<PAGE>

                                                                    Exhibit 10.8


                               SECURITY AGREEMENT
                               ------------------

         SECURITY AGREEMENT (as amended, supplemented, restated or otherwise
modified from time to time, this "Agreement"), dated as of November 9, 2001,
                                  ---------
made by APPLETON PAPERS INC., a Delaware corporation ("API"), PAPERWEIGHT
                                                       ---
DEVELOPMENT CORP. ("PDC"), a Wisconsin corporation, NEW APPLETON LLC, a
                    ---
Wisconsin limited liability company ("New Appleton" and, together with API, PDC
                                      ------------
and any of their respective successor(s) and assigns, the "Grantors"), in favor
                                                           --------
of ARJO WIGGINS APPLETON p.l.c., a corporation incorporated in England and Wales
with company number 2454830 (the "Secured Party").
                                  -------------

                              W I T N E S S E T H:
                              - - - - - - - - - -

         WHEREAS, pursuant to a Purchase Agreement dated as of July 5, 2001 (the
"Purchase Agreement"), PDC and New Appleton have indirectly purchased one
 ------------------
hundred percent (100%) of the outstanding capital stock of API from the Sellers,
as defined therein (the "API Purchase"); and
                         ------------

         WHEREAS, in connection with the API Purchase, AWA and the Grantors have
entered into that certain Fox River AWA Environmental Indemnity Agreement (the
"Indemnity Agreement") dated as of the date hereof; and
 -------------------

         WHEREAS, API acknowledges that it shall receive substantial benefits
from the covenants of the Secured Party in the Indemnity Agreement; and

         WHEREAS, it was a condition precedent to the Secured Party's execution
and delivery of the Indemnity Agreement that the Grantors agree to execute and
deliver this Agreement.

         NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree as follows:

                                   ARTICLE I

                                  DEFINITIONS

         SECTION 1.1 Certain Definitions. The following terms (whether or not
                     -------------------
underscored or capitalized) when used in this Agreement, including its preamble
and recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):

         "Agreement" is defined in the preamble.
          ---------                    --------

         "API" is defined in the preamble.
          ---                    --------

         "API Purchase" is defined in the preamble.
          ------------                    --------

         "Assigned Agreements" is defined in Section 2.1.
          -------------------                -----------

<PAGE>

         "Basic Documents" of a Person means the certificate of incorporation or
          ---------------
certificate of formation and the bylaws or operating agreement of such Person as
amended from time to time.

         "Business Day" means any day, excluding Saturday, Sunday and any other
          ------------
day on which commercial banks in New York, New York or London, England are
authorized or required by law to close.

         "Collateral" is defined in Section 2.1.
          ----------                -----------

         "Event of Default" means (i) an Insolvency Event (as defined in the
          ----------------
Indemnity Agreement) has occurred with respect to any Grantor or any other
Member of the Buyers' Group (as defined in the Indemnity Agreement), or (ii) any
Grantor or any other Member of the Buyers' Group shall have defaulted in the
performance of any of its obligations related to the Secured Party's rights to
receive Recoveries under the Indemnity Agreement (and such default shall not
have been remedied within thirty (30) days after written notice thereof shall
have been given by the Secured Party to the defaulting party; provided that such
                                                              --------
notice and cure period shall not apply if any such extended period could
reasonably be expected to have a material adverse effect to the Secured Party).

         "Grantors" is defined in the preamble.
          --------                    --------

         "Indemnity Agreement" is defined in the preamble.
          -------------------                    --------

         "Liens" means all liens, claims, charges, security interests, options
          -----
or other legal or equitable encumbrances (other than restrictions on transfer
generally arising under the Securities Act or other applicable securities laws).

         "New Appleton" is defined in the preamble.
          ------------                    --------

         "Obligations" means the obligations of a Grantor pursuant to the
          -----------
Indemnity Agreement to remit the Recoveries and the proceeds thereof to Secured
Party, whether now existing or hereafter incurred, direct or indirect, absolute
or contingent, and due or to become due and to pay amounts pursuant to Section
                                                                       -------
6.2 hereof.
---

         "PDC" is defined in the preamble.
          ---                    --------

         "Person" means any individual, firm, partnership, association, trust,
          ------
corporation, joint venture, unincorporated organization, limited liability
company, governmental body or other entity.

