New Deferred Compensation Plan



 Exhibit 10.12 
 APPLETON PAPERS INC. 
 NEW DEFERRED COMPENSATION PLAN* 
 The Appleton Papers Inc. New Deferred Compensation
Plan provides eligible executives an opportunity to defer base salary and/or bonuses. With the exception of FICA taxes, monies deferred are not subject to Federal and/or State income taxation until they are distributed to the participant.

  

	I.	Establishment and Purpose 

 Appleton Papers Inc.
(the “Company”) established an unfunded deferred compensation plan within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder
(“ERISA”) for a select group of management and/or highly compensated employees. Such plan, as set forth in this document, is known as the Appleton Papers Inc. New Deferred Compensation Plan (the “Plan”). 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. 
 For purposes of the Plan, the word “Company” includes any affiliates and subsidiaries of Appleton Papers Inc. that adopt this Plan with the consent of Appleton Papers Inc. 
  

	II.	Eligibility 

 Certain key executives who occupy the
positions set forth below with respect to the Company, who are selected by the Board of Directors of the Company (the “Board of Directors”), or the officer or committee designated by the Board of Directors are eligible for participation in
the Plan: 
  

	 	•	 	Chief Executive Officer 

  

	 	•	 	Vice Presidents 

  

	 	•	 	Mill Managers 

  


	*	As amended October 31, 2002; Plan Effective Date is November 9, 2001. 








 In addition, the Board of Directors (or the officer or committee designated by the Board of Directors),
may designate any other executive employee of the Company as eligible to participate in the Plan, provided however, that any such executive is a member of a select group of management or highly compensated employees as determined for purposes of
ERISA. 
 Eligible employees who elect to participate in the Plan and make deferrals hereunder are referred to herein as
“Participants”. 
  

	III.	Plan Year 

 The “Plan Year” is the
12-month period beginning on each January 1 and ending on each December 31. The first Plan Year shall commence on the Effective Date. 
  

	IV.	Salary and/or Bonus Deferral 

 Participants may
defer all or a portion of either their base salary and/or bonus on an annual basis. The minimum base salary deferral is $400 per month. The minimum bonus deferral is 25% of the bonus amount. A deferral of 100% of compensation (whether salary or
bonus) shall in all events be subject to, and net of, any applicable withholdings, e.g. FICA and other payroll taxes; provided such amounts shall not be subject to elective deferrals made under Code Section 125, 402(g) or 132(f)(4). 

In addition, a Participant may elect to defer such other amounts of compensation as the Company may agree pursuant to an employment agreement,
separation agreement, retention or loyalty bonus agreement or other similar written contractual arrangement with the Participant; provided that the terms and conditions of such agreement or other arrangement shall be, and are, incorporated herein
and made a part hereof to the extent necessary for the proper administration thereof. 
 Participants shall be provided deferral election
forms and detailed instructions during the month of October prior to each plan year (or, prior to the first day of the month for which a deferral is made or scheduled to commence, where an eligible employee is first made eligible to participate
other than as of the first day of a plan year). Control procedures require that all eligible employees, whether or not they elect to defer, complete and sign a deferred compensation election form. Except as noted above, the completed and signed
forms must be returned to the Plan Administrator by the first day of November prior to the applicable plan year. For the Plan Year commencing on the Effective Date, such election must be made prior to the Effective Date (or such other date prior to
the Effective Date as the Company may permit). 
  

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 Amounts deferred are credited to the Participant’s deferred compensation account as of the date on
which the salary and/or bonus normally would have been paid. FICA and other tax obligations attributable to such deferrals shall be deducted from the amount scheduled for deferral, at the time of deferral. 
  

	V.	Special Company Matching Contribution. 

 A
Participant may receive a Special Company Match pursuant to Exhibit A, attached hereto; provided, however, the Board of Directors (or the officer or committee designated by the Board of Directors), may designate any other executive employee
of the Company as eligible to receive a Special Company Match hereunder. Any Company Match credited to the account of a Participant shall be administered in accordance with the terms and conditions of the Plan. 
  

