SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 1 0 - Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ______________
Commission File No. 0-795
BADGER PAPER MILLS, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-0143840
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 West Front Street
Peshtigo, Wisconsin 54157
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (715) 582-4551
Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such report(s), and (2) has been
subject to such filing requirements for the past 90 days.
X Yes. No.
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the last practicable date: As of June 30, 1998,
1,955,994.
<PAGE>
BADGER PAPER MILLS, INC.
INDEX
Pages
FINANCIAL INFORMATION
Condensed Consolidated Interim Statements of
Operations and Retained Earnings -
Quarter and Six Months Ended
June 30, 1998 and 1997 3
Condensed Consolidated Balance Sheets - June 30, 1998 and
December 31, 1997 4
Condensed Consolidated Statements of Cash Flows - Six Months
Ended June 30, 1998 and 1997 5
Notes to Condensed Consolidated Financial Statements 6-7
MANAGEMENT DISCUSSION AND ANALYSIS 7-8
OTHER INFORMATION
Submission of Matters to a Vote of
Security Holders 9
Exhibits and Reports on Form 8-K 9
SIGNATURES 10
<PAGE>
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF
OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
(Dollars in thousands, except per share data)
For Three Months For Six Months Ended
Ended June 30 June 30
1998 1997 1998 1997
Net Sales $17,462 $17,819 $35,722 $34,033
Cost of Sales 15,720 16,457 32,146 32,733
------- ------ ------ ------
Gross Margin 1,742 1,362 3,576 1,300
Selling and Administrative
Expenses 1,040 1,017 2,246 2,068
------- ------ ------ ------
Operating Income (Loss) 702 345 1,330 (768)
Other Income (Expense), Net 152 125 366 226
Interest Expense (305) (349) (615) (642)
Non Recurring Gain on Lodge
Sale 611 - 611 -
Non Recurring Executive
Termination Expense (286) - (286) -
------- ------ ------ ------
Income (Loss) Before Income
Taxes 874 121 1,406 (1,184)
Income Tax Expense (Benefit) 297 41 477 (403)
------- ------ ------ ------
Net Income (Loss) $577 $80 $929 $(781)
------- ------ ------ ------
Retained Earnings,
Beginning of Period 15,904 17,133 15,552 17,994
Cash Dividends - - -
------- ------ ------ ------
Retained Earnings, End of
Period 16,481 17,213 16,481 17,213
------- ------ ------ ------
Net Earnings (Loss) Per
Share $0.29 $0.04 $0.48 $(0.40)
Dividends Per Share 0 0 0 0
Average Shares Outstanding -
Basic 1,955,994 1,945,130 1,953,323 1,945,130
See Notes to Consolidated Financial Statements.
<PAGE>
BADGER PAPER MILLS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in thousands) June 30, December 31,
1998 1997
ASSETS:
Current Assets:
Cash & Cash Equivalents $974 $1,302
Certificates of Deposit 1,312 1,382
Marketable Securities 1,355 1,318
Accounts Receivable, Net 5,894 5,120
Deferred Income Taxes 1,291 1,291
Inventories 4,515 4,844
Refundable Income Taxes 385 385
Trade Credits 853 996
Other Current Assets 485 298
-------- ---------
Total Current Assets 17,064 16,936
Property, Plant, Equipment &
Timberlands 63,708 66,329
Less: Allowance for Depreciation &
Depletion (36,445) (37,042)
-------- ---------
Total Property, Plant, Equipment &
Timberlands, Net 27,263 29,287
Other Assets 2,120 2,133
-------- ---------
TOTAL ASSETS $46,447 $48,356
-------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Current Portion of Long-Term Debt $123 $123
Accounts Payable 4,051 4,313
Accrued Liabilities 3,877 4,308
-------- ---------
Total Current Liabilities 8,051 8,744
-------- ---------
Deferred Income Taxes 1,185 1,185
Long-Term Debt 18,266 20,394
Other Liabilities 1,539 1,589
-------- ---------
TOTAL LIABILITIES 29,041 31,912
-------- ---------
Stockholders' Equity:
Common Stock, No Par Value
4,000,000 Shares Authorized;
2,160,000 Shares Issued 2,700 2,700
Additional Paid-in Capital 195 190
Retrained Earnings 16,481 15,552
Less Treasury Shares at Cost:
204,006 Shares at 6/30/98 and 208,145
Shares at 12/31/97 (1,970) (1,998)
-------- -------
TOTAL STOCKHOLDERS' EQUITY 17,406 16,444
-------- -------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $46,447 $48,356
======== =======
See Notes to Consolidated Financial Statements
<PAGE>
BADGER PAPER MILLS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in thousands)
For Six Months Ended
June 30
1998 1997
Cash Flows from Operating
Activities:
Net Income (Loss) $929 $(781)
Adjustments to Reconcile to Net Cash
Provided By (Used in) Operating
Activities:
Depreciation 1,399 1,466
Gain on Sale of Lodge (611) -
Changes in Assets and Liabilities:
(Increase) Decrease in Accounts
Receivable, Net (774) (1,725)
(Increase) Decrease in
Inventories 329 (50)
(Decrease) in Accounts Payable (262) (1,239)
(Decrease) in Accrued (431) (993)
Liabilities
(Increase) Decrease in Other (81) 1,076
------- --------
Net Cash Provided by (Used in)
Operating Activities 498 (2,246)
------- --------
