Employee Stock Purchase Plan

EXHIBIT 10.3


800-JR CIGAR, INC.


EMPLOYEE STOCK PURCHASE PLAN


ARTICLE I
Introduction


Sec. 1.01 Statement of Purpose. The purpose of the 800-JR Cigar, Inc. Employee Stock Purchase Plan is to provide eligible employees of the Company and its Subsidiaries, who wish to become stockholders, an opportunity to purchase Common Stock of the Company. The Board of Directors of the Company believes that employee participation in ownership will be to the mutual benefit of the employees and the Company.


Sec. 1.02 Internal Revenue Code Considerations. The Plan is intended to constitute an "employee stock purchase plan" within the meaning of section 423 of the Internal Revenue Code of 1986, as amended.


ARTICLE II
Definitions


Sec. 2.01 "Administrative Committee" means the committee appointed by the Board to administer the Plan, as provided in Section 6.04 hereof.


Sec. 2.02 "Board" means the Board of Directors of the Company.


Sec. 2.03 "Code" means the Internal Revenue Code of 1986, as amended.


Sec. 2.04 "Company" means 800-JR Cigar, Inc., a Delaware corporation.


Sec. 2.05 "Compensation" means the total remuneration paid, during the period of reference, to an Employee by the Company or a Subsidiary, including regular salary or wages, overtime payments, bonuses, commissions and vacation pay, to which has been added (a) any elective deferral amounts by which the Employee has had his current remuneration reduced for the purposes of funding a contribution to any plan sponsored by the Company and satisfying the requirements of section 401(k) of the Code, and (b) any amounts by which the Employee's compensation has been reduced pursuant to a compensation reduction agreement between the Employee and the Company for the purpose of funding benefits through any cafeteria plan sponsored by the Company meeting the requirements of section 125 of the Code. There shall be excluded from "Compensation" for the purposes of the Plan, whether or not reportable as income by the Employee, expense reimbursements of all types, payments in lieu of expenses, the Company contributions to any qualified retirement plan or other program of deferred compensation (except as provided above), the Company contributions to Social Security or worker's compensation, the costs paid by the


Company in connection with fringe benefits and relocation, including gross-ups, and any amounts accrued for the benefit of the Employee, but not paid, during the period of reference.


Sec. 2.06 "Continuous Service" means the period of time during which the Employee has been employed by the Company or a Subsidiary and during which there has been no interruption of the Employee's employment by the Company. For this purpose, periods of Excused Absence shall not be considered to be interruptions of Continuous Service.


Sec. 2.07 "Effective Date" shall mean the date determined by the Administrative Committee on which the first Offering shall commence, if within twelve months of that date, the Plan is or has been approved at a meeting of the stockholders of the Company by the affirmative vote of the holders of the majority of Common Stock of the Company outstanding.


Sec. 2.08 "Eligible Employee" means each person who:


(a) is an Employee whose customary employment is for more than
5 months in any calendar year;


(b) is an Employee whose customary employment is for more than
20 hours per week;


(c) is employed on the Effective Date, or has completed at
least one year of Continuous Service; and


(d) is not deemed for purposes of section 423(b)(3) of the
Code to own stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the
Company.


Sec. 2.09 "Employee" means each person employed by the Company or a Subsidiary.


Sec. 2.10 "Excused Absence" means absence pursuant to a leave of absence granted by the Company or any other entity constituting the Company, absence due to disability or illness, absence by reason of a layoff, or absence by reason of active duty in the armed forces of the United States. In no event may an Excused Absence exceed six (6) months in length (or, if longer and if applicable, the period of the individual's active duty in the armed forces of the United States and such period thereafter as such individual's right to reemployment by the Company is protected by law), and any absence shall cease to be an Excused Absence upon the earlier of (a) the last day of the calendar month in which the duration of the absence reaches six (6) months or (b) the last day of the calendar month in which the leave expires by its terms, the layoff ends by recall or permanent separation from service, or recovery from illness or disability occurs.


Sec. 2.11 "Exercise Date" means the last day of each Purchase Period, as determined by the Administrative Committee.


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Sec. 2.12 "Market Value" means, with respect to Stock, the fair market value of such Stock, determined by such methods or procedures as shall be established from time to time by the Administrative Committee, provided, however, that if the Stock is listed on a national securities exchange or quoted in an interdealer quotation system, the Market Value of such Stock on a given date shall be based upon the last sales price or, if unavailable, the average of the closing bid and asked prices per share of the Stock on such date (or, if there was no trading or quotation in the Stock on such date, on the next preceding date on which there was trading or quotation) as provided by one of such organizations.


Sec. 2.13 "Offering" means the offering of shares of Stock under the Plan.


Sec. 2.14 "Offering Date" means the date on which each Offering is to commence, as determined by the Administrative Committee.


Sec. 2.15 "Participant" means each Eligible Employee who elects to participate in the Plan.


Sec. 2.16 "Plan" means the 800-JR Cigar, Inc. Employee Stock Purchase Plan, as the same is set forth herein and as the same may hereafter be amended.


Sec. 2.17 "Purchase Agreement" means the document prescribed by the Administrative Committee pursuant to which an Eligible Employee has enrolled to be a Participant.


Sec. 2.18 "Purchase Period" means the period beginning on an Offering Date and ending on the Exercise Date.


Sec. 2.19 "Purchase Price" means such term as it is defined in Section 4.03 hereof.


Sec. 2.20 "Stock" means Common Stock of the Company.


Sec. 2.21 "Stock Purchase Account" means a noninterest bearing account consisting of all amounts withheld from an Employee's compensation (or otherwise paid into the Plan) for the purpose of purchasing shares of Stock for such employee under the Plan, reduced by all amounts applied to the purchase of Stock for such Employee under the Plan.


Sec. 2.22 "Subsidiary" shall mean a corporation described in section 424(f) of the Code that has, with the permission of the Board, adopted the Plan.


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ARTICLE III
Admission to Participation


Sec. 3.01 Initial Participation. Any Eligible Employee may elect to be a Participant and may become a Participant by executing and filing with the Administrative Committee a Purchase Agreement at such time in advance and on such forms as prescribed by the Administrative Committee. The effective date of an Eligible Employee's participation shall be the Offering Date next following the date on which the Administrative Committee receives from the Eligible Employee a properly executed and timely filed Purchase Agreement. Participation in the Plan will continue automatically from one Purchase Period to another unless notice is given pursuant to Section 3.02.


Sec. 3.02 Voluntary Discontinuance of Participation. Any Participant may voluntarily withdraw from the Plan by filing a notice of withdrawal with the Administrative Committee at such time in advance as the Administrative Committee may specify. Upon such withdrawal, there shall be paid to the Participant the amount, if any, standing to his credit in his Stock Purchase Ac ...