	VI.	Earnings on Deferred Compensation 

 Earnings are
credited to each Participant’s account as of the first day of each month, before any additional deferrals for that month are credited. The amount of earnings so credited for a month is calculated by multiplying the Participant’s account
balance as of the beginning of such month by an interest factor determined as follows: the weekly average rate for 10-year Treasury notes (as reported by the Federal Reserve Board and quoted in The Wall Street Journal), for the last week ending
within such month. Accounts are not actually invested. 
 For the month with respect to which a Participant’s account is required to be
fully and finally distributed, and after earnings are calculated and credited for such final month, the account shall be deemed to have been distributed on the first day of such month (irrespective of the actual date of distribution). 
  

	VI-A	Special Rules for Deferrals of Loyalty Payment 

 This Article VI-A is effective January 1, 2003. Notwithstanding any other provision of the Plan, including without limitation the payout provisions of Articles VII and XIV, the value of any loyalty payment (relating to the Paperweight
Development Corporation (“PDC”) acquisition of the Company) deferred under this Plan (after adjustment for FICA and other tax obligations attributable thereto) shall, at the time of deferral, be converted 

  

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to notional shares of the common stock of PDC (“Common Stock”), based on the initial $10.00 per share price of PDC, and thereupon shall be credited
to the Participant’s account. 
 The value of each notional share of the Common Stock of PDC payable on a distribution event shall be
determined as set forth below. Articles X and XI are not applicable to deferrals of loyalty payments in any event. 
  

	 	A.	Retirement: the fair market value of a share of Common Stock, determined by the ESOP trustee (“Valuation”) as of December 31 of the Plan Year in which Retirement
occurs; 

  

	 	B.	Death or Termination: the fair market value of a share of Common Stock, determined by reference to the Valuation of June 30 of a Plan Year if death or termination occurs on or
before June 30 of such Plan Year, or as of December 31 of the Plan Year if death or termination occurs on or after July 1 of such Plan Year. 

  

	 	C.	Change of Control; Public Offering: the price per share of Common Stock of PDC received as a result of a Change of Control (as defined in the Appleton Papers Inc. Long Term
Incentive Plan) or (3) a public offering price. 

 All such distributions shall be paid in cash, as soon as practicable
after the determination of the value thereof. 
  

	VII.	Payout 

 Participants may designate, from the
following options, how their deferred amounts are to be paid out upon retirement: 
  

	 	•	 	a single sum in January following the year of retirement. 

  

	 	•	 	annual installments over 5, 10, or 15 years beginning in January following the year of retirement. 

 Such designation must be delivered to the Company, in writing, no later than November 1 of the year immediately preceding the year in which the
Participant’s retirement date occurs. If no designation is made prior to such time, such deferred amounts shall be paid out as provided in Article XIV hereof. Such designations may not be changed after retirement or termination of employment
for any other reason. 
  

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 For purposes of this Plan, “retirement” means termination of employment at or after a
participant’s Normal or Early Retirement Date, as those terms are defined in the Appleton Papers Inc. Retirement Plan for Non-Bargaining Unit Employees (or, if applicable, the similar plan of a company affiliated or under common control with
the Company in which the participant is participating or is a member at the time of termination of employment with the Company). 
  

	VIII.	Beneficiary 

 All Participants are required to
complete a beneficiary notice designating how their deferred compensation account is to be distributed in case of death. Participants may change their beneficiary designations from time to time by completing an amended beneficiary notice.

  

	IX.	No Transfer 

 Except as permitted by Article VIII,
no rights of any kind under this Plan can be transferred or assigned by the Participant or any designated beneficiary or be subject to alienation, encumbrance, garnishment, attachment, execution, or levy or seizure by legal process of any kind,
voluntary or involuntary. 
  

