Exhibit 10.3
NABISCO HOLDINGS CORP.
1994 LONG TERM INCENTIVE PLAN
STOCK OPTION AGREEMENT
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DATE OF GRANT: January 2, 1998
W I T N E S S E T H :
1. GRANT OF OPTION. Subject to (i) the terms and conditions herein and
(ii) the provisions of the Nabisco Holdings Corp. 1994 Long Term Incentive Plan
(the "Plan"), Nabisco Holdings Corp. (the "Company") on the above date has
granted to
XXXXX X. XXXXX (THE "OPTIONEE"),
the right and option to exercise from the Company a total of
250,000 SHARES
of Class A Common Stock of the Company ("Common Stock"), at the exercise price
of $47.938 per share (the "Option"). A copy of the Plan is attached and made a
part of this agreement with same effect as if set forth in the agreement itself.
All capitalized terms used herein shall have the meaning set forth in the Plan,
unless the context requires a different meaning.
2. EXERCISE OF OPTION.
(a) Shares may be purchased by giving the Corporate Secretary of the
Company written notice of exercise, on a form prescribed by the Company,
specifying the number of shares to be purchased. The notice of exercise shall
be accompanied by
(i) tender to the Company of cash for the full purchase price of the
shares with respect to which such Option or portion thereof is
exercised; OR
(ii) the unsecured, demand borrowing by the Optionee from the Company on an
open account maintained solely for this purpose in the amount of the
full exercise price together with the instruction from the Optionee to
sell the shares exercised on the open market through a duly registered
broker-dealer with which the Company makes an arrangement for the sale
of such shares under the Plan.
This method is known as the "broker-dealer exercise method" and is
subject to the terms and conditions set forth herein, in the Plan and
in guidelines established by the Committee. The Option shall be
deemed to be exercised simultaneously with the sale of the shares by
the broker-dealer. If the shares purchased upon the exercise of an
Option or a portion thereof cannot be sold for a price equal to or
greater than the full exercise price plus direct costs of the sales,
then there is no exercise of the Option. Election of this method
authorizes the Company to deliver shares to the broker-dealer and
authorizes the broker-dealer to sell said shares on the open market.
The broker-dealer will remit proceeds of the sale to the Company which
will remit net proceeds to the Optionee after repayment of the
borrowing, deduction of costs, if any, and withholding of taxes. The
Optionee's borrowing from the Company on an open account shall be a
personal obligation of the Optionee which shall bear interest at the
published Applicable Federal Rate (AFR) for short-term loans and shall
be payable upon demand by the Company. Such borrowing may be
authorized by telephone or other telecommunications acceptable to the
Company. Upon such borrowing and the exercise of the Option or
portion thereof, title to the shares shall pass to the Optionee whose
election hereunder shall constitute instruction to the Company to
register the shares in the name of the broker-dealer or its nominee.
The Company reserves the right to discontinue this broker-dealer
exercise method at any time for any reason whatsoever. The Optionee
agrees that if this broker-dealer exercise method under this paragraph
is used, the Optionee promises unconditionally to pay the Company the
full balance in his open account at any time upon demand. Optionee
also agrees to pay interest on the account balance at the AFR for
short-term loans from and after demand.
(b) Notwithstanding provisions for regular exercise, if more than 80% of
the aggregate value of all classes of Company common stock is owned, directly or
indirectly, by RJR Nabisco Holdings Corp. on the date of exercise then the
Company may, in its absolute discretion, make a cash payment to the Optionee,
net of taxes, equal to the product of (x) and (y), where (x) is the excess of
the fair market value of Common Stock on the date of exercise over the exercise
price, and (y) is the number of shares subject to the Option(s) being exercised.
Such cash payment shall be in lieu of delivery of shares.
(c) Subject to Sections 2(b), 2(d), and 4, this Option shall be vested in
three installments. The first installment shall be vested on the 1st of January
following Date of Grant for 33% of the number of shares of Common Stock subject
to this Option. Thereafter, on each subsequent January 1st an installment shall
become vested for 33% and 34%, respectively, of the number of shares subject to
this Option until the Option has become fully vested. To the extent that any
portion of the Option is not exercised, it shall not expire, but shall continue
to be vested at any time thereafter until this Option shall terminate, expire or
be surrendered. An exercise shall be for whole shares only.
(d) This Option shall not be exercised prior to 36 months after the Date
of Grant.
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3. RIGHTS IN EVENT OF TERMINATION OF EMPLOYMENT.
Subject to Sections 2(b), 2(d) and 4:
(a) Except as may be otherwise provided in a written employment or
termination agreement between the Optionee and the Company, the Option shall not
become vested as to any additional shares following the Termination of
Employment of the Optionee for any reason other than a Termination of Employment
because of death, Permanent Disability, Retirement, termination of employment by
the Optionee with Good Reason or involuntary termination of the Optionee without
Cause. In the event of Termination of Employment because of death, Permanent
Disability, Retirement, termination of employment by the Optionee with Good
Reason or involuntary termination without Cause, the Option shall immediately
become vested as to all shares.
(b) The Optionee shall be deemed to have a "Permanent Disability" if he
becomes totally and permanently disabled (as defined in RJR Nabisco, Inc's Long
Term Disability Plan applicable to senior executive officers as in effect on the
date hereof), or if the Board of Directors or any committee thereof so
determines.
