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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered
as
of the 1st day of March, 2004, by and between MICHAEL P. SAGE
("Employee") and
ORCHIDS PAPER PRODUCTS COMPANY, a Delaware corporation
("Company").
WITNESSETH:
WHEREAS, Company operates a tissue paper mill and converting
facility (the "Business"); and
WHEREAS, Employee has developed experience and knowledge
concerning
the Business, which experience and knowledge are of great value to
Company.
NOW, THEREFORE, for and in consideration of the covenants and
conditions hereinafter set forth, and other good and valuable
consideration, the
receipt and sufficiency of which are hereby acknowledged, intending
to be
legally bound hereby, the parties hereto mutually agree as
follows:
1. TERM. Subject to the provisions hereinafter set forth, the
term
of this Agreement shall commence as of the date of this Agreement
and shall end
five (5) years from such date (the "Term"). The Term may be renewed
thereafter
with the prior written consent of both parties.
2. EXTENT OF SERVICES. During the Term, Employee shall be
employed
as President and Chief Executive Officer of the Company, with the
authority,
duties and responsibilities assigned to Employee by the Chairman
and/or Board of
Directors of the Company, which shall be reasonably comparable to
those held,
exercised or assigned to Employee as of the date of this Agreement.
Employee
shall devote all of his working time and efforts exclusively to the
performance
of his duties under this Agreement.
3. CONSIDERATION.
(a) Salary. During the Term, Company shall pay Employee two
hundred twenty-five thousand dollars ($225,000) per year payable in
accordance
with the standard payroll practices of the Company (subject to such
withholdings
and other normal employee deductions as may be required by law) for
his services
pursuant to this Agreement (the "Payment Amount"). Company shall be
entitled to
withhold amounts from the Payment Amount that the Company
reasonably believes it
is required to withhold under any federal, state, local or foreign
tax law to
which Company is subject. At all times during the term of this
Agreement,
Company shall reimburse Employee for his actual, reasonable, and
verifiable
out-of-pocket expenses incurred in performing services pursuant to
this
Agreement required by Company, including without limitation, travel
expenses.
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(b) Benefits. Employee shall be entitled to benefits
substantially the same as those currently received by Employee.
(c) Bonus.
Employee shall be entitled to an annual bonus as
determined by the Board of Directors.
4. TERMINATION. The term of this Agreement shall continue for
the
period specified in Paragraph 1 of this Agreement unless sooner
terminated by
(a) the death of Employee, effective as of the date of death, (b)
the inability,
by reason of a mental or physical condition, to perform his duties
hereunder for
an uninterrupted period of ninety (90) days, or (c) for Cause upon
written
notice to Employee effective as of the date of such notice,
describing such
Cause (as hereinafter defined). For purposes of this Agreement,
"Cause" for
termination shall be deemed to exist if: (i) the Employee engages
in acts of
personal dishonesty or fraud involving the Company; (ii) the
Employee breaches
this Agreement, or (iii) the Employee fails to perform the
responsibilities of
his position with the Company or fails or refuses to perform the
duties assigned
to him in accordance with this Agreement.
(a) In the event that (i) Employee's employment under this
Agreement
is terminated for Cause as provided above, or (ii) Employee
voluntarily
terminates his employment with the Company, prior to the end of the
Term, the
Company shall promptly pay to the Employee (or the Employee's
legal
representatives) the amount of any salary attributable to periods
prior to such
termination, plus the amount of any reimbursable expenses and any
accrued
vacation. No other payments shall be due Employee except any bonus
payments
already earned pursuant to Section 3(b)(v) above.
(b) In the event that Employee's employment is terminated
without
Cause, or the Employee loses his employment for any other reason,
including
without limitation, bankruptcy, closure, reorganization, buyout,
merger,
consolidation or any other reason, the Employee will receive
severance payments
equal to the lesser of (i) two year's salary as provided in Section
3(a) above
or (ii) the remaining salary Employee would have received had
Employee remained
employed through the end of the Term. Employee shall also receive a
pro rata
portion of his Bonus, if earned, for that year. These severance
payments shall
be paid in the same manner and at the same interval as Employee was
being paid
immediately prior to termination.
5. REPURCHASE OPTION / REDEMPTION OPTION.
(a) For purposes of this Agreement, the following terms shall
have the meanings set forth below:
(i) "Employee Stock" means all shares of capital stock of the
Company or Orchids Acquisition Group, Inc. acquired by Employee,
whether held by
Employee or one or more transferees.
(ii) "Fair Market Value" of each share of Employee Stock
means the market value agreed upon by Employee and the Board of
Directors of the
Company
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(the "Board"). If Employee and the Board are unable to agree upon
the market
value, then Employee and the Company will share the cost, on an
equal basis, of
a mutually acceptable business appraiser whose determination will
be binding.
(iii) "Original Value" of each share of Employee Stock will
be equal to $10.00 (as proportionally adjusted for all stock
splits, stock
dividends and other stock recapitalizations affecting the capital
stock of the
Company and/or Orchids Acquisition Group, Inc., as the case may be,
subsequent
to the issuance thereof.
(b) In the event that Employee's employment under this
Agreement
is terminated for Cause as provided above, or (ii) Employee
voluntarily
terminates his employment with the Company, prior to the end of the
Term, the
Employee Stock will be subject to repurchase by the Company
pursuant to the
terms and conditions set forth in this Section 5 (the "Repurchase
Option"). On
or after the date of termination of employment, the Company may
elect to
purchase all or any portion of the Employee Stock at a price per
share equal to
the higer of (i) Original Value or (ii) the Fair Market Value
thereof as
determined as of the termination date. The Company shall elect to
exercise the
right to purchase all or any portion of the shares of Employee
Stock pursuant to
the Repurchase Option by delivering written notice (the "Repurchase
Notice") to
the holder or holders of the Employee Stock. The Repurchase Notice
will set
forth the number of shares of Employee Stock to be acquired from
such holder(s)
and the aggregate consideration to be paid for such shares.
(c) In the event that Employee's employment is terminated
without
Cause, or the Employee loses his employment for any other reason,
including
without limitation, bankruptcy, closure, reorganization, buyout,
merger,
consolidation or any other reason:
(i) all Employee Stock will be subject to the Repurchase
Option and the Company may, on or after the termination date, elect
to purchase
all or any portion of the Employee Stock at a price per share equal
to Fair
Market Value thereof as determined as of the termination date, by
delivering the
Repurchase Notice to the holder or holders of the Employee Stock in
the manner
described in Section 5(b) above; and
(ii) On or after the termination date, Employee may elect to
sell to the Company, and if so elected, the Company must purchase
all or any
portion of the Employee Stock at a price per share equal to the
lower of its
Original Value or the Fair Market Value thereof as determined as of
the
termination date (the "Redemption Option"). Employee shall elect to
exercise the
right to sell to the Company all or any portion of the shares of
Employee Stock
pursuant to the Redemption Option by delivering written not