	X.	Hardship Withdrawal 

 Once deferred, the funds are
expected to remain in the deferred account until the date elected for distribution. However, in the case of a severe financial hardship or genuine financial emergency caused by accident, illness, or other event totally beyond the control of the
participant, application may be made for withdrawal from the account to cover actual expenses. In the event of such withdrawal, deferrals shall be stopped for the balance of the current plan year, as well as the next full plan year. The application
must be in writing and include all of the details relevant to the situation. The Plan Administrator is the sole judge of the severity of the situation and the amount, if any, which may be withdrawn. 
 Hardship withdrawals are paid in a single sum as soon as administratively possible following the date of determination of severe financial hardship or
emergency. 
  

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	XI.	Special Withdrawal Prior to Full Distribution of Account 

 Notwithstanding any other provision of this Plan, a Participant (whether an active Employee of the Company, or a former Employee or Retiree of the Company with a continuing deferred account balance) may at any time request a withdrawal of
all or any portion of his deferred account prior to the full distribution thereof, subject to the irrevocable forfeiture of ten percent (10%) of the amount so withdrawn. Any such forfeiture shall revert solely to the Company. The amount of such
withdrawal, reduced by such forfeiture and any applicable tax withholdings, shall be paid to the Participant as soon as reasonably practicable after the receipt of a written request therefor. 
 Any withdrawal made under this Article XI shall be made from the Participant’s Account for each Year in the amounts and proportions specified by the
Participant; provided that if the Participant does not so specify, such withdrawals shall be made proportionately out of the balance of such accounts outstanding at the time of withdrawal and shall thereby proportionately reduce the amounts of
distributions therefrom. 
 If any such withdrawal causes the balance of the Participant’s Account, or the account of any other
Participant, to be or become taxable by the Internal Revenue Service, such withdrawal, and the right to make future withdrawals, shall be deemed to be null and void ab initio, and the Participant shall redeposit the withdrawn amount to with
the Company (and any amounts forfeited shall be restored by the Company to the Participant’s account), subject to the other terms and conditions of this Plan. This redeposit requirement is a condition to participation in this Plan. 

 

	XII.	Newly Eligible Participants 

 Executives attaining
one of the positions described in Article II above by means of employment or promotion are eligible for participation beginning with the plan year following the date of their selection for participation. Newly eligible participants will be provided
with deferral election forms prior to their first plan year of eligibility. The completed and signed forms must be returned to the Plan Administrator by the first day of November prior to the applicable plan year (or, if the date of selection is on
or after November 1 of such year, by the last day of the month prior to the applicable plan year). 
  

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	XIII.	Transfer to a Non-Eligible Position 

 Participants
who are transferred from an eligible to a non-eligible position are prohibited from deferring additional monies into their accounts as of the date of the reassignment. However, their previously elected payout schedules remain in force. 

 

	XIV.	Payout in the Event of Death or Termination 

 If the
Participant dies, or terminates service for any reason other than retirement, all deferred monies are paid out in a single sum in the month following the month of death or termination. This distribution is made regardless of the payment method
previously elected. 
  

	XV.	Administration of the Plan 

 The Company has
appointed the Vice President Human Resources (the “Plan Administrator”) to administer the Plan. The Plan is administered under the guidelines established by the Plan Administrator, which has sole discretionary authority over the
administration of the Plan. 
 The Company reserves the right to modify, amend or terminate the plan at any time, provided, however, that no
such action will have the effect of diminishing the benefits payable hereunder in respect of any person then participating in or receiving benefits under this Plan, without the consent of such person. 
  

	XVI.	General Provisions 

  

	 	A.	Finality of Determination. The determination of the Plan Administrator as to any disputed questions arising under this Plan, including questions of construction and
interpretation shall be final, binding, and conclusive upon all persons. 

  

	 	B.	Expenses. The expenses of administering the Plan shall be borne by the Company. 

  


	 	C.	Indemnification and Exculpation. The Plan Administrator, its agents and the officers, directors, and employees of the Company shall be indemnified and held harmless by the
Company against and from any and all loss, cost, liability, or expense that may be imposed upon or reasonably incurred by them in connection with or resulting from any claim, action, suit, or proceeding to which they may be a party or in which they
may be involved by reason of any action taken or failure 

  

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to act under this Plan and against and from any and all amounts paid by them in settlement (with the Company’s written approval) or paid by them in
satisfaction of a judgment in any such action, suit, or proceeding. The foregoing provision shall not be applicable to any person if the loss, cost, liability, or expense is due to such person’s gross negligence or willful misconduct.