         "Purchase Agreement" is defined in the preamble.
          ------------------                    --------

         "Recoveries" is defined in Section 1.4 of the Indemnity Agreement.
          ----------                -----------        -------------------

         "Secured Party" is defined in the preamble.
          -------------

         "Securities Act" means the Securities Act of 1933, as amended, or any
          --------------
similar federal law then in force.

                                      -2-

<PAGE>

     "U.C.C." means the Uniform Commercial Code as from time to time in effect
      -----
in the State of New York or, with respect to any Collateral located in any state
or jurisdiction other than the State of New York, the Uniform Commercial Code as
from time to time in effect in such state or jurisdiction.

     SECTION 1.2 Other Definitions. Unless otherwise defined herein or the
                 -----------------
context otherwise requires, terms used in this Agreement, including its preamble
and recitals, have the meanings provided in the Indemnity Agreement. In
addition, as used herein, the words "include," "includes," and "including" shall
be deemed to be followed by the phrase "without limitation."

     SECTION 1.3 U.C.C. Definitions. Unless otherwise defined herein or the
                 ------------------
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Agreement, including its preamble and recitals, with such
meanings.

                                   ARTICLE II

                                SECURITY INTEREST

     SECTION 2.1 Grant of Security. Each Grantor hereby assigns and pledges to
                 -----------------
the Secured Party, and hereby grants to the Secured Party a security interest
in, all of its right, title and interest in and to the following, whether now or
hereafter existing or acquired (the "Collateral"):
                                     ----------

          (a) all of such Grantor's right, title and interest in and to the
     Recoveries (including without limitation those Recoveries constituting
     "commercial tort claims" as defined in Section 9-102(13) of the U.C.C.);

          (b) all of such Grantor's right, title and interest in and to any and
     all contracts and agreements (the "Assigned Agreements") to which such
                                        -------------------
     Grantor is a party to the extent giving rise to a right to receive
     Recoveries, as the Assigned Agreements may be amended, supplemented,
     restated, replaced or otherwise modified from time to time including (i)
     all rights of such Grantor to receive moneys due and to become due to the
     extent constituting Recoveries under or pursuant to the Assigned
     Agreements, (ii) all rights of such Grantor to receive proceeds of any
     insurance, indemnity, warranty or guaranty with respect to the Assigned
     Agreements to the extent the same constitute Recoveries, (iii) all claims
     of such Grantor for damages arising out of or for breach of a default under
     the Assigned Agreements to the extent the same constitute Recoveries, and
     (iv) the right of such Grantor to terminate such Assigned Agreements, to
     perform thereunder and to compel performance and otherwise exercise all
     remedies thereunder in respect of Recoveries;

          (c) with respect to PDC and New Appleton, all of such Grantor's right,
     title and interest in and to the PDC Agreement, as the PDC Agreement may be
     amended, supplemented, restated, replaced or otherwise modified from time
     to time;

                                      -3-

<PAGE>

          (d) all books, records, writings, data bases and other information
     relating to, evidencing or embodying, any of the foregoing in this Section
                                                                        -------
     2.1; and
     ---

          (e) all Proceeds (as defined in the U.C.C.), Supporting Obligations
     (as defined in the U.C.C.) and products of any and all of the foregoing and
     all collateral security and guarantees given by any Person with respect to
     any of the foregoing, to the extent such Proceeds and products have been
     segregated as required under Section 4.1.2.
                                  -------------

     SECTION 2.2 Security for Obligations. This Agreement secures the prompt
                 ------------------------
payment in full of all Obligations.

     SECTION 2.3 Continuing Security Interest. This Agreement shall create a
                 ----------------------------
continuing first priority security interest in the Collateral and shall:

          (a) remain in full force and effect until the full performance of the
     Grantors under the Indemnity Agreement, the payment in full in cash of all
     monetary Secured Obligations and the termination of the Indemnity
     Agreement;

          (b) be binding upon each Grantor, its successors, transferees and
     assigns; and

          (c) inure, together with the rights and remedies hereunder, to the
     benefit of the Secured Party and its successors or assigns.