Cash Flows From Investing
Activities:
Additions to Property, Plant and
Equipment, Net (1,061) (2,575)
Purchase of Certificates of
Deposit (615) -
Proceeds from Sales of
Certificates of Deposit 685 -
Purchase of Marketable
Securities (263) -
Proceeds from Sales of
Marketable Securities 226 490
Proceeds from Refund of Advances
of Leased Assets 1,572 -
Proceeds on Sale of Lodge 725
Unrealized Gain On Marketable
Securities - 4
------- -------
Net Cash (Used in) Provided by 1,269 (2,081)
------- -------
Investing Activities
Cash Flows from Financing
Activities:
(Payments on) Long-Term Debt (28) (26)
Increase to (Decrease in)
Revolving Credit Borrowings (2,100) 3,400
Acquisition of Treasury Stock,
Net 33 -
------- -------
Net Cash (Used in) Provided by
Financing Activities (2,095) 3,374
------- -------
Net (Decrease) Increase in Cash and
Cash Equivalents (328) (953)
Cash and Cash Equivalents:
Beginning of Period 1,302 4,079
------- -------
End of Period 974 3,126
------- -------
See Note to Consolidated Financial Statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared
by Badger Paper Mills, Inc. (the "Company") pursuant to the rules and
regulations of the Securities and Exchange Commission ("SEC") and, in the
opinion of the Company, include all adjustments necessary for a fair
statement of results for each period shown. These adjustments were of a
normal recurring nature. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such SEC rules and regulations. The Company believes that the
disclosures made are adequate to make the information presented not
misleading. It is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto included in
the Company's latest annual report. Certain reclassifications have been
made to the 1997 financial statements to conform to the 1998 presentation.
B. INCOME TAXES
The provision for income tax expense or benefit has been computed
by applying an estimated annual effective tax rate. This rate was a 34%
expense for both the three months and six months periods ended June 30,
1998, resulting from the Company's operating profits during such periods.
For the three months ended June 30, 1997, the Company provided for a 34%
tax expense, resulting from the Company's operating profit. For the six
months ended June 30, 1997, the Company provided for a 34% tax benefit,
resulting from the Company's operating loss during such period.
C. EARNINGS PER SHARE
Earnings per share of common stock are based on weighted average
number of shares of common stock outstanding.
D. INVENTORIES
The major classes of inventories are as follows (in thousands):
June 30, December 31,
1998 1997
Raw materials $1,158 $1,281
Work in process and
finished stock 3,357 3,563
------ ------
$4,515 $4,844
====== ======
E. CONTINGENCIES
The Company operates in an industry which is subject to laws and
regulations at both federal and state levels relating to the protection of
the environment. The Company undergoes continued environmental testing
and analysis, and the precise cost of compliance with environmental
requirements has not been determined.
In addition, the Company is subject to various claims, the ultimate
outcomes of which management cannot predict. Management believes that the
outcomes will not have a material adverse effect on the Company's
consolidated financial position or results of operations.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
The Company reported net sales of $17,462,000 for the second quarter ended
June 31, 1998, which is down slightly from the $17,819,000 reported for
the same period in 1997. Total pounds of paper shipped for the second
quarter of 1998 decreased 5.9% compared to the same period in 1997. The
average selling price of the paper sold increased approximately 3.3% due
to a higher mix of specialty products.
Sales for the six months ended June 30, 1998, were $35,722,000 compared to
$34,033,000 for the same period a year ago. The increased revenue in 1998
is reflective of a 4% increase in shipping volume as well as a slight
increase in average selling prices.
Cost of sales decreased $737,000 or 4.5% to $15,720,000 for the second
quarter of 1998 compared to $16,457,000 for the same period a year
earlier. Year to date cost of sales were $32,146,000 for the six months
ended June 30, 1998, compared to $32,733,000 for the first six months of
1997. The decreased costs were the result of the restructuring of our
business in the first quarter of 1998 that reduced the Company's workforce
by approximately 71 employees.
Selling and administrative expenses increased $23,000 to $1,040,000 for
the second quarter of 1998 compared to $1,017,000 reported for the same
period in 1997. Year to date expenses increased $178,000 to $2,246,000
for 1998 from $2,068,000 for the first six months of 1997. The increase
in 1998 expenses was in part due to costs associated with market
development and consultants providing professional services relative to
our restructuring.
