BADGER PAPER MILLS INC
EXECUTIVE EMPLOYEMENT AGREEMENT
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<TYPE>EX-10
<SEQUENCE>3
<FILENAME>irm337a.txt
<DESCRIPTION>EXECUTIVE EMPLOYEMENT AGREEMENT
<TEXT>
                            BADGER PAPER MILLS, INC.
                     RONALD E. SWANSON EMPLOYMENT AGREEMENT


     This Agreement is entered into on April 30, 2003, between BADGER PAPER
MILLS, INC., a Wisconsin Corporation located at 200 West Front Street, Peshtigo,
Wisconsin ("Badger") and RONALD E. SWANSON, an adult resident of Wisconsin
Rapids, WI ("Swanson").

     1.   Engagement. Badger shall employ Swanson as President and Chief
          Executive Officer effective May 1, 2003. Swanson accepts such
          employment in accordance with the terms and conditions of this
          Agreement.

     2.   Duties. Swanson shall be the President and Chief Executive Officer of
          Badger and agrees to devote his full time, attention and best efforts
          to the performance of this employment. Swanson's duties of employment
          shall include such additional executive duties on behalf of Badger and
          operations of a character in keeping with Swanson's position as
          President and Chief Executive Officer of the company as may from time
          to time by designated by Badger's Board of Directors. As President and
          Chief Executive Officer of Badger, Swanson shall be in charge of the
          operations of the company and shall have full authority and
          responsibility, subject to the general direction and control of the
          Board of Directors, for formulating Badger's polices and administering
          its affairs in all respects, subject to the provisions contained in
          this Agreement.

     3.   Term of Employment. Swanson's employment shall commence on May 1, 2003
          and continue for a term of three (3) years, until April 30, 2006.
          Swanson's employment shall be automatically renewed for a period of
          two (2) years (until April 30, 2008) unless either party gives written
          notice of non-renewal to the other at least six (6) months prior to
          the end of the initial three (3) year term (written notice of
          non-renewal provided no later than November 1, 2007).

     4.   Compensation.

          A.   Swanson shall be paid annual base compensation of $250,000.00.
               For 2003, Swanson shall receive a salary of $166,650.00. Swanson
               shall be eligible to receive bonus compensation calculated as a
               percentage of Pretax Income as described below. For 2003, Swanson
               shall receive a bonus which shall be calculated based on Pretax
               Income starting May 1, 2003, and shall not be based on Pretax
               Income of January through April 2003. "Pretax income" shall be
               the income shown on Badger's books determined in accordance with
               generally accepted accounting principles and practices utilized
               by Badger's independent public accountant or,

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               such other firm of independent public accountants as may be
               determined from time to time. Pretax Income shall be calculated
               before payment of federal and state income taxes and before
               allowance for the bonus payment calculated pursuant to this
               Agreement. However, Pretax Income shall not include income from
               extraordinary items as determined by generally accepted
               accounting principles.

          B.   Swanson shall be paid, as bonus compensation, the following
               amounts:

          Bonus Payment               Pretax Income
          -------------               -------------

               3%             Of      $0.00 - 1,000,000.00
              + 5%            Of      $1,000,001.00 - $3,000,000.00
              + 6%            Of      $3,000,001.00 and over

For example, if Badger has $5,000,000.00 of Pretax Income in a year, Swanson's
bonus shall be $250,000.00 (3% yields $30,000, 5% yields $100,000, 6% yields
$120,000.00 = $250,000.00 bonus).

     The bonus shall be calculated and paid on the basis of audited results.
Historically, audited results for a calendar year are available by March 31 of
the following year.

     5.   Benefits. Swanson shall also receive the following benefits:

          A.   Participation in Badger's comprehensive medical and dental
               insurance plan. The terms and conditions of the plan shall be
               provided under separate cover.

          B.   Participation in Badger's profit sharing and 401(k) plan. The
               terms and conditions of the plan shall be provided under separate
               cover.

