FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20459
[X] QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended March 31, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to ______
Commission File Number 333-31931
NORTH ATLANTIC TRADING COMPANY, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3961898
- -------------------------------------- -----------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
257 Park Avenue South
New York, New York 10010-7304
- ----------------------------------------- ----------------------
(Address of Principal Executive Offices) (Zip Code)
(212) 253-8185
-------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Unchanged
------------------------------------------------------------
(Former name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 528,241 shares of common stock,
$.01 par value, as of March 31, 1998.
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. Financial Statements
NORTH ATLANTIC TRADING COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands except par value)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
----------------------------------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash $ 101 $ 4,087
Accounts Receivable 8,381 4,633
Inventory 58,079 56,110
Income Taxes Receivable 5,326 5,326
Other Current Assets 2,165 1,718
----------- ----------
Total Current Assets 74,052 71,874
Property, Plant & Equipment (Net) 7,881 8,251
Deferred Income Taxes 35,166 34,091
Goodwill (Net) 144,126 145,517
Other Assets 12,966 13,506
----------- ----------
Total Assets $ 274,191 $ 273,239
=========== ==========
Current Liabilities:
Accounts Payable $ 1,047 $ 659
Accrued Liabilities 9,439 5,873
Deferred Income Taxes 6,721 6,721
Current Portion of Long-Term Debt 10,547 9,375
----------- ----------
Total Current Liabilities 27,754 22,628
Long-Term Debt 217,108 220,625
Other Long-Term Liabilities 7,486 7,486
----------- ----------
Total Liabilities 252,348 250,739
----------- ----------
Preferred Stock, net of discount of $1,557 and $1,600,
respectively (Mandatory Redemption Value of $37,057) 35,704 34,581
----------- ----------
Stockholders' Equity (Deficit):
Common Stock, voting, $.01 par value; authorized
shares, 750,000; issued and outstanding shares,
528,241 at March 31, 1998 5 5
Common Stock, nonvoting, $.01 par value; authorized
shares, 750,000; issued and outstanding shares,
-0- at March 31, 1998
Warrants 2,410 2,410
Additional Paid-In Capital 6,128 5,906
Retained Earnings (Accumulated Deficit) (22,404) (20,402)
----------- ----------
Total Stockholders' Equity (Deficit) (13,861) (12,081)
----------- ----------
Total Liabilities and Stockholders' Equity (Deficit) $ 274,191 $ 273,239
=========== ==========
</TABLE>
The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.
2
<PAGE>
NORTH ATLANTIC TRADING COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
ended ended
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Net Sales $ 19,702 $ 12,558
Cost of Sales 6,874 4,484
----------- ----------
Gross Profit 12,828 8,074
Selling, General & Administrative Expenses 7,021 5,365
Amortization of Goodwill 1,392 201
----------- ----------
Operating Income 4,415 2,508
Interest Expense & Financing Costs, Net 6,386 2,480
Other Expense (Income) (16) 27
----------- ----------
Income Before Income Tax Provision (Benefit) (1,955) 1
Income Tax Provision (Benefit) (1,075) ----------
Net Income (Loss) (880) 1
$==========
Preferred Stock Dividends (1,122)
Net Loss Applicable to Common Shares $ (2,002)
===========
Loss per Common Share:
Basic and Diluted $ (3.79)
Weighted Average Common Shares Outstanding:
Basic and Diluted 528,241
Supplemental Unaudited Financial Data:
Historical Income Before Income Tax Provision $ 1
Pro forma Income Tax Provision -
Pro forma Net Income $ 1
==========
Pro forma Earnings Per Common Share:
Basic $ -
Diluted $ -
</TABLE>
The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.
3
<PAGE>
NORTH ATLANTIC TRADING COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
ended ended
March 31, 1998 March 31, 1997
-------------- --------------
<S>
Cash Flows from Operating Activities: <C> <C>
Net Income (Loss) $ (880) $ 1
Adjustments to Reconcile Net Income (Loss)
to Net Cash Used In Operating Activities:
Depreciation 450 450
Amortization of Goodwill 1,392 201
Amortization of Deferred Financing Fees 540 485
Compensation Expense 271
Changes in Operating Assets and Liabilities:
Accounts Receivable (3,748) (803)
Inventory (1,969) 753
Other Current Assets (447) (116)
Deferred Income Taxes (1,075)
Accounts Payable 388 405
Borrowings Under Inventory Financing Agreement 418
Payments on Borrowings Under Inventory
Financing Agreement (1,913)
Accrued Expenses and Other 3,516 (123)
----------- ----------
Net Cash Used In
Operating Activities (1,562) (242)
----------- -----
Cash Flows From Investing Activities:
Capital Expenditures ( 80) (302)
----------- -----
Net Cash Used In Investing Activities ( 80) (302)
----------- -----
Cash Flows from Financing Activities:
Proceeds from Revolving Loans 800
Payments on Term Loans (2,344) (2,118)
----------- -------
Net Cash Used In Activities (2,344) (1,318)
----------- -------
Net Decrease In Cash (3,986) (1,862)
Cash, Beginning of Period 4,087 2,209
----------- ----------
Cash, End of Period $ 101 $ 347
=========== ==========
</TABLE>
The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.
4
<PAGE>
NORTH ATLANTIC TRADING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements are
presented in accordance with the requirements of Form 10-Q and consequently do
not include all the disclosures normally required by generally accepted
accounting principles. The condensed consolidated financial statements have been
prepared in accordance with North Atlantic Trading Company, Inc.'s (the
"Company's") customary accounting practices and have not been audited. In the
opinion of management, all adjustments necessary to fairly present the results
of operations for the reported interim periods have been made and were of a
normal recurring nature. The year-end balance sheet data was derived from
audited financial statements, but does not include all disclosures required by
generally accepted accounting principles.
2. ACQUISITION
On June 25, 1997, the Company acquired NATC Holdings, USA Inc. ("NATC")
for a purchase price of $162.6 million. The excess of the net assets of $117.3
million was recorded as goodwill and is being amortized over 25 years. The
Acquisition was accounted for under the purchase method of accounting and,
accordingly, the results of operations of NATC have been included in the
accompanying financial statements since the date of acquisition.
Following are the unaudited pro forma results of operations as if the
June 25, 1997 transaction had occurred on January 1, 1997 (in thousands, except
per share and share amounts):
Three Months
ended
March 31, 1997
Net Sales $ 22,802
============
Net Loss $ (238)
Preferred Stock Dividends 1,064
------------
Net Loss Applicable to Common Shares $ (1,302)
============
Basic and diluted loss per common share:
Net Loss per common share $ (2.47)
===========
Weighted average common shares outstanding:
Basic and diluted 528,241
5
<PAGE>
This unaudited pro forma financial information is not necessarily
indicative of the operating results that would have occurred had the transaction
been consummated as of January 1, 1997, nor is it necessarily indicative of
future operating results.
3. INVENTORIES
The Company uses the last-in, first-out (LIFO) method for valuing its
inventories.
(In thousands)
3/31/98 12/31/97
----------- -----------
Raw Materials and Work In Process $ 2,277 $ 1,492
Leaf Tobacco 37,047 36,675
Finished Goods - Tobacco 6,136 5,444
Finished Goods - Cigarette Papers 12,343 12,241
Other 276 258
------------ ------------
$ 58,079 $ 56,110
============ ============
4. PROVISION FOR INCOME TAXES
Prior to June 25, 1997, the Company was a limited liability company and
prior to May 17, 1996, the Predecessor was a partnership, neither of which were
subject to state or federal income taxes. Effective June 25, 1997, the Company
became a taxable corporation and recorded a one-time non-cash provision for
income taxes of approximately $5.0 million in order to record its previously
unrecorded deferred income tax assets of $3.1 million and liabilities of $8.1
million.
The provision for income taxes for the three months ended March 31,
1998 has been computed based on the estimated annual effective income tax rate
which is expected to be 55%. The primary difference between the effective income
tax rate and the statutory income tax rate is certain goodwill amortization
which is not deductible for income tax purposes.
5. NOTES PAYABLE AND LONG-TERM DEBT
North Atlantic Trading Company, Inc. is a holding company with no
operations and no assets other than its investment in subsidiaries, income tax
receivables, deferred income tax assets related to the differences between the
book and tax basis of its investment in the Partnership and deferred financing
costs related to its debt. All of the Company's subsidiaries are wholly-owned
and guarantee the Company's debt on a full, unconditional and joint and several
basis. In Management's opinion, separate
6
<PAGE>
financial statements of the subsidiaries are not meaningful to
investors and are not included in these financial statements.
Following is unaudited parent-only summarized financial information of
the Company:
As of March 31, 1998:
Current Assets $ -
Noncurrent Assets 259,224
Current Liabilities 19,690
Noncurrent Liabilities 217,108
Redeemable Preferred Stock 35,704
For the Three Months Ended March 31, 1998:
Equity in Earnings of Subsidiaries $ 2,018
Net Loss Before Payment of Preferred
Stock Dividends (870)
6. NET LOSS PER COMMON SHARE RECONCILIATION
<TABLE>
<CAPTION>
For the Three Months Ended March 31, 1998
Loss Shares Per Share
(Numerator) (Denominator) Amount
<S> <C> <C> <C>
Net Loss $ (880)
Less:Preferred Stock Dividends (1,122)
----------
Basic and Diluted:
Loss available to common
stockholders $ (2,002) 528,241 $(3.79)
========== ======== ======
</TABLE>
The calculations are based on the weighted average number of shares of
common stock outstanding during the period. Common equivalent shares from stock
options of 29,824 and warrants of 63,430 are excluded from these computations as
their effect is antidilutive.
7. CONTINGENCY
On March 30, 1998, an action was filed in California State Court, in
the City and County of San Francisco, against defendants United States Tobacco
Company, Inc., Conwood Company, L.P., Pinkerton Tobacco Company, Inc., National
Tobacco Company, L.P., Swisher International Group, Inc., Brown & Williamson
Tobacco Corporation, Merrill Reese, Inc., Lucky Stores, Inc., Quick Stop
Markets, Inc., Raley's, Inc., Save Mart Supermarkets, Inc., Sav- On Drug Stores,
Inc., The Southland Corporation, Circle K Stores, Inc., Longs Drug Stores
Corporation, Walgreen Co., Safeway, Inc. and DOES 1-500. To date, the complaint
has only been filed with the California court, and has not been served on the
Company or
7
<PAGE>
the other defendants. The complaint purports to be brought on behalf of The City
and County of San Francisco, the People of the State of California and the
Environmental Law Foundation.
Plaintiffs claim that the defendants violated the California Safe
Drinking Water and Toxic Enforcement Act of 1986, Health and Safety Code
ss.ss.25249.6 ("Proposition 65") by "knowingly and intentionally" exposing
California consumers to carcinogens and reproductive toxins in smokeless tobacco
products while failing to provide a "clear and reasonable "warning that
smokeless tobacco products contain substances that are "known to the state to
cause cancer" and "known to the state to cause reproductive toxicity."
Plaintiffs further claim that the defendants violated Cali- fornia's Unfair
Competition Act, Business & Professions Code ss.ss.17200, et seq., by marketing
smokeless tobacco products to children, and by fraudulently concealing from the
public the adverse consequences and addiction associated with smokeless tobacco
products.
The complaint seeks a preliminary and permanent injunction preventing
defendants from selling smokeless tobacco products without a "clear and
reasonable" warning, as well as an injunction ordering defendants to undertake a
court-approved public information campaign to instruct children that the use of
smokeless tobacco products results in exposures to substances known to the State
of California to cause cancer and reproductive harm. The plaintiffs also seek an
award of statutory penalties and damages for each violation of Proposition 65
and the Unfair Competition Act, disgorgement of profits from the sale of
smokeless tobacco products, and attorneys' fees and costs. In the event that the
Company is served with the complaint, the Company intends to defend the action
vigorously.
8
<PAGE>
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
OVERVIEW
On June 25, 1997, the Company acquired all of the issued and
outstanding capital stock of NATC Holdings USA, Inc. ("NATC") (the
"Acquisition"), at which time NATC and its subsidiaries were merged into North
Atlantic Operating Company, Inc. ("NAOC"), a wholly-owned subsidiary of the
Registrant. The Acquisition was accounted for under the purchase method of
accounting and the operating results of NATC have been included from the date of
acquisition. The aggregate acquisition purchase price of $162.6 million was
allocated to the acquired net assets based on the fair market value of such net
assets.
