EXHIBIT 10.2
NORTH ATLANTIC HOLDING COMPANY, INC.
2006 EQUITY INCENTIVE PLAN
RESTRICTED STOCK AWARD AGREEMENT
THIS RESTRICTED STOCK AWARD AGREEMENT is made and entered into as of
_________, _____ by and between North Atlantic Holding Company, Inc. a Delaware
corporation ("Company"), and _________ ("Grantee") pursuant to the terms and
conditions of the North Atlantic Holding Company, Inc. 2006 Equity Incentive
Plan ("Plan").
SECTION 1. GRANT OF RESTRICTED STOCK AWARD.
(a) RESTRICTED STOCK AWARD. On the terms and conditions set forth in this
Agreement, the Company hereby grants the Grantee xxx Shares ("Granted Shares"),
of which:
40% Shares are designated "Time Shares"
40% Shares are designated "EBITDAR Performance Shares"
20% Shares are designated "Debt Performance Shares"
(b) NO PURCHASE PRICE. In lieu of a purchase price, this award is made in
consideration of Service previously rendered by the Grantee to the Company or
its Subsidiaries.
(c) SURRENDER AND CANCELLATION OF PREVIOUSLY GRANTED STOCK OPTIONS. AS A
CONDITION OF THIS AWARD, THE GRANTEE HEREBY SURRENDERS ANY AND ALL PREVIOUSLY
GRANTED STOCK OPTIONS (VESTED OR OTHERWISE), INCLUDING ANY OPTIONS GRANTED UNDER
THE NORTH ATLANTIC TRADING COMPANY, INC. 2002 SHARE INCENTIVE PLAN AND 1997
SHARE INCENTIVE PLAN OF NORTH ATLANTIC TRADING COMPANY, INC., AS SET FORTH IN
EXHIBIT A TO THIS AGREEMENT, AND THE GRANTEE ACKNOWLEDGES AND AGREES THAT SUCH
STOCK OPTIONS SHALL BE IMMEDIATELY CANCELLED AS OF THE DATE HEREOF WITHOUT ANY
FURTHER CONSIDERATION.
(d) PLAN AND DEFINED TERMS. This award is granted under and subject to the terms
of the Plan, which is incorporated herein by reference. If there is any
inconsistency between the terms of the Plan and the terms of this Agreement, the
Plan's terms shall supersede and replace the conflicting terms of this
Agreement. Capitalized terms are defined in Section 10 of this Agreement.
SECTION 2. ISSUANCE OF GRANTED SHARES
(a) STOCK CERTIFICATES. The Company shall cause to be issued a certificate or
certificates for the Granted Shares representing this award, registered in the
name of the Grantee (or in the names of such person and his or her spouse as
community property or as joint tenants with right of survivorship).
(b) STOCKHOLDER RIGHTS. Until such time as the Company reacquires the Granted
Shares or the Granted Shares are forfeited, the Grantee (or any successor in
interest) shall have all the rights of a stockholder (including, without
limitation, voting, dividend and liquidation rights) with respect to the Granted
Shares, subject, however, to the restrictions of this Agreement and the
Stockholders' Agreement.
(c) ESCROW. For so long as Granted Shares are not vested, the Company shall
cause such certificate or certificates to be deposited in escrow. The Grantee
shall deliver to the Company a duly-executed blank Stock Power (in the form
attached hereto as Exhibit C). All regular cash dividends paid on Granted Shares
held in escrow shall be paid directly to the Grantee and shall not be held in
escrow. Granted Shares together with any other assets or securities held in
escrow hereunder, shall be (i) surrendered to the Company for reacquisition
under the forfeiture provision set forth in Section 6 of this Agreement or (ii)
released to the Grantee upon the Grantee's request to the extent the Granted
Shares are not Restricted Shares (but not more frequently than once every six
(6) months). In any event, all Granted Shares which have vested (and any other
vested assets and securities attributable thereto) shall be released within
sixty (60) days upon the date the Grantee's Service terminates.
(d) SECTION 83(B) ELECTION. Section 83 of the Code provides that the Grantee is
not subject to federal income tax until the Granted Shares are vested. If the
Grantee chooses, the Grantee may make an election under Section 83(b) of the
Code, which would cause the Grantee to recognize income in the amount of the
excess (if any) of the Fair Market Value of this award (determined as of the
date of this award) over the Purchase Price (if any). A Section 83(b) election
must be filed with the Internal Revenue Service within thirty (30) days after
the date of this award - even if no tax is due because the Fair Market Value of
the Restricted Shares on the date of this award equals the Purchase Price paid
or equals $0. THE FORM FOR MAKING A SECTION 83(B) ELECTION IS ATTACHED AS
EXHIBIT D. THE GRANTEE ACKNOWLEDGES THAT IT IS THE GRANTEE'S SOLE RESPONSIBILITY
TO TIMELY FILE THE SECTION 83(B) ELECTION AND THAT FAILURE TO FILE A SECTION
83(B) ELECTION WITHIN THE APPLICABLE THIRTY (30) DAY PERIOD MAY RESULT IN THE
RECOGNITION OF ORDINARY INCOME WHEN THE SHARES ARE VESTED.
