Amended and Restated Employment Agreement
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement")
dated as of April 30, 1998, between NORTH ATLANTIC TRADING COMPANY, INC. (the
"Company") and XXXXXXX X. XXX (the "Executive").
AGREEMENT
1. Employment, Duties and Acceptance. (a) The Company shall employ
the Executive during the Term (as hereinafter defined) as the Executive Vice
President and General Counsel of the Company.
(b) The Executive hereby accepts such employment and agrees to
render his services to the Company on a full-time basis. The Executive further
agrees to accept election and to serve during all or any part of the Term or any
Renewal Term as an officer, director or representative of any subsidiary or
affiliate of the Company, without any compensation therefor other than that
specified in this Agreement. The Executive shall report directly to the Chief
Executive Officer of the Company.
(c) The duties to be performed by the Executive hereunder shall be
performed primarily in New York, New York, subject to reasonable travel
requirements on behalf of the Company. The Executive acknowledges that he may be
required to spend a significant amount of time periodically in the Company's
Louisville facility. The Company agrees that the Executive may reside in
Charlotte, North Carolina and, except to the extent that the exigencies of the
Company's business otherwise require, Executive may work one business day per
week out of Charlotte, North Carolina. The Company shall not require the
Executive to relocate outside of Charlotte, North Carolina, without his prior
written consent, which may be withheld in the Executive's discretion. The
Executive shall be reimbursed for his reasonable travel expenses. The Executive
shall be entitled to four (4) weeks of paid vacation time annually.
2. Term of Employment. As used herein, the "Term" means the period
commencing as of April 30, 1998, and ending on April 30, 2002; provided,
however, that, unless either party gives written notice on or prior to April 30,
2000 of termination of this Agreement on April 30, 2002, the Term shall
automatically be
NYFS10...:\80\64980\0003\2475\AGR5138R.08C
extended for an additional one-day period at the end of each day following April
30, 2000 (such that, at the end of every day following April 30, 2002, the Term
shall continue for a total of 24 months thereafter).
3. Compensation. The Executive shall be entitled to the following
compensation:
(a) During the Term, the Company agrees to pay to the Executive a
salary in cash (the "Salary") as compensation for the services to be performed
by him as provided herein. The Salary shall be paid at the rate of $250,000 per
annum through and including July 31, 1998 and at the rate of $275,000 per annum
thereafter. The Salary shall be paid in equal monthly installments or more
frequently in accordance with the Company's salaried payroll payment policy less
such deductions or amounts to be withheld as shall be required by applicable law
and regulations. The Salary shall be reviewed annually and may be increased at
the sole discretion of the Company's Board of Directors.
(b) Upon the execution of this agreement, the Executive shall
receive a bonus in the amount of $75,000. If the Executive has not voluntarily
resigned his employment with the Company prior to February 28, 1999, he shall
receive an additional bonus in the amount of $75,000 on February 28, 1999.
(c) The Executive shall also be eligible throughout the Term to
receive annual cash bonuses (each a "Bonus") as a member of executive management
in accordance with the Company's Management Bonus Program (as in effect from
time to time) based on the Company's audited financial statements for the
applicable year and payable after delivery of such financial statements. The
minimum annual bonus the Executive shall be eligible to receive shall be not
less than 50% of Executive's then current annual Salary.
(d) The Executive shall be entitled to all rights and benefits for
which he shall be eligible under any other incentive program, retirement,
retirement savings, profit-sharing, pension or welfare benefit plan, life,
disability, health, dental, hospitalization and other forms of insurance and all
other so-called "fringe" benefits or perquisites, including reimbursement of the
costs of one club membership in each case at the highest level which the Company
shall from time to time provide for any of its senior executives of the same or
similar stature. In addition, to the extent obtainable at reasonable premiums,
the Company shall provide the Executive with a
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term life insurance policy in an amount equal to $1,000,000.00, with Executive's
estate being the beneficiary.
