Document:

BADGER METER, INC.

                       NONQUALIFIED STOCK OPTION AGREEMENT

          THIS AGREEMENT dated as of the _____ day of _____________, _____, by
and between Badger Meter, Inc., a Wisconsin corporation (the "Company"), and the
undersigned employee (the "Optionee");

                                   WITNESSETH:

          WHEREAS, the Company has adopted the Badger Meter, Inc. Stock Option
Plan (the "Plan"), to permit options to purchase shares of the Company's Common
Stock, $1.00 par value per share ("Stock"), to be granted to certain key
employees of the Company or any subsidiary of the Company (a "Subsidiary"); and

          NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements herein set forth, the parties hereby mutually covenant and agree
as follows:

          1. Grant of Options. Subject to the terms and conditions of the Plan
and this Agreement, the Company grants to the Optionee the option to purchase
from the Company all or any part of an aggregate number of _____ shares of Stock
(hereinafter such shares of Stock are referred to as the "Optioned Shares", and
this option to purchase the Optioned Shares is referred to as the "Option"). The
Option is intended by the Company to constitute a nonqualified stock option.

          2. Option Price. The price to be paid for the Optioned Shares shall be
____________ _____________________________ ($_______) per share (the "Option
Price"), which has been determined by the Plan Administrator designated pursuant
to Section 3 of the Plan to be not less than 100% of the fair market value of
such stock on the date of grant.

          3. Exercise of Option. The Option may be exercised by the Optionee, in
whole or in part, from time to time, during the period beginning one year after
the date of this Agreement and ending ___________ ____, ________, but only in
accordance with the following schedule:

                                             Cumulative Percentage
          Elapsed Number of                        of Shares
         Years After Date of                   Subject to Option
           This Agreement                    Which May Be Purchased
           --------------                    ----------------------
         Less than One Year                             0%
         One Year                                      20%
         Two Years                                     40%
         Three Years                                   60%
         Four Years                                    80%
         Five Years                                   100%

In the event of death, disability or retirement, 100% of the shares subject to
Option may be purchased within twelve (12) months after the date of such
termination, in accordance with the provisions of Section 5(c) herein. To the
extent otherwise exercisable, the Option may be exercised following the
termination of the employment relationship between the Optionee and Company only
as provided in subsections (b) and (c) of Section 5 herein.
<PAGE>
          4. Manner of Exercise and Payment. The Option may be exercised only by
written notice to the Company by the Optionee of the Optionee's intent to
exercise the Option, delivered or mailed by postpaid registered or certified
mail addressed to the Secretary of the Company at its office in Milwaukee,
Wisconsin, specifying the number of Optioned Shares in respect of which the
Option is being exercised. Such notice shall be accompanied by payment of the
entire Option Price of the Optioned Shares being purchased in cash or its
equivalent.

          5.  Termination of Employment.
              -------------------------

          (a) If the Optionee's employment with the Company or a Subsidiary is
terminated by the Company "for cause", or by the Optionee for any reason other
than death, disability, or retirement, the Option shall terminate immediately
upon such termination of employment.

          (b) If the Optionee's employment with the Company or a Subsidiary is
terminated by the Company without cause, the Option may be exercised to the
extent otherwise exercisable at the date of such termination of employment, in
whole or in part, within three (3) months after the date of such termination of
employment, but not thereafter.

          (c) If the Optionee's employment with the Company or a Subsidiary is
terminated by reason of retirement, disability within the meaning of Section
22(e)(3) of the Internal Revenue Code of 1986, as amended ("Code") or death, the
Option may be exercised, to the extent otherwise exercisable at the date of such
termination of employment, in whole or in part, within twelve (12) months after
the date of such termination of employment, but not thereafter. For purposes of
the Section 5, termination by the Employer "for cause" shall mean any
termination of the Optionee by reason of any action or omission on the part of
the Optionee which is contrary to the interests of the Company or not in the
interests of the Company.

          6.  Withholding Taxes.
              -----------------

          (a) It shall be a condition to the obligation of the Company to issue
or transfer shares of Stock upon exercise of the Option that the Optionee pay to
the Company upon its demand or otherwise make arrangement satisfactory to the
Company for payment of such amount as may be requested by the Company for the
purpose of satisfying its liability to withhold federal, state or local income
or other taxes incurred by reason of the exercise of the Option. If any amount
requested is not paid, the Company may refuse to issue to transfer shares of
Stock upon exercise of the Option.

          (b)(i) The Optionee shall be permitted to satisfy the Company's
withholding tax requirements by electing (the "Election") to have the Company
withhold shares of Stock otherwise issuable to the Optionee or to deliver to the
Company shares of stock having a fair market value on the date income is
recognized pursuant to the exercise of the Option (the "Tax Date") equal to the
amount required to be withheld. If the number of shares of Stock determined
pursuant to the preceding sentence shall include a fractional share, the number
of shares withheld or delivered shall be reduced to the next lower whole number
and the Optionee shall deliver to the Company cash in lieu of such fractional
share, or otherwise make arrangements satisfactory to the Company for payment of
such amount.