(e) WITHHOLDING REQUIREMENTS. The Company may withhold any tax (or other
governmental obligation) as a result of the grant of this award and/or the
filing of a Section 83(b) election as a condition to the grant of this award,
and the Grantee shall make arrangements satisfactory to the Company to enable it
to satisfy all such withholding requirements.
(f) STOCKHOLDERS' AGREEMENT. The Grantee agrees to be bound by all of the
provisions, terms and conditions of the Stockholders' Agreement and shall become
a "Management Stockholder" thereunder. The Grantee further agrees to execute and
deliver an amendment to the Stockholders' Agreement or such other instruments as
the Company may reasonably request to evidence the Grantee becoming a
"Management Stockholder" party to the Stockholders' Agreement.
SECTION 3. VESTING
(a) TIME SHARES. Time Shares shall vest as set forth in the following schedule,
provided that the Grantee remains in continuous Service through each vesting
date:
Vesting Date Incremental Percentage Vested of Time Shares
-----------------------------------------------------------------------
____________ ___, ______ __%
____________ ___, ______ __%
____________ ___, ______ __%
____________ ___, ______ __%
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(b) PERFORMANCE SHARES. Performance Shares shall vest based on the Company's
annual performance measured in terms of achievement of EBITDAR and management of
Debt. Exhibit B to this Agreement specifies the Company's performance goals for
calendar years ______ through ______ (each, a "Performance Year") of (i) the
target EBITDAR ("EBITDAR Target") and minimum EBITDAR ("EBITDAR Floor") with
respect to EBITDAR and (ii) the target Debt ("Debt Target") and the maximum Debt
("Debt Ceiling") with respect to Debt. EBITDAR Performance Shares and Debt
Performance Shares (collectively, "Performance Shares") shall vest based on
achievement of EBITDAR and management of Debt, respectively, for each
Performance Year, with twenty-five percent (25%) of such Performance Shares
vesting for achievement at the applicable Target, and a pro rata amount (0-25%)
of such Performance Shares vesting for achievement between (i) the EBITDAR Floor
and/or Debt Ceiling and (ii) the applicable Target, as set forth in Annex I and
the following schedule, provided that the Grantee remains in continuous Service
through each vesting date:
Incremental Percentage Vested of Performance Shares
Calendar Year Vesting Date At Target Above EBITDAR Floor/Below Debt Ceiling
-------------------------------------------------------------------------------------------------------------
---- ------------- 25% pro rata portion
---- ------------- 25% pro rata portion
---- ------------- 25% pro rata portion
---- ------------- 25% pro rata portion
(i) Calculation of Percentage of Vested Performance Shares. At all
times, vesting of EBITDAR Performance Shares under the EBITDAR performance goal
and vesting of Debt Performance Shares under the Debt performance goal shall be
calculated independently of each other.
(ii) Adjustments. The EBITDAR Target, EBITDAR Floor, Debt Target and
Debt Ceiling for each calendar year will be subject to annual review by the
Board of Directors for adjustment during future annual budget-approval processes
and time frames. In addition, the EBITDAR Target, EBITDAR Floor, Debt Target and
Debt Ceiling will be adjusted to reflect acquisitions and dispositions as
mutually agreed upon by the Board of Directors and Chief Executive Officer of
the Company.
(iii) Achievement Between EBITDAR Floor/Debt Ceiling and EBITDAR/Debt
Target. In the event that, for any Performance Year, (i) achievement of EBITDAR
is above the EBITDAR Floor but below the EBITDAR Target and/or (ii) amount of
Debt is above the Debt Target but below the Debt Ceiling, in each case, for such
Performance Year, a pro rata portion of the applicable Performance Shares
otherwise scheduled to vest if achievement were at the applicable Target for
such Performance Year, shall vest as calculated as follows (subject to any
Carry-Back as described in paragraph (v) below):
Number of Performance Shares (EBITDAR or Debt) * 0.25 * Multiple
(A) With respect to EBITDAR , the Multiple is a fraction, (i)
the numerator of which is the amount by which EBITDAR exceeds the EBITDAR Floor
for the applicable Performance Year and (ii) the denominator of which is the
amount by which the EBITDAR Target exceeds the EBITDAR Floor for the applicable
Performance Year.
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(B) With respect to Debt, the Multiple is a fraction, (i) the
numerator of which is the amount by which the Debt Ceiling exceeds the Debt for
the applicable Performance Year and (ii) the denominator of which is the amount
by which the Debt Ceiling exceeds the Debt Target for the applicable Performance
Year.
(iv) Achievement At or Below EBITDAR Floor/At or Above Debt Ceiling.