4. Termination. (a) If during the Term the Executive shall die, the
Executive's legal representative shall be entitled to receive in cash an amount
equal to the sum of (i) any accrued and unpaid Salary to the date of such death,
and (ii) any accrued and unpaid Bonus to the date of such death, including any
Bonus for the year in which the termination occurs, calculated by reviewing the
Company's performance for such entire year and prorating any such Bonus for the
number of days elapsed during such year prior to such termination. The amount
referred to in clause (i) above shall be paid in accordance the Company's
existing payroll practices and any Bonus payable pursuant to clause (ii) above
shall be paid within ten business days after the release of the Company's
audited financial statements for the year in respect of which such Bonus was
awarded. In addition, the Executive (or his legal representative) shall be
entitled to receive any insurance proceeds payable pursuant to any insurance
provided pursuant to Section 3(d) hereof.
(b) If during the Term the Executive shall become physically or
mentally disabled, whether totally or partially, so that he is unable
substantially to perform his services hereunder for a period of at least 90 days
out of any twelve consecutive months (which condition is referred to herein as
the Executive becoming "Disabled"), the Company may at any time prior to the
90th day after the last day of such twelfth consecutive month, by written notice
to the Executive, terminate the Executive's employment, in which event the
Executive (or his legal representative) shall be entitled to receive in cash an
amount calculated as the sum of (i) any accrued and unpaid Salary to the date of
such notice and (ii) any accrued and unpaid Bonus to the date of such notice,
including any Bonus for the year in which the termination occurs, calculated by
reviewing the Company's performance for such entire year and prorating any such
Bonus for the number of days elapsed during such year prior to such termination.
The amount referred to in clause (i) above shall be paid in accordance the
Company's existing payroll practices and any Bonus payable pursuant to clause
(ii) above shall be paid within ten business days after the release of the
Company's audited financial statements for the year in respect of which such
Bonus was awarded. In addition, the Executive (or his legal representative)
shall be entitled to receive any disability benefits payable pursuant to any
plan referred to in Section 3(d) hereof. Nothing herein contained shall be
deemed to limit or abrogate any insurance or other similar benefits available to
the Executive.
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(c) The Executive's employment may be terminated by the Company
during the Term for Cause (as hereinafter defined). If during the Term the
Executive's employment shall be lawfully terminated by the Company for Cause or
the Executive shall voluntarily resign without Good Reason (as hereinafter
defined), the Company's obligation to pay Salary and Bonus for the benefit of
the Executive, and the Executive's obligation to render services hereunder for
the benefit of the Company, shall cease on the effective date of such
termination or resignation (the effective date of a termination or resignation
pursuant to any provision of Section 4 is hereinafter referred to as the
"Termination Date"); provided, however, that the Executive shall be entitled to
receive in cash an amount equal to (i) any accrued and unpaid Salary to the
Termination Date and (ii) any accrued and unpaid Bonus for any year preceding
such Termination Date. The amount referred to in clause (i) above shall be paid
in accordance the Company's existing payroll practices and any Bonus payable
pursuant to clause (ii) above shall be paid within ten business days after the
release of the Company's audited financial statements for the year in respect of
which such Bonus was awarded.
As used herein, the term "Cause" shall mean only (i) a felony
conviction of the Executive (as determined by a court of competent jurisdiction,
not subject to further appeal), (ii) the commission by the Executive of an act
of fraud or embezzlement against the Company or any of its affiliates (as
determined by a court of competent jurisdiction, not subject to further appeal),
(iii) gross misconduct which is demonstrably willful and deliberate on the
Executive's part and which is materially detrimental to the Company or any of
its affiliates, (iv) any material breach by the Executive of any agreement with
the Company or any affiliate thereof not cured within 10 days after receiving
written notice thereof or any material violation of any policies or procedures
of the Company if the Company has given Executive written notice of such
violation and Executive persists in such violation or (v) insubordination
consisting of the Executive's continued failure to take specific action which is
within his individual control and consistent with his status as a senior
executive of the Company and his duties and responsibilities hereunder after
written notice from the Chief Executive Officer of the Company of not less than
10 days; provided, however, that the Executive shall not be terminated for Cause
if the action required to be taken would constitute a breach of the Executive's
responsibilities under the Rules of Professional Conduct of the North Carolina
State Bar Association.
As used herein, the term "Good Reason" means any of the following:
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(i) the assignment to the Executive of any duties inconsistent
with his status as Executive Vice President and General Counsel of
the Company or a material adverse alteration in the nature or status
of his responsibilities from those provided herein or the transfer
of a significant portion of such responsibilities to one or more
other persons;
(ii) the failure by the Company to pay or provide to the
Executive, within 30 days of a written demand therefor, any amount
of compensation or any material benefit which is due, owing and
payable pursuant to the terms hereof or of any written plan,
program, arrangement or policy; or
(iii) the breach in any material respect by the Company of any
of its other obligations or agreements set forth herein and the
failure by the Company to cure such breach within 20 days after
written notice thereof from the Executive.
