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                                                                   Exhibit 10.36

                          AMERICAN PAD & PAPER COMPANY

                    1999 KEY EMPLOYEES STOCK INCENTIVE PLAN

SECTION 1.  Purpose

            The purpose of the American Pad & Paper Company 1999 Key Employees
Stock Incentive Plan (the "Plan") is to enable American Pad & Paper Company, a
Delaware corporation (the "Company") and its subsidiaries to attract, retain and
motivate their employees by providing for or increasing the proprietary
interests of such employees in the Company.

SECTION 2.  Persons Eligible

            Any person employed by the Company or any of its subsidiaries
including any director who is so employed (an "Employee"), shall be eligible to
be considered for the grant of Awards (as defined below) under the Plan.

SECTION 3.  Awards

            (a) The Committee (as defined below), on behalf of the Company, is
authorized under the Plan to enter into any type of arrangement with an Employee
that is consistent with the provisions of the Plan and that by its terms
involves the issuance or potential issuance of (i) shares of Common Stock, par
value $.01 per share, of the Company ("Common Stock") or (ii) a Derivative
Security (as such term is defined in Rule 16a-1 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as such Rule may be
amended from time to time) with an exercise or conversion right at a price
related to Common Stock or with a value derived from the value of the shares of
Common Stock. The entering into of any such arrangement is referred to herein as
the grant of an "Award."

            (b) Awards are not restricted to any specified form or structure and
may include, without limitation, sales or bonuses of stock, restricted stock,
restricted stock unit, stock options, reload stock options, stock purchase
warrants, other rights to acquire stock, securities convertible into or
redeemable for stock, stock appreciation rights, limited stock appreciation
rights, phantom stock, dividend equivalents, performance units or performance
shares, and an Award may consist of one or more such security or benefit.

            (c) Common Stock may be issued pursuant to an Award for any lawful
consideration as determined by the Committee, including, without limitation,
services rendered by the recipient of such Award.


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            (d) Subject to the provisions of the Plan, the Committee, in its
sole and absolute discretion, shall determine all of the terms and conditions of
each Award granted under the Plan, which terms and conditions may include
without limitation:

            (i) a provision permitting the recipient of such Award, including a
      director or officer of the Company, to pay the purchase price of the
      Common Stock or other property issuable pursuant to such Award, or such
      recipient's tax withholding obligation with respect to such Award, in
      whole or in part, by any one or more of the following:

            (A)   the delivery of  previously  owned shares of Common Stock or
                  other property,

            (B)   a reduction in the amount of Common Stock or other property
                  otherwise issuable pursuant to such Award, or

            (C)   the delivery of a promissory  note, the terms and conditions
                  of which shall be determined by the Committee;

            (ii) a provision conditioning or accelerating the receipt of
      benefits pursuant to such Award, either automatically or in the discretion
      of the Committee, upon the occurrence of specified events, including a
      change of control of the Company, an acquisition of a specified percentage
      of the voting power of the Company, the dissolution or liquidation of the
      Company, a sale of substantially all of the property and assets of the
      Company or an event of the type described in Section 7 hereof; or

            (iii) a provision required in order for such Award to qualify as an
      incentive stock option under Section 422 of the Internal Revenue Code (an
      "Incentive Stock Option").

            (e) Notwithstanding any other provision of the Plan, no one Employee
shall be granted options or other Awards with respect to more than 100,000
shares of Common Stock in any one calendar year; provided, however, that this
limitation shall not apply if it is not required in order for the compensation
attributable to Awards hereunder to qualify as performance-based compensation
described in Section 162(m) of the Internal Revenue Code ("Performance-Based
Compensation"). The limitation set forth in this Section 3(e) shall be subject
to adjustment as provided in Section 7 hereof, but only to the extent such
adjustment would not affect the status of compensation attributable to Awards
hereunder as Performance-Based Compensation.