In the second quarter, the Company recorded a non-recurring capital gain
of $611,000 on the sale of the Company's offsite training facility.
Additionally, non-recurring executive termination expenses associated with
the resignations of the Company's former President Vice
President/Administration were also booked in the second quarter of 1998.
Liquidity and Capital Resources
As of June 30, 1998, the Company's capital resources for funding ongoing
operations and capital expenditures include $3,641,000 of cash and
marketable securities and a $12,000,000 Revolving Credit Facility.
Borrowing under the Revolving Credit Facility totaled $9,200,000 as of
June 30, 1998. The Revolving Credit Facility was amended on August 6,
1998 to extend the maturity date to July 1, 1999. The company believes it
has adequate capital resources to meet it's near-term capital and
operating needs.
The Company sold its off-site training facility in Athelstane, Wisconsin
for $725,000 in the second quarter 1998. The sale included the training
facility, a caretaker's residence and 443 acres of land. A $611,000
capital gain was booked because the facility was essentially fully
depreciated. This transaction is consistent with the Company's stated
strategy of reducing costs and redeploying its assets into strategic
investments.
Capital expenditures during the second quarter and the first six months of
1998 were $679,000 and $1,180,000, respectively, compared to $939,000 and
$3,399,000, respectively, during the same period in 1997. Major capital
projects in progress in 1998 include an air spray unit on the number one
paper machine, an automatic turn-up system on the number two paper
machine, the resurfacing of the Yankee dryer on the number one paper
machine and modifications to the number two paper machine associated with
the development of dye sublimation paper. A major portion of the 1997
capital expenditures was related to the new stock preparation addition and
a process computer on the number one paper machine.
Installation of an eight-color flexographic printing press was completed
in the second quarter 1998. The press is owned by General Electric
Capital Corporation (GE Capital) and leased by the Company under a nine-
year operating lease that commenced May 1, 1998. GE Capital reimbursed
the Company in May, 1998 for $1,572,000 advanced by the Company in
connection with the installation of the press.
The proceeds from the sale of the off-site training facility and the
flexographic press reimbursement were used to reduce the Revolving Credit
Facility.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) On Tuesday, May 12, 1998, at 10:00 a.m., the Annual Meeting of
Shareholders of Badger Paper Mills, Inc. was held at the Best
Western Riverfront Inn, 1821 Riverside Avenue, Marinette,
Wisconsin 54143.
(b) Two directors, whose terms expire at the 2001 Annual Meeting,
were elected at the May 12, 1998 Annual Meeting by a vote of
at least 1,368,249 shares "for", and at least 311,388 shares
withheld. The elected directors were Thomas J. Kuber and John
R. Peterson. The directors continuing in office were Mark D.
Burish and James L. Kemerling, whose terms expire at the
Annual Meeting in 1999, and Ralph D. Searles, whose term
expires at the Annual Meeting in 2000.
(c) The shareholders voted against a shareholder proposal to
establish a committee of directors for the purpose of engaging
an investment banking firm to facilitate and promote a sale or
merger of the Company. The vote tallied was 412,452 shares
"for", and 1,145,600 shares "against" such proposal, with
144,587 shares abstaining.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(4.1) Ninth Amendment and Waiver dated August 6, 1998.
(10.1) Employee Resignation and Release Agreement dated
as of March 12, 1998 between Badger Paper Mills,
Inc. And Claude L. Van Hefty.
(10.2) Employee Resignation and Release Agreement dated
as of March 12, 1998 between Badger Paper Mills,
Inc. And Miles L. Kresl, Jr.
(27) Financial data schedules
(b) Reports on Form 8-K:
None.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BADGER PAPER MILLS, INC.
(Registrant)
DATE: August 13, 1998 By /s/ Thomas W. Cosgrove
Thomas W. Cosgrove
President
(Chief Executive Officer)
DATE: August 13, 1998 By /s/ George J. Zimmerman
George J. Zimmerman
Treasurer
(Principal Financial Officer)
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
(4.1) Ninth Amendment and Waiver dated August 6, 1998.
(10.1) Employee Resignation and Release Agreement dated as of March 12,
1998 between Badger Paper Mills, Inc. And Claude L. Van Hefty.
(10.2) Employee Resignation and Release Agreement dated as of March 12,
1998 between Badger Paper Mills, Inc. And Miles L. Kresl, Jr.
(27) Financial data schedules
NINTH AMENDMENT TO CREDIT AGREEMENT
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois
Gentlemen:
The undersigned, BADGER PAPER MILLS, INC., a Wisconsin
corporation ("Badger"), and PLASTECHS, INC., a Wisconsin corporation
("PlasTechs") (collectively, Badger and PlasTechs are hereinafter
sometimes referred to as "Borrowers"), refers to the Credit Agreement
dated as of June 30, 1993, as amended from time to time (the "Agreement")
and currently in effect between the Borrowers and you (the "Bank"). All
capitalized terms used herein without definition shall have the same
meanings as they have in the Agreement.
