CONSULTING AGREEMENT
AGREEMENT made as of this 25th day of June, 1997 between NORTH
ATLANTIC TRADING COMPANY, INC., a Delaware corporation with offices at 000 Xxxx
Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, (the "Company"), and XXXX XXXXXX, who
resides at 00000 Xxxx Xxxxxx Xxxxxx, Xxxx Xxxx, Xxx Xxx, Xxxxxxx 00000 (the
"Consultant").
W I T N E S E T H
WHEREAS, this Agreement is being entered into simultaneously
with the closing (the "Closing") of the Company's acquisition of all of the
shares of NATC Holdings USA, Inc., a Delaware corporation ("NATC Holdings"),
from NATC Holding Company, Ltd., a Bermuda corporation, pursuant to a Stock
Purchase Agreement dated as of April 17, 1997 (the "Stock Purchase Agreement")
between the Company and NATC Holding Company Ltd.; and
WHEREAS, the Company desires to retain the Consultant to
perform consulting services for the Company after the Closing, and the
Consultant desires to render such services to the Company after the Closing, in
each case upon the terms and subject to the conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and conditions hereinafter set forth, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Retention as Consultant. The Company agrees to retain the
Consultant to perform consulting services after the Closing, and the Consultant
agrees to render such services to the Company after the Closing, upon the terms
and subject to the conditions hereinafter set forth. The retention of the
Consultant by the Company hereunder shall be effective and shall commence
immediately following the Closing until the first anniversary of the date of the
Closing (the "Initial Term"), and, thereafter, for successive periods of 12
months each (each such successive period of 12 months being referred to as an
"Additional Term") unless either party notifies the other party in writing at
least 90 days prior to the expiration of the Initial Term or any Additional Term
of its or his election not to renew the Consulting Term, in which event the
retention of the Consultant by the Company hereunder shall terminate as of the
conclusion of the Initial Term or such Additional Term, as the case may be.
For purposes hereof,
2
the period of the Consultant's retention hereunder shall be referred to as the
"Consulting Term."
2. Duties and Extent of Services. The Consultant agrees that,
during the Consulting Term, he shall act as a consultant to the Company under
the direction of the Chief Executive Officer, and shall serve as a director of
the Company, provided the Company has directors' and officers' liability
insurance. The Consultant shall have responsibility and authority to manage and
direct the business of the Company, subject to the supervision of the Chief
Executive Officer of Company (who may also serve as Chief Executive Officer of
the Company). In addition, the Consultant shall have such other or more specific
responsibilities with respect to the business of the Company or any of its
affiliates as may be determined and assigned to the Consultant from time to time
by or upon the authority of the Chief Executive Officer of Company. The
Consultant shall serve the Company faithfully and to the best of his ability in
such capacities, devoting such portion of his business time, attention,
knowledge, energy and skills to such service as shall be reasonable to perform
his duties hereunder, consistent with the level of services rendered by the
Consultant to the corporation formally known as North Atlantic Trading Company,
Inc., a Delaware corporation,
3
during the twelve month period prior to the date of the Closing. The Consultant
shall travel as reasonably required in connection with the performance of his
duties hereunder, including to Company's executive offices in New York, New
York. The Consultant also shall serve during any part of the Consulting Term as
a director of the Company or any other subsidiary of Company without any
compensation therefor other than as specified in this Agreement; provided the
Company has directors' and officers' liability insurance.
3. Compensation and Benefits. The Company agrees to pay
the Consultant, as compensation for consulting services to be rendered by the
Consultant under and pursuant to this Agreement, a consulting fee consisting of
the following salary and compensation benefits:
(a) A base fee, payable in accordance with the Company's
standard payroll practices for senior executive employees, at an annual rate of
$300,000 during the Consulting Term (the "Consulting Fee"); provided, however,
that such a Consulting Fee shall be subject to review from time to time for a
possible increase by the Board of Directors of the Company or the Compensation
Committee thereof.
4
(b) An annual bonus of a minimum of $75,000 (a "Bonus")
subject to and conditioned upon the Company satisfying the EDITDA Budget for
Company in accordance with the terms and conditions set forth in the senior
management bonus plan of Company from time to time in effect.
(c) Prompt reimbursement for all reasonable business-related
expenses incurred by the Consultant in accordance with the policies and
procedures of the Company as in effect with respect to key senior executives of
the Company.
(d) A car allowance of $1,000 per month.