(d) If during the Term the Executive's employment shall be
terminated by the Company without Cause (and other than pursuant to Section
4(b)) or by the Executive for Good Reason (each a "Section 4(d) Event"), the
following provisions shall apply:
(i) The Executive shall be entitled to receive severance pay
equal to the sum of the following amounts:
(A) an amount equal to all accrued but unpaid Salary owing by the
Company as of the Termination Date;
(B) any accrued and unpaid Bonus to the Termination Date, including
any Bonus for the year in which the Executive is terminated, calculated by
reviewing the Company's performance for such entire year and prorating any
such Bonus for the number of days elapsed during such year prior to such
termination;
(C) subject to Section 5 hereof, an amount equal to the Executive's
annual Salary hereunder (at the rate then in effect) for the period
commencing on the Termination Date and ending on the expiration of the
Term; and
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(D) subject to Section 5 hereof, an amount equal to the product of
(A) the highest Bonus paid to the Executive in the two (2) years preceding
Termination Date pursuant to the Company's Management Bonus Program, and
(B) the total number of days remaining in the Term divided by 365.
(ii) The amounts payable by the Company pursuant to Section
4(d)(i) shall be paid as follows:
(A) The amount referred to in clause (A) of Section 4(d)(i) shall be
paid in accordance with the Company's existing payroll practices;
(B) The amount of any Bonus payable pursuant to clause (B) of
Section 4(d)(ii) shall be paid 10 business days after the release of the
Company's annual audited financial statements for the year in respect of
which such Bonus was awarded;
(C) The amounts payable by the Company pursuant to clauses (C) and
(D) of Section 4(d)(i) shall, in the sole discretion of the Company, be
paid either:
(1) as a lump sum cash payment within ten business days after the
Termination Date; or
(2) an amount equal to (x) the sum of (i) one year's salary (at
the rate then in effect) and (ii) the amount of the highest
bonus paid to the Executive in the two (2) years preceding
termination of employment pursuant to the Company's Management
Bonus Program, as a lump sum cash payment within ten business
days after the Termination Date and (y) the balance of the
amounts payable by the Company pursuant to clauses (C) and (D)
of Section 4(d)(i) in equal installments in accordance with
the Company's existing payroll practices during the period
commencing on the Termination Date and ending one year prior
to the conclusion of the Term.
In the event that the Company elects to make payments to the Executive
pursuant to clause (2) above, the Executive shall be entitled to receive
benefits under any benefit plan or program of the Company until the first
anniversary of the Termination Date (other than bonus or other incentive
plans or
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programs) to which the Executive would be entitled pursuant to the terms
of such plan or program if he had remained employed by the Company during
such period (to the extent permitted by the terms of such plan or program
and applicable law), or pursuant to any applicable state or federal law;
provided, however, in the event that the Company is unable to provide
health benefits under its existing plan, the Company will pay the cost of
continuing coverage pursuant to COBRA and, provided further, the
Executive's right to receive benefits pursuant to this sentence shall
terminate if the Executive obtains other employment pursuant to which he
is entitled to receive such benefits.
(iii) Executive may, in his sole discretion, elect to purchase
his assigned Company car at a price not to exceed its pay-off value in
accordance with the Company's financial records and books pursuant to its
fleet contract.
(iv) Any options to purchase shares common stock, par value
$.01, of the Company granted to the Executive and any shares of restricted
stock granted to the Executive that have not vested as of the Termination
Date shall vest as of such date.
(e) During the term of the Executive's employment with Company and
for a period equal to the greater of (x) twelve months after the Termination
Date or (y) the date the last payment is payable to the Executive under the
terms of this Agreement (the "Noncompetition Period"), Executive hereby agrees
not to Compete with the Company. For purposes of this section, the term Compete
means:
(i) soliciting or counseling, personally or by or on behalf of
any person, firm or corporation, the employment of any employee of
Company, or requesting, inducing or attempting to influence any
employee of the Company to terminate his employment with Company; or
(ii) directly or indirectly (A) requesting, inducing or
attempting to influence any supplier of goods or services to Company
to curtail or cancel any business it transacts with Company; or (B)
requesting, inducing or attempting to influence any customer of
Company to curtail or cancel any business they may transact with
Company; or (C) engaging in any business that the Company is engaged
in as of the date of such termination (whether as an officer,
director, partner, employee, consultant, attorney or equity owner).