For any Performance Year, (i) no EBITDAR Performance Shares will vest if EBITDAR
is at or below the EBITDAR Floor and (ii) no Debt Performance Shares will vest
if Debt is at or above the Debt Ceiling, in each case, with respect to such
Performance Year (subject to any Carry-Back as described in paragraph (v)
below).
(v) Carry-Backs.
(A) In the event that achievement of EBITDAR for any Performance
Year exceeds the EBITDAR Target for such Performance Year, the amount of such
excess ("EBITDAR Carry-Back") shall be applied to the first Performance Year in
which achievement was at or below the applicable EBITDAR Target up to an amount
that equals the applicable EBITDAR Target. Any remaining balance of the EBITDAR
Carry-Back shall then be applied to the next, subsequent Performance Year(s) in
which achievement was at or below the applicable EBITDAR Target in the manner
described in the preceding sentence.
(B) In the event that the amount of Debt for any Performance
Year is less than the Debt Target for such Performance Year, the amount by which
the Debt Target exceeds the Debt ("Debt Carry-Back") shall be applied to the
first Performance Year in which the amount of Debt was at or above the
applicable Debt Target up to an amount that equals the applicable Debt Target.
Any remaining balance of the Debt Carry-Back shall then be applied to the next,
subsequent Performance Year(s) in which the amount of Debt was at or above the
applicable Debt Target in the manner described in the preceding sentence.
(C) Accordingly, on the vesting date applicable to the
Performance Year in which the achievement of EBITDAR and/or amount of Debt
results in an EBITDAR Carry-Back and/or Debt Carry-Back, respectively, the
Grantee shall be eligible to receive the Performance Shares that otherwise would
have vested in any prior Performance Year after taking into account the
application of any Carry-Back. Notwithstanding anything to the contrary, in the
event that the Grantee's Service is terminated for any reason, the Grantee shall
not be eligible to receive additional vested Performance Shares as a result of
any Carry-Back pursuant to this paragraph (v) after the date of such
termination.
SECTION 4. TERMINATION OF SERVICE
(a) TERMINATION BY COMPANY WITHOUT CAUSE; RESIGNATION BY GRANTEE FOR GOOD
REASON; DEATH; DISABILITY. In the event that a Grantee's Service is terminated
by the Company without Cause, by the Grantee for Good Reason, or as a result of
the Grantee's death or Disability, (i) all Vested Shares held by the Grantee as
of the date of such termination shall remain outstanding and (ii) all Restricted
Shares held by the Grantee as of the date of such termination shall be
immediately forfeited and cancelled in accordance with Section 6 of this
Agreement.
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(b) TERMINATION BY COMPANY FOR CAUSE. In the event that a Grantee's Service is
terminated by the Company for Cause, all Granted Shares, whether vested or
unvested, held by the Grantee shall be immediately forfeited and cancelled in
accordance with Section 6 of this Agreement.
(c) VOLUNTARY RESIGNATION. In the event a Grantee's Service is terminated by the
Grantee for any reason other than for Good Reason, (i) fifty percent (50%) of
all Vested Shares held by the Grantee as of the date of such termination shall
remain outstanding and (ii) all Restricted Shares and the remaining fifty
percent (50%) of Vested Shares held by the Grantee as of the date of such
termination shall be immediately forfeited and cancelled in accordance with
Section 6 of this Agreement.
(d) BOLLORE RESTRICTIONS; COMPETITIVE ACTIVITY.
(i) In the event a Grantee engages in any Bollore Restrictions at any
time following the termination of a Grantee's Service (other than a termination
of the Grantee's Service by the Company without Cause), any and all Vested
Shares held by the Grantee shall be immediately forfeited and cancelled in
accordance with Section 6 of this Agreement.
(ii) In the event a Grantee engages in any Competitive Activity
within the twelve- month period following the termination of a Grantee's Service
(other than a termination of the Grantee's Service by the Company without
Cause), any and all Vested Shares held by the Grantee shall be immediately
forfeited and cancelled in accordance with Section 6 of this Agreement.
SECTION 5. CHANGE OF CONTROL
Notwithstanding anything herein to the contrary, upon the occurrence of a Change
of Control:
(a) All Restricted Shares held by a Grantee shall no longer be subject to the
vesting schedules set forth in Section 3 of this Agreement, but shall become
subject to a one-year vesting provision whereby such Restricted Shares shall
vest on the first anniversary of the Change of Control, provided that the
Grantee remains in continuous Service on such date.
(b) In the event that a Grantee's Service is terminated by the Company without
Cause (other than as a result of death or Disability) or by the Grantee for Good
Reason, in each case within one (1) year following the Change of Control, all
Restricted Shares held by the Grantee shall immediately vest and become
nonforfeitable on the date of such termination.
