Document:

NINTH AMENDMENT TO
REVOLVING CREDIT AND
SECURITY AGREEMENT 

        THIS
NINTH AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT (“Amendment”),
dated as of March 31, 2005, is by and between BADGER PAPER MILLS, INC., a corporation
organized under the laws of the State of Wisconsin (“Borrower”), and PNC
BANK, NATIONAL ASSOCIATION (“PNC”) as sole Lender and as Agent under the
Credit Agreement referred to below. 

W I T N E S S E T H : 

        WHEREAS,
PNC and Borrower entered into a certain Revolving Credit and Security Agreement, dated as
of November 30, 2001, as amended by a First Amendment to Revolving Credit and
Security Agreement, dated as of April 30, 2002, as further amended by a Second
Amendment to Revolving Credit and Security Agreement, dated as of September, 2002, as
further amended by a Third Amendment to Revolving Credit and Security Agreement, dated as
of August 13, 2003, as further amended by a Fourth Amendment to Revolving Credit and
Security Agreement, dated as of November 14, 2003, as further amended by a Fifth
Amendment to Revolving Credit and Security Agreement, dated as of March 23, 2004, as
further amended by a Sixth Amendment to Revolving Credit and Security Agreement dated as
of April 30, 2004, as further amended by a Seventh Amendment to Revolving Credit and
Security Agreement dated as of May 14, 2004 and as further amended by an Eighth
Amendment to Revolving Credit and Security Agreement, dated as of August 12, 2004 (the
“Credit Agreement”); 

        WHEREAS,
Borrower has requested that the Credit Agreement be amended as set forth herein; 

        NOW,
THEREFORE, in consideration of the terms and conditions contained herein, the parties
hereto agree as follows: 

        1.    DEFINITIONS.
All capitalized terms used herein and not           otherwise defined shall have the
meanings provided for in the Credit Agreement.  

	 	        2.    AMENDMENT.
Subject to the satisfaction of the conditions           precedent set forth in Section 4
below, the Credit Agreement is hereby           amended as follows:  

	 	        2.1    The
definition of “Maximum Revolving Advance Amount” set forth in Section 1.2
of the Credit Agreement is hereby restated in its entirety to read as follows:  

	 	        “Maximum
Revolving Advance Amount” shall mean $9,500,000.” 

	 	        2.2    Section 6.5 of the Credit Agreement is hereby restated in its entirety to read as
follows: 

	 	        “6.5    
Fixed Charge Coverage Ratio; Undrawn Availability. Cause to be
maintained (i) at the end of each calendar quarter commencing with the calendar
quarter ending March 31, 2002 (but excluding the calendar quarters ending September 30,
2003, December 31, 2003, March 31, 2004, June 30, 2004, September 30, 2004, December
31, 2004, March 31, 2005, June 30, 2005 and September 30, 2005), a Fixed Charge Coverage
Ratio of not less than 1.0 to 1.0, calculated for the twelve immediately preceding months
ending as of the date of determination, (ii) at the end of the one-month period
ending June 30, 2004 a Fixed Charge Coverage Ratio of not less than 1.0 to 1.0,
(iii) a Fixed Charge Coverage Ratio of not less than 1.0 to 1.0 at the end of the
calendar quarter ending March 31, 2005 calculated for the three immediately preceding
months, at the end of the calendar quarter ending June 30, 2005 calculated for the six
immediately preceding months, and at the end of the calendar quarter ending September 30,
2005 calculated for the nine immediately preceding months, and (iv) Undrawn
Availability of not less than $2,000,000 as of the close of business on each day during
the period commencing on August 16, 2004 through and including the last day of the
Term.” 

	 	        2.3    The
Borrower acknowledges and agrees that from and after March 31, 2005 all Revolving
Advances shall be Domestic Rate Loans and the Borrower may not elect to have Revolving
Advances be made as or converted to Eurodollar Rate Loans.  

