of December 31,
1997 and Performance Notes as of December 31, 1999. Your election must be in
writing, signed by you and delivered to the Company on or before the foregoing
dates. Your election will be irrevocable and must specify the percentage (from
5% to 100%, in 5% increments) of the Performance Units and Performance Notes
(collectively, the "Grants") which will be paid (i) as soon as practicable after
the year your death, Retirement, Disability or other termination of employment
occurs or (ii) in January of any designated future year. If your employment
with the Company and its subsidiaries terminates before the designated year,
your Grants will be paid as of January of the year following termination.
Common Stock credits will not be paid until at least six months after the date
of deferral. The Company will contribute an additional 3% to the amount
deferred on account of the 3% Company match that you would have received under
the Capital Investment Plan if you had not deferred payment. The 3% match will
not apply to amounts deferred on account of Performance Notes issued pursuant to
the Discount Note Program.
(b) You must specify, on the notice electing deferred payment pursuant to
Section 6(a)(i), whether payment of the Grants will be deferred by cash credit,
Common Stock credit, or a combination of the two. If you elect to defer payment
pursuant to Section 6(a)(ii) or fail to choose a mode of deferral, your deferral
will be by means of a cash credit. Cash credits and stock credits will be
recorded in accounts established in your name on the books of the Company. At
the direction of the Company, your accounts may be consolidated on the books of
the Company or any of its subsidiaries.
(i) If your deferral is wholly or partly a cash credit, your cash
credit account will be credited, as of January 1 of the year that
payment of the Grants would have been made, with the dollar
amount of the portion of the Grants deferred by means of a cash
credit. In addition, your cash credit account will be credited
as of the last day of each calendar quarter with an interest
equivalent in an amount determined
by applying to the current balance in the account an interest
rate equal to the average prime rate of Morgan Guaranty Trust
Company of New York during the quarter. Interest will be
credited for the actual number of days in the quarter using a
365-day year.
(ii) If the deferral is wholly or partly a Common Stock credit, your
Common Stock credit account will be credited, as of January 1 of
the year that payment of the Grants would have been made, with
the Common Stock equivalent of the number of shares of Common
Stock (including fractions of a share) that could have been
purchased with the portion of the Grants deferred by means of a
Common Stock credit at the closing price of the Common Stock on
the date that payment of the Grants would otherwise have been
made. As of the date any dividend is paid to shareholders of
Common Stock, your Common Stock credit account will also be
credited with an additional Common Stock equivalent equal to the
number of shares of Common Stock (including fractions of a share)
that could have been purchased at the Closing Price on such date
with the dividend paid on the number of shares of Common Stock to
which your Common Stock credit account is then equivalent. If
dividends are paid in property, the dividend will be deemed to be
the fair market value of the property at the time of distribution
of the dividend, as determined by the Committee.
(c) Payment of deferred Grants will be made in a single cash payment;
provided, however, that if you elect in writing before December 31 of the year
your employment terminates due to Retirement or Disability, payment will be made
in substantially equal annual installments (not to exceed ten) commencing on the
January following the Retirement or Disability. Notwithstanding any election
under Section 6(b) to defer awards by means of a Common Stock credit, your
Common Stock credit account, if you elect to receive installment payments, will
be converted into a cash credit account as of January 1 of the year in which
such installment payments commence.
(d) At your one-time election in writing to the Committee, all or any
designated portion of your Common Stock credit account may be converted to, and
you will be credited with, a cash credit account as of the first business day of
the calendar quarter following the quarter in which the election is made. The
amount credited to the cash credit account will be determined by multiplying the
number of shares of Common Stock to which your Common Stock credit account is
then equivalent and as to which such election has been made by the Closing Price
on the first business day of the calendar quarter following the quarter in which
the election is made. Any Common Stock credits attributable to dividends paid
on Common Stock during the calendar quarter in which the election is made will
be credited before making the conversion. You may make this election at any
time prior to the end of the calendar year in which termination of employment
occurs. An election by you under this Section 6(d) will be irrevocable.
(e) If the number of outstanding shares of Common Stock is increased as
the result of any stock dividend, subdivision or reclassification of shares, the
number of shares of Common Stock to which your Common Stock credit account is
equivalent will be increased in proportion to the increase in the number of
outstanding shares of Common Stock. If the number of outstanding shares of
Common Stock is decreased as the result of any combination or reclassification
of shares, the number of shares of Common Stock to which your Common Stock
credit account is equivalent will be decreased in proportion to the decrease in
the number of outstanding shares of Common Stock. In the event the Company is
consolidated with or merged into any other corporation and holders of the
Company's Common Stock receive common shares of the resulting or surviving
corporation, your Common Stock credit account, in place of the shares then
credited thereto, will be credited with a stock equivalent determined by
multiplying the number of common shares of stock given in exchange for a share
of Common Stock upon such consolidation or merger, by the number of shares of
Common Stock to which your account is then equivalent. If in such a
consolidation or merger, holders of the Company's Common Stock receive any
consideration other than common shares of the resulting or surviving
corporation, the Committee will determine the appropriate change in your
account. In the event of any extraordinary dividend, including any spin-off,
the Committee will make appropriate adjustments to your Common Stock credit
account.