  

	 	D.	Funding. All benefits paid under this Plan shall be paid from the general assets of the Company. Such amounts shall be reflected on the accounting records of the Company but
shall not be construed to create or require the creation of a trust, custodial, or escrow account. No Participant shall have any right, title, or interest whatever in or to any investment reserves, accounts, or funds that the Company may purchase,
establish, or accumulate to aid in providing benefits under this Plan. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create a trust or fiduciary relationship of any kind between the Company and a Participant
or any other person. Neither a Participant nor any beneficiary of a Participant shall acquire any interest greater than that of an unsecured creditor. 

  

	 	E.	Action by the Company. Any action required of or permitted by the Company under this Plan shall be by resolution of the Board of Directors or any person or persons authorized
by resolution of the Board of Directors including, but not limited to, the Plan Administrator. 

  

	 	F.	Employee Rights. Establishment of the Plan shall not be construed to give any Participant the right to be retained by the Company or to any benefits not specifically provided
by the Plan. 

  

	 	G.	Severability. In the event any provision of the Plan shall be held invalid or illegal for any reason, any illegality or invalidity shall not affect the remaining parts of the
Plan, but the Plan shall be construed and enforced as if the illegal or invalid provision had never been inserted, and the Company shall have the privilege and opportunity to correct and remedy such questions of illegality or invalidity by amendment
as provided in the Plan. 

  

	 	H.	Applicable Law. The Plan is fully exempt from Titles II, III, and IV of ERISA. The Plan shall be governed and construed in accordance with the laws of the State of Wisconsin,
except to the extent such laws are preempted by ERISA. 

  

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	 	I.	Appeals from Denial of Claims. If any claim for benefits under the Plan is wholly or partially denied, the claimant shall be given notice in writing within a reasonable
period of time after receipt of the claim by the Plan (not to exceed 90 days after receipt of the claim or, if special circumstances require an extension of time, written notice of the extension shall be furnished to the claimant and an additional
90 days will be considered reasonable) by registered or certified mail of such denial, written in a manner calculated to be understood by the claimant, setting forth the following information: 

  

	 	(i)	the specific reasons for such denial; 

  

	 	(ii)	specific reference to pertinent Plan provisions on which the denial is based; 

  

	 	(iii)	a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and


  

	 	(iv)	an explanation of the Plan’s claim review procedure. 

 The claimant also shall be advised that he or his duly authorized representative may request a review by the Plan Administrator of the decision denying the claim by filing with the Plan Administrator, within 60 days after such notice has
been received by the claimant, a written request for such review, and that he may review pertinent documents, and submit issues and comments in writing within the same 60-day period. If such request is so filed, such review shall be made by the Plan
Administrator within 60 days after receipt of such request, unless special circumstances require an extension of time for processing, in which case the claimant shall be so notified and a decision shall be rendered as soon as possible, but not later
than 120 days after receipt of the request for review. The claimant shall be given written notice of the decision resulting from such review, which notice shall include specific reasons for the decision, written in a manner calculated to be
understood by the claimant, and specific references to the pertinent Plan provisions on which the decision is based. Only upon the exhaustion of the administrative remedies outlined above may a claimant or his duly authorized representative begin a
legal action pressing a claim for benefits under the Plan. 
 * * * * * 
  