Subject to the provisions of this Section 5, the Grantee shall be entitled to
such consideration in respect of the outstanding Shares subject to this award on
the same terms and conditions as that provided to all other stockholders of the
Company as a result of the Change of Control. In the event that all or any
portion of such consideration is paid in cash, the Grantee shall be entitled to
a cash lump sum amount payable by the Company (or the surviving entity) upon the
earlier of the vesting dates referred to in Section 5(a) and Section 5(b) above.
Such cash amount shall be equal to (i) the product of (A) the cash consideration
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per Share and (B) the number of outstanding Shares subject to this award held by
the Grantee on the date of the Change of Control, plus (ii) monthly interest on
the amount determined in clause (i) from the date of the Change of Control date
through the payment date at a rate equal to the prime rate as published in The
Wall Street Journal at the last business day of each calendar month during such
period. The Company (or the surviving entity) shall cause any such cash amount
(and any interest thereon) payable to the Grantee in respect of the outstanding
Shares subject to this award to be deposited in escrow until the applicable
vesting date.
SECTION 6. FORFEITURE PROVISION.
The Company shall have the right to reacquire the Granted Shares and the Grantee
will be deemed to have transferred the Granted Shares to the Company in the
event:
(a) the Grantee holds any Restricted Shares when his or her Service is
terminated (subject to the provisions of Section 5(b) of this Agreement);
(b) the Grantee holds any Vested Shares that are immediately forfeited and
cancelled when his or her Service is terminated pursuant to Section 4(b) or 4(c)
of this Agreement; or
(c) the Grantee holds any Vested Shares that are immediately forfeited and
cancelled when he or she engages in Bollore Restrictions or Competitive Activity
pursuant to Section 4(d) of this Agreement.
The Company shall reacquire the Granted Shares pursuant to this forfeiture
provision effective on the date the Grantee's Service terminates or the date the
Company has actual knowledge that the Grantee has engaged in Bollore
Restrictions or Competitive Activity. From and after such time, the person from
whom the Granted Shares are to be acquired shall no longer have any rights as a
holder of the Granted Shares and such Granted Shares shall be deemed to have
been reacquired by and transferred to the Company. Once a forfeiture is
effected, this award shall be cancelled with respect to the forfeited Shares and
the Company shall have no further obligation with respect thereto.
SECTION 7. SECURITIES LAW ISSUES.
(a) SECURITIES NOT REGISTERED. The Granted Shares have not been registered under
the Securities Act and are being issued to the Grantee in reliance upon either
(i) the exemption from such registration provided by Rule 701 promulgated under
either the Securities Act for stock issuances under compensatory benefit plans
such as the Plan or (ii) the exemption for grants made to executive officers of
the Company (or of its Parent or Subsidiary) under Section 4(2) of the
Securities Act and Regulation D of the Securities and Exchange Commission
("Regulation D").
(b) GRANTEE REPRESENTATIONS. The Grantee hereby confirms that he or she has been
informed that the Granted Shares are restricted securities under the Securities
Act and that the Granted Shares may not be resold or transferred unless they are
first registered under the Securities Act or unless an exemption from such
registration is available. Accordingly, the Grantee hereby represents and
acknowledges as follows:
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(i) The Granted Shares are being acquired for investment, and not
with a view to sale or distribution thereof.
(ii) The Grantee is prepared to hold the Granted Shares for an
indefinite period and the Grantee is aware that Rule 144 promulgated under the
1933 Act, which exempts certain resales of securities, is not presently
available to exempt the resale of the Granted Shares from the registration
requirements of the Securities Act.
(iii) If the Grantee is an executive officer of the Company (or of a
Parent or Subsidiary), the Grantee further acknowledges that he or she is an
"accredited investor" within the meaning of Rule 501(e) of Regulation D by
virtue of the Grantee's employment position.
(c) NO REGISTRATION RIGHTS. The Company may, but shall not be obligated to
register or qualify this award of the Granted Shares to the Grantee under the
Securities Act or any other applicable law. The Company shall not be obligated
to take affirmative action to cause this award of the Granted Shares to the
Grantee to comply with any law.
(d) TRANSFEREE OBLIGATIONS. Each person (other than the Company) to whom the
Granted Shares are transferred by means of a Permitted Transfer must, as a
condition precedent to the validity of such transfer, acknowledge in writing to
the Company that such person is bound by the provisions of this Agreement and
that the transferred Granted Shares are subject to (i) the forfeiture provision
in Section 6 of this Agreement, (ii) the Stockholders' Agreement, (iii) the
Indenture, (iv) applicable credit agreements and (v) applicable law, in each
case to the same extent such Granted Shares would be so subject if retained by
the Grantee.
(e) PERMITTED TRANSFERS. A "Permitted Transfer" shall mean: (i) a transfer by
beneficiary designation, will or intestate succession or (ii) a transfer to the
Grantee's spouse, children or grandchildren (or their issue) or to a trust
established by the Grantee for the benefit of the Grantee or the Grantee's
spouse, children or grandchildren (or their issue), provided in either case that
the transferee agrees in writing on a form prescribed by the Company to be bound
by all provisions of this Agreement. If the Grantee transfers any Shares
acquired under this Agreement, then such rights shall be applicable to the
transferee to the same extent as to the Grantee.
