Deferral Election Agreement for Management Continuity Severance Benefits – Ralston Purina Company and Key Executives

Summary

This agreement allows selected key executives of Ralston Purina Company, who are subject to a Management Continuity Agreement, to elect to defer their severance benefits in the event of a qualifying termination following a change in control. Executives may choose to defer all or part of their severance payments into specific investment options, subject to approval by the Human Resources Committee. The election to defer is irrevocable and must be made in advance. Deferred amounts are not eligible for company matching and are subject to tax rules and other plan conditions.

EX-10.XXXIV 16 0016.txt June 28, 2000 HIGHLY CONFIDENTIAL - -------------------- DEFERRAL OF POTENTIAL MANAGEMENT CONTINUITY SEVERANCE BENEFITS As a selected key executive subject to a Management Continuity Agreement with the Company dated May 17, 1999 (the "MCA"), you may defer, with the approval of the Human Resources Committee, any lump sum Severance Benefits payable under Article 4, paragraphs a and c of the MCA. Because you are entitled to Severance ------------------------------------- Benefits only upon a Qualifying Termination of your employment within three - -------------------------------------------------------------------------------- years of a Change in Control in accordance with the terms of the MCA, a deferral - -------------------------------------------------------------------------------- of such Severance Benefits can only be given effect if a valid deferral election - -------------------------------------------------------------------------------- and installment payment election are in place at the time Severance Benefits - -------------------------------------------------------------------------------- become payable. - ---------------- Elections to defer and receive installment payments must be made sufficiently in advance of a Qualifying Termination as defined under the MCA, in order to effect the deferral for Federal and State income tax purposes. Deferrals of MCA Severance Benefits can be made into the Prime Rate Fund, the Ralston Purina Equity Fund, or any of the nine "measurement" funds which mirror the returns of the Vanguard Mutual funds that are available in the Ralston Purina Company Savings Investment Plan in accordance with the terms of the Deferred Compensation Plan. Attachment 1 lists Factors to Consider. The Deferred Compensation Plan Prospectus (Attachment 2) summarizes the provisions of those account options. PLEASE NOTE THAT NO COMPANY MATCH WILL BE PROVIDED TO ANY SEVERANCE BENEFITS - -------------------------------------------------------------------------------- DEFERRALS. - --------- In making your election, please carefully review the attached Deferred Compensation Plan Prospectus and the Factors to Consider. Keep in mind that your election to defer may not be changed even if circumstances, such as your personal financial situation or interest rates, change in the future. REQUEST FOR DEFERRAL - ---------------------- PLEASE RETURN ONE COPY OF THE ELECTION FORM (ATTACHMENT 3) BY AUGUST 1, 2000 WHETHER OR NOT YOU WISH TO REQUEST A DEFERRAL. A duplicate form is attached for ------------------------------------------ your records. Deferral Of Potential Management Continuity Severance Benefits June 28, 2000 Page Two The deferral of MCA Severance Benefits is at the discretion of the Human Resources Committee and is subject to its approval. If you have any questions, please call me at extension 2325 or Pat Robbins at extension 5889. Ron Sheban Attachments Attachment 1 FACTORS TO CONSIDER Under current Federal and state income tax laws, you will not be taxed on any deferral amounts or any earnings on those deferral amounts until you actually receive payments of cash or delivery of stock, as applicable, as long as elections to defer are made in a timely fashion. Deferred amounts are taxed as ordinary income in the year received. If you are subject to the income tax laws of a foreign country, you should consult your personal tax advisor regarding the proper tax treatment. The IRS may challenge a deferral of income if the timing of the deferral and payment form elections does not satisfy certain IRS criteria. In such event, the IRS may deem the entire MCA Severance Benefit to have been constructively received and subject to income taxes at the time the Benefits became payable under the MCA Agreement upon a Change of Control and Qualifying Termination of Employment. All wages, without limit, and whether or not deferred, are subject when earned to Social Security to the extent the taxable wage base has not been attained, and the Medicare Hospital Insurance (HI) Tax of 1.45%. To the extent necessary to satisfy these FICA withholding requirements, a portion of the deferred MCA Severance Benefits may, instead, be paid to you and subject to Federal, state, and local taxes, as applicable. All required withholding would first be taken out of any nondeferred MCA Severance Benefits, or your first installment payment of MCA Severance Benefits. MCA Severance Benefits, whether paid or deferred, are not Benefit Earnings for --- purposes of Ralston Purina Company benefit plans. In evaluating the Ralston Purina Equity Fund, consider the length of time your investment in stock equivalents subjects your deferral to market risks. Also consider long-range economic and political