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Notwithstanding the foregoing, (i) after first anniversary of the Termination
Date, the term "Compete" shall mean engaging in any business on behalf of
Swedish Match North America Inc., Conwood Company, L.P. and Xxxxxxx
International Inc., or any of their affiliates (whether as an officer, director,
partner, employee, consultant, attorney or equity owner) and (ii) the term
"Compete" shall not include owning (as a "beneficial owner", as such term is
defined in the Securities Exchange Act of 1934, as amended, or otherwise) one
percent (1%) or less of any class of equity securities of a company that is
engaged in a business in which the company is engaged, provided that such class
of equity securities is listed on a national securities exchange or actively
traded in the over-the-counter market and that the Executive does not serve as
an officer, director, partner, employee, consultant or attorney of such company.
(f) The Company acknowledges and agrees that the Executive shall
have no duty at any time to seek other employment or to mitigate his damages
hereunder. The amounts payable to the Executive under this Agreement shall be
paid regardless of whether the Executive obtains other employment.
(g) Upon any termination of the Executive's employment hereunder,
the Company shall pay to the Executive or reimburse the Executive for any
business expenses and any amount payable under any benefit plan or program or
other amounts that were accrued or incurred but unpaid or unreimbursed at the
Termination Date.
5. Change in Control (a) If within 12 months following the
occurrence of a Change in Control (as hereinafter defined), Executive's
employment is terminated pursuant to Section 4(d) of this Agreement, in lieu of
the payments provided in Sections 4(d)(i)(C) and 4(d)(i)(D) (and payment thereof
as provided in Section 4(d)(ii)(C)), Executive shall receive a lump sum cash
payment, upon such termination, equal to three (3) times the amount of the
Executive's annual Salary (at the rate then in effect); and (b) three (3) times
the highest bonus paid to Executive in the two (2) years preceding the
termination of employment pursuant to the Company's Management Bonus Program.
As used herein, a "Change In Control" shall be deemed to occur as of
the first date on which any person or group of persons acting in concert other
than one or more "Xxxxx Affiliates" (as hereinafter defined) or other members of
senior management of the Company shall become the direct or indirect Beneficial
Owners (as hereinafter defined) of securities of the Corporation representing
more than fifty percent (50%) of the combined voting power of the issued and
outstanding common stock voting securities of the Corporation or shall have the
right to elect by virtue of
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the ownership of securities, by contract or otherwise a majority of the
Company's Board of Directors. For purposes of this Agreement, (i) the term
"Xxxxx Affiliates" shall mean Xxxxxx X. Xxxxx, Xx., his immediate family members
(which includes his parents, spouse, former spouses, issue, siblings or the
issue of any of the foregoing) or affiliates or any trust for the benefit
thereof or which any of the foregoing persons are parties thereto or
beneficiaries thereunder and (ii) the term "Beneficial Owner" shall be given the
definition contained in Rule 13-d-3 under the Securities Exchange Act of 1934,
as amended from time to time.
(b) Notwithstanding any other provision of this Agreement to the
contrary, the Company shall not be obligated to make any payment or provide any
benefit (including the acceleration of stock options) to the extent that such
payment or benefit results in a "parachute payment" (as defined in Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code")); provided,
however, that the Company shall make all payments and provide all benefits under
this Agreement to the fullest extent permitted without giving rise to a
parachute payment.
(c) Whether any payment or benefit under this Agreement results in a
parachute payment (as defined in Section 280G of the Code) (i) shall be
determined by the Company's certified public accountants (the "Accountants");
and (ii) the value of any non-cash benefits or any deferred payment or benefit
shall be determined by the Accountants in accordance with the principles of
Section 280G of the Code.
(d) In the event that a payment or benefit under this Agreement is
subsequently determined by the Accountants to be a parachute payment, the
Executive shall repay to the Company, within 30 days following the time that the
character of such payment or benefit is re-defined by the Accountants, the
amount of such payment or benefit that has been paid to the Executive or on the
Executive's behalf and that would not have been paid if such payment or benefit
had been initially treated as a parachute payment, plus interest on the amount
of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code.