(e) Prompt reimbursement for all reasonable office expenses
incurred by the Consultant in connection with maintaining an office in Florida
and in connection with the business of the Company, of $500 per month for the
rental of office space and $400 per month for secretarial assistance.
(f) Vacation in accordance with the policies of the Company
as in effect with respect to key senior executives.
5
4. Confidentiality; Non-Competition.
(a) The Consultant agrees that during the Consulting Term and
for a period of five years commencing upon the termination of the Consulting
Term, the Consultant will not, directly or indirectly, without the prior written
consent of the Company:
(i) disclose (unless required by law or court
order or other judicial or administrative process) or
use any confidential or secret information relating to
Company or any of its subsidiaries; or
(ii) engage in (other than through the ownership
of five percent (5%) or less or any class of securities
registered under the Securities Exchange Act of 1934, as
amended), the marketing and distribution of cigarette
papers in the United States and Canada.
(b) The Consultant consents and agrees that if it violates any
of the provisions of Section 4(a), the Company would sustain irreparable harm
and, therefore, in addition
6
to any other remedies which the Company may have under this Agreement or
otherwise, the Company shall be entitled to apply to any court of competent
jurisdiction for an injunction restraining the Consultant from committing or
continuing any such violation of this Agreement, and the Consultant shall not
object to any such application. Nothing in this Agreement shall be construed as
prohibiting the Company from pursuing any other remedy or remedies including,
without limitation, recovery of damages.
5. Errors and Omissions. As a further inducement for the
Consultant to enter into this Agreement and as a condition precedent to the
Consultant's obligations hereunder, the Company shall cause the Consultant to be
included under the coverage of any directors' and officers' or similar errors
and omissions insurance policy of the Company for activities taken or omitted
to be taken by the Consultant pursuant to this Agreement.
6. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be delivered personally
or sent by registered or certified mail, return receipt requested, to the other
party hereto at its address as set forth at the beginning of this Agreement, in
either case with a copy to counsel at the following address: (a) with respect to
the Company, North Atlantic
7
Operating Company Inc., c/o National Tobacco Company, L.P., 000 Xxxx Xxxxxx
Xxxxx, Xxx Xxxx, XX 00000 and (b) with respect to the Consultant, Attention:
Xxxx Xxxxxx at the address set forth in the recital. Any party may change the
address to which notices, requests, demands and other communications hereunder
shall be sent by sending written notice of such change of address to the other
parties hereto.
7. Assignability, Binding Effect and Survival. This
Agreement shall inure to the benefit of and shall be binding upon the Company,
the Consultant and their respective heirs, successors and assigns.
Notwithstanding the foregoing, the obligations of the Consultant may not be
delegated and the Consultant may not assign, transfer, pledge, encumber,
hypothecate or otherwise dispose of this Agreement, or any of his rights
hereunder, and any such attempted delegation or disposition shall be null and
void and without effect; provided, however, the Company shall be permitted to
assign or transfer this Agreement to Company or any of its subsidiaries so long
as the duties and responsibilities of the Consultant remain substantially
similar to those contained in this Agreement. The provisions of Sections 4 and 6
shall survive the termination of the Consultant's consulting services pursuant
to this
8
Agreement and, to the extent appropriate to the intention of the parties and the
subject matter of this Agreement, other rights and obligations of the parties
may survive the termination of this Agreement.
8. Complete Understanding; Amendment. This Agreement
constitutes the complete understanding and agreement between the parties hereto
with respect to the subject matter hereof and supersedes all prior negotiations,
representations and agreements made by and between such parties. This Agreement
shall not be altered, modified, amended or terminated except by written
instrument signed by each of the parties hereto. Waiver by either party hereto
of any breach hereunder by the other party shall not operate as a waiver of
any other breach, whether similar to or different from the breach waived.
9. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
10. Section Headings. The Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
9
11. Severability. If any provision of this Agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid and
unenforceable to any extent, the remainder of this Agreement or the application
of such provision to such person or circumstances other than those to which it
is so determined to be invalid and enforceable, shall not be affected thereby,
and each provision hereof shall be validated and shall be enforced for the
maximum period and to the fullest extent permitted by law.
12. Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original, but all of which
taken together shall constitute one and the same instrument.
10
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
NORTH ATLANTIC TRADING
COMPANY, INC.
By:_________________________
Name:
Title:
XXXX XXXXXX
By:_________________________
11
