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 XXXXXXX X. XXXX ("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.
(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 notice (the "Redemption
Notice") to the Company. The Redemption Notice will set forth the number of
shares of Employee Stock to be sold to the Company and the aggregate
consideration to be paid for such shares.
(d) The closing of the transactions contemplated by this Section
5 shall take place on a date mutually agreed to by the Company and Employee,
which date shall not be more than 90 days after the delivery of the Repurchase
Notice or the Redemption Notice, as the case may be. The Company will pay for
the Employee Stock to be purchased pursuant to the
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Repurchase Option or the Redemption Option by cashier's or certified check, or
by wire transfer. The Company shall receive customary representations and
warranties from each seller regarding the sale of the Employee Stock, including
but not limited to the representation that such seller has good and marketable
title to the Employee Stock to be transferred free and clear of all liens,
claims and other encumbrances.
6. EMPLOYEE COVENANTS
(a) Restrictions on Competition. Employee covenants and agrees
that during the period of Employee's employment hereunder and for a period
ending on the earlier of (i) the second (2nd) anniversary of the date of
termination of Employee's employment with the Company, including without
limitation termination by the Company for Cause or without Cause, and (ii) the
last day on which Employee is entitled to receive severance payments pursuant to
Section 4(c), Employee shall not, in the United States of America, or in any
other country of the world in which the Company or any of its subsidiaries has
done business at any time during the last two (2) years prior to termination of
Employee's employment with the Company, engage, directly or indirectly, whether
as principal or as agent, officer, director, employee, consultant, shareholder,
or otherwise, alone or in association with any other person, corporation or
other entity, in any Competing Business. For purposes of this Agreement, the
term "Competing Business" shall mean any person, corporation or other entity
which sells or attempts to sell any products or services which are the same as
or similar to the products and services (a) sold by the Company or any of its
subsidiaries at any time and from time to time during the last two (2) years
prior to the termination of Employee's employment hereunder or (b) being
developed by the Company or any of its subsidiaries during the period of
Employee's employment with the Company.
(b) Non-Solicitation of Customers and Suppliers. Employee agrees
that during his employment with the Company he shall not, directly or
indirectly, solicit the trade of, or trade with, any customer, prospective
customer or supplier of the Company or any of its subsidiaries for any business
propose other than for the benefit of the Company or such subsidiaries. Employee
further agrees that for two (2) years following termination of his employment
with the Company, including without limitation termination by the Company for
Cause or without Cause, Employee shall not, directly or indirectly, solicit for
any Competing Business the trade of, or trade with, any customers or suppliers,
or prospective customers or suppliers, of the Company or any of its
subsidiaries.
(c) Non-Solicitation of Employees. Employee agrees that, during
his employment with the Company and for two (2) years following termination of
Employee's employment with the Company, including without limitation termination
by the Company for Cause or without Cause, Employee shall not, directly or
indirectly, solicit, hire or induce, or attempt to solicit, hire or induce, any
employee of the Company or any of its subsidiaries to leave the Company or any
of its subsidiaries for any reason whatsoever or hire any employee of the
Company or any of its subsidiaries.
(d) Remedy for Breach. Notwithstanding anything in this Agreement
to the contrary, in the event that Employee shall breach this Section 6,
Employee shall
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immediately forfeit all rights to receive any payments to which Employee may be
entitled under Section 4 and the Company shall have no further obligations
thereunder.
7. CONFIDENTIAL INFORMATION. Employee acknowledges that any use of
the Company's Confidential Information (as hereinafter defined) by the Employee
other than for the sole benefit of the Company would be wrongful and cause
irreparable harm to the Company. Accordingly, Employee shall not, at any time
during or subsequent to his employment by the Company, without the express
written consent of Company, publish, disclose or divulge to any person, firm or
corporation, or use, directly or indirectly, for his own benefit or for the
benefit of any person, firm or corporation, for use other than for the Company,
any property, trade secrets or Confidential Information of the Company or its
affiliates. "Confidential Information" means and includes all information known
or used by the Company in its business which is not otherwise properly, legally
and generally known in the industry, including, but not limited to, all data,
reports, interpretations, forecasts, records, statements (written or oral) and
documents of any kind relating to the Company's costs and financial information,
manufacturing methods or processes, market studies, products, existing and
potential customers, expansion plans, acquisition targets, pricing methods and
strategies, new product plans and sources of supply. In addition, all other
information disclosed to the Employee or which the Employee shall obtain during
such employment with the Company which the Employee has a reasonable basis to
believe is confidential, or which the Employee has a reasonable basis to believe
the Company treats as confidential, shall be presumed to be Confidential
Information.
8. SPECIAL RELIEF. The Employee acknowledges that the restrictions
contained in Sections 6 and 7 are reasonable and necessary to protect the
business and interests of the Company and that any violation of these
restrictions will cause substantial and irreparable injury to the Company.
