Exhibit 10.11

 

LETTER OF AGREEMENT

 

BLUE RIDGE PAPER PRODUCTS INC.

 

As of March 21, 2005

 

Phillip E. Bowen

VP & General Manager/Packaging

779 White Oak Road

Waynesville, North Carolina 28786

 

Dear Phillip:

 

This letter confirms the terms and conditions of your continued employment as VP
& General Manager/Packaging of Blue Ridge Paper Products Inc. (the “Company”):

 

1.                                       Position.  You are employed as VP &
General Manager/Packaging of the Company.  In that capacity, you report to the
President and Chief Executive Officer (“CEO”) of the Company.  You agree that
you shall continue to devote your full business time and efforts to promote the
interests of the Company.

 

2.                                       Term.  The term of your continued
employment pursuant to this letter agreement commenced on March [21], 2005 (the
“Commencement Date”) and shall continue through and including the earlier of (i)
the end of the Term (as hereinafter defined)  or (ii) the date on which your
employment is terminated pursuant to this letter agreement.  As used herein, the
“Term” shall mean the period commencing on the Commencement Date and ending on
the 3rd anniversary of the Commencement Date; provided, however, that the Term
shall be automatically renewed for successive additional one-year periods unless
either party shall give the other party at least thirty (30) days’ prior written
notice of non-renewal before the end of the then-current period.

 

3.                                       Duties.  You shall have such duties and
responsibilities as are consistent with the role of VP & General
Manager/Packaging, and such other duties and responsibilities as the CEO or
Board of Directors of the Company (the “Board”) may reasonably assign you.

 

4.                                       Salary.  The Company pays you a base
salary, payable in accordance with the normal payment procedures of the Company
and subject to such withholdings and other normal employee deductions as may be
required by law or elected by you in accordance with the Company’s benefit
plans, at a current annual rate of $185,000 (such salary, as the same may be
changed from time to time in the sole discretion of the Board, your “Salary”). 
You also are eligible to receive an annual cash bonus payment in accordance with
the Blue Ridge Paper Products Performance Incentive Plan as the same may be in
effect from time to time in the sole discretion of the Board.

 

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5.                                       Employee Benefit Programs.  You are
entitled to participate during your term of employment in such pension, life
insurance, health, disability and major medical insurance plans, and in such
other employee benefit plans and programs, for the benefit of the employees of
the Company, as may be maintained from time to time during the term, in each
case, subject to the terms and provisions of such plans or programs.  In
addition, the Company shall make annual contributions to your account under the
Blue Ridge Paper Products Employee Stock Ownership Plan maintained by the parent
company of the Company, Blue Ridge Holding Corp., in accordance with the terms
and conditions thereof.  You will also continue to be eligible to participate in
the Restricted Stock Unit Plan maintained by Blue Ridge Holding Corp. for the
benefit of certain executive officers of the Company in accordance with the
terms and conditions thereof.

 

6.                                       Vacation.  You are currently entitled
to six weeks of paid vacation per annum during the term of your employment in
accordance with Company policy.  Vacation scheduling will be on a mutually
agreeable basis, in accordance with the Company’s business needs.

 

7.                                       Termination for Cause.  The Company may
terminate your employment at any time for “Cause,” as defined below upon written
notice to you to take effect on the date specified in such notice.  If your
employment is terminated by the Company for Cause, the Company will pay to you
any salary or other compensation earned but not paid to you prior to the date of
such termination.  Upon such termination, the Company shall have no obligation
to pay you severance of any kind, nor shall the Company have any further
obligation to pay you salary, bonus or benefits.

 

For purposes of this letter agreement, “Cause” shall mean:  (i) the willful or
negligent failure or refusal by you to perform your duties hereunder; provided
that the Company shall provide you with at least 15 days’ prior written notice
of such failure or refusal and an opportunity to cure the same; (ii) the
commission by you of any material act of dishonesty or breach of trust in
connection with the performance of your duties hereunder; (iii) your being
convicted of, or pleading guilty or no contest to, any felony or any lesser
crime having as its predicate element fraud, dishonesty or misappropriation; or
(iv) a termination due to breach of your obligations under paragraphs 12, 13,
14, 15 or 16 of this letter agreement, in each case, as determined in good faith
by the Board.

