BADGER PAPER MILLS, INC.
RONALD E. SWANSON EMPLOYMENT AGREEMENT
This Agreement is entered into on April 30, 2003, between BADGER PAPER
MILLS, INC., a Wisconsin Corporation located at 200 West Front Street, Peshtigo,
Wisconsin ("Badger") and RONALD E. SWANSON, an adult resident of Wisconsin
Rapids, WI ("Swanson").
1. Engagement. Badger shall employ Swanson as President and Chief
Executive Officer effective May 1, 2003. Swanson accepts such
employment in accordance with the terms and conditions of this
Agreement.
2. Duties. Swanson shall be the President and Chief Executive Officer of
Badger and agrees to devote his full time, attention and best efforts
to the performance of this employment. Swanson's duties of employment
shall include such additional executive duties on behalf of Badger and
operations of a character in keeping with Swanson's position as
President and Chief Executive Officer of the company as may from time
to time by designated by Badger's Board of Directors. As President and
Chief Executive Officer of Badger, Swanson shall be in charge of the
operations of the company and shall have full authority and
responsibility, subject to the general direction and control of the
Board of Directors, for formulating Badger's polices and administering
its affairs in all respects, subject to the provisions contained in
this Agreement.
3. Term of Employment. Swanson's employment shall commence on May 1, 2003
and continue for a term of three (3) years, until April 30, 2006.
Swanson's employment shall be automatically renewed for a period of
two (2) years (until April 30, 2008) unless either party gives written
notice of non-renewal to the other at least six (6) months prior to
the end of the initial three (3) year term (written notice of
non-renewal provided no later than November 1, 2007).
4. Compensation.
A. Swanson shall be paid annual base compensation of $250,000.00.
For 2003, Swanson shall receive a salary of $166,650.00. Swanson
shall be eligible to receive bonus compensation calculated as a
percentage of Pretax Income as described below. For 2003, Swanson
shall receive a bonus which shall be calculated based on Pretax
Income starting May 1, 2003, and shall not be based on Pretax
Income of January through April 2003. "Pretax income" shall be
the income shown on Badger's books determined in accordance with
generally accepted accounting principles and practices utilized
by Badger's independent public accountant or,
such other firm of independent public accountants as may be
determined from time to time. Pretax Income shall be calculated
before payment of federal and state income taxes and before
allowance for the bonus payment calculated pursuant to this
Agreement. However, Pretax Income shall not include income from
extraordinary items as determined by generally accepted
accounting principles.
B. Swanson shall be paid, as bonus compensation, the following
amounts:
Bonus Payment Pretax Income
------------- -------------
3% Of $0.00 - 1,000,000.00
+ 5% Of $1,000,001.00 - $3,000,000.00
+ 6% Of $3,000,001.00 and over
For example, if Badger has $5,000,000.00 of Pretax Income in a year, Swanson's
bonus shall be $250,000.00 (3% yields $30,000, 5% yields $100,000, 6% yields
$120,000.00 = $250,000.00 bonus).
The bonus shall be calculated and paid on the basis of audited results.
Historically, audited results for a calendar year are available by March 31 of
the following year.
5. Benefits. Swanson shall also receive the following benefits:
A. Participation in Badger's comprehensive medical and dental
insurance plan. The terms and conditions of the plan shall be
provided under separate cover.
B. Participation in Badger's profit sharing and 401(k) plan. The
terms and conditions of the plan shall be provided under separate
cover.
C. Participation in a Qualified Stock Option Plan for Badger stock.
Badger, (through the 1998 and/or 2002 Stock Option Plan) shall
grant Swanson an option to purchase up to fifty thousand (50,000)
shares of Badger stock at a price equivalent to the averaged bid
and ask price for the five trading days immediately prior to May
1, 2003. This option to purchase Badger shares shall vest 33.3%
upon the third anniversary of Swanson's employment with Badger
(May 1, 2006); 33.3% upon the fourth anniversary of Swanson's
employment with Badger (May 1, 2007); and 33.4% upon the fifth
anniversary of Swanson's employment with Badger, (May 1,2008).