The Borrowers hereby apply to the Bank for a certain
modification to the Agreement and the Borrowers' borrowing arrangements
with the Bank.
1. AMENDMENT.
Upon your acceptance hereof in the space provided for that
purpose below, the Agreement shall be and hereby is amended as follows:
(a) Section 10 of the Agreement is hereby amended in its entirety to read
as follows:
The definition of "Termination Date" appearing in Section 10 of
the Agreement is hereby amended by deleting the date April 30, 1999
appearing therein and inserting in its place the date July 1, 1999.
2. CONDITIONS PRECEDENT.
The effectiveness of this Ninth Amendment is subject to the
satisfaction of all of the following conditions precedent:
(a) The Borrowers and the Bank shall have executed this Ninth
Amendment.
(b) The Bank shall have received copies executed or certified
(as may be appropriate of all legal documents or proceedings taken in
connection with the execution and delivery hereof and the other
instruments and documents contemplated hereby.
(c) All legal matters incident to the execution and delivery
hereof and of the instruments and documents contemplated hereby shall be
satisfactory to the Bank and its counsel.
3. REPRESENTATIONS.
In order to induce the Bank to execute and deliver this Ninth
Amendment, the Borrowers hereby represent to the Bank that as of the date
hereof and as of the time that this Ninth Amendment becomes effective,
each of the representations and warranties set forth in Section 5 of the
Agreement are and shall be and remain true and correct and the Borrowers
are in full compliance with all of the terms and conditions of the
Agreement and no Default as defined in the Agreement as amended hereby nor
any Event of Default as so defined, shall have occurred and be continuing
or shall arise after giving effect to this Ninth Amendment.
4. MISCELLANEOUS.
(a) Collateral Security Unimpaired. The Borrowers hereby agree
that notwithstanding the execution and delivery hereof, the Collateral
Documents shall be and remain in full force and effect and that any rights
and remedies of the Bank thereunder, obligations of the Borrowers
thereunder and any liens or security interests created or provided for
thereunder shall be and remain in full force and effect and shall not be
affected, impaired or discharged hereby. Nothing herein contained shall
in any manner affect or impair the priority of the liens and security
interest created and provided for by the Collateral Documents as to the
indebtedness which would be secured thereby prior to giving effect hereto.
(b) Effect of Amendment. Except as specifically amended and
modified hereby, the Agreement shall stand and remain unchanged and in
full force and effect in accordance with its original terms. Reference to
this specific Amendment need not be made in any note, instrument or other
document making reference to the Agreement, any reference to the Agreement
in any of such to be deemed to be a reference to the Agreement as amended
hereby.
(c) Costs and Expenses. The Borrowers agree to pay on demand
all out-of-pocket costs and expenses incurred by the Bank in connection
with the negotiation, preparation, execution and delivery of this Ninth
Amendment and the documents and transactions contemplated hereby,
including the fees and expenses of counsel to the Bank with respect to the
foregoing.
(d) Counterparts; Governing Law. This Ninth Amendment may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which when so executed shall be an original
but all of which to constitute one and the same agreement. This Amendment
shall be governed by the internal laws of the State of Illinois.
Dated as of August 6, 1998.
BADGER PAPER MILLS, INC.
By: /s/ Thomas W. Cosgrove
Its: President
PLASTECHS, INC.
By: /s/ Thomas W. Cosgrove
Its: President
Accepted and agreed to at Chicago, Illinois, as of the date and year
last above written.
HARRIS TRUST AND SAVINGS BANK
By: /s/
Its Vice President
EMPLOYEE RESIGNATION AND RELEASE AGREEMENT
This Employee Resignation and Release agreement ("Agreement"),
entered into by and between Badger Paper Mills ("Badger") and Claude L.
Van Hefty ("Mr. Van Hefty") on this 12th day of March, 1998.
1. Except as otherwise expressly provided herein,
this Agreement shall replace and thereby cancel and supersede any other
employment agreement and all obligations of either party arising
thereunder.
2. Mr. Van Hefty's employment with Badger, status as
an officer, and his membership on the Board of Directors shall terminate
effective the 13th day of March, 1998.
3. Badger agrees to pay (less withholding required
by law), those items listed and payable in accordance with Exhibit A. The
payments outlined in this paragraph and Exhibit A represent all financial
obligations from Badger to Mr. Van Hefty, including without limitation
accrued wages, commissions, vacation, severance and any other form of
compensation or benefits (and any exceptions to the foregoing).
Notwithstanding any other provision of this Agreement, Badger will provide
Mr. Van Hefty his rights under state and federal law to insurance
continuation and/or conversion.
4. Mr. Van Hefty agrees that (except in connection
with tax reporting, or other legal obligations or any legal action to
enforce the terms of this Agreement) he will keep confidential the terms
of this Agreement, all performance hereunder and all circumstances
relating to his separation from employment with Badger.
