Document:

EX-10.1

 

Exhibit 10.1

REYNOLDS AMERICAN INC.

LONG-TERM INCENTIVE PLAN

PERFORMANCE SHARE AGREEMENT

DATE OF GRANT: AUGUST 31, 2004

W I T N E S S E T H:

     1. Grant. Pursuant to the provisions of the Reynolds American
Inc. Long-Term Incentive Plan (the “Plan”), Reynolds American Inc. (the “Company”) on the date
set forth above has granted to

“FirstName” “LastName” (the “Grantee”),

subject to the terms and conditions which follow and the terms and conditions
of the Plan, a grant of

“Number” Performance Shares.

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 defined in
this Agreement.

     2. Valuation of Performance Shares. Each Performance Share
shall be equal in value to one share of Common Stock.

     3. Vesting. (a) The Performance Shares shall vest on the
following dates in accordance with the following vesting schedule:

	 	 	 
	(i)

	 	34% on August 31, 2005;
	(ii)

	 	33% on August 31, 2006; and
	(iii)

	 	33% on August 31, 2007.

For the Performance Shares to vest on each such vesting date, the Company must
have paid to its shareholders a dividend of at least $.95 per share in each
fiscal quarter during the period commencing on the Date of Grant and ending on
such vesting date (the “Threshold Requirement”), unless the Company’s Board of
Directors specifically approves the noncancellation of the Performance Shares
upon the declaration of a quarterly dividend of less than $.95 per share. In
the event the Company fails to pay its shareholders a dividend of at least $.95
per share in any fiscal quarter during the period from the Date of Grant and
ending on August 31, 2007, and the Company’s Board of Directors does not
approve the noncancellation of the Performance Shares, the Performance Shares
that have not yet vested shall be cancelled.

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     (b) Notwithstanding anything in Section 3(a) of this Agreement to
the contrary, in the event of (i) the Grantee’s death, (ii) the Grantee’s Permanent
Disability (as such term is defined in the Company’s Long-Term Disability
Plan), or (iii) a Change of Control, 100% of the Performance Shares not
previously vested or cancelled due to the Company’s failure to meet the
Threshold Requirement, shall vest.

     (c) Notwithstanding anything in Section 3(a) of this Agreement to
the contrary, in the event of (i) the Grantee’s involuntary Termination of Employment without
Cause (as such terms are defined in Section 4 of this Agreement), or (ii) the
Grantee’s Retirement (as such term is defined below), the number of Performance
Shares that will vest, if not previously cancelled due to the Company’s failure
to meet the Threshold Requirement, shall be equal to (x) the product of (A) the
original number of Performance Shares granted to the Grantee under this
Agreement and (B) a fraction, the numerator of which shall be the number of
whole or partial months between August 31, 2004 and the date of the Grantee’s
Termination of Employment, and the denominator of which shall be 36, minus (y)
the number of Performance Shares previously vested. For purposes of this
Agreement, the term “Retirement” shall mean an employee’s voluntary Termination
of Employment on or after his or her 65th birthday, or on or after his or her
55th birthday with 10 or more years of service with the Company or a subsidiary
of the Company.

     (d) Notwithstanding anything in Section 3(a) of this Agreement to
the contrary, in the event of the Grantee’s voluntary Termination of Employment (other than
at Retirement) or Termination of Employment for Cause (as such terms are
defined in Section 4 of this Agreement), the Performance Shares that have not
yet vested shall be cancelled.

     4. Termination of Employment. (a) For purposes of this
Agreement, the term “Termination of Employment” shall mean termination from active employment with
the Company or a subsidiary of the Company; it does not mean the termination of
pay and benefits at the end of a period of salary continuation (or other form
of severance pay or pay in lieu of salary).

     (b) For purposes of this Agreement, if the Grantee has an employment or
severance agreement, employment shall be deemed to have been terminated for
“Cause” only as such term is defined in the employment or severance agreement.
For purposes of this 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 of
Employment results from the Grantee’s: (i) criminal conduct; (ii) deliberate
and 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 human resources executive of the Company shall
confirm that any such Termination of Employment 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.

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     5. Dividends. As of the date any dividend is paid to
shareholders of Common Stock, the Grantee shall be paid an amount equal to the product of (a) the
number of Performance Shares held by the Grantee that have not yet vested or
been cancelled pursuant to Section 3 of this Agreement, and (b) the dividend
per share of Common Stock paid to shareholders of Common Stock on such date.
In the case of dividends paid in property, the dividend shall be deemed to be
the fair market value of the property at the time of distribution of the
dividend, as determined by the Committee.

     6. Payment. (a) Payment of Performance Shares shall be made
only in cash as soon as practicable following the date of vesting. The amount of payment shall
be determined by multiplying (i) the number of vesting Performance Shares by
(ii) the Fair Market Value at which the Common Stock is traded at the close of
business on the vesting date.

