UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
January 19, 2005
NORTH ATLANTIC HOLDING COMPANY, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 333-115587 20-0709285
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
257 PARK AVENUE SOUTH 10010-7304
NEW YORK, NEW YORK
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 253-8185
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
(a) On January 20, 2005, North Atlantic Holding Company, Inc. (the "Company")
announced that the Company and its subsidiary, North Atlantic Trading Company,
Inc. ("NATC" and collectively with the Company, the "Companies") have engaged
the management consulting firm of Alvarez & Marsal ("A&M") to assist in the
development of an assessment of the operations and to identify the potential for
performance improvement and cost reduction opportunities. In connection with
such engagement, the Companies and A&M entered into an Engagement Letter
Agreement, dated January 19, 2005 (the "Letter Agreement"). Pursuant to the
Letter Agreement, A&M agreed to make available to the Companies financial
services of Douglas P. Rosefsky, its managing director, which services, upon the
Companies' request, will include serving as Chief Financial Officer of the
Company and NATC, as well as the services of an additional A&M professional as
an assistant to Mr. Rosefsky, and, upon the Companies' request, as
Director-Finance of the Company and NATC (the "Additional Professional") .
Under the terms of the Letter Agreement, the Companies will pay $100,000 per
month to A&M for the services of Mr. Rosefsky, and $50,000 per month for the
services of the Additional Professional. The Companies will also compensate A&M
for certain reasonable out-of-pocket expenses. The Letter Agreement may be
terminated by either party without cause upon thirty days' prior written notice
during the first ninety days after the date of the Letter Agreement, and upon
fifteen days' prior written notice thereafter, provided that after thirty days
from the date of the Letter Agreement, the Companies may terminate the
engagement of the Additional Professional by giving fifteen days' prior written
notice to A&M. The Companies agreed to indemnify Mr. Rosefsky and the Additional
Professional to the same extent as the most favorable indemnification it extends
to any of its officers or directors.
In addition, on January 19, 2005, the Companies and A&M entered into the
Indemnification Agreement (the "Indemnification Agreement"), pursuant to which
the Companies agreed to indemnify A&M and its agents against losses in
connection with A&M's performance under the Letter Agreement.
A copy of the press release announcing the engagement of A&M is attached hereto
as Exhibit 99.1, and is incorporated herein by reference.
(b) On January 19, 2005, the Amended and Restated Loan Agreement, made and
entered into as of February 17, 2004, by and among Bank One, NA as the Agent
Bank, Bank One and LaSalle Bank, National Association, NATC and certain of its
subsidiaries and the Company, was amended pursuant to the 2005 A Amendment to
the Loan Agreement, dated as of January 19, 2005 (the "Loan Agreement
Amendment"), by and among JP Morgan Chase Bank, N.A. (as successor to Bank One,
NA), LaSalle Bank, National Association, NATC and certain of its subsidiaries,
and the Company to eliminate the affirmative covenant that David I. Brunson
remain active in the day-to-day operation and management of NATC, and to delete
certain other references to Mr. Brunson. In addition, the revolving line of
credit available under the Revolving Credit Facility was reduced to an aggregate
principal amount of $35,000,000. The revolving line of credit had been scheduled
to reduce to $40,000,000 in September 2005. NATC has approximately $16,000,000
outstanding under such line of credit.
A copy of the Loan Agreement Amendment it attached hereto as Exhibit 99.2.
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ITEM 1.02. TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT.
(a) On January 19, 2005, Helms Management Corp., a Kentucky corporation and a
stockholder of the Company, terminated that certain Voting Trust Agreement,
dated December 17, 1997 (as amended, the "Voting Trust Agreement"), by and among
Thomas F. Helms, Jr. and David I. Brunson as voting trustees (collectively, the
"Voting Trustees"), and Helms Management Corp. (as amended, the "Voting Trust
Agreement"). Until termination of the Voting Trust Agreement, the Voting
Trustees possessed the power to vote the shares of the Company held by Helms
Management Corp. Upon termination, such power reverted to Helms Management Corp.
(b) Effective January 19, 2005, David I. Brunson resigned as President and Chief
Financial Officer of the Company and NATC and all other positions held by Mr.
Brunson at the Company, NATC and its subsidiaries and affiliates. In connection
therewith, Mr. Brunson's Amended and Restated Employment Agreement dated as of
April 30, 1998, (as amended by a letter agreement dated November 25, the
"Employment Agreement"), was effectively terminated. Pursuant to the Employment
Agreement, NATC is required to make certain severance payments to Mr. Brunson,
including $425,000 payable within ten business days after January 19, 2005, and
an additional $425,000 payable within the next 12 months. In addition, Mr.
Brunson may become entitled to a bonus payment of up to $725,000 relating to
synergies achieved in the integration of the business of Stoker, Inc., that was
acquired by NATC in 2003. Pursuant to the Employment Agreement, after the last
severance payment is made, Mr. Brunson will have an option to require NATC to
repurchase all or a portion of his shares of the Company at their fair market
value. NATC will not be obligated to repurchase these shares if, upon or after
the payment, it would be in default under any instrument, agreement or law by
which it is bound; in this case, the repurchase may be deferred until it can be
completed without such default. Similarly, NATC has an option to repurchase Mr.
