EXHIBIT 10.26
AMENDED AND RESTATED
NONQUALIFIED STOCK OPTION AGREEMENT
GRANTED TO: Xxxxxxx X. Xxx
EFFECTIVE DATE OF July 28, 1997
GRANT:
GRANTED PURSUANT TO: NORTH ATLANTIC TRADING COMPANY 1997
SHARE INCENTIVE PLAN
NUMBER OF UNDERLYING 15,966
SHARES:
EXERCISE PRICE: 18.19 per share
VESTING SCHEDULE: One third commencing on July 28,
1997 and one fifth of
the remaining options on each of the
first five anniversaries thereafter
1. This Amended and Restated Nonqualified Stock Option Agreement is
made and entered into as of December 31, 1997 and amends and restates the
Nonqualified Stock Option Agreement dated as of September 3, 1997 (as so amended
and restated, the "Agreement") between North Atlantic Trading Company, Inc., a
Delaware corporation (the "Company") and Xxxxxxx X. Xxx (the "Employee"). It is
the intent of the Company and the Employee that this Option (as defined in
Paragraph 2 below) will not qualify as an "incentive stock option" under Section
422 of the Internal Revenue Code of 1986, as amended from time to time.
2. The Employee is granted an option to purchase 15,966 shares of the
Common Stock (the "Option"). The Option is granted under the Company's 1997
Share Incentive Plan (the "Plan") and is subject to the terms of the Plan and of
this Agreement. Capitalized terms not defined herein shall have the meanings
ascribed thereto in the Plan.
3. The Option's Exercise Price is $18.19 per share.
4. Subject to Paragraph 5 below, the Option shall become exercisable
according to the vesting schedule set forth below:
5,322 shares of Common Stock shall become exercisable and remain exercisable on
July 28, 1997
2,129 shares of Common Stock shall become exercisable and remain exercisable on
July 28, 1998
2,129 shares of Common Stock shall become exercisable and remain exercisable on
July 28, 1999
2,129 shares of Common Stock shall become exercisable and remain exercisable on
July 28, 2000
2,129 shares of Common Stock shall become exercisable and remain exercisable on
July 28, 2001
2,128 shares of Common Stock shall become exercisable and remain exercisable on
July 28, 2002.
5. The Option, unless sooner terminated or exercised in full, shall
expire on July 28, 2012 and, notwithstanding anything herein to the contrary, no
portion of the Option may be exercised after such date.
6. (a) In the event of death of the Employee, or if the Employee's
employment is terminated due to disability, each stock option theretofore
granted to him shall be exercisable until July 28, 2012, and then only by the
executor or administrator of the estate of the deceased participant or the
person or persons to whom the deceased participant's rights under the Option
shall pass by will or the laws of descent or distribution or the disabled
employee or his legal guardian.
(b) In the event the Employee's employment is terminated due
to retirement, the unexercisable portion of the Option held by the Employee on
the date of termination of employment shall immediately be forfeited by the
Employee and the exercisable portion of the Option held by the Employee on the
date of termination of employment shall remain exercisable until the earlier of
(i) 90 days after the Employee's termination of employment or (ii) the date the
Option would otherwise expire.
(c) In the event the Employee's employment is terminated by
the Company without Cause or by the Executive for Good Reason (as defined in the
Executive's Employment Agreement) and not by reason of the Employee's death or
disability, the unexercisable portion of the Option held by the Employee on the
date of termination of employment shall immediately become exercisable and the
entire Option held by the Employee on the date of termination of employment
shall remain exercisable until the date the Option would otherwise expire.
(d) In the event the Employee's employment is terminated by
the Company or any Subsidiary for Cause or is terminated by the Employee for any
reason other than Retirement, Good Reason, death or Disability, the unvested
portion of the Option held by the Employee at the time of termination of
employment shall immediately be forfeited by the Employee. The vested portion of
the Option shall remain exercisable until the earlier of (i) the end of the 90
day period following the Employee's termination of employment or (ii) the date
the Option would otherwise expire.
7. The Employee may exercise the Option regardless of whether any other
option that the Employee has been granted by the Company remains unexercised. In
no event may the Employee exercise the Option for a fraction of a share or for
less than 100 shares.
8. The Option's Exercise Price shall be paid by the Employee on the
date the Option is exercised, in cash, in shares of Common Stock owned by the
Employee or by a combination of the foregoing. Any shares of Common Stock
delivered in payment of the Exercise Price shall be valued at Fair Market Value.
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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 (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"),
divided by (ii) 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 in 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.
10. The Employee shall not have any of the rights of a shareholder with
respect to the shares of Common Stock underlying the Option while the Option is
unexercised.
11. Any exercise of this Option shall be in writing addressed to the
Corporate Secretary of the Company at the principal place of business of the
Company, specifying the Option being exercised and the number of shares to be
purchased.
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12. If the Company, in its sole discretion, shall determine that it is
necessary, to comply with applicable securities laws, the certificate or
certificates representing the shares purchased pursuant to the exercise of this
Option shall bear an appropriate legend in form and substance, as determined by
the Company, giving notice of applicable restrictions on transfer under or in
respect of such laws.
13. The Employee covenants and agrees with the Company that if, at the
time of exercise of this Option, there does not exist a Registration Statement
on an appropriate form under the Securities Act of 1933, as amended (the "Act"),
which Registration Statement shall have become effective and shall include a
prospectus that is current with respect to the shares subject to this Option,
(i) that he is purchasing the shares for his own account and not with a view to
the resale or distribution thereof, (ii) that any subsequent offer for sale or
sale of any such shares shall be made either pursuant to (x) a Registration
Statement on an appropriate form under the Act, which Registration Statement
shall have become effective and shall be current with respect to the shares
being offered and sold, or (y) a specific exemption from the registration
requirements of the Act, but in claiming such exemption, the Employee shall,
prior to any offer for sale or sale of such shares, obtain a favorable written
opinion from counsel for or approved by the Company as to the applicability of
such exemption and (iii) that the Employee agrees that the certificates
evidencing such shares shall bear a legend to the effect of the foregoing.
14. This Agreement is subject to all terms, conditions, limitations and
restrictions contained in the Plan, which shall be controlling in the event of
any conflicting or inconsistent provisions.
15. This Agreement is not a contract of employment and the terms of the
Employee's employment shall not be affected hereby or by any agreement referred
to herein except to the extent specifically so provided herein or therein.
Nothing herein shall be construed to impose any obligation on the Company to
continue the Employee's employment, and it shall not impose any obligation on
the Employee's part to remain in the employ of the Company.
17. Employee acknowledges and agrees that neither the Company, its
shareholders nor its directors and officers, has any duty or obligation to
disclose to the Employee any material information regarding the business of the
Company or affecting the value of the Common Stock before or at the time of a
termination of the employment of the Employee by the Company, including, without
limitation, any information concerning plans for the Company to make a public
offering of its securities or to be acquired by or merged with or into another
firm or entity.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
NORTH ATLANTIC TRADING COMPANY, INC.
By /s/ Xxxxxx X. Xxxxx, Xx.
-------------------------------
Xxxxxx X. Xxxxx, Xx.
President
ACCEPTED:
/s/ Xxxxxxx X. Xxx
--------------------------------
Signature of Employee
Xxxxxxx X. Xxx
--------------------------------
Name of Employee - Please Print
Date: December 31, 1997
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NYFS10...:\80\64980\0003\2475\FRM9037N.440