(f) LEGENDS. All certificates evidencing Granted Shares shall bear the following
legends:
"THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED,
ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE
TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER
OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES). SUCH
AGREEMENT GRANTS TO THE COMPANY CERTAIN REPURCHASE RIGHTS. THE SECRETARY OF
THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO
THE HOLDER HEREOF WITHOUT CHARGE."
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"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH
ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL,
THAT SUCH REGISTRATION IS NOT REQUIRED."
(g) REMOVAL OF LEGENDS. If, in the opinion of the Company, any legend placed on
a stock certificate representing Granted Shares is no longer required, the
holder of such certificate shall be entitled to exchange such certificate for a
certificate representing the same number of shares but without such legend.
(h) ADDITIONAL RESTRICTIONS. Regardless of whether the offering and sale of
Shares under the Plan have been registered under the Securities Act or have been
registered or qualified under the securities laws of any state, the Company at
its discretion may impose restrictions upon the sale, pledge or other transfer
of such Shares (including the placement of appropriate legends on stock
certificates or the imposition of stop-transfer instructions) if, in the
judgment of the Company, such restrictions are necessary or desirable in order
to achieve compliance with the Securities Act or the securities laws of any
state or any other law.
(i) GRANTEE UNDERTAKING. The Grantee agrees to take whatever additional action
and execute whatever additional documents the Company may deem necessary or
advisable to carry out or effect one or more of the obligations or restrictions
imposed on either the Grantee or upon the Restricted Shares pursuant to the
provisions of this Agreement.
(j) ADMINISTRATION. Any determination by the Company in connection with any of
the matters set forth in this Section 7 shall be conclusive and binding on the
Grantee and all other persons.
SECTION 8. ADJUSTMENT OF SHARES.
In the event of a subdivision of the outstanding Shares, a
declaration of a dividend payable in Shares, a declaration of an extraordinary
dividend payable in a form other than Shares in an amount that has a material
effect on the Fair Market Value of the Shares, a combination or consolidation of
the outstanding Shares into a lesser number of Shares, a recapitalization, a
spin-off, a reclassification or a similar occurrence, the terms of this award
(including, without limitation, the number and kind of Shares subject to this
award and the Purchase Price) may be adjusted as set forth in Section 10 of the
Plan. In the event that the Company is a party to a merger or consolidation,
this award shall be subject to the agreement of merger or consolidation, as
provided in Section 10 of the Plan.
SECTION 9. MISCELLANEOUS PROVISIONS.
(a) NO RETENTION RIGHTS. Nothing in this award or in the Plan shall confer upon
the Grantee any right to continue in Service for any period of specific duration
or interfere with or otherwise restrict in any way the rights of the Company (or
any Parent or Subsidiary employing or retaining the Grantee) or of the Grantee,
which rights are hereby expressly reserved by each, to terminate his or her
Service at any time and for any reason, with or without cause.
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(b) NOTIFICATION. Any notification required by the terms of this Agreement shall
be given in writing and shall be deemed effective upon personal delivery or upon
deposit with the United States Postal Service, by registered or certified mail,
with postage and fees prepaid. A notice shall be addressed to the Company at its
principal executive office and to the Grantee at the address that he or she most
recently provided to the Company.
(c) ENTIRE AGREEMENT. This Agreement, together with the Plan and the
Stockholders' Agreement, constitute the entire contract between the parties
hereto with regard to the subject matter hereof. They supersede any other
agreements, representations or understandings (whether oral or written and
whether express or implied) which relate to the subject matter hereof.
(d) WAIVER. No waiver of any breach or condition of this Agreement shall be
deemed to be a waiver of any other or subsequent breach or condition whether of
like or different nature.
(e) ASSIGNMENT. The Company may assign its rights under this Agreement to any
person or entity selected by the Board of Directors, including, without
limitation, one or more stockholders of the Company.
(f) SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall inure to the
benefit of, and be binding upon, the Company and its successors and assigns and
upon the Grantee, the Grantee's assigns and the legal representatives, heirs and
legatees of the Grantee's estate, whether or not any such person shall have
become a party to this Agreement and have agreed in writing to be joined herein
and be bound by the terms hereof.
(g) CHOICE OF LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, as such laws are applied to
contracts entered into and performed in such State.
SECTION 10. DEFINITIONS.
(a) "AGREEMENT" shall mean this Restricted Stock Award Agreement.
(b) "BOARD OF DIRECTORS" shall mean the Board of Directors of the Company, as
constituted from time to time.
(c) "BOLLORE RESTRICTIONS" shall mean the restrictions described in Section 1.1
of the Stockholders' Agreement (or any successor section thereto).
(d) "CARRY-BACK" shall mean EBITDAR Carry-Back and/or Debt Carry-Back, as the
context requires.