          (ii) If the Optionee is an officer, director or more than 10%
shareholder of the Company (an "Insider"), the full number of shares of Stock
purchased may be issued to the Optionee upon exercise and the Optionee shall be
unconditionally obligated to deliver to the Company, as soon as practicable
after the Tax Date, the number of shares of Stock having a fair market value on
the Tax Date equal to the amount required to be withheld. If the number of
shares so determined shall include a fractional share, the Optionee shall
deliver cash in lieu of such fractional share.

                                       2
<PAGE>
          (iii) The Election must be received by the Secretary of the Company at
its principal office in Milwaukee, Wisconsin, prior to the Optionee's Tax Date;
and if the Optionee is an Insider, the Election (1) shall not be effective until
at least six months after the date of this Agreement; provided, however, that
this restriction shall not apply in the event death or disability of the
Optionee occurs prior to expiration of this six month period, and (2) must be
received by the Secretary of the Company either six months or more prior to the
Tax Date or during a ten-day period beginning on the third business day
following the release of the Company's quarterly or annual summary statement of
sales and earnings which occurs prior to the Tax Date.

          (iv) The Election shall be irrevocable, and shall be subject to
disapproval, in whole or in part, by the Plan Administrator. The Election shall
be made in writing and shall be made according to such rules and regulations and
in such form as the Plan Administrator shall determine.

          7. Status of Optionee. The Optionee shall not be deemed for any
purposes to be a shareholder of the Company with respect to any shares which may
be acquired hereunder except to the extent that the Option shall have been
exercised and a stock certificate has been issued.

          8. Nontransferability of Option. The Option shall not be transferable
by the Optionee otherwise than by will or the laws of descent and distribution.

          9. Powers of Company Not Affected. The existence of the Option shall
not affect in any way the right to power of the Company or its shareholders to
make or authorize any or all adjustments, recapitalizations, reorganizations, or
other changes in the Company's capital structure or its business, or any merger
or consolidation of the Company, or any issuance of bonds, debentures,
preferred, or prior preference stock ahead of or affecting the Stock or the
rights thereof, or dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.

          10. Adjustment of Number of Shares and Price. In the event of a
capital adjustment resulting from a stock dividend (other than a stock dividend
in lieu of an ordinary cash dividend), stock split, reorganization,
recapitalization, merger, consolidation, combination or exchange of shares or
the like, the Optioned Shares shall be adjusted in a manner consistent with such
capital adjustment; provided, however, that no such adjustment shall require the
Company to sell any fractional shares and the adjustment shall be limited
accordingly. The determination of the Plan Administrator as to any adjustment
shall be final.

          11. Restrictions on Optional Shares. Shares of stock purchased under
the Plan and held by any person who is an officer or director of the Company, or
who directly or indirectly controls the Company, may not be sold or otherwise
disposed of except pursuant to an effective Registration Statement under the
Securities Act of 1933 or in a transaction which, in the opinion of counsel for
the Company, is exempt from registration under such Act. The Plan Administrator
may waive the foregoing restrictions in whole or in part in any particular case
or cases, or may terminate such restrictions, whenever the Plan Administrator
determines that such restrictions afford no substantial benefit to the Company.

          12. Interpretation by Plan Administrator. As a condition of the
granting of the Option, the Optionee agrees for himself and his legal
representatives that any dispute or disagreement which may arise under, as a
result of or pursuant to this Agreement, shall be determined by the Plan
Administrator in its sole discretion, and any interpretation by the Plan
Administrator of the terms of this Agreement shall be final, binding and
conclusive.

          13. Employment. It is understood that nothing herein contained shall
be deemed to confer upon the Optionee any right to continue in the employ of the
Company, nor to interfere in any way with the right of the Company to terminate
the employment of the Optionee at any time.

                                       3
<PAGE>

          14. Benefits of Agreement. The benefits and obligations under this
Agreement shall inure to and be binding upon all successors of both parties to
this Agreement.

          IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officers and its corporate seal hereunto
affixed, and the Optionee has hereunto affixed his hand and seal, as of the day
and year first above written.

                                        BADGER METER, INC.

                                        By: __________________________________
                                                  President

                                        Attest _______________________________
                                                  Secretary

                                        AGREED AND ACCEPTED

                                        --------------------------------------

                                       4BADGER PAPER MILLS, INC.
                        ROBERT OLAH EMPLOYMENT AGREEMENT

         This Agreement is entered into on June 13, 2001 between BADGER PAPER
MILLS, INC., a Wisconsin Corporation located at 200 West Front Street, Peshtigo,
Wisconsin ("Badger") and ROBERT OLAH, an adult resident of Cincinnati, Ohio.
("Olah").

     1.   Engagement. Badger shall employ Olah as President and Chief Executive
          Officer effective July 9, 2001. Olah accepts such employment in
          accordance with the terms and conditions of this Agreement.

