March 21, 2002



J. Glenn Davis
5512 Michaels Drive
Appleton, WI  54913

Dear Glenn:

It is with great pleasure that I confirm with you our offer of employment with
Badger Paper Mills, Inc.

The employment offer is as follows:

1.   Your position with the Company will be Vice President Sales and Marketing
     and you will report to Robert A. Olah, President and Chief Executive
     Officer.

2.   Your starting exempt salary will be at the rate of $11,700.00 per month.

3.   You will participate in the Executive Incentive Compensation Plan, under
     which your target award will be 30% of base salary.

4.   You will participate in the Executive Management Stock Option Plan. The
     initial options granted will be 2,000 shares. Details of the plan will be
     provided for you in a separate letter.

5.   Badger maintains a comprehensive major medical and dental plan. The plan
     provides coverage effective on the first day following 60 calendar days of
     continuous active employment. Enclosed is a copy of our current salaried
     premiums. Summary Plan Descriptions are available upon request, but
     normally are handed out at enrollment. Badger will reimburse you any
     premiums for medical and/or dental insurance coverage that you have made to
     your previous employer under COBRA to ensure continuous coverage.

6.   PROFIT SHARING AND 401(k) PLAN:

     The Company has a profit sharing plan which provides a minimum of 4% (but
     up to a maximum of 10%, based on profits) of your W-2 earnings to be placed
     in a trust for your retirement. To become eligible, you generally must have
     1000 hours of service in a year and be employed on December 31, for a
     profit sharing contribution.

     On the first day following 60 calendar days of continuous employment you
     may also participate in the 401(k) plan. (If you do not work 60 calendar
     days of continuous active employment, but work at least 1000 hours in 12
     months of employment, you also may participate in the 401(k) plan). All
     details of this plan are contained in the plan summary. This plan allows
     you to elect to invest from 1% to 65% of your earnings in the 401(k)


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     plan, which is invested in the same investment funds as the profit sharing
     plan. The Company does not provide any matching funds to the 401(k) plan.
     Please keep in mind that the IRS limits you to the amount of 401(k)
     deductions in a year across all qualified plans.

7.   We grant you four (4) weeks vacation for the remainder of 2002. In
     addition, we will credit you for twelve (12) years of prior service to
     determine eligibility for weeks of vacation. If your employment terminates
     prior to one year of employment, refer to the salaried vacation policy.
     Enclosed is a copy of our current salaried vacation policy.

8.   Holidays: The Company recognizes the following as 2002 holidays:

                                 New Year's Day
                             1/2 day for Good Friday
                                  Memorial Day
                         July 4 (plus the day before or
                         the day alter the 4th of July)
                                    Labor Day
                                Thanksgiving Day
                             Day after Thanksgiving
                               December 24 and 25
                                   December 31
                           Two (2) personal holidays*

     Enclosed is a copy of our current salaried holiday schedule.

     *Personal holidays are granted in the following manner: Employees hired
     before January 1 of any year are granted two (2) personal holidays for the
     year. Employees hired prior to July 1 are granted one (1) personal holiday
     for the year. Employees hired after July 1 are not granted personal
     holidays for that year. Based on this policy, you will receive one (1)
     personal holiday(s) beginning in 2002 and two (2) personal holidays in
     subsequent years. Employees who voluntarily or involuntarily terminate
     employment must take personal holiday time off prior to their last day
     worked or lose it.

9.   Group term life insurance will be provided at two (2) times base salary and
     group term accidental death and dismemberment insurance at two (2) times
     base salary to become effective on the first day following 60 calendar days
     of continuous active employment. The monthly cost is $1.00. Summary Plan
     Descriptions are available upon request, but normally are handed out at
     enrollment.

10.  You would have the option to purchase up to $10,000 of additional life
     insurance for yourself, spouse or dependent children. The monthly cost for
     each $1,000 of this additional coverage is $.43 per thousand for the
     employee, $.26 per thousand for the spouse, and $.12 per thousand for
     dependent children as a unit.

11.  Additional accidental death and dismemberment insurance may be purchased by
     you in $1,000 increments up to $10,000 at a monthly rate of $.04 per
     thousand.

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12.  Short-term disability is available to you as a salaried employee if you
     become ill and or have a non-work related injury and are unable to work.
     The Company provides 100% salary continuation for a period not to exceed
     six (6) months in any given 12 month period of time for all illnesses and
     or non-work related injuries.

13.  Long term disability insurance will be provided the first of the month
     following one year of employment. The Long-Term Disability benefit
     commences at the conclusion of the Short-Term Disability period. The
     maximum monthly benefits are listed in the Summary Plan Description. The
     Summary Plan Description will also provide details on limitations,
     exclusions, and specific benefits provided by the Long-Term Disability
     Plan. Summary Plan Descriptions are available upon request, but normally
     are handed out at enrollment.

14.  The Company maintains an educational expense reimbursement policy, which
     will reimburse you for the cost of tuition and books incurred for
     pre-approved classes, which have been successfully completed.

15.  Effective on the first day following 60 calendar days of continuous active
     employment you will be eligible to participate in our safety shoe and
     safety glass prescription programs.

16.  The Company has a Flexible Spending Account to help you save tax dollars by
     designating part of your income as pre-tax to pay your and your family's
     out-of-pocket health care and/or dependent day care expenses. The plan
     provides coverage effective on the first day following 60 calendar days of
     continuous active employment. Each year you will be given the opportunity
     to enroll in the Flexible Spending Accounts, or choose not to participate.
     Your current election will not automatically renew. You must make a new
     election each year during the open enrollment period. Participation is
     optional.

17.  The Company will pay for moving expenses associated with the moving of
     household goods. Kindly contact Alan Steffen, Traffic Manager at Badger
     Paper Mills to make the necessary arrangements. Temporary living expenses
     will be provided for 30 days.

18.  The company will provide you with an automobile, per the Automobile Lease
     Program.

19.  TERMINATION:

     A.   At any time during your employment, either party may terminate your
          employment by providing 30 days' written notice.

     B.   Employer may terminate your employment for cause, defined as:

          i.   conviction or guilty plea to an offense involving fraud,
               embezzlement, theft, dishonesty, or other criminal misconduct
               against Employer;

          ii.  willful, wanton, or grossly negligent misconduct in the course of
               his employment.

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          If Employer terminates you for cause, you shall not be entitled to any
          severance pay.

     C.   After 1 year of continuous active employment, if Badger terminates you
          without cause, you shall be entitled to severance pay equivalent to
          six (6) months base salary as of date of termination.

          In addition to the above payment, the company would provide medical
          coverage at no cost to you for a period not exceeding six months
          following the last day worked, or until coverage is provided by a
          subsequent employer. All other Company benefits would terminate as of
          your last day of employment

The above offer letter of employment is contingent on satisfactorily passing a
health screening and a reference check prior to the start date of your
employment. Health screening must occur within three weeks before the start date
of your employment.

We feel confident in your ability to fulfill all the requirements associated
with this position and look forward to you joining the Badger organization. In
anticipation of your acceptance, we have enclosed a copy of this offer letter
for you to sign (please confirm your start date) and return to us for our files.
A self-addressed envelope is enclosed.

                                          Sincerely,

                                          BADGER PAPER MILLS, INC.

                                          /s/ Robert A. Olah

                                          Robert A. Olah
                                          President and Chief Executive Officer

/s/ J. Glenn Davis
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J. Glenn Davis


March 22, 2002
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DATE



April 1, 2002
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START DATE


Enclosures

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