Subscriptions shall be granted for a Ten (10) year term expiring
on April 30, 2013 and shall generally be subject to the terms and
conditions of the 1998 and/or 2002 Stock Option Plan. The Board
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of Directors, at its discretion, may issue additional options to
Swanson in the future.
D. Three weeks of paid vacation in 2003. Six weeks of paid vacation
each calendar year thereafter. Paid holiday vacation shall be
paid pursuant to Badger policy.
E. Subject to underwriting requirements, Swanson shall be provided
life insurance pursuant to Badger's group Term life insurance
plan in an amount equivalent to two times Swanson's base salary
($500,000.00).
F. Short term and long term disability insurance. The terms and
conditions of the coverage shall be provided under separate
cover.
G. Car allowance of $1,100.00 per month.
H. Reimbursement for relocation expenses from Wisconsin Rapids, WI
to Northeastern Wisconsin, up to an amount of $25,000. Badger
will reimburse Swanson for the following, which may be taxable to
him:
(i) Reasonable expenses incurred in moving furniture, normal
household goods and personal belongings.
(ii) Reasonable expenses while house hunting, including trips to
the Peshtigo, Wisconsin area with spouse.
(iii) Reasonable temporary living expenses incurred in
Wisconsin/Michigan while awaiting occupancy of a primary
residence.
(iv) Reasonable meal expenses.
6. Termination of Employment.
A. At any time during Swanson's employment, either party may
terminate his employment by providing 30 days written notice.
B. Badger may terminate Swanson's employment without notice for
Cause, defined as:
(i) Swanson's conviction or guilty plea to an offense involving
fraud, embezzlement, theft, dishonesty or other criminal
misconduct against Badger;
(ii) Swanson's willful, wanton or grossly negligent misconduct in
the course of his employment;
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(iii) Swanson's substantial and material breach of the Agreement.
If Badger terminates Swanson for Cause, Swanson shall not be entitled
to any severance pay.
C.
(i) If Badger terminates Swanson without Cause, Swanson shall be
entitled to severance pay equivalent to 12 months base
salary as of the date of termination, payable in twelve (12)
equal monthly installments. If Swanson is terminated as a
result of a Change of Control of Badger, defined as a sale
or merger in which Badger does not survive as the acquiring
entity, a transfer of more than 50% of Badger's common stock
in a single transaction or series of related transactions
and/or the sale of all or substantially all of Badger's
assets in a single transaction or series of related
transactions, Swanson shall be entitled to severance pay
equivalent to 12 months base salary as of the date of
termination. If Swanson's employment with Badger, or its
successor, continues after a Change of Control at a base
compensation less than his base compensation pursuant to
this Agreement, Badger shall pay Swanson the difference
between his base compensation pursuant to this Agreement,
and his compensation for employment with Badger or its
successor following the Change of Control for a period of
twelve (12) months, payable in equal monthly installments.
(ii) if Badger terminates Swanson without Cause prior to April
30, 2006, Swanson shall be entitled to continuation of
health insurance for the period of time he was employed but
no less than one (1) year. If Swanson continues to be
employed after three (3) years and is terminated without
Cause, Swanson shall be entitled to health insurance to age
sixty-five (65). Health insurance shall be similar to a plan
provided to other retired executive employees. The health
insurance provision shall also include his wife. Health
insurance shall not be provided to Swanson upon termination
if similar or better health insurance is available from a
subsequent employer.