Therefore, notwithstanding the provisions of Section 18 below, the Employee
agrees that the Company is entitled, in addition to any other remedies, to
preliminary and permanent injunctive relief to secure specific performance, and
to prevent a breach or contemplated breach of this Agreement.
9. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding between the parties relating to this matter and there are no
covenants, conditions, representations, or agreements, oral or written, or any
nature whatsoever, other than those herein contained.
10. AMENDMENTS. No amendment, alteration, or modification of this
Agreement shall be binding upon the parties hereto unless said amendment,
alteration, or modification is in writing and signed by all parties hereto.
11. SEVERABILITY. The provisions of this Agreement shall be deemed
severable, and if any part of any provision is held illegal, void or invalid
under applicable law such provision may be changed to the extent reasonably
necessary to make the provision, as so changed, legal, valid and binding. If any
provision of this Agreement is held illegal, void or invalid in its entirety,
the remaining provisions of this Agreement shall not in any way be affected or
impaired but shall remain binding in accordance with their terms. If, moreover,
any
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one or more of the provisions contained in this Agreement shall, for any reason,
be held to be excessively broad as to time, duration, geographical scope,
activity or subject, it shall be construed by limiting and reducing it so as to
be enforceable to the fullest extent compatible with the applicable law as it
shall then appear.
12. WAIVER. The waiver of a breach of any term of this Agreement by
any of the parties hereto shall not operate or be construed as a waiver by such
party of the breach of any other term of this Agreement or as a waiver of a
subsequent breach of the same term of this Agreement.
13. ASSIGNMENT. Employee shall not assign, transfer, or convey this
Agreement, or in any way encumber the compensation or other benefits payable to
him hereunder, except with the prior written consent of Company. Company may
assign this Agreement and its rights hereunder in whole, but not in part, to any
entity with or into which it may transfer all or substantially all of its assets
(and, in such event, the term "Company" as used herein shall mean and refer to
such successor-in-interest).
14. NOTICES. All notices required or permitted to be given under
this Agreement shall be in writing and shall be delivered personally or sent by
facsimile, overnight delivery, or registered mail, return receipt requested, to
the parties at the addresses set forth below or at such other addresses as
either party may designate to the other in writing:
if to the Employee:
Xx. Xxxxxxx X. Xxxx
[insert contact information]
if to the Company:
Orchids Paper Products Company
Xxxxx 0, Xxx 00-0
Xxxxx, XX 00000
Att: Chairman of the Board of Directors
Notices delivered personally or by overnight delivery shall be effective upon
delivery. Notices properly addressed and delivered by mail, return receipt
requested, shall be effective upon deposit with the United States Postal
Service. Notices sent by facsimile shall be effective upon confirmation of
transmission. Notices sent by facsimile should be prominently marked "URGENT -
DELIVER IMMEDIATELY" or with similar language bringing attention to the
importance of the transmission.
15. BINDING EFFECT. This Agreement shall be binding on the parties
hereto and on their respective heirs, administrators, executors, successors, and
permitted assigns.
16. COUNTERPARTS. This Agreement may be executed in one or more
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counterparts, each of which shall constitute an original, but all of which
together shall constitute but a single document.
17. GOVERNING LAW. This Agreement is being executed in the State of
Oklahoma, and shall be governed by and construed in accordance with the laws of
the State of Oklahoma, except that if any provision of this Agreement would be
illegal, void, invalid or unenforceable under such laws in connection with a
suit or proceeding validly instituted in another jurisdiction, then the laws of
such other jurisdiction shall govern insofar as is necessary to sustain the
validity or enforceability of the terms of this Agreement. Any action or
proceedings in connection with this Agreement may be brought in a court of
record of the State of Oklahoma, or in any United States District Court in the
State of Oklahoma, and the parties executing this Agreement hereby consent to be
subject to the personal jurisdiction of such courts.
18. ARBITRATION. Each party agrees not to bring suit against the
other party in the courts of any jurisdiction in connection with any dispute
which might be the subject of a civil action arising from the interpretation or
application of this Agreement. Each party agrees that any such dispute shall be
resolved by submission to compulsory commercial arbitration to be held in Tulsa,
Oklahoma according to the rules of the American Arbitration Association. The
parties agree to be bound by the decision of the arbitration and that a judgment
of any court of competent jurisdiction may be rendered upon the award made
pursuant to said submission to arbitration.
19. INDEMNIFICATION OF EMPLOYEE. Company shall indemnify Employee to
the maximum extent permitted under applicable law for any liability incurred by
Employee in connection with any advice given or services performed in good faith
pursuant to this Agreement.
20. CONTINUING OBLIGATIONS. The following provisions of this
Agreement shall continue and shall survive the termination of Employee's
employment under this Agreement and the Term: Sections 6, 7, 8,17, 18 and 19.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
EMPLOYEE:
/s/ Xxxxxxx X. Xxxx
------------------------------
Xxxxxxx X. Xxxx
ORCHIDS PAPER PRODUCTS COMPANY
By: __________________________
Name:
Title:
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