Exhibit 10.5
NABISCO HOLDINGS CORP.
1994 LONG TERM INCENTIVE PLAN
STOCK OPTION AGREEMENT
---------------------------
DATE OF GRANT: February 5, 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
(the "Optionee"),
-----------------
the right and option to exercise from the Company a total of
shares
----------
of Class A Common Stock of the Company ("Common Stock"), at the exercise
price of $45.063 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.
3. Rights in Event of Termination of Employment.
Subject to Sections 2(b), 2(d) and 4:
2
(a) Unless 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 or Retirement of the Optionee. In the event of
Termination of Employment because of death, Permanent Disability or Retirement,
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; 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, 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
3
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., ▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, 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." If the Optionee has an employment or
severance agreement, employment shall be deemed to have been terminated for
"Cause" only as such terms is defined in the employment or severance agreement.
If the Optionee does not have an employment or severance agreement that defines
the term "Cause", an Optionee's employment shall be deemed to have been
terminated for "Cause" if the termination results from the Optionee's: (a)
criminal conduct, (b) deliberate continual refusal to perform employment duties
on substantially a full time basis, (c) deliberate and continual refusal to act
in accordance with any specific lawful instructions of an authorized officer or
employee more senior than the Optionee, or (d) deliberate misconduct which could
be materially damaging to the Company or any of its business operations without
a reasonable good faith belief by the Optionee that such conduct was in the best
interests of the Company. A termination of Optionee's employment shall not be
deemed for Cause hereunder unless the senior personnel executive of the Company
shall confirm that any such termination is for Cause as defined hereunder. 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.
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
4
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.
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
------------------------------
Authorized Signatory
------------------------------------
Optionee
Optionee's Social Security Number:
------------------------------------
Optionee's Home Address:
------------------------------------
------------------------------------
------------------------------------
5