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EXHIBIT 10.4
X.X. XXXXXXXX TOBACCO HOLDINGS INC.
1999 LONG TERM INCENTIVE PLAN
TANDEM RESTRICTED STOCK/STOCK OPTION
AGREEMENT
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DATE OF GRANT: July 28, 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") X.X. Xxxxxxxx Tobacco Holdings, Inc. (the "Company") on the above date
has granted, and this Agreement evidences the grant to
(NAME) (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 (NUMBER) 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
(NUMBER) SHARES OF COMMON STOCK OF THE COMPANY ("COMMON
STOCK"), AT THE EXERCISE PRICE OF $27.50 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
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with instructions from the Company to the Company's transfer agent that such
shares 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) July 28, 2002, for 50% of the shares,
July 28, 2003, for an additional 25% of the shares,
July 28, 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 Chief Executive Officer 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
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this Section 2(b) will lapse with respect to that number of shares of Common
Stock which is equal to (x) the product of (A) the total number of shares of
Common Stock granted to the Grantee under this Agreement and (B) a fraction,
the numerator of which is the number of whole or partial months between the
Date of Grant and date of the Grantee's Termination of Employment (as defined
in Section 2(c) of this Agreement) and the denominator of which is 60, minus
(y) the number of shares of Common Stock granted to the Grantee under this
Agreement as to which the restrictions set forth in this Section 2(b) have
lapsed prior to such involuntary termination of employment.
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
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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 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 April 28, 2002 until June 28,
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 April 28, 2003 until June 28,
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 April 28, 2004 until June 28,
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 July 28, 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.
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(vi) In the event of a Change of Control which occurs prior
to July 28, 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 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 July 28, 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
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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. 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. Xxxxxxx 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
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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.
(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, X.X. Xxxxxxxx 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
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Xxxxx 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 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.
X.X. XXXXXXXX TOBACCO HOLDINGS INC.
By:-----------------------------------
Authorized Signatory
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Grantee
Xxxxxxx's Taxpayer Identification Number:
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Xxxxxxx's Home Address:
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