Exhibit 10.16
EXECUTIVE EMPLOYMENT
AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT
(“Agreement”) is effective as of March 1, 2009 by
and between Orchids Paper Products Company (“Company”)
and Keith R. Schroeder (“Executive”).
WHEREAS, Executive serves as the
Company’s Chief Financial Officer pursuant to an employment
agreement, dated as of March 1, 2004 (the “2004
Employment Agreement”);
WHEREAS, the 2004 Employment
Agreement expires on March 1, 2009; and
WHEREAS, Executive desires to
continue to serve as the Chief Financial Officer of the Company and
in exchange for the protection and other consideration set forth in
this Agreement, is willing to give the Company, under certain
circumstances, his covenant not to compete, and the Company desires
to so employ Executive.
NOW, THEREFORE, in consideration of
the promises and the mutual agreements contained herein, the
Company and Executive hereby agree as follows:
ARTICLE I
Definitions
1.1
Definitions
. As used herein, the following terms shall
have the following meanings.
(a)
“Board” means the board
of directors of the Company.
(b)
“Cause” means
(i) engaging by Executive in willful misconduct which is
materially injurious to Company; (ii) conviction of Executive
by a court of competent jurisdiction of, or entry of a plea of
nolo contendere with respect to a felony;
(iii) engaging by Executive in fraud or dishonesty in
connection with the business of Company;
(iv) Executive’s abuse of or dependency on alcohol or
drugs (illicit or otherwise); (v) Executive’s material
breach of this Agreement; or (vi) failure to perform the
lawful directives of the Chief Executive Officer or the Board,
including, without limitation, any failure to regularly report to
the office.
(c)
“Change of Control”
means (i) a change in the ownership of the Company, which
occurs on the date that any one person or more than one person
acting as a group, acquires ownership of stock of the Company that,
together with stock held by such person or group constitutes more
than 50% of the total fair market value or total voting power of
the stock of the Company; or (ii) a change in the ownership of
all or substantially all of the Company’s assets, which
occurs on the date that any one person, or more than one person
acting as a group, acquires (or has acquired during the 12-month
period ending on the date of the most recent acquisition by such
person or persons) assets from the Company that have a total gross
fair market value equal to or more than 80% of the total gross fair
market value of all of the assets of the Company immediately prior
to such acquisition or acquisitions. For this purpose, gross
fair market value means the value of the assets of the Company or
the value of the assets being disposed of determined without regard
to any liabilities associated with such assets.
(d)
“Code” means the
Internal Revenue Code of 1986, as amended.
(e)
“Confidential
Information” shall mean all technical and business
information of the Company, or which is learned or acquired by the
Company from others with whom the Company has a business
relationship in which, and as a result of which, similar
information is revealed to the Company, whether patentable or not,
which is of a confidential, trade secret and/or proprietary
character and which is either developed by Executive (alone or with
others) or to which Executive shall have had access during his
employment. Confidential Information shall include (among
other things) all confidential data, designs, plans, notes,
memoranda, work sheets, formulas, processes, and customer and
supplier lists.
(f)
“Good Reason” means
(i) a requirement that the Executive permanently relocate to a
place of business more than 50 miles from the location at which he
principally performs services for the Company; (ii) a material
diminution in the Executive’s duties; (iii) a
requirement that Executive regularly report directly to a person
other than the Board; or (iv) a material breach of this
Agreement by the Company.
ARTICLE II
Employment
2.1
Employment
. Company agrees to employ Executive and
Executive hereby accepts such employment with the Company, upon the
terms and conditions set forth in this Agreement, for the period
beginning on March 1, 2009 (“Start Date”) and
ending as provided in Section 2.4 of this Agreement
(“Employment Period”).
2.2
Position and
Duties .
(a)
Commencing on the Start Date and
continuing during the Employment Period, Executive shall serve as
Chief Financial Officer of the Company. As Chief Financial
Officer, Executive, subject to the control of the Board, shall
perform such duties as are customary for such position and such
duties as may be assigned to him by Chief Executive
Officer.
(b)
Executive shall devote his best
efforts and his full business time and attention to the business
and affairs of the Company. The Executive shall perform his
duties and responsibilities to the best of his abilities in a
diligent, trustworthy, businesslike and efficient manner. In
the performance of his duties hereunder, Executive shall at all
times report and be subject to the lawful direction of the Chief
Executive Officer and perform his duties hereunder subject to and
in accordance with the resolutions or any other determinations of
the Board and the by-laws of the Company and applicable law.
During the Employment Period, Executive shall not become an
employee of any person or entity other than the Company.
2.3
Base Salary, Bonus and
Benefits .