Upon the full performance of the Grantors under the Indemnity Agreement and the
payment in full of all Obligations, the security interest granted herein shall
terminate and all rights to the Collateral shall revert to the Grantors. Upon
any such termination or release, the Secured Party will, at the Grantors'
expense, execute and deliver to the Grantors such documents as the Grantors
shall reasonably request to evidence such termination.

     SECTION 2.4 Grantors Remain Liable. Anything herein to the contrary
                 ----------------------
notwithstanding:

          (a) the Grantors shall remain liable under all contracts and
     agreements included in the Collateral (including the Assigned Agreements
     and the API Agreement) to the extent set forth therein, and shall perform
     all of their respective duties and obligations under such contracts and
     agreements to the same extent as if this Agreement had not been executed;

          (b) the exercise by the Secured Party of any of its rights hereunder
     shall not release the Grantors from any of their respective duties or
     obligations under any such contracts or agreements included in the
     Collateral; and

          (c) the Secured Party shall have no obligation or liability under any
     such contracts or agreements included in the Collateral by reason of this
     Security Agreement, nor shall the Secured Party be obligated to perform any
     of the obligations or duties of the Grantors thereunder or to take any
     action to collect or enforce any claim for payment assigned hereunder.

                                      -4-

<PAGE>

     SECTION 2.5 Security Interests Absolute. All rights of the Secured Party
                 ---------------------------
and the security interests granted to the Secured Party hereunder, and all
obligations of the Grantors hereunder, shall be absolute and unconditional,
irrespective of:

          (a) the failure of the Secured Party:

              (i)  to assert any claim or demand or to enforce any right or
          remedy against the Grantors or any other Person under the provisions
          of the Indemnity Agreement or otherwise, or

              (ii) to exercise any right or remedy against any other guarantor
          of, or collateral securing, any Obligation (other than in accordance
          with the Indemnity Agreement);

          (b) any change in the time, manner or place of payment or performance
     of, or in any other term of, all or any of the Obligations or any other
     extension, compromise or renewal of any Obligation;

          (c) any reduction, limitation, impairment or termination of any
     Obligation for any reason (other than in accordance with the Indemnity
     Agreement), including any claim of waiver, release, surrender, alteration
     or compromise, and shall not be subject to (and the Grantors hereby waive
     any right to or claim of) any defense or setoff, counterclaim, recoupment
     or termination whatsoever by reason of the invalidity, illegality,
     nongenuineness, irregularity, compromise, unenforceability of, or any other
     event or occurrence affecting, any Obligation or otherwise, subject,
                                                                 -------
     however, to the right of the Grantors to set-off against any Recoveries
     -------
     owing and unpaid by AWA to Grantors under the Indemnity Agreement or that
     certain Relationship Agreement, dated as of the date hereof, by and among
     PDC, PDC Capital Corp., Secured Party, Arjo Wiggins (Bermuda) Holdings
     Limited and Arjo Wiggins Appleton (Bermuda) Limited;

          (d) any amendment to, rescission, waiver, or other modification of, or
     any consent to departure from, any of the Obligations (other than in
     accordance with the Indemnity Agreement);

          (e) any addition, exchange, release, surrender or non-perfection of
     any collateral (including the Collateral), or any amendment to or waiver or
     release of or addition to or consent to departure from any guaranty, for
     any of the Obligations (other than in accordance with the Indemnity
     Agreement); or

          (f) any other circumstances which might otherwise constitute a defense
     available to, or a legal or equitable discharge of, any Grantor (other than
     in accordance with the Indemnity Agreement).

                                      -5-

<PAGE>

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

     SECTION 3.1 Representations and Warranties. The Grantors, jointly and
                 ------------------------------
severally, represent and warrant to the Secured Party as set forth in this
Article.

          SECTION 3.1.1 Location of Collateral. The principal place of business
                        ----------------------
and chief executive office of each Grantor and the office where each Grantor
keeps its records, original copies of all of its contracts and agreements is at
825 East Wisconsin Avenue, Appleton, Wisconsin 54911. PDC and API is each duly
incorporated and in good standing under the laws of the State of Wisconsin. New
Appleton has been duly formed and is a validly existing limited liability
company under the laws of the State of Wisconsin.