5. Mr. Van Hefty shall not disparage or portray in a
negative light Badger, its shareholders, directors, officers, employees,
or agents (past, present or future).
6. Mr. Van Hefty agrees that he will assist Badger
to ensure a smooth transition to employees or other individuals designated
by Badger to assume his responsibilities and the details concerning the
projects and assignments in which he is or was involved and cooperate with
Badger to maintain the morale and productive working relationships of the
employees and independent contractors of Badger. Mr. Van Hefty further
agrees to continue to promote the best interest of Badger in communication
with any third party.
7. In addition to recognizing his ethical
confidentiality obligations, Mr. Van Hefty agrees that he will not,
without the prior written consent of the chairman, or other officer, of
Badger, directly or indirectly disclose to any individual, corporation, or
other entity, or use for his own or such another's benefit, any
information, whether or not reduced to written or other tangible form,
which:
a. is not generally known to the public or in the
industry;
b. has been treated by Badger as confidential or
proprietary; and
c. is of competitive advantage to Badger and in the
confidentiality of which Badger or any of its parent,
subsidiary or affiliated entities has a legally
protectable interest;
(such information being referred to in this paragraph as "Confidential
Information"). Confidential Information which becomes generally known to
the public or in the industry, or in the confidentiality of which Badger
ceases to have a legally protectable interest, shall cease to be subject
to the restrictions of this paragraph.
8. Mr. Van Hefty represents that he has delivered to
Badger all Badger property, including without limitation credit cards,
keys, equipment, supplies, business records, reports, data, computer
diskettes or files, drawings, operating procedures, specifications,
agreements, customer lists or other materials or information acquired by
him in the course of his employment by Badger.
9. Mr. Van Hefty acknowledges that, for the breach
of any of the covenants contained in Paragraphs 5 through 8, inclusive,
Badger will suffer irreparable harm for which the remedy at law is
inadequate, and that an injunction may be entered against him by any court
having jurisdiction, restraining him from breaching or continuing the
breach of this Agreement. Resort to such equitable relief, however, shall
not be construed to be a waiver by Badger of any other rights or remedies
that Badger may have for damages or otherwise.
10. Mr. Van Hefty, on behalf of self, heirs,
executors, attorneys administrators, successors and assigns, hereby fully
and forever releases and discharges Badger and each of its related
entities and each of their partners, principals, members, shareholders,
directors, officers, trustees, employees, contractors, consultants, agents
and attorneys, past, present and future, and all predecessors, successors
and assigns thereof ("released Parties") from any and all claims, demands,
agreements, actions, suits, causes of action, damages, injunctions,
restraint and liabilities, of whatever kind or nature, in law, equity or
otherwise, whether now known or unknown or which has ever existed or which
may now exist (except to enforce the terms of this Agreement), including,
but not limited to, any and all claims, liabilities, demands or causes of
action relating to or arising out of Mr. Van Hefty's recruitment, hiring,
employment, or separation from employment, such as claims under Title VII
of the Civil Rights Act of 1964, as amended, 42 U.S.C. 2000e et seq., 42
U.S.C. 1981, the federal and state (including, without limitation
Wisconsin) statutes or common law, or claims for breach of contract for
misrepresentation, negligence, invasion or privacy, for violation of any
other federal, state or local statute, ordinance or regulation or common
law dealing in any respect with discrimination in employment or otherwise,
defamation, infliction of emotional distress or any other tort under the
common law of any state or for attorneys' fees.
MR. VAN HEFTY SPECIFICALLY WAIVES AND RELEASES THE RELEASED
PARTIES FROM ALL CLAIMS HE MAY HAVE AS OF THE DATE HE SIGNS THIS AGREEMENT
REGARDING CLAIMS OR RIGHTS ARISING UNDER THE AGE DISCRIMINATION IN
EMPLOYMENT ACT OF 1967, AS AMENDED, 29 U.S.C. 621 ("ADEA").
The following provisions are applicable to and made a part of
this Agreement and the foregoing release and waivers:
(i) Mr. Van Hefty does not release or waive any right
or claim which he may have under the Age Discrimination in Employment Act,
as amended by the Older Workers Benefits Protection Act, which arises
after the date of execution of this Agreement.
(ii) In exchange for this general release and waiver
hereunder, Mr. Van Hefty hereby acknowledges that he has received separate
consideration beyond that which he is otherwise entitled to under Badger
policy or applicable law.
(iii) Badger has previously advised, and does hereby
expressly advise, Mr. Van Hefty to consult with an attorney of his
choosing prior to executing this Agreement which contains a general
release and waiver.
(iv) Mr. Van Hefty has twenty-one (21) days from the
date of presentment to consider whether or not to execute this Agreement.
In the event of such execution, Mr. Van Hefty has a further period of
seven (7) days from such date in which to revoke said execution.