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1998 TO THREE
MONTHS ENDED MARCH 31, 1997.
Net Sales. Net Sales for the three months ended March 31, 1998 were
$19.7 million, an increase of 56.8%, or $7.1 million, from the prior year
period. Sales of NAOC for the quarter ended March 31, 1998 were 45.2% of the
Company's consolidated sales.
Sales of smokeless tobacco products for the three months ended March
31, 1998 decreased 14.0% reflecting a volume decrease of 16.1% which was
partially offset by a price increase. Approximately 3.2% of the volume decline
was related to the Company's decision to change certain of its promotional
discounts from a free goods strategy to a price off strategy. The Company
believes that its price off strategy will reduce the cost of the Company's
promotional discount program going forward. The Company announced a price
increase at its National Tobacco Company L.P. ("National Tobacco") subsidiary of
5.6% effective January 1, 1998. Further, on March 2, 1998, the Company, also
through its National Tobacco subsidiary, launched a new value product, Durango.
To date, the results of this product launch have exceeded the Company's
expectations. Sales of Durango for the quarter represented 3.8% of National
Tobacco's net sales.
Gross Profit. Gross profit and gross profit percentage for the three
months ended March 31, 1998 increased to $12.8 million or 65.1% of net sales
compared to $8.1 million or 64.3% of net sales for the prior year's period.
Gross profit attributable to NAOC for the quarter ended March 31, 1998 was 46.9%
of the Company's consolidated gross profit.
9
<PAGE>
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the three months ended March 31, 1998 increased
29.6% to $7.0 million from last year's $5.4 million. This increase was due
primarily to the addition of three new members of senior management and the
reorganization and expansion of the Company's sales organization.
Amortization of Goodwill. Amortization of goodwill for the three months
ended March 31, 1998 was $1.4 million compared to $0.2 million for the prior
year's period. This increase was due to the increase in intangible assets as a
result of the Acquisition.
Interest Expense and Financing Costs. Interest expense and financing
costs increased to $6.4 million for the three months ended March 31, 1998 from
$2.5 million for the prior year's period. This increase was the result of
additional indebtedness incurred in connection with the Acquisition and related
recapitalization.
Income Taxes. The income tax provision reflects the application of the
estimated annual effective tax rate of 55% based on projected earnings for 1998.
The Company's estimated effective tax rate was 40% prior to accounting for the
amortization of non-deductible good will. The Company currently has a net
operating loss carry-forward of approximately $9.5 million, and does not expect
to pay material federal income taxes during 1998.
Net Income (Loss). Due to the factors described above, the net loss for
the three months ended March 31, 1998 was $0.9 million compared to the net
income of $1,000 for the prior year's period.
LIQUIDITY AND CAPITAL REQUIREMENTS
At March 31, 1998, working capital was $47.2 million compared to $49.2
million at December 31, 1997. The Company will fund its seasonal working capital
requirements through its operating cash flows, and, if needed, bank borrowings.
The Company has an undrawn availability of $24 million under its committed $25
million revolving credit facility.
The tobacco for loose leaf chewing tobacco requires aging of
approximately two years before being processed into finished products. The
Company believes that its National Tobacco subsidiary maintains sufficient
tobacco inventories to ensure proper aging as well as an adequate supply based
on its historical and anticipated sales activity. The Company also believes that
its NAOC subsidiary maintains adequate inventories
10
<PAGE>
and that the supply of such inventory will remain stable for the
foreseeable future.
The Company believes that any effect of inflation at current levels
will be minimal. Historically, the Company has been able to increase prices at a
rate greater than that of inflation and believes that it will be able to do so
in the foreseeable future. In addition, the Company has been able to maintain a
stable variable cost structure for its smokeless tobacco products in significant
part due to its procurement and reformulation activities.
Given its current operation, the Company believes that its capital
expenditure requirements for 1998 will be in the $500,000 range.
The Company believes that its operating cash flows, together with its
revolving credit facility, should be adequate to satisfy its reasonable
foreseeable capital requirements. The financing of any significant future
products, business or property acquisitions may require additional debt or
equity financing.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In February 1998, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 132,
"Employers' Disclosures about Pensions and Other Postretirement
Benefits" ("SFAS No. 132"). The Statement revises employers'
disclosures about pension and other postretirement benefit plans.
The Company will adopt SFAS No. 132 in the Company's year-end
1998 reporting as required.
ITEM 3. Not Applicable.
11
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. Legal Proceedings.
On March 30, 1998, an action was filed in California State Court, in
the City and County of San Francisco, against defendants United States Tobacco
Company, Inc., Conwood Company, L.P., Pinkerton Tobacco Company, Inc., National
Tobacco Company, L.P., Swisher International Group, Inc., Brown & Williamson
Tobacco Corporation, Merrill Reese, Inc., Lucky Stores, Inc., Quick Stop
Markets, Inc., Raley's, Inc., Save Mart Supermarkets, Inc., Sav- On Drug Stores,
Inc., The Southland Corporation, Circle K Stores, Inc., Longs Drug Stores
Corporation, Walgreen Co., Safeway, Inc. and DOES 1-500. To date, the complaint
has only been filed with the California court, and has not been served on the
Company or the other defendants. The complaint purports to be brought on behalf
of The City and County of San Francisco, the People of the State of California
and the Environmental Law Foundation.
Plaintiffs claim that the defendants violated the California Safe
Drinking Water and Toxic Enforcement Act of 1986, Health and Safety Code
ss.ss.25249.6 ("Proposition 65") by "knowingly and intentionally" exposing
California consumers to carcinogens and reproductive toxins in smokeless tobacco
products while failing to provide a "clear and reasonable "warning that
smokeless tobacco products contain substances that are "known to the state to
cause cancer" and "known to the state to cause reproductive toxicity."
Plaintiffs further claim that the defendants violated Cali- fornia's Unfair
Competition Act, Business & Professions Code ss.ss.17200, et seq., by marketing
smokeless tobacco products to children, and by fraudulently concealing from the
public the adverse consequences and addiction associated with smokeless tobacco
products.
The complaint seeks a preliminary and permanent injunction preventing
defendants from selling smokeless tobacco products without a "clear and
reasonable" warning, as well as an injunction ordering defendants to undertake a
court-approved public information campaign to instruct children that the use of
smokeless tobacco products results in exposures to substances known to the State
of California to cause cancer and reproductive harm. The plaintiffs also seek an
award of statutory penalties and damages for each violation of Proposition 65
and the Unfair Competition Act, disgorgement of profits from the sale of
smokeless tobacco products, and attorneys' fees and costs. In the event that the
Company is served with the complaint, the Company intends to defend the action
vigorously.
12
<PAGE>
ITEM 2. Changes in Securities and Use of Proceeds.
On March 24, 1998, in connection with Maurice Langston's retirement,
the Company redeemed 10,100 shares of Voting Common Stock from Langston
Enterprises, Inc. ("LEI"), a corporation whose common stock is owned by Maurice
Langston, a director of the Company. The redemption price paid by the Company
was $40.00 per share, for an aggregate redemption price of $404,000.00.
Concurrently with the redemption of shares from LEI, the Company sold
an aggregate of 10,100 shares of Voting Common Stock to seven officers of the
Company and one existing shareholder and director at a price per share of
$40.00, resulting in aggregate proceeds of $404,000.00. The Company used the
proceeds of this sale to pay the redemption price for the LEI redemption. The
shares sold by the Company were sold in reliance on the exemption set forth in
Section 4(2) of the Securities Act.
ITEM 4. Submission of Matters to a Vote of Security Holders.
By Written Consent dated February 19, 1998, the Voting Trust ("Voting
Trust") created under that certain Voting Trust Agreement among Helms Management
Corp., Thomas F. Helms, Jr., David I. Brunson and Jeffrey S. Hay, as majority
stockholder, approved the adoption of an Amended and Restated Certificate of
Incorporation of the Corporation which provides, among other things, for the
elimination of the class of Non-Exchange Preferred Stock from the authorized
capital stock of the Corporation. In addition, the Voting Trust approved the
adoption of Amended and Restated By-Laws of the Corporation.
In lieu of an annual meeting of stockholders, by Written Consent dated
March 24, 1998 the Voting Trust, as majority stockholder, approved the removal
and subsequent reelection of each director of the Company.
ITEM 6. Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit
Number Description
- ------- -----------
3.1 (a)(i) Restated Certificate of Incorporation of North
Atlantic Trading Company, Inc., filed
February 19, 1998.*
13
<PAGE>
3.1 (e)(ii) Certificate of Amendment of Certificate of
Incorporation of International Flavors and
Technology, Inc., filed February 19, 1998.*
3.2 (a) Amended and Restated Bylaws of North Atlantic
Trading Company, Inc.
3.2 (e) Bylaws of International Flavors and
Technology, Inc.*
4.3 First Supplemental Indenture, dated as of
February 26, 1998, among North Atlantic
Trading Company, Inc., National Tobacco
Company, L.P., National Tobacco Finance
Corporation, International Flavors and
Technology, Inc. and The United States Trust
Company of New York.*
10.28 Amended and Restated Nonqualified Stock Option
Agreement, dated as of January 12, 1998,
between North Atlantic Trading Company, Inc.
and Jack Africk.*
10.30 Assignment and Assumption, dated as of January
1, 1998, between National Tobacco Company,
L.P. and North Atlantic Trading Company, Inc.*
10.32 Sales Representative Agreement, effective as
of January 1, 1998, between National Tobacco
Company, L.P. and North Atlantic Operating
Company, Inc.*
10.34 First Amendment to Separation Agreement, dated
as of January 30, 1998, among National Tobacco
Company, L.P., North Atlantic Trading Company,
Inc. and Maurice Langston.*
10.37 North Atlantic Trading Company, Inc. 1998
Executive Committee Bonus Plan*
10.38 North Atlantic Trading Company, Inc. 1998
Management Bonus Plan*
10.39 Amendment, dated as of February 1, 1998, among
North Atlantic Trading Company, Inc., the
various lending institutions referenced
therein and National Westminster Bank plc, as
administrative agent.
14
<PAGE>
10.40 Consent, dated as of March 12, 1998, among
North Atlantic Trading Company, Inc., the
various lending institutions referenced
therein and National Westminster Bank plc, as
administrative agent.
10.41 Securities Redemption Agreement, dated as of
March 24, 1998, between North Atlantic Trading
Company, Inc., Langston Enterprises, Inc. and
Maurice Langston.
10.42 Subscription Agreement, dated as of March 24,
1998, between North Atlantic Trading Company,
Inc. and David I. Brunson.
10.43 Subscription Agreement, dated as of March 24,
1998, between North Atlantic Trading Company,
Inc. and Jeffrey S. Hay.
10.44 Promissory Note, dated March 24, 1998, issued
by David I. Brunson in favor of North Atlantic
Trading Company, Inc.
10.45 Promissory Note, dated March 24, 1998, issued
by Jeffrey S. Hay in favor of North Atlantic
Trading Company, Inc.
27.1 Financial Data Schedule
- ---------------
* Incorporated by reference to the identically numbered exhibit contained in
the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997.
b. Reports on Form 8-K
There were no reports on Form 8-K in the First Quarter of
1998.
15
<PAGE>
SIGNATURES
The Company has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Date: May 13, 1998 NORTH ATLANTIC TRADING COMPANY, INC.
/s/ Thomas F. Helms, Jr.
-------------------------------------
Thomas F. Helms, Jr.
President & Chief Executive Officer
Date: May 13, 1998 /s/ David I. Brunson
-------------------------------------
David I. Brunson
Chief Financial Officer
16
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
3.1 (a)(i) Restated Certificate of Incorporation of North
Atlantic Trading Company, Inc., filed
February 19, 1998.*
3.1 (e)(ii) Certificate of Amendment of Certificate of
Incorporation of International Flavors and
Technology, Inc., filed February 19, 1998.*
3.2 (a) Amended and Restated Bylaws of North Atlantic
Trading Company, Inc.