          C.   Participation in a Qualified Stock Option Plan for Badger stock.
               Badger, (through the 1998 and/or 2002 Stock Option Plan) shall
               grant Swanson an option to purchase up to fifty thousand (50,000)
               shares of Badger stock at a price equivalent to the averaged bid
               and ask price for the five trading days immediately prior to May
               1, 2003. This option to purchase Badger shares shall vest 33.3%
               upon the third anniversary of Swanson's employment with Badger
               (May 1, 2006); 33.3% upon the fourth anniversary of Swanson's
               employment with Badger (May 1, 2007); and 33.4% upon the fifth
               anniversary of Swanson's employment with Badger, (May 1,2008).
               Subscriptions shall be granted for a Ten (10) year term expiring
               on April 30, 2013 and shall generally be subject to the terms and
               conditions of the 1998 and/or 2002 Stock Option Plan. The Board

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               of Directors, at its discretion, may issue additional options to
               Swanson in the future.

          D.   Three weeks of paid vacation in 2003. Six weeks of paid vacation
               each calendar year thereafter. Paid holiday vacation shall be
               paid pursuant to Badger policy.

          E.   Subject to underwriting requirements, Swanson shall be provided
               life insurance pursuant to Badger's group Term life insurance
               plan in an amount equivalent to two times Swanson's base salary
               ($500,000.00).

          F.   Short term and long term disability insurance. The terms and
               conditions of the coverage shall be provided under separate
               cover.

          G.   Car allowance of $1,100.00 per month.

          H.   Reimbursement for relocation expenses from Wisconsin Rapids, WI
               to Northeastern Wisconsin, up to an amount of $25,000. Badger
               will reimburse Swanson for the following, which may be taxable to
               him:

               (i)  Reasonable expenses incurred in moving furniture, normal
                    household goods and personal belongings.

               (ii) Reasonable expenses while house hunting, including trips to
                    the Peshtigo, Wisconsin area with spouse.

              (iii) Reasonable temporary living expenses incurred in
                    Wisconsin/Michigan while awaiting occupancy of a primary
                    residence.

               (iv) Reasonable meal expenses.

     6.   Termination of Employment.

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

          B.   Badger may terminate Swanson's employment without notice for
               Cause, defined as:

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

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

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

          If Badger terminates Swanson for Cause, Swanson shall not be entitled
          to any severance pay.

          C.

               (i)  If Badger terminates Swanson without Cause, Swanson shall be
                    entitled to severance pay equivalent to 12 months base
                    salary as of the date of termination, payable in twelve (12)
                    equal monthly installments. If Swanson is terminated as a
                    result of a Change of Control of Badger, defined as a sale
                    or merger in which Badger does not survive as the acquiring
                    entity, a transfer of more than 50% of Badger's common stock
                    in a single transaction or series of related transactions
                    and/or the sale of all or substantially all of Badger's
                    assets in a single transaction or series of related
                    transactions, Swanson shall be entitled to severance pay
                    equivalent to 12 months base salary as of the date of
                    termination. If Swanson's employment with Badger, or its
                    successor, continues after a Change of Control at a base
                    compensation less than his base compensation pursuant to
                    this Agreement, Badger shall pay Swanson the difference
                    between his base compensation pursuant to this Agreement,
                    and his compensation for employment with Badger or its
                    successor following the Change of Control for a period of
                    twelve (12) months, payable in equal monthly installments.

               (ii) if Badger terminates Swanson without Cause prior to April
                    30, 2006, Swanson shall be entitled to continuation of
                    health insurance for the period of time he was employed but
                    no less than one (1) year. If Swanson continues to be
                    employed after three (3) years and is terminated without
                    Cause, Swanson shall be entitled to health insurance to age
                    sixty-five (65). Health insurance shall be similar to a plan
                    provided to other retired executive employees. The health
                    insurance provision shall also include his wife. Health
                    insurance shall not be provided to Swanson upon termination
                    if similar or better health insurance is available from a
                    subsequent employer.