(c) "Retirement" as used herein means retirement at age 65 or over, or
early retirement at age 55 or over with the approval of the Company, which
approval specifically states that the Option shall become fully exercisable as
to all Shares.
(d) "Termination of Employment" as used herein means termination from
active employment with the Company; it does not mean termination of payment or
benefits at the end of salary continuation or other form of severance or pay in
lieu of salary.
4. EXPIRATION OF OPTION. The Option shall expire or terminate and may not
be exercised to any extent by the Optionee after the first to occur of the
following events:
(a) The tenth anniversary of the Date of Grant, or such earlier time as
the Company may determine is necessary or appropriate in light of applicable
foreign tax laws; or
(b) Immediately upon the Optionee's Termination of Employment for Cause
(as defined in Section 11 herein).
5. TRANSFERABILITY. Other than as specifically provided with regard to
the death of the Optionee, this Option agreement and any benefit provided or
accruing hereunder shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge,
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encumbrance, or charge; and any attempt to do so shall be void. No such benefit
shall, prior to receipt thereof by the Optionee, be in any manner liable for or
subject to the debts, contracts, liabilities, engagements or torts of the
Optionee.
6. NO RIGHT TO EMPLOYMENT. Neither the execution and delivery of this
agreement nor the granting of the Option evidenced by this agreement shall
constitute or be evidence of any agreement or understanding, express or implied,
on the part of the Company or its subsidiaries to employ the Optionee for any
specific period or shall prevent the Company or its subsidiaries from
terminating the Optionee's employment at any time with or without "Cause" (as
defined in Section 11 herein).
7. ADJUSTMENTS IN OPTION. In the event that the outstanding shares of the
Common Stock subject to the Option are, from time to time, changed into or
exchanged for a different number or kind of shares of the Company or other
securities by reason of a merger, consolidation, recapitalization,
reclassification, stock split, stock dividend, combination of shares, or
otherwise, the Committee may make an appropriate and equitable adjustment in the
number and kind of shares or other consideration as to which the Option, or
portions thereof then unexercised, shall be exercisable. Any adjustment made by
the Committee shall be final and binding upon the Optionee, the Company and all
other interested persons.
8. APPLICATION OF LAWS. The granting and the exercise of this Option and
the obligations of the Company to sell and deliver shares hereunder and to remit
cash under the broker-dealer exercise method shall be subject to all applicable
laws, rules, and regulations and to such approvals of any governmental agencies
as may be required.
9. TAXES. Any taxes required by federal, state, or local laws to be
withheld by the Company on exercise by the Optionee of the Option for Common
Stock shall be paid to the Company before delivery of the Common Stock is made
to the Optionee. When the Option is exercised under the broker-dealer exercise
method, the full amount of any taxes required to be withheld by the Company on
exercise of stock options shall be deducted by the Company from the proceeds.
10. NOTICES. Any notices required to be given hereunder to the Company
shall be addressed to The Secretary, Nabisco Holdings Corp., 0 Xxxxxx Xxxxx,
Xxxxxxxxxx, Xxx Xxxxxx 00000, and any notice required to be given hereunder to
the Optionee shall be sent to the Optionee's address as shown on the records of
the Company.
11. TERMINATION FOR "CAUSE" OR WITH "GOOD REASON."
(a) For purposes of this Agreement, an Optionee's employment shall be
deemed to have been terminated for "Cause" only as such term is defined in the
Optionee's employment agreement with the Company effective as of November 20,
1997 (the "Employment Agreement"). Any voluntary termination by the Optionee in
anticipation of an involuntary termination of the Optionee's employment for
Cause shall be deemed to be a termination of Optionee's employment for Cause.
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(b) For purposes of the Agreement, the Optionee's employment shall be
deemed to have been terminated for "Good Reason" only as such term is defined in
the Optionee's Employment Agreement.
12. ADMINISTRATION AND INTERPRETATION. In consideration of the grant, the
Optionee specifically agrees that the Committee shall have the exclusive power
to interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation and application of the Plan and Agreement as are
consistent therewith and to interpret or revoke any such rules. All actions
taken and all interpretations and determinations made by the Committee shall be
final, conclusive, and binding upon the Optionee, the Company and all other
interested persons. No member of the Committee shall be personally liable for
any action, determination or interpretation made in good faith with respect to
the Plan or the Agreement. The Committee may delegate its interpretive
authority to an officer or officers of the Company.
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13. OTHER PROVISIONS.
(a) Titles are provided herein for convenience only and are not to
serve as a basis for interpretation of the Agreement.
(b) This Agreement may be amended only by a writing executed by the
parties hereto which specifically states that it is amending this Agreement.
(c) THE LAWS OF THE STATE OF DELAWARE SHALL GOVERN THE
INTERPRETATION, VALIDITY AND PERFORMANCE OF THE TERMS OF THIS AGREEMENT
REGARDLESS OF THE LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICTS OF
LAWS.
IN WITNESS WHEREOF, the Company, by its duly authorized officer, and the
Optionee have executed this Agreement as of the date of Grant first above
written.
NABISCO HOLDINGS CORP.
By
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Authorized Signatory
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Optionee
Optionee's Social Security Number:
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Optionee's Home Address:
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