11. To the maximum extent permitted by law, Mr. Van
Hefty covenants not to sue or to institute or cause to be instituted any
kind of claim or action (except to enforce this Agreement) in any federal,
state or local agency or court against any of the Released Parties arising
out of, in the course of, from or attributable to his employment by Badger
or his separation from Badger. Mr. Van Hefty acknowledges and agrees that
the release and covenant not to sue are essential and material terms of
this Agreement and that, without such release and covenant not to sue, no
agreement would have been reached by the parties. He understands and
acknowledges the significance and consequences of this release and this
Agreement.
12. The provisions of this Agreement shall be
construed in accordance with the laws of the State of Wisconsin. Mr. Van
Hefty hereby submits to the jurisdiction of any court (state or federal)
sitting in the County of Marinette, State of Wisconsin for the purpose of
any lawsuit concerning the construction or enforcement of this Agreement
and further agrees he will neither file nor seek to have any lawsuit
removed or transferred to any other forum. In the event that any clause,
paragraph, or subparagraph of this Agreement shall be determined to be
contrary to governing law or otherwise unenforceable, all portions of this
Agreement shall be enforced to the maximum extent permitted by law.
13. Mr. Van Hefty warrants and represents that he has
neither made nor suffered to be made any assignment or transfer of any
right, claim, demand or cause of action covered by the above release or
covenant not to sue and that he is the sole and absolute owner of all
thereof and that he has not filed or suffered to be filed on his behalf
any Claim, action, demand or other matter of any kind covered by the above
release or covenant not to sue as of the date and time of the execution of
this Agreement. Finally, Mr. Van Hefty warrants and represents that he
knows of no other or further claim under any statute or common law,
including without limitation the Workers' Compensation law, against
Badger.
14. Mr. Van Hefty agrees that neither this Agreement
nor performance hereunder constitutes an admission by Badger of any
violation of any federal, state or local law, regulation, common law, of
any breach of any contract or any other wrongdoing of any type.
15. Mr. Van Hefty acknowledges that he has read and
fully understands this Agreement, that it fully reflects the entire
agreement between the parties, that no representation or inducement has
been made to him by or on behalf of Badger except as set forth herein, and
that he KNOWINGLY and VOLUNTARILY enters into this Agreement.
PLEASE READ CAREFULLY. THIS EMPLOYEE SEVERANCE AND RELEASE
AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
DATE: June 2, 1998 DATE: May 5, 1998
BADGER PAPER MILLS, INC. CLAUDE L. VAN HEFTY
By: /s/ Thomas J. Kuber /s/ Claude L. Van Hefty
Thomas J. Kuber Claude L. Van Hefty
Print Full Name Print Full Name
<PAGE>
EMPLOYEE RESIGNATION AND RELEASE AGREEMENT
(Continued)
EXHIBIT A
PAYMENTS TO CLAUDE L. VAN HEFTY
1. Badger shall make the following payments to Mr. Van Hefty
until June 30, 2000. If Mr. Van Hefty dies prior to June 30, 2000,
payments shall continue, as scheduled, to Mr. Van Hefty's estate.
a. Full salary ($14,583.33 per month) from April 1, 1998
through December 31, 1998; and
b. 50% salary ($7,291.66 per month) from January 1, 1999
through June 30, 2000.
2. Badger shall pay the premiums due on the Hartford Life
Insurance policies on Mr. Van Hefty's life for calendar year 1997 and the
first quarter of 1998. (Calendar year 1997 = $18,000.00; first quarter
1998 = $4,500.00).
3. Badger shall make the customary profit sharing contribution
(4% of gross salary = $2,333.33) to Mr. Van Hefty's account for the first
quarter of 1998.
4. Mr. Van Hefty shall take assignment of ownership of the
life insurance policies on his life, currently owned by Badger:
a. Hartford Life Insurance Policy #U01547098
Annual premium: $11,500.00
b. Hartford Life Insurance Policy #U01540133
Annual premium: $6,500.00
5. Pursuant to earlier corporate resolution, Badger shall
provide lifetime medical benefits to Mr. Van Hefty and his spouse.
EMPLOYEE RESIGNATION AND RELEASE AGREEMENT
This Employee Resignation and Release agreement ("Agreement"),
entered into by and between Badger Paper Mills ("Badger") and Miles L.
Kresl, Jr. ("Mr. Kresl") on this 12th day of March, 1998.
1. Except as otherwise expressly provided herein,
this Agreement shall replace and thereby cancel and supersede any other
employment agreement and all obligations of either party arising
thereunder.
2. Mr. Kresl's employment with Badger, and his
status as an officer, shall terminate effective the 13th day of March,
1998.
3. Badger agrees to pay (less withholding required
by law), those items listed and payable in accordance with Exhibit A. The
payments outlined in this paragraph and Exhibit A represent all financial
obligations from Badger to Mr. Kresl, including without limitation accrued
wages, commissions, vacation, severance and any other form of compensation
or benefits (and any exceptions to the foregoing). Notwithstanding any
other provision of this Agreement, Badger will provide Mr. Kresl his
rights under state and federal law to insurance continuation and/or
conversion.