Notwithstanding the foregoing provisions of this Section 7(e), in the event any
portion of the payment or benefit to be refunded to the Company has been paid to
any federal, state or local authority, repayment thereof shall not be required
until actual refund or credit of such portion has been made to the Executive,
and interest payable to the Company shall not exceed interest received or
credited to the Executive by such tax authority for the period it held such
portion. The Executive and the Company shall mutually agree upon the course of
action to be pursued (and the method of allocating the expenses thereof) if the
Executive's good faith claim for refund or check is denied.
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6. Put Option. (a) If the Executive's employment is terminated
pursuant to Section 4(d), Executive shall have the right and option (the "Put
Option"), commencing on the date on which the last payment is to be made by the
Company to the Executive pursuant to the terms of Section 4(d)(ii) (the "Last
Payment Date"), to require the Company to repurchase all or a portion of his
Shares at their "Fair Market Value", as defined in the Exchange and
Stockholders' Agreement dated June 25, 1997, by and among the Company, the
Executive and the other parties thereto, as amended (the "Stockholders'
Agreement"), as of the date of exercise of the Put Option. The Put Option (i)
shall be exercisable by the Executive giving written notice (the "Put Notice")
of the exercise thereof to the Company, attention: Secretary, at the principal
executive office of the Company and (ii) may only be exercised one time during
the 12-month period commencing on the Last Payment Date or during any subsequent
period of 12 consecutive months commencing on an anniversary of the Last Payment
Date, and (iii) shall at all times and in all respects be subject, subordinate
and junior in right of payment to all borrowings, secured or unsecured, now
owing or which hereafter may become owing, of the Company, and the Company shall
not be obligated to repurchase any Shares if the Company upon or after such
payment would be in default under or violation of any instrument, agreement or
law to which the Company is a party or by which the Company or any of its assets
is materially bound or affected. If the Company is unable to repurchase all or a
portion of the Executive's Shares for which the Put Option is exercised for any
of the reasons enumerated in the immediately preceding sentence, the repurchase
of such Shares may be deferred until such time as such repurchase may be made
without default under or violation of such instrument, agreement or law;
provided, however, if the repurchase of all or a portion of the Executive's
Shares for which the Put Option is exercised is to be deferred, the Company
shall give the Executive notice thereof (a "Deferral Notice") within ten
business days after the determination of the Fair Market Value thereof, and the
Executive, by written notice to the Company given within ten business days after
the date of the Company's notice, may elect to withdraw the Put Notice with
respect to the Shares for which such repurchase is deferred and, provided
further, in the event of the withdrawal of the Put Notice by the Executive as
contemplated by the immediately preceding proviso, for purposes of clause (ii)
of this Section 6(a), such Put Notice will be deemed not to have been given.
(b) Notwithstanding anything to the contrary contained in Section
6(a) but subject to the last sentence of this Section 6(b), if Executive's
employment is terminated pursuant to Section 4(d) or the Executive otherwise
voluntarily terminates his employment with the Company, the Company shall have
the right and option (the
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"Call Option"), exercisable by giving written notice of the exercise thereof to
the Executive at his address appearing on the books and records of the Company
(the "Call Notice"), to repurchase all of the Executive's Shares at their Fair
Market Value as of the date of the Call Notice at any time during the five year
period commencing on the Termination Date. Any Call Notice shall be accompanied
by a certificate signed by an executive officer of the Company certifying on
behalf of the Company that the repurchase of the Executive's Shares by the
Company would not constitute a default under or violation of any instrument,
agreement or law to which the Company is a party or by which the Company or any
of its assets is materially bound or affected (it being understood that such
certification may be based on reasonable assumptions with respect to the Fair
Market Value of the Executive's Shares and other matters pertaining to such
repurchase, which assumptions, if any, shall be set forth in such certificate).
