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EXHIBIT 10.3
▇.▇. ▇▇▇▇▇▇▇▇ TOBACCO HOLDINGS INC.
1999 LONG TERM INCENTIVE PLAN
TANDEM RESTRICTED STOCK/STOCK OPTION
AGREEMENT
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DATE OF GRANT: June 15, 1999
W I T N E S S E T H
1. Tandem Restricted Stock and Option Grant.
Pursuant to the provisions of the 1999 Long Term Incentive Plan (the
"Plan") ▇.▇. ▇▇▇▇▇▇▇▇ Tobacco Holdings, Inc. (the "Company") on the above date
has granted, and this Agreement evidences the grant to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (THE "GRANTEE")
subject to the terms and conditions which follow and the terms and conditions
of the Plan, of a grant of
(A) A TOTAL OF 85,000 SHARES OF COMMON STOCK OF THE COMPANY (THE
"RESTRICTED STOCK GRANT"), AND, IN TANDEM,
(B) THE RIGHT AND OPTION TO PURCHASE FROM THE COMPANY A TOTAL OF
340,000 SHARES OF COMMON STOCK OF THE COMPANY ("COMMON
STOCK"), AT THE EXERCISE PRICE OF $32.4375 PER SHARE, THE
CLOSING PRICE OF A SHARE OF COMMON STOCK ON THE DATE OF GRANT
(THE "OPTION").
A copy of the Plan is attached and made a part of this agreement with the same
effect as if set forth in the Agreement itself. All capitalized terms used
below shall have the meaning set forth in the Plan, unless otherwise indicated.
2. Terms of Restricted Stock Grant.
(a) Receipt and Delivery of Stock. The Grantee waives receipt from the
Company of a certificate or certificates representing the shares of Common
Stock granted hereunder, registered in his name and bearing a legend evidencing
the restrictions imposed on such shares of Common Stock by this Agreement. The
Grantee acknowledges and agrees that the Company shall retain custody of such
certificate or certificates until the restrictions imposed by Section 2(b) of
this Agreement on the shares of Common Stock granted hereunder lapse. The
Grantee acknowledges and agrees that, alternatively, the shares of Common Stock
granted hereunder may be in book-entry form with instructions from the Company
to the Company's transfer agent that such shares
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shall remain restricted until the restrictions imposed by Section 2(b) of this
Agreement on such shares lapse.
(b) Restrictions on Transfer of Stock. The shares of Common Stock
granted hereunder may not be sold, tendered, assigned, transferred, pledged or
otherwise encumbered prior to the earliest of:
(i) June 15, 2002, for 50% of the shares,
June 15, 2003, for an additional 25% of the shares,
June 15, 2004, for an additional 25% of the shares;
(ii) the date of the Grantee's Retirement (as defined in
this Section 2(b));
(iii) the earlier of (x) 60 days after the date of the
Grantee's Permanent Disability (as defined in the
Company's Long Term Disability Plan) or (y) receipt
of written notice by the Company that the Grantee
has declined to make the Section 3 Election (as
defined in Section 3(a) of this Agreement) pursuant
to Section (3)(a)(v) of this Agreement, for 100% of
the shares;
(iv) the earlier of (x) 60 days after the date of the
Grantee's death or (y) receipt of written notice by
the Company that the Grantee's representative has
declined to make the Section 3 Election pursuant to
Section (3)(a)(v) of this Agreement, for 100% of the
shares; or
(v) the earlier of (x) 60 days after the date of a
Change of Control or (y) receipt of written notice
by the Company that the Grantee has declined to make
the Section 3 Election pursuant to Section
(3)(a)(vi) of this Agreement, for 100% of the
shares.
For purposes of this Agreement, the term "Retirement" shall mean
retirement at age 65 or over, or early retirement at age 55 or over with the
approval of the Board of Directors of the Company, which approval specifically
states the number or percentage of shares with respect to which the
restrictions referred to in this Section 2(b) will lapse.
Upon the earlier of (i) 60 days after the involuntary termination of
the Grantee's employment with the Company or a subsidiary of the Company
without Cause (as defined in Section 4(d) of this Agreement) (an "Involuntary
Termination") or (ii) receipt of written notice by the Company that the Grantee
has declined to make the Section 3 Election pursuant to Section 3(a)(vii) of
this Agreement, the restrictions imposed by this Section 2(b) will lapse as to
50% of the shares of Common Stock granted to the Grantee pursuant to this
Agreement if such Involuntary Termination occurs on or before June 14,
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2002, and will lapse as to 100% of such shares if such Involuntary Termination
occurs after June 14, 2002.
At the time the restrictions imposed by this Section 2(b) shall lapse
upon any of the shares of Common Stock granted to the Grantee under this
Agreement, provided that the Grantee shall not have made a Section 3 Election
with respect to such shares, the appropriate number of shares of Common Stock
shall be delivered to the Grantee without a restrictive legend on any Common
Stock certificate, or, if such shares are held in book-entry form, the
Company's transfer agent shall be instructed to remove the restrictions on such
shares.
