EXHIBIT 10.1
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600 Lexington Avenue, 6th Floor
New York, NY 10022
Phone: (212) 759-4433
Fax: (212) 759-5532
ALVAREZ & MARSAL LOGO
[GRAPHICS OMITTED]
June 26, 2006
Thomas F. Helms, Jr.
Chairman of the Board
North Atlantic Trading Company, Inc.
257 Park Avenue South
NY, NY 10010
Dear Mr. Helms:
Reference is made to the amended and restated engagement letter (the "Engagement
Letter"), dated April 11, 2005, among North Atlantic Trading Company, Inc.
("NATC") and North Atlantic Holding Company, Inc. (collectively, the "Company")
and Alvarez & Marsal, LLC ("A&M"). This letter confirms and sets forth the terms
and conditions of the amendment to the Engagement Letter. Upon execution of this
letter by each of the parties below, this letter will constitute an agreement
between the Company and A&M, effective as of May 11, 2006.
1. Sections 2a and 2b of the Engagement Letter are hereby deleted in
their entirety and replaced with the following:
"2. Compensation
a. A&M will be paid by the Company for the services of Mr. Rosefsky
and for the services of the Additional Officer a fixed monthly
fee of $175,000 in the aggregate. The Company recognizes that in
order for A&M to effectively and efficiently fulfill the terms of
this engagement, the CEO must be able to staff the project with
required personnel as needed. The Company will compensate A&M for
the services of such other personnel as A&M and the Board of NATC
mutually agree would be appropriate to assist in this engagement
based on the then current hourly billing rate for such other
personnel.
b. The current hourly billing rates for other A&M personnel based on
the position held by such A&M personnel in A&M, are:
i. Managing Director $500 - $675
ii. Director $375 - $475
iii.Associate $275 - $375
iv. Analyst $150 - $300
Such rates shall be subject to adjustment annually at such time
as A&M adjusts its rates generally."
2. Exhibit A to the Engagement Letter is hereby amended as follows:
a. The applicable percentages for EBITDAR Improvement are hereby
deleted in their entirety and replaced with the following:
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Amount of EBITDAR
Improvement (Annualized): Applicable percentage:
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$0 - $2,999,999 5%
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$3,000,000 - $5,999,999 7.5%
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$6,000,000 - $9,999,999 10.0%
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$10,000,000 and up 12.5%
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b. The definition of "EBITDAR" is hereby amended to add the
following at the end: "plus all legal fees and expenses incurred
by the Company after December 31, 2005 in connection with any
litigation commenced after December 31, 2005."
c. The Working Capital Portion of the performance-based fee
provision is hereby amended by deleting the second sentence in
its entirety and replacing it with the following: "The working
capital to be reviewed by the Board in making its determination
will be the Accounts Receivable plus Inventory (excluding LIFO
reserves) less Accounts Payable less Accrued Expenses (excluding
restructuring expense payables and accruals, if any, and
excluding any working capital investments made outside of the
ordinary course of business), determined on a basis consistent
with the 2005 Business Plan and current financial reporting."
All other terms and conditions as set forth in the Engagement Letter remain
in full force and effect.
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If the foregoing is acceptable to you, kindly sign the enclosed copy to
acknowledge your agreement with its terms.
Very truly yours,
Alvarez & Marsal, LLC
By: /s/ Douglas P. Rosefsky
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Douglas P. Rosefsky
Managing Director
Accepted and Agreed: Accepted and Agreed:
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North Atlantic Trading Company, Fred Stoker & Sons, Inc.
Inc. International Flavors and Technology,
Inc.
By: /s/ Thomas F. Helms, Jr. North Atlantic Cigarette Company, Inc.
-------------------------- North Atlantic Operating Company, Inc.
Thomas F. Helms, Jr. National Tobacco Finance Corporation
Chairman of the Board RBJ Sales, Inc.
Select Tobacco Brands, Inc.
North Atlantic Holding Company, Stoker, Inc.
Inc.
By: /s/ Thomas F. Helms, Jr. By: /s/ Thomas F. Helms, Jr.
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Thomas F. Helms, Jr. Thomas F. Helms, Jr.
Chairman of the Board Chairman of the Board
National Tobacco Company, L.P.
By: National Tobacco Finance
Corporation, as its general
partner
By: /s/ Thomas F. Helms, Jr.
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Thomas F. Helms, Jr.
Chairman of the Board