     (b) In the event of the death of a Grantee, any payment to which such
Grantee is entitled under the Plan shall be made to the beneficiary designated
by the Grantee to receive the proceeds of any noncontributory group life
insurance coverage provided for the Grantee by the Company or a subsidiary of
the Company (“Group Life Insurance Coverage”). If the Grantee has not
designated such beneficiary, or desires to designate a different beneficiary,
the Grantee may file with the Company a written designation of a beneficiary
under the Plan, which designation may be changed or revoked only by the
Grantee, in writing. If no designation of beneficiary has been made by a
Grantee under the Group Life Insurance Coverage or filed with the Company under
the Plan, distribution upon such Grantee’s death shall be made in accordance
with the provisions of the Group Life Insurance Coverage. If a Grantee is no
longer an employee of the Company at the time of death, no longer has any Group
Life Insurance Coverage and has not filed a designation of beneficiary with the
Company under the Plan, distribution upon such Grantee’s death shall be made to
the Grantee’s estate.

     7. Transferability. Other than as specifically provided in this
Agreement with regard to the death of the Grantee, this Agreement and any benefit provided or
accruing hereunder shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or change; and any
attempt to do so shall be void. No such benefit shall, prior to receipt
thereof by the Grantee, be in any manner liable for or subject to the debts,
contracts, liabilities, engagements or torts of the Grantee.

     8. No Right to Employment. Neither the execution and delivery
of this Agreement nor the granting of the Performance Shares evidenced by this
Agreement shall constitute 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 specific capacity or shall prevent the Company or its
subsidiaries from terminating the Grantee’s employment at any time with or
without Cause.

     9. Adjustments in Performance Shares. In the event that the
outstanding shares of the Common Stock subject to the Grant are, from time to time, changed into
or exchanged for a different number or kind of shares of the Company or other
securities by reason of a merger, consolidation, recapitalization,
reclassification, stock split, stock

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dividend, spinoff combination of shares or otherwise, the Committee shall make
an appropriate and equitable adjustment in the number and kind of shares or
other consideration as to which the Grant shall be equivalent. Any adjustment
made by the Committee shall be final and binding upon the Grantee, the Company
and all other interested persons.

     10. Application of Laws. The Grant and the obligations of the Company
hereunder shall be subject to all applicable laws, rules and regulations and to
such approvals of any governmental agencies as may be required.

     11. Taxes. Any taxes required by federal, state or local laws to
be withheld by the Company on the grant or payment of Performance Shares 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 necessary
withholding by the Company to satisfy such tax withholding obligations prior to
delivery of the payment of the Performance Shares.

     12. Notices. Any notices required to be given hereunder to the
Company shall be addressed to The Secretary, Reynolds American Inc., Post Office Box 2990,
Winston-Salem, NC 27102-2990, 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.

     13. Administration and Interpretation. In consideration of the
grant of Performance Shares hereunder, the Grantee specifically agrees that the
Compensation 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 this Agreement as are consistent therewith and
to interpret or revoke any such rules. All actions taken and all
interpretation and determinations made by the Compensation Committee shall be
final, conclusive and binding upon the Grantee, the Company and all other
interested persons. No member of the Compensation Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or this Agreement. The Compensation Committee
may delegate its interpretive authority to an officer or officers of the
Company.

     14. Amendment. The Board of Directors may amend the Plan and the
Compensation Committee may amend this Agreement at any time and in any way,
except that any amendment of the Plan or this Agreement that would impair the
Grantee’s rights under this Agreement may not be made without the Grantee’s
written consent.

     15. Obligations of Grantee. (a) In consideration of the grant of
Performance Shares hereunder, the Grantee, both while actively employed and in the event of
Grantee’s Termination of Employment for any reason, specifically agrees that
within the term of this Grant or within one year following the payment of any
amounts pursuant to the Grant, if later: (i) the Grantee will personally
provide reasonable assistance and cooperation to the Company in activities
related to the prosecution or defense of any pending or future lawsuits or
claims involving the Company; (ii) the Grantee will promptly notify the Company
upon receipt of any requests from anyone other than an employee or agent of the
Company for information regarding the Company, or if the Grantee becomes aware
of any potential claim or proposed litigation against the

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Company; (iii) the Grantee will refrain from providing any information related
to any claim or potential litigation against the Company to any non-Company
representatives without either the Company’s written permission or being
required to provide information pursuant to legal process; (iv) the Grantee
will not disclose or misuse any confidential information or material concerning
the Company; and (v) the Grantee will not engage in any activity contrary or
harmful to the interests of the Company. In further consideration of the grant
of Performance Shares hereunder, the Grantee specifically agrees that if
required by law to provide sworn testimony regarding any Company-related
matter: the Grantee will consult with and have Company designated legal counsel
present for such testimony (the Company will be responsible for the costs of
such designated counsel); the Grantee will confine his or her testimony to
items about which the Grantee has knowledge rather than speculation, unless
otherwise directed by legal process; and the Grantee will cooperate with the
Company’s attorneys to assist their efforts, especially on matters the Grantee
has been privy to, holding all privileged attorney-client matters in strictest
confidence.