	 	        2.4    The
Borrower acknowledges and agrees that pursuant to Section 2.1(a) of the Credit Agreement
the Agent currently has in effect a reserve in the amount of $500,000 and that effective
as of March 31, 2005 the Agent will increase such reserve to $1,000,000. The Borrower
further acknowledges and agrees that the establishment and increase of such reserve is a
commercially reasonable act on the part of the Agent.  

        3.    EXPENSES.
Borrower shall pay, upon demand, all reasonable           attorneys’ fees and
out-of-pocket costs of Agent and Lender in connection           with this Amendment and
the agreements, documents and other items contemplated           hereunder.  

        4.    REAFFIRMATION
OF GRANT OF SECURITY INTEREST. Borrower           expressly acknowledges
and agrees that all collateral, security interests,           liens, pledges and
mortgages heretofore, under this Amendment or hereafter           granted to Agent
including, without limitation, such collateral, security           interests, liens,
pledges and mortgages granted under the Credit Agreement and           the Other
Documents and all supplements thereto, extend to and secure all of the
          obligations of Borrower to Agent and Lenders, now existing or hereafter arising
          including, without limitation, those arising in connection with the Credit
          Agreement, as amended by this Amendment, upon the terms set forth in such
          agreements, all of which security interests, liens, pledges and mortgages are
          hereby ratified, reaffirmed, confirmed and approved.  

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        5.    RELEASE.
Borrower hereby fully and forever releases and           discharges Agent and Lenders and
their respective predecessors, successors,           assigns, stockholders, affiliates,
directors, officers, employees, agents,           attorneys, independent contractors and
representatives (whether now or           heretofore acting in such capacity or
otherwise) (the           “Releasees”), from any and all claims,
demands, liabilities,           obligations, actions, causes of action and suits at law
or in equity, of           whatsoever kind or nature, whether known or unknown,
discovered or undiscovered,           matured or not matured, asserted or unasserted,
which Borrower heretofore had or           asserted or now or hereafter has or may assert
against any one or more of the           Releasees, arising out of or in respect of any
actions, conduct, circumstances           or events on or prior to the date hereof in
connection with the administration           by Agent and Lenders of their financing
arrangements with Borrower. In           furtherance and not in limitation of the
provisions of the preceding sentence,           Borrower also agrees not to sue or
prosecute any action against any or all of           the Releasees with respect to any of
the matters contemplated within the scope           of said sentence, and Borrower agrees
to hold each and all of the Releasees           harmless in respect of any suit or
prosecution by Borrower in contravention of           the provisions of this sentence.  

        6.    MISCELLANEOUS.  

	 	        6.1    Limited
Nature of Amendment. The parties hereto acknowledge and agree that the
terms and provisions of this Amendment amend, add to and constitute a part of the Credit
Agreement. Except as expressly waived or modified and amended by the terms of this
Amendment, all of the other terms and conditions of the Credit Agreement and all
documents executed in connection therewith or referred to or incorporated therein remain
in full force and effect and are hereby ratified, reaffirmed, confirmed and approved.  

	 	        6.2    Conflict.
If there is an express conflict between the terms of this Amendment and the terms of the
Credit Agreement, or any of the other agreements or documents executed in connection
therewith or referred to or incorporated therein, the terms of this Amendment shall
govern and control.  

	 	        6.3    Counterparts.  This Amendment may be executed in one or more counterparts, each of
which shall be deemed to be an original. 

	 	        6.4    Representations
and Warranties. Borrower represents and warrants to Agent and Lenders as
follows: (A) Borrower has all necessary corporate power and authority to execute and
deliver this Amendment and perform its obligations hereunder; (B) this Amendment and
the Credit Agreement, as amended hereby, constitute the legal, valid and binding
obligations of Borrower and are enforceable against Borrower in accordance with their
terms; and (C) all representations and warranties of Borrower contained in the
Credit Agreement and all other agreements, instruments and other writings relating
thereto are true and complete as of the date hereof.  