(c) Forfeiture of Stock. Upon the earlier of a Section 3 Election or
the Grantee's Termination of Employment, subject to the provisions of Section
2(b) in the case of an Involuntary Termination, the Grantee shall forfeit all
right, title and interest in and to the shares of Common Stock still subject to
the restrictions set forth in Section 2(b)(i) of this Agreement (or the portion
thereof to which such Section 3 Election relates, as the case may be) and to
any dividends to be paid thereafter on such shares. Such forfeited shares of
Common Stock shall revert to the Company and shall not become transferable by
the Grantee or anyone claiming through the Grantee. For purposes of this
Agreement, the term "Termination of Employment" shall mean the termination of
the Grantee's active employment with the Company or a subsidiary of the
Company; it does not mean the termination of the Grantee's pay and benefits at
the end of a period of salary continuation (or other form of severance pay or
pay in lieu of salary). The Committee or its agent shall act promptly to record
forfeitures pursuant to this paragraph on the stock transfer books of the
Company.
(d) Dividends. If the Grantee is a shareholder of record on any
applicable record date, he shall receive any dividends on the shares of Common
Stock granted hereunder when paid regardless of whether the restrictions
imposed by Section 2(b) of this Agreement hereof have lapsed.
(e) Voting. If the Grantee is a shareholder of record on any
applicable record date, he shall have the right to vote the shares of Common
Stock granted hereunder regardless of whether the restrictions imposed by
Section 2(b) of this Agreement hereof have lapsed.
(f) Registration. The shares of Common Stock granted hereunder may be
offered and sold by the Grantee only if such shares are registered for resale
under the Securities Act of 1933 (the " 1933 Act") as amended, or if an
exemption from registration under such Act is available. The Company has no
obligation to effect such registration. By executing this Agreement, the
Grantee (i) agrees not to offer or sell the shares of Common Stock granted
hereunder unless and until such shares are registered for resale under the 1933
Act or an exemption from registration is available, (ii) represents that he
accepts such shares of Common Stock for his own account for investment and not
with a view to, or for sale in connection with, the distribution of any part
thereof and (iii) agrees
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that he or his beneficiary, on request, will be obligated to repeat these
representations in writing prior to any future delivery of such shares of
Common Stock.
3. Option Terms
(a) Elections. The Option shall be exercisable only if and to the
extent the Grantee makes one or more of the following elections (each, a
"Section 3 Election") in accordance with the following terms and conditions,
and any further procedures which may be established by the Company from time to
time:
(i) During the period from March 15, 2002 until May 15,
2002, the Grantee may elect to cancel up to 50% of the Restricted Stock Grant
in exchange for the right to exercise the Option with respect to the same
percentage of shares of Common Stock covered by the Option.
(ii) During the period from March 15, 2003 until May 15,
2003, the Grantee may elect to cancel up to 25% of the Restricted Stock Grant
in exchange for the right to exercise the Option with respect to the same
percentage of shares of Common stock covered by the Option.
(iii) During the period from March 15, 2004 until May 15,
2004, the Grantee may elect to cancel up to 25% of the Restricted Stock Grant
in exchange for the right to exercise the Option with respect to the same
percentage of shares of Common Stock covered by the Option.
(iv) In the event the date of the Grantee's Retirement
occurs prior to June 15, 2004, during the period of 60 days commencing 90 days
prior to the date of the Grantee's Retirement, the Grantee may elect to cancel
the portion of his Restricted Stock Grant that will no longer be subject to the
restrictions set forth in Section 2(b) of this Agreement as a result of the
Grantee's Retirement in exchange for the right to exercise a corresponding
portion of the Option.
(v) In the event of the date of the Grantee's Permanent
Disability or death occurs prior to June 15, 2004, during the period of 60 days
commencing on the date of the Grantee's Permanent Disability or death, as
applicable, the Grantee (or upon his death, his representative) may elect to
cancel the portion of his Restricted Stock Grant still subject to the
restrictions set forth in Section 2(b) of this Agreement immediately prior to
the date of the Grantee's Permanent Disability, or death, as applicable, in
exchange for the right to exercise a corresponding portion of the Option.
(vi) In the event of a Change of Control which occurs
prior to June 15, 2004, during the period of 60 days commencing on the date of
such Change of Control, the Grantee may elect to cancel the portion of his
Restricted Stock Grant still subject to the restrictions set forth in Section
2(b) of this Agreement immediately prior to
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the date of such Change of Control in exchange for the right to exercise a
corresponding portion of the Option.
(vii) In the event of an Involuntary Termination (as
defined in Section 2(b) of this Agreement) that occurs prior to June 15, 2004,
during the period of 60 days commencing on the date of such Involuntary
Termination, the Grantee may elect to cancel the portion of his Restricted
Stock Grant that will no longer be subject to the restrictions set forth in
Section 2(b) of this Agreement as a result of such Involuntary Termination in
exchange for the right to exercise a corresponding portion of the Option.
Upon the Grantee making any of the foregoing Section 3 Elections, the portion
of the Option subject to such Section 3 Election shall become exercisable on
the date that the restrictions set forth in Section 2(b) of this Agreement on
the corresponding portion of the Restricted Stock Grant would have lapsed.