(e) "CAUSE," with respect to a Grantee, shall mean (unless another definition is
provided in the employment agreement between the Company or, if applicable, the
Subsidiary, and the Grantee, in which case such definition shall govern, or
otherwise agreed to in writing by the Board of Directors and the Grantee):
(i) conviction of, or plea of guilty or nolo contendere to, a felony;
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(ii) a willful and intentional breach of any covenants contained in this
Agreement by the Grantee; or
(iii) gross negligence or willful misconduct in the performance of the
participant's duties with the Company and its Subsidiaries.
No act, or failure to act, shall be considered "willful" unless committed in bad
faith and without a reasonable belief that the act or omission was in the best
interests of the Company. No termination for Cause shall be effective with
respect to a participant who is a Senior Officer unless made by a majority of
the Board of Directors, at a meeting of the Board of Directors, held for such
purpose, where the Grantee and his or her counsel had on opportunity, on at
least fifteen (15) days' notice, to be heard before the Board of Directors.
(f) "CHANGE OF CONTROL" shall mean the first to occur of any of the following
events:
(i) Any person or group of related persons (other than the Management
Group) for purposes of Section 13(d) of the Exchange Act, becomes the
beneficial owner of the power, directly or indirectly, to vote or
direct the voting of securities having more than 50% of the ordinary
voting power for the election of directors of the Company. "Management
Group" shall mean Thomas F. Helms, Jr., David I. Brunson and other
members of senior management of the Company on the date of the
Indenture.
(ii) A majority of the Board of Directors of the Company shall consist of
Persons who are not Continuing Directors of the Company, as the case
may be. "Continuing Director" shall mean, as of the date of
determination, any person who (1) was a member of the Board of
Directors on the date of the Indenture or (2) was nominated for
election or elected to the Board of Directors with the affirmative
vote of a majority of the Continuing Directors who were members of
such Board of Directors at the time of such nomination or election.
(iii) The consummation of any sale, lease, exchange or other disposition
(in one transaction or a series of related transactions) of all or
substantially all of the assets of the Company and its Subsidiaries.
A transaction shall not constitute a Change of Control if its sole purpose is to
change the state of the Company's incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company's securities immediately before such transaction.
(g) "CODE" shall mean the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated thereunder.
(h) "COMPANY" shall mean North Atlantic Holding Company, Inc., a Delaware
corporation, and its successors and assigns.
(i) "COMPETITIVE ACTIVITY," with respect to a Grantee, shall mean any of the
following undertaken without the prior written consent of the Board of
Directors:
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(i) soliciting or counseling, personally or by or on behalf of any person,
firm or corporation, the employment of any employee of the Company or
a Subsidiary, or requesting, inducing or attempting to influence any
employee of the Company or a Subsidiary to terminate his or her
employment with Company or a Subsidiary; or
(ii) directly or indirectly (A) requesting, inducing or attempting to
influence any supplier of goods or services to the Company or a
Subsidiary to curtail or cancel any business it transacts with the
Company or a Subsidiary; (B) requesting, inducing or attempting to
influence any customer of Company or a Subsidiary to curtail or cancel
any business it may transact with the Company or a Subsidiary; or (C)
engaging in any business (whether as an officer, director, partner,
employee, consultant or equity owner) that the Company or a Subsidiary
is engaged in as of the date of termination of the Grantee's Service.
Notwithstanding the foregoing, "Competitive Activity" shall not include owning
(as a "beneficial owner" as such term is defined in the Exchange Act) two
percent (2%) or less of any class of equity securities of a company that is
engaged in a business in which the Company or a Subsidiary 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 Grantee does not
serve as an officer, director, partner, employee or consultant of such company.
(j) "CONSULTANT" shall mean a person who performs bona fide services for the
Company or a Subsidiary as a consultant or advisor, excluding Employees and
Directors.
(k) "DEBT CARRY-BACK" shall have the meaning ascribed to such term in Section
3(b)(v)(B) of this Agreement.
(l) "DEBT CEILING" shall have the meaning ascribed to such term in Section 3(b)
of this Agreement.
(m) "DEBT PERFORMANCE SHARES" shall have the meaning ascribed to such term in
Section 1(a) of this Agreement.
(n) "DEBT TARGET" shall have the meaning ascribed to such term in Section 3(b)
of this Agreement.
(o) "DIRECTOR" shall mean a member of the Board of Directors or the board of
directors of a Subsidiary who is not an Employee.
(p) "DISABILITY" shall mean with respect to a participant, (i) "disability" as
defined in any employment agreement between the between the participant and the
Company (or, if applicable, the Subsidiary employing the participant) or (ii) if
the participant is not a party to an employment agreement or "disability" is not
defined therein, the participant's inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment, as determined by the Board of Directors in its sole discretion.
(q) "EBITDAR" shall have the meaning ascribed to "Consolidated EBITDAR" as set
forth in the Financing Agreement.
