Exhibit 10.1
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
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1.1
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Definitions
. As used herein, the following terms shall have
the following meanings.
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(a)
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“Board” means the board
of directors of the Company.
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(b)
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“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.
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(c)
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“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.
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(d)
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“Code” means the
Internal Revenue Code of 1986, as amended.
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(e)
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“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.
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(f)
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“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.
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ARTICLE II
Employment
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2.1
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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”).
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2.2
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Position and
Duties .
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(a)
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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.
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(b)
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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.
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2.3
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Base Salary, Bonus and
Benefits .
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(a)
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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
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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.
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(b)
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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.
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(c)
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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.
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(d)
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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.
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(a)
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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”).
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(b)
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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
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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.
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(c)
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Termination Without
Cause .
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(i)
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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.
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(ii)
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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.
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(d)
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Termination by
Executive .
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(i)
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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
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