SECTION 4.  Stock Subject to Plan

            (a) At any time, the aggregate number of shares of Common Stock
issued and issuable pursuant to all Awards granted under the Plan shall not
exceed 1,500,000, subject to adjustment as provided in Section 7 hereof. Shares
of Common Stock issued pursuant to the Plan may be authorized but unissued
shares, treasury shares, reacquired shares or any combination thereof.

            (b) For purposes of Section 4(a) hereof, the aggregate number of
shares of Common Stock issued and issuable pursuant to Awards granted under the
Plan shall at any time be deemed to be equal to the sum of the number of shares
of Common Stock which have been issued


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pursuant to Awards and which have not been repurchased by the Company and the
number of shares which are or may be issuable at or after such time pursuant to
Awards granted prior to such time.

SECTION 5.  Duration

            No Awards shall be granted under the Plan after April 27, 2009.
Shares of Common Stock may be issued after April 27, 2009 pursuant to Awards
granted prior to such date, however, no shares of Common Stock shall be issued
under the Plan after April 27, 2019.

SECTION 6.  Administration

            (a) The Plan shall be administered by a committee (the "Committee")
of the Board of Directors of the Company (the "Board") consisting of two or more
directors, each of whom is a "Non-Employee Director" (as such term is defined in
Rule 16b-3 under the Exchange Act, as such Rule may be amended from time to
time) and an "outside director" as defined in Section 162(m) of the Internal
Revenue Code; provided that to the extent permitted at any time under Rule 16b-3
or any successor rule and under Section 162(m) of the Internal Revenue Code or
any successor statutory provision, and any implementing regulations, without
adversely affecting the ability of the Plan to comply with the conditions for
exemption from Section 16 of the Exchange Act provided by Rule 16b-3 and the
exemption from the limitations on the deductibility of certain executive
compensation provided by Section 162(m), the Committee may delegate the
administration of the Plan in whole or in part, on such terms and conditions, to
such other person or persons as it may determine in its discretion, which
persons may be officers or employees of the Company or third parties (each such
person, an "Authorized Delegate").

            (b) Subject to the provisions of the Plan, the Committee (or its
Authorized Delegate) shall be authorized and empowered to do all things
necessary or desirable in connection with the administration of the Plan,
including the following:

            (i)   adopt,  amend and rescind rules and regulations  relating to
      the Plan;

            (ii) determine which persons meet the requirements of Section 2
      hereof for eligibility under the Plan and to which of such eligible
      persons, if any, Awards shall be granted hereunder;

            (iii) determine  whether,  and the extent to which adjustments are
      required pursuant to Section 7 hereof;

            (iv)  interpret   and   construe   the  Plan  and  the  terms  and
      conditions of any Award granted hereunder; and
            (v) correct any defect or supply any omission or reconcile any
      inconsistency in the Plan or in any Award in the manner and to the extent
      the Committee deems necessary or desirable to carry it into effect.

            (c) Any decision of the Committee (or any Authorized Delegate) in
the interpretation and administration of the Plan shall lie within its sole and
absolute discretion and shall


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be final, conclusive and binding on all parties concerned. The Committee may act
only by a majority of its members in office, except that the members thereof may
authorize any one or more of their members or any Authorized Delegate to execute
and deliver documents or to take any other ministerial action on behalf of the
Committee with respect to Awards made or to be made to Plan participants. No
member of the Committee or Authorized Delegate shall be liable for anything done
or omitted to be done by such member or Authorized Delegate, by any other member
of the Committee or by any other Authorized Delegate in connection with the
performance of duties under the Plan, except for his or her own willful
misconduct or as expressly provided by statute. Determinations to be made by the
Committee under the Plan may be made by Authorized Delegates.