3.2 (e) Bylaws of International Flavors and
Technology, Inc.*
4.3 First Supplemental Indenture, dated as of
February 26, 1998, among North Atlantic
Trading Company, Inc., National Tobacco
Company, L.P., National Tobacco Finance
Corporation, International Flavors and
Technology, Inc. and The United States Trust
Company of New York.*
10.28 Amended and Restated Nonqualified Stock Option
Agreement, dated as of January 12, 1998,
between North Atlantic Trading Company, Inc.
and Jack Africk.*
10.30 Assignment and Assumption, dated as of January
1, 1998, between National Tobacco Company,
L.P. and North Atlantic Trading Company, Inc.*
10.32 Sales Representative Agreement, effective as
of January 1, 1998, between National Tobacco
Company, L.P. and North Atlantic Operating
Company, Inc.*
10.34 First Amendment to Separation Agreement, dated
as of January 30, 1998, among National Tobacco
Company, L.P., North Atlantic Trading Company,
Inc. and Maurice Langston.*
10.37 North Atlantic Trading Company, Inc. 1998
Executive Committee Bonus Plan*
10.38 North Atlantic Trading Company, Inc. 1998
Management Bonus Plan*
10.39 Amendment, dated as of February 1, 1998, among
North Atlantic Trading Company, Inc., the
various lending institutions referenced
therein and National Westminster Bank plc, as
administrative agent.
<PAGE>
10.40 Consent, dated as of March 12, 1998, among
North Atlantic Trading Company, Inc., the
various lending institutions referenced
therein and National Westminster Bank plc, as
administrative agent.
10.41 Securities Redemption Agreement, dated as of
March 24, 1998, between North Atlantic Trading
Company, Inc., Langston Enterprises, Inc. and
Maurice Langston.
10.42 Subscription Agreement, dated as of March 24,
1998, between North Atlantic Trading Company,
Inc. and David I. Brunson.
10.43 Subscription Agreement, dated as of March 24,
1998, between North Atlantic Trading Company,
Inc. and Jeffrey S. Hay.
10.44 Promissory Note, dated March 24, 1998, issued
by David I. Brunson in favor of North Atlantic
Trading Company, Inc.
10.45 Promissory Note, dated March 24, 1998, issued
by Jeffrey S. Hay in favor of North Atlantic
Trading Company, Inc.
27.1 Financial Data Schedule
- ---------------
* Incorporated by reference to the identically numbered exhibit contained in
the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997.
Exhibit 3.2(a)
BY-LAWS
OF
NORTH ATLANTIC TRADING COMPANY, INC.
(a Delaware corporation)
ARTICLE I
Stockholders
------------
SECTION 1. Annual Meetings. The annual meeting of stockholders for
the election of directors and for the transaction of such other business as may
properly come before the meeting shall be held each year at such date and time,
within or without the State of Delaware, as the Board of Directors shall
determine.
SECTION 2. Special Meetings. Special meetings of stockholders for
the transaction of such business as may properly come before the meeting may be
called by order of the Board of Directors or by stockholders holding together at
least a majority of all the shares of the Corporation entitled to vote at the
meeting, and shall be held at such date and time, within or without the State of
Delaware, as may be specified by such order. Whenever the directors shall fail
to fix such place, the meeting shall be held at the principal executive office
of the Corporation.
SECTION 3. Notice of Meetings. Written notice of all meetings of the
stockholders shall be mailed or delivered to each stockholder not less than 10
nor more than 60 days prior to the meeting. Notice of any special meeting shall
state in general terms the purpose or purposes for which the meeting is to be
held.
SECTION 4. Stockholder Lists. The officer who has charge of the
stock ledger of the Corporation shall prepare and make, at least 10 days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, either at a place within the city where the
meeting is to be held, which place
NYFS10...:\80\64980\0003\1948\BYL2178R.59A
<PAGE>
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the Corporation, or to vote in person or by proxy at any
meeting of stockholders.
SECTION 5. Quorum. Except as otherwise provided by law or the
Corporation's Certificate of Incorporation, a quorum for the transaction of
business at any meeting of stockholders shall consist of the holders of record
of a majority of the issued and outstanding shares of the capital stock of the
Corporation entitled to vote at the meeting, present in person or by proxy. At
all meetings of the stockholders at which a quorum is present, all matters,
except as otherwise provided by law or the Certificate of Incorporation, shall
be decided by the vote of the holders of a majority of the shares entitled to
vote thereat present in person or by proxy. If there be no such quorum, the
holders of a majority of such shares so present or represented may adjourn the
meeting from time to time, without further notice, until a quorum shall have
been obtained. When a quorum is once present it is not broken by the subsequent
withdrawal of any stockholder.
SECTION 6. Organization. Meetings of stockholders shall be presided
over by the Chairman, if any, or if none or in the Chairman's absence the
Vice-Chairman, if any, or if none or in the Vice-Chairman's absence the
President, if any, or if none or in the President's absence a Vice-President,
or, if none of the foregoing is present, by a chairman to be chosen by the
stockholders entitled to vote who are present in person or by proxy at the
meeting. The Secretary of the Corporation, or in the Secretary's absence an
Assistant Secretary, shall act as secretary of every meeting, but if neither the
Secretary nor an Assistant Secretary is present, the presiding officer of the
meeting shall appoint any person present to act as secretary of the meeting.
SECTION 7. Voting; Proxies; Required Vote. (a) At each meeting of
stockholders, every stockholder shall be entitled to vote in person or by proxy
appointed by
2
<PAGE>
instrument in writing, subscribed by such stockholder or by such stockholder's
duly authorized attorney-in-fact (but no such proxy shall be voted or acted upon
after three years from its date, unless the proxy provides for a longer period),
and, unless the Certificate of Incorporation provides otherwise, shall have one
vote for each share of stock entitled to vote registered in the name of such
stockholder on the books of the Corporation on the applicable record date fixed
pursuant to these By-laws. At all elections of directors the voting may but need
not be by ballot and a plurality of the votes cast there shall elect. Except as
otherwise required by law or the Certificate of Incorporation, any other action
shall be authorized by a majority of the votes cast.
(b) Any action required or permitted to be taken at any meeting of
stockholders may, except as otherwise required by law or the Certificate of
Incorporation, be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of record of the issued and outstanding capital stock of
the Corporation having a majority of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted, and the writing or writings are filed with the permanent
records of the Corporation. Prompt notice of the taking of corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
SECTION 8. Inspectors. The Board of Directors, in advance of any
meeting, may, but need not, appoint one or more inspectors of election to act at
the meeting or any adjournment thereof. If an inspector or inspectors are not so
appointed, the person presiding at the meeting may, but need not, appoint one or
more inspectors. In case any person who may be appointed as an inspector fails
to appear or act, the vacancy may be filled by appointment made by the directors
in advance of the meeting or at the meeting by the person presiding thereat.
Each inspector, if any, before entering upon the discharge of his or her duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of his ability.
The inspectors, if any, shall determine the number of shares of stock
outstanding and the voting power of each, the shares of stock represented at the
meeting, the existence of a quorum,
3
<PAGE>
and the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the person presiding at
the meeting, the inspector or inspectors, if any, shall make a report in writing
of any challenge, question or matter determined by such inspector or inspectors
and execute a certificate of any fact found by such inspector or inspectors.
ARTICLE II
Board of Directors
------------------
SECTION 1. General Powers. The business, property and affairs of the
Corporation shall be managed by, or under the direction of, the Board of
Directors.
SECTION 2. Qualification; Number; Term; Remuneration. (a) Each
director shall be at least 18 years of age. A director need not be a
stockholder, a citizen of the United States, or a resident of the State of
Delaware. The number of directors constituting the entire Board shall be 2, or
such larger number as may be fixed from time to time by action of the
stockholders or Board of Directors, one of whom may be selected by the Board of
Directors to be its Chairman. The use of the phrase "entire Board" herein refers
to the total number of directors which the Corporation would have if there were
no vacancies.
(b) Directors who are elected at an annual meeting of stockholders,
and directors who are elected in the interim to fill vacancies and newly created
directorships, shall hold office until the next annual meeting of stockholders
and until their successors are elected and qualified or until their earlier
resignation or removal.
(c) Directors may be paid their expenses, if any, of attendance at
each meeting of the Board of Directors and may be paid a fixed sum for
attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation
4
<PAGE>
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
SECTION 3. Quorum and Manner of Voting. Except as otherwise provided
by law, a majority of the entire Board shall constitute a quorum. A majority of
the directors present, whether or not a quorum is present, may adjourn a meeting
from time to time to another time and place without notice. The vote of the
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
SECTION 4. Places of Meetings. Meetings of the Board of Directors
may be held at any place within or without the State of Delaware, as may from
time to time be fixed by resolution of the Board of Directors, or as may be
specified in the notice of meeting.
SECTION 5. Annual Meeting. Following the annual meeting of
stockholders, the newly elected Board of Directors shall meet for the purpose of
the election of officers and the transaction of such other business as may
properly come before the meeting. Such meeting may be held without notice
immediately after the annual meeting of stockholders at the same place at which
such stockholders' meeting is held.
SECTION 6. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such times and places as the Board of Directors shall
from time to time by resolution determine. Notice need not be given of regular
meetings of the Board of Directors held at times and places fixed by resolution
of the Board of Directors.
SECTION 7. Special Meetings. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board, Chief
Executive Officer or by a majority of the directors then in office.
SECTION 8. Notice of Meetings. A notice of the place, date and time
and the purpose or purposes of each special meeting of the Board of Directors
shall be given to each director by mailing the same at least two days before the
special meeting, or by telegraphing or telephoning the same or by delivering the
same personally not later than the day before the day of the meeting.
5
<PAGE>
SECTION 9. Organization. At all meetings of the Board of Directors,
the Chairman, if any, or if none or in the Chairman's absence or inability to
act the President, or in the President's absence or inability to act any
Vice-President who is a member of the Board of Directors, or in such
Vice-President's absence or inability to act a chairman chosen by the directors,
shall preside. The Secretary of the Corporation shall act as secretary at all
meetings of the Board of Directors when present, and, in the Secretary's
absence, the presiding officer may appoint any person to act as secretary.
SECTION 10. Resignation. Any director may resign at any time upon
written notice to the Corporation and such resignation shall take effect upon
receipt thereof by the Chief Executive Officer, President or Secretary, unless
otherwise specified in the resignation. Any or all of the directors may be
removed, with or without cause, by the holders of a majority of the shares of
stock outstanding and entitled to vote for the election of directors.
SECTION 11. Vacancies. Unless otherwise provided in these By-laws,
vacancies on the Board of Directors, whether caused by resignation, death,
disqualification, removal, an increase in the authorized number of directors or
otherwise, may be filled by the affirmative vote of a majority of the remaining
directors, although less than a quorum, or by a sole remaining director, or at a
special meeting of the stockholders, by the holders of shares entitled to vote
for the election of directors.
SECTION 12. Action by Written Consent. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if all the directors consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board of
Directors.
6
<PAGE>
ARTICLE III
Committees
----------
SECTION 1. Appointment. From time to time the Board of Directors by
a resolution adopted by a majority of the entire Board may appoint any committee
or committees for any purpose or purposes, to the extent lawful, which shall
have powers as shall be determined and specified by the Board of Directors in
the resolution of appointment.
SECTION 2. Procedures, Quorum and Manner of Acting. Each committee
shall fix its own rules of procedure, and shall meet where and as provided by
such rules or by resolution of the Board of Directors. Except as otherwise
provided by law, the presence of a majority of the then appointed members of a
committee shall constitute a quorum for the transaction of business by that
committee, and in every case where a quorum is present the affirmative vote of a
majority of the members of the committee present shall be the act of the
committee. Each committee shall keep minutes of its proceedings, and actions
taken by a committee shall be reported to the Board of Directors.
SECTION 3. Action by Written Consent. Any action required or
permitted to be taken at any meeting of any committee of the Board of Directors
may be taken without a meeting if all the members of the committee consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the committee.
SECTION 4. Term; Termination. In the event any person shall cease to
be a director of the Corporation, such person shall simultaneously therewith
cease to be a member of any committee appointed by the Board of Directors.