          SECTION 3.1.2 Ownership, No Liens, etc. The Grantors own the
                        ------------------------
Collateral free and clear of any Lien, except for the security interest created
by this Agreement. No effective financing statement or other instrument similar
in effect covering all or any part of the Collateral has been signed by the
Grantors or is on file in any recording office, except as may have been filed in
favor of the Secured Party relating to this Agreement.

          SECTION 3.1.3 Validity, etc. This Agreement creates a valid first
                        -------------
priority security interest in the Collateral, subject to no Liens other than the
security interest created by this Agreement, securing the payment and
performance of the Obligations, and all filings and other actions necessary or
desirable to perfect and protect such security interest have been duly taken.

          SECTION 3.1.4 Authorization, Approval, etc. No authorization, approval
                        ----------------------------
or other action by, and no notice to or filing with, any governmental authority
or regulatory body (other than the filing of financing statements in the Uniform
Commercial Code filing offices of Delaware and Wisconsin), is required either:

          (a) for the grant by the Grantors of the security interest granted
     hereby or for the execution, delivery and performance of this Agreement by
     the Grantors, or

          (b) for the perfection of or the exercise by the Secured Party of its
     rights and remedies hereunder.

          SECTION 3.1.5 Due Execution, Validity, Etc. Each Grantor has full
                        ----------------------------
power and authority, and holds all requisite governmental licenses, permits and
other approvals, to enter into and perform its obligations under this Agreement.
The execution, delivery and performance by each Grantor of this Agreement does
not contravene or result in a default under such Grantor's Basic Documents or
contravene or result in a default under any contractual restriction, Lien or
governmental regulation or court decree or order binding on each Grantor. This
Security Agreement has been duly executed and delivered on behalf of each
Grantor and constitutes the legal, valid and binding obligation of each Grantor
enforceable in accordance with its terms.

                                      -6-

<PAGE>

                                   ARTICLE IV

                                    COVENANTS

     SECTION 4.1   Certain Covenants. The Grantors covenant and agree that, so
                   -----------------
long as any portion of the Obligations shall remain unpaid or unperformed, the
Grantors shall, unless the Secured Party shall otherwise consent in writing,
perform the obligations set forth in this Section.

          SECTION 4.1.1 Location. Each Grantor shall keep its principal place of
                        --------
business and chief executive office and the office where it keeps its records
concerning the Collateral, and originals of all Collateral at the principal
place of business and chief executive office of the Grantors; not change its
name except upon thirty (30) days' prior written notice to the Secured Party;
hold and preserve any records constituting a part of the Collateral; and permit
representatives of the Secured Party at any time during normal business hours,
upon reasonable notice, to inspect and make abstracts from such records and
chattel paper, subject to the obligations of Secured Party under Section 9.2 of
the Purchase Agreement.

          SECTION 4.1.2 As to Collateral.
                        ----------------

          (a) Without limitation of the obligations of any Grantor pursuant to
     the Indemnity Agreement, the Grantors shall (i) maintain a segregated
     deposit account (the "Segregated Account") with a financial institution
     reasonably acceptable to the Secured Party, (ii) specify on all invoices
     and other payment instructions relating to the Collateral that payment is
     to be made directly to the Segregated Account, (iii) promptly deposit any
     payments or other monies received in respect of the Collateral in the
     Segregated Account. The Grantors shall take all actions reasonably
     requested by the Secured Party to perfect the Secured Party's security
     interest in the Segregated Account. The Grantors shall not modify in any
     respect the arrangements relating to the Segregated Account without the
     prior written approval of the Secured Party.