     7.   Trade Secrets and Confidential Information. During the term of this
          Agreement, Swanson may have access to, and become familiar with,
          various trade secrets and confidential information belonging to Badger
          including, but not limited to, research and development, product
          formulae and processes, sales methods, pricing and costs, customer
          lists, marketing

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          plans and information, and strategic business plans. Swanson
          acknowledges that such confidential information and trade secrets are
          owned and shall be continued to be owned solely by Badger. During the
          term of his employment and for three (3) years after employment
          terminates for any reason, regardless of whether termination is
          initiated by Swanson or Badger, Swanson agrees not to use,
          communicate, reveal or otherwise make available such information for
          any purpose whatsoever, or to divulge such information to any person,
          partnership, corporation or entity other than Badger or persons
          expressly designated by Badger, unless compelled to disclose by valid
          judicial process. Upon termination of Swanson's employment, for any
          reason whatsoever, Swanson shall return to Badger all originals and
          copies of Badger's books, records, documents, customer lists or other
          documents, in his possession.

     8.   Restrictive Covenant.

          A.   For a period of two (2) years after this Agreement has been
               terminated for any reason, regardless of whether termination is
               initiated by Swanson or Badger, or for a period of time equal to
               the length of Swanson's employment if such tenure is less than
               two (2) years, Swanson will not, directly or indirectly, solicit
               any person, company, firm or corporation who is or was a customer
               at Badger during a period of three (3) years prior to the
               termination of Swanson's employment and who is or was one of
               Badger's top fifteen (15) customers by dollar volume as measured
               over a calendar year period. Swanson agrees not to solicit such
               customers on behalf of himself or any other person, firm, company
               or corporation.

          B.   If the scope or enforceability of any provision of this
               Restrictive Covenant is disputed at any time, a court or other
               trier of fact may modify and enforce the Covenant to the extent
               that it believes the Covenant is reasonable under circumstances
               existing at that time.

          C.   Swanson acknowledges that compliance with sections 7 and 8 is
               necessary to protect Badger's business and good will and that
               breach of these sections will irreparably and continually damage
               Badger. Further, an award of money damages will not be adequate
               to remedy such harm. Consequently, in the event of Swanson's
               breach of any of these covenants, Badger shall be entitled to
               both a preliminary or permanent injunction in order to prevent
               continuation of such harm; and money damages to include, without
               limitation, all reasonable costs and attorneys' fees incurred by
               Badger and enforcing the provisions of this agreement. The
               foregoing shall not prohibit employer from electing and pursuing
               any other remedy. If Swanson violates sections 7 or 8, Badger
               shall be entitled to recover, as a portion of its damages, but
               not as a

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               full measure of damages, any and all severance payments made to
               Swanson under this Agreement whether already paid, or owing.

     9.   Assignment. Neither party shall have the right to assign any rights or
          obligations under this Agreement without the prior written approval of
          the other party.

     10.  Severability. If any provision of Agreement is adjudged by any court
          to void or unenforceable in whole or in part, the adjudication shall
          not effect the validity of the remainder of the Agreement.

     11.  Applicability. This Agreement shall be binding upon, and shall inure
          to the benefit of the parties and respective successors, heirs,
          assigns, executors, administrators and personal representatives.

     12.  Notice. Any notice to be given to a party shall be in writing,
          deposited in the U.S. Mail, first class postage pre-paid, addressed to
          Badger at 200 West Front Street, Peshtigo, Wisconsin 54157 and to
          Swanson at such address as he shall designate from time to time.

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

     14.  Modification. No alteration of or modification to any of the
          provisions of this Agreement shall be valid unless made in writing and
          signed by both parties.

     15.  Governing Law. This Agreement shall be subject to and governed by the
          laws of the State of Wisconsin. Furthermore, any dispute between the
          parties arising from this Agreement or the parties business
          relationship shall be venued in the State of Wisconsin.

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

                                        BADGER PAPER MILLS, INC.


                                        By: /s/ Harold J. Bergman
                                           -------------------------------------
                                            Harold J. Bergman
                                            Authorized Board Member



                                        By: /s/ Ronald E. Swanson
                                           -------------------------------------
                                            Ronald E. Swanson


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