     (b) If the Company reasonably determines that the Grantee has materially
violated any of the Grantee’s obligations under this Agreement, then this Grant
shall terminate, effective the date on which such violation began (unless
otherwise terminated sooner), and the Company may demand the return of any
amount paid to the Grantee hereunder, and the Grantee hereby agrees to return
such amounts upon such demand. If after such demand the Grantee fails to
return such amounts, the Grantee acknowledges that the Company has the right to
deduct from any amounts the Company owes to the Grantee (including, but not
limited to, wages or other compensation), or to commence judicial proceedings
against the Grantee, to recover such amounts and any and all of its attorney’s
fees and costs.

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     16. GOVERNING LAW. THE LAWS OF THE STATE OF NORTH
CAROLINA 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.

	 	 	 	 	 
	

	 	REYNOLDS AMERICAN INC.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	
 
	

	 	 	 	Authorized Signatory
	 
	 	 	 	 
	
	 	 	 	 
	Grantee	 	 	 	 
	 
	 	 	 	 
	Grantee’s Taxpayer Identification Number:
	 	 	 	 
	 
	 	 	 	 
	
 
	 
	 	 	 	 
	Grantee’s Home Address:
	 	 	 	 
	 
	 	 	 	 
	
 
	 
	 	 	 	 
	
 
	 
	 	 	 	 
	
 

6EX-10.2 FORM OF INCENTIVE STOCK OPTION AGREEMENT

 

EXHIBIT 10.2

R & G Financial Corporation

2004 STOCK OPTION PLAN

INCENTIVE STOCK OPTION AGREEMENT

     Stock Option Agreement (this “Option Agreement”), dated as of
            (the “Grant Date”), between R & G Financial Corporation (the
“Company”) and             (the
“Participant”). This Option Agreement is pursuant to the terms of the R & G
Financial Corporation 2004 Stock Option Plan (the “Plan”), a copy of which has
been furnished to the Participant and the terms of which are incorporated
herein by reference. Unless otherwise indicated, whenever capitalized terms are
used in this Option Agreement, they shall have the meanings set forth in the
Plan.

     Section 1. Grant of Options. The Participant is hereby granted an option
representing
            shares of Common Stock (“Shares”) under the terms and
conditions specified herein (the “Option”). Such Option is intended to
constitute an Incentive Stock Option. If the Option granted hereunder fails
to qualify as an Incentive Stock Option for any reason, then the Option, or
portion thereof that does not so qualify, shall be treated as a Nonqualified
Stock Option.

     Section 2. Option Price. The exercise price of the Option shall be
$        per share (the “Option Price”).

     Section 3. Vesting of Option.

     3.1     Vesting Schedule. The Option shall vest and become exercisable based
on the passage of time according to the following vesting schedule:

20% of the Shares vest 1 year from the Grant Date.

40% of the Shares vest 2 years from the Grant Date.

60% of the Shares vest 3 years from the Grant Date.

80% of the Shares vest 4 years from the Grant Date.

100% of the Shares vest 5 years from the Grant Date.

     3.2     Accelerated Vesting. Notwithstanding Section 3.1, the Option shall
become fully and immediately vested and exercisable upon: (i) a Sale Event; or
(ii) upon the death, Disability or Retirement of the Participant as set forth
in Section 8.01(b) of the Plan.

     3.3     Discretionary Vesting. The Board may, in its sole discretion,
accelerate the vesting of the Option at any time and for any reason.

     Section 4. Incentive Stock Option Limitation. Pursuant to section 422(d)
of the Code and the applicable provision of the PRC, to the extent the
aggregate Fair Market Value of shares of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by the Participant
during any calendar year under all plans of the Company and its subsidiaries
exceeds $100,000, such options shall be treated as Nonqualified Stock Options
(the Company shall designate which options will be treated as Nonqualified
Stock Options).

 

 

     Section 5. Option Term. The Option may be exercised, to the extent that
it is vested pursuant to Section 3, during the Option Term, unless earlier
terminated in accordance with the terms of the Plan. For purposes hereof, the
“Option Term” shall commence on the Grant Date and shall expire on the tenth
anniversary thereof. Upon the expiration of the Option Term, to the extent
unexercised, the Option shall terminate and be of no further force or effect.

