Your Bank...Your Partner

Your Bank...Your Partner

February 27, 2004

Mr. Xxxx Xxxxxx
Xxxxxx Paper Xxxxx, Inc.
000 X. Xxxxx Xx.
Xxxxxxxx, XX 00000

Dear Xxxx:

Badger Paper Xxxxx, Inc. was in default of our loan agreement at 12/31/03 due to not meeting the debt service coverage covenant. Wisconsin Business Bank agrees to waive this covenant as it pertains to the year 2003.

This waiver should not be construed to be a waiver of any other rights under the note, loan agreement and related loan documents.

Please sign below to accept these terms.

Sincerely,

Xxxxx X. Xxxxxxxx
Vice President

I agree and acknowledge the above terms on this _____ day of ______________, 2004.

By ______________________________
      Xxxxxxx X. Xxxxxx
      CFO, Vice President/Secretary
      Badger Paper Xxxxx, Inc.

0000 Xxx Xxxxxx Xx., P.O. Box 5307, De Pere, WI 00000-0000
Phone 000-000-0000 Fax 000-000-0000
xxx.xxxxxxxxxx.xxx