Form of Director RSU Award Agreement under 22nd Century Group, Inc. 2021 Omnibus Incentive Plan

EX-10.4 4 tm2117228d1_ex10-4.htm EXHIBIT 10.4


Exhibit 10.4







This Agreement (this “Agreement”) is made as of _________ ___, _____ (the “Effective Date” and the “Date of Grant”), between 22nd Century Group, Inc., a Nevada corporation (the “Company”), and _________________ (the “Director”).


WHEREAS, the Company has adopted the 22nd Century Group, Inc. 2021 Omnibus Incentive Plan (the “Plan”), providing for awards to certain officers, employees, directors, consultants and advisors of the Company and its Affiliates; and


WHEREAS, the Administrator of the Plan has determined that it would be in the best interest of the Company and its shareholders to provide the Director with an incentive to remain in the service of the Company and to increase shareholder value by providing the Director with the opportunity to own Stock of the Company.


NOW THEREFORE, in consideration of the promises and mutual agreements set forth in this Agreement, the Director and the Company hereby agree as follows:


1.             Grant of Award.


(a)               Award. The Company, as of the Effective Date, hereby grants to the Director an award (the “Award”) of ______ restricted stock units (the “RSUs”) subject to the restrictions, terms and conditions set forth below and in the Plan.


(b)               Omnibus Incentive Plan. This Award is granted pursuant to the Plan, a copy of which the Director acknowledges having received. The terms and conditions of the Plan are incorporated into this Agreement by reference. If there is a conflict between the provisions of this Agreement and the provisions of the Plan, the provisions of the Plan will govern. Capitalized terms not otherwise defined in this Agreement have the meanings set forth in the Plan.


2.             Vesting of Award.


Subject to Section 4, all of the RSUs shall vest on the first anniversary of the Date of Grant.


3.             Settlement.


As soon as reasonably practicable (but no more than thirty (30) days) after the vesting date or event (in the case of Section 4), the Company will issue to the Director a number of Shares equal to the number of RSUs that vested on such date or event.





4.            Change in Control or Termination of Service.


In the event of (i) a Change in Control of the Company (as defined below) or (ii) termination of Director’s service with the Company as a result of death or Disability (as defined below), then all then-unvested RSUs shall become 100% vested as of the date of such event (or, in the case of a Change in Control, as of immediately prior to the date of such event). In the event of the termination of Director’s service with the Company for any reason other than death or Disability, all then-unvested RSUs will be forfeited as of the date of such termination without consideration therefor.


For purposes of this Agreement, a "Change in Control" shall be deemed to exist if any of the following occurs:


(a)               a person, as defined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (other than the Director or a group including the Director), either (1) acquires twenty percent (20%) or more of the combined voting power of the outstanding securities of the Company or any entity which directly or indirectly controls the Company, which securities have the right to vote in elections of directors of the Company or any entity which directly or indirectly controls the Company, and such acquisition shall not have been approved within sixty (60) days following such acquisition by a majority of the Continuing Directors (as defined below) then in office, or (2) acquires fifty percent (50%) or more of the combined voting power of the outstanding securities of the Company or any entity which directly or indirectly controls the Company, which securities have the right to vote in elections of directors of the Company or any entity which directly or indirectly controls the Company; or


(b)               Continuing Directors shall for any reason cease to constitute a majority of the Board; or


(c)               the Company or any entity which directly or indirectly controls the Company disposes, by sale of stock, assets or otherwise, of all or substantially all or a material portion of the business of the Company or the business of any entity which directly or indirectly controls the Company to a party or parties other than a subsidiary or other affiliate of the Company or any entity which directly or indirectly controls the Company pursuant to a partial or complete liquidation of the Company or any entity which directly or indirectly controls the Company; or


(d)               the Board or any entity which directly or indirectly controls the Company approves the consolidation or merger of the Company or any entity which directly or indirectly controls the Company with or into any other person or entity (other than a wholly-owned subsidiary of the Company or any other entity which is directly or indirectly controlled by the Company or its parent corporation), or any other person's consolidation or merger with or into the Company or any entity, which directly or indirectly controls the Company, which results in all or part of the outstanding shares of common stock of the Company or any entity which directly or indirectly controls the Company being changed in any way or converted into or exchanged for stock or other securities or cash or any other property.





For purposes of the definition of Change in Control, the term "Continuing Director" shall mean a member of the Board or any entity which directly or indirectly controls the Company who either was a member of the Board on the date hereof or who subsequently became a director of the Company or any entity which directly or indirectly controls the Company and whose election, or nomination for election, was approved by a vote of at least two-thirds (2/3) of the Continuing Directors then in office.


For purposes of this Agreement, “Disability” shall mean the Director’s failure, due to a mental or physical condition, to perform the essential functions of the Director’s position for more than 120 days in any 360 day period.