     Section 6. Exercise of Option. An Option may be exercised by the
Participant (or such other person as may be specified in the Plan) to the
extent vested, with respect to whole shares only, by giving written notice to
the Company of exercise along with payment of the aggregate exercise price.
The Option Price for the Shares acquired pursuant to the exercise of the Option
shall be paid: (i) in cash or by check; (ii) in whole shares of Common Stock;
or (iii) a combination of (i) and (ii) above. The value of any share of Common
Stock delivered in payment of the Option Price shall be its Fair Market Value
on the date the Option is exercised.

     Section 7. Withholding of Taxes. The Company shall withhold from any
amounts due and payable by the Company to the Participant (or secure payment
from the Participant in lieu of withholding) the amount of any federal or state
withholding or other taxes, if any, due from the Company with respect to the
exercise of the Option, and the Company may defer such issuance until such
withholding or payment is made unless otherwise indemnified to its satisfaction
with respect thereto. The Company shall have the right to: (i) make deductions
from any settlement of this Option, including the delivery of Shares, or
require Shares or cash, or both, be withheld from any settlement of this
Option, in each case in an amount sufficient to satisfy the withholding
obligation; or (ii) take such other action as may be necessary or appropriate
to satisfy the withholding obligation.

     Section 8. Adjustments. If at any time while the Option is outstanding,
the number of outstanding shares of Common Stock is changed by reason of a
reorganization, recapitalization, stock split or any other event described in
Article V of the Plan, the number and/or kind of Shares subject to the Option
and/or the Option Price of such Shares shall be adjusted in accordance with the
provisions of the Plan.

     Section 9. Option Not Transferable. This Option may not be transferred,
pledged, assigned, hypothecated or otherwise disposed of in any way by the
Participant, except by will or laws of descent and distribution, and during the
Participant’s life, may only be exercised by the Participant. Any attempt to
effect a transfer of this Option that is not otherwise permitted by the Board,
the Plan, or this Option Agreement shall be null and void.

     Section 10. Disqualifying Disposition. If Shares acquired by exercise of
the Option are disposed of within two years following the Grant Date or one
year following the transfer of such Shares to the Participant upon exercise,
the Participant shall, promptly following such disposition, notify the Company
in writing of the date and terms of such disposition and provide such other
information regarding the disposition as the Board may reasonably require.

     Section 11. No Rights as Shareholder or Continued Employment.

     11.1     No Right as Shareholder. The Participant shall not have any
privileges of a Shareholder of the Company with respect to any Shares subject
to (but not acquired upon valid

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exercise of) the Option, nor shall the Company have any obligation to pay
any dividends or otherwise afford any rights to which Shares are entitled with
respect to such Shares, until the date of the issuance to the Participant of a
stock certificate evidencing such Shares.

     11.2     No Right to Continued Employment. Nothing in this Option Agreement
shall confer upon a Participant who is an employee of the Company or any of its
subsidiaries any right to continue in the employ of the Company or any of its
subsidiaries or to interfere in any way with the right of the Company or any of
its subsidiaries to terminate the Participant’s employment at any time.

     Section 12. Miscellaneous Provisions.

     12.1     Notices. All notices, requests and demands to or upon a party hereto
shall be in writing and shall be deemed to have been duly given when delivered
by hand or three days after being deposited in the mail, postage prepaid or, in
the case of facsimile notice, when received, addressed as follows or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be
effective only upon receipt.

         If to the Company, to the following address:

R & G Financial Corporation

280 Jesus T. Piñero Avenue

Hato Rey, San Juan, Puerto Rico 00918

Attn: Joseph R. Sandoval,

         Executive Vice President and Chief Financial Officer

Facsimile: (787) 766-8175

         If to the Participant, to the address or facsimile number as shown on the
signature page hereto.

     12.2     Amendment. This Option Agreement may be amended only by a writing
executed by the parties hereto that specifically states that it is amending
this Option Agreement.

     12.3     Governing Law. This Option Agreement shall be construed and
interpreted in accordance with and governed by the laws of the Puerto Rico,
other than the conflict of laws provisions of such laws.

     12.4     Titles. Titles are provided herein for convenience only and are not
to serve as a basis for interpretation or construction of this Option
Agreement.

     12.5     Construction. The construction of this Option Agreement is vested in
the Board, and the Board’s construction shall be final and conclusive on all
persons.

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     IN WITNESS WHEREOF, this Option Agreement has been executed and delivered
by the parties hereto.

	 	 	 
	PARTICIPANT

	 	R & G FINANCIAL CORPORATION
	 
	 	 
	

	 	

	Name:

	 	Name:
	 
	 	 
	

	 	

Title:
	 
	 	 
	

	 	 
	Address:
	 	 
	 
	 	 
	

	 	 
	Telephone number:
	 	 
	 
	 	 
	

	 	 
	Facsimile:
	 	 

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