	 	        6.5    Governing  Law.  This  Amendment  was executed and  delivered in Chicago,  Illinois
and shall be governed by and  construed in          accordance with the internal laws (as
opposed to conflicts of law provisions) of the State of Illinois. 

[SIGNATURE PAGE
FOLLOWS] 

-3- 

        IN
WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year
first above written. 

		
		BADGER PAPER MILLS, INC.
	

 	By:  /s/ Paul M. Bouthilet
		Name:  Paul M. Bouthilet
		Title:  Vice President, Chief Financial Officer, Secretary and Treasurer
	

 	PNC BANK, NATIONAL ASSOCIATION, 
as Agent and Lender
	

 	By:  /s/ Sherry Winick
		Name:  Sherry Winick
		Title:  Vice President

-4-TENTH AMENDMENT TO 
REVOLVING CREDIT AND
SECURITY AGREEMENT 

        THIS
TENTH AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT (“Amendment”),
dated as of May 23, 2005, is by and between BADGER PAPER MILLS, INC., a corporation
organized under the laws of the State of Wisconsin (“Borrower”), and PNC
BANK, NATIONAL ASSOCIATION (“PNC”) as sole Lender and as Agent under the
Credit Agreement referred to below. 

W I T N E S S E T H : 

        WHEREAS,
PNC and Borrower entered into a certain Revolving Credit and Security Agreement, dated as
of November 30, 2001, as amended by a First Amendment to Revolving Credit and
Security Agreement, dated as of April 30, 2002, as further amended by a Second
Amendment to Revolving Credit and Security Agreement, dated as of September, 2002, as
further amended by a Third Amendment to Revolving Credit and Security Agreement, dated as
of August 13, 2003, as further amended by a Fourth Amendment to Revolving Credit and
Security Agreement, dated as of November 14, 2003, as further amended by a Fifth
Amendment to Revolving Credit and Security Agreement, dated as of March 23, 2004, as
further amended by a Sixth Amendment to Revolving Credit and Security Agreement dated as
of April 30, 2004, as further amended by a Seventh Amendment to Revolving Credit and
Security Agreement dated as of May 14, 2004, as further amended by an Eighth
Amendment to Revolving Credit and Security Agreement, dated as of August 12, 2004 and as
further amended by a Ninth Amendment to Revolving Credit and Security Agreement dated as
of March 31, 2005 (the “Credit Agreement”); 

        WHEREAS,
Borrower has requested that the Credit Agreement be amended to clarify Section 6.6 thereof
as set forth herein; 

        WHEREAS,
pursuant to the Eighth Amendment to Revolving Credit and Security Agreement, dated as of
August 12, 2004 (the “Eighth Amendment”) by and between Borrower and PNC,
Section 6.6 of the Credit Agreement was restated in its entirety so as to provide for a
limitation on the net loss of Borrower (Section 6.6 of the Credit Agreement, as so
restated being referred to herein as the “Net Loss Covenant”); 

        WHEREAS,
at the time of the execution and delivery of the Eighth Amendment it was the intent and
understanding of Borrower and PNC that for purposes of the calculation of net loss for the
Net Loss Covenant, the gross income of Borrower would not be reduced for any nonoperating
asset impairment charge with respect to Borrower’s Fourdrinier paper machine that
might be recommended by Borrower’s independent accountants; 

        WHEREAS,
Borrower’s independent accountants recommended that Borrower take an asset impairment
charge against Borrower’s Fourdriner paper machine for the fiscal year ending
December 31, 2004 in an amount equal to $4,556,000 (the “Asset Impairment
Charge”); 

        WHEREAS,
Borrower and PNC believe that the existing text of the Net Loss Covenant does not clearly
reflect the intent of Borrower and PNC with respect to the calculation of net loss; 

        NOW,
THEREFORE, in consideration of the terms and conditions contained herein, the parties
hereto agree as follows: 

        1.    DEFINITIONS.
All capitalized terms used herein and not           otherwise defined shall have the
meanings provided for in the Credit Agreement.  