          (b) Subject to the terms, conditions and limitations of the Indemnity
     Agreements, the Grantors shall, at their own expense and until the
     occurrence and during the continuance of an Event of Default, use their
     best efforts to collect, as and when due, all amounts due with respect to
     any of the Collateral, including the taking of such action with respect to
     such collection as the Secured Party may reasonably request or, in the
     absence of such request, as the Grantors may deem advisable. The Secured
     Party, however, may, at any time following the occurrence and during the
     continuance of an Event of Default notify any parties obligated on any of
     the Collateral to make payment to the Secured Party of any amounts due or
     to become due thereunder and enforce collection of any of the Collateral by
     suit or otherwise and surrender, release, or exchange all or any part
     thereof, or compromise or extend or renew for any period (whether or not
     longer than the original period) any indebtedness thereunder or evidenced
     thereby. Upon request of the Secured Party after the occurrence and during
     the continuance of an Event of Default, the Grantors will, at their own
     expense, notify any parties obligated on any of the Collateral to make
     payment to the Secured Party of any amounts due or to become due
     thereunder.

                                      -7-





<PAGE>

          (c) After the occurrence and during the continuance of an Event of
     Default, the Secured Party is authorized to endorse, in the name of the
     Grantors, any item, howsoever received by the Secured Party, representing
     any payment on or other proceeds of any of the Collateral.

          SECTION 4.1.3 Transfers and Other Liens. The Grantors shall not:
                        -------------------------

          (a) sell, assign (by operation of law or otherwise) or otherwise
     dispose of any of the Collateral; or

          (b) create or suffer to exist any Lien upon or with respect to any of
     the Collateral, except for the security interest created by this Agreement.

          SECTION 4.1.4 Further Assurances, etc. The Grantors agree that, from
                        -----------------------
time to time at their own expense, the Grantors will promptly execute and
deliver all further instruments and documents, and take all further action, that
may be necessary, or that the Secured Party may reasonably request, in order to
perfect, preserve and protect any security interest granted or purported to be
granted hereby or to enable the Secured Party to exercise and enforce its rights
and remedies hereunder with respect to any Collateral. With respect to the
foregoing and the grant of the security interest hereunder, the Grantors hereby
authorize the Secured Party to file one or more financing or continuation
statements, and amendments thereto, for the purpose of perfecting, confirming,
continuing, enforcing or protecting the security interest granted by the
Grantors and naming a Grantor as debtor and the Secured Party as secured party;
provided that such financing and continuation statements, and amendments
--------
thereto, are limited to the Collateral. A carbon, photographic or other
reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.

                                    ARTICLE V

                               THE SECURED PARTY

          SECTION 5.1.1 Secured Party Appointed Attorney-in-Fact. Each Grantor
                        ----------------------------------------
hereby irrevocably constitutes and appoints the Secured Party and any officer or
agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of such Grantor and in the name of such Grantor or in its own name for the
purpose of carrying out the terms of this Agreement, to take, upon the
occurrence and during the continuance of any Event of Default, any and all
appropriate action and to execute any and all documents and instruments that may
be necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, such Grantor hereby gives the
Secured Party the power and right, on behalf of such Grantor, without notice to
or assent by such Grantor, after the occurrence and during the continuance of an
Event of Default, to (i) direct any party liable for any payment under any of
the Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Secured Party or as the Secured Party shall direct;
(ii) ask or demand for, collect, and receive payment of and give receipt for,
any and all moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (iii) sign and indorse any
assignments,

                                      -8-

<PAGE>

verifications, notices and other documents in connection with any of the
Collateral; (iv) commence and prosecute any suits, actions or proceedings at law
or in equity in any court of competent jurisdiction to collect the Collateral or
any portion thereof and to enforce any other right in respect of any Collateral;
(v) defend any suit, action or proceeding brought against the Company with
respect to any Collateral; (vi) settle, compromise or adjust any such suit,
action or proceeding and, in connection therewith, give such discharges or
releases as the Secured Party may deem appropriate; (vii) notify, or require
such Grantor to notify, account debtors to make payment directly to the Secured
Party and change the post office box number or other address to which such
account debtors make payments; and (viii) generally, sell, transfer, pledge, and
make any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Secured Party were the absolute owner
thereof for all purposes, and do, at the Secured Party's option and the
Grantors' expense, at any time, or from time to time, all acts and things that
the Secured Party deems necessary to protect, preserve or realize upon the
Collateral and the Secured Party's security interests therein and to effect the
intent of this Agreement, all as fully and effectively as such Grantor might do.

The Grantors hereby acknowledge, consent and agree that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.