4. Mr. Kresl agrees that (except in connection with
tax reporting, or other legal obligations or any legal action to enforce
the terms of this Agreement) he will keep confidential the terms of this
Agreement, all performance hereunder and all circumstances relating to his
separation from employment with Badger.
5. Mr. Kresl shall not disparage or portray in a
negative light Badger, its shareholders, directors, officers, employees,
or agents (past, present or future).
6. Mr. Kresl agrees that he will assist Badger to
ensure a smooth transition to employees or other individuals designated by
Badger to assume his responsibilities and the details concerning the
projects and assignments in which he is or was involved and cooperate with
Badger to maintain the morale and productive working relationships of the
employees and independent contractors of Badger. Mr. Kresl further agrees
to continue to promote the best interest of Badger in communication with
any third party.
7. In addition to recognizing his ethical
confidentiality obligations, Mr. Kresl agrees that he will not, without
the prior written consent of the chairman, or other officer, of Badger,
directly or indirectly disclose to any individual, corporation, or other
entity, or use for his own or such another's benefit, any information,
whether or not reduced to written or other tangible form, which:
a. is not generally known to the public or in the
industry;
b. has been treated by Badger as confidential or
proprietary; and
c. is of competitive advantage to Badger and in the
confidentiality of which Badger or any of its parent,
subsidiary or affiliated entities has a legally
protectable interest;
(such information being referred to in this paragraph as "Confidential
Information"). Confidential Information which becomes generally known to
the public or in the industry, or in the confidentiality of which Badger
ceases to have a legally protectable interest, shall cease to be subject
to the restrictions of this paragraph.
8. Mr. Kresl represents that he has delivered to
Badger all Badger property, including without limitation credit cards,
keys, equipment, supplies, business records, reports, data, computer
diskettes or files, drawings, operating procedures, specifications,
agreements, customer lists or other materials or information acquired by
him in the course of his employment by Badger.
9. Mr. Kresl acknowledges that, for the breach of
any of the covenants contained in Paragraphs 5 through 8, inclusive,
Badger will suffer irreparable harm for which the remedy at law is
inadequate, and that an injunction may be entered against him by any court
having jurisdiction, restraining him from breaching or continuing the
breach of this Agreement. Resort to such equitable relief, however, shall
not be construed to be a waiver by Badger of any other rights or remedies
that Badger may have for damages or otherwise.
10. Mr. Kresl, on behalf of self, heirs, executors,
attorneys administrators, successors and assigns, hereby fully and forever
releases and discharges Badger and each of its related entities and each
of their partners, principals, members, shareholders, directors, officers,
trustees, employees, contractors, consultants, agents and attorneys, past,
present and future, and all predecessors, successors and assigns thereof
("released Parties") from any and all claims, demands, agreements,
actions, suits, causes of action, damages, injunctions, restraint and
liabilities, of whatever kind or nature, in law, equity or otherwise,
whether now known or unknown or which has ever existed or which may now
exist (except to enforce the terms of this Agreement), including, but not
limited to, any and all claims, liabilities, demands or causes of action
relating to or arising out of Mr. Kresl's recruitment, hiring, employment,
or separation from employment, such as claims under Title VII of the Civil
Rights Act of 1964, as amended, 42 U.S.C. 2000e et seq., 42 U.S.C. 1981,
the federal and state (including, without limitation Wisconsin) statutes
or common law, or claims for breach of contract for misrepresentation,
negligence, invasion or privacy, for violation of any other federal, state
or local statute, ordinance or regulation or common law dealing in any
respect with discrimination in employment or otherwise, defamation,
infliction of emotional distress or any other tort under the common law of
any state or for attorneys' fees.
MR. KRESL SPECIFICALLY WAIVES AND RELEASES THE RELEASED PARTIES
FROM ALL CLAIMS HE MAY HAVE AS OF THE DATE HE SIGNS THIS AGREEMENT
REGARDING CLAIMS OR RIGHTS ARISING UNDER THE AGE DISCRIMINATION IN
EMPLOYMENT ACT OF 1967, AS AMENDED, 29 U.S.C. 621 ("ADEA").
The following provisions are applicable to and made a part of
this Agreement and the foregoing release and waivers:
(i) Mr. Kresl does not release or waive any right
or claim which he may have under the Age Discrimination in Employment Act,
as amended by the Older Workers Benefits Protection Act, which arises
after the date of execution of this Agreement.
(ii) In exchange for this general release and
waiver hereunder, Mr. Kresl hereby acknowledges that he has received
separate consideration beyond that which he is otherwise entitled to under
Badger policy or applicable law.
(iii) Badger has previously advised, and does
hereby expressly advise, Mr. Kresl to consult with an attorney of his
choosing prior to executing this Agreement which contains a general
release and waiver.