 

8.                                       Termination Without Cause.  The Company
may terminate your employment at any time without Cause upon written notice to
you to take effect on the date specified in such notice.  If your employment is
terminated by the Company without Cause, the Company shall pay to you the
equivalent of your average annual compensation (based on the last five years’
average) and benefits for a period of one (1) year from the date of your
termination, in accordance with the normal pay practices of the Company;
provided, however, that any obligations of the Company to you pursuant to this
paragraph shall terminate upon any matter constituting Cause becoming known to
the Company subsequent to such termination.  Except as set forth in this
paragraph, upon such a termination, neither you nor the Company shall have any
further rights, obligations or claims against the other except as specifically
provided under this letter agreement or imposed by law.

 

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9.                                       Termination With Good Reason.  You may
voluntarily terminate your employment at any time with “Good Reason,” as defined
below, upon written notice to take effect on the date specified in such notice. 
In the event of any such termination under this paragraph, the Company shall pay
to you the equivalent of your average annual compensation (based on the last
five years’ average) and benefits for a period of one (1) year from the date of
your termination, in accordance with the normal pay practices of the Company;
provided, however, that any obligations of the Company to you pursuant to this
paragraph shall terminate upon any matter constituting Cause becoming known to
the Company subsequent to such termination.  Except as set forth in this
paragraph, upon such a termination, neither you nor the Company shall have any
further rights, obligations or claims against the other except as specifically
provided under this letter agreement or imposed by law.

 

For purposes of this letter agreement, “Good Reason” shall mean the Company,
without your consent, (i) assigns to you duties inconsistent with your position,
title, authority or duties that results in a substantial diminution of such
position, title, authority or duties; provided that you shall provide the
Company with at least 15 days’ prior written notice of such diminution and the
Company shall not have remedied such diminution within fifteen days of receipt
of such notice; or (ii) the Company materially breaches this letter agreement
and fails to cure such breach within 15 days of written notice thereof.

 

10.                                 Termination Following a Change of Control. 
Anything contained herein to the contrary notwithstanding, if, within 12 months
of a Change of Control, as defined below, your employment is terminated for any
reason or no reason by the Company (including any such termination for “Cause”)
or for any reason or no reason by you (including any such termination without
“Good Reason”), the Company shall pay to you the equivalent of your average
annual compensation (based on the last five year’s average) and benefits for a
period of one (1) year from the date of your termination, in accordance with the
normal pay practices of the Company, provided, however, that any obligations of
the Company to you pursuant to this paragraph shall be satisfied by the payment
to you of such amounts pursuant to paragraph 8 or 9 hereof.

 

For purposes of this letter agreement, “Change of Control” means the occurrence
of one or more of the following events:  (i) any direct or indirect sale, lease,
transfer, conveyance or other disposition (other than by way of merger or
consolidation), in one transaction or a series of related transactions, of all
or substantially all of the assets of the Company to any person, other than a
transaction in which the transferee is controlled by one or more Permitted
Holders (as hereinafter defined); (ii) the Company consolidates or mergers with
or into any Person other than a transaction in which the surviving person is
controlled by one or more Permitted Holders or any such transaction where the
voting stock of the Company outstanding immediately prior to such transaction is
converted or exchanged for voting stock of the surviving person constituting a
majority of the outstanding shares of such voting stock of such surviving person
and one or more Permitted Holders have the right to elect a majority of the
board of directors of such surviving person; (iii) the approval by the holders
of capital stock of the Company of any plan or proposal for the liquidation or
dissolution of the Company; or (iv) the Permitted Holders, or any one ore more
of them, cease for any reason to be the beneficial owner, directly or
indirectly, in the aggregate of at least a majority of the total voting power of
the voting stock of the Company (or if the voting stock of the Company is wholly
owned by a parent holding company, the voting

 

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stock of such parent holding company).  For purposes of this letter agreement,
“Permitted Holders” shall mean and include each of the Blue Ridge Paper Products
Employee Stock Ownership Plan, KPS Investors. LLC, KPS Special Situations Fund,
L.P., KPS Supplemental Fund, L.P. and their respective affiliates.