Brunson's shares at the fair market value. In the event NATC and Mr. Brunson are
unable to agree upon the fair market value of these shares, an independent
investment banking firm will be selected to determine such fair market value, in
accordance with the procedure provided for by the Employment Agreement. If
neither Mr. Brunson nor NATC exercise their respective options by the earliest
of the fifth anniversary of the termination of Mr. Brunson's employment or the
date on which NATC refinances, or uses proceeds derived from refinancing,
certain of its obligations, NATC will be required to repurchase Mr. Brunson's
shares on such date unless Mr. Brunson waives his right to require NATC to
purchase his shares.
ITEM 5.02. DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS;ELECTION OF DIRECTORS;
APPOINTMENT OF PRINCIPAL OFFICERS.
As discussed in item 1.02 above, effective January 19, 2005, David I. Brunson
resigned as President and Chief Financial Officer of NATC and the Company, and
from all other positions held by him at the Company, NATC and its subsidiaries
and affiliates. Also on January 19, 2005, Mr. Brunson has not been reelected as
a director of the Company by the Company's stockholders.
As announced by the press release attached hereto as Exhibit 99.1, effective
January 19, 2005, Douglas P. Rosefsky was appointed Chief Financial Officer of
the Company, to serve on an interim basis until a permanent Chief Financial
Officer is selected. Certain information regarding Mr. Rosefsky follows.
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Douglas P. Rosefsky, age 36, Chief Financial Officer since January 19, 2005. Mr.
Rosefsky became a Director of Alvarez & Marsal in November 2000, and a Managing
Director in September 2003. Mr. Rosefsky has worked in a variety of management
and advisory services roles in several industries, most recently, from November
2003 until August 2004, as Chief Executive Officer of DLT Solutions, Inc., a
leading technology solutions provider to the government with $300 million in
annual revenue. From January 2003 to August 2003, Mr. Rosefsky acted as Chief
Risk Officer and Chief Financial Officer of Kleinert's Buster Brown, a leading
designer, manufacturer and retailer of children's apparel. From April 2001 until
January 2003, Mr. Rosefsky served as Senior Vice President - Finance and Co-Head
of International of Warnaco Inc., a global retail and apparel company based in
New York. From January 2001 until August 2001, Mr. Rosefsky served as Financial
Advisor, Communications Corporation of America, and between January 2000 and
December 2000, as Vice President - Finance of Charter Behavioral Health
Corporation.
In addition, Thomas F. Helms Jr., Chief Executive Officer and Chairman of the
Board of Directors of each of the Companies, was appointed President of each of
the Companies. Mr. Helms, Jr. has been Chief Executive Officer and Chairman of
NATC's Board of Directors since June 1997. He is also the Chairman of the Board
of Directors and Chief Executive Officer and a Director of the Company, the
Chief Executive Officer of National Tobacco Company, L.P., the Chief Executive
Officer and a Director of North Atlantic Cigarette Company, the President of
National Tobacco Finance Corporation, the Chairman of the Board of Directors,
Chief Executive Officer and a Director of North Atlantic Operating Company, the
Chairman and President and a Director of Stoker, Inc., the Chairman and
President and a Director of Fred Stoker & Sons, Inc. and the Chairman and
President and a Director of RBJ Sales, Inc. In 1988, Mr. Helms formed National
Tobacco Company, L.P., which acquired certain loose leaf chewing tobacco assets
of Lorillard, Inc. Mr. Helms also served as President and Chief Executive
Officer of Culbro Corporation's smokeless tobacco division from 1983 until
shortly prior to its sale to American Maize-Products Company in March 1986. From
1979 to 1982, Mr. Helms was General Manager of the Etherea Cosmetics and
Designer Fragrances Division of Revlon, Inc. From 1964 to 1979, Mr. Helms was
employed in marketing and sales positions in various divisions of Revlon, Inc.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
99.1 Press release, dated January 20, 2005
99.2 2005 A Amendment to the Amended and Restated Loan Agreement,
made and entered into as of February 17, 2004, by and among
Bank One, NA as the Agent Bank, Bank One and LaSalle Bank,
National Association, the Company, certain of its
subsidiaries and North Atlantic Holding Company, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NORTH ATLANTIC HOLDING COMPANY, INC.
By: /s/ Thomas F. Helms, Jr
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Name: Thomas F. Helms, Jr.
Title: Chief Executive Officer
Dated: January 21, 2005
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Exhibit Index
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Exhibit No. Exhibit
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99.1 Press release, dated January 20, 2005
99.2 2005 A Amendment to the Amended and Restated Loan Agreement,
made and entered into as of February 17, 2004, by and among
Bank One, NA as the Agent Bank, Bank One and LaSalle Bank,
National Association, the Company, certain of its
subsidiaries and North Atlantic Holding Company, Inc.
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