EXHIBIT 10.3
AMENDMENT NO. 2
TO
TANDEM RESTRICTED STOCK/STOCK OPTION AGREEMENT
This AMENDMENT NO. 2 ("Amendment No. 2") dated as of April 24,
2002, is made and entered into by and between X.X. Xxxxxxxx Tobacco Holdings
Inc., a Delaware corporation (the "Company"), and ______________________ (the
"Grantee"), amends the Tandem Restricted Stock/Stock Option Agreement, dated
[JUNE 15, 1999 OR JULY 28, 1999], between the Company and the Grantee (the
"Agreement"). Capitalized terms not otherwise defined herein have the meanings
assigned to them in the Agreement.
WHEREAS, the Company and the Grantee desire to amend certain
provisions of the Agreement in the manner and as more fully set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in the Agreement and this Amendment No. 2, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Clause (ii) of Section 3(b) of the Agreement is hereby amended
and replaced in its entirety to read as follows:
"(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
instructions from the Grantee to sell the shares exercised
(excluding the Tax Shares (as defined below)) 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. In connection with the exercise of an Option,
a number of shares (rounded down to the nearest whole
share)(the "Tax Shares") having a value equal to the amount
of the Grantee's minimum tax withholding amount payable in
connection with the Grantee's exercise of such Option shall
be deducted from the number of shares authorized to be sold
by the broker-dealer. If the shares (not including the Tax
Shares) purchased upon the exercise of an Option or a portion
thereof can not be sold for a price equal to or greater than
the sum of (x) the full exercise price, (y) direct costs of
the sales, and (z) any shortfall on the minimum tax
withholding amount as a result of rounding down the number of
Tax Shares to the nearest whole share (the "Tax Rounding
Amount"), 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 (not including the Tax Shares) in the open
market. The broker-dealer will return the Tax Shares
to the Company's transfer agent and will remit to the Company
an amount (the "Company Amount") of the sale proceeds equal
to the amount necessary to satisfy the Grantee's repayment of
the borrowing and any additional withholding of taxes
(including any Tax Rounding Amounts). The broker-dealer will
remit the net proceeds to the Grantee after deduction of
costs, if any, and any Company Amount. 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 instructions 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 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. Grantee also
agrees to pay interest on the account balance at the AFR for
short-term loans from and after demand."
2. Paragraph (e) of Section 4 of the Agreement is hereby amended
and replaced in its entirety to read as follows:
"(e) Taxes.
(i) Any taxes required by federal, state or
local laws to be withheld by the Company on the Date of 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.
Any taxes required by federal, state or local laws to be
withheld by the Company on the delivery of unrestricted
shares of Common Stock pursuant to the Restricted Stock Grant
shall be satisfied by the time such taxes are required to be
paid or deposited by the Company. The Grantee hereby
authorizes the Company to take the following actions prior to
the delivery of unrestricted shares of Common Stock: (x)
deduct a sufficient number of shares of Common Stock to
satisfy the tax withholding and (y) convert to cash a
sufficient number of shares of Common Stock to satisfy the
Tax Rounding Amount.
(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 satisfied before
delivery of shares of Common Stock is made to the Grantee.
The Grantee hereby authorizes the Company to take the
following actions prior to the delivery of unrestricted
shares of Common Stock: (x) deduct a sufficient number of
shares of Common Stock to satisfy the tax withholding and (y)
convert to cash a sufficient number of shares of Common Stock
to satisfy the Tax Rounding Amount. When the tandem Option is
exercised under the broker-dealer exercise method, the
Grantee hereby agrees that the full amount of the taxes
required to be
withheld by the Company on exercise of stock options shall be
satisfied by the broker-dealer returning the applicable
number of Tax Shares to the Company's transfer agent and
remitting any Tax Rounding Amounts to the Company."
3 All references to the Agreement shall be deemed to refer to
the Agreement as amended by this Amendment No. 2.
4. Except as specifically amended hereby, the original provisions
of the Agreement shall remain in full force and effect.
5. This Amendment No. 2 may be executed in counterparts, each of
which shall be deemed as original, but all of which shall
constitute the same instrument.
6. The laws of the state of Delaware shall govern the
interpretation, validity and performance of the terms of this
Amendment No. 2 regardless of the laws that might be applied
under principles of conflicts of laws.
7. This Amendment No. 2 shall be effective as of the date hereof.
IN WITNESS WHEREOF, this Amendment No. 2 been duly executed
and delivered by the Company and the Grantee as of the date first above
written.
X.X. XXXXXXXX TOBACCO HOLDINGS, INC.
By:______________________________________
Authorized Signatory
-------------------------
Grantee