5.             Rights as a Shareholder; Dividend Equivalents.


The Director shall not have any rights of a shareholder with respect to the Shares underlying the RSUs (including, without limitation, any voting rights or any right to dividends) until the Shares have been issued hereunder. If, however, after the Date of Grant and prior to the settlement date, a record date with respect to a cash dividend on the Shares occurs, then on the date that such dividend is paid to Company shareholders the Director shall be credited with “dividend equivalents” in an amount equal to the dividends that would have been paid to the Director if the Director owned a number of Shares equal to the number of outstanding RSUs hereunder as of such record date. The dividend equivalents will be deemed to be reinvested in additional restricted stock units (determined by multiplying the cash dividends paid by the Fair Market Value of a Share on the dividend payment date) and will be subject to the same terms and conditions, and shall vest and be settled or be forfeited (if applicable) at the same time as the RSUs to which they are attributable.


6.             Restrictions on Transfer.


The Director may not transfer any interest in the RSUs other than under the Director’s will or as required by the laws of descent and distribution. The RSUs also may not be pledged, attached, or otherwise encumbered. Any purported assignment, alienation, sale, transfer, pledge, attachment or encumbrance of the RSUs in violation of the terms of this Agreement shall be null and void and unenforceable against the Company or its successors. In addition, notwithstanding anything to the contrary herein, the Director agrees and acknowledges that (a) with respect to any Shares issued hereunder that have not been registered under the Securities Act of 1933, as amended (the “Act”), he or she will not sell or otherwise dispose of such Shares except pursuant to an effective registration statement under the Act and any applicable state securities laws, or in a transaction which, in the opinion of counsel for the Company, is exempt from such registration, and a legend will be placed on the certificates for the Shares to such effect, and (b) the Director agrees not to sell any Shares acquired under this Award other than as set forth in the Plan and at a time when applicable laws, Company policies or an agreement between the Company and its underwriters do not prohibit a sale.





7.            Agreements of the Director.


The Director acknowledges that: (a) this Agreement is not a contract of employment or service and the terms of the Director’s service are not affected in any way by this Agreement except as specifically provided in this Agreement; and (b) the Award made by this Agreement does not confer any legal rights upon the Director for continuation of service or interfere with or limit any right to terminate the Director’s service.


8.             Legal Compliance Restrictions.


The Company is not obligated to issue or deliver any certificates or make any book entry evidencing Shares subject to the RSUs unless and until the Company is advised by its counsel that the issuance and delivery of the certificates or book entry are in compliance with all applicable laws, regulations of governmental authorities and the requirements of any securities exchange upon which the Shares are traded.


9.             Taxes.


As a condition of receiving this award of RSUs, the Director agrees to pay to the Company upon demand such amount as may be requested by the Company for the purpose of satisfying its liability to withhold federal, state, or local income or other taxes, if any, due by reason of the grant, vesting or settlement of, or by reason of any other event relating to, the RSUs. However, the Director may elect to have the Company satisfy any such withholding obligations by withholding a number of Shares otherwise issuable hereunder having a Fair Market Value on the date the tax obligation arises equal to the amount to be withheld; provided, however, that the amount to be withheld may not exceed the total maximum statutory tax rates associated with the transaction to the extent needed for the Company to avoid adverse accounting treatment. If the Director does not make the payment or election described in the foregoing, then the Company or an affiliate may withhold such taxes from other amounts owed to the Director or may choose to satisfy the withholding obligations by withholding Shares otherwise issuable hereunder in accordance with the preceding sentence.


10.           Notices.


Except as otherwise provided in this Agreement, all offers, notices and other communications given pursuant to this Agreement will be deemed to have been properly given if in writing and (a) hand delivered, (b) mailed, addressed to the appropriate party at the address of the party as shown at the beginning of this Agreement, postage prepaid, by certified or registered mail or by Federal Express or similar overnight courier service, or (c) sent by e-mail, facsimile or similar electronic transmission, with confirmation sent by way of one of the methods provided above. Either party may from time to time designate by written notice given in accordance with the provisions of this Section any other address or party to which such notice or communication or copies thereof must be sent.





11.          Binding Effect.


This Agreement is binding upon, and inures to the benefit of, the respective successors, assigns, heirs, executors, administrators and guardians of the parties hereto.


12.           Opportunity to Review.


The Director acknowledges and understands that this Agreement has been prepared on behalf of the Company by its legal counsel. The Director further acknowledges and understands that it is advisable for him or her to, and he or she has had reasonable opportunity to, consult with legal counsel or other independent advisors, other than the Company’s legal counsel, with respect to the terms and conditions of this Agreement


13.           Severability.


Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be enforceable under applicable law. However, if any provision of this Agreement is deemed unenforceable under applicable law by a court having jurisdiction, the provision will be unenforceable only to the extent necessary to make it enforceable without invalidating the remainder thereof or any of the remaining provisions of this Agreement.


14.           New York Law.


This Agreement will be construed and interpreted in accordance with the laws of the State of New York without regard to principles of conflicts of law.


15.           Multiple Counterparts.


This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. Any party may execute this Agreement by facsimile signature and the other party is entitled to rely on such facsimile signature as evidence that this Agreement has been duty executed by that party. Any party executing this Agreement by facsimile signature must immediately forward to the other party an original signature page by overnight mail.





IN WITNESS WHEREOF, the Company and the Director have caused this Agreement to be executed and delivered, all as of the day and year first above written.