Appleton Papers Inc. Long Term Incentive Plan

1.1   Purpose

The Board adopted the Plan for the purpose of assisting the Company in attracting and retaining key management employees who are in a position to make a significant contribution to the growth and profitability of the Company by providing a reward for performance and incentive for future endeavor.  The Plan will be implemented through the opportunity to earn Phantom Stock Units, the value of which is related to the appreciation in the value of the Company’s stock.

1.2   Effective Date

The effective date of the Plan (the “Effective Date”) is the date upon which a controlling interest in the Company is acquired by Paperweight Development Corporation.  The effective date of the Plan as restated herein is January 1, 2009.

Capitalized words and phrases used in the Plan have the following meanings unless otherwise expressly provided herein:

2.1   Board

"Board" means the Board of Directors of Appleton Papers Inc.

2.2   Cause

"Cause" in connection with the termination of the Participant's employment with the Company, means that, in the judgment of the Committee, based upon any information or evidence reasonably persuasive to the Committee, the Participant: (1) willfully engaged in activities or conducted himself or herself in a manner seriously detrimental to the interests of the Company or its subsidiaries and affiliates; or (2) failed to execute the duties reasonably assigned to him or her in a reasonably timely, effective, or competent manner; provided, however, that the termination of the Participant's employment because of Disability shall not be deemed to be for Cause.

2.3   Change of Control

“Change of Control” means: (1) the termination of the ESOP or amendment of the ESOP so that it ceases to be an employee stock ownership plan; (2) the ESOP ceases to own a majority interest in the Company; (3) the sale, lease, exchange or other transfer of all or substantially all of the assets of the Company (in one transaction or in a series of related transactions) to a person or entity that is not controlled by the Company; (4) the approval by the Company shareholders of any plan or proposal to terminate the Company’s business, to liquidate or dissolve the Company or to sell substantially all the Common Stock; (5) the Company merges or consolidates with any other company and the Company is not the surviving company of such merger or consolidation; or (6) any other event or series of events whereby ownership and effective control of the Company is transferred or conveyed to a person or entity that is not controlled by the Company.

2.4   Committee

“Committee” means the Compensation Committee of the Board.

2.5   Common Stock

"Common Stock" means the common stock of Paperweight Development Corporation.

2.6   Company

"Company" means Appleton Papers Inc., 825 East Wisconsin Avenue, Appleton, Wisconsin 54911-1703.  “Company” also means (except where the context relates solely to Appleton Papers Inc.) any subsidiary or other affiliate of Appleton Papers Inc. who employs an Eligible Employee (as designated by the Committee in accordance with Section 4.1).  Any such subsidiary or affiliate of Appleton Papers Inc. that has become a “Company” as provided above is deemed to have designated Appleton Papers Inc. as its agent with respect to amending or terminating the Plan.  Any such action by Appleton Papers Inc. shall be binding on such subsidiary or affiliate at the time taken.

2.7   Disability

“Disability” means a physical or mental condition of the Participant which results in the Participant receiving benefits under an applicable Company’s long term disability insurance plan, or in the event the Participant is not participating in a Company long term disability insurance plan, means disability as defined under the long term disability plan of Appleton Papers Inc.

2.8   Eligible Employee

"Eligible Employee" means an employee of Appleton Papers Inc. in the following classifications:  (1) the Chief Executive Officer, (2) a Vice President or Mill Manager, (3) a director-level employee; and (4) any other key employee of a participating Company who has been designated by the Committee as an Eligible Employee.

2.9   Employment .

References in the Plan to “employment” with the Company; “year(s) of employment” and “termination of employment” shall in all events refer to the total period of employment with Appleton Papers Inc. and any of its subsidiaries or affiliates.  For example, a Participant’s termination of employment for purposes of the Plan shall occur at the time the Participant is no longer employed by Appleton Papers Inc., or any of its subsidiaries or affiliates.

2.10   ESOP .

"ESOP" means the Appleton Papers Retirement Savings and Employee Stock Ownership Plan.

2.11   Exercise Date

“Exercise Date” means the date upon which a Participant delivers a Notice of Exercise as provided herein during the Exercise Period and within the Exercise Window indicating the Participant’s intention to cash out the Phantom Stock Units granted pursuant to a particular Grant Confirmation.

