June 8, 2005
Mr. Lawrence Wexler
393 Carter Street
New Canaan, CT 06840
RE: EMPLOYMENT TERMS
Dear Larry:
I am pleased to offer you the position of Chief Operating Officer ("COO") of
North Atlantic Trading Company, Inc. In this position and at this time, you will
report to me as Chief Executive Officer. This position will have the
responsibilities typical of a COO, including supervision of sales, marketing,
and manufacturing. Additional responsibilities may be added at the Company's
discretion from time to time, without written modification of this Agreement.
This position will require significant travel, primarily to our Louisville
facilities. It is expected that you will be traveling or away from your New
York/Connecticut area work station approximately 50% of business days. You will
not be required to relocate your residence from your current home.
In accordance with our discussions, I have outlined below the principal terms
and conditions of your employment. This letter, when signed by you, will
represent your Employment Agreement:
Commencement Date: June 8, 2005. You will be employed for an indefinite
term, and the provisions of this Agreement shall
remain in effect until such time as modified by
mutual written agreement or until your employment is
severed under one of the conditions set forth below.
Base Salary: $385,000 per annum, paid in accordance with the
Company's regular payroll cycle and policies.
Bonuses: You will be a participant in the Company's
Management Bonus Program under which you will be
eligible for a bonus of up to 50% of your then
current annual base salary.
In respect of fiscal year 2005, $50,000 of your
bonus will be earned if the Company's EBITDAR is
greater than or equal to an amount established by
the CEO in consultation with you, $50,000 will be
tied to the achievement of certain objectives
established by the CEO in consultation with you, the
achievement of which will be determined by the CEO
in his reasonable discretion, and the remainder of
your potential performance bonus will be based upon
the Company exceeding the EBITDAR target and
objectives so established, the successful strategic
repositioning of Company brands and the Company's
financial outlook for 2006, as determined by the CEO
in his reasonable discretion.
Bonuses for any year are paid after the completion
of the year-end audit for such year and upon the
recommendation of the CEO, at his discretion, and
after approval by NATC's Board of Directors. In
general, you must remain an employee and demonstrate
satisfactory performance through the payment date to
be entitled to receive a bonus.
Stock Options: You agree that you forfeit all stock option rights
granted but not vested prior to this agreement. You
will be issued stock options or restricted stock
under terms no less favorable, including dates of
vesting, than your existing stock option grant to
replace those options you have forfeited. You will
retain the 2,500 options in which you are currently
vested.
Vacations Four (4) weeks of paid vacation, subject to the
Company's policy regarding vacations. Vacation days
do not transfer from one year to the next and no
compensation is paid for unused vacation (except as
may be required by law upon separation from
employment).
Automobile: The Company has currently leased a vehicle for your
use on Company business. You may continue the use of
that vehicle until its lease expires. At that time,
in addition to the right to purchase the vehicle,
the Company will grant you an automobile allowance
of $500 per month, grossed up for state and federal
income taxes only. You will have no other benefits
related to automobile use.
Additional Benefits: You are eligible to join the Company's group benefit
plans under each plan's terms and conditions, such
as the Company's Medical and Dental plans.
Termination: The employment relationship may be severed at any
time, subject to the provisions of the Severance
section below, as follows:
Termination by the Company Without Cause. The
Company may terminate your employment without
"cause" at any time.
Termination for Cause. The Company may terminate
your employment for "cause" at any time, with or
without notice. For purposes of this Agreement,
"cause" shall mean:
Your failure to render required and expected
services in accordance with your obligations under
this Agreement;
Insubordination consisting of your continued
failure to take specific action which is within your
individual control and consistent with your status
as a senior manager of the Company and your duties
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and responsibilities after being provided not less
than 10 days' written notice;
Your material breach of any agreement with the
Company not cured within 10 days after written
notice thereof, or any material violation of any
policies or procedures of the Company;
Your commission of an act of fraud, embezzlement
or similar dishonest act against the Company or any
customer, client or business associate of the
Company;
Your conviction for any felony or crime of
dishonesty (as determined by a court of competent
jurisdiction, and not subject to further appeal);
Any egregious or unwarranted conduct by you that
discredits the Company or is detrimental to the
reputation or standing of the Company; or
Gross misconduct which is demonstrably willful
and deliberate on your part.
If you are terminated for cause, the Company shall
only be required to pay to you such salary and other
benefits as have accrued as of the date and time of
termination, and as may otherwise be required by
law.
Voluntary Termination by You. You may voluntarily
terminate your employment by giving the Company two
(2) weeks written notice. In such event, the Company
may relieve you of your duties prior to the
expiration of the notice period, provided that the
Company continues paying your salary and other
benefits and emoluments of employment for the
duration of the notice period.
