22nd CENTURY GROUP, INC.

2014 OMNIBUS INCENTIVE PLAN

STOCK OPTION AWARD AGREEMENT

 

                                Dear :  

 

You have been granted an option (this “Option”) to purchase shares of the common
stock of 22nd Century Group, Inc. (the “Company”) pursuant to the Company’s 2014
Omnibus Incentive Plan (the “Plan”) and this Stock Option Award Agreement (this
“Option Agreement”). This Option is granted under and governed by the terms and
conditions of the Plan and this Option Agreement. Additional provisions
regarding this Option and definitions of capitalized terms used and not defined
in this Option Agreement can be found in the Plan.

 

Grant Date:   _____________ ___, 20__       Type of Option:   ¨ Incentive Stock
Option     ¨ Nonqualified Stock Option       Number of Option Shares:  
___________       Exercise Price per Share:   $__.__       Term:   This Option
shall expire on the tenth anniversary of the Grant Date (the “Expiration Date”),
unless terminated earlier pursuant to the terms of this Option Agreement or the
Plan.  Notwithstanding the foregoing, if this Option is designated as an
Incentive Stock Option and is granted to an employee who, at the time of the
grant, owns (directly or indirectly, within the meaning of Code Section 424(d))
more than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or of any Subsidiary, then the Expiration Date shall mean
the fifth anniversary of the Grant Date.           Upon termination or
expiration of this Option, all your rights hereunder shall cease.       Vesting:
  This Option will vest on the __________ anniversary of the Grant Date,
provided that you are continuously employed with or in the service of the
Company or its Affiliates through such anniversary date.           The vesting
of this Option may be accelerated in the Administrator’s sole discretion if it
determines circumstances so warrant.       Termination of
Employment:   The following conditions apply in the event that your employment
or service with the Company and its Affiliates is terminated prior to the
Expiration Date of this Option.  In no event, however, will the time periods
described herein extend the term of this Option beyond its Expiration Date or
beyond the date this Option is otherwise cancelled or terminates pursuant to the
provisions of the Plan.      

 

 

 

 

    a.        Termination Other than As a Result of Death, Disability or
Cause.  If your employment or service terminates (at a time when you could not
have been terminated for Cause) other than by reason of your death or Disability
and other than for Cause, then the unvested portion of this Option shall
automatically terminate immediately and the vested portion of this Option shall
automatically terminate 90 days after the date of such termination.          
b.        Termination for Cause.  If your employment or service terminates for
Cause, then this Option shall automatically terminate immediately on the date of
such termination.           c.        Termination As a Result of Death or
Disability.  If your employment or service terminates by reason of your death or
Disability (at a time when you could not have been terminated for Cause), then
the unvested portion of this Option shall automatically terminate immediately
and the vested portion of this Option shall automatically terminate 12 months
after such termination.           d.        Determination of Cause After
Termination.  Notwithstanding the foregoing, if after your employment or service
terminates the Company determines that it could have terminated you for Cause
had all relevant facts been known at the time of your termination, then the
Company may terminate this Option immediately upon such determination, and you
will be prohibited from exercising this Option thereafter.  In such event, you
will be notified of the termination of this Option.           If the date this
Option terminates as specified above (other than as a result of a termination
for Cause) falls on a day on which the stock market is not open for trading or
on a date on which you are prohibited by Company policy (such as an insider
trading policy) from exercising the Option, the termination date shall be
automatically extended to the first available trading day following the original
termination date, but not beyond the Expiration Date.       Manner of Exercise:
  You may exercise this Option only if it has not been forfeited or has not
otherwise expired, and only to the extent this Option is vested.  To exercise
this Option, you must comply with such exercise and notice procedures as the
Administrator may establish from time to time, including, without limitation,
payment of the exercise price and any applicable tax withholding
amounts.  Unless otherwise determined by the Administrator, the payment of the
exercise price and applicable tax withholding amounts may be made at your
election (i) in cash or its equivalent (e.g., by check), (ii) in Shares having a
Fair Market Value equal to the aggregate exercise price for the Shares being
purchased and satisfying such other requirements as may be imposed by the
Administrator (provided that such Shares have been held by the Participant for
no less than six months or such other period, if any, as established from time
to time by the Administrator to avoid adverse accounting treatment under
generally accepted accounting principles), (iii) partly in cash and partly in
such Shares, or (iv) by having the Company withhold from the Shares otherwise
issuable upon exercise a whole number of shares with a Fair Market Value equal
to the exercise price and applicable tax withholding amounts and issuing the net
number of remaining shares of Stock to you; provided that, if the whole number
of Shares does not exactly equal the exercise price and applicable tax
withholding amounts, then the Company will withhold the whole number of Shares
necessary to cover such amounts and will issue a check to you equal to the Fair
Market Value of any fractional Share not needed.      

 