ARTICLE IV
Officers
--------
SECTION 1. Election and Qualifications. The Board of Directors shall
elect the officers of the Corporation, which shall include a Chief Executive
Officer, a President and a Secretary, and may include, by election or
appointment, one or more Vice-Presidents (any one or more of whom may be given
an additional designation of rank or function), a Treasurer and such Assistant
Secretaries, such
7
<PAGE>
Assistant Treasurers and such other officers as the Board may from time to time
deem proper. Each officer shall have such powers and duties as may be prescribed
by these By-laws and as may be assigned by the Board of Directors or the
President. Any two or more offices may be held by the same person except the
offices of President and Secretary.
SECTION 2. Term of Office and Remuneration. The term of office of
all officers shall be one year and until their respective successors have been
elected and qualified, but any officer may be removed from office, either with
or without cause, at any time by the Board of Directors. Any vacancy in any
office arising from any cause may be filled for the unexpired portion of the
term by the Board of Directors. The remuneration of all officers of the
Corporation may be fixed by the Board of Directors or in such manner as the
Board of Directors shall provide.
SECTION 3. Resignation; Removal. Any officer may resign at any time
upon written notice to the Corporation and such resignation shall take effect
upon receipt thereof by the Chief Executive Officer, President or Secretary,
unless otherwise specified in the resignation. Any officer shall be subject to
removal, with or without cause, at any time by vote of a majority of the entire
Board.
SECTION 4. Chairman of the Board. The Chairman of the Board of
Directors, if there be one, shall preside at all meetings of the Board of
Directors and shall have such other powers and duties as may from time to time
be assigned by the Board of Directors.
SECTION 5. Chief Executive Officer. The Chief Executive Officer of
the Corporation shall have such duties as customarily pertain to that office and
as may be assigned from time to time by the Board of Directors. The Chief
Executive Officer shall have general management and supervision of the property,
business and affairs of the Corporation and over its other officers; may appoint
and remove assistant officers and other agents and employees; and may execute
and deliver in the name of the Corporation powers of attorney, contracts, bonds
and other obligations and instruments.
SECTION 6. President. The President shall have such duties as
customarily pertain to that office and as may be assigned from time to time by
the Board of Directors and may execute and deliver in the name of the
Corporation
8
<PAGE>
powers of attorney, contracts, bonds and other obligations and instruments.
SECTION 7. Vice-President. A Vice-President may execute and deliver
in the name of the Corporation contracts and other obligations and instruments
pertaining to the regular course of the duties of said office, and shall have
such other authority as from time to time may be assigned by the Board of
Directors or the President.
SECTION 8. Treasurer. The Treasurer shall in general have all duties
incident to the position of Treasurer and such other duties as may be assigned
by the Board of Directors or the President.
SECTION 9. Secretary. The Secretary shall in general have all the
duties incident to the office of Secretary and such other duties as may be
assigned by the Board of Directors or the President.
SECTION 10. Assistant Officers. Any assistant officer shall have
such powers and duties of the officer such assistant officer assists as such
officer or the Board of Directors shall from time to time prescribe.
ARTICLE V
Books and Records
-----------------
SECTION 1. Location. The books and records of the Corporation may be
kept at such place or places within or outside the State of Delaware as the
Board of Directors or the respective officers in charge thereof may from time to
time determine. The record books containing the names and addresses of all
stockholders, the number and class of shares of stock held by each and the dates
when they respectively became the owners of record thereof shall be kept by the
Secretary as prescribed in the By-laws and by such officer or agent as shall be
designated by the Board of Directors.
SECTION 2. Addresses of Stockholders. Notices of meetings and all
other corporate notices may be delivered personally or mailed to each
stockholder at the stockholder's address as it appears on the records of the
Corporation.
9
<PAGE>
SECTION 3. Fixing Date for Determination of Stockholders of Record.
(a) In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
the Board of Directors may fix a record date, which record date shall not be
more than 60 nor less than 10 days before the date of such meeting. If no record
date is fixed by the Board of Directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held. A determination of stockholders
of record entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which date shall not be more than 10 days
after the date upon which the resolution fixing the record date is adopted by
the Board of Directors. If no record date has been fixed by the Board of
Directors, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the Board
of Directors is required, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Corporation by delivery to its registered office in this State, its
principal place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by this chapter, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.
(c) In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the
10
<PAGE>
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall be not
more than 60 days prior to such action. If no record date is fixed, the record
date for determining stockholders for any such purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto.
ARTICLE VI
Certificates Representing Stock
-------------------------------
SECTION 1. Certificates; Signatures. The shares of the Corporation
shall be represented by certificates, provided that the Board of Directors of
the Corporation may provide by resolution or resolutions that some or all of any
or all classes or series of its stock shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until such
certificate is surrendered to the Corporation. Notwithstanding the adoption of
such a resolution by the Board of Directors, every holder of stock represented
by certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate, signed by or in the name of the Corporation by
the Chairman or Vice-Chairman of the Board of Directors, or the President or
Vice-President, and by the Treasurer or an Assistant Treasurer, or the Secretary
or an Assistant Secretary of the Corporation, representing the number of shares
registered in certificate form. Any and all signatures on any such certificate
may be facsimiles. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
The name of the holder of record of the shares represented thereby, with the
number of such shares and the date of issue, shall be entered on the books of
the Corporation.
SECTION 2. Transfers of Stock. Upon compliance with provisions
restricting the transfer or registration of transfer of shares of stock, if any,
shares of capital stock shall be transferable on the books of the Corporation
only
11
<PAGE>
by the holder of record thereof in person, or by duly authorized attorney, upon
surrender and cancellation of certificates for a like number of shares, properly
endorsed, and the payment of all taxes due thereon.
SECTION 3. Fractional Shares. The Corporation may, but shall not be
required to, issue certificates for fractions of a share where necessary to
effect authorized transactions, or the Corporation may pay in cash the fair
value of fractions of a share as of the time when those entitled to receive such
fractions are determined, or it may issue scrip in registered or bearer form
over the manual or facsimile signature of an officer of the Corporation or of
its agent, exchangeable as therein provided for full shares, but such scrip
shall not entitle the holder to any rights of a stockholder except as therein
provided.
The Board of Directors shall have power and authority to make all
such rules and regulations as it may deem expedient concerning the issue,
transfer and registration of certificates representing shares of the
Corporation.
SECTION 4. Lost, Stolen or Destroyed Certificates. The Corporation
may issue a new certificate of stock in place of any certificate, theretofore
issued by it, alleged to have been lost, stolen or destroyed, and the Board of
Directors may require the owner of any lost, stolen or destroyed certificate, or
his legal representative, to give the Corporation a bond sufficient to indemnify
the Corporation against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
any such new certificate.
ARTICLE VII
Dividends
---------
Subject always to the provisions of law and the Certificate of
Incorporation, the Board of Directors shall have full power to determine whether
any, and, if any, what part of any, funds legally available for the payment of
dividends shall be declared as dividends and paid to stockholders; the division
of the whole or any part of such funds of the Corporation shall rest wholly
within the lawful discretion of the Board of Directors, and it shall not be
required at any time, against such discretion, to divide or
12
<PAGE>
pay any part of such funds among or to the stockholders as dividends or
otherwise; and before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the Board
of Directors from time to time, in its absolute discretion, thinks proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purpose as the Board of Directors shall think conducive to the interest of the
Corporation, and the Board of Directors may modify or abolish any such reserve
in the manner in which it was created.
ARTICLE VIII
Ratification
------------
Any transaction, questioned in any law suit on the ground of lack of
authority, defective or irregular execution, adverse interest of director,
officer or stockholder, non-disclosure, miscomputation, or the application of
improper principles or practices of accounting, may be ratified before or after
judgment, by the Board of Directors or by the stockholders, and if so ratified
shall have the same force and effect as if the questioned transaction had been
originally duly authorized. Such ratification shall be binding upon the
Corporation and its stockholders and shall constitute a bar to any claim or
execution of any judgment in respect of such questioned transaction.
ARTICLE IX
Corporate Seal
--------------
The corporate seal shall have inscribed thereon the name of the
Corporation and the year of its incorporation, and shall be in such form and
contain such other words and/or figures as the Board of Directors shall
determine. The corporate seal may be used by printing, engraving, lithographing,
stamping or otherwise making, placing or affixing, or causing to be printed,
engraved, lithographed, stamped or otherwise made, placed or affixed, upon any
paper or document, by any process whatsoever, an impression, facsimile or other
reproduction of said corporate seal.
13
<PAGE>
ARTICLE X
Fiscal Year
-----------
The fiscal year of the Corporation shall be fixed, and shall be
subject to change, by the Board of Directors. Unless otherwise fixed by the
Board of Directors, the fiscal year of the Corporation shall be the calendar
year.
ARTICLE XI
Waiver of Notice
----------------
Whenever notice is required to be given by these By-laws or by the
Certificate of Incorporation or by law, a written waiver thereof, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice.
ARTICLE XII
Bank Accounts, Drafts, Contracts, Etc.
--------------------------------------
SECTION 1. Bank Accounts and Drafts. In addition to such bank
accounts as may be authorized by the Board of Directors, the primary financial
officer or any person designated by said primary financial officer, whether or
not an employee of the Corporation, may authorize such bank accounts to be
opened or maintained in the name and on behalf of the Corporation as he may deem
necessary or appropriate, payments from such bank accounts to be made upon and
according to the check of the Corporation in accordance with the written
instructions of said primary financial officer, or other person so designated by
the Treasurer.
SECTION 2. Contracts. The Board of Directors may authorize any
person or persons, in the name and on behalf of the Corporation, to enter into
or execute and deliver any and all deeds, bonds, mortgages, contracts and other
obligations or instruments, and such authority may be general or confined to
specific instances.
SECTION 3. Proxies; Powers of Attorney; Other Instruments. The
Chairman, the Chief Executive Officer or any other person designated by either
of them shall have the
14
<PAGE>
power and authority to execute and deliver proxies, powers of attorney and other
instruments on behalf of the Corporation in connection with the rights and
powers incident to the ownership of stock by the Corporation. The Chairman, the
Chief Executive Officer or any other person authorized by proxy or power of
attorney executed and delivered by either of them on behalf of the Corporation
may attend and vote at any meeting of stockholders of any company in which the
Corporation may hold stock, and may exercise on behalf of the Corporation any
and all of the rights and powers incident to the ownership of such stock at any
such meeting, or otherwise as specified in the proxy or power of attorney so
authorizing any such person. The Board of Directors, from time to time, may
confer like powers upon any other person.
SECTION 4. Financial Reports. The Board of Directors may appoint the
primary financial officer or other fiscal officer or any other officer to cause
to be prepared and furnished to stockholders entitled thereto any special
financial notice and/or financial statement, as the case may be, which may be
required by any provision of law.
ARTICLE XIII
Amendments
----------
The Board of Directors shall have power to adopt, amend or repeal
By-laws. By-laws adopted by the Board of Directors may be repealed or changed,
and new By-laws made, by the stockholders, and the stockholders may prescribe
that any By-law made by them shall not be altered, amended or repealed by the
Board of Directors.
15
Exhibit 10.39
AMENDMENT
---------
AMENDMENT (the "Amendment"), dated as of February 1, 1998,
among NORTH ATLANTIC TRADING COMPANY, INC. (the "Borrower"), the institutions
party to the Credit Agreement referred to below (the "Lenders") and NATIONAL
WESTMINSTER BANK PLC, as Administrative Agent"). All capitalized terms used
herein and not otherwise defined shall have the respective meanings provided
such terms in the Credit Agreement.
W I T N E S S E T H :
-------------------
WHEREAS, the Borrower, the Lenders and the Administrative
Agent are parties to a Credit Agreement dated as of June 25, 1997 (as currently
in effect, the "Credit Agreement");
WHEREAS, the parties hereto wish to amend the Credit Agreement
as herein provided;
NOW, THEREFORE, it is agreed:
1. Section 4.02(A)(1) of the Credit Agreement is amended by
(I) inserting immediately prior to the reference to "80%" therein the phrase "an
amount equal to (x)" and (II) inserting immediately after the reference to
"December 31, 1997)" therein the phrase "less the aggregate principal amount of
Term Loans voluntarily prepaid during such fiscal year to Section 4.01".
2. Section 7.01(b) of the Credit Agreement is amended by
inserting after the reference to "45 days" therein the phrase "(or 90 days in
the case of the fourth quarter of a fiscal year)".