Death of Disability. This Agreement will terminate
if you die or become "disabled." For purposes of
this Agreement, you shall be considered "disabled"
if you are so considered under any applicable
disability insurance policy maintained by the
Company or, if no such disability insurance policy
is in effect, on the date that a neutral physician
determines that you are or will be unable by reason
of illness or accident to perform your duties
hereunder for a continuous period of 120 days, or
for a period of more than 120 days in any 12 month
period, and that there is no objectively reasonable
accommodation that would allow you to perform your
duties hereunder.
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Severance: If your employment is terminated by the Company
without "cause," you will--upon your execution of a
Severance and Release Agreement in a form acceptable
to the Company--be paid an amount equal to your then
current annual compensation which will include your
base salary for a period of twelve months in
accordance with the Company's regular payroll cycle.
In addition, you will also receive an amount equal
to the average annual bonus paid to you under the
Company's Management Performance Bonus program for
the prior two calendar years. However, the bonus
received for 2004 will be deemed to have been
$100,000. If you are terminated without cause in the
year 2005 or prior to the bonus determination date
in 2006, for the purposes of this calculation, the
bonus for calendar 2005 will also be deemed to have
been $100,000 or such other amount as was actually
paid to you under the Company's Management
Performance Bonus program. Also, should you be
terminated without cause, you will be paid any
accrued or unpaid bonus to the date of termination
for the year in which the termination occurs, such
bonus to be determined by the Board, in its sole
discretion, after reviewing the Executive's and the
Company's performance for such entire year and
prorating any such bonus for the number of days
elapsed during such year prior to the date of
termination. All "additional benefits", automobile
allowances and stock option rights described in this
letter will expire upon termination of employment
for any reason, unless otherwise provided by the
separate written terms of those benefits.
For a period of twelve (12) months following the
date of termination of employment without cause, if
the Executive is eligible and elects continuation
coverage under the Company's "group health plan"
pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA"), the Executive
will continue to contribute to the Company's group
health plan at the same rate and based on the same
level of coverage as in effect with respect to the
Executive immediately prior to the date of
termination and the Company will pay the balance of
the Executive's cost for such continuation coverage.
If you obtain other employment during the twelve
months of severance, then these continuation
coverage benefits will terminate when you qualify
for the new employer's health benefits.
The Company shall deduct from severance payments
such taxes and other statutory amounts as would
normally have been deducted but for the separation
from employment, and shall report such payments to
the taxing authorities. Unless otherwise provided
herein or by other written agreement, the Company
shall cease paying and taking deductions for, other
benefits plans upon your separation of employment
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for any reason. To continue to receive severance,
you will be required to demonstrate reasonable
efforts to search for other employment.
Covenant Not to Compete
and Confidentiality: You agree that you will not compete with the Company
or its affiliates for a period of one year if you
leave the Company, whether voluntarily or
involuntarily. You also agree not to disparage--at
any time--the Company, its employees, officers and
directors or its business. Further, while an
employee of the Company, and after any termination
of your employment, you will observe the strict
confidentiality of the information concerning the
Company, its trade secrets, its business and its
employees, officers and directors, and shall only
use such information to further the Company's
interests. "Compete," as used in this section means,
directly or indirectly: soliciting employees;
inducing employees to terminate their employment;
influencing any suppliers of goods or services or
customers to reduce or cancel any business it does
with the Company or its affiliates; or engaging in
any business that the Company or its affiliates is
engaged in or planned to be engaged in at the time
of termination.
Miscellaneous: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of
Kentucky without regard to any state's conflict of
laws rules. This Agreement contains the entire
agreement between the parties hereto with respect to
the subject matter hereof. Except as otherwise
expressly provided herein, this Agreement may not be
amended orally, but only by a written agreement
signed by both parties. The rights and obligations
of Employee under this Agreement are personal and
may not be assigned or delegated by you. This
Agreement shall be binding upon, and inure to the
benefit of, and be enforceable by, the parties
hereto. If any provision of this Agreement shall be
invalid or unenforceable to any extent, the
remainder of this Agreement shall not be affected
thereby and this Agreement shall be enforced to the
greatest extent permitted by law, it being the
intent of the parties that the invalid provisions be
reformed rather than be deleted.
Please also note that the terms and conditions of your employment outlined above
are subject to (i) the execution and delivery of this Letter Agreement, and (ii)
in the case of bonuses, vacation and other benefits, the applicable plans or
policies of the Company.
Please also note that this agreement supersedes and replaces in all respects the
agreement between you and North Atlantic Trading Company, Inc., dated December
1, 2003, and that that agreement shall be no further force or effect.
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I trust that this letter adequately outlines our offer and our discussion.
However, if you have any questions or issues, please do not hesitate to call me.
We are pleased to offer you this opportunity and look forward to a long and
mutually rewarding relationship.
Sincerely,
/s/ Douglas Rosefsky
Douglas Rosefsky
Chief Executive Officer
/s/ Lawrence Wexler
Name: Lawrence Wexler
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Date:
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