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    A properly completed notice of stock option exercise (or such other notice
as is prescribed) will become effective upon receipt of the notice and any
required payment by the Company (or its designee); provided that the Company may
suspend exercise of the Option pending its determination of whether your
employment will be or could have been terminated for Cause and, if such a
determination is made, your notice of stock option exercise (or such other
notice as is prescribed) will automatically be rescinded.           If,
following your death, your beneficiary or heir, or such other person or persons
as may acquire your rights under this Option by will or by the laws of descent
and distribution, wishes to exercise this Option, such person must contact the
Company and prove to the Company’s satisfaction that such person has the right
and is entitled to exercise this Option.           Your ability to exercise this
Option, or the manner of exercise or payment of withholding taxes, may be
restricted by the Company if required by applicable law or by the Company’s
trading policies as in effect from time to time.       Restrictions on Resale  
By accepting this Option, you agree not to sell any shares of Stock acquired
under this Option at a time when applicable laws, Company policies or an
agreement between the Company and its underwriters prohibit a sale.      
Transferability:   You may not transfer or assign this Option for any reason,
other than by will or the laws of descent and distribution or as otherwise set
forth in the Plan.  Any attempted transfer or assignment of this Option, other
than as set forth in the preceding sentence or the Plan, will be null and void.
      Market Stand-Off:   In connection with any underwritten public offering by
the Company of its equity securities pursuant to an effective registration
statement filed under the Securities Act of 1933, as amended (the “Securities
Act”), you agree that you shall not directly or indirectly sell, make any short
sale of, loan, hypothecate, pledge, offer, grant or sell any option or other
contract for the purchase of, purchase any option or other contract for the sale
of, or otherwise dispose of or transfer or agree to engage in any of the
foregoing transactions with respect to, any Shares acquired under this Option
without the prior written consent of the Company and the Company’s
underwriters.  Such restriction shall be in effect for such period of time
following the date of the final prospectus for the offering as may be requested
by the Company or such underwriters.  In no event, however, shall such period
exceed one hundred eighty (180) days.      

 

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Recoupment; Rescission of Exercise:   If the Administrator determines that
recoupment of incentive compensation paid to you pursuant to this Option is
required under any law or any recoupment policy of the Company, then this Option
will terminate immediately on the date of such determination to the extent
required by such law or recoupment policy, any prior exercise of this Option may
be deemed to be rescinded, and the Administrator may recoup any such incentive
compensation in accordance with such recoupment policy or as required by
law.  The Company shall have the right to offset against any other amounts due
from the Company to you the amount owed by you hereunder and any exercise price
and withholding amount tendered by you with respect to any such incentive
compensation.       Notice of Disqualifying Disposition:   If this Option is
designated as an Incentive Stock Option and you sell Shares that were acquired
through the exercise of this Option within two years from the Grant Date or one
year from the date of exercise, you must notify the Administrator of the sale to
permit proper treatment of the compensation expense.       Restrictions on
Exercise, Issuance and Transfer of Shares:   a.        General.  No individual
may exercise this Option, and no shares of Stock subject to this Option will be
issued, unless and until the Company has determined to its satisfaction that
such exercise and issuance will comply with all applicable federal and state
securities laws, rules and regulations of the Securities and Exchange
Commission, rules of any stock exchange on which shares of Stock of the Company
may then be traded, or any other applicable laws.  In addition, if required by
underwriters for the Company, you agree to enter into a lock-up agreement with
respect to any shares of Stock acquired or to be acquired under this Option.    
      b.        Securities Laws.  You acknowledge that you are acquiring this
Option, and the right to purchase the shares of Stock subject to this Option,
for investment purposes only and not with a view toward resale or other
distribution thereof to the public which would be in violation of the Securities
Act.  You agree and acknowledge with respect to any shares of Stock that have
not been registered under the Securities Act, that: (i) you will not sell or
otherwise dispose of such shares of Stock, except as permitted pursuant to a
registration statement declared effective under the Securities Act and qualified
under any applicable state securities laws, or in a transaction which in the
opinion of counsel for the Company is exempt from such required registration,
and (ii) that a legend containing a statement to such effect will be placed on
the certificates evidencing such shares of Stock.  Further, as additional
conditions to the issuance of the shares of Stock subject to this Option, you
agree (with such agreement being binding upon any of your beneficiaries, heirs,
legatees and/or legal representatives) to do the following prior to any issuance
of such shares of Stock: (i) to execute and deliver to the Company such
investment representations and warranties as are required by the Company; (ii)
to enter into a restrictive stock transfer agreement if required by the Board;
and (iii) to take or refrain from taking such other actions as counsel for the
Company may deem necessary or appropriate for compliance with the Securities
Act, and any other applicable federal or state securities laws, regardless of
whether the shares of Stock have at that time been registered under the
Securities Act, or otherwise qualified under any applicable state securities
laws.        

 

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Miscellaneous:   ·         This Option Agreement may be amended only by written
consent signed by both you and the Company, unless the amendment is not to your
detriment or the amendment is otherwise permitted without your consent by the
Plan.           ·         The failure of the Company to enforce any provision of
this Option Agreement at any time shall in no way constitute a waiver of such
provision or of any other provision hereof.           ·         You will have
none of the rights of a shareholder of the Company with respect to this Option
until Shares are transferred to you upon exercise of the Option.          
·         In the event any provision of this Option Agreement is held illegal or
invalid for any reason, such illegality or invalidity shall not affect the
legality or validity of the remaining provisions of this Option Agreement, and
this Option Agreement shall be construed and enforced as if the illegal or
invalid provision had not been included in this Option Agreement.          
·         As a condition to the grant of this Option, you agree (with such
agreement being binding upon your legal representatives, guardians, legatees or
beneficiaries) that this Option Agreement shall be interpreted by the
Administrator and that any interpretation by the Administrator of the terms of
this Option Agreement or the Plan, and any determination made by the
Administrator pursuant to this Option Agreement or the Plan, shall be final,
binding and conclusive.           ·         This Option Agreement may be
executed in counterparts.

 

BY SIGNING BELOW AND AGREEING TO THIS STOCK OPTION AWARD AGREEMENT, YOU AGREE TO
ALL OF THE TERMS AND CONDITIONS DESCRIBED HEREIN AND IN THE PLAN. YOU ALSO
ACKNOWLEDGE HAVING READ THIS AGREEMENT AND THE PLAN.

 

22nd CENTURY GROUP, INC.             By:         [Name of Authorized Officer]  
[Name of Recipient]

 

Date:    

 

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