SECTION 7.  Adjustments

            If the outstanding securities of the class then subject to the Plan
are increased, decreased or exchanged for or converted into cash, property or a
different number or kind of securities, or if cash, property or securities are
distributed in respect of such outstanding securities, in either case as a
result of a reorganization, merger, consolidation, recapitalization,
restructuring, reclassification, dividend (other than a regular, quarterly cash
dividend) or other distribution, stock split, reverse stock split or the like,
or if substantially all of the property and assets of the Company are sold,
then, unless the terms of such transaction shall provide otherwise, the
Committee shall make appropriate and proportionate adjustments in (a) the number
and type of shares or other securities or cash or other property that may be
acquired pursuant to Awards theretofore granted under the Plan, (b) the maximum
number and type of shares or other securities that may be issued pursuant to
Awards thereafter granted under the Plan and (c) to the extent permitted under
Section 3(e) hereof, the maximum number of shares of Common Stock with respect
to which Awards may be granted to any Employee during any calendar year;
provided, however, that no adjustment shall be made to the number of shares of
Common Stock that may be acquired pursuant to outstanding Incentive Stock
Options or the maximum number of shares of Common Stock with respect to which
Incentive Stock Options may be granted under the Plan to the extent such
adjustment would result in such options being treated as other than Incentive
Stock Options; provided further that no such adjustment shall be made to the
extent the Committee determines that such adjustment would result in the
disallowance of a federal income tax deduction for compensation attributable to
Awards hereunder by causing such compensation to be other than Performance-Based
Compensation.

SECTION 8.  Amendment and Termination

            The Board may amend or terminate the Plan at any time and in any
manner; provided however, that no such amendment or termination shall deprive
the recipient of an Award previously granted under the Plan of any of his or her
rights thereunder, without the consent of such recipient and provided further
that no amendment shall become effective without stockholder approval if such
stockholder approval is required by law.

SECTION 9.  Effectiveness

            The Plan shall be submitted to the stockholders of the Company for
their approval and adoption in accordance with Section 162(m) under the Internal
Revenue Code. The Plan shall


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not be effective and no Award shall be made hereunder unless and until the Plan
has been so approved and adopted.

SECTION 10.  Miscellaneous Provisions

            (a) Neither the Plan nor any action taken hereunder shall be
construed as giving any Employee or other person any right to continue to be
employed by the Company or any of its subsidiaries.

            (b) Except as may be set forth in an Award or otherwise approved by
the Committee an Employee's rights and interest under the Plan may not be
assigned or transferred, hypothecated or encumbered in whole or in part either
directly or by operation of law or otherwise (except in the event of an
Employee's death) including, but not by way of limitation, execution, levy,
garnishment, attachment, pledge, bankruptcy or in any other manner.

            (c) It is the intent of the Company that the Plan comply in all
respects with Rule 16b-3 under the Exchange Act and Section 162(m) of the
Internal Revenue Code, that any ambiguities or inconsistencies in construction
of the Plan be interpreted to give effect to such intention and that if any
provision of the Plan is found not to be in compliance with Rule 16b-3 or
Section 162(m), such provision shall be deemed null and void to the extent
required to permit the Plan to comply with Rule 16b-3 or Section 162(m), as the
case may be.

            (d) The Company shall have the right to deduct from any payment made
under the Plan any federal, state, local or foreign income or other taxes
required by law to be withheld with respect to such payment. It shall be a
condition to the obligation of the Company to issue shares of Common Stock,
other securities or property or any combination thereof, upon exercise,
settlement or payment of any Award under the Plan, that the recipient of an
Award (or any beneficiary or person entitled to act) pay to the Company, upon
its demand, such amount as may be required by the Company for the purpose of
satisfying any liability to withhold such taxes.

            (e) By accepting any Award or other benefit under the Plan, each
recipient of an Award and each person claiming under or through him or her shall
be conclusively deemed to have indicated his or her acceptance and ratification
of, and consent to, any action taken under the Plan by the Company, the Board or
the Committee or its delegates.

            (f) The validity, construction, interpretation, administration and
effect of the Plan, and of its rules and regulations, and rights relating to the
Plan and to Awards granted under the Plan, shall be governed by the substantive
laws, but not the choice of law rules, of the State of Delaware.


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