(f) If you die, whether before or after termination of employment, any
cash credit account and Common Stock credit account to which you are entitled,
including any award approved after your death as to which an election to defer
was made, will be distributed in cash (unless the Committee otherwise provides)
to your beneficiaries pursuant to Section 7.
7. BENEFICIARIES. If you die, the Company will make payments pursuant to
this Agreement to the beneficiary designated in writing by you specifically for
the Plan or, if there is no such designation or the named beneficiary is dead,
to the beneficiary most recently designated by you to receive the proceeds of
any Company-paid group life insurance coverage provided to you. Otherwise, the
distribution will be made to default beneficiaries as provided under the
Company-paid group life insurance plan. Only you may change or revoke your
designation.
8. TAX WITHHOLDING. The Company or one of its subsidiaries will deduct
any taxes required to be withheld by federal, state, local or foreign
governments from the awards that you receive pursuant to this Agreement.
9. TRANSFER. Except as set forth in this Agreement, you may not transfer,
pledge or encumber your Grants or any other benefits that you receive pursuant
to this Agreement. Except as required by law, creditors may not attach or seize
such Grants or benefits.
10. INTERPRETATION. The Committee has the power to interpret this
Agreement and complete discretion in making valuations and determinations and
taking other action pursuant to the Agreement. All interpretations,
determinations and actions by the Committee will be final and binding on all
parties. The Company, the Board of Directors, the Committee and the officers
and employees of the Company and its subsidiaries will not be liable for any
action taken in good faith in interpreting and performing this Agreement.
11. NO RIGHT TO EMPLOYMENT. The execution, delivery and performance of
this Agreement do not constitute an agreement or understanding, express or
implied, on the part of the Company or its subsidiaries to employ you for any
specific period or in any specific capacity and do not prevent the Company or
its subsidiaries from terminating your employment at any time with or without
Cause. "Termination of employment" under 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 forms of severance pay or pay in lieu of
salary.
12. NOTICES. Any notices to the Company pursuant to this Agreement
should be addressed to: The Secretary, RJR Nabisco Holdings Corp., 1301
Avenue of the Americas, New York, NY 10019-6013. Any notice to you pursuant
to this Agreement will be sent to your address as shown on Company records.
13. CHANGE OF CONTROL. In the event of a Change of Control: (i) all
unvested Performance Notes and Performance Units issued to you will vest if you
are terminated without Cause within two years after the date of the Change of
Control, and (ii) the value of the Performance Notes will not be less than the
Closing Price of Common Stock on the date of the Change of Control.
14. YOUR OBLIGATIONS.
(a) You agree that, until the third anniversary of (i) your last day of
employment with the Company or any of its subsidiaries, or (ii) the last date on
which you receive any payment pursuant to this Agreement, whichever is later:
(A) you will personally provide reasonable assistance and cooperation to the
Company or any of its subsidiaries in activities related to the prosecution or
defense of any pending or future lawsuits or claims involving the Company or any
of its subsidiaries; (B) you will promptly notify the Company upon receipt of
any requests from anyone other than an employee or agent of the Company for
information regarding the Company or any of its subsidiaries or if you become
aware of any potential claim or proposed litigation against the Company or any
of its subsidiaries; (C) you will refrain from providing any information related
to any claim or potential litigation against the Company or any of its
subsidiaries to any non-Company representatives unless you have the Company's
written permission or are required to provide information pursuant to legal
process; (D) you will not disclose or misuse any confidential information or
material concerning the Company or any of its subsidiaries; and (E) you will not
engage in any activity contrary or harmful to the
interests of the Company or any of its subsidiaries. You agree that if required
by law to provide sworn testimony regarding any matter relating to the Company
or any of its subsidiaries: you will consult with and have Company-designated
legal counsel present for such testimony (the Company will be responsible for
the costs of this counsel); you will confine your testimony to items about which
you have knowledge rather than speculation, unless otherwise directed by legal
process; and you will assist the efforts of the Company's attorneys to hold all
privileged attorney-client matters in strictest confidence, especially matters
you have been privy to.
(b) If the Company reasonably determines that you have materially violated
any of your obligations under this Agreement, then the Grants hereunder shall
terminate, effective no later than the date on which such violations began. In
that event, you agree to return to the Company on its demand any amounts paid to
you pursuant to this Agreement. If you fail to do so, the Company may deduct
from any amounts the Company owes to you (including, but not limited to, wages
or other compensation), or commence judicial proceedings against you, to recover
these amounts and related attorneys' fees and expenses. In addition, you agree
that the Company may pursue any other remedies available in law or at equity,
including injunctive relief, for any breach of this Section 14.
15. CHOICE OF LAW. This Agreement will be governed by the substantive law
of the State of New York. Any legal action or proceeding with respect to this
Agreement may be brought in the federal or state courts located in the Borough
of Manhattan in New York City.
IN WITNESS WHEREOF, the Company and you have executed this Agreement as of
the Date of Grant.
RJR NABISCO HOLDINGS CORP.
By _________________________
Authorized Signatory
_______________________________
GRANTEE
Grantee's Taxpayer Identification Number: Grantee's Home Address
_________________________ ______________________________
______________________________
Date: ______________________