Notwithstanding the foregoing, in the event that the Executive has not
theretofore exercised the Put Option for all of his Shares or the Company has
not theretofore exercised the Call Option, the Company shall exercise the Call
Option on the earliest to occur of the following events:
(i) the fifth anniversary of the Termination Date;
(ii) the date on which proceeds derived from any refinancing of
the Company's indebtedness under the "Credit Agreement" or
the "Indenture" (in each case as defined in the
Stockholders' Agreement and including, for purposes of such
definitions, any agreements or instruments entered into or
issued pursuant to the Credit Agreement or the Indenture) or
from any refinancing of the Company's obligations under the
"Preferred Stock" (as defined in the Stockholders'
Agreement) are used by the Company to repurchase or pay
dividends on any outstanding equity securities of the
Company (other than the Preferred Stock or any securities
issued to refinance the Preferred Stock); and
(iii)the date on which the Company refinances its indebtedness
under the Credit Agreement or the Indenture or its
obligations under the Preferred Stock, except in the event
and to the extent that (A) the Credit Agreement, Indenture
or Preferred Stock remains outstanding after such
refinancing and prohibits the proceeds of such refinancing
from being used to repurchase or
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pay dividends on any equity securities of the Company (other
than the Preferred Stock or any securities issued to refinance
the Preferred Stock) or (B) the third parties providing such
refinancing, after good faith negotiations, do not permit any
portion of the proceeds of such refinancing to be used to
repurchase or pay dividends on any equity securities of the
Company (other than the Preferred Stock or any securities
issued to refinance the Preferred Stock).
In the event that, within 15 business days after the date that the Company gives
a Call Notice to the Executive pursuant to this Section 6(b), the Executive
elects to irrevocably waive his rights to require the Company to repurchase any
of the Executive's Shares pursuant to the Put Option (including the repurchase
of any Shares subject to a prior exercise of the Put Option that has not yet
been consummated), which waiver shall be in writing and shall make specific
reference to this last sentence of Section 6(b) (the "Put Option Waiver"), all
rights and obligations of the Company under this Section 6 shall terminate and
be of no further force or effect from and after the giving of the Put Option
Waiver (it being understood that the rights and obligations of the Company and
the Executive under the Stockholders' Agreement shall remain in full force and
effect).
(c) Any repurchase of the Executive's Shares pursuant to this
Section 6 shall take place at the principal executive office of the Company at a
date and time during normal business hours designated by the Company by notice
to the Executive, which date shall be no later than the fifteenth business day
after the determination of the repurchase price of the applicable Shares (except
in the case of a deferred purchase as contemplated by the last sentence of
Section 6(a), which shall take place no later than the fifteenth business day
after the prohibition against repurchase first lapses or is waived). The Company
shall repurchase the Executive's Shares to be so sold to it for cash, certified
bank check or immediately available funds in the amount of the repurchase price
against delivery of certificates representing such Shares to the Company, duly
endorsed in blank or accompanied by a stock power duly executed in blank. The
Executive shall execute and deliver such additional documents as the Company may
reasonably request to document such transaction.
(d) Notwithstanding anything to the contrary contained in this
Section 6, (i) the Company shall have the right to designate any third party or
parties to purchase all or a portion of the Executive's Shares to be sold
pursuant to the exercise of the Put Option or Call Option (in lieu of the
Company effecting such purchase),
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(ii) the Executive agrees to sell his Shares to any third party or parties so
designated in writing by the Company to the Executive prior to the date of the
closing of such sale as contemplated by Section 6(c), (iii) upon the purchase by
any such third party or parties of such Shares on the terms and conditions
otherwise applicable to the Company, the Company's obligations with respect to
such Put Option or Call Option with respect to such Shares shall be deemed to
have been satisfied and (iv) if the Company designates a third party or parties
to effect such purchase and provides notice thereof to the Executive prior to
the time by which the Company would otherwise be obligated to provide a Deferral
Notice to the Executive under Section 6(a), the Company shall not be obligated
to furnish such a Deferral Notice with respect to the Shares to be purchased by
such third party or parties and the Executive shall not have a right to withdraw
the Put Notice with respect to such Shares. In the event that any third party
designated by the Company to purchase all or a portion of the Executive's Shares
in accordance with this Section 6(d) fails to consummate such purchase as
contemplated hereby, (i) if the repurchase of all or a portion of such Shares by
the Company would not constitute a default under or violation of any instrument,
agreement or law to which the Company is a party or by which the Company or any
of its assets is materially bound or affected, the Company shall repurchase all
of such Shares or the portion of such shares which would not constitute such a
default or violation on the terms contemplated hereby or (ii) if the repurchase
of all or a portion of such Shares by the Company would constitute such a
default or violation, the Company shall promptly give the Executive a Deferral
Notice with respect to such Shares and the Executive may withdraw the Put Notice
with respect to such Shares in accordance with the last sentence of Section
6(a).