3. The definition of Consolidated Net Income in Section 10 of
the Credit Agreement is amended by inserting after the reference to "LIFO
reserves" therein the phrase ", defined benefit pension plans, post-retirement
benefit plans under FAS 106 and stock option plans under either APB 25 or SFAS
123".
4. The definition of Excess Cash Flow in Section 10 of the
Credit Agreement is amended by deleting the reference to "or prepayments" in
clause (ii)(z) of such definition.
<PAGE>
5. In order to induce the Lenders to enter into this
Amendment, the Borrower (x) represents and warrants that no Default or Event of
Default exists on the Amendment Date referred to below after giving effect to
this Amendment, and (y) makes each of the representations, warranties and
agreements contained in the Credit Agreement on the Amendment Date after giving
effect to this Amendment (it being understood that any representation or
warranty which by its terms is made as of a specified date shall be required to
be true and correct in all material respects as of such date).
6. This Amendment is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement or any other Credit Document.
7. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which counterparts when executed and delivered shall be an original, but all
of which shall together constitute one and the same instrument. A complete set
of counterparts shall be lodged with the Borrower and the Administrative Agent.
8. This Amendment and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed by the law
of the State of New York.
9. This Amendment shall become effective on the date (the
"Amendment Date") on which each of the Borrower and the Required Lenders shall
have signed a copy hereof (whether the same or different copies) and shall have
delivered (including by way of telecopier) the same to the Administrative Agent
at its Notice Office.
10. At all times on and after the Amendment Date, all
references in the Credit Agreement and each of the Credit Documents to the
Credit Agreement shall be deemed to be references to such Credit Agreement after
giving effect to this Amendment.
* * *
-2-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.
NORTH ATLANTIC TRADING COMPANY, INC.
By: /s/ David Brunson
---------------------------------------
Name: David Brunson
Title: Executive Vice President &
Chief Financial Officer
NATIONAL WESTMINSTER BANK PLC,
Individually and as Administrative Agent
By: /s/ Andrew S. Weinberg
---------------------------------------
Name: Andrew S. Weinberg
Title: Senior Vice President
BANK ONE KENTUCKY, NA
By: /s/ K.J. Brenner
---------------------------------------
Name: K.J. Brenner
Title: Senior Vice President
GOLDMAN SACHS CREDIT PARTNERS, L.P.
By: /s/ Stephen J. McGuinness
---------------------------------------
Name: Stephen J. McGuinness
Title: Authorized Signatory
LEHMAN COMMERCIAL PAPER INC.
By: /s/ Michele Swenson
---------------------------------------
Name: Michele Swenson
Title: Authorized Signatory
-3-
<PAGE>
HARCH CAPITAL MANAGEMENT
By:
---------------------------------------
Name:
Title:
INDOSUEZ CAPITAL FUNDING II, LTD.
By INDOSUEZ CAPITAL, as Portfolio Advisor
By: /s/ Francoise Berthelot
---------------------------------------
Name: Francoise Berthelot
Title: Vice President
TCW LEVERAGED INCOME TRUST, L.P.
By: TCW Advisers (Bermuda), Ltd.,
as General Partner
By: /s/ Mark L. Gold
---------------------------------------
Name: Mark L. Gold
Title: Managing Director
By: TCW Investment Management Company,
as Investment Advisor
By: /s/ Justin L. Driscoll
---------------------------------------
Name: Justin L. Driscoll
Title: Senior Vice President
CRESCENT/MACH I PARTNERS, L.P.
By: /s/ Justin L. Driscoll
---------------------------------------
Name: Justin L. Driscoll
Title: Senior Vice President
PAMCO CAYMAN LTD.
By Protective Asset Management Company
as Collateral Manager
By: /s/ James Dondero, CFA, CPA
---------------------------------------
Name: James Dondero, CFA, CPA
Title: President
Protective Asset Management Company
-4-
<PAGE>
COMMERCIAL LOAN FUNDING TRUST I
By: Lehman Commercial Paper Inc., not in
its individual capacity but soley as
Administrative Agent
By: /s/ Michele Swenson
---------------------------------------
Name: Michele Swenson
Title: Authorized Signatory
SANWA BUSINESS CREDIT CORP.
By: /s/ Peter L. Skavia
---------------------------------------
Name: Peter L. Skavia
Title: Vice President
TEXAS COMMERCE BANK/ALLIANCE
CAPITAL MANAGEMENT
By:
---------------------------------------
Name:
Title:
-5-
NYFS11...:\90\64590\0003\2475\AMD4308V.340
Exhibit 10.40
CONSENT
-------
CONSENT (this "Consent"), dated as of March 12, 1998, among
NORTH ATLANTIC TRADING COMPANY, INC. (the "Borrower"), the institutions party to
the Credit Agreement referred to below (the "Lenders") and NATIONAL WESTMINSTER
BANK PLC, as Administrative Agent (the "Administrative Agent"). All capitalized
terms used herein and not otherwise defined shall have the respective meanings
provided such terms in the Credit Agreement.
W I T N E S S E T H :
-------------------
WHEREAS, the Borrower, the Lenders and the Administrative
Agent are parties to a Credit Agreement dated as of June 25, 1997 (as currently
in effect, the "Credit Agreement");
WHEREAS, the Borrower has requested a consent to be provided
under the Credit Agreement as herein provided;
NOW, THEREFORE, it is agreed:
1. No prepayment will be required under Section 4.02(e) of the
Credit Agreement as a result of the proposed transaction whereby the Borrower
will repurchase 10,100 shares of its common stock from a retiring officer for
$40 a share (which repurchase is permitted under Section 8.09) and the
contemporaneous sale of such repurchased shares to other employees, officers and
directors of the Borrower.
2. In order to induce the Lenders to enter into this
Amendment, the Borrower (x) represents and warrants that no Default or Event of
Default exists on the Effective Date referred to below after giving effect to
this Consent, and (y) makes each of the representations, warranties and
agreements contained in the Credit Agreement on the Effective Date after giving
effect to this Consent (it being understood that any representation or warranty
which by its terms is made as of a specified date shall be required to be true
and correct in all material respects as of such date).
3. This Consent is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement or any other Credit Document.
4. This Consent may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which
counterparts when
<PAGE>
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A complete set of counterparts shall be
lodged with the Borrower and the Administrative Agent.
5. This Consent and the rights and obligations of the parties
hereunder shall be construed in accordance with and governed by the law of the
State of New York.
6. This Consent shall become effective on the date (the
"Effective Date") on which each of the Borrower and the Required Lenders shall
have signed a copy hereof (whether the same or different copies) and shall have
delivered (including by way of telecopier) the same to the Administrative Agent
at its Notice Office.
7. At all times on and after the Effective Date, all
references in the Credit Agreement and each of the Credit Documents to the
Credit Agreement shall be deemed to be references to such Credit Agreement after
giving effect to this Consent.
* * *
-2-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Consent to be duly executed and delivered as of the date
first above written.
NORTH ATLANTIC TRADING COMPANY, INC.
By: /s/ David Brunson
---------------------------------------
Name: David Brunson
Title: Executive Vice President &
Chief Financial Officer
NATIONAL WESTMINSTER BANK PLC,
Individually and as Administrative Agent
By: /s/ Andrew S. Weinberg
---------------------------------------
Name: Andrew S. Weinberg
Title: Senior Vice President
BANK ONE KENTUCKY, NA
By: /s/ K.J. Brenner
---------------------------------------
Name: K.J. Brenner
Title: Senior Vice President
GOLDMAN SACHS CREDIT PARTNERS, L.P.
By: /s/ Johnathan L. Kolatch
---------------------------------------
Name: Johnathan L. Kolatch
Title: Authorized Signatory
LEHMAN COMMERCIAL PAPER INC.
By: /s/ Michele Swenson
---------------------------------------
Name: Michele Swenson
Title: Authorized Signatory
-3-
<PAGE>
HARCH CAPITAL MANAGEMENT
By:
---------------------------------------
Name:
Title:
INDOSUEZ CAPITAL FUNDING II, LTD.
By:
---------------------------------------
Name:
Title:
TCW LEVERAGED INCOME TRUST
By:
---------------------------------------
Name:
Title:
CRESCENT/MACH I PARTNERS, L.P.
By:
---------------------------------------
Name:
Title:
PAMCO CAYMAN LTD.
By: /s/ Mark K. Okada CFA
---------------------------------------
Name: Mark K. Okada
Title: Executive Vice President
Executive Asset Management
Company
-4-
<PAGE>
COMMERCIAL LOAN FUNDING TRUST I
By Lehman Commercial Paper Inc. not in its
individual capacity but soley as
administrative agent
By: /s/ Michele Swenson
---------------------------------------
Name: Michele Swenson
Title: Authorized Signatory
SANWA BUSINESS CREDIT CORP.
By: /s/ Peter L. Skavla
---------------------------------------
Name: Peter L. Skavla
Title: Vice President
TEXAS COMMERCE BANK/ALLIANCE INVESTMENTS
LIMITED
By: /s/ Sheryl Rothman
---------------------------------------
Name: Sheryl Rothman
Title: Authorized Signatory
-5-
NYFS11...:\90\64590\0003\2475\CON4308W.110
Exhibit 10.41
SECURITIES REDEMPTION AGREEMENT
-------------------------------
THIS SECURITIES REDEMPTION AGREEMENT (this "Agreement") is made as of
this 24th day of March, 1998 between NORTH ATLANTIC TRADING COMPANY, INC., a
Delaware corporation (the "Company"), LANGSTON ENTERPRISES, INC., a North
Carolina corporation (the "Redeeming Shareholder"), and Maurice Langston, an
individual residing in Winfield, Alabama ("Langston").
STATEMENT OF PURPOSE
A. The Company is a party to that certain Agreement dated October 29,
1997 between National Tobacco Company, L.P. ("National Tobacco"), the Company
and Langston regarding Langston's resignation as an employee of National Tobacco
as amended by that certain First Amendment to the Agreement dated January 30,
1998 between National Tobacco, the Company and Langston (the "Resignation
Agreement"), and the parties hereto intend that this Agreement amend, replace
and supersede Section 5 of the Resignation Agreement.
B. Langston is the sole shareholder of all the outstanding capital
stock of the Redeeming Shareholder which in turn owns 47,138 shares of the
Company's issued and outstanding shares of common stock, $0.01 par value per
share (the "Common Stock");
C. The Company desires to redeem and purchase, and the Redeeming
Shareholder desires to sell to the Company, 10,100 shares of Common Stock (the
"Redeemed Shares"), all upon the terms and conditions more particularly
described herein; and
D. The Company desires to receive, and the Redeeming Shareholder
desires to grant, a right of first refusal regarding the remaining 37,038 shares
of Common Stock (the "Remaining Shares"), all upon the terms and conditions
described herein;
AGREEMENT
NOW, THEREFORE, in consideration of the premises, covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and the
Redeeming Shareholder mutually agree as follows:
1. PURCHASE AND SALE OF REDEEMED SHARES.
------------------------------------
(A) PURCHASE AND SALE. Upon the terms and subject to the conditions
hereinafter set forth, the Redeeming Shareholder agrees to sell, transfer and
deliver to the Company, and the Company agrees to redeem and purchase from the
Redeeming Shareholder, the Redeemed Shares, free and clear of all liens,
encumbrances and claims.
<PAGE>
(B) PURCHASE PRICE. In consideration of the sale, transfer and delivery
to the Company by the Redeeming Shareholder of the Redeemed Shares, the Company
shall pay to the Redeeming Shareholder the sum of $404,000.00 (the "Purchase
Price"). In addition to the Purchase Price, the Company shall pay to the
Redeeming Shareholder a contract amendment fee of $4,600.00. At the Closing (as
defined below), the Company shall deliver to the Redeeming Shareholder the
Purchase Price which shall be paid by wire transfer of immediately available
funds to an account or accounts designated in writing by the Redeeming
Shareholder.
(C) CLOSING DATE. The closing of the redemption of the Redeemed Shares
(herein referred to as the "Closing") and all other transactions contemplated
hereby shall take place at the principal offices of the Company located at 257
Park Avenue South, New York, New York 10010 on or before March 24, 1998, or at
such other place and at such other time and date as may be mutually agreed upon
in writing by the Company and the Redeeming Shareholder. The date of the Closing
is referred to in this Agreement as the "Closing Date".