11
(r) "EBITDAR Carry-Back" shall have the meaning ascribed to such term in Section
3(b)(v)(A) of this Agreement.
(s) "EBITDAR Floor" shall have the meaning ascribed to such term in Section 3(b)
of this Agreement.
(t) "EBITDAR Performance Shares" shall have the meaning ascribed to such term in
Section 1(a) of this Agreement.
(u) "EBITDAR Target" shall have the meaning ascribed to such term in Section
3(b) of this Agreement.
(v) "EMPLOYEE" shall mean any individual who is a common-law employee of the
Company or a Subsidiary.
(w) "FAIR MARKET VALUE" of a Share as of a given date shall be:
(i) If the Shares are listed on any established stock exchange or a
national market system, including, without limitation, The Nasdaq National
Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market
Value shall be the closing sales price for a share of such stock (or the closing
bid, if no sales were reported) as quoted on such exchange or system for the
last market trading day prior to the time of determination, as reported in The
Wall Street Journal or such other source as the Board of Directors deems
reliable;
(ii) If the Shares are regularly quoted by a recognized securities
dealer but selling prices are not reported, its Fair Market Value shall be the
mean between the high bid and low asked prices for a Share on the last market
trading day prior to the day of determination; or
(iii) In the absence of an established market for the Shares, the
Fair Market Value thereof shall be determined in good faith by the Board of
Directors, in accordance with the principles set forth in Section 409A of the
Code. Such determination shall be conclusive and binding on all persons.
(x) "FINANCING AGREEMENT" shall mean that certain Financing Agreement, dated as
of June 16, 2005, by and among North Atlantic Trading Company, Inc., National
Tobacco Company, L.P., North Atlantic Operating Company, Inc., National Tobacco
Finance Corporation, North Atlantic Cigarette Company, Inc., RBJ Sales, Inc.,
Fred Stoker & Sons, Inc. and Stoker, Inc., as Borrowers, North Atlantic Holding
Company , Inc., as Guarantor, the Financial Institutions from time to time party
thereto, as lenders, and Fortress Credit Corp., as Agent, as may be amended from
time to time.
(y) "GOOD REASON," with respect to a Grantee, shall mean (unless another
definition is provided in the employment agreement between the Company or, if
applicable, the Subsidiary, and the Grantee, in which case such definition shall
govern, or otherwise agreed to in writing by the Board of Directors and the
Grantee), the termination by the Grantee of his or her Service within ninety
(90) days following the Grantee's actual knowledge of the occurrence, without
the Grantee's written consent, of any of the following events:
12
(i) any change in the duties or responsibilities of the Grantee that
is inconsistent in any material and adverse respect with the Grantee's
position(s), duties, responsibilities or status with the Company (including any
material and adverse diminution of such duties or responsibilities), or a
material and adverse change in the Grantee's titles or offices with the Company
(including, if applicable, membership on the Board of Directors) or reporting
obligations (other than to the Board of Directors);
(ii) a reduction in the Grantee's then current base salary or bonus
opportunity;
(iii) the relocation of the Grantee's office to a location more than
twenty-five (25) miles from its then current location; or
(iv) the failure of the Company to continue in effect any material
employee benefit plan, compensation plan, welfare benefit plan or fringe benefit
plan in which the Grantee is then participating.
Notwithstanding the foregoing, "Good Reason" shall include the termination by
the Grantee of his or her Service for any reason beyond the Grantee's control
(such as family death, family disability or family illness) with written consent
of the Chief Executive Officer, unless the Grantee is the Chief Executive
Officer, in which case, with the written consent of Board of Directors.
(z) "GRANTED SHARES" shall have the meaning ascribed to such term in Section
1(a) of this Agreement.
(aa) "GRANTEE" shall mean the person named herein.
(bb) "INDENTURE" shall mean that certain Indenture, dated as of February 17,
2004, between the Company and Wells Fargo Bank Minnesota, National Association,
as may be amended from time to time.
(cc) "PERFORMANCE SHARE" shall have the meaning ascribed to such term in Section
3(b) of this Agreement.
(dd) "PERFORMANCE YEAR" shall have the meaning ascribed to such term in Section
3(b) of this Agreement.
(ee) "PERMITTED TRANSFER" shall have the meaning ascribed to such term in
Section 7(e) of this Agreement.
(ff) "PLAN" shall mean the North Atlantic Holding Company, Inc. 2006 Equity
Incentive Plan, as may be amended from time to time.
(gg) "PURCHASE PRICE" shall mean the price, if any, paid by the Grantee for the
Granted Shares.
(hh) "REGULATION D" shall have the meaning ascribed to such term in Section 7(a)
of this Agreement.
13
(ii) "RESTRICTED SHARE" shall mean a Granted Share that is not vested.
(jj) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
(kk) "SENIOR OFFICERS" shall mean the Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer and General Counsel of the Company or any of
its Subsidiaries, and such other persons as the Board of Directors shall
determine in its sole discretion.