7. Trade Secrets and Confidential Information. During the term of this
Agreement, Swanson may have access to, and become familiar with,
various trade secrets and confidential information belonging to Badger
including, but not limited to, research and development, product
formulae and processes, sales methods, pricing and costs, customer
lists, marketing
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plans and information, and strategic business plans. Swanson
acknowledges that such confidential information and trade secrets are
owned and shall be continued to be owned solely by Badger. During the
term of his employment and for three (3) years after employment
terminates for any reason, regardless of whether termination is
initiated by Swanson or Badger, Swanson agrees not to use,
communicate, reveal or otherwise make available such information for
any purpose whatsoever, or to divulge such information to any person,
partnership, corporation or entity other than Badger or persons
expressly designated by Badger, unless compelled to disclose by valid
judicial process. Upon termination of Swanson's employment, for any
reason whatsoever, Swanson shall return to Badger all originals and
copies of Badger's books, records, documents, customer lists or other
documents, in his possession.
8. Restrictive Covenant.
A. For a period of two (2) years after this Agreement has been
terminated for any reason, regardless of whether termination is
initiated by Swanson or Badger, or for a period of time equal to
the length of Swanson's employment if such tenure is less than
two (2) years, Swanson will not, directly or indirectly, solicit
any person, company, firm or corporation who is or was a customer
at Badger during a period of three (3) years prior to the
termination of Swanson's employment and who is or was one of
Badger's top fifteen (15) customers by dollar volume as measured
over a calendar year period. Swanson agrees not to solicit such
customers on behalf of himself or any other person, firm, company
or corporation.
B. If the scope or enforceability of any provision of this
Restrictive Covenant is disputed at any time, a court or other
trier of fact may modify and enforce the Covenant to the extent
that it believes the Covenant is reasonable under circumstances
existing at that time.
C. Swanson acknowledges that compliance with sections 7 and 8 is
necessary to protect Badger's business and good will and that
breach of these sections will irreparably and continually damage
Badger. Further, an award of money damages will not be adequate
to remedy such harm. Consequently, in the event of Swanson's
breach of any of these covenants, Badger shall be entitled to
both a preliminary or permanent injunction in order to prevent
continuation of such harm; and money damages to include, without
limitation, all reasonable costs and attorneys' fees incurred by
Badger and enforcing the provisions of this agreement. The
foregoing shall not prohibit employer from electing and pursuing
any other remedy. If Swanson violates sections 7 or 8, Badger
shall be entitled to recover, as a portion of its damages, but
not as a
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full measure of damages, any and all severance payments made to
Swanson under this Agreement whether already paid, or owing.
9. Assignment. Neither party shall have the right to assign any rights or
obligations under this Agreement without the prior written approval of
the other party.
10. Severability. If any provision of Agreement is adjudged by any court
to void or unenforceable in whole or in part, the adjudication shall
not effect the validity of the remainder of the Agreement.
11. Applicability. This Agreement shall be binding upon, and shall inure
to the benefit of the parties and respective successors, heirs,
assigns, executors, administrators and personal representatives.
12. Notice. Any notice to be given to a party shall be in writing,
deposited in the U.S. Mail, first class postage pre-paid, addressed to
Badger at 200 West Front Street, Peshtigo, Wisconsin 54157 and to
Swanson at such address as he shall designate from time to time.
13. Complete Understanding. This Agreement constitutes the complete and
entire understanding between the parties, all prior representations or
agreements having been merged into this Agreement.
14. Modification. No alteration of or modification to any of the
provisions of this Agreement shall be valid unless made in writing and
signed by both parties.
15. Governing Law. This Agreement shall be subject to and governed by the
laws of the State of Wisconsin. Furthermore, any dispute between the
parties arising from this Agreement or the parties business
relationship shall be venued in the State of Wisconsin.
IN WITNESS WHEREAS, the parties have executed this Agreement on the date
set forth above.
BADGER PAPER MILLS, INC.
By: /s/ Harold J. Bergman
-------------------------------------
Harold J. Bergman
Authorized Board Member
By: /s/ Ronald E. Swanson
-------------------------------------
Ronald E. Swanson
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