2. REPRESENTATIONS AND WARRANTIES OF THE REDEEMING SHAREHOLDER. The
-----------------------------------------------------------
Redeeming Shareholder hereby represents and warrants to the Company as follows:
(A) AUTHORITY. It is a corporation validly existing and in good
standing under the laws of the State of North Carolina. It has full right, power
and authority: (i) to execute and deliver this Agreement; (ii) to perform its
obligations under this Agreement; and (iii) to sell, transfer, assign and
deliver to the Company full title to the Redeemed Shares pursuant to this
Agreement. This Agreement has been duly executed and delivered by the Redeeming
Shareholder and constitutes a legal, valid and binding agreement enforceable
against the Redeeming Shareholder in accordance with its terms.
(B) TITLE. It is the sole record and beneficial owner of the Redeemed
Shares, and it holds good and valid title thereto, free and clear of all manner
of liens, pledges, charges, encumbrances, agreements, rights and interests and
claims of all others whatsoever and subject to no restriction. Assuming the
consummation of the transactions contemplated by this Agreement, the Company
will acquire good and valid title to the Shares and will be the full, absolute,
legal and beneficial owner of the Redeemed Shares, free and clear of all liens,
encumbrances, charges, agreements, rights, interests and claims of all others
whatsoever and subject to no restrictions, other than pursuant to the
Stockholders' Agreement (as defined below).
(C) NO CONFLICTS. The execution, delivery and performance of this
Agreement by the Redeeming Shareholder of the transactions contemplated hereby
do not and will not conflict with or result in any breach of any of the
provisions of, constitute a default under, or result in a violation of, (i) the
Redeeming Shareholder's charter or bylaws, (ii) any agreement, indenture, trust
or instrument to which the Redeeming Shareholder is a party or by which the
Redeeming Shareholder is bound or affected or (iii) any law, statute, rule or
regulation to which the Redeeming Shareholder is subject.
- 2 -
<PAGE>
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
---------------------------------------------
(A) AUTHORITY. The Company hereby represents and warrants that it is a
corporation validly existing and in good standing under the laws of the State of
Delaware. It has full right, power and authority: (i) to execute and deliver
this Agreement and (ii) to perform its obligations under this Agreement. This
Agreement has been duly executed and delivered by the Company and constitutes a
legal, valid and binding agreement enforceable against the Company in accordance
with its terms.
(B) NO CONFLICTS. The Company represents and warrants that the
execution, delivery and performance of this Agreement by the Company of the
transactions contemplated hereby do not and will not conflict with or result in
any breach of any of the provisions of, constitute a default under, or result in
a violation of, (i) the Company's charter or bylaws, (ii) any agreement,
indenture, trust or instrument to which the Company is a party or by which the
Company is bound or affected or (iii) any law, statute, rule or regulation to
which the Company is subject.
4. CONDITIONS TO THE COMPANY'S OBLIGATIONS. Each and every obligation
---------------------------------------
of the Company hereunder to be performed at or before the Closing, shall be
subject to the satisfaction, at or before the Closing, of each of the following
conditions, unless waived in writing by the Company:
(A) The Redeeming Shareholder shall sell, transfer and deliver the
Redeemed Shares to the Company in accordance with the terms hereof;
(B) The representations and warranties of the Redeeming Shareholder
contained in Section 2 shall be true and correct in all respects at and as of
the Closing Date as though then made. In addition, the Redeeming Shareholder
shall have performed in all material respects all covenants and agreements
contained herein required to be performed by the Redeeming Shareholder prior to
the Closing.
(C) The Company shall have received the following Closing documents, in
form and substance satisfactory to the Company, and all of which shall, except
as specified below, be fully executed originals:
(i) Certificates of the Secretary of State of the jurisdiction
of incorporation of the Redeeming Shareholder as to the good standing
of the Redeeming Shareholder as of a date on or about the Closing Date;
(ii) Certificate, dated as of the Closing Date, of the
president and secretary of the Redeeming Shareholder, stating that all
of the conditions specified in Section 4(b) have been fully satisfied
with respect to the Redeeming Shareholder;
(iii) Copies of resolutions of the board of directors and
shareholders of the Redeeming Shareholder authorizing the transactions
contemplated by this Agreement, which resolutions shall have been
certified by the president of the Redeeming Shareholder to be true and
correct; and
- 3 -
<PAGE>
(iv) Any and all other documents, stock powers, powers of
attorney, certificates, resignations and assurances which may be
reasonably requested by the Company in connection with the redemption.
5. CONDITIONS TO THE REDEEMING SHAREHOLDER'S OBLIGATIONS. Each and
-----------------------------------------------------
every obligation of the Redeeming Shareholder hereunder to be performed at or
before the Closing, shall be subject to the satisfaction, at or before the
Closing, of the Company delivering the Purchase Price to the Redeeming
Shareholder.
6. RIGHT OF FIRST REFUSAL.
----------------------
(A) OFFER TO SELL REMAINING SHARES. If the Redeeming Shareholder shall
desire to sell all or any of the Remaining Shares at any time following the date
hereof, it must first receive a bona fide written offer from a third party
prospective purchaser to purchase all or part of the Remaining Shares and then
deliver to the Company a written notice ("Notice") containing the following
information:
(i) The name and address of the prospective purchaser of the
Remaining Shares;
(ii) The number of Remaining Shares that the Redeeming
Shareholder desires to sell to the prospective purchaser;
(iii) The price being offered to the Redeeming Shareholder,
the terms of payment and any other terms and conditions of such offer;
(iv) Evidence that the prospective purchaser has the financial
resources to complete the proposed transaction as may be reasonably
requested by the Company; and
(v) The proposed closing date for the transaction shall be
within not less than 30 nor more than 90 days after the date of
delivery of the Notice. For a period of 60 days after the giving of the
Notice by the Redeeming Shareholder, the Company or its designee shall
have the option, exercisable in whole or in part, by notice in writing
to the Redeeming Shareholder to purchase the Remaining Shares that are
proposed to be sold at the price and upon the terms and conditions set
forth in the Notice. A failure by the Company to give written notice of
exercise during such period shall be deemed a rejection by the Company
of its option to purchase.
(B) NON-CASH CONSIDERATION FOR SHARES. If any consideration to be
received by a Redeeming Shareholder from a prospective purchaser of its
Remaining Shares is property other than cash, then the price per share for such
Remaining Shares shall be measured to that extent by the fair market value
(determined as hereinafter provided) of such non-cash consideration. If non-cash
consideration has been offered to the Redeeming Shareholder, the Company may
deliver to the Redeeming Shareholder, in payment of the non-cash portion of the
purchase price for the Shares proposed to be sold, an amount of cash equal to
the fair market value of the non-cash consideration that has been offered to the
Redeeming Shareholder. For purposes hereof, the fair market value of non-cash
consideration shall in each case be agreed upon by the
- 4 -
<PAGE>
Redeeming Shareholder and the Company, or, in the absence of such agreement,
such fair market value shall be determined by an appraisal thereof by an
independent qualified appraiser who shall be mutually agreed to by the Company
and the Redeeming Shareholder. The result of any appraisal conducted hereunder
shall be binding on all parties, and the cost of any such appraisal shall be
borne equally by the parties hereto. Any closing provided for herein may be
extended for such reasonable period of time as may be necessary in order for a
required appraisal to be completed.
(C) CLOSINGS. If the Company shall exercise its right of first refusal
pursuant to this Section 6, the closing of the purchase and sale transaction
shall be held at the principal office of the Company located at 257 Park Avenue
South, New York, New York 10010 or, in the event the address of the principal
office changes, such new address, on a date designated by the Company, which
date in no event shall be later than 90 days after the Redeeming Shareholder
delivers the Notice to the Company.
(D) RIGHT TO TRANSFER. If the Company does not elect to purchase all of
the Remaining Shares that a Redeeming Shareholder desires to sell, the Redeeming
Shareholder shall have the right to sell within 30 days following such failure
to elect by the Company all, but not less than all, of the Remaining Shares
covered by the bona fide offer to the prospective purchaser named in the Notice;
provided, that the sale is made in strict accordance with the terms of the sale
set forth in the Notice. In addition, as a condition to any such sale, the
purchaser of the Remaining Shares must agree in writing that it, its heirs,
successors and assigns, shall be subject to and bound by the provisions of this
Agreement and the Stockholders' Agreement (as defined below). Any Remaining
Shares not sold within such 30-day period shall again be subject to this Section
6 in connection with any proposed sale thereof.
7. RIGHT TO CALL REMAINING SHARES. Except as set forth below, the
------------------------------
Company hereby waives its right to repurchase the Remaining Shares pursuant to
Sections 4.2 and 4.3 of the Exchange and Stockholders' Agreement dated June 25,
1997 between the Company, certain other parties and the Redeeming Shareholder
(the "Stockholders' Agreement"). In the event that, at any time following the
termination of the Consulting Term (as defined in that certain Consulting
Agreement dated as of October 29, 1997 between National Tobacco and Langston
(the "Consulting Agreement")), Langston engages in the marketing, distribution
or sale of smokeless tobacco products in the United States on behalf of any
competitor of the Company, either as an employee or indirectly as a consultant
or stockholder (other than as a holder of less than five percent (5%) of the
stock of a publicly traded company), the Company shall have the right to
repurchase all shares of common stock of the Company then held by the Redeeming
Shareholder in accordance with the terms and procedures set forth in Sections
4.2 and 4.3 of the Stockholders' Agreement without regard to the 180-day time
limitation set forth in Sections 4.2 and 4.3 of the Stockholders' Agreement.
Prior to making any transfer of any of the Remaining Shares (by gift, bequest,
devise or otherwise) other than pursuant to Section 6 hereof, the Company agrees
that, as a condition to such transfer, the transferee of any of the Remaining
Shares must agree in writing that it, its heirs, successors and assigns, shall
cause the transferee to be subject to and bound by the provisions of this
Agreement and the Stockholders' Agreement.
- 5 -
<PAGE>
8. GENERAL.
-------
(A) FEES AND EXPENSES. The Company agrees to reimburse the Redeeming
Shareholder and Langston for all reasonable costs and out-of-pocket expenses in
an amount not to exceed $3,500, including reasonable attorneys' fees and
expenses, incurred in connection with the preparation, execution and delivery of
this Agreement and other related documentation.
(B) INDEMNIFICATION.
(i) BY THE REDEEMING SHAREHOLDER AND LANGSTON. Each of the
Redeeming Shareholder and Langston, jointly and severally, hereby
agrees to indemnify and hold harmless the Company and its officers,
directors, employees, representatives, agents, successors and assigns
from any and all damages, liability, losses, costs and expenses
(including reasonable attorneys' fees) which may be incurred by reason
of the Redeeming Shareholder's or Langston's failure to fulfill any of
the terms, covenants and conditions contained herein or by reason of
the Redeeming Shareholder's or Langston's breach of any of the
representations, warranties and covenants contained herein.
(ii) BY THE COMPANY. The Company hereby agrees to indemnify
and hold harmless the Redeeming Shareholder and its officers,
directors, employees, representatives, agents, successors and assigns
from any and all damages, liability, losses, costs and expenses
(including reasonable attorneys' fees) which may be incurred by reason
of the Company's failure to fulfill any of the terms, covenants and
conditions contained herein or by reason of the Company's breach of any
of the representations, warranties and covenants contained herein.
(C) ENTIRE AGREEMENT. This Agreement contains the entire understanding
and agreement of the parties hereto with respect to the subject matter hereof,
and supersedes and replaces Section 5 of the Resignation Agreement, and there
are no restrictions, representations, warranties, covenants or undertakings of
the parties hereto except those expressly set forth in this Agreement.
Notwithstanding the foregoing, this Agreement does not amend, replace or
supersede in any way the remaining sections of the Resignation Agreement, the
Consulting Agreement or the Release Agreement dated as of October 29, 1997
between National Tobacco and the Redeeming Shareholder.
(D) FURTHER ASSURANCES. The parties hereto each agree to execute such
other instruments, documents or agreements as may be reasonably necessary or
desirable for the implementation of this Agreement and the consummation of the
transactions contemplated hereby.
(E) 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.
(F) GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York, without
giving effect to the provisions, policies or principles thereof respecting
conflict or choice of laws.
