AMENDMENT NO. 1 TO THE
NONQUALIFIED STOCK OPTION AGREEMENT
GRANTED TO: Xxxxx X. Xxxxxxx
EFFECTIVE DATE OF ORIGINAL GRANT: April 23, 1997
GRANTED PURSUANT TO: NORTH ATLANTIC TRADING
COMPANY 1997 SHARE INCENTIVE
PLAN
DATE OF AMENDMENT: September 2, 1997
Amendment No. 1 (the "Amendment"), dated and effective September 2,
1997, to the Nonqualified Stock Option Agreement, made and entered into as of
June 25, 1997, between North Atlantic Trading Company, Inc., a Delaware
corporation (the "Company"), and Xxxxx X. Xxxxxxx. Paragraph 9 of the Agreement
is hereby amended in its entirety to read as follows:
9. (a) The Employee may pay within thirty (30) days following the
exercise of the Option the amount of taxes required to be withheld upon exercise
of the Option by (i) delivering a check made payable to the Company or (ii)
delivering to the Company shares of Common Stock having a Fair Market Value
equal to the amount of such withholding taxes; provided, however, that at the
Employee's election, any amount due to the Company under this Section 9(a) may
be reduced in whole or part by any amounts the Company owes such Employee under
subparagraph (b) below.
(b) Unless otherwise agreed to by the parties, on or before
April 15 of the calendar year following the year in which the Option is
exercised (the "Payment Date"), the Company shall pay the Employee an amount
(the "Payment") equal to the sum of:
(i) the difference between (A) the amount of taxable
income reportable by the Employee in connection with the
exercise of the Option multiplied by the highest aggregate
marginal statutory federal, state and local income tax rate
(determined by taking into account the deductibility of
state and local income taxes for federal income tax
purposes) to which such Employee is subject at the time of
exercise (the "Marginal Ordinary Tax Rate") and
(B) the amount of taxable income reportable by the Employee
in connection with the exercise of the Option multiplied by
the highest aggregate marginal statutory federal, state and
local income tax rate (determined by taking into account the
deductibility of state and local income taxes for federal
income tax purposes) to which such Employee would be subject
at the time of exercise if such taxable income was
characterized as long-term capital gain (the "Marginal
Capital Gain Tax Rate") (such difference referred to as the
"Incremental Tax Amount"); and
(ii) (A) the Incremental Tax Amount divided by (B)
one minus the Employee's marginal Ordinary Tax Rate.
(c) The payment shall not be made pursuant to Section 9(b) in
the event the Option is exercised (i) within 180 days prior to the Employee's
termination of employment described in Section 6(d) of the Agreement or (ii)
following the Employee's termination of employment described in Section 6(d) of
the Agreement. Notwithstanding the foregoing, if the Payment Date falls within
180 days from the date of exercise, the Company shall only make the Payment to
Employee upon the signing of an undertaking, reasonably satisfactory to the
Company, by the Employee to repay the Payment to the Company if Employee
terminates his employment as described with Section 6(d) of the Agreement within
180 days of the date of the exercise of the Option.
(d) The Company shall treat the amount paid in 9(b) as
compensation payable to the Employee.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date first written above.
NORTH ATLANTIC TRADING COMPANY
By /s/ Xxxxxx X. Xxxxx, Xx.
---------------------------
Xxxxxx X. Xxxxx, Xx.
President
ACCEPTED:
/s/ Xxxxx X. Xxxxxxx
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Signature of Employee
Xxxxx X. Xxxxxxx
-------------------------------
Name of Employee - Please Print
Date: September 2, 1997