(ll) "SERVICE" shall mean service as an Employee, Director or Consultant. For
any purpose under this Agreement, Service shall be deemed to continue while the
Grantee is on a bona fide leave of absence, if such leave was approved by the
Company in writing or if continued crediting of Service for such purpose is
expressly required by the terms of such leave or by applicable law (as
determined by the Company).
(mm) "SHARE" shall mean one share of common stock of the Company, with a par
value of $0.01 per share, as adjusted in accordance with Section 10 of the Plan.
(nn) "STOCKHOLDERS' AGREEMENT" shall mean that certain Amended and Restated
Exchange and Stockholders' Agreement, dated as of February 9, 2004, by and among
the Company, North Atlantic Trading Company, Inc. and the stockholders named
therein, as may be amended from time to time.
(oo) "SUBSIDIARY" shall have the meaning ascribed to such term in the Indenture.
(pp) "TARGET" shall mean EBITDAR Target and/or Debt Target, as the context
requires.
(qq) "TIME SHARES" shall have the meaning ascribed to such term in Section 1(a)
of this Agreement.
(rr) "VESTED SHARE" shall mean a Granted Share that is vested.
14
By signing below, the Grantee accepts this award, and acknowledges and agrees
that this award is granted under and governed by the terms and conditions of the
North Atlantic Holding Company, Inc. 2006 Equity Incentive Plan and the
Restricted Stock Award Agreement.
GRANTEE: NORTH ATLANTIC HOLDING COMPANY, INC.
- -------------------------- By:
-------------------------------
Title:
-----------------------------
15
EXHIBIT A
SURRENDERED STOCK OPTIONS
[List of Grantee's surrendered stock options]
EXHIBIT B
PERFORMANCE GOALS
----------------------------------- ------------------- ------------------- ------------------- -------------------
EBITDAR [Year] [Year] [Year] [Year]
----------------------------------- ------------------- ------------------- ------------------- -------------------
EBITDAR Target
----------------------------------- ------------------- ------------------- ------------------- -------------------
EBITDAR Floor
----------------------------------- ------------------- ------------------- ------------------- -------------------
---------------------------------- -------------------- ------------------- ------------------- -------------------
DEBT [Year] [Year] [Year] [Year]
---------------------------------- -------------------- ------------------- ------------------- -------------------
Debt Ceiling
---------------------------------- -------------------- ------------------- ------------------- -------------------
Debt Target
---------------------------------- -------------------- ------------------- ------------------- -------------------
EXHIBIT C
STOCK POWER
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto North Atlantic Holding Company, Inc. (the "Company"),
_________________ (_____) shares of the common stock, par value $0.01 per share,
of the Company standing in his/her/their/its name on the books of the Company
represented by Certificate No. ________________ herewith and do(es) hereby
irrevocably constitute and appoint ________________________ his/her/their/its
attorney-in-fact, with full power of substitution, to transfer such shares on
the books of the Company.
Dated: __________________ Signature: _________________________________
Print Name and Mailing Address
____________________________________________
____________________________________________
____________________________________________
INSTRUCTIONS: Please do not fill in any blanks other than the signature
line and printed name and mailing address. Please print your
name exactly as you would like your name to appear on the
issued stock certificate. The purpose of this assignment is
to enable the Company to exercise its right to forfeit the
Shares without requiring additional signatures on your part.
EXHIBIT D
SECTION 83(b) ELECTION
This statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.
(1) The taxpayer who performed the services is:
Name: ___________________________
Address: ___________________________
___________________________
Social Security Number:
____________________________
(2) The property with respect to which the election is being made is _________
shares of the common stock, par value $0.01 per share, of North Atlantic
Holding Company, Inc.
(3) The property was issued on _________________.
(4) The taxable year in which the election is being made is the calendar year
___________.
(5) The property is subject to a substantial risk of forfeiture to which the
issuer has the right to acquire the property at the lower of fair market
value or the original purchase price, at any time prior to the vesting
date. The issuer's right to reacquire the property lapses in a series of
installments over a _____________-year period ending on
____________________, 200__.
(6) The fair market value at the time of transfer (determined without regard to
any restriction other than a restriction which by its terms will never
lapse) is $___________ per share.
(7) The amount paid for such property is $__________ per share.
(8) A copy of this statement was furnished to North Atlantic Holding Company,
Inc. for whom taxpayer rendered the services underlying the transfer of
property.
(9) This statement is executed on __________________________________.
______________________________ _____________________________________
Spouse (if any) Taxpayer
This election must be filed with the Internal Revenue Service Center with which
taxpayer files his or her Federal income tax returns and must be made within
thirty (30) days after the execution date of the Restricted Stock Agreement.
This filing should be made by registered or certified mail, return receipt
requested. You should retain two (2) copies of the completed form for filing
with your Federal and state tax returns for the current tax year and an
additional copy for your records.