        2.    AMENDMENT.
Subject to the satisfaction of the conditions           precedent set forth in Section 4
below, effective as of December 31, 2004           the Credit Agreement is hereby amended
as follows:  

	 	        2.1    Section
6.6 of the Credit Agreement is hereby amended by adding the following sentence
immediately after the existing text thereof:  

	 	
“For
purposes of calculating Borrower’s net loss, no deduction shall be made from gross
income for any asset impairment charge taken by Borrower against its Fourdrinier paper
machine.” 

        3.    EXPENSES.
Borrower shall pay, upon demand, all reasonable           attorneys’ fees and
out-of-pocket costs of Agent and Lender in connection           with this Amendment and
the agreements, documents and other items contemplated           hereunder.  

        4.    CONDITIONS
PRECEDENT. This Amendment shall become effective           upon the
execution and delivery to Agent of executed counterparts of this           Amendment,
together with executed counterparts of the Ninth Amendment to           Revolving Credit
and Security Agreement, dated as of March 31, 2005.  

        5.    REAFFIRMATION
OF GRANT OF SECURITY INTEREST. Borrower           expressly acknowledges
and agrees that all collateral, security interests,           liens, pledges and
mortgages heretofore, under this Amendment or hereafter           granted to Agent
including, without limitation, such collateral, security           interests, liens,
pledges and mortgages granted under the Credit Agreement and           the Other
Documents and all supplements thereto, extend to and secure all of the
          obligations of Borrower to Agent and Lenders, now existing or hereafter arising
          including, without limitation, those arising in connection with the Credit
          Agreement, as amended by this Amendment, upon the terms set forth in such
          agreements, all of which security interests, liens, pledges and mortgages are
          hereby ratified, reaffirmed, confirmed and approved.  

        6.    MISCELLANEOUS.  

	 	        6.1    Limited
Nature of Amendment. The parties hereto acknowledge and agree that the
terms and provisions of this Amendment amend, add to and constitute a part of the Credit
Agreement. Except as expressly waived or modified and amended by the terms of this
Amendment, all of the other terms and conditions of the Credit Agreement and all
documents executed in connection therewith or referred to or incorporated therein remain
in full force and effect and are hereby ratified, reaffirmed, confirmed and approved.  

-2- 

	 	        6.2    Conflict.
If there is an express conflict between the terms of this Amendment and the terms of the
Credit Agreement, or any of the other agreements or documents executed in connection
therewith or referred to or incorporated therein, the terms of this Amendment shall
govern and control.  

	 	        6.3    Counterparts.  This Amendment may be executed in one or more  counterparts,  each of
which shall be deemed          to be an original. 

	 	        6.4    Representations
and Warranties. Borrower represents and warrants to Agent and Lenders as
follows: (A) Borrower has all necessary corporate power and authority to execute and
deliver this Amendment and perform its obligations hereunder; (B) this Amendment and
the Credit Agreement, as amended hereby, constitute the legal, valid and binding
obligations of Borrower and are enforceable against Borrower in accordance with their
terms; and (C) all representations and warranties of Borrower contained in the
Credit Agreement and all other agreements, instruments and other writings relating
thereto are true and complete as of the date hereof.  

	 	        6.5    Governing
Law. This Amendment was executed and delivered in Chicago, Illinois and
shall be governed by and construed in accordance with the internal laws (as opposed to
conflicts of law provisions) of the State of Illinois.  

[SIGNATURE PAGE
FOLLOWS] 

-3- 

        IN
WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year
first above written. 

		
		BADGER PAPER MILLS, INC.
	

 	By:  /s/ Paul M. Bouthilet
		Name:  Paul M. Bouthilet
		Title:  Vice President, Chief Financial Officer, Secretary and Treasurer
	

 	PNC BANK, NATIONAL ASSOCIATION, 
as Agent and Lender
	

 	By:  /s/ Sherry Winick
		Name:  Sherry Winick
		Title:  Vice President

-4-

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