April 14, 1997
Xx. Xxxxx X. Xxxxxxx
0 Xxxxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Dear Xxxxx:
In connection with your employment with NTC Holding, LLC ("NTC Holding")
and National Tobacco Company, L.P. ("NTC"), we have reached certain agreements
on a personal basis, and this letter is written to set forth the terms of those
agreements:
1. In the event of a sale of substantially all the issued and outstanding
equity of NTC Holding or a sale of all or substantially all the assets of NTC
Holding prior to the earlier of a refinancing of the Company's indebtedness
(other than the refinancing anticipated in connection with the North Atlantic
Trading Company ("NATC") transaction) or May 17, 2001, I agree to pay to you an
amount equal to 1.78% of the value of the common equity of the Company (based on
the transaction valuation at that time and subject to dilution for stock
issuances between the date hereof and the closing date of the sale) minus
$445,000.00. No payment will be required to be made pursuant to this agreement
in the event of (a) a sale of the Company following the occurrence of an Adverse
Condition, as defined in the Operating Agreement, (b) a sale of the Company
pursuant to which I receive gross proceeds of less than $25 million, or (c)
pursuant to a merger or consolidation in which management of NTC Holding
receives a significant equity stake in the resulting company and you are offered
employment terms comparable to the terms of your employment with the Company.
2. It is anticipated that NTC Holding will be recapitalized after the NATC
transaction but prior to
Xx. Xxxxx X. Xxxxxxx
April 14, 1997
Page 2
May 17, 2001 (the "First Recap"). In the event the Company is recapitalized
following the first recap and as a result of the second recapitalization a
dividend of at least $25 million is paid to the equity holders of the Company, I
agree to increase your equity ownership in the Company by 1%.
3. In connection with the documentation of the Company's acquisition of
NATC, if I am advised by the Company's attorneys or accountants that the payment
described in Paragraph 1 above should be documented as a stock option, you agree
to enter into a stock option agreement with me so long as the financial impact
of the stock option is neutral to you.
4. Except as set forth below, the agreements set forth above are
conditioned on your being an employee of the Company at the time any payment is
required to be made. In the event your employment with the Company is terminated
for any reason other than Cause within eighteen months of the date payment is
required to be made pursuant to this agreement, you will be entitled to receive
payment even though you are no longer employed by the Company.
If the foregoing accurately sets forth our agreement relating to the
subject matter hereof, please execute both copies of this letter in the space
provided below and return a copy to me for my files.
Very truly yours,
Xxxxxx X. Xxxxx, Xx.