(e) Nothing contained herein shall be construed as an waiver or
amendment of any provision of the Stockholders' Agreement, express or implied.
7. Withholding Taxes. The Company may require, as a condition to any
payments required to be made by the Company pursuant to this Agreement or as a
condition to effectuating a repurchase of Shares pursuant to Section 6 hereof,
that the Company be reimbursed in cash for any taxes required by any government
to be withheld or otherwise deducted and paid by the Company in respect of such
payment or repurchase of Shares by the Company. In lieu thereof, the Company or
any affiliate thereof which employs the Executive shall have the right to
withhold the amount of such taxes from any sums due or to become due from it to
the Executive.
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9. Expenses. In the event that the Executive institutes any legal
action to enforce his rights under, or to recover damages from breach of, this
Agreement, the Executive, if he is the prevailing party, shall be entitled to
recover from the Company any actual expenses for attorneys' fees and
disbursements reasonably incurred by him.
10. Assignment. This Agreement is binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
Notwithstanding the foregoing, neither party shall assign or transfer any rights
or obligations hereunder, except that the Company may assign or transfer this
Agreement to (a) a successor corporation in the event of a merger,
consolidation, or transfer or sale of all or substantially all of the assets, of
the Company or (b) an affiliate of the Company; provided that no such assignment
referred to in the foregoing clause (a) or (b) shall relieve the Company from
liability for its obligations hereunder. Any purported assignment, other than as
provided above, shall be null and void.
11. Indemnification. The Company shall indemnify the Executive in
accordance with its Certificate of Incorporation and Bylaws, copies of which
have been delivered to the Executive, against all costs, charges and expenses
incurred or sustained by him in connection with any action, suit or proceeding
to which he may be made a party by reason of his being an officer, director or
employee of the Company or of any subsidiary or affiliate of the Company. The
Company's obligations under this Section 11 shall survive any termination of
this Agreement or the Executive's employment hereunder.
12. Notices. All notices, requests, consents and other
communications, required or permitted to be given hereunder, shall be in writing
and shall be delivered personally or sent by prepaid telegram, telex, facsimile
transmission, overnight courier or mailed, first class, postage prepaid by
registered or certified mail, as follows:
If to the Company: North Atlantic Trading Company, Inc.
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to the Executive: 000 Xxxxxxxxx Xxxxxxx
Xxx Xxxxxx, XX 00000
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or such other address as either party shall designate by notice in writing to
the other in accordance herewith. Any such notice shall be deemed given when so
delivered personally, by telex, facsimile transmission or telegram, or if sent
by overnight courier, one day after delivery to such courier by the sender or if
mailed, five days after deposit by the sender in the U.S. mails.
13. Entire Agreement; Non-Exclusive Rights. (a) Subject to Section
13(b), this Agreement shall constitute the entire agreement between the
Executive and the Company concerning the subject matter hereof, and performance
of its obligations hereunder by the Company shall constitute full settlement and
release of any claim or cause of action, of whatsoever nature, which the
Executive might otherwise assert or claim against the Corporation or any of its
directors, stockholders, officers or employees on account of any termination.
This Agreement supersedes the Employment Agreement, dated July 28, 1997, between
the Corporation and the Executive, and such agreement is hereby terminated and
of no further force or effect. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing, signed by the Executive and an authorized officer of the Company.
(b) Nothing in this Agreement shall impair or limit (i) any right or
obligation of any party hereto under the Stockholders' Agreement or (ii) the
Executive's continuing or future participation, during the term of Executive's
employment, in any benefit bonus, incentive or other plan or program provided by
the Company and for which the Executive may qualify, nor shall anything herein
limit or otherwise prejudice such rights as the Executive may have under any
other agreements with the Company, including, but not limited to stock option or
restricted stock agreements. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan or program of the
Company at or subsequent to the Termination Date shall be payable in accordance
with such plan or program.
14. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first written above.
NORTH ATLANTIC TRADING COMPANY, INC.
By:/s/ Xxxxxx X. Xxxxx, Xx.
--------------------------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Chairman of the Board of Directors and
Chief Executive Officer
/s/ Xxxxxxx X. Xxx
--------------------------------------------------
Xxxxxxx X. Xxx
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