conditions, the prospects of the business underlying the stock, and whether the Company will be willing and able to declare and pay dividends to create dividend equivalents. The Prime Rate Fund will credit interest equivalents on your deferred amounts annually based on the average of the daily close of business prime rates. These equivalents may vary substantially from year to year depending on changes in interest rates. For the Vanguard measurement funds, deferred amounts will earn returns (which may be positive or negative) as if they had been invested at the net asset value (net of investment advisory fees) of the measurement funds. Note that these funds are used for measurement purposes only. Your account will be credited with investment returns based on these funds but will be reflected as a bookkeeping entry only and will not represent an actual investment made on your behalf. Participants in the Plan are permitted to transfer any amounts credited to an account under the Prime Rate Option or any Measurement Fund Option on a daily basis to any other deferral options offered under the Plan. Participants may also transfer, on a daily basis, any amounts which have been deferred under the Ralston Purina Equity Option for at least one-year. Benefits under the Deferred Compensation Plan for Key Employees are unfunded. In considering the options, you should note that your right to receive distributions from the Plan is that of a general creditor of Ralston Purina Company. The Pension Source Act prohibits a state from taxing installment payments made over a period of at least ten years to a former resident who is residing in a non income tax bearing state at the time the installment payments are made. Consider your deferral participation carefully and consult your personal advisor if you have any questions. Please refer to the enclosed Deferred Compensation Plan Prospectus for more details. Your election to defer may not be changed for ============================================= any reason. =========== June 28, 2000 JUNE 28, 2000 DEFERRAL ELECTION ATTACHMENT 3 MANAGEMENT CONTINUITY SEVERANCE BENEFITS ---------------------------------------- I. DEFERRAL ELECTION. Please submit my request as follows with respect to Severance Benefits under Article 4a & b of the Management Continuity Agreement dated May 17, 1999 that may be paid to me upon a Qualifying Termination following a Change in Control. I understand that an election to defer, once made, is IRREVOCABLE, ----------- and is SUBJECT TO MANAGEMENT APPROVAL. CHECK ONE BOX BELOW: - ---------------------- ___ NO DEFERRAL Check here if you do not wish to defer any portion of your MCA Severance Benefits. Ignore items 1) and 2) and proceed to Part III below. ___ DEFERRAL Check here if you wish to defer any portion of your MCA Severance Benefits. Complete items 1) and 2) and the bottom section. NOTE: THIS DEFERRAL ELECTION WILL BE GIVEN EFFECT ONLY IF A VALID INSTALLMENT PAYMENT OPTION ELECTION IS ALSO IN PLACE. (SEE PART II, PAYMENT ELECTION, BELOW.) 1) FILL IN ONE BLANK ONLY: --- Defer % OR Defer all up to $________________ OR Defer all in excess of $___________________ 2) PLEASE ALLOCATE THE AMOUNT INDICATED IN ITEM 1) ABOVE IN WHOLE PERCENTAGE INCREMENTS TO THE FOLLOWING ACCOUNT(S): __ Ralston Purina Equity Fund _______% Vanguard International Growth Fund _______% __ Prime Rate Fund _______% Vanguard LifeStrategy Income Fund _______% __ Vanguard Wellington Fund _______% Vanguard LifeStrategy Conservative Growth Fund _______% __ Vanguard 500 Index Fund _______% Vanguard LifeStrategy Moderate Growth Fund _______% __ Vanguard Windsor II Fund _______% Vanguard LifeStrategy Growth Fund _______% __ Vanguard Small-Cap Index Fund _______% TOTAL 100% ---- THERE IS NO COMPANY MATCH ON ANY SEVERANCE BENEFITS DEFERRAL II. PAYMENT ELECTION. CHECK ONE BOX BELOW TO SELECT A PAYMENT OPTION. The election made below will apply only to distributions from the Deferred Compensation Plan attributable to MCA Severance Benefits deferrals. AN INSTALLMENT FORM ELECTION WILL APPLY ONLY -------------------------------------------- TO DISTRIBUTIONS OF MCA SEVERANCE BENEFITS RESULTING FROM A QUALIFYING - ------------------------------------------------------------------------------- TERMINATION THAT OCCURS AT LEAST SIX (6) MONTHS FOLLOWING THE DATE THE - ------------------------------------------------------------------------------- INSTALLMENT FORM ELECTION IS COMPLETED. - ------------------------------------------ (NOTE: If you have a current distribution election form on file with respect to payments from your Deferred Compensation Plan account, and you wish such distribution election also to apply to any deferred MCA Severance Benefits, this Payment Election section does not have to be completed; rather, such election form will also apply to distributions of your MCA Severance Benefits.) CHECK ONE: __ 5 ANNUAL INSTALLMENTS __ 10 ANNUAL INSTALLMENTS III. - ------------------------------- ---------------------------------- Social Security Number Signature - ------------------------------- ---------------------------------- Today's Date Name (Type or Print) - ------------------------------- ---------------------------------- Division Department Location - ------------------------------- ---------------------------------- Home Street Address City State Zip RETURN NO LATER THAN AUGUST 1, 2000 TO RON SHEBAN - 1A ------------------------------------------------------