NONQUALIFIED STOCK OPTION AGREEMENT
GRANTED TO: Xxxxx X. Xxxxxxx
EFFECTIVE DATE OF April 23, 1997
GRANT:
GRANTED PURSUANT TO: NORTH ATLANTIC TRADING COMPANY 1997
SHARE INCENTIVE PLAN
NUMBER OF UNDERLYING 30,928
SHARES:
EXERCISE PRICE: 18.19 per share
VESTING SCHEDULE: One third commencing on April 23, 1997 and each
of the first two anniversaries thereafter
1. This Nonqualified Stock Option Agreement (the "Agreement") is made
and entered into as of June 25, 1997 between North Atlantic Trading Company,
Inc., a Delaware corporation (the "Company") and Xxxxx X. Xxxxxxx (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 30,928 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:
10,309 shares of Common Stock shall become exercisable and remain exercisable on
April 23, 1997
10,310 shares of Common Stock shall become exercisable and remain exercisable on
April 23, 1998
10,309 shares of Common Stock shall become exercisable and remain exercisable on
April 23, 1999.
5. The Option, unless sooner terminated or exercised in full, shall expire
on April 23, 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 April 23, 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. The Employee may pay 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 at the time of such exercise shares of Common
Stock having a Fair Market Value equal to the amount of such withholding taxes.
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.
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,
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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/ Xxxxx X. Xxxxxxx
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Signature of Employee
Xxxxx X. Xxxxxxx
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Name of Employee - Please Print
Date: June 25, 1997
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