- 6 -
<PAGE>
(G) SEVERABILITY. If at any time subsequent to the date of this
Agreement, any provision of this Agreement shall be held by any court of
competent jurisdiction to be illegal, void or unenforceable, such provision
shall be of no force or effect but the illegality or unenforceability of such
provision shall have no effect upon or impair the enforceability of any other
provision.
(H) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute but one and the same agreement.
(I) NO THIRD PARTY BENEFICIARIES. This Agreement shall be binding upon
and inure solely to the benefit of the parties hereto and their permitted
assigns and nothing herein, express or implied, is intended to or shall confer
upon any other person or entity any legal or equitable right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.
(J) NOTICES AND ADDRESSES. All notices, requests, demands and other
communications called for or contemplated hereunder shall be in writing and
shall be deemed duly given or made: (i) when delivered in person; (ii) one (1)
business day after delivered via reputable overnight courier service or
guaranteed next day service; or (iii) when transmitted by wire or by electronic
message transmission addressed to the parties at the following addresses, or at
such other address as the parties may designate by written notice in the manner
aforesaid:
If to the Company: North Atlantic Trading Company, Inc.
257 Park Avenue South
New York, New York 10010
Attention: President
Facsimile No.: (212) 253-8296
With a copy to (which Fennebresque, Clark, Swindell & Hay
shall not constitute NationsBank Corporate Center
notice): 100 North Tryon Street, Suite 2900
Charlotte, North Carolina 28202-4011
Attention: John S. Chinuntdet, Esq.
Facsimile No.: (704) 347-3838
If to the Redeeming Mr. Maurice Langston
Shareholder and/or 11592 Highway 107
Langston: Winfield, Alabama 35594
Facsimile No.: (205) 487-2800
With a copy to (which Ganz Hollinger & Towe
shall not constitute 1394 Third Avenue
notice): New York, New York 10021
Attention: Jerrietta R. Hollinger, Esq.
Facsimile No.: (212) 772-2216
- 7 -
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the date specified above.
NORTH ATLANTIC TRADING COMPANY, INC.
By: /s/ Thomas F. Helms, Jr.
-------------------------------
Name: Thomas F. Helms, Jr.
Title: Chief Executive Officer
LANGSTON ENTERPRISES, INC.
By: /s/ Maurice Langston
-------------------------------
Name: Maurice Langston
Title: President
/s/ Maurice Langston
-------------------------------
Maurice Langston
The undersigned, Myra M. Langston, the spouse of Maurice Langston
hereby acknowledges and agrees to the provisions of this Agreement.
/s/ Myra M. Langston
-------------------------------
Myra M. Langston
- 8 -
Exhibit 10.42
SUBSCRIPTION AGREEMENT
North Atlantic Trading Company, Inc.
257 Park Avenue South
New York, New York 10010
THIS SUBSCRIPTION is made and entered into as of the 24th day of March,
1998, by and among NORTH ATLANTIC TRADING COMPANY, INC., a Delaware corporation
formerly named North Atlantic Trading Acquisition Company, Inc. (the "Company"),
and David I. Brunson (the "Subscriber").
WHEREAS, the Company is authorized to purchase 10,100 shares of Voting
Common Stock (the "Share Repurchase"), par value $.01 per share (the "Voting
Common Stock") from Maurice Langston; and
WHEREAS, the Company is authorized to re-issue the shares purchased
from Maurice Langston and sell such Shares pursuant to this Agreement; and
WHEREAS, the Subscriber is purchasing the number of shares of Voting
Common Stock indicated opposite his name on the signature page hereto;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements hereinafter contained, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Sale of Voting Common Stock. Subject to the terms and
conditions herein set forth, the Company shall issue and sell to the Subscriber,
and the Subscriber shall purchase from the Company, the number of shares of
Voting Common Stock set forth opposite his name on the signature page hereto, at
a purchase price of $40.00 per share.
2. Subscriber Representations. In order to induce the Company
to sell the Voting Common Stock to the Subscriber and to enter into this
Agreement, the Subscriber makes the following representations and warranties,
which shall be true, correct and complete in all material respects on the date
hereof:
a. The Subscriber has obtained, to the extent he deems
necessary, professional advice with respect to the risks inherent in
the Purchase of the securities described in Section 1, as applicable,
and the suitability of the securities to be purchased by the Subscriber
pursuant to this Agreement in light of the Subscriber's financial
condition and investment needs;
<PAGE>
b. The Subscriber, either alone or with the assistance of his
own professional advisor, has such knowledge and experience in
financial and business matters that he is capable of evaluating the
merits and risks inherent in securities to be received by him pursuant
to this Agreement, as applicable, and the Subscriber has the net worth
to undertake such risk;
c. The Subscriber is aware of the Company's business affairs
and has acquired sufficient additional information about the Company to
reach an informed and knowledgeable decision regarding the merits and
risks of investing in the securities to be received by him pursuant to
this Agreement. The Subscriber has had ample opportunity to ask
questions of the Company and its representatives and to seek
independent investment, tax, and legal advice prior to investing in the
securities to be received by him pursuant to this Agreement.
d. The Subscriber believes that the securities to be received
by him pursuant to this Agreement are suitable for him based on his
investment objectives and financial needs, and the subscriber has
adequate means for providing his current financial needs and personal
contingencies and has no need for liquidity of investment with respect
to the securities to be received by him pursuant to this Agreement;
e. The Subscriber is in a financial position to hold the
securities to be received by him pursuant to this Agreement, as
applicable, for an indefinite period of time and he is able to bear the
economic risk and withstand a complete loss of his investment in the
securities to be received by him pursuant to this Agreement;
f. The Subscriber is not acquiring any securities to be
received by him with a view to any distribution thereof in a
transaction that would violate the Securities Act or the securities
laws of any State of the United States or any other applicable
jurisdiction; and
g. The Subscriber understands that the securities to be
received by him pursuant to this Agreement will be issued by the
Company without registration under the Securities Act and without
qualification and/or registration under applicable state securities
laws ("Blue Sky Laws") pursuant to exemptions from registration and/or
qualification contained in the Securities Act and in the Blue Sky Laws.
The Subscriber understands that the securities must be held
indefinitely unless (A) subsequently registered and/or qualified under
the Securities Act and under the Blue Sky Laws unless exemptions from
the registration and/or qualification requirements under the Securities
Act and under the Blue Sky Laws are available in connection with any
proposed transfer of the securities by the Subscriber and (B) the
proposed transfer is permitted under the terms of this Agreement.
2
<PAGE>
3. Stockholders' Agreement. The Subscriber hereby agrees that
he shall (i) be bound by all of the provisions and conditions of the Exchange
and Stockholders' Agreement, dated as of June 25, 1997, between the Company and
each of the stockholders parties thereto, as such agreement may be amended from
time to time (the "Stockholders' Agreement"), and (ii) become a Management
Stockholder (as such term is defined in the Stockholders' Agreement) under the
Stockholders' Agreement as if such Subscriber was an original signatory thereto.
4. Headings. The headings of sections of this Agreement are
for convenience only and shall not be considered in construing or interpreting
any of the terms or provisions hereof
5. Word Meanings. The words such as "herein", "hereinafter",
"hereof", and "hereunder" refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise requires.
The singular shall include the plural, and vice versa, unless the context
otherwise requires.
6. Counterparts. This Agreement may be executed in several
counterparts, all of which together shall constitute one agreement binding on
all parties hereto, notwithstanding that all the parties have not signed the
same counterpart.
7. Entire Agreement. This Agreement, as effective on the date
hereof, contain the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all prior writings or agreements with
respect to such subject matter.
8. Governing Law; Consent to Jurisdiction and Venue. This
Agreement shall be construed according to and governed by the laws of the State
of Delaware without regard to principles of conflict of laws. The parties hereby
submit to the exclusive jurisdiction and venue of the state courts of New York
County, New York and the United States District Court for the Southern District
of New York, and agree that the Company or the Subscriber may, at their option,
enforce their rights hereunder in such courts.
3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
NORTH ATLANTIC TRADING COMPANY, INC.
By: /s/ Thomas F. Helms, Jr.
-----------------------------------------
Name: Thomas F. Helms, Jr.
Title: President
/s/ David I. Brunson
-----------------------------------------
Name: David I. Brunson
Number of Shares to be Purchased: 2,250
Total Purchase Price: $90,000.00
4
Exhibit 10.43
SUBSCRIPTION AGREEMENT
North Atlantic Trading Company, Inc.
257 Park Avenue South
New York, New York 10010
THIS SUBSCRIPTION is made and entered into as of the 24th day of March,
1998, by and among NORTH ATLANTIC TRADING COMPANY, INC., a Delaware corporation
formerly named North Atlantic Trading Acquisition Company, Inc. (the "Company"),
and Jeffrey S. Hay (the "Subscriber").
WHEREAS, the Company is authorized to purchase 10,100 shares of Voting
Common Stock (the "Share Repurchase"), par value $.01 per share (the "Voting
Common Stock") from Maurice Langston; and
WHEREAS, the Company is authorized to re-issue the shares purchased
from Maurice Langston and sell such Shares pursuant to this Agreement; and
WHEREAS, the Subscriber is purchasing the number of shares of Voting
Common Stock indicated opposite his name on the signature page hereto;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements hereinafter contained, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Sale of Voting Common Stock. Subject to the terms and
conditions herein set forth, the Company shall issue and sell to the Subscriber,
and the Subscriber shall purchase from the Company, the number of shares of
Voting Common Stock set forth opposite his name on the signature page hereto, at
a purchase price of $40.00 per share.
2. Subscriber Representations. In order to induce the Company
to sell the Voting Common Stock to the Subscriber and to enter into this
Agreement, the Subscriber makes the following representations and warranties,
which shall be true, correct and complete in all material respects on the date
hereof:
a. The Subscriber has obtained, to the extent he deems
necessary, professional advice with respect to the risks inherent in
the Purchase of the securities described in Section 1, as applicable,
and the suitability of the securities to be purchased by the Subscriber
pursuant to this Agreement in light of the Subscriber's financial
condition and investment needs;
<PAGE>
b. The Subscriber, either alone or with the assistance of his
own professional advisor, has such knowledge and experience in
financial and business matters that he is capable of evaluating the
merits and risks inherent in securities to be received by him pursuant
to this Agreement, as applicable, and the Subscriber has the net worth
to undertake such risk;
c. The Subscriber is aware of the Company's business affairs
and has acquired sufficient additional information about the Company to
reach an informed and knowledgeable decision regarding the merits and
risks of investing in the securities to be received by him pursuant to
this Agreement. The Subscriber has had ample opportunity to ask
questions of the Company and its representatives and to seek
independent investment, tax, and legal advice prior to investing in the
securities to be received by him pursuant to this Agreement.
d. The Subscriber believes that the securities to be received
by him pursuant to this Agreement are suitable for him based on his
investment objectives and financial needs, and the subscriber has
adequate means for providing his current financial needs and personal
contingencies and has no need for liquidity of investment with respect
to the securities to be received by him pursuant to this Agreement;
e. The Subscriber is in a financial position to hold the
securities to be received by him pursuant to this Agreement, as
applicable, for an indefinite period of time and he is able to bear the
economic risk and withstand a complete loss of his investment in the
securities to be received by him pursuant to this Agreement;
f. The Subscriber is not acquiring any securities to be
received by him with a view to any distribution thereof in a
transaction that would violate the Securities Act or the securities
laws of any State of the United States or any other applicable
jurisdiction; and
g. The Subscriber understands that the securities to be
received by him pursuant to this Agreement will be issued by the
Company without registration under the Securities Act and without
qualification and/or registration under applicable state securities
laws ("Blue Sky Laws") pursuant to exemptions from registration and/or
qualification contained in the Securities Act and in the Blue Sky Laws.
The Subscriber understands that the securities must be held
indefinitely unless (A) subsequently registered and/or qualified under
the Securities Act and under the Blue Sky Laws unless exemptions from
the registration and/or qualification
2
<PAGE>
requirements under the Securities Act and under the Blue Sky Laws are
available in connection with any proposed transfer of the securities by
the Subscriber and (B) the proposed transfer is permitted under the
terms of this Agreement.