 

11.                                 Termination Without Good Reason.  You may
voluntarily terminate your employment without Good Reason upon providing at
least thirty (30) days’ written notice to the Company, or such shorter period as
the Company may allow.  If your employment is terminated pursuant to this
paragraph, the Company will pay to you any salary or other compensation earned
but not paid to you prior to the date of such termination.  Upon such
termination, the Company shall have no obligation to pay you severance of any
kind, nor shall the Company have any further obligation to pay you salary, bonus
or benefits.

 

12.                                 Non-Competition.  By signing this letter
agreement, you acknowledge and agree that the services you perform for the
Company are services that are unique and extraordinary and that, by reason of
your employment, you will acquire and have access to proprietary and
Confidential Information, as defined herein below, and trade secrets concerning
the Company’s operations, future plans and methods of doing business and those
of the Company’s affiliates.  Accordingly, you agree that:

 

(a)                                  In connection with any termination of your
employment by you pursuant to the terms of this letter agreement, whether with
or without Good Reason, the written notice of such termination shall include, to
the extent available, the name of your new employer and a description of your
new position, duties and responsibilities.

 

(b)                                 During the term of your employment and
during the Restrictive Period, as defined below, you will not, absent prior
written consent from the Company, directly or indirectly, engage in a
Competitive Business Activity in the United States.  The term “Competitive
Business Activity” shall mean:

 

(i)                         engaging in or managing or directing persons
engaging in the manufacture, sale or distribution of liquid packaging board,
including gable top cartons and/or uncoated freesheet paper for envelopes,
and/or any other product that the Company or any “affiliate” (as defined below)
manufactures, sells or distributes (“Competing Business”), whether independently
or as an employee, agent, consultant, advisor, independent contractor,
proprietor, partner, officer, director or otherwise;

 

(ii)                      acquiring or having an ownership interest in an entity
that derives more than 10% of its gross revenue from any Competing Business,
except for ownership of 1% or less of any entity whose securities are freely
tradable on an established market; or

 

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(ii)                      participating in the financing, operation, management
or control of any firm, partnership, corporation, entity or business described
in subparagraph (ii) immediately above.

 

The term “Restrictive Period” shall mean the period beginning upon a termination
of your employment with the Company and ending on the date which is (i) in the
event that your employment is terminated pursuant to paragraphs 7 or 11, the
second anniversary of such termination or (ii) in the event that your employment
is terminated pursuant to paragraphs 8, 9 or 10, the first anniversary of such
termination.

 

13.                                 Non-Solicitation.  During the term of your
employment and during the Restrictive Period, you will not, either for your
benefit or for the benefit of any other person or entity, directly or
indirectly, solicit any contractor or employee of the Company or its affiliates
to terminate his or her employment or other relationship with the Company or it
affiliates.

 