(a)
Subject to the terms of this
Agreement, in consideration of Executive’s agreements
contained herein, for the period beginning on the Start Date,
Executive’s base salary shall be $190,025 per annum
(“Base Salary”), which shall be payable in
equal
2
installments during the year in
accordance with the Company’s normal payroll schedule and
shall be subject to deductions for customary withholdings,
including, without limitation, federal and state withholding taxes
and social security taxes. The Board shall evaluate the Base
Salary annually and make such changes to the Base Salary as it
deems are appropriate, but in no event shall the Base Salary be
less than $190,025.
(b)
Executive shall be eligible for the
opportunity to earn annual performance bonuses in an amount up to
100% of Base Salary (with a target bonus equal to 60% of Base
Salary), based on the achievement of such targets as shall be
established, in accordance with the Company’s annual bonus
program. Executive must remain employed by the Company on the
payment date of any such bonus in order to receive any such
bonus. Subject to the terms of the actual bonus plan, any
bonus thereunder is payable in cash on or after January 1 and
no later than April 15 of the calendar year following the
applicable fiscal year with respect to such bonus. In
addition, during the Employment Period, Executive shall be entitled
to participate in all retirement, disability, pension, savings,
life, health, medical, dental, insurance and other fringe benefits
or plans of the Company generally available to executive employees
of the Company.
(c)
During the Employment Period, the
Company upon the submission of proper substantiation by the
Executive, shall reimburse the Executive for all reasonable
business expenses actually and necessarily paid or incurred by him
in the course of and pursuant to the business of the Company, in
accordance with Company policies relating to the reimbursement of
business expenses.
(d)
Executive shall be entitled to four
weeks of vacation during the first year of employment and five
weeks of vacation during each year of employment thereafter,
consistent with Company policy and to be taken at times which do
not unreasonably interfere with the performance of
Executive’s duties hereunder. Unused vacation time
shall be treated in accordance with the Company’s policies in
effect from time to time.
2.4
Term
.
(a)
General Term
. This Agreement shall
commence on the Start Date and terminate on December 31, 2011
(“Initial Term”) unless extended or sooner terminated
as provided herein. The Initial Term shall automatically be
extended for successive additional one-year periods (each, a
“Renewal Period”), unless either party to this
Agreement provides the other party with notice of termination of
this Agreement at least 60 days prior to the expiration of the
Initial Term or any Renewal Period thereafter (“Notice
Period”).
(b)
Termination for Cause or
Voluntary Termination . If the Executive is terminated by the
Company for Cause or if the Executive terminates his employment for
any reason other than as provided in Section 2.4(d), the
Executive shall be entitled only to his Base Salary through the
date of termination, but shall not be entitled to any further Base
Salary or any applicable bonus, benefits or other compensation for
that
3
year or any future year, except as
may be provided in an applicable benefit plan or program, or to any
severance compensation of any kind, nature or amount.
(c)
Termination Without
Cause .
(i)
Before or More Than Twelve Months
Following Change of Control . If the Executive is terminated by the
Company without Cause before a Change in Control or more than
twelve months following a Change of Control (including any
termination which is a direct result of the Company’s
election to terminate the Executive’s employment without
Cause at the end of the Initial Term or any Renewal Period), the
Executive shall be entitled to all previously earned and accrued
but unpaid Base Salary up to the date of such termination and
severance pay in an amount equal to one year of Base Salary.
Such severance payments will be made in equal installments over a
one-year period, payable on the dates on which the
Executive’s Base Salary would have otherwise been paid if
Executive’s employment had continued. All payments
shall be subject to deductions for customary withholdings,
including, without limitation, federal and state withholding taxes
and social security taxes.
(ii)
Within Twelve Months After Change
of Control .
Notwithstanding the foregoing, if the Executive is terminated by
the Company without Cause within twelve months after a Change of
Control (including, without limitation, any termination which is a
direct result of the Company’s election to terminate the
Executive’s employment without Cause at the end of the
Initial Term or any Renewal Period), the Executive shall be
entitled to all previously earned and accrued but unpaid Base
Salary up to the date of such termination and severance pay in an
amount equal to two (2) years of Base Salary. Such
severance payment will be made in a lump sum on the date that is 90
days after the date of termination of employment. All
payments shall be subject to deductions for customary withholdings,
including, without limitation, federal and state withholding taxes
and social security taxes.
(d)
Termination by
Executive .
(i)
Good Reason Within Twelve Months
After Change of Control . If Executive terminates his employment
for Good Reason within twelve (12) months after a Change of
Control, Executive shall notify Company in writing if he believes
the termination is for Good Reason. Executive shall set forth
in reasonable detail why Executive believes Good Reason
exists. If such termination is for Good Reason, Executive
shall be entitled to all previously earned and accrued but unpaid
Base Salary up to the date of such termination and severance pay in
an amount equal to two (2) years of Base Salary. Such
severance payment will be made in a lump sum