     SECTION 5.2 Secured Party May Perform. If a Grantor fails to perform any
                 -------------------------
agreement contained herein, the Secured Party may itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Secured Party
incurred in connection therewith shall be payable by the Grantors pursuant to
Section 6.2.
-----------

     SECTION 5.3 Secured Party Has No Duty. In addition to, and not in
                 -------------------------
limitation of, Section 2.4, the powers conferred on the Secured Party hereunder
               -----------
are solely to protect its interest in the Collateral and shall not impose any
duty on it to exercise any such powers. The Secured Party's sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the U.C.C. or otherwise, shall be to
deal with it in the same manner as the Secured Party deals with similar property
for its own account. Neither the Secured Party nor any of its officers,
directors, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of the Grantors or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof (including the
taking of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Collateral). The Secured Party shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers, and neither the Secured Party nor any of its officers,
directors, employees or agents shall be responsible to the Grantors for any act
or failure to act hereunder, except for their own gross negligence or willful
misconduct.

                                   ARTICLE VI

                                    REMEDIES

     SECTION 6.1 Certain Remedies. If any Event of Default shall have occurred
                 ----------------
and be continuing, the Secured Party may exercise in respect of the Collateral,
in addition to other rights

                                      -9-

<PAGE>

and remedies provided for herein or otherwise available to it, all the rights
and remedies of a secured party on default under the U.C.C. (whether or not the
U.C.C. applies to the affected Collateral) and also may exercise any and all
rights and remedies of the Grantors in respect of the Collateral, including any
and all rights of the Grantors to demand or otherwise require payment of any
account under, or performance of any provision of any agreements constituting a
portion of the Collateral.

     SECTION 6.2 Expenses. The Grantors, jointly and severally, agree to pay to
                 --------
the Secured Party upon demand the amount of any and all reasonable costs and
expenses, including the reasonable fees and disbursements of its counsel and of
any experts and agents, which the Secured Party may incur in connection with (a)
the exercise or enforcement of any of the rights of the Secured Party or (b) the
failure by the Grantors to perform or observe any of the provisions hereof.

                                   ARTICLE VII

                               GENERAL PROVISIONS

     SECTION 7.1 Amendments; etc. No amendment to or waiver of any provision of
                 ---------------
this Agreement nor consent to any departure by a Grantor herefrom, shall in any
event be effective unless the same shall be in writing and signed by the Secured
Party, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

     SECTION 7.2 Notices. All communications provided for hereunder shall be in
                 -------
writing and shall be deemed to be given when delivered in person or by private
courier with receipt, when telefaxed and received, and,

                  If to any Grantor:
                  Appleton Papers Inc.
                  825 E. Wisconsin Avenue
                  P.O. Box 359
                  Appleton, WI 54912-0359
                  Facsimile: (920) 740-6802

                  Attention: Paul Karch,
                  Vice President, Law and
                  Public Affairs and
                  General Counsel

                  with a copy to:

                  Godfrey & Kahn, S.C.
                  780 N. Water Street
                  Milwaukee, WI 53202
                  Facsimile: (414) 273-5198
                  Attention: Christopher B. Noyes

                                      -10-

<PAGE>

                  If to the Secured Party:

                  Arjo Wiggins Appleton plc
                  St. Clement House
                  Alencon Link
                  Basingstoke
                  Hampshire RG21
                  ENGLAND
                  Facsimile: 011-44-1256-796075
                  Attention: Company Secretary

                  and

                  AWA Group Services SAS
                  Washington Plaza
                  29 Rue de Berri
                  75408 Paris
                  Cedex 08
                  FRANCE
                  Facsimile: 011-33-1-5669-3963
                  Attention: Director of Legal Affairs

                  with a copy to:

                  McDermott, Will & Emery
                  50 Rockefeller Plaza
                  New York, NY 10020
                  Attention:  C. David Goldman
                  Facsimile No.:  212-547-5444

or to such other address as any such party shall designate by written notice to
the other parties hereto.

     SECTION 7.3 Section Captions. Section captions used in this Agreement are
                 ----------------
for convenience of reference only, and shall not affect the construction of this
Agreement.

