EXHIBIT 10.3
Director's
Option
97 (Annual)
RJR NABISCO HOLDINGS CORP.
EQUITY INCENTIVE AWARD PLAN FOR DIRECTORS AND KEY EMPLOYEES
OF RJR NABISCO HOLDINGS CORP. AND SUBSIDIARIES
STOCK OPTION AGREEMENT
___________________________
DATE OF GRANT: April 16, 1997
W I T N E S S E T H :
1. GRANT OF OPTION. Pursuant to the provisions of the Equity Incentive
Award Plan for Directors and Key Employees of RJR Nabisco Holdings Corp. and
Subsidiaries (the "Plan"), RJR Nabisco Holdings Corp. (the "Company") on the
above date has granted to
(FIRST NAME)(LAST NAME)(THE "OPTIONEE"),
subject to the terms and conditions which follow and the terms and conditions of
the Plan, the right and option to exercise from the Company a total of
1,300 SHARES
of Common Stock, par value $.01 per share, of the Company, at the exercise price
of $33.50 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 whole 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; together with payment for taxes pursuant to Section 9
herein; 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) This Option shall be exercisable in three installments. The first
installment shall be exercisable on the first anniversary following
Date of Grant for 33% of the number of shares of Common Stock subject
to this option. Thereafter, on each subsequent anniversary, an
installment shall become exercisable for 33% and 34%, respectively, of
the number of shares subject to this Option until the Option has
become fully exercisable. To the extent that any of the above
installments is not exercised when it
-2-
becomes exercisable, it shall not expire, but shall continue to be
exercisable at any time thereafter until this Option shall terminate,
expire or be surrendered. An exercise shall be for whole shares only.
(c) This Option shall not be exercisable prior to six months after the
Date of Grant.
(d) If any shares of the Common Stock are to be disposed of in accordance
with Rule 144 under the Securities Act of 1933 or otherwise, the
Optionee shall promptly notify the Company of such intended
disposition and shall deliver to the Company at or prior to the time
of such disposition such documentation as the Company may reasonably
request in connection with such sale and, in the case of a disposition
pursuant to Rule 144, shall deliver to the Company an executed copy of
any notice on Form 144 required to be filed with the SEC.
3. RIGHTS IN THE EVENT OF RESIGNATION OR NON-ELECTION TO THE BOARD.
Except as may be otherwise provided in this Section 3, after the Optionee's
resignation or non-election to the Board of Directors of the Company (the
"Board"), the Option shall NOT become exercisable as to any shares in addition
to those already exercisable pursuant to the schedule described in Section 2(b).
Notwithstanding the foregoing, if a non-election of the Optionee to the Board is
due to death or Permanent Disability (as defined in the Company's Long Term
Disability Plan), the Option shall immediately become exercisable as to all
shares.
4. EXPIRATION OF OPTION. The Option shall expire or terminate and may not
be exercised to any extent by the Optionee after the tenth anniversary of the
Date of Grant.
5. TRANSFERABILITY. Other than as specifically provided with regard to
the death of the Optionee, this 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. CONSIDERATION TO THE COMPANY. In consideration of the granting of this
Option by the Company, the Optionee agrees to render faithful and efficient
services to the Company, with such duties and responsibilities as shall from
time to time prescribe. Nothing in this Agreement or in the Plan shall confer
upon the Optionee any right to continue in the service of the Company or any
Subsidiary as a director or in any other capacity or shall interfere with or
restrict in any way the rights of the Company and its Subsidiaries and their
respective shareholders, which are hereby expressly reserved, in connection with
the removal of the Optionee from the Board of Directors of the Company or any
Subsidiary at any time for any reason whatsoever, with or without cause, subject
to applicable law and the relevant certificate of incorporation and bylaws.
-3-
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 shall 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 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, RJR Nabisco Holdings Corp., 1301 Avenue of
the Americas, New York, NY 10019-6013, 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. 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.
12. 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.
-4-
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.
RJR NABISCO HOLDINGS CORP.
By ____________________________
Authorized Signatory
_______________________________
Optionee
Optionee's Taxpayer Identification Number:
_______________________________
Optionee's Home Address:
__________________________
__________________________
__________________________
-5-