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 ATTACHMENT A 
 APPLETON PAPERS INC. 
 NEW DEFERRED COMPENSATION PLAN 
 EXHIBIT A 
 SPECIAL COMPANY
MATCH 
 OVERVIEW 
 Due to tax law
limitations2 on contributions to the Appleton Papers Savings and Employee Stock Ownership Plan (the “KSOP”
or “Plan”), some executives are not able to receive the full amount of “matching contributions” available under the Plan. Normally, the Company matches the first 6% of elective deferrals at $1.00 on the dollar for employee
deferrals to the Executive’s ESOP Accounts and $.50 on the dollar for deferrals to non-ESOP accounts. 
 In addition, eligible Appleton Papers
executives who elect to defer income under the Appleton Papers Inc. New Deferred Compensation Plan are not currently eligible for Company matching contributions on that portion of their income that would have been previously eligible for a 401(k)
match. 
 To partially remedy this situation, Appleton Papers provides a Special Company Match of $.50 on each dollar that cannot be matched under the Plan
because of these tax limitations, and on income deferred under the New Deferred Compensation Plan. The maximum Special Company Match is the difference between a theoretical match (not to exceed $10,000) and the actual 401(k) match (but assuming the
actual match in all events to be $.50 for each dollar up to 6% of pay). 
 The details of this Special Company Match are
explained below. 
 ELIGIBILITY 
  

	1.	Executives selected by the Compensation Committee as eligible for participation in the Appleton Papers Inc. New Deferred Compensation Plan will also be eligible for the Special
Company Match. To actually receive a Special Company Match, executives must defer salary and/or bonus to the New Deferred Compensation Plan. 

  

	2.	Executives must also be Participants in the KSOP, and elect to defer a minimum of 6% of eligible Compensation into the Plan. 

  


	2	Tax law limits the amount of elective contributions that can be made under the Company Plan (for the year 2001, the indexed maximum elective deferral is $10,500),
and the amount of compensation that may be used for benefit purposes (for the year 2001, the indexed maximum compensation is $170,000). 

  

 A-1 








 ADMINISTRATION 
  

	1.	Appleton Papers will credit a Special Company Match to the Participant’s account in the New Deferred Compensation Plan, which is the difference between the theoretical 401(k)
match (not to exceed $10,000) and the actual 401(k) match (prorated to $.50 on the dollar up to 6% of pay). The theoretical match is 3% of eligible compensation as defined under the Plan, not reduced by IRS limits or other deferral decisions. This
will typically be base salary plus bonus. 

  

	2.	The Special Company Match may not exceed 50% of the amount actually being deferred by the Participant under the Appleton Papers New Deferred Compensation Plan for the year to which
the Special Company Match applies. 

  

	3.	Each January, Appleton Papers will calculate the amount of any Special Company Match dollars to be added to the Participant’s deferred compensation account. The adjustment will
be made as of February 1st, at which time the Special Company Match will first become subject to interest earnings. 

  

	  	Example of Year-end Calculation: Assume Executive earns $150,000 salary + $50,000 bonus and elects to defer 6% under the Plan and the entire bonus under the Appleton
Papers New Deferred Compensation Plan. 

 Executive’s Name
                                        
             
  

	 	I.	DETERMINATION OF “SPECIAL MATCH” 

  

				
	 	  	Year 2000
	 Total Salary Earned
	  	$	150,000
	 Total Bonus Earned
	  	 	50,000
		  	 	 
	 Total Compensation
	  	$	200,000
		  	 	 
	 Theoretical Match Available*
	  	 	6,000
	 Actual 401(k) Match**
	  	 	-4,500
		  	 	 
	 Available Special Company Match
	  		
	 Through Deferred Comp. ***
	  	$	1,500
		  	 	 



	*	3% of Total Compensation, not to exceed $10,000. 


	**	Actual from payroll system (prorated to $.50 on the dollar up to 6% of pay). 


	***	Limited to 50% of compensation actually deferred under the Appleton Papers New Deferred Compensation Plan by Participant. 

  

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	 	II.	NEW DEFERRED COMPENSATION PLAN SUMMARY 

  

				
	 Salary/Bonus
	  	$	50,000
	 Special Company Match
	  	 	1,500
		  	 	 
	 Appleton Papers New Deferred Comp. Total
	  	$	51,500
		  	 	 

  

	4.	The payout of the Special Company Match dollars held within the Appleton Papers Inc. New Deferred Compensation Plan will follow the payout option selected under the appropriate
salary/bonus deferral election. 

 * * * * * 
  

 A-3