     SECTION 7.4 Severability. Wherever possible each provision of this
                 ------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

     SECTION 7.5 Execution in Counterparts. This Agreement may be executed by
                 -------------------------
the parties hereto in several counterparts, each of which shall be executed by
the Grantors and the Secured Party and be deemed to be an original and all of
which shall constitute together but one and the same agreement.

                                      -11-

<PAGE>

     SECTION 7.6 Successors and Assigns. This Agreement shall be binding upon
                 ----------------------
and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that no Grantor may assign or
transfer its rights or obligations hereunder without the prior written consent
of the Secured Party.

     SECTION 7.7 Governing Law, Entire Agreement, etc. THIS SECURITY AGREEMENT
                 ------------------------------------
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK. THIS SECURITY AGREEMENT AND THE INDEMNITY AGREEMENT CONSTITUTE THE
ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.

     SECTION 7.8 Forum Selection and Consent to Jurisdiction. ANY LITIGATION
                 -------------------------------------------
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS SECURITY
AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF THE SECURED PARTIES OR THE GRANTORS MAY BE BROUGHT AND
MAINTAINED IN THE FEDERAL AND STATE COURTS LOCATED IN THE STATE OF NEW YORK;
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
--------  -------
OTHER PROPERTY MAY BE BROUGHT, AT THE SECURED PARTY'S OPTION, IN THE COURTS OF
ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE
GRANTORS HEREBY EXPRESSLY AND IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE
JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH
ABOVE AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH SUCH LITIGATION SUBJECT TO ANY RIGHTS OF APPEAL OF ANY JUDGMENT
RENDERED BY THE HIGHEST COURT IN THE STATE OF NEW YORK OR THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AS THE CASE MAY BE. THE
GRANTORS FURTHER IRREVOCABLY CONSENT TO SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF DELAWARE.
THE GRANTORS HEREBY EXPRESSLY AND IRREVOCABLY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY HAVE OR HEREAFTER MAY HAVE TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. TO THE EXTENT THAT THE GRANTORS HAVE OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,

                                      -12-

<PAGE>

ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, THE GRANTORS, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY IRREVOCABLY WAIVE SUCH IMMUNITY IN RESPECT OF THEIR OBLIGATIONS UNDER
THIS SECURITY AGREEMENT.

     SECTION 7.9  Waiver of Jury Trial. THE SECURED PARTY AND THE GRANTORS
                  --------------------
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS SECURITY AGREEMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE
SECURED PARTY OR THE GRANTORS. THE GRANTORS ACKNOWLEDGE AND AGREE THAT THEY HAVE
RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER
PROVISION OF EACH OTHER DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION
IS A MATERIAL INDUCEMENT FOR THE GRANTORS ENTERING INTO THE DOCUMENTS.

     SECTION 7.10 Waiver of Certain Claims. TO THE EXTENT PERMITTED BY
                  ------------------------
APPLICABLE LAW, NO GRANTOR SHALL ASSERT, AND EACH GRANTOR HEREBY WAIVES, ANY
CLAIM AGAINST THE SECURED PARTY OR ANY OF IT AFFILIATES ON ANY THEORY OF
LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED
TO DIRECT TO ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT
OF, THIS AGREEMENT OR ANY INSTRUMENT CONTEMPLATED HEREBY.

                            [Signature Page Follows]

                                      -13-

<PAGE>

         IN WITNESS WHEREOF, the Grantors have caused this Security Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.

                                 GRANTORS:

                                 APPLETON PAPERS INC.


                                 By: /s/ Paul J. Karch
                                 Name:  Paul J. Karch
                                 Title: Secretary

                                 PAPERWEIGHT DEVELOPMENT CORP.


                                 By: /s/ Doug Buth
                                 Name:  Douglas P. Buth
                                 Title: President & CEO

                                 NEW APPLETON LLC


                                 By: /s/ Doug Buth
                                 Name:  Douglas P. Buth

                                 Title: President of Paperweight Development
                                        Corp., Sole Member of New Appleton
                                        LLC

                                 SECURED PARTY:

                                 ARJO WIGGINS APPLETON p.l.c.


                                 By: /s/ Luca PaVeri-Fontana
                                 Name:  Luca PaVeri-Fontana
                                 Title: Director

                                      -14-