3. Stockholders' Agreement. The Subscriber hereby agrees that
he shall (i) be bound by all of the provisions and conditions of the Exchange
and Stockholders' Agreement, dated as of June 25, 1997, between the Company and
each of the stockholders parties thereto, as such agreement may be amended from
time to time (the "Stockholders' Agreement"), and (ii) become a Management
Stockholder (as such term is defined in the Stockholders' Agreement) under the
Stockholders' Agreement as if such Subscriber was an original signatory thereto.
4. Headings. The headings of sections of this Agreement are
for convenience only and shall not be considered in construing or interpreting
any of the terms or provisions hereof
5. Word Meanings. The words such as "herein", "hereinafter",
"hereof", and "hereunder" refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise requires.
The singular shall include the plural, and vice versa, unless the context
otherwise requires.
6. Counterparts. This Agreement may be executed in several
counterparts, all of which together shall constitute one agreement binding on
all parties hereto, notwithstanding that all the parties have not signed the
same counterpart.
7. Entire Agreement. This Agreement, as effective on the date
hereof, contain the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all prior writings or agreements with
respect to such subject matter.
8. Governing Law; Consent to Jurisdiction and Venue. This
Agreement shall be construed according to and governed by the laws of the State
of Delaware without regard to principles of conflict of laws. The parties hereby
submit to the exclusive jurisdiction and venue of the state courts of New York
County, New York and the United States District Court for the Southern District
of New York, and agree that the Company or the Subscriber may, at their option,
enforce their rights hereunder in such courts.
3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
NORTH ATLANTIC TRADING COMPANY, INC.
By: /s/ Thomas F. Helms, Jr.
----------------------------------------
Name: Thomas F. Helms, Jr.
Title: President
/s/ Jeffrey S. Hay
----------------------------------------
Name: Jeffrey S. Hay
Number of Shares to be Purchased: 2,250
Total Purchase Price: $90,000.00
4
Exhibit 10.44
PROMISSORY NOTE
U.S. $60,000.00 March 24, 1998
FOR VALUE RECEIVED, the undersigned, David I. Brunson (the
"Maker"), HEREBY PROMISES TO PAY to the order of North Atlantic Trading Company,
Inc. (together with any successor in interest or assignee thereof, the "Payee")
at its offices located at 257 Park Avenue South, New York, New York, 10010-7304,
or at such other place as Payee or any holder hereof may from time to time
designate to Maker in writing, in immediately available funds the principal sum
of sixty thousand United States dollars ($60,000.00), plus accrued interest as
provided herein, in lawful money of the United States, in accordance with the
terms hereafter set forth.
Interest shall accrue on the unpaid principal balance hereof
at the fixed rate equal to six and one-half percent (6.5%) per annum from the
date hereof until paid in full and shall be payable in cash on each anniversary
of the date hereof. The outstanding principal amount of this Note, together with
all accrued and unpaid interest thereon shall, unless sooner accelerated, be due
and payable in full on March 31, 2003 or on the following business day if any
such date is not a business day. Interest hereunder shall be computed on the
basis of the actual number of days elapsed over the period of a 365-day year.
Maker hereby waives diligence, demand, presentment, protest and notice, and
assents to extensions of time of payments, releases, surrender or substitution
of security, or forbearance or other indulgence, without notice.
All payments shall be applied first to accrued and unpaid
interest hereunder and then to the principal balance hereof. If the Maker shall
default in the punctual payment of any sum payable hereunder whether or not
notice of such default is given, then: (i) all amounts outstanding under this
Note shall become immediately due and payable without any further notice by
Payee; and (ii) the unpaid principal balance outstanding at such date shall bear
interest at the rate equal to eight and one-half percent (8.5%) per annum;
provided, however, that in no case shall the rate of interest exceed the maximum
amount permitted by applicable law. The rights and remedies referred to above
shall be cumulative, nonexclusive and enforceable alternatively, successively
and concurrently. Maker acknowledges and agrees that his obligation to pay
principal and interest hereunder shall not be subject to any counterclaims,
offsets or defenses against Payee or any holder of this Note that are presently
existing or which may arise in the future.
This Note may be prepaid at any time, in whole or in part, at
Maker's option, and shall become due and payable in full (i) upon any sale,
transfer, redemption, assignment, hypothecation, pledge or other disposition of
all or any part of the shares of common stock of the Payee held by the Maker
except for transfers to a living trust for the benefit of any or all of the
Maker's spouse or descendants or to a deceased Maker's executors, legal heirs,
devisees, administrators or testamentary trustees and beneficiaries, or
transfers pursuant to which the
<PAGE>
Payee agrees to waive its right to such prepayment, or (ii) within sixty (60)
days after termination of Maker's employment with the Payee or any of its
subsidiaries. Any prepayment shall be made without premium or penalty, and any
such prepayment shall be applied and credited first to any accrued and unpaid
interest hereunder to the date of such prepayment and the balance, if any, to
the reduction of the principal amount hereof.
If, after the due date for the payment of any principal or
interest hereunder, this Note is referred to an attorney for collection, Maker
shall be liable for attorneys' fees and expenses and other expenses and costs of
collection.
Maker hereby irrevocably consents to the jurisdiction of the
courts of the State of New York and the courts of the United States of America
located in the State of New York in connection with any action or proceeding
arising out of or related to this Note.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAW PRINCIPLES THEREOF, AND SHALL BE BINDING UPON THE SUCCESSORS AND ASSIGNS OF
MAKER AND SHALL INURE TO THE BENEFIT OF PAYEE, ITS SUCCESSORS, ENDORSEES AND
ASSIGNS.
This Note may not be changed, modified or terminated orally,
but only by an agreement in writing signed by the party to be charged. No
extension of the date on which payment is due shall be effective unless signed
by Payee.
If any term or provision of this Note shall be invalid,
illegal or unenforceable, the validity of all other terms and provisions hereof
shall in no way be affected.
IN THE EVENT OF ANY LITIGATION WITH RESPECT TO THIS NOTE,
MAKER WAIVES (TO THE EXTENT PERMITTED BY LAW) THE RIGHT TO A TRIAL BY JURY, ALL
RIGHTS OF SET-OFF AND RIGHTS TO INTERPOSE COUNTERCLAIMS AND CROSS-CLAIMS (UNLESS
SUCH SET-OFF, COUNTERCLAIM OR CROSS-CLAIM COULD NOT, BY REASON OF ANY APPLICABLE
FEDERAL OR STATE PROCEDURAL LAWS, BE INTERPOSED, PLEADED OR ALLEGED IN ANY OTHER
ACTION) AND THE DEFENSES OF FORUM NON CONVENIENS AND IMPROPER VENUE.
/s/ David I. Brunson
-----------------------------
David I. Brunson
2
Exhibit 10.45
PROMISSORY NOTE
U.S. $60,000.00 March 24, 1998
FOR VALUE RECEIVED, the undersigned, Jeffrey S. Hay (the
"Maker"), HEREBY PROMISES TO PAY to the order of North Atlantic Trading Company,
Inc. (together with any successor in interest or assignee thereof, the "Payee")
at its offices located at 257 Park Avenue South, New York, New York, 10010-7304,
or at such other place as Payee or any holder hereof may from time to time
designate to Maker in writing, in immediately available funds the principal sum
of sixty thousand United States dollars ($60,000.00), plus accrued interest as
provided herein, in lawful money of the United States, in accordance with the
terms hereafter set forth.
Interest shall accrue on the unpaid principal balance hereof
at the fixed rate equal to six and one-half percent (6.5%) per annum from the
date hereof until paid in full and shall be payable in cash on each anniversary
of the date hereof. The outstanding principal amount of this Note, together with
all accrued and unpaid interest thereon shall, unless sooner accelerated, be due
and payable in full on March 31, 2003 or on the following business day if any
such date is not a business day. Interest hereunder shall be computed on the
basis of the actual number of days elapsed over the period of a 365-day year.
Maker hereby waives diligence, demand, presentment, protest and notice, and
assents to extensions of time of payments, releases, surrender or substitution
of security, or forbearance or other indulgence, without notice.
All payments shall be applied first to accrued and unpaid
interest hereunder and then to the principal balance hereof. If the Maker shall
default in the punctual payment of any sum payable hereunder whether or not
notice of such default is given, then: (i) all amounts outstanding under this
Note shall become immediately due and payable without any further notice by
Payee; and (ii) the unpaid principal balance outstanding at such date shall bear
interest at the rate equal to eight and one-half percent (8.5%) per annum;
provided, however, that in no case shall the rate of interest exceed the maximum
amount permitted by applicable law. The rights and remedies referred to above
shall be cumulative, nonexclusive and enforceable alternatively, successively
and concurrently. Maker acknowledges and agrees that his obligation to pay
principal and interest hereunder shall not be subject to any counterclaims,
offsets or defenses against Payee or any holder of this Note that are presently
existing or which may arise in the future.
This Note may be prepaid at any time, in whole or in part, at
Maker's option, and shall become due and payable in full (i) upon any sale,
transfer, redemption, assignment, hypothecation, pledge or other disposition of
all or any part of the shares of common stock of the Payee held by the Maker
except for transfers to a living trust for the benefit of any or all of the
Maker's spouse or descendants or to a deceased Maker's executors, legal heirs,
devisees, administrators or testamentary trustees and beneficiaries, or
transfers pursuant to which the
<PAGE>
Payee agrees to waive its right to such prepayment, or (ii) within sixty (60)
days after termination of Maker's employment with the Payee or any of its
subsidiaries. Any prepayment shall be made without premium or penalty, and any
such prepayment shall be applied and credited first to any accrued and unpaid
interest hereunder to the date of such prepayment and the balance, if any, to
the reduction of the principal amount hereof.
If, after the due date for the payment of any principal or
interest hereunder, this Note is referred to an attorney for collection, Maker
shall be liable for attorneys' fees and expenses and other expenses and costs of
collection.
Maker hereby irrevocably consents to the jurisdiction of the
courts of the State of New York and the courts of the United States of America
located in the State of New York in connection with any action or proceeding
arising out of or related to this Note.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAW PRINCIPLES THEREOF, AND SHALL BE BINDING UPON THE SUCCESSORS AND ASSIGNS OF
MAKER AND SHALL INURE TO THE BENEFIT OF PAYEE, ITS SUCCESSORS, ENDORSEES AND
ASSIGNS.
This Note may not be changed, modified or terminated orally,
but only by an agreement in writing signed by the party to be charged. No
extension of the date on which payment is due shall be effective unless signed
by Payee.
If any term or provision of this Note shall be invalid,
illegal or unenforceable, the validity of all other terms and provisions hereof
shall in no way be affected.
IN THE EVENT OF ANY LITIGATION WITH RESPECT TO THIS NOTE,
MAKER WAIVES (TO THE EXTENT PERMITTED BY LAW) THE RIGHT TO A TRIAL BY JURY, ALL
RIGHTS OF SET-OFF AND RIGHTS TO INTERPOSE COUNTERCLAIMS AND CROSS-CLAIMS (UNLESS
SUCH SET-OFF, COUNTERCLAIM OR CROSS-CLAIM COULD NOT, BY REASON OF ANY APPLICABLE
FEDERAL OR STATE PROCEDURAL LAWS, BE INTERPOSED, PLEADED OR ALLEGED IN ANY OTHER
ACTION) AND THE DEFENSES OF FORUM NON CONVENIENS AND IMPROPER VENUE.
/s/ Jeffrey S. Hay
-----------------------------
Jeffrey S. Hay
2
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 101
<SECURITIES> 0
<RECEIVABLES> 8,381
<ALLOWANCES> 0
<INVENTORY> 58,079
<CURRENT-ASSETS> 74,052
<PP&E> 10,984
<DEPRECIATION> 3,103
<TOTAL-ASSETS> 274,191
<CURRENT-LIABILITIES> 27,754
<BONDS> 0
35,704
0
<COMMON> 5
<OTHER-SE> (13,866)
<TOTAL-LIABILITY-AND-EQUITY> 274,191
<SALES> 19,702
<TOTAL-REVENUES> 19,702
<CGS> 6,874
<TOTAL-COSTS> 6,874
<OTHER-EXPENSES> (16)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,386
<INCOME-PRETAX> (1,955)
<INCOME-TAX> (1,075)
<INCOME-CONTINUING> (880)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,002)
<EPS-PRIMARY> (3.79)
<EPS-DILUTED> (3.79)
</TABLE>