(iv) Mr. Kresl has twenty-one (21) days from the
date of presentment to consider whether or not to execute this Agreement.
In the event of such execution, Mr. Kresl has a further period of seven
(7) days from such date in which to revoke said execution.
11. To the maximum extent permitted by law, Mr. Kresl
covenants not to sue or to institute or cause to be instituted any kind of
claim or action (except to enforce this Agreement) in any federal, state
or local agency or court against any of the Released Parties arising out
of, in the course of, from or attributable to his employment by Badger or
his separation from Badger. Mr. Kresl acknowledges and agrees that the
release and covenant not to sue are essential and material terms of this
Agreement and that, without such release and covenant not to sue, no
agreement would have been reached by the parties. He understands and
acknowledges the significance and consequences of this release and this
Agreement.
12. The provisions of this Agreement shall be
construed in accordance with the laws of the State of Wisconsin. Mr.
Kresl hereby submits to the jurisdiction of any court (state or federal)
sitting in the County of Marinette, State of Wisconsin for the purpose of
any lawsuit concerning the construction or enforcement of this Agreement
and further agrees he will neither file nor seek to have any lawsuit
removed or transferred to any other forum. In the event that any clause,
paragraph, or subparagraph of this Agreement shall be determined to be
contrary to governing law or otherwise unenforceable, all portions of this
Agreement shall be enforced to the maximum extent permitted by law.
13. Mr. Kresl warrants and represents that he has
neither made nor suffered to be made any assignment or transfer of any
right, claim, demand or cause of action covered by the above release or
covenant not to sue and that he is the sole and absolute owner of all
thereof and that he has not filed or suffered to be filed on his behalf
any Claim, action, demand or other matter of any kind covered by the above
release or covenant not to sue as of the date and time of the execution of
this Agreement. Finally, Mr. Kresl warrants and represents that he knows
of no other or further claim under any statute or common law, including
without limitation the Workers' Compensation law, against Badger.
14. Mr. Kresl agrees that neither this Agreement nor
performance hereunder constitutes an admission by Badger of any violation
of any federal, state or local law, regulation, common law, of any breach
of any contract or any other wrongdoing of any type.
15. Mr. Kresl acknowledges that he has read and
fully understands this Agreement, that it fully reflects the entire
agreement between the parties, that no representation or inducement has
been made to him by or on behalf of Badger except as set forth herein, and
that he KNOWINGLY and VOLUNTARILY enters into this Agreement.
PLEASE READ CAREFULLY. THIS EMPLOYEE SEVERANCE AND RELEASE
AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
DATE: June 2, 1998 DATE: May 6, 1998
BADGER PAPER MILLS, INC. MILES L. KRESL, JR.
By: /s/ Thomas J. Kuber /s/ Miles L. Kresl, Jr.
Thomas J. Kuber Miles L. Kresl. Jr.
Print Full Name Print Full Name
<PAGE>
EMPLOYEE RESIGNATION AND RELEASE AGREEMENT
(Continued)
EXHIBIT A
PAYMENTS TO MILES L. KRESL, JR.
1. Badger shall make the following payments to Mr. Kresl until
June 30, 2000. If Mr. Kresl dies prior to June 30, 2000, payments shall
continue, as scheduled, to Mr. Kresl's estate.
a. Full salary ($7,791.66 per month) from April 1, 1998
through December 31, 1998; and
b. 50% salary ($3,895.83 per month) from January 1, 1999
through June 30, 2000.
2. Badger shall pay the premiums due on the Hartford Life
Insurance policies on Mr. Kresl's life for calendar year 1997 and the
first quarter of 1998. (Calendar year 1997 = $11,800.00; first quarter
1998 = $2,950.00).
3. Badger shall make the customary profit sharing contribution
(4% of gross salary = $1,246.66) to Mr. Kresl's account for the first
quarter of 1998.
4. Pursuant to earlier corporate resolution, Badger shall
provide lifetime medical benefits to Mr. Kresl and his spouse.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 2286
<SECURITIES> 1355
<RECEIVABLES> 5894
<ALLOWANCES> 0
<INVENTORY> 4515
<CURRENT-ASSETS> 17064
<PP&E> 63708
<DEPRECIATION> 36445
<TOTAL-ASSETS> 46447
<CURRENT-LIABILITIES> 8051
<BONDS> 18266
2700
0
<COMMON> 0
<OTHER-SE> 195
<TOTAL-LIABILITY-AND-EQUITY> 46447
<SALES> 35722
<TOTAL-REVENUES> 35722
<CGS> 32146
<TOTAL-COSTS> 34392
<OTHER-EXPENSES> (691)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 615
<INCOME-PRETAX> 1406
<INCOME-TAX> 477
<INCOME-CONTINUING> 929
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 929
<EPS-PRIMARY> .48
<EPS-DILUTED> 0
</TABLE>