2.12   Exercise Period

“Exercise Period” means, with respect to a particular grant of Phantom Stock Units, the period or periods during which such Phantom Stock Units are exercisable, as determined by the Committee on the Grant Date and as set out in the Grant Confirmation.

2.13   Exercise Window

“Exercise Window” means each 60 day period following the date of the announcement of the Fair Market Value assigned to the Common Stock as of June 30 ^th and December 31 ^st of each year as confirmed by Notice sent to each Participant by the Company on a semi-annual basis as soon as administratively practical after the date of announcement.

2.14   Fair Market Value

“Fair Market Value” means the fair market value of a Phantom Stock Unit which is equal to the fair market value most recently assigned to Common Stock under the terms of the ESOP prior to the Grant Date or the Exercise Date, as applicable.  For Example, an exercise of a Phantom Stock Unit during an Exercise Window between January 1 and June 30 will be based on the fair market value assigned to the Common Stock under the ESOP on the prior December 31 valuation. An exercise during an Exercise Window between July 1 and December 31 will be based on the prior June 30 valuation.

2.15   Participant

“Participant” means an Eligible Employee who participates in the Plan in accordance with Article 4.

2.16   Phantom Stock Unit

“Phantom Stock Unit” means a bookkeeping unit and accounting mechanism designed to measure the value of a nonequity compensation unit payable as taxable compensation to the Participant in accordance with Article 5.  One Phantom Stock Unit has a value, as of the date of grant to a Participant pursuant to Section 4.1, equal to the value of one share of Common Stock at such time (as determined pursuant to Section 5.6).

2.17   Plan

“Plan” means the Appleton Papers Inc. Long Term Incentive Plan, as set forth herein and as amended from time to time.

2.18   Plan Year

“Plan Year” means the fiscal year of Appleton Papers Inc.

2.19   Representative

“Representative” means the personal representative of the Participant's estate, and after final settlement of the Participant's estate, the successor or successors entitled thereto by law.

2.20   Retirement

“Retirement” means termination of employment with the Company under a tax-qualified retirement plan maintained by the Company or an applicable subsidiary or affiliate, including early retirement under such plan.

3.1   Committee Administration

The Committee shall be responsible for the operation and administration of the Plan. The decision of a majority of the members of the Committee shall consti­tute the decision of the Committee.  The Committee may act either at a meeting at which a majority of the members of the Committee is present or by a writing signed by all Committee members.  The Committee shall have full discretion, power and authority to make factual determinations, construe, interpret and administer the Plan, to adopt such rules and regulations governing the administration of the Plan, and shall exercise all other duties and powers conferred on it by the Plan, or which are incidental or ancillary thereto, and may designate agents to assist it in administration of the Plan.  The Committee shall have the sole, final and conclusive authority to determine, consistent with and subject to the provisions of the Plan, the individuals eligible to participate in the Plan, the Participants to whom Phantom Stock Units are to be awarded, the number of Phantom Stock Units to be awarded, vesting of awards and all other matters relating to the Plan.  Benefits will be paid only if the Committee determines in its discretion that the applicant is entitled to them.

3.2   Maximum Reserved Units

The maximum number of Phantom Stock Units that may be granted each year shall be authorized by the Compensation Committee of the Board of Directors in accordance with the executive compensation goals and policies.

3.3   Changes in Capital Structure

If there is a change in the outstanding Common Stock by reason of the issuance of additional units, recapital­ization, reclassification, reorganization or similar transaction, the Committee shall proportionately adjust, in an equitable manner, the aggregate number of available Phantom Stock Units and the number of Phantom Stock Units held by Partici­pants.  The adjustment shall be made in a manner that will cause the relationship between the aggregate appreciation in the outstanding Common Stock and the increase in value represented by each Phantom Ownership Unit to remain unchanged as a result of the transaction.

4.1   Annual Grants

Phantom Stock Units shall be granted, as of the first day of a Plan Year (the “Grant Date”), to all Eligible Employees who are Participants with respect to that Plan Year.&