(b) Exercise of Option. Shares subject to the Option may be purchased
by giving the 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 Grantee 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 Grantee 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 such shares on the open
market. The broker-dealer will remit proceeds of the sale to the Company which
will remit net proceeds to the Grantee after repayment of the borrowing,
deduction of costs, if any, and withholding of taxes. The Grantee's borrowing
from the Company on an open account shall be a personal obligation of the
Grantee 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 Grantee 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.
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The Grantee agrees that if this broker-dealer exercise method under this
paragraph is used, the Grantee promises unconditionally to pay the Company the
full balance in his open account at any time upon demand. ▇▇▇▇▇▇▇ also agrees
to pay interest on the account balance at the AFR for short-term loans from and
after demand.
(b) Expiration of Option.
(i) The Option shall expire or terminate and may not be
exercised to any extent by the Grantee after the first to occur of the
following events:
(x) 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
(y) immediately upon the Optionee's Termination of
Employment for Cause (as defined in Section 4(d) of this Agreement).
(ii) Upon the Grantee's failure to make a Section 3
Election during the designated period with respect to a portion of the
Restricted Stock Grant, that portion of the tandem Option to which such Section
3 Election, if made, would have related, shall immediately terminate and have
no force or effect.
4. General Provisions
(a). No Right to Employment. Neither the execution and delivery of
this Agreement nor the tandem awards 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 Grantee
for any specific period or in any particular capacity and shall not prevent the
Company or its subsidiaries from terminating the Grantee's employment at any
time with or without Cause (as defined in Section 4(d) of this Agreement).
(b) Change in Common Stock or Corporate Structure. In the event of any
stock split, spin-of, stock dividend, extraordinary cash dividend, stock
combination or reclassification, recapitalization or merger, change in control,
or similar event, the Committee shall make an appropriate adjustment to the
exercise price of the Option or to the number or kind of shares or other
consideration covered by this Agreement or to which the Option, or portions
thereof then unexercised, shall be exercisable, and such other revisions to
this Agreement as it deems are equitably required. Any adjustment or revision
made by the Committee shall be final and binding on the Grantee, the Company
and all other interested persons; provided; however, that the Committee may not
make any such adjustments or revisions that are adverse to the Grantee without
his written consent.
(c) Application of Laws. All aspects of the tandem awards evidenced by
this Agreement shall be subject to all applicable laws, rules and regulations
and to such approvals of any governmental agencies as may be required.
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(d) Termination for Cause. If the Grantee 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 Grantee does not have an employment or severance agreement that defines
the term "Cause", the Grantee's employment shall be deemed to have been
terminated for "Cause" if the termination results from the Grantee's: (i)
criminal conduct; (ii) deliberate continual refusal to perform employment
duties on substantially a full time basis; (iii) deliberate and continual
refusal to act in accordance with any specific lawful instructions of an
authorized officer or employee more senior than the Grantee; or (iv) deliberate
misconduct which could be materially damaging to the Company or any of its
business operations without a reasonable good faith belief by the Grantee that
such conduct was in the best interests of the Company. A termination of
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.
Any voluntary termination of employment by the Grantee in anticipation of an
involuntary termination of employment for Cause shall be deemed to be a
termination of employment for Cause.
(e) Taxes.
(i) Any taxes required by federal, state or local laws to be
withheld by the Company on the Date of Grant or the delivery of unrestricted
shares of Common Stock pursuant to the Restricted Stock Grant shall be paid to
the Company by the Grantee by the time such taxes are required to be paid or
deposited by the Company. The Grantee hereby authorizes the conversion to cash
by the Company of a sufficient number of shares of Common Stock to satisfy the
withholding prior to the delivery of unrestricted shares of Common Stock.
(ii) Any taxes required by federal, state, or local laws to be
withheld by the Company upon exercise by the Grantee of the tandem Option shall
be paid to the Company before delivery of shares of Common Stock is made to the
Grantee. When the tandem 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.
(f) Notices. Any notices required to be given hereunder to the Company
shall be addressed to The Secretary, ▇.▇. ▇▇▇▇▇▇▇▇ Tobacco Holdings, Inc., Post
Office Box 2866, Winston-Salem, NC, 27102-2866, and any notice required to be
given hereunder to the Grantee shall be sent to the Grantee's address as shown
on the records of the Company.
(g) Administration and Interpretation. In consideration of the
Restricted Stock Grant and the Option grant, the Grantee 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 interpretation
and determinations made by the Committee shall be final, conclusive, and
binding upon the Grantee, the Company and all other interested persons. No
member of
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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.
(h) GOVERNING LAW. 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 Grantee have executed this Agreement as of the Date of Grant first above
written.
▇.▇. ▇▇▇▇▇▇▇▇ TOBACCO HOLDINGS INC.
By:
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Authorized Signatory
Grantee
▇▇▇▇▇▇▇'s Taxpayer Identification Number:
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▇▇▇▇▇▇▇'s Home Address:
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