     2.   Duties. Olah 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. Olah's duties of employment
          shall include such additional executive duties on behalf of Badger and
          operations of a character keeping with Olah'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, Olah 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. Olah's employment shall commence on July 1, 2001
          and continue for a term of three (3) years, until June 30, 2004.
          Olah's employment shall be automatically renewed for a period of two
          (2) years (until June 30, 2006) 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 December 31, 2003). (These dates
          presume a July 1, 2001 employment start date)

     4.   Compensation.

          A.   Olah shall be paid annual base compensation of $250,000.00. Olah
               shall be eligible to receive bonus compensation calculated as a
               percentage of Pretax Income as described below. "Pretax Income"
               shall be the net 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.

                                                1

<PAGE>
          B.   Olah 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, Olah'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.

For calendar year 2001, Olah is guaranteed a bonus of no less than $25,000,
calculated on the basis of annual bonus of $50,000 for Badger performance in
2001. If the bonus calculation for 2001 exceeds $50,000, Olah shall be paid 50%
of the bonus amount exceeding $50,000 for 2001. For calendar year 2002, Olah's
bonus shall be calculated pursuant to the formula set forth above; provided,
however, that Olah's 2002 bonus shall be guaranteed to be not less than $50,000.

          5.   Benefits. Olah 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. The plan shall grant Olah an option to purchase up to
                    one hundred thousand (100,000) shares of Badger stock at a
                    price equivalent to the averaged bid and ask price for the
                    five trading days immediately prior to July 1, 2001. This
                    option to purchase Badger shares shall vest 50% upon the
                    third anniversary of Olah's employment with Badger (July 1,
                    2004) and 50% upon the fifth anniversary of Olah's
                    employment with Badger, (July 1, 2006.) Olah may exercise
                    this option at any time within five (5) years of the final
                    vesting date; no later than June 30, 2011. (The valuation
                    date, vesting dates, and exercise deadline presume a July 1,
                    2001 employment start date)

               D.   Two and one-half weeks of paid vacation in 2001. Five weeks
                    of paid vacation each calendar year thereafter. Paid holiday
                    vacation pursuant to Badger policy.

                                                2

<PAGE>
               E.   Subject to underwriting requirements, Olah shall be provided
                    life insurance pursuant to Badger's group Term life
                    insurance plan in an amount equivalent to two times Olah'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 $800 per month.

               H.   Reimbursement for relocation expenses from Cincinnati, Ohio
                    to Wisconsin, up to an amount of $25,000. Badger will
                    reimburse Olah 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 while awaiting occupancy of a primary
                          residence.

                    (iv)  Reasonable meal expenses.

          6.   Termination of Employment.

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

               B.   Badger may terminate Olah's employment without notice for
                    cause, defined as:

                    (i)   Olah's conviction or guilty plea to an offense
                          involving fraud, embezzlement, theft, dishonesty or
                          other criminal misconduct against Badger;

                    (ii)  Olah's willful, wanton or grossly negligent misconduct
                          in the course of his employment;

                    (iii) Olah's substantial and material breach of the
                          Agreement.

               If Badger terminates Olah for cause, Olah shall not be entitled
               to any severance pay.

                                        3

<PAGE>

               C.   If Badger terminates Olah without cause, Olah 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 Olah is terminated as a
                    result of a change of control of Badger, defined as a sale,
                    merger, transfer or exchange of fifty percent (50%) of the
                    Badger's stock and/or assets, Olah shall be entitled to
                    severance pay equivalent to 12 months base salary as of the
                    date of termination. If Olah'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 Olah 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.

          7.   Trade Secrets and Confidential Information. During the term of
               this Agreement, Olah 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 plans and
               information, and strategic business plans. Olah 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 Olah or Badger, Olah 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 Olah's employment,
               for any reason whatsoever, Olah 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 Olah or Badger, or for a period of time
                    equal to the length Olah's employment if such tenure is less
                    than two (2) years, Olah 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 Olah'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. Olah 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

                                                4

<PAGE>
                    enforce the Covenant to the extent that it believes the
                    Covenant is reasonable under circumstances existing at that
                    time.

               C.   Olah acknowledges that compliance with sections 7 and 9 is
                    necessary to protect Badger's business and good will and
                    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 Olah'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 Olah violates sections 7 or 9, Badger shall be
                    entitle to recover, as a portion of its damages, but not as
                    a full measure of damages, any and all severance payments
                    made to Olah under this Agreement whether already paid, or
                    owing.

          10.  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.

          11.  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.

          12.  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.

          13.  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 Olah at such address as he shall designate from time
               to time.

          14.  Complete Understanding. This Agreement constitutes the complete
               and entire understanding between the parties, all prior
               representations or agreements having been merged into this
               Agreement.

          15.  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.

          16.  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.

                                        5

<PAGE>

     IN WITNESS WHEREAS, the parties have executed this Agreement on the date
set forth above.

                                            BADGER PAPER MILLS, INC.

                                            By:  /s/ Harold J. Bergman
                                               -----------------------------
                                                Director

                                            By:  /s/ Robert A. Olah
                                               -----------------------------
                                                Robert Olah

                                       6

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