14.                                 Non-Disclosure of Confidential Information. 
By signing this letter agreement, you recognize that your services as an
employee of the Company are unique services, and that by reason of your
employment you will have access to and acquire proprietary and other
confidential information and trade secrets concerning operations, future plans
and methods of doing business of the Company, its affiliates and their
respective clients.  Accordingly, you hereby covenant that you will not at any
time during your employment by the Company or any time thereafter reveal or
divulge to any person, firm, corporation or other business entity or use for
your own personal or business purposes or for the personal or business purposes
of any other person (other than the Company) any trade secrets or confidential
information or knowledge relating to the business or businesses of the Company,
its affiliates or their respective clients, including, without limiting the
generality of the foregoing, any information or knowledge pertaining to
products, formulae or processes, and developments or improvements with respect
thereto, inventions, discoveries, trademark, patents, designs, sketches,
manufacturing, packaging, merchandising, advertising, distribution and sales
methods, sales and profits figures, budgeting materials, customer lists and
relationships between the Company and any of its customers, suppliers, ultimate
consumers or affiliates (collectively, “Confidential Information”). 
Notwithstanding the foregoing, Confidential Information shall not include
information that (i) was, or becomes through no breach of your obligations
hereunder, generally known to the public; or (ii) becomes known to you from
sources other than the Company under circumstances not involving any breach of
an agreement to which any such source is a party.  As used in this letter
agreement, the term “affiliate” means the Parent and each corporation or other
business entity at any time directly or indirectly controlled by the Parent, its
successors or assigns.  As used in this letter agreement, the term “client”
means any person, firm or corporation to whom goods, services or intellectual
property are actively being supplied by the Company or an affiliate for
compensation at the time you learn of such person’s, firm’s or corporation’s
Confidential Information, or to whom the Company or an affiliate is at such time
actively soliciting a business relationship to engage in such activities.  You
acknowledge that any materials or documents relating to the Company’s
Confidential Information, in existence or developed in the future, including all
copies thereof, are proprietary to the Company and shall, following the
termination of your employment, regardless of the circumstances thereof or
reasons therefor, remain the Company’s sole and exclusive property and that you
shall immediately return all such materials

 

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and documents including any copies thereof to the Company upon any termination
of your employment or upon any prior request.

 

15.                                 Customer and Supplier Solicitation.  During
the term of your employment and during the Restrictive Period, you shall not
divert, or attempt to divert any person, business or entity from doing business
with the Company, nor will you attempt to induce any such person, business or
entity to cease being a customer of or supplier to the Company.

 

16.                                 Non-Disparagement.  You will not, during
your employment with the Company or at any time thereafter, publicly disparage
the Company, its affiliates and shareholders or any of their officers,
directors, employees or agents, other than in connection with disclosures
required by applicable law, regulation or order of court or governmental agency.

 

17.                                 Remedy.  You hereby recognize and agree that
the Company would not have an adequate remedy at law or in equity for the breach
or threatened breach by you of any one or more of the covenants set forth in
paragraphs 12, 13, 14, 15 and 16 and agree that, in addition to such other
remedies as may be available to the Company, in law or in equity, the Company
may obtain an injunction or restraining order, without the posting of any bond
or security and without the proof of special damages, to enjoin you from the
breach or threatened breach of such covenants.  The restrictions set forth in
paragraphs 12, 13, 14, 15 and 16 are considered by you and the Company to be
reasonable for the purposes of protecting the business of the Company.  However,
if any such restriction is found by a court of competent jurisdiction to be
unenforceable because it is too broad, it is the intention of you and the
Company that such restriction shall be interpreted to be as broad as possible
consistent with allowing its enforceability.

 

18.                                 Arbitration: Costs, Fees and Expenses. 
Except for disputes with respect to paragraphs 12, 13, 14, 15 and 16 hereof, any
dispute respecting the meaning and intent of this letter agreement or any of its
terms and provisions shall be submitted to arbitration in Charlotte, North
Carolina before a single arbitrator in accordance with the Commercial Rules of
the American Arbitration Association then in effect, and the arbitration
determination resulting from any such submission shall be final and binding upon
the parties hereto.  All costs, fees and expenses associated with any dispute
respecting the meaning and intent of this letter agreement or any of its terms
and provisions shall be borne by the party unsuccessful in such dispute.

 

19.                                 Survival of Obligations.  You agree that
your obligations under paragraphs 12, 13, 14, 15 and 16 will survive any
termination of your employment.

 

20.                                 Amendment.  Following your execution of this
letter agreement, no provision thereof may be amended unless such amendment is
agreed to in writing and signed by you and an authorized officer of the Company.

 

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Our respective signatures below indicate our mutual assent to the terms of this
letter agreement.

 

 

Very truly yours,

 

 

 

Blue Ridge Paper Products Inc.

 

 

 

 

 

/s/ Richard A. Lozyniak

 

 

By:   Richard A. Lozyniak

 

Title:   President and CEO

 

 

 

 

Agreed to and accepted:

 

 

 

 

 

/s/ Phillip E. Bowen

 

 

Phillip E. Bowen

 

 

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